Review Reports - Institutional, Economic, and Socio-Economic Determinants of the Entrepreneurial Activity of Nations

Round 1

Reviewer 1 Report

The paper presents an investigation that analyses how institutional and socio-economic determinants affect to the entrepreneurial activity in the contexts of developed and developing countries. The empirical study includes the information of 21 countries around the world during the years 2003-2018, which is analyzed using preliminary data analysis.

In basis to this analysis, the authors conclude that the control of corruption, commercial freedom, innovativeness, and inward foreign direct investment have a positive role on entrepreneurial activity, while unemployment has a significantly negative influence on entrepreneurial activity.

The paper is well-written and technically sound. The introductory section and the theoretical framework are well-structured and include a sufficient number of references. Methodological section list the countries object of investigation (16 developed countries and 5 developing countries), and the (dependent and independent) variables considered in the study. The conclucions obtained seem to be accurate according to the analysis developed.

Nevertheless, the paper can be still improved taking into account the comments provided below:

1) Firstly, the authors should justify with detail why these countries and variables have been choosen. In particular, the study include 16 developed countries and only 5 developing countries, i.e. it is not balanced the representation of both groups of countries. But, even more important, is to justify the variables/hypotheses selected. For example, the authors analyze (among others) the effect of unemployment on entrepreneurial activity. Why other variables such as age of the population or the percentage of women employed in these countries have not been considered?

2) In lines 369-371 it is said: " Three possibilities are assessed: (i) leptokurtic variables (values above 3); (ii) platykurtic variables (values under 3); and (iii) mesokurtic variables (kurtosis value equal to 0). However, mesokurtic variables are those having a kurtosis value equal to 3 (i.e. excess kurtosis equal to zero). Please, revise it in that sentence and, if necessary, in the rest of the paper.

3) Tables exceed the page width. I suggest to use the new journal templates before submitting the revised version of the paper (see: https://www.mdpi.com/journal/admsci/announcements/2328).

4) Tables 2 and 3 are overlapping in the text. Please, revise it.

5) Figure 1 is not readable. Please, resize it (I suggest to increase the size and to design the image in a format 5x2 (5 rows and 2 columns)).

6) The reference list should be checked. For example, reference "Youssef, A. B., Boubaker, S. & Omri, A. (2017). Entrepreneurship and sustainability : The need for innovative and institutional 1033 solutions. Technological Forecasting & Social Change, 6(11): xxx-xxx." is not correct, since volume and page numbers are: "vol. 129(C), pages 232-241." Something similar can be said of reference "Pradhan, R. P., Arvin, M. B., Nair, M., Bennett, S. E. (2020)" , where "vol. 42(5), pages 1106-1122." is missing. Please, check all the references before submitting the revised version.

Author Response

Institutional, Economic, and Socio-Economic Determinants of the Entrepreneurial Activity of Nations

Manuscript ID: admsci-1099113. R1

Dear Editor-in-Chief, Prof. Dr. Isabel-María Garcia‐Sanchez

Firstly, we would like to thank all the reviewers for the constructive feedback and suggestions concerning the previous version of the manuscript. Secondly, we are very pleased to have had the opportunity to revise and resubmit the paper. Considering the answers to the questions raised, we provide a global overview of what was changed according to the review proposals and constructive suggestions made by the reviewers. We believe that after incorporating the suggestions by the reviewers the quality of the manuscript is significantly improved.

Yours faithfully

The Authors

Reviewer 1:

The paper is well-written and technically sound. The introductory section and the theoretical framework are well-structured and include a sufficient number of references. Methodological section list the countries object of investigation (16 developed countries and 5 developing countries), and the (dependent and independent) variables considered in the study. The conclusions obtained seem to be accurate according to the analysis developed.

Nevertheless, the paper can be still improved taking into account the comments provided below:

A1: We acknowledge the reviewer’s comment. For addressing this comment, the sentences presented below were introduced in item 3.1. Period of study, data sources and variables.

The countries were chosen according to the availability of data and later divided following the criteria of the World Economic Situation and Prospects (WESP), which employs a wide range of trends in various dimensions of the global economy, being prepared by the Development Policy and Analysis Division (DPAD) of the Department of Economic and Social Affairs of the United Nations Secretariat (UN/DESA) (WESP, 2014).

In analytical terms, the World Economic Situation and Prospects (WESP) categorises countries by the following groups: developed economies; economies in transition; and developing economies, however, from the availability of data, the countries that were chosen for this empirical study fall into the categories of developed economies and developing economies (WESP, 2014).

The largest differences between groups of countries with developed economies, and countries with developing economies, are due to disparities in the percentages of exports and imports of fuel; gross domestic income (countries divided into high in-come; high middle income; low middle income; and low income (countries under $1035 are considered low-income countries; between $1036 and $4085 are considered countries with low average incomes; between $4086 and $12,615 are countries with high average incomes; and finally countries with incomes higher than $12,615 are high-income countries.

In addition, the theoretical framework and hypothesis development was expanded and reinforced, as well as all the models were estimated using a new group of determinant factors, namely: institutional (corruption and freedom of trade); socio-economic (unemployment, age dependency ratio, household and NPISHs final consumption; education index; and life expectancy at birth); and economic (innovation; economic growth; and Inward FDI). The sections: 2. Theoretical framework and hypothesis development; 4. Empirical application; and 5. Concluding remarks; were revised (please see the red coloured sentences) according to this highly valuable comment.

A2: We acknowledge the reviewer’s comment. For addressing this comment, the sentence was corrected as recommended, in the following terms:

Calculation of the kurtosis statistic can determine possible excess of kurtosis, i.e., the existence, or not, of outliers. Three possibilities are assessed: (i) leptokurtic variables (values above 3); (ii) platykurtic variables (values under 3); and (iii) mesokurtic variables (i.e. excess kurtosis equal to zero).

3) Tables exceed the page width. I suggest to use the new journal templates before submitting the revised version of the paper (see: https://www.mdpi.com/journal/admsci/announcements/2328).

A3: We acknowledge the reviewer’s comment. The revised version of the manuscript is using the new journal templates, but apparently in some cases we will need a specialized professional support of the Editorial assistant for framing the Tables, in an adequate format, due to the extensive set of results obtained, incorporating all the comments from the 3 reviewers.

4) Tables 2 and 3 are overlapping in the text. Please, revise it.

A4: We acknowledge the reviewer’s comment. The revised version of the manuscript has solved the overlapping Tables 2 and 3.

5) Figure 1 is not readable. Please, resize it (I suggest to increase the size and to design the image in a format 5x2 (5 rows and 2 columns)).

A5: We acknowledge the reviewer’s comment. The revised version of the manuscript incorporates a larger image, according to what is possible to generate from the software in use.

6) The reference list should be checked.

For example, reference "Youssef, A. B., Boubaker, S. & Omri, A. (2017). Entrepreneurship and sustainability : The need for innovative and institutional 1033 solutions. Technological Forecasting & Social Change, 6(11): xxx-xxx." is not correct, since volume and page numbers are: "vol. 129(C), pages 232-241."

Something similar can be said of reference "Pradhan, R. P., Arvin, M. B., Nair, M., Bennett, S. E. (2020)" , where "vol. 42(5), pages 1106-1122." is missing. Please, check all the references before submitting the revised version.

A6: We acknowledge the reviewer’s comment. The references were revised and all the references were checked.

Author Response File: Author Response.pdf

Reviewer 2 Report

The article is very interesting. My comments after reading it:

Lack of information about the criteria for selecting countries for analysis and the criterion of division into developed and developing countries.
It seems that among selected developed countries there are large disproportions in their development.
It seems that the innovative factor should be interpreted with a time delay, pro-innovative activities (including the process of raising qualifications bring benefits usually after a few years).
It seems better to provide the value of the coefficient of variation in tab. 2 than SD (if the variability values have already been compared).
There is no information about the symbol JB in the text (Jarque-Bera test).
In tab. 4 not all correlation values have a specific p-value (similarly to other tables). Does it mean no statistical significance, I would recommend to indicate it?
I would suggest bolding the most important values in the result tables.

Author Response

Institutional, Economic, and Socio-Economic Determinants of the Entrepreneurial Activity of Nations

Manuscript ID: admsci-1099113. R1

Dear Editor-in-Chief, Prof. Dr. Isabel-María Garcia‐Sanchez

Yours faithfully

The Authors

Reviewer 2:

The article is very interesting. My comments after reading it:

Lack of information about the criteria for selecting countries for analysis and the criterion of division into developed and developing countries.

A1: We acknowledge the reviewer’s comment. For addressing this comment, the sentences presented below, were introduced in the item 3.1. Period of study, data sources and variables.

The countries were chosen according to the availability of data, and later divided following the criteria of the World Economic Situation and Prospects (WESP), which employs a wide range of trends in various dimensions of the global economy, being prepared by the Development Policy and Analysis Division (DPAD) of the Department of Economic and Social Affairs of the United Nations Secretariat (UN/DESA) (WESP, 2014).

It seems that among selected developed countries there are large disproportions in their development.

A2: We acknowledge the reviewer’s comment. For addressing this comment, the following sentences were introduced in item 5.3. Limitations:

Adding to the previous, it should be noted that, in an embryonic analysis of the present investigation, the variable Human Development Index was included as an explanatory variable, but it raised some problems regarding the correlation matrix (high correlation pairs with the variables Trade Freedom and Corruption). This index would be very relevant to contrast the countries in the sample, especially, in terms of economic policy choices and regulatory actions, through its three dimensions: (i) average life expectancy; (ii) number of years of schooling; and (iii) standard of living; however, it was not possible to operationalize it in the context of the present empirical study, which is here addressed as a limitation that could be surpassed in future research using disaggregated data.

It seems that the innovative factor should be interpreted with a time delay, pro-innovative activities (including the process of raising qualifications bring benefits usually after a few years).

A3: We acknowledge the reviewer’s comment. For addressing this comment, it is used a new variable (PATPC_LAG1), that is, the Lagged ratio of total number of patents (direct entries and national PCT) to gross domestic product per capita constant lcu (cf. Table 2. Variables: Description and sources), in order to capture the lagged effects of past levels of innovative activity on the TEA.

It seems better to provide the value of the coefficient of variation in tab. 3 than SD (if the variability values have already been compared).

A4: We acknowledge the reviewer’s comment. For addressing this comment, it was incorporated the coefficient of variation in Table 3. Descriptive statistics.

There is no information about the symbol JB in the text (Jarque-Bera test).

A5: We acknowledge the reviewer’s comment. For addressing this comment, along the revised version, it is used, instead, the correct mentioning to the Jarque-Bera test.

In tab. 4 not all correlation values have a specific p-value (similarly to other tables). Does it mean no statistical significance, I would recommend to indicate it?

A6: We acknowledge the reviewer’s comment. For addressing this comment, in Table 4, this was corrected by providing all the correspondent p-values.

I would suggest bolding the most important values in the result tables.

A7: We acknowledge the reviewer’s comment. For addressing this comment, in all tables of the revised version of the manuscript all the significant values are displayed in bold.

Author Response File: Author Response.pdf

Reviewer 3 Report

This paper investigates the effect of selected institutional and economic indicators on entrepreneurship potential at country level. To this aim, a selected sample of 21 countries are studied over time, i.e. 2003-2018 period. I would suggest the below revisions before the paper can be published in Administrative Sciences.

It is quite bold claim that the literature lacks empirical studies at country level on the role of institutional environment on entrepreneurial activity. I would suggest author(s) have a look at some of the published and widely cited papers on this matter. This is not an overlooked area. The issue is what can you contribute to this area?

Acs, Z. J., Autio, E. and Szerb, L. (2014). National systems of entrepreneurship: Measurement issues and policy implications. Research Policy, 43(3), 476–494.

Aidis, R., Estrin, S. and Mickiewicz, T. (2008) Institutions and entrepreneurship development in Russia: a comparative perspective. Journal of Business Venturing, 23(6), 656-672.

Chowdhury, F., Audretsch, D.B. and Belitski, M. (2019) Institutions and entrepreneurship quality. Entrepreneurship Theory and Practice, 43(1), 51-81.

Estrin, S., Korosteleva, J. and Mickiewicz, T. (2013). Which institutions encourage entrepre- neurial growth aspirations? Journal of Business Venturing, 28(4), 564–580.

Junior, E.I., Dionisio, E.A., Fischer, B.B., Li, Y. and Meissner, D. (2020) The global entrepreneurship index as a benchmarking tool? Criticisms from an efficiency perspective. Journal of Intellectual Capital, ahead-of-print, https://doi.org/10.1108/JIC-09-2019-0218

Radosevic, S. and Yoruk, E. (2013). Entrepreneurial propensity of innovation systems: Theory, methodology and evidence. Research Policy, 42(5), 1015–1038

Sine, W. D. and David, R. J. (2003). Environmental jolts, institutional change, and the creation of entrepreneurial opportunity in the US electric power industry. Research Policy, 32(2), 185–207 

Sine, W. D. and David, R. J. (Eds.). (2010). Institutions and entrepreneurship. Research in the sociology of work (Vol. 21). Emerald Group Publishing Ltd. 

Following point 1 above, institutional environment is not only about corruption and free trade. Please see the above papers, to start with, on how they measured/operationalised institutions. Author(s) will need to improve their measurement of institutions in their paper for a substantial contribution on this subject.

The so-called socio-economic indicators selected in this research are indeed economic indicators. Why should patents be a socio-economic indicator? In terms of its indirect effects to society perhaps, yes, but directly it is a purely economic indicator. Author(s) will need to add indicators such as average household income, age, education, occupation, wealth in their category of socio-economic indicators. I would suggest to bring in a third category as economic indicators, put all your indicators in there apart from unemployment. Then use the indicators mentioned above in the socio-economic category along with unemployment. In the economic category, can you differentiate between outward and onward FDI? A least three of the countries in the developing country group have substantial outward FDI. How does this effect their international entrepreneurship aspirations? Therefore, a careful selection and re-categorisation of indicators is necessary.

Author(s) claim their interest lies in contributing to advancing the still limited knowledge about the hypothetical non-linear effects of institutional and socio-economic factors…. on entrepreneurial activity (p.13-14). How is your model supposed to be non-linear? Quantile regression still responds to linearity. Your estimators are non-linear due to the nature of quantile regression but your model is linear. I would expect a model with mediation or moderation effects at least and tested by PLS-PM or SEM so that you could investigate non-linear relationships in the model.

All of your findings corroborate with the existing research which already have been shown. What do you add to the extant entrepreneurship literature? I would recommend to improve and add more indicators to your research, categorise them more effectively and revise your conceptual model.

Discuss your new results for developed and developing countries separately? Are there any differences between these groups? Discuss findings for quantiles? Why do quantiles matter?

Author Response

Institutional, Economic, and Socio-Economic Determinants of the Entrepreneurial Activity of Nations

Manuscript ID: admsci-1099113. R1

Dear Editor-in-Chief, Prof. Dr. Isabel-María Garcia‐Sanchez

Yours faithfully

The Authors

Reviewer 3:

It is quite bold claim that the literature lacks empirical studies at country level on the role of institutional environment on entrepreneurial activity. I would suggest author(s) have a look at some of the published and widely cited papers on this matter. This is not an overlooked area. The issue is what can you contribute to this area?

A1: We acknowledge the reviewer’s comment. For addressing this comment, the following reference studies were incorporated in the revised version of the manuscript:

Acs, Z. J., Autio, E. and Szerb, L. (2014). National systems of entrepreneurship: Measurement issues and policy implications. Research Policy, 43(3), 476–494.

Aidis, R., Estrin, S. and Mickiewicz, T. (2008) Institutions and entrepreneurship development in Russia: a comparative perspective. Journal of Business Venturing, 23(6), 656-672.

Chowdhury, F., Audretsch, D.B. and Belitski, M. (2019) Institutions and entrepreneurship quality. Entrepreneurship Theory and Practice, 43(1), 51-81.

Estrin, S., Korosteleva, J. and Mickiewicz, T. (2013). Which institutions encourage entrepre- neurial growth aspirations? Journal of Business Venturing, 28(4), 564–580.

Radosevic, S. and Yoruk, E. (2013). Entrepreneurial propensity of innovation systems: Theory, methodology and evidence. Research Policy, 42(5), 1015–1038.

Sine, W. D. and David, R. J. (2003). Environmental jolts, institutional change, and the creation of entrepreneurial opportunity in the US electric power industry. Research Policy, 32(2), 185–207.

Sine, W. D. and David, R. J. (Eds.). (2010). Institutions and entrepreneurship. Research in the sociology of work (Vol. 21). Emerald Group Publishing Ltd.

In addition, the original argumentation was corrected at the item 1. Introduction:

However, the literature still reveals the need for prosecuting additional empirical studies, at the macro level, on the role of the context and quality of the institutional environment in determining entrepreneurial activity (Honig & Karlsson, 2013; Small-bone & Welter, 2020).

Also adding evidences coming from previous studies:

The literature addressing the relationships between the institutional environment and entrepreneurial activity, deals with the first concept in terms of stability, restrictions, control and hardness of measures, while the second is approached alluding to change, the increasing of new agents, creativity and innovation, being highlighted, in this context, the pioneering contributions of the Institutional Theory, with regard to the determining factors of entrepreneurial activity (Sine & David, 2003). In addition, Sine & David (2010) underline that institutional change has positive effects in terms of exploiting new opportunities for the growth of entrepreneurial activity.

Chowdhury, Audretsch & Belitski (2019) argue that entrepreneurship is essential for the vitality of economies, stressing that institutions are vital both to the quantity and quality of entrepreneurial activity, so countries need to fight corruption, and thereby improve their institutional environments. Following the Institutional Theory, the observance of high levels of corruption perception interacts with the level of aspirations and motivations of new entrepreneurs. Thus, as core agents of entrepreneurial activity, entrepreneurs need governments that have the capacity for creating favourable environments, which are able to ensure efficient property rights and to prevent corruption (Estrin, Korosteleva & Mickiewicz, 2013).

Also presenting the contributions, contrasting with previous literature:

As for contributions, regarding institutional factors, the evidence obtained here indicates that when countries control their institutions, fighting corruption and expanding free trade, they achieve better performance in entrepreneurial activity, which ratifies the previous evidence found by Anokhin and Schulze (2009). Regarding economic factors, there is confirmation of the expected positive and significant influence of innovativeness, economic growth and foreign direct investment on entrepreneurial activity. Concerning unemployment, this has non-linear effects on entrepreneurial activity, corroborating the evidence obtained previously by Faria, Cuestas and Gil-Alana (2009). In relation to the remaining socio-economic determinants, namely, households and NPISHs’ final consumption expenditure, education index, and life expectancy at birth, denote positive and significant effects on the entrepreneurial activity. On the contrary, the age dependency ratio has a negative and significant influence.

Following point 1 above, institutional environment is not only about corruption and free trade. Please see the above papers, to start with, on how they measured/operationalised institutions. Author(s) will need to improve their measurement of institutions in their paper for a substantial contribution on this subject.

A2: We acknowledge the reviewer’s comment, but due to limitations in access to data that would allow the increase in the number of institutional determinants used in the analysis, we recognize the limitation that relates to the exclusive use of corruption and free trade factors.

A sentence with limitation was included in the conclusions:

Regarding the variables selected to measure the institutional environment, as institutional determinants were selected, corruption and free trade, mainly due to the lack of data for the 21 countries under study, in the 2003-2018 period.

In the item 5.3. Limitations, it was stressed the need for using disaggregated data in future research:

Furthermore, in the item 5.4 Future research, it was mentioned as avenue for future research endeavours:

Considering the inspiring research line followed by Radosevic & Yoruk (2013), in future studies, it would be interesting to be able to operationalize, empirically, an approach of structural equations of the PLS-SEM type, to measure, in alternative terms, the nonlinear effects of different categories of determining factors, incorporating a higher level of disaggregation and detail to the institutional factors of flexible environments versus non-flexible environments for the development of entrepreneurial activity, in the context of entrepreneurial, innovative and sustainable ecosystems.

The so-called socio-economic indicators selected in this research are indeed economic indicators. Why should patents be a socio-economic indicator? In terms of its indirect effects to society perhaps, yes, but directly it is a purely economic indicator. Author(s) will need to add indicators such as average household income, age, education, occupation, wealth in their category of socio-economic indicators. I would suggest to bring in a third category as economic indicators, put all your indicators in there apart from unemployment. Then use the indicators mentioned above in the socio-economic category along with unemployment. In the economic category, can you differentiate between outward and onward FDI? A least three of the countries in the developing country group have substantial outward FDI. How does this effect their international entrepreneurship aspirations? Therefore, a careful selection and re-categorisation of indicators is necessary.

A3: We acknowledge the reviewer’s comment. For addressing this comment, all the models were estimated using a new group of determinant factors, namely: institutional (corruption and freedom of trade); socio-economic (unemployment, age dependency ratio, household and NPISHs final consumption; education index; and life expectancy at birth); and economic (innovation; economic growth; and Inward FDI).

Author(s) claim their interest lies in contributing to advancing the still limited knowledge about the hypothetical non-linear effects of institutional and socio-economic factors…. on entrepreneurial activity (p.13-14). How is your model supposed to be non-linear? Quantile regression still responds to linearity. Your estimators are non-linear due to the nature of quantile regression but your model is linear. I would expect a model with mediation or moderation effects at least and tested by PLS-PM or SEM so that you could investigate non-linear relationships in the model.

A4: We acknowledge the reviewer’s comment. For addressing this comment,

We appreciate the reviewer's comment, leading to the clarification that the estimation of the quantile regression model allows to measure the nonlinearity of the relationships between the explanatory variables and the variable explained, along the distribution of the dependent variable, that is, the Total Entrepreneurial Activity (TEA).

The following sub-section was added in the revised version of the manuscript:

4.4.2. Evaluating the quantile regression

The quantile regression model allows analysing the different types of effects of explanatory variables, along the distribution of the explained variable. Thus, this empirical study contributes in a differentiated way to the advancement of knowledge about the effects of institutional, economic, and socio-economic determinants, along the distribution of entrepreneurial activity.

According to the results obtained in tables 1,2,3 and 4 of the quantile regression, it is possible to observe that the effects of independent variables along the distribution of the dependent variable (TEA) are very robust, that is, when the distribution of TEA in-creases from quantile to quantile, the significance and effects obtained from explanatory variables are relevant, being in line with the expected results (cf. Table 14).

In summary, for higher levels of the TEA distribution, the evidence shows to have a high explanatory power and robustness, which provides an extensive basis of empirical findings, of a global dimension, applicable to both developed and developing countries. Overall, in order to increase entrepreneurial activity, countries should stimulate innovative capacity, household income and the quality of their institutional and business environments.

The suggestion of operationalization of the empirical test of the PLS-PM or SEM model is considered in the context of suggestions for future investigations, however, given the nature of time series of the variables under test, for now it was decided to use econometric tools, such as panel models and quantile regression.

Please see again, the item 5.4 Future research, where this comment was addressed and value as an avenue for future research endeavours:

All of your findings corroborate with the existing research which already have been shown. What do you add to the extant entrepreneurship literature? I would recommend to improve and add more indicators to your research, categorise them more effectively and revise your conceptual model.

A5: We acknowledge the reviewer’s comment. For addressing this comment, as it was previously mentioned all the models were estimated using a new group of determinant factors, for extending the operational model of analysis. In addition, the sections: 2. Theoretical framework and hypothesis development; 4. Empirical application; and 5. Concluding remarks; were revised (please see the red coloured sentences) according to this highly valuable comment.

Discuss your new results for developed and developing countries separately? Are there any differences between these groups? Discuss findings for quantiles? Why do quantiles matter?

A6: We acknowledge the reviewer’s comment. For addressing this comment, after calibrating the new model estimations, the discussion was revised and restructured according to the following sections:

4.4. Discussion and summary of new evidence

4.4.1. Contrasting developed vs developing countries

4.4.2. Evaluating the quantiles distribution

Round 2

Reviewer 3 Report

This is a much-revised version of the original manuscript. Thank you for the extensive revisions provided. I would suggest the below very minor points to be considered before the manuscript can be published in Administrative Sciences.

Can you explain how did you code the crisis dummy? What types of crises have been considered? It deserves an explanation in section 3.1 similar to the one you provided for development level dummy.
Models 3 and 4. Development dummy. Is this coded 1 for developed country and 0 for developing country? Please state and explain the findings. This explanation comes up in section 4.4, but should be stated in here. Merely stating the coefficient sign and significance level is not satisfactory. What do your findings imply for development level and TEA relationship? What would it indicate if the coefficient is negative or positive? In section 4.4. please discuss whether your findings to this respect corroborate with other studies or contradict them. See Minniti, Bygrave and Autio (2005) who show that there is a U-shaped relationship between nascent entrepreneurship rates and per capita income level of countries. This perfectly explains and confirms your findings.
Table 14. Previous evidence. Do you mean this is evidence from previous research? Then, you should state in Table the studies and the scholars who conducted the research. If this is your previous evidence from previous version of your paper, then take it out.
Table 16. Is there typo in UNEM*DDESEN? Should this be UNEM*DDEVEL? Also, please check the rest of the interaction variables.
Are models 5, 6 and 7 better located after model 4? I understand that might necessitate robustness tests to be conducted for models 5, 6 and 7 as well which is a laborious task; so, I leave it with the authors.

Minniti, M., W.D. Bygrave, and E. Autio. 2005. Global entrepreneurship monitor: 2005 executive report. Wellesley, MA: Babson College.

Author Response

Institutional, Economic, and Socio-Economic Determinants of the Entrepreneurial Activity of Nations

Manuscript ID: admsci-1099113. R2

Dear Editor-in-Chief, Prof. Dr. Isabel-María Garcia‐Sanchez

Firstly, we would like to thank all the reviewers for the constructive feedback and suggestions concerning the previous version of the manuscript. Secondly, we are very pleased to have had the opportunity to revise and resubmit the paper. Considering the answers to the questions raised, we provide a global overview of what was changed according to the review proposals and constructive suggestions made by the reviewer. We believe that after incorporating the suggestions by the reviewer the quality of the manuscript is significantly improved.

Yours faithfully

The Authors

Reviewer 3:

Q1: Can you explain how did you code the crisis dummy? What types of crises have been considered? It deserves an explanation in section 3.1 similar to the one you provided for development level dummy.

A1: We acknowledge the reviewer’s comment. For addressing this comment, in section 3.1, we added information to support the development process of the DCRISIS, that is, crisis dummy. The following sentences were added:

The Crisis Dummy represents the global financial crisis of 2008-2009. This global crisis began with the housing market’s bubble, created by an overwhelming load of mortgage-backed securities that bundled high-risk loans. This recessive crisis implied a global economic downturn that negatively impacted world financial markets, as well as the banking and real estate industries. The crisis rapidly spread into a global economic shock, resulting in several bank failures. Economies worldwide slowed during this period since credit tightened and international trade declined. Housing markets deteriorated and unemployment raised. In short, the Crisis Dummy was created for capturing the effects caused by the global economic and financial crisis of 2008-2009. It assumes a value of 1 in the years 2008 and 2009, and a value of 0 for the remaining years 2003 to 2018.

Q2: Models 3 and 4. Development dummy. Is this coded 1 for developed country and 0 for developing country? Please state and explain the findings. This explanation comes up in section 4.4, but should be stated in here. Merely stating the coefficient sign and significance level is not satisfactory. What do your findings imply for development level and TEA relationship? What would it indicate if the coefficient is negative or positive? In section 4.4. please discuss whether your findings to this respect corroborate with other studies or contradict them. See Minniti, Bygrave and Autio (2005) who show that there is a U-shaped relationship between nascent entrepreneurship rates and per capita income level of countries. This perfectly explains and confirms your findings.

A2: We acknowledge the reviewer’s comment. For addressing this comment, first, we would like to clarify that the dummy was created to divide developed countries (value 1) and developing countries (value 0).

The results are robust because the development dummy, this has negative and very significant effects all at 1%, and so the more developed countries are, the less likely they are to increase entrepreneurial activity. Therefore, our results agree that the most developed countries are not as likely to create entrepreneurial activity, compared to developing countries. In sum, there is a negative relationship between development level and total entrepreneurial activity.

In line with previous statements, in item: 4.3.1. Results of estimation of the models; the following sentence was introduced:

In order to capture the effects that the different conditions of the countries in the sample can have on the distribution of entrepreneurial activity, a dummy variable was created to represent the status of developed country (value 1), and developing country (value 0).

Moreover, the following argumentation contrasting the findings now obtained and the reference study of Minniti, Bygrave and Autio (2005), was introduced in line 792 of the same referred item: 4.3.1. Results of estimation of the models; in the following terms:

Therefore, the countries under analysis that are grouped according to the criterion provided by WESP (2014), denote interesting results, from which it can be retained that the more developed the countries are, the less prone they will be to develop further entrepreneurial activity flows.

This set of results is aligned with the vision of Minniti, Bygrave & Autio (2005), according to which the objectives of countries with high income levels, are essentially to maintain competitiveness levels; support companies with high added value and great growth potential; and develop its innovative capacity. In many of these countries, government policies are created to create efficient mechanisms for companies already installed to survive and grow in their business area, so that they try to increase their export levels. The same authors argue that countries with the average income level must create measures and mechanisms to support the adoption of new technologies and an entrepreneurial culture. Many of these countries choose to create measures to encourage the creation of new entrepreneurial activities; promote adoption measures for new innovations and new technologies, mainly through tax reductions; monetary incentives to create potential businesses; credit facilities; low interest rates, among other measures to encourage the creation of new businesses and an entrepreneurial culture mainly in developing countries.

Q3: Table 14. Previous evidence. Do you mean this is evidence from previous research? Then, you should state in Table the studies and the scholars who conducted the research. If this is your previous evidence from previous version of your paper, then take it out.

A3: We appreciate the reviewer’s comment. Therefore, we revised the title in table 14 and removed the column concerning “previous evidence”. The new title is the following one: Table 14. Summing-up of research hypotheses and evidences.

Q4: Table 16. Is there typo in UNEM*DDESEN? Should this be UNEM*DDEVEL? Also, please check the rest of the interaction variables.

A4: We are very grateful for the comment made by the reviewer. All interaction variables were corrected and verified. Please see changes introduced in Table 16.

Q5: Are models 5, 6 and 7 better located after model 4? I understand that might necessitate robustness tests to be conducted for models 5, 6 and 7 as well which is a laborious task; so, I leave it with the authors.

A5: We appreciate the reviewer’s suggestion. However, models 5, 6 and 7 were estimated with the motivation of analysing the terms of interaction. Therefore, it is possible to assess the role played by the country's development condition, that is, accelerating or restraining the effects of the institutional, economic and socioeconomic determinants on entrepreneurial activity. Lastly, it should be noted that the results of the first 4 models are more objective in terms of responding to the hypotheses described in item 2.