The Role of Formal Institutional Support On Starting A Business: Evidence from Saudi Arabia

This thesis explores and examines the role of formal institutional support for early stage entrepreneurs in Saudi Arabia. Although entrepreneurship literature has attracted a considerable amount of attention, the relationships between the regulatory, cognitive and normative dimensions of the institutional profile, and support for entrepreneurship and business performance have been under-explored in prior research, in particular in the context of early stage entrepreneurs within a developing economy such as Saudi Arabia. Therefore, the main research question is approached via six sub-questions, which explore the most important reasons for starting a business, the types of institutional support used by early stage entrepreneurs, the relationship between early stage entrepreneurial ideas and the provision of institutional/entrepreneurial support, the relationship between institutional support and early stage business performance, the challenges faced by entrepreneurs in accessing the available institutional supports, and how these challenges can be overcome to enhance entrepreneurship in the context of Saudi Arabia. The study takes a two-stage mixed methods approach to data collection. First, a large panel data set was acquired from early stage entrepreneurs involved in support programmes in Saudi Arabia. A survey of early stage entrepreneurs who were involved in support programmes in the main cities in Saudi Arabia produced a response rate of 27% (n = 117). The purpose of this first stage was to explore the role of formal institutional support for early stage entrepreneurs in Saudi Arabia, and to inform the second, qualitative stage. In the second stage, a group of support institution officials (n = 13) and early stage entrepreneurs (n = 7) were selected for qualitative data collection, using semi-structured interviews, aiming to gain deeper understanding of support agencies’ impact on entrepreneurs and to explore how participants view the process of application for support. The main findings of the study are that the most important reasons that motivate entrepreneurs for starting a business is taking advantage of opportunity. The main types of institutional support used by early stage entrepreneurs are consultation, finance and networking. Findings also showed there is a positive relationship between early stage entrepreneurial ideas and the provision of institutional support and a positive relationship was found between institutional support, especially the regulatory dimension, and early stage business performance. The main challenges faced by entrepreneurs in accessing support in Saudi Arabia are lack of access and poor quality of education and training, bureaucracy, and lack of access to finance, while the main challenges faced by support institutions are lack of awareness of support for entrepreneurship and lack of access to data. The challenge that faced both is institutions working in isolation from each other. This thesis proposed modifications to a number of entrepreneurship models (Bhave, 1994; Shane, 2003; GEM, 2005), and offers recommendations to entrepreneurs, institution officials and policy makers to enhance support for entrepreneurship