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CULTURE AND

ENTREPRENEURIAL

POTENTIAL: A NINE

COUNTRY STUDY OF

LOCUS OF CONTROL AND

INNOVATIVENESS

STEPHEN L. MUELLERFlorida International University, Miami, FL

ANISYA S. THOMASFlorida International University, and Stockholm School of

Economics, Stockholm, Sweden

EXECUTIVESUMMARY

Entrepreneurship research has identified a number of personal characteris-tics believed to be instrumental in motivating entrepreneurial behavior. Twofrequently cited personal traits associated with entrepreneurial potential areinternal locus of control and innovativeness. Internal locus of control hasbeen one of the most studied psychological traits in entrepreneurship re-search, while innovative activity is explicit in Schumpeter’s description of the

entrepreneur. Entrepreneurial traits have been studied extensively in the United States. However, cross-cultural studies and studies in non-U.S. contexts are rare and in most cases limited to comparisons betweenone or two countries or cultures. Thus the question is raised: do entrepreneurial traits vary systematicallyacross cultures and if so, why?

Culture, as the underlying system of values peculiar to a specific group or society, shapes the develop-ment of certain personality traits and motivates individuals in a society to engage in behaviors that maynot be evident in other societies. Hofstede’s (1980) extensive culture study, leading to the developmentof four culture dimensions, provide a clear articulation of differences between countries in values, beliefs,

Address correspondence to Professor Stephen L. Mueller, Assistant Professor, Florida InternationalUniversity, College of Business Administration, Department of Management and International Business,Miami, FL 33199; Phone: (305) 348-4219; Fax: (305) 348-3278; E-Mail: [email protected]

An earlier version of this paper was presented at the National Academy of Management Meeting inBoston on August 12, 1997. The authors gratefully acknowledge the contributions of Professor Jan Luytjeswho was instrumental in initiating the cross-national collaborative team that gathered the data used in theproject. We are also grateful to our collaborators in the various countries whose effort and cooperation wereessential to the completion of this study.

Journal of Business Venturing 16, 51–75 2000 Elsevier Science Inc. All rights reserved. 0883-9026/01/$–see front matter655 Avenue of the Americas, New York, NY 10010 PII S0883-9026(99)00039-7

52 S.L. MUELLER AND A.S. THOMAS

and work roles. Although Hofstede did not specify the relationship between culture and entrepreneurialactivity per se, his culture dimensions are useful in identifying key aspects of culture related to the potentialfor entrepreneurial behavior.

In this paper we offer several hypotheses about the relationship between two of Hofstede’s culturedimensions and psychological traits associated with entrepreneurial potential. We expect that an internallocus of control orientation is more prevalent in individualistic cultures than in collectivistic cultures.Likewise, we expect that an innovative orientation is more prevalent in low uncertainty avoidance culturesthan in high uncertainty avoidance cultures. However, since neither internal locus of control nor innova-tiveness alone is sufficient to explain entrepreneurial motivation, we also hypothesize that individualswith both an internal locus of control and innovative orientation should appear more frequently in highlyindividualistic and low uncertainty cultures.

These hypotheses were tested on a sample of over 1,800 responses to a survey of third- and fourth-year students at universities in nine countries. Eighteen items in the survey instrument were used to con-struct scales for innovativeness and locus of control. Items for the innovativeness scale were adaptedfrom the Jackson Personality Inventory while items used for the locus of control scale were adapted fromRotter’s I-E scale.

The results of this exploratory study support the proposition that some cultures are more conducivefor entrepreneurship than others. In individualistic cultures we found an increased likelihood of an inter-nal locus of control orientation. There was also support for the hypothesis that an entrepreneurial orienta-tion, defined as internal locus of control combined with innovativeness, is more likely in individualistic,low uncertainty avoidance cultures than in collectivistic, high uncertainty avoidance cultures.

Culture, it appears, may condition potential for entrepreneurship, generating differences across na-tional and regional boundaries. One tentative conclusion is that a “supportive” national culture will, cet-eris paribus, increase the entrepreneurial potential of a country. This suggests that in addition to supportfrom political, social, and business leaders, there needs to be a supportive culture to cultivate the mindand character of the potential entrepreneur. To be motivated to act, potential entrepreneurs must perceivethemselves as capable and psychologically equipped to face the challenges of a global, competitive mar-ketplace. Business education can play an important role in this regard by providing not only the technicaltools (i.e. accounting, marketing, finance, etc.), but by also helping to reorient individuals toward selfreliance, independent action, creativity, and flexible thinking.

This study examines only two entrepreneurial traits (innovativeness and internal locus of control)and only one of the many contextual factors (culture) which may explain differences among countriesin the rate of new venture formation. Future research should expand this investigation to include othertraits associated with entrepreneurial behavior as well as the effect of other contextual factors such aseducation system, political economy, and stage of economic development. 2000 Elsevier Science Inc.

INTRODUCTIONWith diminished political and economic barriers between countries and the globaliza-tion of business activities, the process of new venture formation has become an increas-ingly relevant and interesting area for research. The renewed interest in entrepreneur-ship by government policy makers and business leaders worldwide has been promptedby several factors. In advanced industrialized countries, particularly the United States,increased entrepreneurial activity is seen as a means to revitalize stagnating industriesand provide new jobs to compensate for employment problems created by corporaterestructuring and downsizing (Birley 1986; Birch 1979). Furthermore, entrepreneur-ship, touted by economists in the Schumpeterian tradition for over a century, has beenrediscovered as a potential catalyst for technological progress (Schumpeter 1934; Hagen1962; Kilby 1971; Baumol 1986). Today, entrepreneurial ventures are often seen as incu-bators for product and market innovation (Reynolds 1987).

CULTURE AND ENTREPRENEURIAL POTENTIAL 53

In less developed countries, the encouragement of entrepreneurial activities is rec-ommended as a way to stimulate economic growth (Harper 1991). Consequently, na-tional incentive and education programs designed to stimulate new venture develop-ment have been instituted by the governments of a large number of Asian and LatinAmerican countries as well as in the transition economies of Central and Eastern Eu-rope (Audretsch 1991; Gibb 1993).

Despite the apparent universal appeal of entrepreneurship as a prescription foreconomic growth and development, many questions about new venture formation innon-U.S. contexts remain unanswered. For example, there is a question as to whethermany of the human motivation and performance theories underlying the entrepreneur-ship field, developed primarily by North American researchers in a North Americancontext, are generalizable to countries with distinctly different cultural, social, and eco-nomic climates (Adler 1991; Boyacigiller and Adler 1991; Thomas, Shenkar, and Clarke1994). Such questions can only be answered through cross-cultural, cross-contextual re-search. However, with a few exceptions (Shane 1992, 1993; McGrath, MacMillan, andScheinberg 1992; Huisman 1985; Baum et al. 1993), international comparative studiesof entrepreneurship are rare, hampered by barriers such as difficulty in gaining accessto entrepreneurs in other countries, high expense, and lack of reliable secondary data.

In spite of these limitations, entrepreneurship research has been instrumental inclarifying and articulating many of the key contextual factors necessary to encourageentrepreneurial activity (Pennings 1980; Bruno and Tyebjee 1982). However, a separatebut equally important question has not been addressed: At a national or regional level,is there an adequate supply of prospective entrepreneurs? That is, are there sufficientnumbers of individuals with the requisite personal attitudes, aptitudes, values, percep-tions, and ambitions to exploit opportunities and initiate business ventures? If not, thenprograms designed to encourage entrepreneurial activity within a given country or re-gion may fall short of achieving the desired results.

In this paper, we investigate the relationship between national culture and two per-sonal characteristics commonly associated with entrepreneurial potential: internal locusof control and innovativeness. Building on both cross-cultural management and entre-preneurship research, we develop and test hypotheses linking national culture to entre-preneurial traits using an international sample of nine countries. The results of this studyprovide the basis for assessing cross-national differences in potential for entrepreneurialactivity. Implications for future cross-cultural research in entrepreneurship are also dis-cussed.

MOTIVATING NEW VENTURE FORMATIONThe connection between entrepreneurs and new venture formation is well established.Many authoritative definitions of entrepreneur actually include some reference to ven-ture or enterprise creation. For example, Bygrave and Hofer (1991) define an entrepre-neur as “. . . someone who perceives an opportunity and creates an organization to pur-sue it” (Bygrave and Hofer 1991, p. 14). In formulating national policy recommendations,Vesper defines entrepreneurship as “the creation of new independent businesses” (Ves-per 1983, p. 1).

Although theoretical models of the new venture creation process differ in the as-sumptions and variables they encompass, they include common elements as well. Sha-pero (1975) for example, sees the prospective entrepreneur’s readiness to act as deter-


mined jointly by prior experience and the perception of current opportunities.According to Shapero, general readiness becomes a predisposition to initiate a venturewhen the individual experiences a precipitating event such as a layoff. However, thispredisposition turns to action only when the individual perceives a suitable opportunityand can assemble the financial and other required resources from a supportive environ-ment (Shapero 1975; Shapero and Sokol 1982; Krueger 1993; Martin 1984). Gartner(1985) defines the creation of a new venture as an interaction among four dimensions:personal characteristics of the entrepreneur (individual), competitive entry strategies(organization), push and pull factors (environment), and the actions taken by the entre-preneur to bring the enterprise into existence (process). Shapero and Sokol (1982) de-scribe the entrepreneurial venture formation process as a life path change in which situa-tional factors such as negative displacement (e.g., job termination), along with a positivepull from a partner, mentor, or customer, combined with a perception that entrepre-neurship is both desirable and feasible, leads to the initiation of a new venture.

These and other venture creation process frameworks (e.g., Moore 1986; Kruegerand Brazeal 1994), implicitly or explicitly suggest that the rate of new venture formationis contingent upon not only the economic, social, and political climate which facilitatesand supports entrepreneurial activity, but also the availability of individuals predis-posed to initiate new ventures.

Entrepreneurial PotentialIn describing entrepreneurs, Joseph Schumpeter noted that these were the individualswho attempted to “. . . reform or revolutionize the pattern of production by exploitingan invention . . . or untried technical possibility for producing a new commodity or pro-ducing an old one in a new way . . . [This] requires aptitudes that are present in onlya small fraction of the population . . .” (Schumpeter 1934, p. 132).

Schumpeter’s observation suggests that in addition to an entrepreneurial climate,the creation of new ventures and entrepreneurial activity depends upon the availabilityof prospective entrepreneurs, i.e. individuals possessing personality traits combinedwith personal circumstances which are likely to lead them to forming a new venture.

Motivations for becoming an entrepreneur have generally been categorized as ei-ther push/pull situational factors or personal characteristics. Research has shown thatnew venture initiation often occurs as a result of situational pushes or pulls that includefrustration with present life-style, childhood, family environment, education, age, workhistory, role models, and support networks (Hisrich 1990; Martin 1984; Moore 1986;Krueger 1993; Scheinberg and MacMillan 1988). Some individuals are pushed into en-trepreneurship by negative factors such as dissatisfaction with existing employment, lossof employment, and career setbacks. A number of empirical studies support this viewand characterize entrepreneurs as misfits, rejects from society, or displaced individuals(Brockhaus 1980; Shapero 1975; Kets de Vries 1977; Gilad and Levine 1986). Alterna-tively, individuals may be pulled into entrepreneurship by positive factors such as earlytraining and exposure to business which encourages the search for business opportuni-ties (Krueger 1993; Mancuso 1973; Gilad and Levine 1986; Scheinberg and MacMil-lan 1988).

In addition to push and pull factors, personal characteristics (sometimes referredto as personality traits) also play a role in new venture initiation. Beginning with McClel-land (1961), there has been a stream of entrepreneurship research which focuses on


the personal characteristics of the actor instead of the act of new venture creation.McClelland (1961) asserted that qualities associated with a high need for achievement,namely preferences for challenge, acceptance of personal responsibility for outcomes,and innovativeness, are defining characteristics of successful initiators of new busi-nesses. McClelland’s work spurred a number of entrepreneurial traits studies to identifythose characteristics which not only motivate individuals to initiate new ventures, butalso contribute to venture success (Dunkelberg and Cooper 1982; Hornaday and Aboud1971; Timmons 1978). Despite recent criticism of the traits approach (e.g., Brockhausand Horwitz 1986; Carsrud, Olm, and Eddy 1986; Gartner 1988), there is a continuedinterest in determining what motivates some individuals to initiate a venture while oth-ers do not (Carland, Hoy, Boulton, and Carland 1984; Carland, Hoy, and Carland 1988;McClelland 1987; Solomon and Winslow 1988; Winslow and Solomon 1989). Further-more, a number of recent empirical studies suggest that entrepreneurs can be distin-guished from the general population on the basis of motivation (Spangler 1992; Johnson1990), values (McGrath et al. 1992), and attitudes (Robinson, Stimpson, Huefner, andHunt 1991).

Several theorists have argued that some personal characteristics or traits define theentrepreneur and are instrumental in motivating entrepreneurial behavior. Hisrich, insummarizing research on entrepreneurial behavior, notes that the entrepreneur is some-one who demonstrates initiative and creative thinking, is able to organize social andeconomic mechanisms to turn resources and situations to practical account, and acceptsrisk and failure (Hisrich 1990). McClelland offers a similar set of defining traits to ex-plain entrepreneurial behavior. These traits are high need for achievement, moderaterisk-taking propensity, preference for energetic and/or novel activity, and assuming per-sonal responsibility for successes or failure (McClelland 1961). Begley and Boyd foundthat entrepreneurs (founders) scored significantly higher than small business managers(non-founders) in need for achievement, risk-taking propensity, and tolerance of ambi-guity (Begley and Boyd 1987). Brockhaus reviewed a number of trait studies and identi-fied three consistent attributes associated with entrepreneurial behavior: need forachievement, internal locus of control, and a risk-taking propensity (Brockhaus 1982).In this paper we examine two frequently cited personal traits associated with entrepre-neurial potential, namely internal locus of control and innovativeness.

Internal Locus of ControlAlthough the search for the Heffalump (Kilby 1971) continues with no consensus ona clear, universally acceptable definition of the entrepreneur (Perry 1990), there is atleast some general agreement that the entrepreneur, however defined, is a self-moti-vated individual who takes the initiative to start and build an enterprise relying primarilyon self rather than others to formulate and implement his or her goals. Personal attri-butes such as independence, need for control, self reliance, confidence, initiative, andresourcefulness have been frequently cited as closely associated with entrepreneurialvalues and behavior (McClelland 1987; Hornaday and Aboud 1971; Solomon and Wins-low 1988; Timmons 1978).

In psychology research, there is a long tradition of research related to perceivedcontrol and its effects on human behavior in various situations (Strickland 1989). Rotter(1966) made a significant contribution to this tradition with the development of a “locusof control” construct. According to Rotter, an individual perceives the outcome of an


event as being either within or beyond his or her personal control and understanding.An “internal” believes that one has influence over outcomes through ability, effort, orskills. On the other hand, “externals” believe that forces outside the control of the indi-vidual determine outcomes (Rotter 1966).

Rotter’s locus of control construct and later adaptations and refinements of his orig-inal I-E scale (Levenson 1974) have been widely used in studies related to organizationaland managerial issues (Durant and Nord 1976; Kets de Vries 1977; Spector 1982; Jen-nings 1983). Not surprisingly, internal locus of control has also been one of the moststudied psychological traits in entrepreneurship research (Perry 1990). An associationbetween entrepreneurial behavior and an internal locus of control orientation hasstrong face validity. Entrepreneurs by most definitions are initiators, taking responsibil-ity for their own welfare and not dependent on others (McClelland 1961). Furthermore,if one does not believe that the outcome of a business venture will be influenced bypersonal effort, then that individual is unlikely to risk exposure to the high penaltiesof failure. Since perception of both risk and ability to affect results are crucial to the newventure formation decision, it follows that prospective entrepreneurs are more likelyto have an internal locus of control origination than an external one (Brockhaus 1982;Brockhaus and Horowitz 1986).

The identification of internal locus of control as a possible entrepreneurial traitspurred numerous empirical studies. Early studies during the 1970s showed generallypositive findings (Jennings 1983). For example, Borland found in a sample of 375 busi-ness-school students that those students who expected to start a company someday hada stronger belief in internal control (Borland 1974). Brockhaus found that business stu-dents with entrepreneurial intentions tended to have an higher internal locus of controlthan those who did not have such intentions (Brockhaus 1975). Shapero administeredRotter’s I-E questionnaire to 134 Texan and Italian entrepreneurs and found that theyscored significantly more internal than other groups tested (Shapero 1975). In a similarstudy, Pandey and Tewary (1979) found entrepreneurs to score higher on internal locusof control measures.

Investigation of the locus of control construct and entrepreneurs continued intothe 1980s with mixed results (Ahmed 1985; Begley and Boyd 1987; Brockhaus 1980;Cromie and Johns 1983; Venkatapathy 1984). In most of these studies, locus of controlwas assessed with Rotter’s (1966) I-E scale. One possible explanation for inconclusiveresults is that as more recent locus of control researchers have shown (e.g., Collins 1974;Levenson 1974; Lefcourt 1981; Paulhus 1983), the original Rotter measure is multidi-mensional and not all of its dimensions appear to be equally plausible predictors of en-trepreneurial behavior (Shaver and Scott 1991; Gatewood, Shaver, and Gartner 1995).More recent empirical studies using multidimensional measures of locus of control,however, generally support the claim that entrepreneurs are more internal than non-entrepreneurs. For example, Bonnett and Furnham (1991) used a three-dimensional(internal, external, and chance) economic locus of control scale and found a group ofstudent entrepreneurs to be more internal than a control group. Similarly, Levin andLeginsky (1990) used Levenson’s (1974) IPC scale and found that entrepreneurial socialworkers tended to exhibit a greater internal locus of control than the general population.

An internal locus of control orientation can also been viewed as a prerequisite foraction. Shapero (1982) and Krueger (1993) proposed that propensity to act, a dispositionto act upon one’s decisions, is an essential element of the new venture initiation process.They argue that an individual who perceives an entrepreneurial opportunity to be both


desirable and feasible may not actually initiate a new venture unless the individual ispredisposed psychologically to actually act upon his or her decision (Shapero 1975;Krueger 1993; Krueger and Brazeal 1994). Furthermore, according to Shapero, the pro-pensity to act on an opportunity depends on one’s perception of control (Shapero 1975).Thus conceptually at least, an internal locus of control orientation (ILOC) increasesthe likelihood that a potential entrepreneur will take action to carry out his/her plans.

InnovativenessInnovation is the “. . . process that turns an invention . . . into a marketable product”(Gabor 1970). Innovation is therefore more than invention; it also involves the commer-cialization of ideas, implementation, and the modification of existing products, systemsand resources (Bird 1989, p. 39).

Innovative activity is explicit in Schumpeter’s description of the entrepreneur.Schumpeter (1934) defined the role of the entrepreneur as a catalyst of change, seeingthe entrepreneur as “. . . an idea man and a man of action . . . instrumental in discoveringnew opportunities” (Schumpeter 1965). Drucker further elaborated the innovator roleof the entrepreneur and described innovation as “the specific tool of entrepreneurs . . .[and] . . . the means by which they exploit change . . .” (Drucker 1985). In differentiatingthe entrepreneur from the small business owner, Carland, Hoy, Boulton, and Carland(1984) argue that innovative strategic practices are necessary for new ventures to beprofitable and grow. In making this distinction, they define the entrepreneur as “. . . anindividual who establishes and manages a business for the principal purposes of profitand growth . . . [and] . . . is characterized principally by innovative behavior . . .” (Car-land et al. 1984, p. 358).

Assigning the role of innovator to the entrepreneur implies that successful entre-preneurs adopt and implement competitive strategies such as introducing new productsand services, new methods of production, opening new markets or sources of supply,or even reorganizing an entire industry (Bird 1989; Carland et al. 1984). However, priorto implementation, the potential entrepreneur must be able to effectively formulatesuch strategies suggesting the possession of personal characteristics which reflect cre-ativity and innovativeness.

There appears to be strong empirical evidence to support the claim that entrepre-neurs, particularly those successful at growing an enterprise, are more innovative thannon-entrepreneurs. For example, research by Sexton and Bowman-Upton (1986) showsthat entrepreneurship students tend to be more innovative than other business adminis-tration students. Carland, Carland, Hoy, and Boulton (1988) found that entrepreneurswho establish and manage a business for the principal purposes of profit and growthhave a higher preference for innovation than other small business owners. Carland andCarland (1991) found that both male and female entrepreneurs have significantly higherlevels of innovative preference than their managerial counterparts. Buttner andGryskiewicz (1993) found entrepreneurs scored higher on Kirton’s adaption-innovationscale (Kirton 1976) than general managers of large organizations. Also using Kirton’sadaption-innovation scale, Goldsmith and Kerr (1991) found that entrepreneurship stu-dents were more innovative than other business students. Smith and Miner (1985) foundthat founders of fast-growing firms scored significantly higher in personal innovationthan individuals holding managerial positions. Tuunanen and Hyrsky (1997) found thatin both Finnish and American samples of business owners, those who report their pri-


mary objectives to be profit and growth scored higher on Jackson’s innovativeness mea-sure than did those reporting family income as their primary goal. Furthermore, for theAmerican sample at least, founders scored higher than non-founders. (Tuunanen andHyrsky 1997).

Other studies have shown that innovation is a primary motive to start a business.For example, Shane, Kolvereid, and Westhead (1991) report that the opportunity toinnovative and be in the forefront of new technology was frequently given as a reason forstarting a business. The opportunity to innovate is also frequently cited in internationalstudies as a motive for starting an enterprise (Scheinberg and MacMillan 1988; Blaise,Toulouse, and Clement 1990).

It is apparent from these and other studies that entrepreneurial traits, particularlylocus of control, have been studied extensively in the United States. However, cross-cultural studies of entrepreneurial traits and studies in non-U.S. contexts are rare andin most cases limited to comparisons between one or two countries or cultures (e.g.,McGrath, MacMillan, and Scheinberg 1992; Tuunanen 1997; Koiranen, Hyrsky, and Tu-unanen 1997; Tuunanen and Hyrsky 1997). In the cases of locus of control and innova-tiveness, to our knowledge there have been no comprehensive investigations to deter-mine whether these particular traits vary across a wide spectrum of cultures. The questionremains: do entrepreneurial traits vary systematically across cultures and if so why? Fur-thermore, if differences across culture do exist, what are the new venture formationimplications? In the following section we examine the role of culture in the developmentof entrepreneurial values and formulate hypotheses relating national culture to theprevalence of individuals with internal locus of control and innovative orientations.

CULTURE AND ENTREPRENEURIAL TRAITSBarnouw (1979) defines culture as “. . . the configuration of . . . stereotyped patternsof learned behavior which are handed down from one generation to the next throughthe means of language and imitation . . .” (p. 5). Kroeber and Parson’s (1958, p. 583)earlier cross-disciplinary definition of culture included “. . . patterns of values, ideas,and other symbolic-meaningful systems as factors in the shaping of human behavior. . .” Hofstede (1980) refers to culture as “the collective programming of the mind whichdistinguishes the members of one human group from another . . . [and] includes systemsof values” (p. 25).

Values and norms are powerful forces for controlling and directing human behav-ior. Erez and Earley (1993) note that culture shapes the cognitive schema which ascribemeaning and values to motivational variables and guide choices, commitments, andstandards of behavior. Further, since values are typically determined early in life (Hof-stede 1980; Barnouw 1979), they tend to be “programmed” into individuals resultingin behavior patterns which are consistent with the cultural context and endure over time(Hofstede 1980).

Thus culture, as the underlying system of values peculiar to a specific group or soci-ety, shapes the development of certain personality traits and motivates individuals ina society to engage in behaviors that may not be as prevalent in other societies. Entrepre-neurial activity (i.e., new venture creation) may be one of these behaviors which variesacross countries due to differences in cultural values and beliefs. Clearly many factorsunderlying entrepreneurial behavior are common across cultures (e.g., economic incen-tives can motivate action in all cultures). However, since culture reinforces certain per-


sonal characteristics and penalizes others, we would expect some cultures to be moreclosely aligned with an entrepreneurial orientation than others. Huisman (1985) for ex-ample noted wide variance in entrepreneurial activity across cultures and concludedthat cultural values influence entrepreneurial behavior. McGrath et al. (1992) reached asimilar conclusion in a 10-country study of entrepreneurs and non-entrepreneurs. Theyfound that entrepreneurs differed significantly from their career professional counter-part in culture-based values and beliefs such as “Success is owning your own company,”“Rewards should be based on merit,” and “Equality is everyone’s right.” (McGrath etal. 1992, p. 126).

Dimensions of CultureUsing the results of his 40-country study of 88,000 employees and managers of a singleU.S. multinational (IBM), Geert Hofstede (1980) constructed four distinct dimensionsof culture as an underlying framework to identify and explain differences in cultural pat-terns observed across countries. Hofstede’s power distance, uncertainty avoidance, indi-vidualism and masculinity dimensions define a specific set of values which describe someaspect of culture and human activities. Although Hofstede did not specify the relation-ship between culture and entrepreneurial activity per se, his culture dimensions are use-ful in identifying the key elements of culture related to entrepreneurial orientation.

In the following sections, we examine two of Hofstede’s culture dimensions, indi-vidualism and uncertainty avoidance, and offer hypotheses linking these dimensions tothe prevalence of individuals exhibiting innovativeness and internal locus of control ori-entations.

IndividualismIndividualism pertains to societies in which social ties and commitments are loose.Everyone is expected to look after himself or herself and the immediate family. Collec-tivism, at the opposite pole from individualism, pertains to societies in which peoplefrom birth onwards are integrated into strong, cohesive ingroups which throughout alifetime continue to protect them in exchange for unquestioning loyalty (Hofstede 1991,p. 51).

In individualistic cultures, social identity is based on individual contribution. Basicsocial values emphasize personal initiative and achievement. Autonomy, variety, plea-sure, and personal financial security take precedent over group loyalty. As a result, inhighly individualistic countries, there is greater employment mobility since individualsare expected to look after their own interests (Hofstede 1980, p. 235).

In collectivistic cultures, people are born into extended families or clans which pro-tect them in exchange for loyalty. Social identity is based on group membership. Thereis greater emphasis on belonging vis-a-vis personal initiative. Thus individual initiativeis not highly valued and deviance in opinion or behavior is typically punished. In collec-tivistic cultures, group decisions are considered to be superior to individual decisions.(Hofstede 1980, p. 235).

As noted earlier, entrepreneurs are frequently characterized as exhibiting an inter-nal locus of control. As “internals,” entrepreneurs believe in their own abilities toachieve and give little credence to external forces such as destiny, luck, or powerfulothers (Rotter 1966). In highly individualistic countries (e.g., United States, United


Kingdom, Australia), individual freedom of action and independence are highly valued.Therefore, entrepreneurs who exhibit high levels of self-confidence, self-reliance, andbravado are admired and encouraged.

In a recent study, Busenitz and Barney (1997) showed that entrepreneurs’ decision-making styles differ from that of managers in a large organizations in how they perceiverisk. Specifically they found that entrepreneurs tend to be more overconfident than man-agers in making decisions in situations where information is limited or there is a highdegree of outcome uncertainty (Busenitz and Barney 1997). Such findings support thenotion that entrepreneurs tend to discount risk in business situations and perceive them-selves as “in-control” of their ventures. Since individualistic cultures are more support-ive of individual action and more tolerant of independent action than are collectivisticcultures, we would expect that an internal locus of control orientation would be lessprevalent in collectivistic cultures than in individualistic cultures.

A review of cross-cultural studies of locus of control suggests a considerableamount of empirical support for expecting differences in the prevalence of internals(and hence potential entrepreneurs) across cultures. For example, using Rotter’s I-Escale, Parsons and Scheider (1974) found that U.S. students were significantly more in-ternal than Japanese students. Reitz and Groff (1974) found U.S. workers to be moreinternal than Mexican workers on Rotter’s leadership/success subscale and more inter-nal than Japanese and Thai workers on the respect, politics, and luck/fate subscales.

Several studies using the IPC scales (Levenson 1974) also found significant differ-ences in locus of control orientation between some of the more collectivistic culturesand the United States. Cole and Cole (1974) for example, found U.S. male businessstudents to have a higher internal IPC score than Mexican male business students. Mah-ler (1974) found that Japanese university students were less internal than U.S. universitystudents. In a rare study comparing entrepreneurs across cultures, Kaufmann, Welsh,and Bushmarin (1995) found that Russian entrepreneurs scored significantly lower onthe internal IPC scale than did U.S. entrepreneurs sampled in an earlier study byRupke (1978).

The formation of successful new ventures clearly requires initiative on the part ofthe founder or the founding team. Whether founded by an individual or small team, thebusiness initiators must be independent, self-reliant, and self-confident. Individualisticcultures tend to reinforce and reward independent action and initiative; collectivisticcultures reward these actions less. Thus,

H1: An internal locus of control orientation is more prevalent in individualistic cul-tures than in collectivistic cultures.

Uncertainty AvoidanceHofstede defines uncertainty avoidance as “. . . the extent to which the members of aculture feel threatened by uncertain or unknown situations” (Hofstede 1991, p. 113).According to Hofstede, strategies for coping with uncertainty are rooted in culture andreinforced through basic institutions such as family, school, and state (Hofstede 1980).In low uncertainty avoidance cultures, members are expected to cope with uncertaintyas best they can. In high uncertainty avoidance cultures, structures are established whichminimize the level of uncertainty faced by individual members.

In low uncertainty avoidance cultures, the inherent uncertainty of life is more easily


accepted and each day is taken as it comes. It is believed that conflict and competitioncan be controlled within the rules of “fair play” and used constructively. Social deviantsare not perceived as threatening, hence there is a greater tolerance for creative or novelbehavior. In low uncertainty avoidance cultures, there is more willingness to take risks,and achievement is often recognized in terms of pioneering effort (Hofstede 1980,p. 184).

In high uncertainty avoidance cultures on the other hand, it is believed that conflictand competition unleashes destructive aggression and should be avoided. Deviant per-sons and ideas are considered dangerous; hence a lack of tolerance for anyone or any-thing that is perceived as “different.” In high uncertainty avoidance cultures, youngerpeople, prone to antiestablishment attitudes and behavior, are regarded with suspicion.There is more concern with security in life, and achievement is defined in terms of secu-rity. Hofstede also found that in high uncertainty avoidance societies, there is a greaterfear of failure, a lower willingness to take risks, lower levels of ambition, and lowertolerance for ambiguity (Hofstede 1980, p. 184).

As noted earlier, innovativeness has long been associated with entrepreneurial be-havior and even regarded by some as a defining element of the entrepreneurial role(Schumpeter 1934; Carland, et. al 1984). Creativity and innovativeness have also beenlinked to a high tolerance for ambiguity, another common characteristic of entrepre-neurs (Schere 1982; Begley and Boyd 1987). Entrepreneurs also tend to have an optimis-tic bias and evaluate uncertain situations as more favorable than the facts justify(McClelland 1987). The tendency to discount external constraints is also considered tobe a key attribute of creative individuals (Whiting 1988). Since creative and entrepre-neurial behavior is by definition deviant in a social context, some researchers even goso far as to suggest that successful entrepreneurs may be mildly sociopathic (Winslowand Solomon 1989).

Since low uncertainty avoidance cultures are more accepting of non-traditional be-haviors, it follows that entrepreneurs in these contexts enjoy greater freedom and legiti-macy than their counterparts in high uncertainty avoidance cultures where the “devi-ance” of entrepreneurs would be viewed with suspicion. In support of this contention,Tuunanen et al. (1997) found that U.S. entrepreneurs had somewhat higher preferencesfor innovation than their counterparts in Finland, a country with a relatively high uncer-tainty avoidance culture compared to the United States (Hofstede 1980). In a cross-national study of innovation rates, Shane (1992) found that in terms of the number oftrademarks granted to nationals of 33 different countries, per capita rate of innovationwas lower in uncertainty avoiding countries compared to uncertainty acceptingcountries.

H2: An innovative orientation is more prevalent in low uncertainty avoidance cul-tures than in high uncertainty avoidance cultures.

Entrepreneurial Orientation and CultureNo single trait or characteristic defines the entrepreneur, nor does it allow one to predictentrepreneurial behavior. It is a configuration of traits that separates the potential entre-preneur from those who are not predisposed or motivated to engage in new ventureformation. Neither internal locus of control or innovativeness alone is sufficient to ex-plain entrepreneurial motivation nor to define what we call an entrepreneurial orienta-


tion: a predisposition which is likely to lead to behavior associated with entrepreneur-ial activity.1

Given the theoretical and empirical support as outlined above, we would expectthat an entrepreneurial orientation should include as a minimum, both internal locusof control and innovativeness. Entrepreneurial orientation implies an individual whois self-reliant, self confident, with strong determination and perseverance to initiate andgrow an enterprise. Thus, individuals with both an internal locus of control and innova-tive orientation should appear more frequently in highly individualistic cultures whichsupport the strongly independent and persevering element of entrepreneurial behaviorand at the same time support creativity and innovative problem-solving to deal with anuncertain and ambiguous world. As an extension of H1 and H2, we expect that countrieswhich are both low in uncertainty avoidance and highly individualistic would yield thegreatest number of individuals with an entrepreneurial orientation.

H3: An entrepreneurial orientation (i.e., internal locus of control combined withinnovativeness) is more prevalent in individualistic, low uncertainty avoidance cul-tures than in collectivistic, high uncertainty avoidance cultures.

METHODS

Survey AdministrationThe sample used for this study was drawn from a large data set containing responsesto a survey of third- and fourth-year students at 25 universities in 15 countries. Theinstrument administered to the students surveyed their attitudes and perceptions aboutfree-markets, competition, and the contribution of entrepreneurs to economic develop-ment. It also contained items designed to measure locus of control and innovative orien-tations. Respondents were additionally instructed to provide specific biographical back-ground information so they could be categorized by age, gender, and national origin.

The instrument was pre-tested on approximately 400 undergraduate business stu-dents at an American university. As a result of this pre-test, several of the questionswere modified to reduce or eliminate ambiguity. Subsequently, during 1996 the ques-tionnaire was distributed to students studying business, economics, or engineering ina variety of different universities worldwide. Questionnaires were administered in aclassroom setting by local professors who agreed to participate in the project and admin-ister the surveys in exchange for access to the data set.

University students were selected as subjects for this study for several reasons. To-day’s university students, we believe, represent a significant share of the pool of poten-tial entrepreneurs in both the developed and developing countries. As the demands oftechnology and global competition increases, the need for university-trained entrepre-neurs will becomes more evident, and success in business will increasingly be dependent

1 The term entrepreneurial orientation has been used by other researchers in the context of firm behavior.For example, Covin and Slevin (1989) referred to entrepreneurial orientation as a strategic posture of thefirm. Covin and Slevin (1988) also used the term to refer to a top management team’s decision-making style.In later work (e.g. Covin and Slevin 1991), these authors abandoned the term entrepreneurial orientation infavor of “entrepreneurial posture.” More recently, Lumpkin and Dess (1996) used the term as a constructrepresenting the extent to which a firm’s strategic profile contains autonomy, innovativeness, risk taking, pro-activeness, and competitive aggressiveness. We use the term entrepreneurial orientation as a label for a setof personal traits associated with entrepreneurial potential. Our use of the term should not to be confusedwith a firm-level attribute as found in Covin and Slevin or Lumpkin and Dess.


upon the founder’s education and training. Furthermore, sampling only students in busi-ness, economics, and engineering enhances cross-national comparability by effectivelycontrolling for important variables such as literacy, work experience, age, and educa-tion. Finally, as a matter of practicality, student subjects are generally convenient, acces-sible, and through the support of administering professors, it was possible to maintaincontrol over the testing environment.

Translation

In the United States, Canada, Ireland, and at schools in European countries where thestudents’ command of English was highly proficient, the survey was administered inEnglish. In the case of the Latin American countries, the survey instrument was firsttranslated into Spanish by a bilingual native Spanish speaker and then backtranslatedinto English by a bilingual native English speaker. For European countries where trans-lations were required, (i.e., Croatia, the Czech Republic, Slovenia, Germany), the in-strument was translated by bilingual professors at the local institutions where the instru-ment was administered.

MeasuresThe survey instrument was composed of 62 items. Respondents were asked to indicatethe extent to which they agreed or disagreed with each item by choosing one of fiveresponses: (A) strongly agree, (B) agree, (C) neither agree or disagree, (D) disagree,or (E) strongly disagree.

Of the 62 items, 18 were used to construct scales for innovativeness (10 items) andlocus of control (8 items). Items for the innovativeness scale were adapted from theJackson Personality Inventory (Jackson 1994) while items used for the locus of controlscale were adapted from Rotter’s I-E scale (Rotter 1966). Both scales were subjected toreliability testing using data collected in this nine-country study. Reliability test resultsindicate that Cronbach’s alpha scores were in an acceptable range for both scales withminimal variance across country samples. For example, alpha scores ranged from 0.82(Canada) to 0.66 (China) for the innovativeness scale and from 0.81 (Canada) to 0.53(Slovenia) for the internal locus of control scale. Both scales were also determined tobe unidimensional based on results obtained from principal component analysis.

Innovativeness

The Jackson Personality Inventory Manual (JPI), which defines innovativeness as a ten-dency to be creative in thought and action, was used to capture this construct as innova-tion, creativity, and initiative have been consistently identified as one of the enduringcharacteristics of entrepreneurs. (McClelland 1987; Fernald and Solomon 1987; Horna-day and Aboud 1971; Timmons 1978).

Adjectives on the instrument used to describe entrepreneurs which highly correlatewith innovativeness include imaginative, inventive, enterprising, original, resourceful,and farsighted (Jackson 1994). A high score on the JPI innovativeness scale indicatesa preference for novel solutions to problems and an appreciation for original ideas. Forthis study, 8 items were adapted from the JPI innovativeness scale. Typical of these are


statements such as “I often surprise people with my novel ideas” and “I like to experi-ment with various ways of doing the same thing.”

Locus of Control

A modified Rotter I-E Scale was used in this study to measure internal locus of control(Rotter 1966). This scale is designed to measure the respondent’s perceived ability toinfluence events in his or her own life. Internal persons believe that fate and fortuneis within their own personal control. In contrast, external persons believe that their livesare controlled by external forces such as destiny, luck, or powerful others (Begley andBoyd 1987). Ten items were adapted for this purpose. Typical of these are statementssuch as “My life is determined by my own actions” and “When I get what I want, itis usually because I worked hard for it.”

To minimize the effect of response bias in which some respondents tend to givemore extreme responses than others, innovativeness and locus of control scores wereconverted from a numeric to a binary score (high or low). Scores ranged from a maxi-mum of 40 to a minimum of 8 for innovativeness and a maximum of 60 to a minimumof 10 for internal locus of control. A frequency distribution of scores for both measureswas used to determine a suitable breakpoint value which separated the upper 50 percen-tile from the lower 50 percentile. In this manner, each respondent’s score was convertedfrom a numeric score to a high/low value.

Entrepreneurial Orientation

For analysis purposes, innovativeness and internal locus of control were treated as twoessential elements of an entrepreneurial predisposition. Thus individuals with an entre-preneurial orientation (EO) are defined as those who are at the same time innovativeand have an internal locus of control orientation. In operationalizing this EO construct,if a respondent were categorized as HIGH innovativeness and HIGH internal locusof control, then that respondent would also be designated as HIGH entrepreneurialorientation. If however, the respondent was categorized as LOW innovativeness, LOWinternal locus of control, or both, then that respondent would be categorized as LOWentrepreneurial orientation. Using this scheme, 378 of the 1,790 respondents (21%)were categorized as HIGH EO, and 1,412 (79%) were categorized as LOW EO.

Culture

Student respondents were asked a series of background questions to determine theirnationality. If a student indicated that he or she was not a native or a long time residentof the country in which their university was located, then that response was eliminatedfrom the data set. The remaining responses were then coded by nationality (i.e., Canada,Ireland, United States, etc.) based on the university’s location.

Of the 15 countries surveyed, only nine were in the Hofstede 1980 study therebylimiting the culture analysis to the United States, Croatia and Slovenia (former Yugosla-via), Canada, Ireland, Belgium, Germany, Singapore, and China (PRC). Each of thesecountries was scored using Hofstede’s cultural indices denoted as “UAI” (uncertaintyavoidance) and “IDV” (individualism). Hofstede did not obtain culture data for thePRC directly but did score both Taiwan and Hong Kong. Based on the results of a study


TABLE 1 Descriptive Statistics and Correlationsa

StandardVariables Means Deviations 1 2 3 4 5

1. Genderb 0.53 0.52. Individualismc 54.25 30.75 0.0991***3. Uncertainty

Avoidanced 56.11 22.83 0.0641** 20.4601***4. Innovativenesse 0.41 0.49 0.1287*** 0.0576* 0.02725. Locus of Controlf 0.41 0.49 0.0367 0.2451*** 20.0946*** 0.2011***6. Entrepreneurial

Orientationg 0.22 0.41 0.0993*** 0.1645*** 20.0414 0.6299*** 0.6318***

a N 5 1790; b Male 5 1; Female 5 0; c Hofstede 1980; d Hofstede 1980; e High Innovativeness 5 1; Low Innovativeness 50; f Internal LOC 5 1; External LOC 5 0; g Innovativeness x Locus of Control; *** p , 0.001; ** p , 0.01; * p , 0.05.

by McGrath, MacMillan, Yang and Tsai (1992) in which they concluded that 50 years ofideological pressure had little effect on the basic collectivist values and attitudes amongmainland Chinese, we used Hofstede’s Taiwan and Kong Hong data to provide an esti-mate of culture dimension scores for the Peoples Republic of China.

RESULTSTable 1 provides descriptive statistics and zero order correlations for each of the vari-ables. Gender is modeled as a dichotomous variable with “1” representing male and“0” representing female. As shown in Table 1, the mean value for gender is 0.53 indicat-ing 53% of the sample is male and 47% of the sample is female. Innovativeness and locusof control are also dichotomous variables with “1” representing high innovativeness andinternal locus of control and “0” representing low innovativeness and external locus ofcontrol respectively. Entrepreneurial orientation is a constructed dichotomous variablewhich equals “1” when both innovativeness and locus of control are “1” and “0” wheneither innovativeness or locus of control is “0.” As the mean values in Table 1 indicate,41% of the sample have an innovative orientation, 41% have an internal locus of controlorientation, and 22% have both. This relatively low occurrence of an entrepreneurialorientation (i.e., high innovativeness plus ILOC) in our sample is consistent with theexpectation that entrepreneurial potential is a relatively rare characteristic.

Multivariate logistic regression analysis was used to test the three hypotheses asto the effect of culture on the likelihood of (1) an internal locus of control orientation,(2) an innovative orientation, or (3) a combined ILOC/innovative orientation defined asentrepreneurial orientation. Using the SAS LOGISTIC procedure (SAS Institute 1989),maximum likelihood estimates for each independent variable included in the model aregenerated and various measures of model fit such as the -2 log likelihood statistic are re-ported. Logistic regression is similar to least-squares regression except it is most appropri-ately used when the dependent variable is binary, i.e., 1 or 0, yes or no, high or low.

The results of the logistic regression analysis are summarized as Table 2. Genderwas included as a control variable in all regression models tested.

Results of regression analysis provide support for Hypothesis 1 and Hypothesis 3,but not for Hypothesis 2. While controlling for gender, the sign of the coefficient forthe individualism-collectivism dimension of culture is positive and significant at the 0.99confidence level supporting the claim that an innovative orientation is more likely in


TABLE 2 Logistic Regression Analysis: Effects of Culture and Gender on Locus on Controland Innovativeness

H1 H3Internal Locus H2 Entrepreneural Orientation

of Control Innovativeness (Innovativeness 1 Internal LOC)

Intercept 1.3265*** 0.8363*** 1.3283*** 2.3972*** 2.1718***(0.1172) (0.1482) (0.1745) (0.1558) (0.1280)

Gender 0.0710 0.5787*** 0.6041*** 0.5231*** 0.5503***(Male 5 1, Female 5 0) (0.0959) (0.0984) (0.1200) (0.1210) (0.1209)

Individualism 0.0166*** 0.0131***(0.0016) (0.0020)

Uncertainty Avoidance 0.0017 20.0055*(0.0022) (0.0026)

Entrepreneur Supportive 0.0002***(Low UA 3 IDV) (0.0000)

Std. Errors in Parentheses; ** *p , 0.001; * *p , 0.01; * p , 0.05.

individualistic cultures and less likely in collectivistic cultures (Hypothesis 1). However,although the sign of the coefficient for uncertainty avoidance was is the predicted direc-tion for Hypothesis 2 (i.e., negative), this result is not statistically significant indicatingno difference in the likelihood of an innovative orientation between low and high uncer-tainty avoidance cultures. The effect of gender on innovativeness was, however, signifi-cant indicating that an innovative orientation is more likely among males in the samplethan females. On the other hand, there was no significant difference between males andfemales in the likelihood of an internal locus of control orientation.

Hypothesis 3, which predicts that an entrepreneurial orientation (internal locus ofcontrol combined with innovativeness) is more likely in low uncertainty avoidance andindividualistic cultures, was tested using three different regression models. First, theeffect of individualism on the likelihood of entrepreneurial orientation was tested alone.Similarly, the effect of uncertainty avoidance on the likelihood of entrepreneurial orien-tation was tested. In the third model, a combined uncertainty avoidance/individualismculture scale was constructed by computing the product of a country’s uncertainty avoid-ance score and individualism score. Because of its hypothesized relationship with entre-preneurial potential, this combined culture scale is label as “entrepreneurship suppor-tive.” All three regression models tested provide support for Hypothesis 3. As shown inTable 1, the likelihood of an entrepreneurial orientation is (a) greater in individualisticcultures, (b) greater in low uncertainty avoidance cultures, and (c) greatest in cultureswhich are at the same time low uncertainty avoidance and highly individualistic.

DISCUSSIONThe results of this exploratory study support the proposition that some cultures are moreconducive for entrepreneurship than others. As hypothesized, individualism was foundto increase the likelihood of an internal locus of control orientation supporting the argu-ment that individualistic cultures foster strong entrepreneurial values that promote self-reliance and independent action while collectivistic cultures do not. Furthermore therewas support for the hypothesis that an entrepreneurial orientation, defined as internallocus of control combined with innovativeness, is more likely in individualistic, low un-certainty avoidance cultures than in collectivistic, high uncertainty avoidance cultures.


However, contrary to Hypothesis 2, an innovativeness orientation is by itself no morelikely in a low uncertainty avoidance culture than in a high uncertainty avoidance culture.

The lack of support for Hypothesis 2, suggesting that prevalence of innovativenessmay not be associated with any particular culture or country, is an interesting findingand requires closer examination. Our data show that innovativeness (measured usingthe Jackson Personality Inventory scale) is equally likely in low uncertainty avoidancecultures (e.g., Anglo-American) as in high uncertainty avoidance cultures (e.g., Asian).The explanation for this finding may lie in how innovative orientation is measured.

Although we found that an entrepreneurial orientation varies in frequency acrosscultures, we suspect that the propensity to think creatively, which is what the JPI scalemeasures, may in fact be a universal trait and not shaped by culture. This is to say thatcreativity and creative thinkers are equally prevalent in a variety of cultural contexts.However, innovativeness, as it relates specifically to the new venture creation processand the problems that entrepreneurs must solve, may be another matter.

As other researchers have demonstrated, entrepreneurs differ from non-entrepre-neurs in their decision-making styles. Buttner and Gryskiewicz (1993), for example,found that entrepreneurs have a more innovative problem-solving style than their man-agerial counterparts in larger U.S. organizations. Similarly, Goldsmith and Kerr (1991)found that entrepreneurship students used a more innovative problem-solving stylethan general business students. Both studies used the Kirton Adaption-Innovation In-ventory instrument to measure stylistic differences in problem solving and decisionmaking with “adaption” at one end of a continuum and “innovation” at the other (Kir-ton 1976). According to Kirton, adaptors try to do things “better” through incrementalimprovement while innovators try to do things “differently” by changing the way thingsare (Kirton 1976). What we suspect is that decision-making and problem-solving stylesvary in frequency across cultures rather than creative thinking per se. If that is the case,then we would expect to find adaptive styles to be more prevalent in high uncertaintyavoidance cultures (e.g., Japan) and innovative styles to be more prevalent in low uncer-tainty avoidance cultures (e.g., the United States).

Despite the inconclusive results on innovativeness, the overall positive findings ofthis study (i.e. support for Hypothesis 1 and Hypothesis 3) suggest that culture is animportant variable in determining entrepreneurial potential at the national or regionallevel. Culture, it appears, may condition potential for entrepreneurship, generating dif-ferences across national and regional boundaries. As we have demonstrated, some cul-tures, particularly cultures which are low uncertainty avoidance and individualistic ap-pear to be more supportive of entrepreneurs than are other cultural configurations. Onetentative conclusion is that a “supportive” culture increases, ceteris paribus, the entre-preneurial potential of a country.

Krueger and Brazeal (1994) noted that support from political, social, and businessleaders is critical to the encouragement of entrepreneurial activity. This support is typi-cally provided in the form of incentive programs or inducements to encourage thefounding of new enterprises. But our research suggests that it is equally important thatthere be a supportive culture to cultivate the mind and character of the potential entre-preneur. To be motivated to act, potential entrepreneurs must perceive themselves ascapable and psychologically equipped to face the challenges of a global, competi-tive marketplace.

Traits such as internal locus of control and innovativeness are not necessarily immu-table. As entrepreneurship educators are found of saying “entrepreneurs are made, not


born.” This statement implies that entrepreneurship can be taught and an individual’sself-perception and potential for entrepreneurship can be enhanced. For example,Krueger and Brazeal (1994) note that research suggests we can train individuals to be-have more autonomously. Such training would be aimed at enhancing a student’s per-ceived self-efficacy at specific tasks or competencies critical to launching and main-taining a successful venture.

Clearly business education can play an important role in this regard by providingnot only the technical tools of business (accounting, marketing, finance, etc.), but alsohelping students develop the necessary skills for self-management and coping with ad-versity and uncertainty (Krueger and Brazeal 1994).

Entrepreneurial Traits ResearchThe use of personal characteristics such as locus of control and innovativeness in entre-preneurship studies has been questioned (Gartner 1988). Much of the criticism of thetraits approach to the study of entrepreneurship is based on the implied assumptionthat traits are acquired at birth or an early age. The use of the term “personality” inmany traits studies also implies that such characteristics are immutable and unaffectedby experience or circumstance. However, characteristics such as locus of control andinnovativeness are not necessarily imprinted at birth or an early age and may be ac-quired at a later time due to experiences in the work place, education, exposure to rolemodels, parents, and social setting (culture) which shape values and beliefs.

Criticism of the entrepreneurial traits research is also based on a lack of significantempirical findings to support the claim that entrepreneurs are psychologically “differ-ent” from the general population. The application of certain psychometric tests whichmeasure need for achievement and risk-taking propensity for example, have generallyfailed to discriminate between entrepreneurs and professional business managers(Brockhaus 1982; Gartner 1985). However, this failure to confirm empirically the psy-chological differences between practicing entrepreneurs and non-entrepreneurs maybe misleading. Clearly not all those predisposed actually become entrepreneurs. Otherfactors such as push/pull and the environment also affect the probability that one willinitiate a venture. It is therefore reasonable to expect that a significant portion of thenon-entrepreneur population possess entrepreneurial tendencies as well. In otherwords, having entrepreneurial values, attitudes, and perceptions is simply a precondi-tion for entrepreneurial behavior and not to be confused with the act itself (McClelland1961). In this study the concern is with potential entrepreneurs, not practicing entrepre-neurs. Therefore it was appropriate to investigate those characteristics, whether learnedor innate, for which there is a theoretical basis for predicting an increase in the likelihoodof venture initiation.

Entrepreneurial Potential and New Venture CreationThe bulk of entrepreneurship research and theorizing about factors which stimulatenew venture creation would seem to suggest that all that is needed is a supportive infra-structure or economic incentives to provide the motivation to initiate new ventures.However, as we have argued, an adequate pool of entrepreneurially oriented individualsmust also be available. Since the culture of a country influences the values, attitudes,and beliefs of its people, we can expect variety in the distribution of individuals with


entrepreneurial potential across cultural contexts. Extending this logic leads to the prop-osition that the greater the frequency of the entrepreneurial orientation among the pop-ulation of a country, the greater the stock of potential entrepreneurs, and hence (ceterisparibus) the higher the rate of new venture formation.

Study LimitationsAs noted, the study sample consists exclusively of third- and fourth-year university stu-dents. This sampling approach has the advantage of forcing homogeneity of respondentsacross countries and thereby eliminating the need to control for critical demographicvariables such as age, education, and experience. However, at the same time we recog-nize the possibility that a lack of uniformity in the demographic composition of studentbodies across countries might be a source of sample bias.

This study is also limited by the number and type of countries selected. Althoughevery attempt was made to sample a wide range of countries based on region, countrieswere not selected with a goal to achieve maximum variance across cultural dimensions.As a result, it was not possible to account for the independent effect of each culturedimension. In recognizing this limitation, we are in the process of collecting data fromadditional countries (e.g., Mexico, Australia, Italy, South Africa, and Turkey).

In retrospect we recognize that the choice of measures for innovativeness and con-trol orientation may be another limitation of this pilot study. In future studies, we planto incorporate alternative measures of innovativeness (e.g., Kirton 1973) and control(e.g., Burger 1985; Palhus 1983).

Future International Entrepreneurship ResearchThis study advances entrepreneurship research by demonstrating that certain character-istics associated with entrepreneurial potential are more prevalent in some cultures andless prevalent in others. These findings highlight the need for the development of entre-preneurial profiles which recognize both commonality and differences across cultures.Empirically this means a call for finer grained studies and inductive research in differentcontexts to determine the traits profiles of potential entrepreneurs in different cultures.Such efforts should provide a baseline profile from which deviations can be assessedand the impact of culture on entrepreneurship more thoroughly examined.

The observed differences between males and females in this study also highlightsthe need for a more thorough examination of gender effects across a variety of cultural,economic, and political context. Although innovativeness is more frequently observedamong the males in this sample, there were no significant differences among men andwomen in locus of control orientation. This finding of differences between men andwomen in the likelihood of an entrepreneurial orientation suggests systematic genderdifferences in motives leading to new venture initiation (Birley 1989; Bowen and Hisrich1986; Fischer, Reuber, and Dyke 1993). Given that the rate of new business start-upsby women is increasing rapidly in many countries and most of the literature on entrepre-neurship was derived by studying male entrepreneurs, the theoretical foundation of thefield needs to be expanded to include the issue of gender in an international context.One approach would be to explore the interaction effect of gender and culture on thelikelihood of an entrepreneurial orientation. The research question would be: Are the


observed differences between men and women as our study reports the same acrosscultures or is the entrepreneurship “gap” greater in some cultures than in others? Ifso, what is the theoretical basis for such differences?

This study examined only two entrepreneurial traits (innovativeness and internallocus of control) and only one of the many contextual factors (culture) which may helpto explain differences among countries in the rate of new venture formation. Futureresearch should expand this avenue of research to include other traits associated withentrepreneurial behavior and macro level factors including education system, politicaleconomy, and stage of economic development. Ultimately, consensus among these vari-ous perspectives will provide a more complete theoretical framework for explainingentrepreneurial behavior within and across varying political and socioeconomiccontexts.

In this study we were able to overcome the barrier of access, a significant hurdleto international entrepreneurship research, by soliciting the cooperation of colleaguesfrom 25 universities in 15 countries during the data collection phase of the project. Asa result, there is now in place a valuable network of entrepreneurship researchers toinvestigate the new venture creation process in the developing economies of LatinAmerican, Asia, and Eastern Europe.

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APPENDIX

Survey Items Related to Locus of Control and InnovativenessRespondents were to indicate the extent to which they agree or disagree with the follow-ing statements. Five structured choices were offered: Strongly Agree, Agree, NeitherAgree nor Disagree, Disagree, Strongly Disagree.

Ten items comprise the locus of control scale (adapted from Rotter 1966):

1. My success depends on whether I am lucky enough to be in the right place at theright time.

2. To a great extent my life is controlled by accidental happenings.3. When I get what I want, it is usually because I am lucky.4. My life is determined by my own actions.5. When I get what I want, it is usually because I worked hard for it.6. It is not wise for me to plan too far ahead, because things turn out to be a matter

of bad fortune.7. Whether or not I am successful in life depends mostly on my ability.8. I feel that what happens in my life is mostly determined by people in powerful po-

sitions.9. I feel in control of my life.

10. Success in business is mostly a matter of luck.

Eight items comprise the innovativeness scale (adapted from Jackson Personality In-ventory 1994):

1. I often surprise people with my novel ideas.2. People often ask me for help in creative activities.3. I obtain more satisfaction from mastering a skill than coming up with a new idea.4. I prefer work that requires original thinking.5. I usually continue doing a new job in exactly the way it was taught to me.6. I like a job which demands skill and practice rather than inventiveness.7. I am not a very creative person.8. I like to experiment with various ways of doing the same thing.