The Effect of Good Governance as Institutional Quality on Entrepreneurial Motivation in High- and Low-Income Countries

This article aims to shed light on the differences in the effects of six constructed governance indices on entrepreneurial motivation. Using an unbalanced panel dataset of 86 countries over 2010–2018, the study finds that good governance as institutional quality measured by WGIs is positively related to a desirable entrepreneurial activity represented by the ratio of opportunity-driven to necessity-driven entrepreneurship. More importantly, relative differences in the importance of institutional quality are found between the two groups of countries, i.e., high-income countries and low-income countries. The study suggests that countries at different stages of economic development find appropriate strategies fit to their situations to improve institutional quality and build environments that foster desirable and productive entrepreneurship.