This conceptual paper introduces “the entrepreneurship triangle” as a mechanism to analyze entrepreneurial ecosystems and explain differences in entrepreneurship across nations. The theory provides a structure to examine how institutional processes and changes in state, market, and society co-evolve with entrepreneurial actions. Using these dimensions (state, market, and society), we analyze the expected dominance of high and low levels of entrepreneurship in a country. High-level entrepreneurship refers to one that occurs in a formal/organized manner, whereas low-level entrepreneurship refers to one that occurs in an informal/unorganized fashion. We argue that, depending on the arrangement of state, market, and society institutional mechanisms in place in a country, one can predict either high- or low-level entrepreneurship, or a mixture of the two. This provides direct implications for international business policy, as one of the main levers that states can adjust to improve entrepreneurial activity in their market is through changes in their institutions.
