The effect of cultural environment on entrepreneurial decisions

Abstract

This paper empirically examines whether the cultural environment plays a role in entrepreneurial decisions in Europe, the United States, Canada, and Australia. To explore this issue, we use data from the Adult Population Survey (APS) of 2010 to 2015 provided by the Global Entrepreneurship Monitor (GEM). To calculate the cultural factor, we utilize data from the GEM National Expert Survey (NES) data and apply a probit model to measure the effect of culture based on an unobserved latent variable of satisfaction, measured through a dichotomous variable identifying entrepreneurs. Results show a positive and statistically significant relationship between the cultural factor and the individual choice of entrepreneurial activity, suggesting that cultural environment is important, especially in European and Mediterranean countries. Our findings are robust to the introduction of several country variables, and to the use of different subsamples. Further, they do not qualitatively depend on the age of individuals