The Human Capital Puzzle and Ambitious Entrepreneurship: a Comparative Institutional Approach

Abstract: We propose a multilevel model in which pro-market institutions dampen the growth aspirations of entrepreneurs with formally transmitted human capital, while they augment the aspirations of entrepreneurs with human capital acquired in the marketplace. Further, we posit that this mechanism will be triggered when the entrepreneurs’ socio-cognitive trait of fear of failure is low, which could otherwise preclude a role of institutions. We test our predictions on a dataset of individual- and country-level characteristics obtained from the Global Entrepreneurship Monitor and World Development Indicators for the period 2005–2016. Results confirm our predictions and pave the way to institutional adaptive policymaking.