Institutional factors related to digital entrepreneurship by startups and SMEs in the Latin American context: Two cases in Brazil

Abstract

Digital entrepreneurship relies not only on the individual entrepreneurs' skills and effort but also on rules and structures related to institutions, especially in developing contexts such as Latin America. Considering this, we analyse how institutional factors can affect digital entrepreneurship by SMEs and startups and what types of institutional changes are needed to support digital entrepreneurship by these companies. Based on institutional theory as a theoretical lens, we conducted two case studies in Brazil. The research results indicate that the digital entrepreneurial ecosystem's actors perform institutional work that generates changes related to the regulative, normative, and cultural/cognitive institutional pillars. These changes affect both the legitimacy of digital innovations created by SMEs and startups and the legitimacy of these companies as ecosystem players, which is vital for them to access the resources needed to innovate and thrive. Based on these results, we propose a theoretical framework and provide suggestions for practice and public policies related to digital entrepreneurship by SMEs and startups in the context studied.