Entrepreneurship: It’s not only about who you are…but also where you are.

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Entrepreneurship: It’s not only about who you are…but also where you are.
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What do you need to promote entrepreneurship? Entrepreneurially motivated people or an entrepreneurial culture? Both? …not really, one might just be enough.

The question why some societies are more entrepreneurial than others has been asked for about a century in the social sciences. The question why some individuals are more entrepreneurial than others is even older. To answer both questions separately there is a substantial amount of good information we can rely upon today.

Entrepreneurship, however, is a multilevel phenomenon. In order to properly grasp it, individual and social level analysis should be performed at the same time. Hence, questions addressing how these two levels of analysis interact become particularly relevant when trying to draw an accurate picture. And – comparatively speaking – this type of questions is far newer. The key reason to use this multilevel analysis is that entrepreneurial behaviour can only be understood if the context of the individual is taken into account. That means, we need to acknowledge that situational contingencies can change the relevance of individual characteristics.

Research in the field has traditionally focused on either the nature of the entrepreneur or the types of contexts that promote entrepreneurship. At the individual level, a huge body of literature has looked into the personal characteristics of entrepreneurs. Above all, topics such as personality traits, entrepreneurial skills, cognition, risk tolerance and the need for achievement, have received a great deal of attention. Something similar happens with studies that compare countries. Country-level researchers have mainly looked at economic, market and cultural-institutional conditions that hinder or facilitate entrepreneurial activity.

We published a research article showing evidence on how entrepreneurial motivations and national culture interplay. In that article we answer the question: Where are individual motivations more important to explain entrepreneurial behaviour, in more or less entrepreneurial societies?

Intuitively, a conjoint effect could be expected: both, cultural values and individual motivations reinforce each other when it comes to explaining the individual’s decision to be an entrepreneur. In other words, the more entrepreneurial a society is, the more relevant individual motivations might be to explain entrepreneurial behaviour.

Well…not that fast! Our study proves that the contrary is the case. Individual motivations are more important in cultures that are not supportive of entrepreneurship. Moreover, individual motivations and cultural values compensate for each other in explaining entrepreneurship. That is: an entrepreneurial culture does not necessarily increase the probability to be an entrepreneur for somebody who is already driven by personal entrepreneurial motivations. Instead, culture may play an instrumental role in compensating for the lack of these individual motivations, increasing the likelihood of being an entrepreneur.

We frame the findings within the situational strength theory, according to which contexts may restrict the effects of individual drivers, if they provide strong incentives for the desirability of a specific behaviour. Applied to entrepreneurship, this means that individual motivations may determine behaviour particularly in weak situations, meaning those situations in which few external rewards reinforce entrepreneurial behaviour. In strong situations, where there are large situational incentives in favour of this behavioural outcome, individual characteristics (motivational values, in this case) become less important because they are overruled by situational cues. They are just not as relevant any more.

Thus, we can conclude that individual motivations are a more important driver of entrepreneurship in less entrepreneurial cultures. In such cultures a person has to rely more on his/her motivational values. So, it is in non-entrepreneurial societies that (potential) entrepreneurs need to overcome the lack of societal resources, incentives and social legitimation. We got these insights developing advanced statistical models using data from the European Social Survey, which includes more than 35.000 individuals living in 28 countries.

The effects of entrepreneurship on economic development and social innovation are widely acknowledged and have triggered a massive interest in identifying its determinants. Studies such as this one contributes to understand what explains entrepreneurship and how these explanatory variables interact. The article presents fine-grained analysis integrating different-levels of entrepreneurship determinants and providing key evidence-based insights: individual motivations are essential in the decision to be an entrepreneur, but they are even more important in societies that do not highly promote entrepreneurship. Culture matters, but it matters differently depending on a person’s motivational values.

A number of implications can be drawn from these insights. Particularly for entrepreneurial education and policy-making in targeting (would-be) entrepreneurs who are most likely to benefit from societal support.

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If you want to know more about the topics discussed here, you might want to take a look at the following articles:

Autio E, Pathak S and Wennberg K (2013) Consequences of cultural practices for entrepreneurial behaviors. Journal of International Business Studies, 44(4): 334‒362. DOI: 10.1057/jibs.2013.15.

Cooper W and Withey M (2009) The strong situation hypothesis. Personality and Social Psychology Review 13(1): 62‒72. DOI: 10.1177/1088868308329378.

De Clercq D, Lim D and Hoon Oh C (2013) Individual-level resources and new business activity: the contingent role of institutional context. Entrepreneurship Theory and Practice 37(2): 303‒330. DOI: 10.1111/j.1540-6520.2011.00470.x.

Fayolle A, Liñán F and Moriano J (2014) Beyond entrepreneurial intentions: values and motivations in entrepreneurship. International Entrepreneurship and Management Journal 10(4): 679‒689. DOI: 10.1007/s11365-014-0306-7.

Fuentelsaz L, Maicas J, and Montero J (2018) Entrepreneurs and innovation: The contingent role of institutional factors. International Small Business Journal 1-26

Hayton J and Cacciotti G (2013) Is there an entrepreneurial culture? A review of empirical research. Entrepreneurship & Regional Development 25(9-10): 708‒731. DOI: 10.1080/08985626.2013.862962.

Licht A (2010) Entrepreneurial motivations, culture, and the law. In: Freytag A and Thurik R (eds) Entrepreneurship and Culture. Berlin: Springer-Verlag, pp. 11‒40.

Liñán F, Moriano JA and Jaén I (2016) Individualism and entrepreneurship: does the pattern depend on the social context? International Small Business Journal 34(6): 760‒776. DOI: 10.1177/0266242615584646.

Schwartz SH (2011) Values: cultural and individual. In: Van de Vijver FJR, Chasiotis A and Breugelmans SM (eds) Fundamental Questions in Cross-Cultural Psychology. New York: Cambridge University Press, pp. 463‒493.

Shepherd DA (2011) Multilevel entrepreneurship research: opportunities for studying entrepreneurial decision making. Journal of Management 37(2): 412‒420. DOI: 10.1177/0149206310369940.

Shepherd DA and Patzelt H (2018) Entrepreneurial Cognition, Motivation and Entrepreneurial Cognition. In: Shepherd DA and Patzelt H (eds) Motivation and Entrepreneurial Cognition. Exploring the mindset of entrepreneurs. Cham: Palgrave Macmillan.

Stephan U, Uhlaner L and Stride C (2015) Institutions and social entrepreneurship: the role of institutional voids, institutional support, and institutional configurations. Journal of International Business Studies 46(3): 308‒331. DOI: 10.1057/jibs.2014.38.

Wennberg K, Pathak S and Autio E (2013) How culture molds the effects of self-efficacy and fear of failure on entrepreneurship. Entrepreneurship and Regional Development. An International Journal 25(9-10): 756‒780.

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One Comment
  1. Nice one, profe!
    Let me know if you’re ever in Berlin – would be great to catch up over coffee.

    Saludos,
    Ellie

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