Public economics

Finance

Sociology

Business

Macro

Social science

Economic growth

Epistemology

World Wide Web

Philosophy

Economics

Classical economics

Affect (linguistics)

Programming language

Index (typography)

Economic freedom

Human capital

Quality (philosophy)

Computer science

Entrepreneurship

Market economy

Financial capital

Communication

Social capital

Economic system

Small Business Economics

We examine how economic institutions, measured by the Economic Freedom of the World (EFW) index, affect the relationship between capital—human, social, and financial—and opportunity-motivated entrepreneurship (OME). To do this, we develop a multi-level model that connects theories of human and social capital at the micro-level to institutional theories at the macro-level. Using data from the Global Entrepreneurship Monitor (GEM), we then test the predictions of our model and find evidence that economic institutions play a crucial role in the relationship between these three distinct types of capital and OME. Our results are somewhat counter-intuitive—as the quality of the institutional environment improves, human and financial capitals become less important determinants of entrepreneurship while the relationship between social capital and entrepreneurship substantially strengthens.

Capital is not enough: opportunity entrepreneurship and formal institutions