Foreign venture presence and domestic entrepreneurship: A macro level study

Building upon the literature of necessity- and opportunity-driven entrepreneurship, this study explores how the presence of foreign ventures affect domestic entrepreneurship. We hypothesize that foreign ventures reduce necessity-driven entrepreneurship by diminishing unemployment in domestic economies, and stimulate opportunity-driven entrepreneurship by increasing knowledge stocks in domestic economies. Empirical results based on country-level longitudinal data of 30 countries from 1980 through 2008 support our hypotheses. We conclude that over time, domestic economies with more foreign ventures might have more opportunity- driven entrepreneurial activities and less necessity-driven entrepreneurial activities. Thus, foreign ventures can change the structure of domestic entrepreneurship in host countries.