Culture's role in entrepreneurship: self-employment out of dissatisfaction

Abstract

This paper studies the influence of cultural and economic variables on differences in the level of entrepreneurship hi more than twenty Western nations and Japan, for the period 1974-1994.We combine data on entrepreneurial and economic variables with data on cultural variables.Firot, we consider crocs-uvtinnal relationships between the cultural variables and entrepreneurship.The results yield evidence that, across nations, dissatisfaction with society and with life in general are the main determinants of entrepreneurship.Countries where people are less satisfied have more entrepreneurs.These are often societies with larger power distance, stronger uncertainty avoidance, more bureaucracy and corruption, and which are relatively poor.Subsequently, we carry out regressions including economic and dissatisfaction variables for which time series are available.There are indications for a U-shaped relationship between prosperity and entrepreneurship.Furthermore, unemployment is consistently found to be a significant push factor for self-employment.However, dissatisfaction with life and with society come out again as main determinants of entrepreneurship across nations, even stronger than the economic variables.Finally, by repeating the regressions for several cultural country clusterings, we show that neglecting the role of the cultural context creates an incorrect picture of the influence of the economic determinants on entrepreneurship.'The authors would like to thank Jessika van Veen for the tremendous (and often troublesome) job of collecting additional data.

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