Explore our Research Papers

Human Capital for Micro, Small, and Medium-Sized Enterprises (MSMES) in APEC Developing Economies: Indonesia

Published on May 29, 2019

This report investigates how institutional environments influence the usefulness of individuals’ human capital for entrepreneurial activity, that is, new business creation.

Based on the logic of institutional theory, we posit that various dimensions of a country’s institutional environment — specifically, regulatory dimension such as government policy and support for new and growing businesses; cognitive dimension such as entrepreneurship education; and normative dimension such as entrepreneurship-friendly cultural and social norms — may have differing moderation effects on the relationship between individuals’ level of education and their engagement in entrepreneurial activities.

Our analysis of the dataset comprising 32,540 individuals from 14 APEC countries in 2014 indicates that an individual’s education level is positively related to new business creation. Further, our findings suggest that teaching entrepreneurship across all levels of education facilitates highly educated individuals’ engagement in new business activity. We also find that providing support for new and growing businesses can encourage highly educated individuals to create new business with innovative characteristics.