Institutional Foundations of Varieties in Entrepreneurship: A Case Study of Hungary and Slovenia

Abstract

Nowadays, a commonly held belief in capitalist economies is that innovative entrepreneurship is a precondition for sustained economic growth. In response, policy-makers have devised a multitude of entrepreneurship policies, aiming to stimulate this type of economic activity. Because the effectiveness of these efforts is not as expected, this study aims to provide insights into the influence of the institutional environment on tentative entrepreneurial efforts. It is thereby hypothesized that the influence of the economy at large is more important than the individual inhabitant’s circumstances. Due to the fact that capitalist economies’ inner workings can differ profoundly from one another, the Varieties of Capitalism framework is introduced to differentiate between these different types of economies. A rich method of data collection is chosen to sensitize the results for individual circumstances and attitudes. This amounted to 11 interviews with innovative individuals active in the Hungarian and Slovenian ICT industry. It is found that the influence of the institutional context is profound in guiding both the type of innovations upon which new ventures are based and the motives of individuals when opening their own firms. Nonetheless, it does not seem to explain micro-level tendencies conclusively, as entrepreneurial skill acquisition methods of interviewees do not match theoretical expectations. Furthermore, the influence of individual characteristics is discernable at the micro-level. Institutional and individual explanations of entrepreneurship are therefore not found to be mutually exclusive, warranting analyses sensitive to multiple influential factors, upon which entrepreneurship policies could be more effectively based.