Foreign direct investment and domestic entrepreneurship: insights from Asia

Purpose This paper aims to assess the relationships between foreign direct investment (FDI) and domestic entrepreneurship (DE) with the moderating role of formal institutions (FI) and informal institutions (II) and information communication technology (ICT) capacities in Asia. Design/methodology/approach This study is based on unbalanced panel data of 17 Asian countries from 2006 to 2018 at different stages of development, using the three-stage least squares estimation method. Findings The research findings indicate that FDI directly affects the establishment of domestic formal and informal entrepreneurship. In addition, FDI firms via the buffer mechanism of FI and II and ICT development for DE. Through its adjustment to the quality of institutions and ICT infrastructure, economic development determines the direction of FDI’s impact on DE. Originality/value The study findings grant empirical evidence and theoretical contributions to the relationship between FDI and domestic entrepreneurial development through the buffering mechanism of FI and II and the role of ICT.