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Entrepreneurial activities are essential for the sustained economic viability of a country. In today's environment, society needs more job creators than job seekers. Due to outdated policies, governmental institutions can severely impact entrepreneurship within their borders. Therefore, it is no surprise that researchers have called for more detailed studies of entrepreneurial activities within a country, labeling them as an under-represented area of investigation (Busenitz et al., 2000).
The World Bank defines entrepreneurship as “the activities of an individual or a group aimed at initiating economic activities in the formal sector under a legal form of business” (Klapper et al., 2006). Researchers have found that the pace of new business creation is greatly influenced by differences in institutional environments across countries (Karlsson & Acs, 2002). There is also evidence of a positive relationship between entrepreneurship and information and communication technology (ICT) adoption, especially in developing countries with better e-government resources (Almeida & Zouain, 2016). But the critical factors (financial, infrastructural, and educational) needed for starting a new business differ between nations. There is a lack of research that investigates the effect of these country-level factors on entrepreneurial activities. This research fills the void.
Exploring the national context within which new businesses blossom is essential because much of the existing literature focuses on wealthy versus emerging countries. As such, it only repeats a worn-out narrative of the digital divide in terms of access to technology for business development (Baliamoune-Lutz, 2003). Even in developing countries, poor people spend a significant portion of their disposable income on ICT-enabled mobile phone services. In addition to communication, these services provide internet access and run businesses. This shows that citizens of developing countries are getting used to the digital world. Hence, based on the narrative that only wealthy countries have access to technology, the research on entrepreneurship sounds hollow.
It is well-established that ICT-supported innovations fuel entrepreneurial activities. Between 1980 and 2013, ICT-based startups (including mobile payments, electronic commerce, blockchain, and sharing platforms) have increased by 203% in the United States, while startups in the private sector as a whole declined by 9% (Hathaway, 2013). Businesses today are driven by ICT, and a sound understanding of technology tools and their applications is a must for new-age entrepreneurs (Dheeriya, 2009). Researchers argue that adoption and the knowledge of the latest ICT developments are the key drivers of entrepreneurship (Yunis et al., 2018; Zenebe et al., 2018). The annual Global IT report characterizes ICT use by the government, businesses, and individuals, which may influence new business creation differently (WEF, 2016). Also, ICT related infrastructure and skills can play a key role in providing relevant resources for new businesses to flourish (Burtch et al., 2018)
Equally important is a country’s ability to provide a conducive environment that promotes entrepreneurial activities. Hence, the ease of doing business (EDB) in a country plays an essential role in reducing the cost of starting a business and encouraging entrepreneurship (Anokhin & Schulze, 2009). The World Bank’s EDB index summarizes the regulatory environment’s availability and maturity for starting a new business (Doingbusiness.org, 2016). While individual factors that make up the EDB have been examined for their effect on new business development, ICT’s role in influencing EDB and indirectly impacting the entrepreneurial activity has rarely been explored (Canare, 2018).
In general, countries with institutions that support entrepreneurial activity have better EDB (Carbonara et al., 2016). However, only a few studies have quantified EBD’s effect on the actual creation of new businesses or new business density (NBD) in a country. In a nation, the NBD is defined as the number of newly registered limited liability corporations (in the calendar year) per 1,000 people between ages 15-64 years (World Bank, 2019). The study examines the direct and indirect (via EDB) effect of five ICT indicators (ICT usage by individuals, businesses, governments, ICT skills, and ICT infrastructure) on NBD.
When individuals initiate economic activities to form a new business, they need access to resources (human, financial, production, etc.). Since access to these resources is essential to a new business formation, this study will use the Resource-based Theory (RBT) theoretical lens to explain the proposed hypotheses. The next section provides context for the use of RBT in entrepreneurship.