An Institutional View of Local Entrepreneurial Climate

Abstract

This paper proposes a conceptual framework on the role of formal and informal institutional factors at the sub-national level (e.g., city) in shaping the climate conducive for the growth and success of micro, small, and medium enterprises. Extant literature reveals that institutional analyses tend to focus on either formal or informal institutions, in narrow and fragmented ways. Likewise, previous studies focused their analysis on national or country-wide institutional frameworks, ignoring the institutional heterogeneity of regions and cities within a given country. This study attempts to develop an integrated institutional approach at the city-level and stretch the conceptual boundaries of formal and informal institutions as they shape the local entrepreneurial climate―the set of tangible and intangible institutional factors that are shaping the performance of entrepreneurial firms in a geographically and politically defined area such as a city.