Bridging Institutional Support and Entrepreneurial Competence for Sustainable Entrepreneurship

ABSTRACT In this paper, the mediating role of entrepreneurial competence among the specified institutional support mechanisms will be examined in terms of the sustainable entrepreneurship development in the context of an emerging economy. The research uses the Competence‐based perspective and the Institutional Theory as the conceptualization of institutional support as a dynamic scaffolding process that works through three phases of entrepreneurship, namely, initial, growth, and sustenance. Based on survey data of 389 entrepreneurs who were members of the Bangladesh Small and Cottage Industries Corporation (BSCIC) Northern Zone and the implementation of a Partial Least Squares Structural Equation Modeling (PLS‐SEM), the results indicate that institutional support is an important contributor to entrepreneurial competence, which affects further development of sustainable entrepreneurship. The mediation analysis provides the effects of partial mediation, which signifies institutional mechanisms as having both direct and indirect effects on the sustainability outcomes due to the formation of competence. This study has a theoretical contribution as it puts entrepreneurial competence as a micro‐foundation of institutional effectiveness, which further extrapolates Institutional Theory into a process‐based capability‐building framework. In practice, the results indicate that policy interventions need to shift away from resource provision to structured competence‐building architectures in order to be able to sustain resource‐constrained environments in the long term.