Moderating relationship of institutions for opportunity entrepreneurship and economic development. Literature review and proposed conceptual framework
| DOI | https://doi.org/10.1108/WJEMSD-06-2017-0031 |
| Published date | 10 September 2017 |
| Date | 10 September 2017 |
| Pages | 350-374 |
| Author | Hasan Ghura,Xiaoqing Li,Arezou Harraf |
| Subject Matter | Strategy,Business ethics,Sustainability |
Moderating relationship of
institutions for opportunity
entrepreneurship and
economic development
Literature review and proposed
conceptual framework
Hasan Ghura
Department of Business, Box Hill College Kuwait,
Abo Halifa, Kuwait
Xiaoqing Li
Brunel Business School, Brunel University London, London, UK, and
Arezou Harraf
Department of Business, Box Hill College Kuwait,
Abo Halifa, Kuwait
Abstract
Purpose –The purpose of this paper is to develop a conceptual framework that illustrates how
resource-based countries, such as those in the Gulf Cooperation Council, can move their economies towards a
more sustainable diversified model, through creating and fostering institutions that are conducive for
opportunity entrepreneurship.
Design/methodology/approach –Several key variables pertaining to formal and informal institutions
which impact opportunity entrepreneurship are presented in a conceptual framework based on a
comprehensive, non-systematic literature review.
Findings –Findings from the comprehensive literature review suggest that institutions play a moderating
role between opportunity entrepreneurship and economic development. Institutions can stimulat e
entrepreneur’s behaviour leading to economic growth and subsequently development. Proposals worth
pursuing in empirical studies in the future are presented based on the review of the literature.
Practical implications –This framework offers a model for oil-based countries in resolving structural
problems in fostering entrepreneurship when responding to economic challenges.
Originality/value –The proposed framework in this study takes into consideration a comprehensive set of
formal and informal institutional factors, rarely discussed in the existing literature, that link opportunity
entrepreneurship and economic growth and development. Insights offered by this study have implications for
government policy changes in developing effective institutions.
Keywords Economic development, Knowledge-based economy, Institutional economics,
Economic growth, Oil-based countries, Opportunity entrepreneurship
Paper type Conceptual paper
Introduction
In the history of development economics, the availability of natural resources such as oil and
gas, copper and gold has been thought of as key drivers in economic growth (Schwab and
Sala-i-Martín, 2013). In this realm, over several decades, Gulf Cooperation Council (GCC)
countries that are driven by non-renewable resources, mainly oil and gas, have experienced
a rapid increase in economic growth (i.e. GDP per capita) and standards of living due to the
high demand on mineral resources (Callen et al., 2014). However, these countries risk lower
levels of productivity in other economic activities such as manufacturing and services
industries, because of overreliance on non-renewable resources. Moreover, these countries
World Journal of
Entrepreneurship, Management
and Sustainable Development
Vol. 13 No. 4, 2017
pp. 350-374
© Emerald PublishingLimited
2042-5961
DOI 10.1108/WJEMSD-06-2017-0031
The current issue and full text archive of this journal is available on Emerald Insight at:
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350
WJEMSD
13,4
will be more susceptible to variations in oil and gas prices in the global market (i.e. the Dutch
disease) (Sachs and Warner, 1995; Schwab and Sala-i-Martín, 2013). Therefore, the
abundance of natural resources may not necessarily be directly associated with economic
growth that lead for sustainable development (Al-Roubaie, 2013).
TheGCCcountrieshavemadeseveralattemptstodiversifytheireconomiestowardsamore
sustainable model. However, theireffortshavenotproveneffective across the board
(Callen et al., 2014). Recently, Qatar, Bahrain and UAE are among GCC countries that have
managed to move forward in the stages of economic development to reach the innovation-driven
stage (knowledge-based economy) by depending less on oil revenues and focusing more on
export diversification (Schwab and Sala-i-Martín, 2016).
Thereisagrowingbodyofliterature that has recognised the importance
of entrepreneurship in economic growth and development (Acs and Szerb, 2010;
Acs et al., 2014b). In line with efforts to move towards a more developed and sustainable
economic model, the GCC countries have vested much time and emphasis on
entrepreneurship in recent years (Al-Obaidy, 2012; Al-Roubaie, 2013; Callen et al., 2014).
In the same realm, there has been renewed interest in institutional economics to provide a
better understanding for entrepreneurship research (Bruton et al., 2010), which is of
particular importance to GCC countries in moving towards a more sustainable economic
development. The preliminary evidence suggested that institutional environment is among
the most important factors for the variations of entrepreneurship activity in different stages
of economic development (Busenitz et al., 2000; Acs et al., 2014b). As shown above,
researchers agree that institutions play an important role in entrepreneurship activity.
However, despite this knowledge, little is known about which institutional factors are the
most important to productive (i.e. opportunity) entrepreneurship (Levie and Autio, 2011;
Urbano and Alvarez, 2014). In addition, much of the research to date has tended to restrict
the concept of institutions into formal factors (e.g. laws and regulations), while
informal factors (e.g. culture and social norms) have not been considered at length
(Carlos Díaz Casero et al., 2013; Castaño-Martínez et al., 2015; Fuentelsaz et al., 2015). In this
respect, in spite of the importance of the constant interaction between formal and informal
institutions, very little attention has been paid to the effects of such interaction on
entrepreneurship (Williamson, 2000; Bruton et al., 2008; Carlsson et al., 2013; Ahlstrom and
Ding, 2014; Smallbone et al., 2013; Chowdhury et al., 2015; Aparicio et al., 2016).
To this end, there is a need to have a better understanding on the interaction between
formal and informal institutions that strengthen the relationship between productive
(i.e. opportunity) entrepreneurship and economic development (Bruton et al., 2008;
Al-Roubaie, 2013; Carlsson et al., 2013; Smallbone et al., 2013; Ahlstrom and Ding, 2014;
Chowdhury et al., 2015). As a result, this study attempts to fill the gap in the literature by
proposing a conceptual framework of institutional factors (formal and informal) that
moderate the relationship between opportunity entrepreneurship and economic
development in the context of oil-based countries (e.g. GCC countries) (Bjørnskov and
Foss, 2013).
In this study, the authors conducted a traditional narrative review (non-systematic
review) in relation to opportunity entrepreneurship, institutions and economic growth/
development literature. Although the systematic review has its strengths by being more
structured and explicit in the selection of the studies (Denyer and Tranfield, 2008), the
subject of entrepreneurship and economic development, however, has been widely studied
in different fields such as international business, general management, regional studies,
entrepreneurial economics and institutional economics in which systematic methodology
becomes limited to specific keywords and academic journals (Aliaga-Isla and Rialp, 2013).
As a result, a non-systematic review will better enhance our understanding of the subject of
interest for this study.
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Moderating
relationship of
institutions
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