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Individualistic culture and entrepreneurial opportunities

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  • Assmann, Daisy
  • Ehrl, Philipp

Abstract

The present paper evaluates the effect of the cultural trait “individualism” on opportunity entrepreneurship, using cross-country data from the Global Entrepreneurship Index (GEI). We use a combination of the fractional probit regression model and an instrumental variable approach to avoid biased estimates. Individualism emphasizes freedom, personal achievements, and encouragement of change, i.e., values related to the entrepreneurial spirit. Accordingly, we find that in individualistic countries opportunity entrepreneurship is higher. About half of the magnitude of this effect is transmitted indirectly because people in individualistic countries tend to perceive better opportunities and because those nations are more innovative. The direct effect seems to occur because people derive more utility from their outstanding position in society, and/or due to personal attitudes and social legitimation. These findings are robust to the sample composition and to differences in institutions, religious affiliation, unemployment, education, and wealth.

Suggested Citation

  • Assmann, Daisy & Ehrl, Philipp, 2021. "Individualistic culture and entrepreneurial opportunities," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 1248-1268.
  • Handle: RePEc:eee:jeborg:v:188:y:2021:i:c:p:1248-1268
    DOI: 10.1016/j.jebo.2021.06.035
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    More about this item

    Keywords

    Individualism; Entrepreneurship; Opportunity perception; Innovation; Fractional Probit;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • Z1 - Other Special Topics - - Cultural Economics
    • D2 - Microeconomics - - Production and Organizations
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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