Entrepreneurship, innovation, and internationalization: The moderating role of the institutions/Emprendimiento, innovaci
| Autor | Prada-Villamizar, Stephanie |
| Cargo | Literature review article |
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Introduction
The institutional mechanisms of an economy can facilitate transactions, safeguard property rights and stimulate or discourage behaviors and entre-preneurship actions. Many factors determine these achievements: rules and regulations, the quality of government, the availability of education, and the ambient culture. Many of these factors fall under the heading of institutions and constitute the constraints on behavior imposed by the state or societal norms that shape economic interactions.
Those countries with institutional weaknesses have inefficient labor, developed product and capital markets (Ciravegna, Lopez & Kundu, 2013), which in turn will limit investments in relevant activities such as innovation in production processes (Zhang, Tan, Ji, Chung & Tseng, 2017). Given that institutions are in charge of creating and enforcing the rules of the economy, they play a moderating role through three pillars--regulatory, normative and cognitive--each focused on different institutional dimensions.
Innovation and internationalization are among the activities usually affected by the country's institutional weaknesses. Developing these activities has positive effects on countries such as increased employment, steady economic growth, higher productivity of the company, and company survival in local and external markets (Kijek & Kijek, 2019; Van Lacker, Mondelaers, Wauters & Van Huylenbroeck, 2016). Therefore, it is necessary to provide companies with institutional mechanisms that allow them to overcome institutional weaknesses and conduct their activities to achive better performance.
Therefore, the main objective of the article is to give recommendations that will enable countries to improve their institutional frameworks and thus they can benefit from the positive effects of innovation and internationalization strategies. The development of these activities makes it possible to build what Brodzicki (2017) has called a virtuous circle, in which higher levels of innovation increase the probability of internationalization of companies and consequently they will have to continue innovating to prevail in external markets. As shown in Figure 1, institutions are two-way moderating agents (see dotted line in the graph), since through their pillars they influence the levels of innovation and internationalization, facilitating the existence of the virtuous circle.
To achieve the main objective, this paper conducts a review of relevant investigations that have been published in different scientific journals, with the aim of synthesizing some basic ideas that allow the development of an integrative institutional framework for future research on innovation and internationalization strategies. Four key words are used when searching for articles in databases: institutions, innovation, internationalization, and entrepreneurship. The selected articles are conceptually reinforced with precursor classic research in the selected topic, for example, articles by North (2001) and Coase (2009) have been included to analyze conceptual theories on institutions. Developing this theoretical framework allows the introduction of relevant concepts and, at the same time, contributes to a better understanding of how institutions influence the spillover of innovation and internationalization strategies on the economy of the countries. This knowledge will enable us to give recommendations to managers and policy makers for applying in growth strategies and economic development policies of countries.
Below, the article presents the methodology applied in the search of studies that will build the theoretical framework. Subsequently, the paper focuses the theoretical analysis on institutions and presents key concepts and their linkages with entrepreneurship, innovation and internationalization decisions. The fourth part of the paper presents some recommendations for possible strategy and policy improvements that can be implemented based on the three pillars, with the purpose of achieving an adequate institutional framework in any country and thus overcoming institutional weaknesses. Finally, the paper summarizes the main conclusions of the study, and it addresses some future research areas.
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Methodology
The main methodological approach of this research is the analysis of the existing bibliography from databases containing publications of scientific journals on the topic. We analyze the articles contained in two scientific databases: ScienceDirect (Elsevier) and ResearchGate. These databases were chosen because their search processes in indexed databases allow to consult relevant academic studies published in different journals with different topics, aims, and audience. Both databases provide users with a vast number of publications which, combined with the ease of access to documents, facilitates an in-depth analysis.
The first step carried out was the definition of a search strategy. Brodzicki (2017) article becomes a main source through the concept of the virtuous circle between innovation and internationalization, and the importance of institutional frameworks for companies and countries to take advantage of benefits of mutual influence. Once the area of research and the databases to be consulted have been defined, the "text analysis" method is applied according to Zupic and Cater (2015) following the association of words based on titles, abstracts or keyword lists. For data collection, four key words were defined: "Institutions", "Innovation", "Internationalization" and "Entrepreneurship". The search was conducted in English in order to have a greater number of articles to choose from, we covered the period 2004-2020 and applied a filter to select only publications classified as articles.
Subsequently, the search equation was defined to obtain the records for the period under analysis. The search in ScienceDirect was "Institutions AND Innovation AND Internationalization AND Entrepreneurship", resulting in a total of 852 articles. The search in ResearchGate limits the results to 100 articles per query. To avoid this limitation, six searches linking two by two the keywords were run as follows: "Institutions AND Innovation", "Institutions AND Internationalization", "Institutions AND Entrepreneurship", "Innovation AND Internationalization", "Innovation AND Entrepreneurship" and "Internationalization AND Entrepreneurship", obtaining a total of 600 articles. The search strategy and the results are summarized in Table 1 below, adding the number of documents selected according to the database.
For the selection of the articles, the title and abstract were analyzed in order to select those that theoretically contribute to the conceptualization of the virtuous circle between innovation and internationalization and the importance of an institutional framework that promotes entrepreneurship and facilitates the existence of the circle. The selected articles (65 in total, 30 contained in ScienceDirect and 35 in ResearchGate) are conceptually reinforced with some classic research precursors in their fields, such as the oned carried out by North (2001) and Coase (2009) to address theories on institutions, or the contribution of Johanson and Valhne (1977) in the theory of internationalization.
Table 2 presents the selected articles according to the scientific journal they belong to, and Table 3 presents the articles by the name of their authors and the year of publication, according to the keyword with which they theoretically contribute to the research. For instance, authors such as Newburry, McIntery and Xavier (2016) appear in more than one keyword as their work discusses topics associated with three of the keywords used in the methodology.
This literature review process seeks to introduce relevant concepts related to the proposed research topic, which will be presented in detail in section three of this paper, and at the same time, it provides a source of information to list several recommendations to improve the institutional framework of a country, that will be addressed in the fourth section of this document.
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Institutions: Link with entrepreneurship, innovation and internationalization
In the first chapter of the book "Essays on Economics and Economists", Coase (2009) considers that "... a market economy of any importance is not feasible without adequate institutions." (p.16), such institutional structure is composed of standards and regulations that, for the author, allow to quickly resolve transactions.
Some other authors such as Hayek (1966) also emphasizes that the main function of institutions and regulations is to impose limits on the actions that can be performed. Masten (1996) stresses that regulations should not tell people what to do, but what not to do. Dikson and Weaver (2008) also state that an entrepreneurial orientation is promoted by an adequate institutional framework and acknowledge that legal systems must safeguard property rights and their enforcement matter because they affect the transactional trust between parties. The influence of institutions is not only found in entrepreneurial orientation; Bucelli, Costa Neto and Vendrametto (2014) find a positive correlation between the institutional level and the type of external environment, where a higher level of the former translates into a higher degree of stability in the economy in general.
The authors mentioned above allow us to outline some theoretical ideas about institutions, the central axis of this paper. The development of entrepreneurship, innovation, internationalization, and other elements of a country's economic life are related to the institutional framework. To consider the interrelationships under study, it is necessary, first, to deepen the analysis of institutions as the main variable of the external environment of any economy. The favorable effect of an adequate institutional framework in the economy has been the focus of several studies...
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