THE ROLE OF INSTITUTIONS AND DIGITAL INFRASTRUCTURE FOR SUSTAINABLE ENTREPRENEURSHIP: A MACRO-LEVEL PERSPECTIVE ON TWIN TRANSFORMATION

Abstract

This study explores the macro-level dynamics of twin transformation, particularly the role of formal institutions and digital infrastructure in fostering sustainable entrepreneurship. We argue that sustainable entrepreneurship is one of the key drivers of sustainability transformation and, by increasingly leveraging digital infrastructure, creates a reinforcing dynamic that propels macro-level twin transformation. We draw on institutional theory and extend it by incorporating literature that emphasises the role of digital infrastructure in fostering entrepreneurship and societal progress. Building on this theoretical framework, we develop our hypotheses and test them using a cross-country sample of 58 countries, with data spanning from 2009 to 2019. To quantitatively evaluate our hypotheses, we employ multivariate ordinary least squares regression. We find that the quality of formal institutions positively influences sustainable entrepreneurship, with this effect being significantly reinforced by a robust digital infrastructure. Our findings contribute to the literature on twin transformation and highlight the interconnected nature of digitalisation and sustainability. Policy implications highlight the need to align institutional reforms with digital advancements to foster sustainable entrepreneurship and drive macro-level economic and societal change.

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