Accessible Requires Authentication Published by De Gruyter September 26, 2019

Culture, Entrepreneurship and Economic Development. An Empirical Approach

Monica Violeta Achim, Sorin Nicolae Borlea and Viorela Ligia Văidean

Abstract

This paper investigates the influence of culture on the level of entrepreneurship and the possible moderating role of the level of economic development upon this relationship. For our purpose, an initial sample of 125 countries (43 high-income and 82 low-income countries) is used, over the 2006–2016 time period. At first, we use a panel analysis of the reduced sample which is furthermore completed by a hierarchical regression analysis. Our main results provide clear evidence that culture represents an important predictor of the level of entrepreneurship. Among the dimensions of culture, uncertainty avoidance and indulgence versus restraint are found to have the highest influence upon the level of entrepreneurship. Moreover, our empirical findings reveal that the relationship between culture and entrepreneurship is moderated differently by economic development. Thus, high-income countries face a three times higher rate of entrepreneurship than low-income countries. Our findings suggest that culture is more valued in high-income countries offering a higher social support in entrepreneurial activities than in low-income countries. We also find that some cultural patterns such as individualism, femininity, low uncertainly avoidance, short-term orientation or restrain may stimulate entrepreneurship in high-income countries but may be very dysfunctional in low-income countries. Our findings are also useful for policy makers to acknowledge the relationship between the cultural values of a country and its entrepreneurial activities, in order to adjust their policy measures for a better stimulation of the business environment.

JEL Classification: L26; M13; O57

Appendix

A Appendix

Clusters of countries and mean of entrepreneurship rate (ENTR), 2006–2016.

Low-income countriesENTRHigh-income countriesENTR
Afghanistan0.43Australia12.19
Albania8.19Austria0.62
Argentina0.52Belgium3.06
Armenia1.49Canada0.06
Azerbaijan0.82Chile5.39
Bangladesh0.09Croatia3.62
Belarus0.89Cyprus22.70
Belize3.56Czech Republic3.10
Bhutan0.06Denmark7.54
Bolivia0.48Estonia15.49
Bosnia and Herzegovina0.81Finland3.59
Botswana11.01France2.81
Brazil0.93Germany1.28
Bulgaria8.54Greece0.92
Burkina Faso0.11Hong Kong25.06
Colombia1.66Iceland11.26
Congo Democratic Republic0.02Ireland5.42
Costa Rica1.67Israel3.27
Dominica3.77Italy2.24
Dominican Republic1.02Japan0.09
El Salvador0.50Latvia8.80
Ethiopia0.03Lithuania3.30
Gabon4.04Luxembourg11.61
Georgia4.61Malta13.08
Ghana0.94Netherlands4.33
Grenada2.13New Zealand14.71
Guatemala0.68Norway6.95
Haiti0.04Oman1.22
Hungary4.80Poland0.88
India0.10Portugal4.51
Indonesia0.26Russia3.60
Iraq2.71Singapore7.72
Jamaica1.17Slovakia4.24
Jordan0.77Slovenia3.90
Kazakhstan1.91South Korea1.91
Kenya0.68Spain3.17
Kyrgyzstan1.01Sweden5.93
Laos0.21Switzerland4.25
Lesotho1.29Taiwan1.86
Macedonia4.65United Arab Emirates21.10
Malawi0.09United Kingdom11.71
Malaysia2.30Uruguay2.90
Maldives5.04Qatar1.82
Mauritius8.42
Mexico0.48
Moldova1.88
Mongolia5.36
Montenegro6.94
Morocco1.38
Namibia0.78
Nepal0.64
Niger0.00
Nigeria0.74
Pakistan0.04
Panama0.60
Peru3.34
Philippines0.28
Romania4.93
Rwanda0.93
Saint Vincent and the Grenadines1.95
Samoa0.93
Sao Tome and Principe2.48
Senegal0.32
Serbia1.82
Sierra Leone0.23
South Africa8.11
South Sudan0.41
Sri Lanka0.39
Suriname0.98
Syria0.04
Tajikistan0.35
Thailand0.75
Timor-Leste3.98
Togo0.13
Tonga11.91
Tunisia1.38
Turkey1.06
Uganda0.61
Ukraine1.06
Uzbekistan0.72
Vanuatu1.39
Zambia1.08
Average2.01Average6.35

B Appendix

Note: Avg_Entr_all stands for the average business entry density rate for the entire sample of countries, in each year, Avg_Entr_HI stands for the average business entry density rate for the high income countries, in each year and Avg_Entr_LI stands for the average business entry density rate for the low income countries, in each year.

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Published Online: 2019-09-26

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