1.1 Entrepreneurial activities in BRICS nations

BRICS nation have an extra gain in making a knowledge-based economy in comparison of other developing economies in the world. BRICS have high entrepreneurial investment opportunities to transit the economy from efficiency driven to innovation driven stage (Coulibaly et al., 2018). High per capital availability of financial resources through formal and informal institution is the result of government innovation driven policy in BRICS economies. BRICS countries altogether accounts for 35% of world's gross domestic product (GDP). As per Doing Business Report (2020), China ranked third while Brazil hold 124th rank in the world. Russia performed better in doing business and occupied 28th rank while India and South Africa ranked 63rd and 84th respectively in the world. It is general postulation that entrepreneurial activities in BRICS economies foster economic growth. Thus, the government of BRICS countries are taking several steps to help entrepreneurs directly or indirectly. For instance, in order to improve socio-economic condition of the society and to boost entrepreneurial activities, the Indian government has introduced many schemes like Atal Innovation Mission, ASPIRE, MUDRA bank, e BIZ portal, Dairy Processing and Infrastructure Development Fund, Multiplier Grants Scheme (MGS), Credit Guarantee Scheme for Startups, Software Technology Park (STP) Scheme, Venture Capital Assistance Scheme, Centre for Innovation, Incubation and Entrepreneurship (CIIE), IIM Ahmedabad, and so on. Atal innovation Mission in India was established to provide promotional platform which involves the academicians to create an ecosystem of innovation, skill development, research, and development. E-BIZ portal is designed as government to business communication software to transform and develop a conducive entrepreneurial ecosystem in the country. Also, Brazil government has formed the Brazilian Innovation Agency (FINEP), which support programs for instance the Primeira Empresa Inovadora (PRIME) scheme to help innovative new ventures in many ways. According to Global Entrepreneurship Monitor (GEM), 6.3% of Russian working adult population are involved in creation and managing of new companies. Among the working age population between the age group of 18–64 years, 85% people in India, 62% in Brazil, 67% in China, and 60% in South Africa think that they have sufficient skills and awareness to commence a new venture. This percentage is only 35% in Russia (GEM Report, 2019). BRICS economies are in the transition stage among an efficient driven phase and innovation driven stage. But, during the last 15 years, TEA in BRICS economies have not increased in comparison of other developing countries (Global Entrepreneurship Monitor (GEM) GEM Report, 2019). In the year 2018, TEA of Brazil, Russia, India, China and South Africa was 17.8, 5.55, 14.97, 10.39, and 10.77% respectively while this percentage was 13.8 (Brazil), 2.47 (Russia), 10.81 (India), 12.11 (China), and 6.49 (South Africa) in 2004, thus reflecting some barriers in entrepreneurial economic ecosystem of these countries.

Table 1 demonstrates features of entrepreneurial environment in BRICS countries. It also shows national and international comparisons of BRICS economies positioning in promoting entrepreneurial culture. The Global Entrepreneurship Index (GEI) is a significant instrument to facilitate countries precisely assesses and evaluates their place in entrepreneurial ecosystem that creates more jobs (Global Entrepreneurship Index, 2018). The opportunity perception of people shows the extent to which BRICS entrepreneurs can identify good opportunities to execute an innovative idea in the area where they live. BRICS nations heavily investing in business incubators established for providing training to make their visions into a reality. China with the international rank 43rd scores highest in the group shows that entrepreneurial ecosystem in China support pioneering, creative, and sharp rising new ventures. South Africa holds the second rank in the group followed by India, Russia, and Brazil, respectively. Skill perception pillar is designed to analyze the percentage of the population who believe they have adequate startup skills. India and China also have low startup skills. It is depicted from the Table 1 that India is very strong in product innovation while weak in the area of technology absorption.

Risk perception pillar is considered to examine the proportion of the people who do not believe that fear of collapse would stop them from starting a venture. It is frequently said that entrepreneurs with healthier social networks are more flourishing, can discover new business opening, and can find additional and superior physical resources and services. It is also revealed from Table 1 that entrepreneurs of Russia are more skilled while South Africa has low skilled entrepreneurs in the BRICS nations. In the global economy, information and communication technologies (ICT) are the key to achieve inclusive growth. Human capital is also vital for entrepreneurial culture and overall development of the nation. Russia score high in terms of human capital in the group followed by China. On the other hand, Brazil scores lowest in human capital in the group. India and South Africa are also the worst performers in human capital. The above table also disclosed that entrepreneurs of Brazil, Russia and China have better networks which help them to identify more viable opportunities, and also help them to access more and better resources. India and China leads in product innovation. Entrepreneurial success depends on the idea generation and implementation with new technology. China leads the group in terms of process innovation, which help the country to increase production possibilities that materialize in a shift of the global frontier. Brazil score very low in process innovation, human capital, internationalization, technology absorption, and risk acceptance reflecting that fear of failure would prevent them from starting a business. Such kind of behavior of the people (that a new idea may turn out to be fruitless) can harm both the financial and mental state of the nation. Brazil's education system is the main obstacle to promote outcomes. China score is very high in risk capital. Finally, Table 1 also demonstrates institutional and individual level entrepreneurial performance. At institutional level BRICS economies scored more than 0.5 while at individual level Brazil and Russia scores less than 0.5.

Keeping in view the importance of BRICS nations in the world, the present study explores the dynamics of linkage among entrepreneurship, government support and economic growth in BRICS countries. The study is unique as it elucidated the significant role of government effectiveness, role of domestic credit, perception about opportunities, ease to access the physical resources, and corruption in promoting the entrepreneurial activities in BRICS economies. In addition, the study also clarified the imperative role of entrepreneurial activities in economic growth of BRICS economies.

2.1 Institutional factors (formal and informal) and total entrepreneurial activity

Entrepreneurial ecosystems are important factor for nascent and new entrepreneurs and will create an atmosphere that diverts resource allotment to industrious uses. It also enhances the factor output with the help of process modernization. The factors affecting entrepreneurial environment are opportunity perception, startup skill, cultural support, technology absorption, product innovation, process innovation, human capital, internationalization, and risk acceptance. But the very important nutrient for entrepreneurship without which entrepreneurs will die is venture capital. Institutional factors that affect the entrepreneurial activities can be formal and informal. Formal factors include process and cost to commence a new company, availability of credit facility, ease of doing business and control over corruption. Informal pillars include perception of people toward good opportunities to start a business, skills and talent, human values, cultural support and perception toward government supportive program and so on. Innovation policies comprise direct subsidies, complimentary tax handling, high research and development (R&D) spending, and availability of seed funding for entrepreneurs (Lerner, 2000). Douhan and Henrekson (2010) defined that institutions can have expensive plus advantageous effects on industrious activities. North (1990) and Williamson (1998) stated that institutions and economic transaction creates multidimensional impact on entrepreneurs demand and supply. Entrepreneurial activities make significant contribution to economic growth. Many studies highly focused on impact of institutional factor on entrepreneurial activity (Acs et al., 2008; North, 1990). The theoretical foundation of this manuscript is based on (Acs et al., 2008; Aparicio et al., 2016; Atems & Shand, 2018; Saberi & Hamdan, 2019; Wong et al., 2005). Conscientious environment analysis is required for entrepreneurial decision-making (Williamson, 2000). Wong et al. (2005) stated that entrepreneurs have required skills to contribute in economic growth by expanding economic activities. Growth of economic activities can be achieved through inventiveness in products, services by serving new customer groups, and gaining competitive advantage in global era.

For instance, Ritesh Agarwal an Indian entrepreneur created a network of 2200 hotels operating in 154 cities across India focused on small hotels (especially those have less than 100 rooms) and collaborate with their owner to change the facility and customer service in these hotels. Consequently, demand of these hotels increased rapidly and he became the young billionaire entrepreneur of the world. A need of conceptual framework to describe the entrepreneurial ecosystem is recognized by Gnyawali and Fogel (1994) who propounded five important dimensions of innovative atmosphere namely government plan and procedure, socio-economic condition of the nation, entrepreneurial and business skill, financial assistance to business, and nonfinancial assistance to new venture through government procurement program or counseling or support system. Baumol (1990) focused on the importance of institutions to encourage entrepreneurial activity as well as described entrepreneurial ecosystem within which any activity is productive and destructive. Moreover, inefficient institutions reduce aggregate productivity and social welfare by hampering productive entrepreneurship. Societal confidence through quality education is required for success of the entrepreneurial culture (Koellinger, 2008). Djankov et al. (2005) explored that social networking, perceptions toward local institutional environment, and human being qualities are three essential variables in innovations.

Young and Welsch (1993) concluded that entrepreneurs in developing countries faces many hurdles such as shortage of financial support, government rules and procedures, lack of facts on diverse parameters of new business, and towering inflation rate. Government can influence the entrepreneurial activities by creating business culture and make them function efficiently by removing obstacles that create problem in accessing physical resources and utilities to start new business. Aparicio et al. (2016) found that informal institutions like control of bribery have a direct and significant effect on entrepreneurial activities. In addition, the study revealed that TEA have an affirmative impact on economic growth. Chambers and Munemo (2019) found that entrepreneurial activities are considerably lower in economies with too much entry guidelines. Entrepreneurial activities are also notably harmed by shortage of overall institutions quality. Good governance leads to higher entrepreneurial activity. The study also suggested that domestic entrepreneurship could be enhanced by dropping barriers to new ventures and by convalescing institutional quality (mainly regulatory quality, political stability, and accountability).

2.2 Corruption and entrepreneurial activities

According to Wennekers et al. (2005), developing countries have low level of control over corruption in comparison to developed nations, as a result entrepreneurs found low barriers in business establishment in developed countries. Hence, control over corruption reduces the uncertainty of business failure and increase confidence in the entrepreneurs and market (Bohata & Mladek, 1999). Generally, in most emerging economies, a handful startup financing companies and banks are accessible to provide funds to entrepreneurs. The success of an entrepreneurial venture is influenced by positive and supportive environment (Okhomina, 2010). Klapper et al. (2006) concluded that costly regulations obstruct the entry of new firms and entry barricades work most successfully in preventing entry in low corruption economies rather than in high-corruption economies. Dreher and Gassebner (2007, 2013) explained that the corruption assists firm entry in extremely controlled economies. Dutta and Sobel (2016) found that corruption always hampers the entrepreneurial activities in countries having healthier business environment. Liu et al. (2019) found that corruption and entrepreneurship are related in a nonlinear way and corruption acutely weakened people's entrepreneurial eagerness. Goel and Saunoris (2019) found that entrepreneurship is negatively affected by corruption.

2.3 Domestic credit and entrepreneurial activities

Venture capital is the backbone of entrepreneurial activities in an economy. Entrepreneurs need financial assistance to diversify or spread the startup risk and for expansion of the projects. Pennings (1982) found that accessibility of financial support, urban area, and non-financial support by universities especially in research and development are important factors to foster the rate of entrepreneurial activities. Innovations cannot survive without access to financial institutions. Gregory (2019) explored that financial openness is positively related with entrepreneurial activities in emerging economies.

2.4 Government effectiveness and entrepreneurial activities

Growing evidence indicates that entrepreneurship has linked with faster rates of economic growth and increases the prosperity in the country through the product and process innovation, hence reduces unemployment (Saberi & Hamdan, 2019).Studies also acknowledge the role of government schemes in promoting entrepreneurship (Congregado et al., 2012). Aparicio et al. (2016) using panel data of 43 countries found that informal institutions like government procedure, financial assistance to business, entrepreneurial and business skills have significant association with opportunity entrepreneurship. Further, the results of three stage least square method confirmed the positive and significant relationship between economic growth and entrepreneurship. In a study of six Gulf Cooperation Council (GCC) countries, it was found that government support is a significant factor in entrepreneurship development, hence supports economic growth (Saberi & Hamdan, 2019). Audretsch et al. (2002) explained that entrepreneurship accumulates wealth for the society. The role of institutions has emerged as a dominant conventional role in entrepreneurship and rationalization of continuing economic performance (Rodrik et al., 2004).

2.5 Perceived opportunities to start a new business and entrepreneurial activities

It is the government policies, rules, regulation, actions, and number of programs of entrepreneurship development in universities that persuade the entrepreneurial opportunity, susceptibility to new ventures, and capacity to innovate. Ideally, it is the largely outlook and perception of the individuals that persuades the tendency to innovate (Cassar, 2007; Wiklund & Shepherd, 2003). Enterprise development institutes need to be taken as key change maker in analyzing the ability of the enterprise and business skills dimension. The occurrence of skilled entrepreneurs and flourishing entrepreneurial role models in a culture conveys a note to the budding entrepreneurs that entrepreneurship or start-up is an attractive career option (Gnyawali & Fogel, 1994). More training programs for the new entrepreneurs are required in less developed economies where market imperfections exist and large firms manage the industrial sector. Baumol (1990) explored that ingenuity, attentiveness and the aptitude to get things done are the personality traits that influence the opportunity entrepreneurial. Further, Koellinger et al. (2007) found a positive and significant association between capacity of people and entrepreneurial activity in developed as well as in developing countries. Dvouletý and Orel (2019) studied innovative behavior in African countries and found that perceived opportunities to set up a new venture have a positive impact on entrepreneurship, and corruption perceptions have a negative impact on overall entrepreneurial activities.

2.6 Entrepreneurial activities and economic growth

Acs and Varga (2005) concluded by analyzing the panel data of 11 economies that opportunity entrepreneurship has a positive and significant impact on economic development. Further, entrepreneurship is considered as mechanism to assist the spread out of knowledge and actually commercializes the innovative ideas into productive ones (Acs & Varga, 2005). Entrepreneurs have creative methods to utilize the non-utilized resources and to produce high quality products and services. Douhan and Henrekson (2010) concluded that all opportunity entrepreneurs are motivated to earn profits. The environment shaping the economy includes quality of governance, financial assistance and accessibility of physical infrastructure such as communication, transport facility, and the perceptions of entrepreneurs. Acs et al. (2008) found that entrepreneurial activities are positively associated with economic growth and U shaped association exists among the two as economies are shifting from competence driven phase to modernism driven stage in developed economies. Further, it was also concluded that the U-shaped relation is not very constructive to rationalize the role of entrepreneurship in developing nations as they are on the threshold of efficiency driven phase. Carree et al. (2007) proposed that L-shaped relation among innovation and economic development as all economies are not in the upward part of development. Urbano et al. (2019) discovered that high level of entrepreneurial activities lead to increase in GDP.

3.1 Hypotheses

Taking into account the previous studies, an empirical analysis is done for the group of five countries: Brazil, Russia, India, China, and South Africa for the period of 2004–2018. Two models (Model 1 and Model 2) are framed to investigate the impact of institutional factors on entrepreneurial activity, and spillover result of entrepreneurial activities on economic growth in BRICS nations. The following hypotheses are formulated:

3.2 Model specification

Model 1: Impact of Institutional Factors on Entrepreneurial Activities

Model 2: Spillover outcomes of Entrepreneurial Activities on Economic Growth

where is the total entrepreneurial activities for BRICS country (i) in the year (t). is the Gross Domestic Product per capita for BRICS nations (i) in the year (t). is the control of corruption for BRICS nations (i) in the year (t). signifies the government effectiveness for BRICS nations (i) in the year (t). stands for the perception of individuals toward new business for BRICS nations (i) in the year (t). represents the domestic credit to private sector for BRICS nations (i) in the year (t). symbolizes the ease of access to physical resources, communication, utilities and transportation, and so on. for BRICS nation (i) in the year (t). stands for imports of goods and services as the percentage of GDP for BRICS nations (i) in the year (t). signifies the presence and quality of programs in BRICS nations (i) in the year (t). represents foreign direct investment as the percentage of GDP for BRICS nation (i) in the year (t). , , , , are the slopes coefficients for Model 1. , , , , are the slopes coefficients for Model 2. and are constants for Model 1 and Model 2, respectively. and are error terms for Model 1 and Model 2, respectively.

Correlation coefficients of all the variables under study are reported in Table 3. It is revealed that total entrepreneurial activity is positively correlated with economic growth. While import, control over corruption and government effectiveness are negatively correlated with total entrepreneurial activity. Domestic credit by financial institution, government program to promote entrepreneurs ecosystem, foreign direct investment, ease of doing business proxy of business environment and perceived opportunity to start a business (PERO) are significantly correlated with total entrepreneurial activity. These institutional as a well as individual factor represents that entrepreneurial ecosystem in BRICS are very strong and encouraging for novelty.

4.1 Model 1: Testing the impact of institutional factors on total entrepreneurial activity

The influence of institutional factors on entrepreneurial activity in BRICS is investigated using fixed effect approach (Model 1) is presented in Table 4 demonstrate that the model is statistically significant. The high value of R² revealed that 83% variation in the dependent variable (TEA) is explained by corruption, government effectiveness, perceived opportunities, domestic credit to private sectors and ease of doing business. Thus, the results of the Model 1 reject H1, H2, H3, H4, and H5. The Durbin–Watson test values revealed that there is absence of autocorrelation. The results also demonstrate that corruption has negative and significant impact on entrepreneurial activities through high entry barriers. The burden of corruption could bind the real utilization of the documented entrepreneurial prospect. Corruption among public officials, irregular payments and bribes to carry out business, imports and exports, to use public utilities, lack of transparency and accountability, awarding of public contracts and licenses will altogether threatens the entrepreneur's ability to operate in a country. As mentioned before, the estimated model explains that government effectiveness has a constructive influence on entrepreneurial activities in BRICS counties. Generally, government services efficacy is assessed by the high-quality supremacy variable and the governance cost is measured usually by taxation. The positive sign of government effectiveness increases the percentage of the total entrepreneurial activities to cash an excellent opportunity, to boost income, or to accomplish individual aspirations. The negative coefficient of domestic credit to private players reveals that monetary support given by the financial institution has negative impact on entrepreneurial activity and suggests that the BRICS counties should have mature banking and financial system, which provide support to new entrepreneurs. The negative sign of ease of access to physical resources and other basic infrastructure to entrepreneurs and small-scale industries indicate adverse outcomes on the entrepreneurial activities. This could be due to the perception of entrepreneurs about availability of physical resources due to large strata of the society being forced to start a business as government sector jobs are scarce to meet their demand for job. However, the perception of people regarding starting a business has positive impact on total entrepreneurial activity. This shows that existence of self-assurance in aptitudes and skills in people which further has significant influence on entrepreneurial activity (Estrin & Mickiewicz, 2012). Opportunity entrepreneurs are supposed to be better in terms of quality skills, their preparedness, than need based entrepreneurs (GEDI Report, 2019). Entrepreneurial culture of a country can be improved by promoting public private partnerships and by establishing well performing financial and educational institutions.

4.2 Model 2: Investigating the spillover effect of entrepreneurship on economic growth

Table 5 demonstrates the impact of total entrepreneurial activity on economic growth. Model 2 captures the impact of total entrepreneurial activity, Import, domestic credit to private business, the presence and quality of government programs and foreign direct investment on economic growth in BRICS countries. The results of the Model 2 reveal that entrepreneurial activities (p < 0.01) considerably boost economic growth in BRICS economies. It is also important to highlight that import, domestic credit, government programs also have positive and significant impact on economic growth (see Table 5 and results follows Naude et al., 2008). Thus, the results of the Model 2 reject H6. Positive coefficient of TEA (0.023) explains that 1% boost up in entrepreneurial activity will raise the GDP by 0.02%, ceteris paribus. These results confirmed that entrepreneurial activity could be a vehicle to generate spillovers effect with faster rate of economic growth through knowledge generation, creating new job, and by providing innovative product and value added services. Hence, entrepreneurial activities could be an engine for economic growth (Aparicio et al., 2016; Saberi & Hamdan, 2019). However, relationship between FDIPER and economic growth is not found significant.

Braunerhjelm et al. (2010) proposed that new entrepreneurs renovate information into socio-economically pertinent awareness and hence spread out could be generated in the economy to attain faster economic growth. High magnitude of government programs in the Model 2 explains that 1% increase in the government program will faster the economic growth by 0.31%. The presence and quality of government program will provide government support to innovative entrepreneurs through subsidies, skill development especially in incubation centre, training and advice service, hence speedup economic growth (Pickernell et al., 2013). The model is highly significant and has high explanatory power, explaining 96% variance in economic growth. In addition, the significant value of Durbin Watson demonstrates the absence of autocorrelation. Hausman test (p = 0.0000) reject the null hypothesis and suggests that fixed effect model is most appropriate in comparison of random effect approach.