Why are Some Nations More Entrepreneurial than Others? Unraveling the Link Between Cultural Tightness-Looseness and New Firm Creation

42 Pages Posted: 16 Jun 2022 Last revised: 25 Jul 2023

See all articles by Valentina Assenova

Valentina Assenova

University of Pennsylvania - The Wharton School

Raphael ('Raffi") H. Amit

The Wharton School UPENN

Date Written: July 24, 2023

Abstract

Grounded in cultural systems theory, we evaluate the role of cultural variation along the tightness-looseness continuum as a potential explanation for cross-national differences in the propensity to engage in entrepreneurship. Employing a novel research design that instruments for cultural tightness-looseness, we investigate whether greater cultural looseness explains higher rates of new firm creation using global data on entrepreneurship rates from national business registries. Our results reveal that the construct of cultural tightness-looseness explains 40 percent of the variation in new firm creation rates per 1000 people in the working age population in a sample of 57 nations. Nations with higher cultural looseness also exhibit stronger cultural support for entrepreneurship, greater entrepreneurial opportunity perception, and greater entrepreneurial aspirations, on average, than those with lower cultural looseness.

Keywords: culture; entrepreneurship; opportunity recognition; entrepreneurial firms; international entrepreneurship; entrepreneurial behavior; entrepreneurial orientation

JEL Classification: L26, M13, O57, O44, Z13

Suggested Citation

Assenova, Valentina and Amit, Raphael H., Why are Some Nations More Entrepreneurial than Others? Unraveling the Link Between Cultural Tightness-Looseness and New Firm Creation (July 24, 2023). Available at SSRN: https://ssrn.com/abstract=4133792 or http://dx.doi.org/10.2139/ssrn.4133792

Valentina Assenova (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3620 Locust Walk
SHDH Suite 2000
Philadelphia, PA 19104-6370
United States

Raphael H. Amit

The Wharton School UPENN ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6370
United States
215 898 7731 (Phone)

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