Individualism and Venture Capital: A Cross-Country Study

Management International Review, Forthcoming

50 Pages Posted: 17 Jun 2019 Last revised: 12 Jul 2019

See all articles by Pascal A. Gantenbein

Pascal A. Gantenbein

University of Basel - Faculty of Business and Economics

Axel H. Kind

University of Konstanz

Christophe Volonté

University of Basel; University of Konstanz

Date Written: May 5, 2019

Abstract

We investigate the effect of individualism – a dimension of culture that is strongly associated with entrepreneurship – on venture-capital investments using a large cross-country sample. Our sample consists of 1,496 country-year observations and includes 88 countries from 1998 to 2014. Controlling for economic conditions, the legal environment, and different aspects of culture, we find that individualism is positively and significantly related to venture-capital investments and explains 30% of cross-country variation. This result is stable across different subsamples, several measures of venture-capital investments, and even holds when using the political system 200 years ago as an instrument for individualism. The quality of formal institutions (rule of law) and entrepreneurial attitudes (uncertainty avoidance) partially mediate the effect of individualism on venture-capital investments, while economic conditions (GDP per capita) moderate this effect.

Keywords: Comparative Entrepreneurship, Cultural Values, Individualism, Institutions, Venture Capital

JEL Classification: G3, G24, G38, Z10

Suggested Citation

Gantenbein, Pascal A. and Kind, Axel H. and Volonté, Christophe, Individualism and Venture Capital: A Cross-Country Study (May 5, 2019). Management International Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3400870 or http://dx.doi.org/10.2139/ssrn.3400870

Pascal A. Gantenbein

University of Basel - Faculty of Business and Economics ( email )

Petersplatz 1
Basel, 4001
Switzerland

Axel H. Kind

University of Konstanz

Universitätsstraße 10
Konstanz, D-78457
Germany

Christophe Volonté (Contact Author)

University of Basel ( email )

Peter Merian-Weg 6
Basel, CH-4002
Switzerland

University of Konstanz ( email )

Fach D-144
Universitätsstraße 10
Konstanz, D-78457
Germany

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