Finding innovative new ventures in China and the United States: An institutional context

Although the variation of innovativeness has received a considerable amount of attention addressing the individual aspects and traits of entrepreneurs, this stream of research has primarily been limited to conceptual models within a single country, and has only addressed the technical aspects of innovation. While the contributions of such research has been valuable to suggest that certain individual traits do play a role in the pursuit of either innovative or imitative new ventures, it has dealt with innovativeness in a vacuum without taking into consideration how formal and informal institutions influence a person's behavior.;The current study adds to the innovativeness of the new venture literature stream by utilizing the theoretical foundations of the institution-based view of entrepreneurship. The institution-based view of entrepreneurship states that a society makes rational choices about intended entrepreneurial activities in accordance with the institutional setting, which then promotes or prevents certain entrepreneurial actions. Institutions exist to remove uncertainty and the cost of taking certain actions seen as beneficial to the society, such as being innovative. However, when there is a lack of institutions, uncertainty rises and increases the cost of taking certain actions, such as trying to introduce something new to the market. While many of these institutional issues have been explored at the country level, the subnational region represents proxies for unique political, economic, and social institutions that directly affect entrepreneurs and their entrepreneurial actions. This study extends the institution-based view of entrepreneurship by not only showing how it applies to the variation of the innovativeness of new ventures, but also that the it is pertinent to study the societal acceptance of entrepreneurial actions at a subnational level, as subnational institutions differ within each country.;To research this, first a cross-country comparison will be completed between China and the United States to compare how national and subnational institutional environments influence the propensity of innovative new ventures. This basis provides many implications for both entrepreneurship and international business research, along with implications that impact entrepreneurs, managers, and policy makers.