(Press-News.org)
Scholars and policymakers have highlighted the positive impact of human capital on entrepreneurial activity. Vast attention has also been directed to the beneficial role of pro-market institutions for entrepreneurship. A new article published in the Strategic Entrepreneurship Journal shows that the positive relation between pro-market institutions and growth aspirations is weaker for entrepreneurs with general human capital (higher education), but stronger for those with specific human capital (start-up or investment experience). Interestingly, during the Global Financial Crisis (GFC) and the COVID-19 pandemic, the differential effect of pro-market institutions on growth aspirations exists only for entrepreneurs with specific human capital.
Why do Institutions and Human Capital Matter?
Institutions serve as “rules of the game,” providing a context-specific nature to entrepreneurship. Such rules tend to remain stable over decades in their orientation toward more pro-market or more regulated organization. Entrepreneurs take the institutional environment as a given when envisioning venture growth, which has been shown to be facilitated by pro-market institutions that reduce transaction costs.
Pro-market institutions promote economic liberalization, which requires bearing the opportunity cost of managing market uncertainty. Accordingly, in more liberalized markets (as compared to more regulated ones), entrepreneurs with specific human capital from start-up or investment (business angel) experience are expected to have higher growth aspirations. In contrast, general human capital acquired through higher education can be at odds with liberalized markets and, thus, weaken growth aspirations. The reasoning is that general information transmitted via education is useful in more predictable markets, conferring an advantage to interpret regulation rather than to manage uncertainty.
Do predictions change in a crisis? When uncertainty spikes and resources are scarcer, entrepreneurs with specific marketplace experience can have an even higher advantage to navigate a pro-market context. Conversely, there are mixed effects for those with general human capital. Higher education may still be incongruent with pro-market contexts. However, it can provide an advantage of signaling future labor returns in a crisis such as the GFC and can serve to understand crisis-time regulations (e.g., COVID-19 relief packages to small firms).
An International Dataset Spanning Good Times and Two Crises
Entrepreneur-level data come from the Global Entrepreneurship Monitor and comprise 141,003 observations from 93 countries spanning years 2005 to 2020. They confer two advantages: (1) country representativeness together with international comparativeness and (2) exogenous variation from the GFC and COVID-19 pandemic. To gauge pro-market institutions, the study uses data from the Heritage Foundation and Fraser Institute. These measures provide a continuum of real institutional arrangements, in which completely free or completely regulated markets do not exist.
What do the Data Say?
The results show that the positive relationship between pro-market institutions (measured through economic liberalization) and entrepreneurial growth aspirations is weaker for highly educated entrepreneurs (general human capital) but stronger for those with market experience (specific human capital). During crises, this dynamic shifts: The negative interaction of pro-market institutions and general human capital vanishes, while the positive interaction with specific human capital becomes more pronounced compared to non-crisis periods. This holds for start-up and business angel experience during the GFC and especially for start-up experience during the COVID-19 pandemic. One reason may be that during the GFC, investment experience was crucial for attracting funding, whereas in the COVID-19 pandemic, entrepreneurs could rely on government aid, and start-up experience took prominence.
These patterns are more robust for early-stage business owners (between three months and three and a half years of activity) compared to nascent entrepreneurs (first three months of activity), highlighting the significance of start-up experience, particularly in a crisis. Finally, potential complementarities emerge in more liberalized markets between higher education and business angel experience, mostly driven by non-crisis times.
Implications for Policymaking
In the wake of the GFC and the COVID-19 pandemic, generous funding has been dedicated to business and education policies. Consistent with this study’s results, recent proposals seek to increase complementarities between education and experience. An example could be to better integrate formal education with connections to lenders and equity investors. Such policies could have higher returns in pro-market institutional contexts which tend to feature economic growth through innovation. If education-based human capital serves as a precursor of growth, this research emphasizes the need to align theoretical training with real business experiences for aspiring entrepreneurs. This can enable entrepreneurs to scale up their ventures in institutional frameworks known to foster growth.
Find additional explanations in the full study available with open access in the Strategic Entrepreneurship Journal.
END
The most important support person for women to succeed in their ambition to breastfeed is the new mother’s partner. The partner also needs to be included through more support from healthcare professionals.
Together with Region Sörmland, Uppsala University has implemented a breastfeeding support programme. It provides new parents with structured breastfeeding support throughout the healthcare chain. The study is presented in an article published in the International Breastfeeding Journal. Interviews were conducted to investigate how the partner perceived the support in both the breastfeeding support group and in a control group that had ...
Rochester Institute of Technology Professor Moumita Das, from the School of Physics and Astronomy, has been elected an American Physical Society Fellow for her exceptional contributions to physics.
The APS Fellowship Program was created to recognize members who have made advances in physics through original research and publication, innovative contributions in the application of physics to science and technology, or teaching or service in the activities of the organization. No more than one half of 1 percent of the APS membership, excluding students, is recognized with fellowship. Only four people from Das’s field worldwide were ...
A new research centre focused on harnessing the positive powers of fungi is being established at Cranfield University with a £7.2 million injection of funding from Research England.
Fungi are one of the most diverse kingdoms in all living organisms and have an estimated global monetary value of 54.57 trillion US dollars. Long used for food and medicine, only a small proportion of classified fungi species has been studied in detail and developed for industrial use – leaving an estimated three million species yet to be discovered and evaluated. To date, research of fungi has largely focused on mitigating negative effects like disease, toxins and food loss.
The ...
To tackle the challenges of a shrinking wireless spectrum, the University of Houston has joined the Spectrum Management with Adaptive and Reconfigurable Technology (SMART) Hub – a Department of Defense Spectrum Innovation Center to conduct multifaceted spectrum research to meet national defense needs. The center, led by Baylor University, is a collection of researchers, engineers and economic and policy experts looking to enact a paradigm shift in the use and management of the wireless spectrum.
SMART Hub will develop next-generation technologies for unprecedented spectrum agility, to revolutionize ...
About The Study: In this study involving 481,000 individuals over a mean follow-up period of nearly 13 years, individuals who predominantly engaged in sitting at work exhibited a higher risk of mortality from all causes and cardiovascular disease compared with those who predominantly did not sit. Individuals who predominantly sit at work would need to engage in an additional 15 to 30 minutes of physical activity per day to mitigate this increased risk and reach the same level of risk as individuals who predominantly do not sit at work.
Authors: Chi-Pang Wen, M.D., Ph.D., of the National Health Research ...
About The Study: In this prospective cohort study of 220 pregnant individuals with preterm and full-term deliveries, receipt of three or more compared with two doses of COVID-19 vaccine before delivery resulted in 10-fold higher cord anti-Spike antibody levels. Maternal antibody concentration appeared more important than delivery gestational age in determining cord anti-Spike antibody levels. The number of doses and timing considerations for COVID-19 vaccine in pregnancy should include individuals at risk for preterm delivery.
Authors: Alisa Kachikis, M.D., M.S., of the University ...
Study analyzed a West Virginia policy that tailored duration limits to a patient’s clinical setting
Researchers found a 27-57% reduction in prescription length with the tailored policy
Additional research is needed on potential consequences of limits, such as use of illicit opioids for pain relief
CHICAGO --- Many states have passed new laws that place restrictions on the duration of first-time opioid prescriptions to help address the opioid epidemic.
While most laws are one-size-fits-all, policies more tailored to the patient, such as their age or clinical setting (outpatient clinic, emergency room, etc.), were more effective ...
One in three children who suffer from bacterial meningitis live with permanent neurological disabilities due to the infection. This is according to a new epidemiological study led by Karolinska Institutet and published in leading medical journal JAMA Network Open.
For the first time, researchers have identified the long-term health burden of bacterial meningitis. The bacterial infection can currently be cured with antibiotics, but it often leads to permanent neurological impairment. And since children are often affected, ...
Researchers with McMaster University have created the instruction manual that will help scientists across the globe find hard to detect B cells.
Led by PhD student Alyssa Phelps and Department of Medicine Assistant Professor Josh Koenig, researchers wanted to chart a path to finding these cells as part of their work in understanding food allergies. Their work was published in the journal Nature Protocols on Jan. 19, 2024.
B cells are a type of immune cell that makes antibodies. These cells help fight conditions like cancer and infections but can also cause autoimmune diseases and allergies.
"One of the big problems with trying to study these B ...
HOUSTON – (Jan. 19, 2024) – Amanda Marciel describes her current research, supported by a CAREER Award from the National Science Foundation, as an effort to understand and make “really soft, stretchable stuff.”
Expressed more formally, she works at the molecular level to design branch elastomers that return to their original shape after being stretched.
“What I’m doing is creating synthetic networks that have a gel-like softness and are highly elastic for such applications as stretchable ...
