A Multi-level Empirical Study of Ethnic Diversity and Shadow Economy as Moderators of Opportunity Recognition and Entrepreneurial Entry in Transition Economies

Abstract

Our multi-level model about the relationship between opportunity recognition and entrepreneurial entry in transition economies suggests that ethnic fractionalization along with the size of the shadow economy are moderators of individual-level opportunity recognition. Whereas ethnic diversity increases entrepreneurial entries, a large informal sector appears to decrease them. We also find that opportunity recognition may be a more important predictor of entry when ethnic diversity is low and...