Stephan_culture-eship_Stava_08122011 (2).pdf

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Dr Ute Stephan

University of Sheffield

Institute of Work Psychology & Centre for Regional Economic and

Enterprise Development

[email protected]

http://iwp.dept.shef.ac.uk/site/staffmember/ute_stephan/

8 Dec 2011, Stavangar Innovation Seminar

Culture's Consequences forEntrepreneurship:

Recent findings and future directions


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Overview

1. Entrepreneurship

2. Past Research on Culture and Entrepreneurship: The Values

Perspective

3. Current Research: A Cultural Norms Perspective on Culture and

Entrepreneurship

4. Future directions


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Comparative Entrepreneurship research (branch of international

entrepreneurship & international business)

Entrepreneurship is significant for national economies as it contributes to

employment creation, productivity and economic growth (Van Praag and Versloot,2007)

Considerable national differences in entrepreneurship rates and attitudes,

which are stable over time (e.g. van Stel, 2005),

and cannot be fully explained by differences in formal nationalinstitutions such as business regulation (e.g., Levie & Autio, 2008; Van Stel, et al.,2007)

At least partly attributable to differences in national culture

(e.g., European Commission, 2004; Freytag & Thurik, 2007; Hayton et al., 2002; Stephan &Uhlaner, 2010; Uhlaner & Thurik, 2007)

Cultures role for national

entrepreneurship?


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Rate of New Business Owners I(less than 3.5 years, mean 2005-08, as percent of

adult population)

0,66% to


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Most

entre

pren

eurial

dev

elope

dcountrie

s

Rate of New Business Owners II(less than 3.5 years, mean 2005-08, as percent of

adult population)

> 4%


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The worlds most sustainable businesses(established business owner rate, >3.5yrs, mean 2005-08, % of adult

population)

1.33 to >7%


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The worlds most sustainable businesses(established business owner rate, >3.5yrs, mean 2005-08, % of adult

population)

> 7%


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- occupational choice to work for ones own account and risk (i.e., the self-

employed and other business-owners) (Hbert & Link, 1982; Wennekers, 2006)

- new business ownership rate (Gartner, 1989; Reynolds et al, 2005) as a

dynamic indicator of entrepreneurship

- established business ownership rate as a static indicator of

entrepreneurship, can be thought of as a proxy for the sustainability

of entrepreneurship (Bosma, Acs, Autio, Coduras, & Levie, 2009)

Entrepreneurship


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- Different types of entrepreneurship (Quality indicators):

- economically-motivated, necessity vs. independence-motivated,

opportunity entrepreneurship (e.g., Minniti, Bygrave, & Autio, 2006)

- Innovative entrepreneurship based on new products and markets (cf.Schumpeter, 1934; Koellinger, 2008)

Others:

- Social vs. commercial entrepreneurship(e.g., Estrin, Mickiewicz & Stephan,

2011WP; Zahra et al., 2009)

- Female entrepreneurship (Estrin & Mickiewicz, 2011)

- High-aspiration entrepreneurship (Bowen & DeClercq,2008)

Quality of Entrepreneurship


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2. Past Research on Culture and Entrepreneurship


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Focus on Cultural Values

Culture is the collective programming of the mind that distinguishes the

members of one group or category of people from another(Hofstede,1980/2001) Culture resides in the person

Cultural values virtually equated with culture, particularly Hofstede value

dimensions (Hofstede, 1980/2001): Individualism-Collectivism, Power Distance,Uncertainty Avoidance and Masculinity-Femininity

Values

Respondents personal preferences or personally important goals(e.g., Hofstede, 2001; Schwartz, 1992)

Culture = mean aggregated score of these individual values


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Aggregate Trait/ValueMany people per society with

entrepreneurial traits

Societal LegitimationCultural values are supportive of

entrepreneurship

Main hypotheses how culture

influences entrepreneurship?

Davidsson, 1995; Davidsson & Wiklund, 1997; Stephan, 2008

different rationales, but similar prediction:

the more widespread entrepreneurial values within a country, the higher the

rates of entrepreneurship

dates back to Webers (1930) thesis that protestant values foster

entrerpeneurship and form the basis of capitalism


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Evidence: Cultural Values and

Entrepreneurship? I

At the individual-level relatively consistent findings (although diverse

measurement approaches):

entrepreneurs value individualism (autonomy, independence)/openness to change,

achievement and power, and potentially low uncertainty avoidance

when contrasted with other occupational groups and population-

representative samples of employees(e.g., Hayton et al., 2002, ETP, also Davidsson & Wiklund, 1997; Noseleit, 2010, Rauch & Frese,

2007; Stephan, Huysentruyt & Van Looy, 2011)

entrepreneurial personality

This was assumed to generalize to the national level (cf. Hayton et al., 2002)

However, ..


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At the national-level by and large inconsistent findings (and much less

research)

Research uses almost exclusively Hofstedes value dimension (1980) finds

largely inconsistent results

Cultural values associated with national entrepreneurship: both individualism & collectivism

both low & high power distance

low & high! uncertainty avoidance

Controlling for GDP

e.g., Hofstede et al., 2004; Hayton et al., 2002; Wennekers et al., 2007

Uhlaner & Thurik, 2007: Materialism (as opposed to postmaterialism)associated with entrepreneurship


Entrepreneurship? II


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Limitations of Nation-Level Research so far:

Wide range of entrepreneurship indicators used as dependent variable (new

firm formation, innovation, self-employment) makes direct comparison of results difficult

Mix of regional and national level studies

Critique of Hofstedes dimensions (measurement quality, age/lack of stability collected

1968-72, e.g. Spector et al., 2002; Smith, 2004)

Values seem to be mainly individual-level constructs (Fischer & Schwartz, 2011),

and relative distal to actual behavior(more closely related to decision-making

and attitudes) thus, values might not be the right cultural variable to look at

Indeed, past research suggests that cultural values are generally only weakly

related to descriptions of actual cultural behaviorand indices of societal

effectiveness (Fischer, 2006; House et al., 2004; Javidan et al., 2006; Peng et al., 1997; vanOudenhoven, 2001).


Entrepreneurship? III


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3. Current Research: A Cultural Norms Perspective

on Culture and Entrepreneurship

Stephan, U. & Uhlaner, L. (2010). Performance-based vs. Socially supportive

Culture: A Cross-national Study of Descriptive Norms and Entrepreneurship.

Journal of International Business Studies, 41, 1347-1364.


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Back to Definitions of Culture

Culture is the collective programming of the mind that distinguishes the

members of one group or category of people from another(Hofstede,

1980/2001) Culture in the person

But culture has also been defined as:

a collective creation. It is socially constructed by human beings in

interaction with others. (Crushner & Brislin, 1996, p. 6)

a cultural group's characteristic way of perceiving its socialenvironment. (Triandis, 1996)

I suggest a view of culture that bridges cross-cultural psychology,

institutional sociology and new institutional economics (e.g., Stephan &Uhlaner, 2010):

Culture as informal institutions - i.e., patterns or repetitions of common

behaviors and practiced codes of conduct - which structure societal

interactions (Barley & Tolbert, 1997; Hatch & Cunliffe, 2006; North, 1991).

Culture influences behavior of its members by providing a dominant logicof action (Swidler, 1986).


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Cultural Practices/Norms

are characteristic behaviors displayed by most people within a culture asobserved by members of that culture (Fischer, 2006, 2008; Fischer et al., 2009;

Shteynberg, Gelfand, & Kim, 2009; Stephan & Uhlaner, 2010).

Individuals and organizations conform (more or less consciously) to these

norms by repeating behaviors which are typical for their own societies(Cialdini, 2003; Cialdini & Trost, 1998; Fischer, 2006; Powell & DiMaggio, 1991;

Shteynberg et al., 2009).

Measurement: Respondents describe actual typical, i.e. shared behavior intheir society, need to satisfy statistical tests for sharedness (e.g., House et al.,2004)

Cultural Norms

Cultural Norms = important context for individual actions, not yet well

researched with regard to entrepreneurship


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Which cultural norms relate to national

entrepreneurship?

GLOBE study (House et al., 2004): only measure of cultural norms that is well-validated,

conceptually coherent and available for many cultures

various dimensions, which can be summarized into higher-order dimensions (Peterson &

Castro, 2006, also Hofstede, 2006)

two relevant for eship

Replication of Peterson & Castro (2006) second-order factor analysis (Gorsuch, 1983), N=40

countries, Varimax rotation:

0.750.86Cronbachs Alphab

24.1649.15Variance explained (%)

0.770.880.07Assertivenessa0.85-0.910.13Humane orientationa0.56-0.10-0.74In-group collectivism

0.660.26-0.77Power distance0.66-0.090.81Performance orientation

0.810.020.90Uncertainty avoidance

0.820.030.90Future orientation

hSocially supportive

CulturePerformance-Based

Culture


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Performance-Based Culture and Socially-

Supportive Culture

Performance-based culture

rewards individual accomplishments (vs collective membership, family

relationships or position) and encourages systematic, future-orientedplanning as a key way to achieve high performance.

High: Anglo, Germanic & Nordic Europe, Low: Latin American, Latin & Eastern Europe

Socially supportive culture (SSC)

How people typically interact with and treat one another(e.g., concerned aboutothers, friendly, and tolerant of mistakes vs. dominant, assertive, and tough, House et

al., 2004):

high SSC=positive societal climate in which people support each other

- SSC as a direct measure of social capital as an instantiated informal normthat promotes co-operation (Fukuyama, 2001:7), i.e. a descriptive norm based

on repeated experiences of supportiveness and helpfulness

- Consistent with weak-tie social capital view, and earliest social capital research

as goodwill, fellowship, sympathy and social intercourse (Hanifan (1916:130),

High: Southern & Confucian Asian, Anglo, Nordic Europe, Low: Germanic, Eastern &

Latin Europe


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Performance-based culture and Socially supportive culture (N=61 cultures, based on Stephan & Uhlaner, 2010,drawing on data provided by the GLOBE study, House et al., 2004)


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Performance-Based Culture and

Entrepreneurship

Performance-based culture

- rewards individual accomplishments (vs collective membership, family

relationships or position) and encourages systematic, future-orientedplanning as a key way to achieve high performance.

- is a facilitative context for entrepreneurship, because it encourages

achievement-striving and planning behaviors- Entrepreneurship = achievement orientated activity (e.g., McClelland, 1976;

Rauch & Frese, 2007), a performance based culture encourages and

recognizes the individual achievements of successfully founding and

running a firm- Planning important for successfully founding and running a firm,

prevents abandoning of firm formation process and failure of existing

firms (e.g., Brinckmann et al., 2008; Delmar & Shane, 2003, Frese et al., 2007; Miller &Cardinal, 1994; van Gelder et al., 2007)

Hypothesis 1. PBC is positively associated with national entrepreneurship

rate.


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Socially Supportive Culture and

Entrepreneurship

Socially supportive culture (SSC)

- entrepreneurs in high SSC are likely to receive more help and support in

founding and running their enterprise, i.e. the higher weak-tie social capitalof SSCs will facilitate entrepreneurship

- Multiple, mutually reinforcing mechanisms likely at play:

- Nation-level social capital literature suggests: ease of sharing of

information (Adler & Kwon, 2002), reduced need for monitoring and formal

control (Portes, 1998: 10), and lower transaction costs due to a heightened

tendency to cooperate voluntarily (Fukuyama, 2001)

- Individual-level: more resources (information, money, emotional

support) available through networks (e.g., Aldrich et al., 1987; Bruederl &

Preisendoerfer, 1998, Burt, 1992, ODonnell et al., 2001, Uzzi, 1997)

Hypothesis 2. SSC is positively associated with national entrepreneurship

rate.


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Method

Sample: 40 countries (from five continents)

Argentina, Australia, Austria, Bolivia, Brazil, Canada, China, Colombia, Denmark, Ecuador,

Egypt, Finland, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Iran, Ireland,

Israel, Italy, Kazakhstan, Malaysia, Mexico, The Netherlands, New Zealand, Philippines,

Russian Federation, Singapore, Slovenia, South Africa, South Korea, Spain, Switzerland,

Thailand, Turkey, United Kingdom, United States, and Venezuela

National Entrepreneurship Rates: Global Entrepreneurship Monitor(e.g., Reynolds et al., 2005)

- Based on population representative survey (18 64years of age), min. N = 2000

- Averaged for years 2005 2008 (high stabilities)

1) new business owner rate (actively manage a business for less than 42 months)

2) established business owner rate (businesses older than 42 months)

3) independence-motivated new business owner rate

4) innovative new business owner rate


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Method

Cultural Norms: Project GLOBE (House et al., 2004)

Phase 2 of GLOBE (1994-1997): questionnaires in 62 cultures, N>17,000

middle managers from 951 local companies (three industry sectors)

Good internal consistency, interrater agreement; multi-level confirmatory factor

analyses, validation etc. (see House et al., 2004)

Control variable/alternative explanation: National wealth

Gross Domestic Product (GDP) per capita in purchasing power standards,

averaged for 2005 2008 (International Monetary Fund, 2007)

1110987654321


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13,458.6.42.319.1913.17.35.43.74.674.463.95SD

21,421.92.743.3965.6048.473.963.59.97-.098.215.43MEAN(1.00/-).76***.12-.41**-.44**-.34*64***-.24.03-.43**-57***11.GDP

(.94/

.96)

.46**-.15-.48***-.1172***-.10.12-.27t-.34*10. Entrepreneurial

frameworkcond.

(.89/.69)

.36*.03.45**.45**.31t.29t.15.189. Opportunityexistence

(.69

/.60)

.45**.52***-.1751***.48**.57***.64***8. Social desirability

of entrepr.

(.82/-).33*-.21.34*.41**.56***.55***7. Entrepreneurial

self-efficacy

(-

/.75)

.01.50***.43**.45***.51***6. Socially-supportive

culture

(-

/.85)

-.11.18-.28t.31t5. Performance-

based culture

(.71/-)66***69***.79***4. Innovative new

business owner rate

(.83/-)66***.71***3. Independent new

business owner (ln)

(.79/-)88***2. Established

business owner rate

(.93/-)1. New business

owner rateIn diagnonal average 4-year retest-reliabilities

/ cronbachs alpha for multi-item indices


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Results

Positive effects of SSC but not PBC on Entrepreneurship

support for H2 but not H1

The successful entrepreneur may be a tough-minded, autonomousindividual (e.g., Rauch & Frese, 2007), but s/he prospers best in asocially-supportive culture, rich in (weak-tie) social capital.

Well perhaps its a bit more


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Well, perhaps it s a bit more

complicated

Some argue: the immediate antecedents of entrepreneurship are through

supply- and demand-side factors, and

National culture is a background variable impacting supply- and demand-side factors

e.g., Thornton, 1999, Levie & Autio, 2008, Verheul et al., 2002, Wennekers, 2006

Commonly discussed supply- and demand- influences on nationalentrepreneurship rates that are likely impacted by PBC and SSC

Demand

National framework conditions

Opportunity existence

Supply

Social Desirability ofEntrepreneurship

Entrepreneurial Self-efficacy


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Demand-Side

society tends to build institutions that are consistent with that societys

norms (Baumol et al.,2007; Fukuyama, 2001; Levie & Autio, 2008; Licht, Goldschmidt, &Schwartz, 2007; Pryor, 2007).

high PBC, with emphasis on prediction, efficiency and individual

accomplishments associated with clear government regulations for start-up

and transparent, fair and equal access to resources (Djankov et al., 2002).

efficient institutions, in turn, are regarded as the major influence on the

existence of entrepreneurial opportunit ies (Levie & Autio, 2008; Verheul et al.,2002).

H3. PBC is positively associated with a) more favorable national

environmental framework conditions and b) higher opportunityexistence; and

H4: Environmental framework condit ions mediate the relationship

between PBC and opportunity existence.


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Supply-side

entrepreneurship as performance- and achievement-oriented activity (e.g.,

Collins et al.,2004; McClelland, 1976; Rauch & Frese, 2007), consistent with

the norms of a PBC

Thus entrepreneurship may be perceived as socially desirable in a high

PBC.

H5: PBC is positively associated with the social desirabili ty of

entrepreneurship.

socially supportive environments are positively associated with self-

efficacy beliefs (Choi & Chang, 2009; Choi, Price, & Vinokur, 2003), because such an

environment allows a person to experiment with new ways of doing thingswithout fear of appraisal, and frequent and open exchanges of feedback(Choi et al., 2003: 360; also Anderson & West, 1998; Edmondson, 1999).

H6. A SSC is positively associated with higher self-efficacy beliefs.


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Method

Demand Conditions

Opportunity existence. prevalence of opportunities for entrepreneurship,

independently assessed by GEM Expert Panel

Entrepreneurial framework conditions

based on Factor analysis, mean forseven subindices of quality of entrepreneurial framework conditions,

independently assessed by GEM Expert Panel:

government policies, governmental regulations, research and development activity,

physical infrastructure, services, intellectual property rights protection and formal supportspecifically for high-growth businesses

Supply Conditions

Social desirability of entrepreneurship. Based on GEM adult population survey

mean of three items 1) most people consider starting a new business a desirable careerchoice; 2) you often see stories in the public media about successful new businesses; and

3) those successful at starting a new business have a high level of status and respect.

Entrepreneurial self-efficacy. Based on GEM adult population survey (random

half entrepreneurially active and in-active) Do you have the knowledge, skill andexperience required to start a new business? (see Arenius & Minniti, 2005;Koellinger, 2008).


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However, only supply-side (not demand-side) variables associated with

entrepreneurship rates

Effect of SSC on entrepreneurship mediated by supply-side (desirability of

entrepreneurship, self-efficacy)

I li ti I


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Implications I

First study to relate cultural norms (vs. cultural values) to entrepreneurship

Performance-based culture influences demand-side, but not

entrepreneurship rates, while socially supportive culture affects entrepreneurship largely

through supply-side

Demand-side results consistent with research reporting weak to negativerelations between entrepreneurial framework conditions and

entrepreneurship (Levie & Autio, 2008; Van Stel et al., 2007).

evolutionary perspective would suggest that although efficient formal

institutions create opportunities and access to resources for new firms,at the same time they also create increased competition, thus potentially

squeezing out new firms (Aldrich & Martinez, 2001; Swaminathan, 1996)

I li ti II


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Implications II

Societies with a socially supportive culture, i.e. a culture rich in weak-tie

social capital in the mid 1990s have higher rates of entrepreneurship (new

and established business owners, independence-motivated and

innovative) roughly 10 years later

people in these cultures likely receive more support & resources through

(larger) personal networks and feel safe to experiment and to take risks,

thereby building entrepreneurial self-efficacy

SSC desirability of entrepreneurship: such cultures are more inclusive and

more accepting of minority groups (e.g. Fukuyama, 2001; Uslaner, 2004) and

entrepreneurs may be seen as a minority (e.g. 5-10% of adult population on

average engaged in entrepreneurship)

M th d l i l i li ti


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Methodological implications

Methodological Implications

Second-order factor analysis on dimensions of cultural norms and criterion

validation with regard to entrepreneurship advances research on cultureby reducing dimensionality, and thereby alleviating multicolliniearity issues

for comparative reserach

SSC as a new measure of social capital, consistent with the core defintionof social capital (instantiated norms facilitaing cooperation, Fukuyama), may

help advance social capital research plagued with measurement problems

Take home -- First conclusion from Norms and Entrepreneurshipresearch

The successful entrepreneur may be a tough-minded, autonomous

individual (e.g., Rauch & Frese, 2007), but s/he prospers best in asocially-supportive culture, rich in (weak-tie) social capital.


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4. Future Directions


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Still a young, but significant research field due to the economic

significance of entrepreneurship.

i.e. lots of research opportunities abound!

Research focus by and large on connecting culture with entrepreneurship

(rates), but HOW culture influences entrepreneurship is still very much a

black box.

The decision to engage in entrepreneurship is an occupational choicewhich can be modelled e.g. with Theory of Planned Behavior(e.g.Iakovleva, Kolvereid & Stephan, 2011)

Entrepreneurship is a process (occupational decision engaging and

sustaining entrepreneurial behavior): Are certain concepts of culture more

important for one part than for the other (e.g. values vs. practices)?

Are different types of entrepreneurial activity susceptible to different

cultural influences? E.g. female entrepreneurship to gender egalitarianism


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Is it the dominant culture, or are certain subcultures that are relevant? Is it

perhaps the strength/tightness vs. looseness of culture (cf. Gelfand et al.,

2006, 2011) that is relevant?

Clarify further the interplay of culture/informal institutions with formal

institutions (e.g. the rule of law) and other antecedents of entrepreneurship

And the BIG question How would an intervention look like to make aculture more entrepreneurial?

The underlying question is how to change culture

Insights on how culture influences entrepreneurship also feed back toenrich theories of culture on topics such as

Clarifying the culture-behaviour link

Cultural homogeneity vs. heterogeneity

Culture strength

Culture change


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Thank you!

[email protected]

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Stephan_culture-eship_Stava_08122011 (2).pdf