Exploring the effects of institutional logics on entrepreneurial opportunity evaluations in emerging economies
Article Date: 05 November 2024
Article URL: https://www.tandfonline.com/doi/full/10.1080/00472778.2024.2418027?af=R
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Summary
This experimental study tests how two institutional logics — family and market — influence entrepreneurial opportunity evaluations in an emerging economy (India). Using a two-wave scenario experiment with 326 aspiring entrepreneurs who made 630 investment-evaluation decisions, the authors show that the family logic increases willingness to invest compared with the market logic. The paper also tests boundary conditions: financial stakes, reputational stakes, information congruence and support from close associates. Key surprises: reputational stakes and information congruence produced effects opposite to some initial predictions. Findings are robust across two industries (tea and furniture) and various robustness checks.
Key Points
- Primary finding: In this Indian sample, the family institutional logic makes entrepreneurs more willing to invest than the market logic — family acts as a perceived safety net.
- Method: Scenario-based experiment (64 scenario full-factorial design, incomplete block assignment) with 326 final-year MBA students in India, producing 630 decisions.
- Moderating effects: High financial stakes amplify the family-logic advantage over market logic; support from close associates strengthens family-logic effects.
- Unexpected results: Contrary to hypotheses, reputational stakes weakened the family-logic advantage and information congruence increased family-logic willingness to invest more than market logic.
- Controls and robustness: Results hold controlling for age, gender, work experience, risk-taking preferences and across two contrasting industries; multiple imputation and sensitivity tests confirm robustness.
- Theoretical contribution: Extends institutional logics literature by framing logics not just as a lens (focusing attention) but also as a mirror (helping entrepreneurs anticipate stakeholders’ reactions).
- Practical implication: Policymakers and programme designers should consider local institutional logics (family ties) when designing entrepreneurship supports in emerging markets.
Why should I read this?
Short version — this paper tells you why family ties in emerging markets don’t always make entrepreneurs cautious. In India, family expectations and loyalty can actually push people to take the plunge because they expect support if things go wrong. If you work on entrepreneurship policy, study family firms, or design programmes for emerging markets, this flips a common assumption and is worth a quick read.
Author’s take (punchy)
Punchy and practical: the study upends the idea that family-orientated entrepreneurs are always conservative. In resource-scarce settings, family can be the risk-buffer that motivates action. The experimental design is neat, the sample is relevant for early-stage entrepreneurship, and the boundary-condition findings force you to rethink neat theoretical predictions from developed-market studies.
Context and relevance
Why it matters: entrepreneurship drives growth in emerging markets but operates in contexts of resource scarcity, weak formal institutions and high information asymmetry. This research locates micro-level decision processes within broader institutional logics and shows that the family logic can substitute for formal safety nets — encouraging rather than discouraging entrepreneurial action in emerging economies. That matters for researchers comparing developed and emerging contexts, for policymakers designing startup support, and for practitioners trying to understand motivation and risk-taking among founders in family-dominated economies.
Limitations & what to watch next
The experiment uses MBA students in India (aspiring entrepreneurs), so findings may not generalise to all entrepreneur populations or other emerging economies. The scenarios delivered single-logics experimentally, whereas real life involves institutional pluralism and overlapping logics. Further field studies across different countries and founder types would help test external validity.
Source
Source: https://www.tandfonline.com/doi/full/10.1080/00472778.2024.2418027?af=R