Formal and informal institutional factors, opportunity entrepreneurship and economic growth by GMM method

The literature shows that entrepreneurship and a quality institutional environment lay a firm foundation for the economic growth in a developed country and yield the desirable outcomes. The present paper studied the role of an institutional environment in the execution of entrepreneurial activities and the economic growth. Accordingly, the effective institutional factors were categorized under official institutional factors and non-official institutional factors; entrepreneurial activities were classified under two motivational groups: opportunity-oriented entrepreneurship and necessity-oriented entrepreneurship. Afterwards, their effects in the economic growth were examined. The main objective of this study was to examine the effect of entrepreneurship and institutional environments on the economic growth in the selected countries. The data of 30 selected countries were gathered through Generalized Method of Moments (GMM) within the 2009-2017 timeframe. The results showed that the opportunity-oriented entrepreneurship, official institutions, and non-official institutions had a significant effect on the economic growth; the degree of effect varied according to how developed the countries were. Therefore, in order to attain the economic growth and development, the policymakers should place the quality of the institutional environment and the type of entrepreneurs’ motivation at the top of their agendas.