Purpose The purpose of this paper is to use a unique set of measures from Holmes et al. (2013) to clarify the relationship between entrepreneurial readiness and entrepreneurial behaviours across countries and determine whether formal institutions moderate this relationship. Design/methodology/approach This paper uses data collected by the Global Entrepreneurship Monitor, the Index of Economic Freedom, Political Risk Services, and the Freedom House and Political Constraint Index to test a theoretical model. A multilevel analysis is performed based on set of 377,356 observations from 51 countries spanning eight years (2001-2008). Findings The results suggest that entrepreneurial readiness has a strong relationship with entrepreneurial behaviour (as measured by entrepreneurial entry and opportunity-based entrepreneurship) and that this relationship strengthens with increases in political democracy (PD), government regulations (GR), financial capital availability (FCA) and market liquidity (ML). Research limitations/implications The study is based on Holmes et al.’s (2013) institutions that are most important for society, uses satisfactory sample size and multi-level modelling. However, many more institutional conditions that remain to be considered might affect entrepreneurial activities. Practical implications For policy-makers, the results show that PD, GR, FCA and ML correlate favourably with entrepreneurial behaviour when individuals have a high level of entrepreneurial readiness. Policy-makers should introduce policies that provide a secure environment to individuals to start their own ventures. Originality/value The current study is among the first to examine the three dimensions of formal institutions—political, regulatory, and economic institutions—in a single study. Using the three dimensions, the study explains theoretically and examines empirically the effect of individual-level entrepreneurial readiness on entrepreneurial behaviour.

Purpose The purpose of this paper is to clarify the relationship between entrepreneurial cognition and innovative entrepreneurial activity (IEA) across countries using an institutional perspective. Design/methodology/approach The paper tests theoretical model using data collected by the Global Entrepreneurship Monitor, the Global Leadership and Organizational Behavior Effectiveness study and the Index of Economic Freedom (IEF). A multi-level analysis is performed based on set of 1,004,620 observations from 49 countries spanning 13 years (2001–2013). Findings The results suggest that in terms of formal regulations; the relationship between entrepreneurial cognitions and IEA becomes stronger when there is an increase in intellectual property right and business freedom regulations in a country. On the other hand, in terms of informal institutions the relationship between entrepreneurial cognitions and IEA becomes stronger when the level of institutional collectivism and uncertainty decreases and performance orientation increases. Originality/value The study indicates that entrepreneurship by innovation increases when the individuals possess high level of entrepreneurial cognition under suitable institutional conditions (e.g. intellectual property right, business freedom, institutional collectivism, uncertainty avoidance and performance orientation).

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