How Perceptions of the Global Economic Slowdown Impact and Local Risks Adversely Affect Perceived Opportunities and Subsequent Startup Activities

Abstract

The Great Recession which began in 2008 is the worst global recession since World War II. Arguably, this global economic slowdown began with failures in financial regulation and housing policies. Undisputable are the adverse effects of this global financial crisis. Worldwide wealth was destroyed. Unemployment rose precipitously. Small businesses and medium businesses found it difficult to access funding sources. Large businesses reduced investments. However, little has been empirically established regarding the effects of the global slowdown on entrepreneurial startups. This study applies a cognitive lens to examine the effects of the perceived global slowdown impact along with the effects of perceived local risks on startup activities when mediated by perceived opportunities. All hypothesized relationships are found to be significant. Equally important, perceived opportunity is found to fully mediate the relationship between perceived global slowdown impact and startup activity. It is also found to partially mediate the relationship between perceived local risks and startup activities. Hence, this manuscript establishes the basis for beginning to understand how the perceived global slowdown impact is relevant for global startup activity.