Figure 4.1 below pulls together the main themes in the extant literature so far into a unified framework and connects the influences that institutions exert on entrepreneurship. Taking stock of the extant literature, it seems that (a) institutions arrangements can be categorised into three - regulatory, cultural-cognitive and normative (b) irrespective of the nature of institutions, institutions play several roles, which determine, inhibit, or (and) promote entrepreneurship (c) depending on the nature of institutions, start-ups fail, or emerge, firms survive or grow. Thus, Figure 4.1 sets forth the working model of this thesis: evidently, institutional influences on entrepreneurship have much to do with the nature of institutions, and there seems to be the lack of a holistic framework depicting the roles institutions play in entrepreneurship.
The institutional classification of Scott (1995) as well as the application of the construct of institutional profile by Kostova (1997) and Busenitz et al., (2000) conceptualise a country's institutional profile into three - regulatory, normative and cultural-cognitive. These institutional dimensions play several roles in entrepreneurship development. As evidence in the literature, institutions shape opportunity fields for entrepreneurship (North, 1990); institutions determine the transaction cost of entrepreneurship (Acemoglu & Johnson, 2005); institutions create stability for entrepreneurship (Kelman, 1987); institutions guide the strategic activities of entrepreneurial firms (Scott, 1995); institutions confer legitimacy upon entrepreneurship (Suchman, 1995); institutions (re)allocate entrepreneurship (Baumol, 1990); and institutions counter market failures (Rodrik, 1999). In spite of the potential roles the institutional dimensions will play in entrepreneurship, the nature of institutions, whether efficient or inefficient, may determine the impact on entrepreneurial action. For instance, from the institutional perspective, while entrepreneurs operating within a framework of efficient institutions can easily exploit
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opportunity fields to start and (or) grow their businesses, that may not be the case for entrepreneurs operating within inefficient institutional framework, as depicted in Figure 4.1.
The model basically outlines what the literature says about institutional dimensions and their influences upon entrepreneurship. This will guide this study's investigation to unearth the dimensions as well as the influences of institutional dimensions in entrepreneurship in Ghana. But the question still remains as to what entrepreneurs do when the institutional framework poses a challenge to their activities. The next Chapter attempts to address this issue.
83 Institutions (regulatory,
normative, and cultural-cognitive)
Roles of institutions
• shape opportunity fields • determine ease of doing
business and transaction cost • determine stability and
certainty of business environment
• guide entrepreneurial strategic activities
• confer legitimacy • (re)allocation process • counter market failures Efficient Inefficient Efficient institutions Inefficient institutions
Figure 4.1 Roles of Institutions in Entrepreneurship
Nature of institutions Entrepreneurship • Start-up failure • Start-up • Firm survival • Firm growth
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4.3 Summary
Institutional theorists agree that institutions determine the rules of the game, however the exact nature of the institutional influences and the extent to which institutions matter for entrepreneurship may not be well conceptualised. In view of this, although there have been extensive studies focused on the interactions between institutions and entrepreneurship, most of the literature relating to the roles that institutions play in entrepreneurship have been studied in isolation. It may indicate that whilst there have been some research in this area, a few studies have gone beyond the 'what' of basic comparisons, to ask the 'how' and 'why' questions to advance theory.
This chapter has attempted to synthesise how institutions influence entrepreneurship by investigating the roles of institutions in shaping entrepreneurship. As shown in Figure 4.1, institutions shape the opportunity fields for entrepreneurship; institutions facilitate exchange and reduce transaction cost; institutions reduce uncertainty of social interaction; institutions counter market failures; institutions guide entrepreneurial firm's strategic activities; institutions confer legitimacy on entrepreneurship; and institutions influence the allocation and reallocation of entrepreneurship.
Although institutions seem to be fundamental in entrepreneurship, the notion of institutions determining the rules of the game is problematic because it alludes to the classic debate that actors (entrepreneurs) are somehow unable to disengage from institutional framework and act to suit their interest. This relates to the “paradox of embedded agency” (Holm, 1995; Seo & Creed, 2002), which alludes to the tension between institutional determinism ((Leca et al., 2008) and entrepreneurs: How can entrepreneurs' act if their beliefs and actions are determined by the institutional environment within which they operate? Resolving this paradox is a key challenge to the formulation of theoretical foundations for the study of institutions and entrepreneurship. The review of the literature suggests that whereas early institutional studies considered mainly the constraints' institutions impose on entrepreneurs, other works on institutions and entrepreneurship aimed to build a theory of action suggests that actors (entrepreneurs) are knowledgeable agents with a capacity to reflect and act in ways other than those prescribed by taken-for-granted social rules, technological artifacts and other institutions (Schutz & Natanson,
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1973; Giddens, 1984; Mutch, 2007; Abebrese, 2014). Conceptualized in this way, institutional structures do not necessarily constrain entrepreneurs, instead, may also serve as the fabric to be used for the unfolding of entrepreneurship (Garud et al., 2007). Hence, entrepreneurs use their “capacity to imagine alternative possibilities…within the contingencies of the moment” (Emirbayer & Mische 1998, p. 963) so as to operationalise their activities. Based on this premise, the next chapter explores the resilient strategies entrepreneurs champion so as to be able to carry out their activities (Garud & Karnøe, 2001; Battilana, 2006; Abebrese, 2014) within constraints.
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Chapter Five: Assessing entrepreneurial resilient strategies in
dealing with Institutional Constraints
5 Introduction
Chapter Four examined the roles that institutions play in entrepreneurship. This Chapter reviews the resilience concept and resilience strategies entrepreneurs adopt to overcome institutional constraints. The Chapter commences with a review of the Concept of Resilience, transposes the concept of resilience to entrepreneurs, and branches into the resilience strategies entrepreneurs adopt to overcome institutional constraints. Section 5.1 deals with the concept of resilience, while Section 5.2 contains the resilience strategies entrepreneurs adopt to overcome or mitigate adversity. The Chapter is summarised in Section 5.3.