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Uncertainty Avoidance and the Rate of Business Ownership across 22 OECD Countries, 1976-2000

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Author Info
Sander Wennekers (EIM Business and Policy Research)
Roy Thurik () (Faculty of Economics, Erasmus University Rotterdam, and EIM Business and Policy Research)
André van Stel () (EIM Business and Policy Research, and Erasmus University)
Niels Noorderhaven (Tilburg University)

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Abstract

This paper deals with the influence of cultural attitudes towards uncertainty on the level of business ownership across countries. First, the concepts of uncertainty and risk are elaborated, as well as their relevance for entrepreneurship. Second, cross-sectional regression analysis using data for three separate years in twenty Western countries and Japan and controlling for GDP per capita, yields evidence that uncertainty avoidance is positively correlated with the prevalence of business ownership. This surprising finding suggests that a personal trait (risk aversion) and its related cultural characteristic (uncertainty avoidance) may have a diverging impact on entrepreneurship. Possibly, a climate of uncertainty avoidance in large organizations pushes enterprising individuals towards self-employment. Third, we carry out pooled panel regressions with respect to business ownership rates in two distinct cultural country clusters for the years 1976, 1988 and 2000. In the group of high-uncertainty avoidance countries a strongly negative relationship between GDP per capita and the level of business ownership is found, suggesting that rising opportunity costs of entrepreneurship are the dominant perception in this cultural environment. In a group of low-uncertainty avoidance countries no such influence of per capita income is found, but the profits associated with being self-employed are positively associated with business ownership.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 03-089/3.

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Date of creation: 07 Nov 2003
Date of revision: 01 Sep 2004
Handle: RePEc:dgr:uvatin:20030089

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Keywords: P52; Zl; M13; 011; 057;

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Rui Baptista, 2004. "Culture, Institutions and Government Attitudes towards New Firm Entry," Papers on Entrepreneurship, Growth and Public Policy 2004-39, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
  2. Lorraine Uhlaner & Roy Thurik, 2005. "Post-Materialism Influencing Total Entrepreneurial Activity Across Nations," Papers on Entrepreneurship, Growth and Public Policy 2005-20, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
    Other versions:
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