How Do Developments in Emerging Market Institutions Impact Entrepreneurship? The Case of India’s Improving ‘Ease of Doing Business’

Kolah, Bizan Sarosh
Hurd, Fiona
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Master of Business
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Auckland University of Technology

Emerging markets have been an important area of research in the international business discipline, largely due to both the opportunities available in these markets, and the challenges faced in entering these markets (Tracey & Phillips, 2011). As a large emerging market, India has been of particular interest. Entrepreneurship has been previously researched in these markets and is largely found in both the formal and the informal economy (Luo, 2003). Moreover, Entrepreneurship has been found to be an important driver, and marker, of development in emerging markets (Wyrwich, Stuetzer & Sternberg, 2016). Entrepreneurship in the past has been defined by its characteristics and individuals became entrepreneurs in these markets out of necessity, in order to provide basic necessities for their families in the newly industrialised conditions. However, as countries move to emerging status, entrepreneurship also changes as entrepreneurship is then driven by choice and entrepreneurial capabilities (Zahra, Sapienza & Davidsson, 2006). This change in the outlook of entrepreneurship has been attributed to developments in the institutional environment in these emerging markets (Ngo, Janssen, & Falize, 2016). The World Bank’s Ease of Doing Business Index is seen as an indicative measure of institutional development. In 2017, India entered the top 100 of the World Bank’s Ease of Doing Business Ranking (The World Bank, 2017d), indicating substantial institutional development. However, the impact of this development on entrepreneurship is not well understood. Hence this study aims at determining how developments in emerging market institutions impact entrepreneurship, by examining the impact of institutional development on entrepreneurship in India between 2014-2017 under the Modi government.

This study has used a qualitative descriptive methodology with a post-positivist paradigm to conduct this research. Secondary data collection has been used to gather the data. Thematic analysis was used for the data analysis, coding themes that emerged, which was both an inductive and a deductive process. A case study approach was used in order to prove how developments of institutions impact entrepreneurship in emerging markets. In order to choose a suitable case, this research underwent a case selection, which determined why India would be a suitable case for this research. In order to answer the research question, India has been used to demonstrate how developments in the institutional environments impact entrepreneurship in India within a specific time frame of 2014-2017.

The findings illustrate that institutions have a major impact on entrepreneurship in India. As institutions in India develop, they improved business reforms by making setting up of and conducting business cheaper and faster, while also promoting and supporting entrepreneurship through initiatives such as Startup India, Make in India, and Digital India and campaigns such as Skill India. The findings of this research have identified that although financial aid is important to entrepreneurship in emerging markets, the ‘awareness’ of financial resources that are available to entrepreneurs in India remains a barrier, as entrepreneurs are unaware of the resources available to them. Also, the developments in institutions and the enhancement of entrepreneurship have changed the way in which many cultures in India view entrepreneurship. In the past, entrepreneurship was considered a risky career choice and individuals would only become entrepreneurs out of necessity (push factors), however, many cultures are now viewing entrepreneurship as an advantageous career option and individuals are now becoming entrepreneurs out of choice (pull factors).

Emerging , Institutions , Entrepreneurship , Ease of doing business
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