Modeling the Nexus Between Technological Innovations and Institutional Quality for Entrepreneurial Development in Southeastern Europe

Entrepreneurship has been critical in fostering economic growth. The technological innovations and quality of institutions are crucial in promoting entrepreneurship and promoting an environment conducive to entrepreneurial activities. This study investigated the effect of technological innovations and institutional quality on entrepreneurial development with annual data from 2014 to 2021 across Southeastern European countries. The cross-sectional auto-regressive regressive distributed lag model (C-S ARDL), quantile regression and Granger causality were employed to achieve the objectives of this study. A dynamic panel generalized method of moments (GMM) estimator was also applied to perform a robust analysis. The findings revealed a significant long-term relationship between technological innovations and entrepreneurial development, with a coefficient of 0.088. There also exists a significant and positive impact on institutional quality and entrepreneurial development in the long run, with a coefficient of 5.912. Furthermore, the outcome revealed that the exchange rate negatively influences entrepreneurial development in Southeast Europe. The Granger causality reports a bi-directional relationship between technological innovations and entrepreneurial development in Southeastern Europe. The study concluded that a significant relationship exists between technological innovations, institutional quality, and entrepreneurial development in Southeastern Europe. The study recommends that governments of Southeastern European countries strengthen their regulatory structures and institutions to improve the welfare of society through a reduction in political, social, and economic unpredictability while boosting trust and investment from entrepreneurs.