Relationship between individualist–collectivist culture and entrepreneurial activity: evidence from Global Entrepreneurship Monitor data

Abstract

This paper examines how one dimension of national culture (an individualist–collectivist orientation) is related to Total Entrepreneurial Activity, depending on the level of economic development, measured by GDP per capita. Researchers have traditionally associated individualism with high rates of firm creation, arguing that an orientation towards achievement and the pursuit of personal objectives (dominant aspects in individualist cultures) are determinants of entrepreneurial activity. The current analysis shows that a country’s culture correlates to entrepreneurship, but cannot uphold the idea that higher levels of individualism mean higher rates of entrepreneurship. Using data from the Global Entrepreneurship Monitor on 52 countries, the results show that a country’s entrepreneurship rate is negatively related to individualism when development is medium or low, and positively related to individualism when the level of development is high. Thus, individualism is not related to entrepreneurship in the same way in countries with differing levels of development.