Our study explores the effect of institutions in determining the prevalence of formal entrepreneurship and investigates the entrepreneurial choice in response to these institutions. To pursue the objectives of the study, we utilized eleven years of data from 23 countries of the Asian region. As explanatory variables, entry regulations were taken as a proxy measure of formal institutions; whereas, social capital was considered a proxy measure of informal institutions. Based on the nature of data, we applied a pooled OLS regression model to examine the influence of explanatory variables on the entrepreneurial choice. The findings proclaimed that at an individual level, both formal and informal institutions have a negative effect on entry into formal entrepreneurship. Further, the estimations of the interaction terms revealed the existence of asymmetry between formal and informal institutions regarding that negative influence on entry into formal entrepreneurship.

This research study was funded by the following: [1] Research on the Formation, Evolution and Promotion Strategies of Self-organizing Mass Entrepreneurship and Innovation Behavior, China National Social Science Foundation (16BGL028); [2] Perception of fairness in self-organized mass entrepreneurship, Jiangsu Province Graduate Scientific Research Innovation (4061160023).

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