Rugged individualism, economic growth, and inter-county variation in entrepreneurial activity

Abstract

ABSTRACT Does intra-country variation in individualism explain variations in intra-country entrepreneurial activity? Rugged individualism, a combination of individualism and anti-statism, is proxied by the total years of frontier experience in a US county between 1790 and 1890. We exploit this historic variation in tandem with present-day GDP growth in a county to test how the historic frontier experience interacts with changes in economic growth to explain the entrepreneurial activity. With small effect sizes, the findings demonstrate the greater (limited) value of rugged individualism in low (high) GDP growth conditions in driving entrepreneurial activity. Robust to a variety of specifications and a placebo test, the mechanism seems to operate through lower collective efficacy in counties with higher total frontier experience. The findings carry implications for within-country cultural variations and entrepreneurial activity.