Regulatory efficiency, formal education, and opportunity-motivated versus necessity-motivated entrepreneurship

Purpose This study examines the linkages between the institutional forces of regulatory efficiency and entrepreneurial motivations. We investigate whether the dimensions of regulatory efficiency (business freedom, labor freedom and monetary freedom) differentially influence the opportunity and necessity-based motivations of entrepreneurship, and the degree to which formal education moderates these linkages. Design/methodology/approach We review the literature and develop hypotheses, which we examine via large-scale data from multiple sources. We employ multilevel logistic regression using Global Entrepreneurship Monitor data (2006–2017) from over 125,000 entrepreneurs across 86 countries, integrate those data with country-year regulatory efficiency data from the Heritage Foundation and examine the robustness of our empirical results in a replication study using data from the Fraser Institute. Findings We find that formal education level moderates the effects of regulatory efficiency on entrepreneurial motivation type. In particular, business freedom associates negatively with opportunity-motivated entrepreneurship, particularly among entrepreneurs with low formal education. In contrast, labor freedom and monetary freedom associate positively with opportunity-motivated entrepreneurship, especially among entrepreneurs with high formal education. We also report the results of robustness tests and replicability analyses. Originality/value This study disaggregates regulatory efficiency into distinct dimensions and demonstrates their differential effects on opportunity-motivated and necessity-motivated entrepreneurship. It sheds new light on institutional influences by showing how formal education moderates these relationships, revealing stronger effects among more highly educated entrepreneurs. These implications extend prior research that has largely relied on aggregate institutional indices and treated formal education as a control variable.