In the expanding literature on entrepreneurship, the primary area of focus has been on the individual characteristics of the person contemplating or engaging in entrepreneurial activity. Often-studied characteristics have included need for achievement, risk-taking propensity, and locus of control (Begley & Boyd, 1987; Brockhaus & Horowitz, 1986). Since the 1980s, the focus has expanded to include elements related to the individual's network of contacts (Aldrich & Zimmer, 1986) and ability to develop a coherent strategy (Low & MacMillan, 1988).
Less attention has been paid to the larger socio-cultural environment
within which entrepreneurship takes place. The present paper seeks
to identify socio-cultural factors that predict intention to start a business
in various countries. It represents an effort to address questions
regarding the environment within which entrepreneurship occurs. Given
the dearth of attention to this area, the paper is necessarily exploratory
and seeks to provoke interest in additional work on the topic. This
paper is a component of a larger project that also will seek to evaluate
the politico-economic factors that influence predisposition toward starting
Existing Literature on the Area
Shapero and Sokol (1982) presented a model of the larger-scale precursors to starting a business that remains the reference point for subsequent studies on the topic. In their model, the usual inducement to forming a business is a displacement, for example, being fired, leaving school or the armed services, getting divorced, or moving to another country. For our purposes, the model's primary components are the inducement categories that influence one after a displacement. According to Shapero and Sokol, the first question asked after a displacement is whether it is desirable to start a business. They identify socio-cultural dimensions as of primary importance as inducements to answer the desirability question in the affirmative. The next question is whether starting a business is feasible. Primary in answering this question positively are factors in the environment such as the availability of financial and other support and the existence of models for success. A person who can answer both the desirability and feasibility questions positively has a high likelihood of taking the steps necessary to start a business.
The Shapero and Sokol (1982) paper sketches the general model and discusses some relevant features of it, but they leave it to others to more systematically fill in the specific dimensions in the socio-cultural and politico-economic categories that are relevant to decision making. Regarding socio-cultural dimensions, several have been suggested, including placing a high value on innovation, risk taking, and independence (Kolvereid & Obloj, 1994; Shapero & Sokol, 1982), personal values (Huisman, 1985; Shapero & Sokol, 1982), high social status for entrepreneurship (Davidsson, 1995; Ray & Turpin, 1987; Shane, Kolvereid, & Westhead, 1991), the importance placed on work in a society (McGrath, McMillan, Yang, & Tsai, 1992) and failure meaning loss of face (McGrath, McMillan, & Scheinberg, 1992).
As opposed to the number of socio-cultural dimensions suggested, the number that have been empirically tested is smaller. In a cross-country comparison of entrepreneurs with nonentrepreneurs, McGrath, McMillan, and Sheinberg (1992) found that entrepreneurs were less likely to agree that failure is associated with a loss of respect. Ray (1994), on the other hand, argued that fear of failure drove Singaporean entrepreneurs to strive harder to avoid insolvency. In a study of regions within Sweden, Davidsson (1995) concluded that a diverse set of entrepreneurial values differentiated in small but meaningful ways between regions in predicting the rates of new business start-ups, but a measure of the social status of entrepreneurship did not.
As can be seen, relatively little evidence exists on the question. One purpose of the present paper will be to seek to identify a set of socio-cultural dimensions that are potentially relevant to those considering starting a business. Since the literature in the area is characterized by an absence of scales to measure relevant dimensions, the paper will take initial steps to develop such scales. Finally, the paper will test the ability of these constructs to predict the degree to which individuals are interested in starting their own business.
In identifying the socio-cultural dimensions to include in the study as possible predictors of interest in becoming an entrepreneur, the authors chose a two-pronged approach. First, dimensions cited in the research literature were identified. Second, experts on entrepreneurship in Singapore and Indonesia were consulted and asked about the dimensions they viewed as potentially relevant. This process is described in the Methodology section below. The use of Asian experts was expected to provide an alternative perspective from the American-based one that is prominent in most academic research literature.
On the basis of this approach, four socio-cultural dimensions were chosen: the social status of entrepreneurship, the shame that might arise from a business failure, the value placed on innovation, and the value of work in a society. The concept of "face" was seen as playing a major role in influencing attitudes toward starting a business. Face has been defined as having two dimensions, the second of which refers to the prestige associated with success (Redding, 1993). Ethnic Chinese in particular (Hwang, 1987), but also other Asians cultures such as the Japanese (Hayashi, 1988), Thai (Mole, 1973), and Indonesians (Geertz, 1963) place high value on harmonious social relations that preserve the social order and protect face. In these group-oriented societies, people try to fit in with the group rather than stand out from it. At the same time, they strive in their actions to enhance their own face within the group. Since a high value is placed on the social hierarchy and people carefully attend to it, a major factor seen to affect entrepreneurship is the social status associated with it in a society. High social status of entrepreneurship is expected to encourage people to regard entrepreneurial careers positively and to encourage those with entrepreneurial ambitions to move forward.
The flip side of face concerns the shame from loss of face. To fail at a business one initiated would lead to the embarrassment associated with failure. Given this circumstance, the possibility of failure is expected to keep some people away from the risky activity of business start-up. These two dimensions were thought to be especially relevant in an Asian context.
High value placed on work and on innovation were expected to predict entrepreneurship. Value of work was thought important because business ownership requires such intensive time and effort that societies that did not place a high value on work might not see the worth in entrepreneurial striving. In the Asian context, the Overseas Chinese, Japanese, and Koreans were regarded as placing the highest value on work as compared with societies such as Thailand, Indonesia, and Malaysia. Within these societies, those who placed the highest value on work were thought to be most likely to tackle the rigors of business start-up and operations.
Finally, the role of innovation did not emerge as a particularly relevant factor thought to influence propensity to start a business. It received no real attention in the various discussions in Singapore and saw mixed opinions expressed as to its importance in the Indonesian setting. However, innovation and entrepreneurship are so closely linked in the literature that innovation has been included as a defining element of entrepreneurship (e.g., Carland, Hoy, Boulton, & Carland, 1984). Given the central role it is given in Western approaches to entrepreneurship, it was identified as a dimensions worthy of inclusion in this study.
Given the exploratory nature of this study, no formal hypotheses will
be presented. However, the above discussion indicates that high social
status for entrepreneurship in a society, high value for work, and low
fear of the shame of failure contribute to the propensity toward starting
a business. The value placed on innovation plays a less clear role.