Digital entrepreneurship in developing countries: The role of institutional voids

Abstract

Entrepreneurship is often considered a key means to tackling the ongoing challenge of poverty among the rural populations in developing countries. We study how drawing on the support of various stakeholders—specifically family, community, and business partners—helps overcome institutional voids and foster entrepreneurship in Indian microenterprises. We also examine how the adoption of digital technologies—e.g., in the form of smartphone apps—can strengthen those relationships. By surveying more than 1,000 microentrepreneurs in rural India, we find that both the families and communities (in particular self-help groups) of entrepreneurs have a positive and significant effect on entrepreneurship that is strengthened when digital technologies are used. Support from business partners, however, is negatively associated with entrepreneurship.