Dina M Mansour PhD Candidate Management Dept Birkbeck University of London

1. Entrepreneurship, Institutions and PolicyA Developing Country PerspectiveWork-in-Progress to be presented at the CIMR/Wiley Workshop Part of PhD Thesis Dina M Mansour PhD Candidate Management Dept Birkbeck University of London

2. This Thesis Title: “High-growth entrepreneurship in a developing world context: An institutional theory interrogation of the Egyptian hospitality* sector” * Still being calculated from GEM raw data Research questions: (i) How do formal and informal institutions impact upon high-growth entrepreneurship? (ii) Which of these institutions (formal or informal) are more pronounced? (iii) What are the policy implications of these? Actors/Stakeholders: Government/policy makers: government-led programs, state-run VCs, law makers Private commercial sector: High-growth sector(s) as defined by GEM Related stakeholders: investors, mentors, incubation managers, researchers

3. Purpose of this thesis • To explore the dynamics of entrepreneurship and institutions in an emerging country as shaped by public policy • To investigate how institutions promote/foster quality of innovative firms as opposed to quantity of venture formation • To determine the conducive institutions that impact opportunity entrepreneurship in an emerging country context • Encourage discussion on entrepreneurship in the Middle East

4. Theoretical dimension Schumpeter and Kirzner: Entrepreneurial opportunities • - Entrepreneurship is equilibrating forces/ • Ability to spot new opportunity – Kirzner • -Innovator, agent of change/constantly • disequilibrium due to creative destruction-Schumpeter North: Institutional Theory (sociological & political perspectives) • Institutions are humanly devised constraints that structure human interaction. Formal (rules, laws, constitutions), Informal (norms, behaviour, conventions)/Rules of the game Baumol: -The form of entrepreneurial activity depends on institutional context. Productive entrepreneurship is stimulated by power of rules of law and arbitrary exercise of government power. weak institutions may increase net returns to non-productive/destructive entrepreneurship.

5. Current paper Title: “Institutional dynamics of entrepreneurship in a developing country: The role of public policy in Egypt” Purpose: Examining the dynamics of institutions and entrepreneurship policy in a developing country while using high-growth entrepreneurship as unit of analysis (distinguishing policies that promote self-employment and number of new ventures, and quality productive entrepreneurship) Research questions: (i) What is the impact of different institutions in shaping entrepreneurial activity in a developing country? (ii) What is the role of public policy and government support in entrepreneurship development in a developing country? Actors/Stakeholders: Government/policy makers: government-led programs, state-run VCs, law makers, government-led incubators/accelerators Methodology: Exploratory in-depth interviews

6. Entrepreneurship + Institutions • The dynamics of entrepreneurship can be vastly different depending on institutional context and level of economic development (Acs et al 2008). • The institutional environment needs to be explicit in order to understand why the effect of entrepreneurship on growth differs across regions and countries (Urbano et al 2018). • The institutional environment determines the formal and informal rules of the game, places constraints on human action, and, possibly, reduces uncertainty. Thus, institutions (and the policies that shape them) are crucial in determining entrepreneurial behaviour (North 1990, Minniti 2008). • The form of entrepreneurial activity depends on institutional context. Productive entrepreneurship is stimulated by power of rules of law and arbitrary exercise of government power. Weak institutions may increase net returns to non-productive/destructive entrepreneurship. (Baumol, 1990).

7. Entrepreneurship + Institutions in Developing Countries • Informal institutions in developing countries play a very significant role in shaping formal institutions and in the operation of market, and can emerge as the preponderant rules of interaction when formal institutions and markets fail (North 1990). • Entrepreneurship fails to flourish where inadequatelegal quality, poorlaw enforcement and high levels of corruption proliferate (Herrera and Echeverri 2014 ) • In a developing country with underdeveloped institutions, there are a number of institutional deficiencies and constraints on entrepreneurship and development: unclear and inconsistent policies, inadequate governance, disjointed infrastructure, limited funding options, inhibiting cultural norms, personalized networks, and missing key stakeholders (Naude et al. 2008; Manimala & Wasdani 2015 ; Hoffecker 2016). • High degree of businessinformality, the state is then missing considerable revenues and information about the consequences of its policy initiatives (Thurik 2009).

8. Government Support and Entrepreneurship Entrepreneurship Policy: • Public policies may adjust the level of entrepreneurship in a society. Governments are able to foster economic growth by adjusting economic institutions that work to protect entrepreneurs and stimulate their motives to act (Jacquemin and Janssen 2015). • Measures taken to stimulate more entrepreneurial behavior in a region or a country (Stevenson and Lundström, 2001) Four categories: - 1) administrative and regulative burden, 2) reducing barriers to expansion, 3) financing and 4) soft support. (Stevenson and Lundström, 2001; Storey 2003; Minniti, 2008; Castano, 2016; Ubrano, 2018)

9. Empirical Setting: EgyptMacroeconomic, Business and Entrepreneurship Views,2017 • Population (Million): 97.5 • GDP (USD bn): 234 • GDP Per Capita (USD): 2,472 • World Bank classification/Income Level: Lower Middle Income • Unemployment rate: 10.9% • CPI Inflation rate: 23.3% • GDP Growth Rate: 4.2% (5.5% 2018) • Largest trade partners: UAE, KSA, Turkey (export), China, Germany, US (import) • Global Entrepreneurship Monitor (GEM) early-stage entrepreneurial activity (TEA) (2017): 17/64 • WB Doing Business (2018): 128/190 • Global Competitive Report (2017): 115/138 • SME contribution to GDP (2015) : 80% • Political Stability (World Governance Indicators, 2016): 9/100 • Transparency Int’l: Corruption Index (2017): 32/100

10. Initial Empirical Analysis: Entrepreneurship Support Main Challenges Generally supportive laws, programs and government awareness of entrepreneurship importance. Implementation and details are the most problematic Lack of coordination between government entities, effort duplication R&D, research commercialization and tech-transfer Lack of finance, ICT and scientific infrastructure deficiencies Bureaucracy, slow support processes Entrepreneurs confusion to seek help, unclear laws, support Policymakers, public officials disconnected/unknowledgeable from market, thus helping entrepreneurs is random • Ineffective government, randomness, lack of transparency • Critical lack of data availability • Dedicated government organization for MSFs and entrepreneurship, established 2017 • Generally supportive government interventions (one functioning VC, incubator/accelerator, scattered early-training programs), notspecific, more self-employment/reducing unemployment than economically effective activities • Officials indecisiveness out of fear • High-growth entrepreneurship not defined (sometimes unheard of) • Addressing private-public-university partnerships, non-functional programs • Bankruptcy law passed 2018

11. Delimiting the Research Problem • The impact of different institutions on entrepreneurship in Egypt e.g. Exploring if legal institutions play a role in the development & success of new ventures • Examining the impact of institutions in shaping entrepreneurial actions and how formal and informal entrepreneurs act to shape their institutional environments. i.e. act as institutional entrepreneurs • Investigating role of informal institutions on formal institutions on higher quality/high-growth entrepreneurship in the Egyptian context