Born to be an Entrepreneur? How Cultural Origin Affects Entrepreneurship

University of Zurich, Department of Economics, Working Paper No. 309, 2018

60 Pages Posted: 2 Jan 2019

See all articles by Katharina Erhardt

Katharina Erhardt

ETH Zürich - KOF Swiss Economic Institute

Simon Haenni

University of Zurich - Department of Economics

Date Written: December 11, 2018

Abstract

Persistent differences in entrepreneurial activity between regions and countries remain unexplained. This paper argues that cultural heritage is an important determinant. We exploit a quasi-experimental setting comparing entrepreneurial activities of individuals with different cultural ancestry from within Switzerland but who live in the same municipality today and are hence exposed to the same economic and institutional environment. We find that individuals with cultural origin on the German-speaking side of the Swiss language border found 20% more firms than their counterparts with cultural origin on the French-speaking side ─ no matter if they currently live in the German-speaking or French-speaking region. These newly founded firms are identical in terms of survival rate, industry composition, legal form, and firm size, independent of the cultural origin of firm founders. A model of entrepreneurial choice suggests that the empirical patterns of firm entry and performance are more likely driven by differences in risk aversion or preferences for entrepreneurship rather than by skill.

Keywords: culture, entrepreneurship, natural experiment

JEL Classification: D22, L26, Z10

Suggested Citation

Erhardt, Katharina and Haenni, Simon, Born to be an Entrepreneur? How Cultural Origin Affects Entrepreneurship (December 11, 2018). University of Zurich, Department of Economics, Working Paper No. 309, 2018, Available at SSRN: https://ssrn.com/abstract=3300087 or http://dx.doi.org/10.2139/ssrn.3300087

Katharina Erhardt (Contact Author)

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Simon Haenni

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

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