The entrepreneurship triangle: a novel approach to explain national differences in entrepreneurship

Abstract

This conceptual paper introduces the entrepreneurship triangle as a mechanism to analyze differences in entrepreneurial ecosystems across nations. The theory provides a structure to examine how institutional processes and changes in state, market, and society co-evolve with entrepreneurial actions. Using these dimensions (state, market, and society), we analyze the expected dominance of high and low levels of entrepreneurship in a country. High-level entrepreneurship occurs in a formal/organized manner, whereas low-level entrepreneurship occurs in an informal/unorganized fashion. We argue that, depending on the arrangement of state, market, and society institutional mechanisms in place in a country, we can predict either high- or low-level entrepreneurship, or a mixture of the two. This has direct implications for public policy, as one of the main levers that states can employ to improve entrepreneurial activity in their country is through changes in their institutions.