Why Are Some Nations More Entrepreneurial than Others? The Role of National Culture in Organizational Founding Rates

Abstract

Why are some nations more entrepreneurial than others? This study examines the cultural antecedents of cross-national variation in the rates of organizational founding. It argues that some nations became more entrepreneurial than others through their adaptive response to ecological adversity. Nations that historically faced low ecological adversity developed cultural systems that favored rule-breaking versus rule-following (cultural looseness versus tightness). These behavioral and psychological adaptations developed to cope with adversity affected the cultural support for entrepreneurial activity, and a host of behavioral determinants of organizational founding, including national attitudes, abilities, and aspirations toward entrepreneurship, opportunity perception, risk acceptance, and opportunity motivations for entry into entrepreneurship – factors predictive of higher rates of organizational founding. Consistent with this explanation, archival evidence about the prevalence of ecological adversity in 230 geopolitical regions of the world shows that low levels of ecological adversity correspond to high levels of cultural looseness, which contributed to high rates of organizational founding.

Keywords: entrepreneurship, culture, ecology, cross-national differences

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