Uncertainty Avoidance and the Rate of Business Ownership Across 21 OECD Countries, 1976-2004

29 Pages Posted: 23 Dec 2006

See all articles by S. Wennekers

S. Wennekers

EIM Netherlands - Business and Policy Research

Roy Thurik

Montpellier Business School; Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC); Erasmus Research Institute of Management (ERIM); EIM Netherlands - Business and Policy Research; Tinbergen Institute

Andre J. van Stel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

N. Noorderhaven

Tilburg University and Institute for Research on Intercultural Cooperation

Date Written: November 28, 2006

Abstract

Persistent differences in the level of business ownership across countries have attracted the attention of scientific as well as political debate. Cultural as well as economic influences are assumed to play a role. This paper deals with the influence of cultural attitudes towards uncertainty on the rate of business ownership across 21 OECD countries. First, the concepts of uncertainty and risk are elaborated, as well as their relevance for entrepreneurship. An occupational choice model is introduced to underpin our reasoning at the macro-level. Second, regression analysis using pooled macro data for 1976, 1990 and 2004 and controlling for several economic variables, yields evidence that uncertainty avoidance is positively correlated with the prevalence of business ownership. According to our model, a restrictive climate of large organizations in high uncertainty avoidance countries pushes individuals striving for autonomy towards self-employment. Regressions for these three years separately show that in 2004, this positive correlation is no longer found, indicating that a compensating pull of entrepreneurship in countries with low uncertainty avoidance may have gained momentum in recent years. Third, an interaction term between uncertainty avoidance and GDP per capita in the pooled panel regressions shows that the historical negative relationship between GDP per capita and the level of business ownership is substantially weaker for countries with lower uncertainty avoidance. This suggests that rising opportunity costs of self-employment play a less important role in this cultural environment, or are being compensated by increasing entrepreneurial opportunities.

Keywords: Entrepreneurship, Business Ownership, Comparative Analysis of Economies, Cross Country Study, Cultural Economics, Uncertainty Avoidance

Suggested Citation

Wennekers, Sander and Thurik, Roy and van Stel, Andre J. and Noorderhaven, Niels, Uncertainty Avoidance and the Rate of Business Ownership Across 21 OECD Countries, 1976-2004 (November 28, 2006). ERIM Report Series Reference No. ERS-2006-065-ORG. Available at SSRN: https://ssrn.com/abstract=949661

Sander Wennekers (Contact Author)

EIM Netherlands - Business and Policy Research ( email )

Postbus 7001
2701 AA Zoetermeer
Netherlands
31 79 3413634 (Phone)

Roy Thurik

Montpellier Business School

France

Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC) ( email )

3000 DR Rotterdam
Netherlands
+31 10 408 2232 (Phone)
+31 10 408 9146 (Fax)

HOME PAGE: http://www.thurik.com

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

EIM Netherlands - Business and Policy Research

Postbus 7001
2701 AA Zoetermeer
Netherlands
+31 79 341 3634 (Phone)
+31 79 331 3742 (Fax)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Andre J. Van Stel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

Niels Noorderhaven

Tilburg University and Institute for Research on Intercultural Cooperation ( email )

Postbus 90153
Tilburg, DC 5000 LE
Netherlands
+31-13-4662420 (Phone)

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