Entrepreneurial Self-Efficacy Under Different Regulatory Environments: Evidence from India and the US

Abstract

This research investigated the impact of regulatory complexity on entrepreneurial self- efficacy and its implications for startup success. While the importance of a favorable regulatory environment is widely acknowledged, a significant gap exists in understanding the psychological mechanisms through which regulatory burdens affect individual entrepreneurs. This study employed a novel two-component methodology, combining in- depth case documentation of business formation processes in India and the United States with a controlled experimental simulation. By randomly assigning participants to high- complexity and low-complexity regulatory environments, the research measured the direct impact on entrepreneurial self-efficacy. The findings provide irrefutable evidence that the regulatory environment has a direct impact on the entrepreneurial self-efficacy. The study offers insights for policymakers on designing more effective, human-centric regulatory frameworks that foster innovation and support the growth of new ventures. This study contributes to both institutional economics and entrepreneurship theory by providing a more nuanced understanding of the psychological costs of regulatory friction in regulatory systems.