The influence of regional institutional setting on the performance of innovative entrepreneurship

Abstract

Purpose Two types of institutional constraints, namely, institutional voids and policy uncertainty, have been recognised and elaborated, including their influence on new venture performance. However, not enough attention has been paid to the multidimensional attribute of institutional transformation. By hinting at a relatively underexplored third type of institutional constraints, i.e. institutional fragility, this paper aims to build a comprehensive framework of institutional constraints to analyse how innovative start-up performance is influenced by institutional constraints. Design/methodology/approach Using Chinese manufacturing firms as the empirical sample, the authors use an econometric method to test the relationship between institutional constraints and the performance of innovative start-ups. Findings On the basis of a uniquely constructed database from 2005 to 2007, the authors find that institutional constraints are negatively associated with innovative start-up performance proxied by return on assets, sales growth and new product sales. Originality/value The study offers researchers and practitioners a detailed view of institutional constraints and innovative start-up performance.

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