Cultural theory of entrepreneurship

What is the cultural theory of entrepreneurship?

Thomas Cochran (1965) proposed that entrepreneurs are influenced by their own attitudes toward their occupation, and the expectations of groups facilitating new ventures, as well as the difficulty level of the operational requirements of the career. He argues that both attitudes of potential entrepreneurs and the expectations of sanctioning groups are culturally determined.

He looked to evidence in historical cases such as the entrepreneurial prominence of Protestants in America, Samurais in Japan, the Yoruba in Nigeria, the Kikuya in Kenya, Christians in Lebanon, the Halai Memon in Pakistan, and the Parsis in India. Each of these cases can be considered interpretations derived from cultural biases.

Hofstede (1980) proposed that culture captures the set of values, beliefs and expectations about behaviors that are shared by a social group. Cultural values can be unconscious or conscious, rational or irrational, but either way, they influence the social, political and technological institutions of a society. These institutions then serve to reinforce the values in a virtuous or vicious circle.

Cultural values influence the entrepreneurial behaviors in a society, such as the propensity take risks, or to pursue innovations that deviate from norms. Some cultures may value conformity, which discourages innovation. For instance, Shane (1992) finds that individualism is positively related to innovation whereas power-distance is negatively related to innovation. Davidsson and Wiklund (1997) find that societies that value autonomy, have a higher level of need for achievement and greater self-efficacy tend to have higher rates of new venture founding. Low uncertainty avoidance may also play a role in new venture creation.

Subsequent studies suggest that these relationships may change within a culture over time, suggesting the need for more research.

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Other Cultural Theories of Entrepreneurship:

Sources:

Cochran, T. C. (1965). The entrepreneur in economic change. Explorations in Economic History, 3(1), 25-38.

Hofstede, G. (1980). Culture and organizations. International Studies of Management and Organization, 10(4), 15-41.

Davidsson, P., and Wiklund, J. (1997). Values, beliefs and regional variations in new firm formation rates. Journal of Economic psychology, 18(2), 179-199.

Shane, S. A. (1992). Why do some societies invent more than others?. Journal of Business Venturing, 7(1), 29-46.

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