Culture and entrepreneurial potential: A nine country study of locus of control and innovativeness


Entrepreneurship research has identified a number of personal characteristics believed to be instrumental in motivating entrepreneurial behavior. Two frequently cited personal traits associated with entrepreneurial potential are internal locus of control and innovativeness. Internal locus of control has been one of the most studied psychological traits in entrepreneurship research, while innovative activity is explicit in Schumpeter's description of the entrepreneur. Entrepreneurial traits have been studied extensively in the United States. However, cross-cultural studies and studies in non-U.S. contexts are rare and in most cases limited to comparisons between one or two countries or cultures. Thus the question is raised: do entrepreneurial traits vary systematically across cultures and if so, why? Culture, as the underlying system of values peculiar to a specific group or society, shapes the development of certain personality traits and motivates individuals in a society to engage in behaviors that may not be evident in other societies. Hofstede's (1980) extensive culture study, leading to the development of four culture dimensions, provide a clear articulation of differences between countries in values, beliefs, and work roles. Although Hofstede did not specify the relationship between culture and entrepreneurial activity per se, his culture dimensions are useful in identifying key aspects of culture related to the potential for entrepreneurial behavior. In this paper we offer several hypotheses about the relationship between two of Hofstede's culture dimensions and psychological traits associated with entrepreneurial potential. We expect that an internal locus of control orientation is more prevalent in individualistic cultures than in collectivistic cultures. Likewise, we expect that an innovative orientation is more prevalent in low uncertainty avoidance cultures than in high uncertainty avoidance cultures. However, since neither internal locus of control nor innovativeness alone is sufficient to explain entrepreneurial motivation, we also hypothesize that individuals with both an internal locus of control and innovative orientation should appear more frequently in highly individualistic and low uncertainty cultures. These hypotheses were tested on a sample of over 1,800 responses to a survey of third- and fourth-year students at universities in nine countries. Eighteen items in the survey instrument were used to construct scales for innovativeness and locus of control. Items for the innovativeness scale were adapted from the Jackson Personality Inventory while items used for the locus of control scale were adapted from Rotter's I-E scale. The results of this exploratory study support the proposition that some cultures are more conducive for entrepreneurship than others. In individualistic cultures we found an increased likelihood of an internal locus of control orientation. There was also support for the hypothesis that an entrepreneurial orientation, defined as internal locus of control combined with innovativeness, is more likely in individualistic, low uncertainty avoidance cultures than in collectivistic, high uncertainty avoidance cultures. Culture, it appears, may condition potential for entrepreneurship, generating differences across national and regional boundaries. One tentative conclusion is that a "supportive" national culture will, ceteris paribus, increase the entrepreneurial potential of a country. This suggests that in addition to support from political, social, and business leaders, there needs to be a supportive culture to cultivate the mind and character of the potential entrepreneur. To be motivated to act, potential entrepreneurs must perceive themselves as capable and psychologically equipped to face the challenges of a global, competitive marketplace. Business education can play an important role in this regard by providing not only the technical tools (i.e. accounting, marketing, finance, etc.), but by also helping to reorient individuals toward self reliance, independent action, creativity, and flexible thinking. This study examines only two entrepreneurial traits (innovativeness and internal locus of control) and only one of the many contextual factors (culture) which may explain differences among countries in the rate of new venture formation. Future research should expand this investigation to include other traits associated with entrepreneurial behavior as well as the effect of other contextual factors such as education system, political economy, and stage of economic development. © 2000 Elsevier Science Inc.

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Journal of Business Venturing