Cultural Theory of Entrepreneurship

Scholars have long been fascinated by differences observed between cultures. For example, Thomas Cochran (1965) proposed that entrepreneurs are influenced by 1) their own attitudes toward their occupation, and 2) the expectations of groups facilitating new ventures, as well as 3) the difficulty level of 
the operational requirements of the career. He argues that both attitudes of potential entrepreneurs and the expectations of investors 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 imperfect interpretations.

Later on, Hofstede (1980) proposed that culture captures the set of values, beliefs, and expectations about behaviours 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. He argued that a national culture could be measured along six dimensions.
  • Power Distance
  • Uncertainty Avoidance
  • Individualism vs. Collectivism
  • Masculinity vs. Femininity
  • Long vs. Short Term Orientation
  • Indulgence vs. Restraint
Whole countries could then be measured to be more or less individualist/collectivist and then compared with each other. Cultural values influence the entrepreneurial behaviours in a society, such as the propensity take risks, or to pursue innovations that deviate from norms. Some cultures may value conformity, which may discourage innovation. For instance, Shane (1992) finds that individualism is positively related with innovation whereas power-distance is negatively related with 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.