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Purpose: This study focuses on analyzing the institutional context and collaborative networks affecting farmers' entrepreneurial capacity in Mexico. Originality/value: Both the institutional framework and collaborative networks are part of the environment faced by the farmer and empower them to decide about their business, being decisive elements to generate confidence in the environment and reduce the risk of assuming economic responsibilities. Design/methodology/approach: We incorporate the moderating effect of the institutional context considering its influence on collaboration networks. The statistical technique of structural equation models was used to test the hypotheses. The sample comprised 192 farmers from the state of Aguascalientes, Mexico. Findings: The results showed significant and positive effects of institutional pillars and collaborative networks on the capacity to undertake. Regarding the non-significant effects of the institutional context as a moderating variable, further research is suggested to review the relationship of institutional pillars with collaboration networks and their possible negative relationship. Institutional pillars represent the perception of the social structure relevant to measuring society's position regarding the capacities, in this case, of rural entrepreneurship, especially when making public policies. The impact of current government actions on the commercial activity should be considered. Subsequently, public policies must have a practical application by the legal framework and the formation of an environment of certainty based on the normative and cognitive pillars of the institutional context. [ABSTRACT FROM AUTHOR]