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Entrepreneurship in emerging Economies

Emerging economies are characterized by an increasing market orientation and an expanding economic foundation. The success of many of these economies is such that they are rapidly becoming major economic forces in the world. Entrepreneurship plays a key role in this economic development. Yet to date, little is known about entrepreneurship in emerging economies. This introductory article to the special issue on entrepreneurship in emerging economies examines the literature that exists to date in this important domain. It then reviews the research that was generated as part of this special issue on this topic. The article concludes with a discussion of the critical future research needs in this area.

The influence of culture on entrepreneurship has been of continued scholarly interest for over three decades. Researchers have explored the effect of national, regional, and organizational cultures on wealth creation through new venture creation, innovation, and risk taking. Using data from multiple countries and applying diverse research methods, organizational scholars have explored the relationship between cultural variables and entrepreneurial behaviour and outcomes. As empirical findings corroborate some patterns and significant relationships, it is essential to review past studies and identify new avenues to be explored in future research. While considerable progress has been made, we believe that substantial components and manifestations of culture and its contingent influence on entrepreneurial outcomes are yet unexplored, providing new opportunities for scholarly inquiry.

Researchers explain that the percentage of start-up businesses is higher in the poorest countries because there are fewer alternatives available for making a living in those places. Developing countries tend to foster innovation, creating room for entrepreneurs to replicate something locally that has been produced elsewhere. New business start-ups also rose significantly in China and India this year. Entrepreneurial activity in China is up to 16.2 per cent from 13.7 per cent last year. In India, meanwhile, one in every ten people is engaged in entrepreneurial activity, the report shows. But India also has the highest level of failed start-ups--at 15 per cent--among the nations studied. Governmental bureaucracy and the presence of large companies in India make it more difficult for start-up companies to establish themselves. For high-income countries such as Japan and the core nations of the European Union, early-stage entrepreneurial activity remains low, at 10 per cent or less. While the proportion of people starting businesses in the U.S. dropped slightly in 2006, the level of entrepreneurship remains high compared to European countries such as the United Kingdom, where it hovers just above five per cent. Even in low-income countries, entrepreneurs are often driven by passion and opportunity, the study found. A majority of entrepreneurs across the world claim they are starting a business to capitalize on an opportunity. In high-income countries, this translates into high percentages of entrepreneurs forsaking other career options to pursue an entrepreneurial opportunity. In Denmark, Norway and the Netherlands, that type of opportunity-driven entrepreneurship accounted for more than 90 per cent of new start-ups.

Reflecting the internationalization of the marketplace and the increasing prominence of entrepreneurial firms in the global economy, the research paths of international business and entrepreneurship are intersecting with increasing frequency. International business researchers are broadening their traditional focus on large multinational companies to also include entrepreneurial firms in their research agendas. Cross-border business activity is of increasing interest to entrepreneurship researchers, and accelerated internationalization is being observed in even the smallest and newest organizations.

Many directions for future work remain open. In particular, more comparative studies, studies in mature or stable fields, studies of failing or failed institutional entrepreneurs, and studies accounting for the individual as well as the organizational and organizational field levels of analysis are needed. Further insight into institutional entrepreneurship could help to articulate a more complex and extended view of the new institutionalism, which views actors as both embedded in institutional arrangements and developing creative activities. The intersection between agency and structure remains one of the major challenges to contemporary research in institutional theory.

Many studies in entrepreneurship have tended to assume that entrepreneurs think and act similarly irrespective of where they are located. In this view, there is little significant diversity in the cultural and institutional contexts of different countries where entrepreneurs operate. The entrepreneurs' actions are not only constrained by institutional and cultural forces in their environment, but they are also enabled, as opportunities are opened for those who can understand and make the most of the local institutional regime. These institutional patterns of commercial interaction are readily grasped by successful entrepreneurs, which in turn lead them to form business systems that are distinctive. In this sense, entrepreneurs from emerging economies are embedded in on-going institutional structures that have an effect on their activities. They can also act to shape their institutional environments.

The benefits to academia in studying emerging economies are not only in the better understanding of these economies, but the inclusion of emerging economies into the mainstream of entrepreneurship research offers the potential to expand our theoretical understanding of entrepreneurship in general. As researchers explore entrepreneurship in emerging economies it will allow us to understand better how culturally bounded entrepreneurial behaviour is. The assumptions of profit maximization, self-interest, and opportunistic and individualistic behaviour may not be universal. The understanding of the variation that theories need to incorporate to address these differences in emerging economies will help researchers to more thoroughly understand and develop their theoretical foundations.