A dynamic relationship between entrepreneurial orientation and entrepreneurial activity

Policymakers have shown an interest in adopting policies that promote entrepreneurial activity. Yet, one of the major questions that remain unanswered in the entrepreneurship literature is why entrepreneurial activity varies across countries. This paper takes an in-depth look at the dynamic relationship between the institutional environment in developing countries, resource availability, and EO. We propose that despite changes in economic wealth, an entrepreneur’s past experience influences risk-taking, innovativeness, and proactive behavior. Additionally, the resource endowment of an individual is a better instrument for EO in the changing environment.