Innovative-oriented start-ups across countries: Conditions for the positive effect of a financial system

Abstract This study sets out to examine the effect of financial systems on the share of a nation's start-ups that are innovative-oriented. The study combines the national business systems perspective with the resource-based view to argue that the financial system substitutes for a weak state and skill development system. This argument is supported by an analysis of a panel data set comprising 283 country-year data over five years. The study shows that it is necessary to model innovative entrepreneurship differently than other aspirational entrepreneurship forms. Because innovations develop out of the efforts of multiple actors, it becomes necessary to model an interaction between system components.