Marta 

Peris-Ortiz 
José M. Merigó-Lindahl Editors

Entrepreneurship,
Regional
Development and
Culture
An Institutional Perspective
Entrepreneurship, Regional Development
and Culture
Marta Peris-Ortiz • José M. Merigó-Lindahl
Editors

Entrepreneurship, Regional
Development and Culture
An Institutional Perspective
Editors
Marta Peris-Ortiz José M. Merigó-Lindahl
Department of Business Administration Department of Management Control
Universitat Politècnica de València and Information Systems
Valencia, Spain University of Chile
Santiago, Chile

ISBN 978-3-319-15110-6 ISBN 978-3-319-15111-3 (eBook)

DOI 10.1007/978-3-319-15111-3

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Preface

Entrepreneurship, regional development and culture are three dimensions of the

same phenomenon, which is built around entrepreneurial action and the formal and
informal institutions that help or hinder entrepreneurial activity and its effects on
regional economic growth. Penrose (1959) referred to the mind of the manager as a
fundamental business resource, implying that the manager’s ideas stem from the
beliefs and values (i.e. the cultural framework) that have shaped or influenced his or
her thinking. Likewise, through the concept of enactment, Weick (1969) referred to
the capability for the best business proposals and initiatives to succeed in their eco-
nomic and social environments, implying that these proposals represent the ways that
managerial thinking and its supporting beliefs and values materialize (North, 2005).
The success of entrepreneurial action and the economic growth this success leads
to depend on the suitability of the economic environment in which this action takes
place or on the action’s capability to transform the economic environment. In other
words, the success of entrepreneurial action depends on the discovery of opportuni-
ties within the economic environment (Shane, 2012; Shane & Venkataraman, 2000).
However, entrepreneurial initiative and economic environment may not be suited to
one another, even though they share a common history. The phenomenon of entre-
preneurship, therefore, should be studied to discover which conditions stimulate or
improve entrepreneurial activity and to identify circumstances in which the proba-
bility of entrepreneurial success is greatest, whether because entrepreneurial action
adapts to the economic environment or because entrepreneurial action is capable of
transforming the surroundings.
Therefore, to discover which conditions stimulate entrepreneurship and to iden-
tify circumstances in which entrepreneurial action is most successful, the present
book collates 12 chapters that address issues ranging from cultural conditions of
entrepreneurship (North, 1990; Schwartz, 1994) to the effects of entrepreneurship
on economic growth in different countries or regions.
Relationships between culture and entrepreneurship explain how the culture of
the social and economic environment affects entrepreneurial behaviour and strategy
(Chaps. 1–5, 7, 9 and 10); how values and culture generated within the business
(i.e. in the corporate dimension of entrepreneurship) affect entrepreneurial action

v
vi Preface

(Chaps. 6 and 12); and how public policies and entrepreneurship generate values,
culture and differing levels of legitimacy in entrepreneurial action (Chaps. 5, 7
and 8). Although entrepreneurship is usually understood in its strictly economic
dimension (i.e. as the search for profit-making opportunities), there are other rel-
evant dimensions of entrepreneurial action. Chapters 5 and 10 show that entrepre-
neurship can also be understood as a solution to social problems (Tracey, Phillips,
& Jarvis, 2011). In contrast, by considering entrepreneurship in the broader sense
of the institutional approach to entrepreneurial action (Veblen, 1899, Veciana &
Urbano, 2008), Chap. 11 shows that entrepreneurship is linked to broader ethical
and anthropological issues.
The diversity of these 12 chapters enriches this collection of studies of entrepre-
neurial culture and action. The chapters make several notable contributions. First,
Chap. 3 uses historical antecedents of entrepreneurial context to explain current
characteristics of entrepreneurial context. Second, Chaps. 6 and 12 show the impor-
tance of business values in explaining entrepreneurial action (i.e. in the corporate
dimension of entrepreneurship). Third, Chaps. 2–4 and 8–10 present research on
entrepreneurship in terms of cultural and contextual conditions in different countries
or regions and, consequently, in terms of different forms of entrepreneurial action.
Finally, as Orlikowski (1992, 2002) has noted in relationships between culture
and entrepreneurship, the way in which entrepreneurial action shapes business tech-
nology and practices forms or changes the business’s dominant ideas, values and
beliefs. Thus, the way a business acts creates organizational or formal institutional
aspects and informal aspects or values and beliefs (Tracey et al., 2011; Weick &
Roberts, 1993). These aspects then affect future decisions and actions. It is also
worth mentioning entrepreneurship policies in society because the way that entre-
preneurial activities are carried out and the fundamental role that entrepreneurship
plays in business shape society (North, 1981; North, Smallbone, & Vickers, 2001).

Valencia, Spain Marta Peris-Ortiz

Santiago, Chile José M. Merigó-Lindahl

Bibliography

North, D. C. (1981). Structure and change in economic history. New York: W. W. Norton & Company.
North, D. C. (1990). Institutions, institutional change and economic performance. Princeton, NJ:
Princeton University Press.
North, D. C. (2005). Understanding the process of economic change. Princeton, NJ: Princeton
University Press.
North, D. C., Smallbone, D., & Vickers, I. (2001). Public support policy for innovative SMEs.
Small Business Economics, 16(2), 303–317.
Orlikowski, W. J. (1992). The duality of technology: Rethinking the concept of technology in
organizations. Organization Science, 3(3), 398–427.
Orlikowski, W. J. (2002). Knowing in practice: Enacting a collective capability in distributed orga-
nizing. Organization Science, 13(3), 249–273.
Penrose, E. (1959). The theory of the growth of the firm. Oxford, NY: Basil Blackwell/Wiley.
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Schwartz, S. H. (1994). Beyond individualism/collectivism: New cultural dimensions of values. In

U. Kim, H. C. Triandis, C. Kâğitçibaşi, S.-C. Choi, & G. Yoon (Eds.), Individualism and col-
lectivism: Theory, method, and applications. Cross-cultural research and methodology series
(Vol. 18, pp. 85–119). Thousand Oaks, CA: Sage.
Shane, S. (2012). Reflections on the 2010 AMR decade Award: Delivering on de promise of entre-
preneurship as a field of research. Academy of Management Review, 37(1), 10–20.
Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research.
Academy of Management Review, 25, 217–226.
Tracey, P., Phillips, N., & Jarvis, O. (2011). Bridging institutional entrepreneurship and the cre-
ation of new organizational forms: A multilevel model. Organization Science, 22(1), 60–80.
Veblen, T. B. (1899): The theory of the leisure class: An economic study of institutions. A Penn
State Electronic Classics Series Publication.
Veciana, J. M., & Urbano, D. (2008). The institutional approach to entrepreneurship research.
Introduction. International Entrepreneurship Manager Journal, 4, 365–379.
Weick, K. E. (1969). The social psychology of organization. Reading, MA: Addison Wesley.
Weick, K. E., & Roberts, K. H. (1993). “Collective mind in organizations: Heedful interrelating on
flight decks. Administrative Science Quarterly, 38, 357–381.
Contents

1 A Cultural Perspective on Entrepreneurship

and Regional Development: The Case of the Bages (Catalonia) ........ 1
Daniela Gimenez, Marta Peris-Ortiz, and David Urbano
2 Entrepreneurship and Location: The Cultural Differences
Between Two Countries .......................................................................... 23
João J. Ferreira and Cristina I. Fernandes
3 Entrepreneurship and the Influence of History:
How Much Impact Do Country-Specific Historical Factors
Have on Entrepreneurship Initiatives? ................................................. 35
Inés Alegre and Jasmina Berbegal-Mirabent
4 Understanding the Role of Culture and Economic
Conditions in Entrepreneurship ............................................................ 53
Francisco Liñán, Inmaculada Jaén, and Francisco J. Ortega
5 The Effect of Cultural Factors on Social Entrepreneurship:
The Impact of the Economic Downturn in Spain ................................ 75
Elisabeth Ferri, Maria Noguera, and David Urbano
6 The Entrepreneur’s Values and the Growth Expectations
of New Ventures....................................................................................... 89
Alejandro Campos, Esther Hormiga, and Alba Sánchez
7 Entrepreneurship Policy and Its Impact on the Cultural
Legitimacy for Entrepreneurship in a Developing
Country Context...................................................................................... 109
Vesna Mandakovic, Boyd Cohen, and José Ernesto Amorós
8 The Role of Normative Legitimacy in the Development
of Efficiency-Driven Countries .............................................................. 127
Emilio Díez, Camilo Prado-Román, Francisco Díez-Martín,
and Alicia Blanco-González

ix
x Contents

9 Cultural Influences on the Entrepreneurial Intentions

of University Students: A Comparative Study Between
Spain and Portugal ................................................................................. 141
Joao J. Ferreira, Cristina I. Fernandes, Mário L. Raposo,
Jose C. Sanchez, and Brizeida R. Hernandez-Sanchez
10 Social Entrepreneurship and Social Entrepreneurs:
The Influence of Cultural Context ........................................................ 157
Antonio Ariza-Montes, Emilio J. Morales-Fernández,
and Antonio Sianes
11 Understanding Entrepreneurship Through the Enrichment
of Institutional Theory by Ethics ........................................................... 179
Alexis J. Bañón-Gomis
12 The Importance of a Proactive Culture of Exporting SMEs:
Effect on Export Performance and Regional Development ................ 191
Antonio Navarro-García, Ramón Barrera-Barrera,
and Arturo Calvo-Mora Schmidt

Index ................................................................................................................. 213

Chapter 1
A Cultural Perspective on Entrepreneurship
and Regional Development: The Case
of the Bages (Catalonia)

Daniela Gimenez, Marta Peris-Ortiz, and David Urbano

Abstract The purpose of this chapter is to analyze, from a qualitative approach, the
relationship between institutions, entrepreneurship and local development in the
region of the Bages (Catalonia). The main findings suggest in the light of insti-
tutional economics that entrepreneurship in this region is greatly influenced by
informal institutions (culture, social networks and role models). Also, the results
highlight the influence of entrepreneurship on the regional development (jobs gen-
eration, economic growth and innovation). The research has conceptual implica-
tions (advancing in the application of institutional perspective in the field of
entrepreneurship) and practical implications (for the design of governmental poli-
cies towards regional development).

1.1 Introduction

The creation of new businesses is considered a key element of economic growth,

innovation and employment (Carree, Van Stel, & Thurik, 2002; Davidsson,
Lindmark, & Olofsson, 1994; North, Smallbone, & Vickers, 2001; Van Stel &
Kashifa, 2008; Wennekers & Thurik, 1999; among others). In recent years, scholars

D. Gimenez (*)
Business Administration, University of Witten/Herdecke,
50, Alfred-Herrhausen-Street, Witten, North Rhine Westfalia 58448, Germany
e-mail: daniela.gimenez@e-campus.uab.cat; Daniela.GimenezJimenez@uni-wh.de
M. Peris-Ortiz
Business Administration, Universitat Politècnica de València,
s/n Camino de Vera, Valencia, Valencia 46022, Spain
e-mail: mperis@doe.upv.es
D. Urbano
Department of Business, Autonomous University of Barcelona,
Building B, Campus UAB, Bellaterra (Cerdanyola del Vallès), Barcelona 8193, Spain
e-mail: david.urbano@uab.cat

© Springer International Publishing Switzerland 2015 1

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_1
2 D. Gimenez et al.

in the entrepreneurship field have studied the factors that affect entrepreneurship
and their positive impact on economic growth to understand what promotes entre-
preneurial activity and also how to improve the development of regions or countries
to increase wealth in society.
In order to understand the phenomenon of entrepreneurship, different approaches
have been utilized: economic, psychological, organizational and institutional. Based
on North (1990, 2005), the institutional approach applied to the entrepreneurship
field, considers that the role of the environment in the decision to create a company is
critical, not only regarding legal aspects, public policy and support services (formal
institutions), but especially in relation to the socio-cultural context (informal institu-
tions) (Alvarez, Urbano, Corduras, & Navarro, 2011; Thornton, Ribeiro-Soriano, &
Urbano, 2011; Veciana & Urbano, 2008; among others). Nevertheless, few studies
have been focused on this topic (Benneworth, 2004; Fornahl, 2003; Fritsch, 2008).
Therefore, the purpose of this chapter is to analyze, from a qualitative approach, the
relationship between institutions, entrepreneurship and local development in the
region of the Bages (Catalonia). Specifically the research questions are the following:
(1) which institutions affect entrepreneurial activity in the Bages? and (2) how does
entrepreneurial activity influence regional development? To answer these questions,
we use case study method (Yin, 1994) and in particular, a multiple case study of four
organizations (support organizations and firms) in the region of the Bages (Catalonia).
The main findings of the study suggest that the creation of new ventures in the
Bages is greatly influenced by informal institutions (culture, social networks and
role models) and education as a formal institution. Also, the results highlight the
influence of entrepreneurship on the regional development, specifically through the
generation of new jobs, the stimulation of economic growth and innovation.
The research has both conceptual and practical implications. Theoretically, the
paper advances in the application of institutional perspective in the field of entrepre-
neurship and also considering the regional development. Empirically, the work
could be useful for the design of governmental policies towards the regional
economic and social development.
After this brief introduction, the chapter is structured in four sections. First, the
conceptual framework is presented. Second, the methodology of the research is
explained. Third, the main findings are discussed. And finally, conclusions and
future research lines are presented.

1.2 Conceptual Framework

1.2.1 Institutional Approach

North (1990, 2005) suggested that institutions are the humanly devised constraints
that structure political, economic and social interaction, through informal constr-
aints (sanctions, taboos, customs, traditions, and codes of conduct) and formal rules
(constitutions, laws, and property rights). On the other hand, Scott (2008, p. 33)
1 A Cultural Perspective on Entrepreneurship and Regional Development: The Case… 3

proposed a definition of institutions as “cognitive, normative and regulative

structures and activities that provide stability and meaning in social behavior”; these
three pillars are integrated by cultures, structures, and routines, and they operate at
multiple levels of jurisdiction. Furthermore, Busenitz, Gómez, and Spencer (2000)
introduced and validated a measure of a country’s institutional profile for entrepre-
neurship, consisting of regulatory, cognitive and normative dimensions, using a
database of six countries. This research demonstrated that entrepreneurs in one
country might have a competitive advantage over entrepreneurs in other countries
because of country-level institutional differences, or, more precisely, a country’s
strengths and weaknesses. It is important to observe that Baumol (1993) emphasized
the role that the institutional environment plays in the promotion of entrepreneurial
development, suggesting that productive entrepreneurship occurs at lower levels
where the incentives and support are weaker. Baumol (1993) also presented an anal-
ysis of the types of entrepreneurship that can arise in different institutional environ-
ments; for instance, there may be benefits and rewards for rent-seeking activities, or
the benefits of engaging in illegal entrepreneurial activity may outweigh the costs.
Also he highlighted the importance of institutions in providing incentives for
different types of economic activity. It is important to realize how he connected
entrepreneurship and the institutional approach.
Some authors such as Hayton, George, and Zahra (2002) have observed that
there are three research streams that integrate national culture and entrepreneurship.
The first research stream focuses on the impact of national culture on the aggregate
measures of entrepreneurship, such as national innovative capacity or the number of
new businesses created. The second stream addresses the association between
national culture and the characteristics of individual entrepreneurs. Within this
stream of literature, researchers have examined the values, beliefs, motivations, and
cognitions of entrepreneurs across cultures. The third stream explores the impact of
national culture on corporate entrepreneurship. Bruton, Ahlstrom, and Li (2010)
also studied entrepreneurship and institutional theory in three major areas—institu-
tional setting, legitimacy and institutional entrepreneurship.

1.2.2 Entrepreneurial Activity from an Institutional

Perspective: Proposed Model

Various authors have justified the relevance of the institutional approach in the field
of entrepreneurship (Bruton et al., 2010; Hayton et al., 2002; Thornton et al., 2011;
Veciana & Urbano, 2008). As we mentioned before, based on North (1990, 2005), the
institutional approach applied to the entrepreneurship field (Alvarez & Urbano, 2011;
Guerrero & Urbano, 2012; Urbano, Toledano, & Soriano, 2010; Urbano, Toledano,
& Ribeiro Soriano, 2011; among others) considers that informal institutions include
cultural and social norms, the social image of entrepreneurs, entrepreneurial role
models, fear of failure, etc., and formal institutions include education, opportunities,
abilities and knowledge for starting up businesses, finance, government policies,
government programs, etc.
4 D. Gimenez et al.

Personal and situational variables typically have an indirect influence on

entrepreneurship by influencing key attitudes and general motivation to act. Role
models, for instance, affect entrepreneurial intentions largely because they affect
attitudes and beliefs such as perceived self-efficacy (Krueger, Reilly, & Casrud,
2000). It is important to emphasize attention to the social, cultural, and political
environment, which represents the institutional environment where entrepreneur-
ship emerges, the effect of societal attitudes towards entrepreneurship, the nature
and extent of business opportunities, and the resources that can be mobilized to
exploit those opportunities (Welter & Smallbone, 2011). In empirical research,
Alvarez et al. (2011) found that four informal institutions (primary education, cul-
tural and social norms, opportunities to start up a business, and the social image of
entrepreneurs) have a greater influence than formal institutions. In addition, the
evidence shows that broad cultural characteristics are associated with the national
level of entrepreneurship. High individualism, low uncertainty avoidance and high
power distance have, in particular, been shown to have a correlation with the
national rate of innovation (Bruton et al., 2010). In empirical research, Verheul, Van
Stel, and Thurik (2006) observed links between entrepreneurship rates and per cap-
ita income, unemployment, whether the sector was informal, whether the country
was a former communist country, and whether there was informal venture capital.
They found that the negative effect of the unemployment rate is smaller for women
than for men, and that the effect of life satisfaction on entrepreneurship is positive
for women and is non-existent for men. The relevance of informal institutions is
that they have spontaneous origins (Williamson, 2000) and are constituted by cul-
ture and by social relations. Because human, social and cultural capital are often
antecedents to acquiring financial capital and the other resources needed to start a
business, an institutional approach with its broad meta-theory holds out promise for
developing future entrepreneurship research (Thornton et al., 2011). Considering
the previous literature, the following propositions are suggested:
P1: Informal factors promote entrepreneurial activity.
P1a: Cultural factors have a positive influence on entrepreneurial activity.
Social networks are defined by a set of actors (individuals and organizations) and
a set of linkages between those actors (Brass, 1992). According to Anderson and
Jack (2002), social networks are also a set of relationships that can define the per-
ception of a community, whether this is a business community or a more general
community in society. Also Burt (1992) described social networks as the relation-
ships through which one receives opportunities to use financial and human capital;
a network is not solely the property of an individual, but is jointly owned by its
members.
In empirical research in Russia, Aidis, Estrin, and Mickiewicz (2008) observed
two different characteristics of networking in the Russian economy: the scale of the
phenomenon is wider than in developed economies, and networks do not comple-
ment the market but can be a substitute for the market, increasing transaction costs.
Also, Aidis et al. (2008) observed that young people in Poland and Brazil have a
higher likelihood of being involved in the creation of new ventures than young
1 A Cultural Perspective on Entrepreneurship and Regional Development: The Case… 5

people in Russia, and they suggested that this pattern could be consistent with the
properties of the networks. Older Russians probably have an advantage in terms of
their access to networks and contact with the bureaucracies that are involved in the
creation of businesses. Aidis et al. also observed the importance of networks in
Russia. Considering these factors, the new institutionalism has worked to stimulate
significant discussions not only about formal rules and governance structures, but
also about informal norms and social networks, and about the relationship between
these. Then, we suggest the following proposition:
P1b: Social networks positively influence entrepreneurial activity.
Some authors, such as Shapero and Sokol (1982) and Krueger et al. (2000), high-
light the importance of positive examples on a decision to become an entrepreneur.
According to Anderson (1980), the factor which influences whether individuals are
treated as role models is whether the information fits into already existing patterns
or may be easily linked; this process is conducted through cognitive cues which are
accumulated and attached to cognitive frames or representations.
Moreover, Fornahl (2003) suggested that institutional factors influence entrepre-
neurial activity; the roles of entrepreneurs are examples of how the environment can
in some contexts be a positive influence. He argued that cognitive representations
and information available to an economic agent are the basis for decision-making;
this individual is embedded in a social context that has an influence on the represen-
tations and the learning processes, and this cognitive representation is then shared
with a group of agents so that this group, because it receives the same information,
has a similar perception. As Welter and Smallbone (2011) proposed, entrepreneur-
ship results from the creativity, drive, and commitment of individuals. In this way
the business environment can influence the nature and extent of entrepreneurship
and the behavior of entrepreneurs. In order to observe this suggestion empirically,
they analyzed certain countries that were members of the European Union and that
showed a rapid change in their policy and institutional environments over time, and
they considered the scale of the challenge of building institutional capacity and
changing institutional behavior. Their results may explain the fact that, when entre-
preneurs are more established, the probability that there is an increased number
of new ventures is higher: the social environment affects the propensity to start
an entrepreneurial career (Gibson, 2004). The importance of role models has been
observed empirically in many research studies: for example, in a study in Russia it
was observed that individuals who are already in the business sector dominate the
entry into entrepreneurial activity in the country. Also, knowing other entrepreneurs
plays an important and positive role in the activity, and a previous failed entrepreneu-
rial attempt is not significantly associated with serial entrepreneurship (which is dif-
ferent from the position in comparator countries) (Aidis et al., 2008). Moreover, Van
Auken, Fry, and Stephens (2006) observed a relationship between the intention to
carry out 20 specific activities in which role models and potential entrepreneurs might
engage, and the desire to own a business. Role model activities such as involving the
respondent in professional activity, employment in the business and discussions about
the business were found to be significantly related to interest in starting a business.
6 D. Gimenez et al.

Some authors find that role models can weakly predict future entrepreneurial activity
(Carsrud, Olm, & Eddy, 1987; Scott & Twomey, 1988). Other authors have observed
the influence of role models as a predictor for the intention of becoming an entre-
preneur (Bandura, 1986; Fornahl, 2003; Krueger, 1993; Krueger et al., 2000;
Lafuente, Vaillant, & Rialp, 2008). Thus, we suggest the following proposition:
P1c: Role models encourage entrepreneurship.
Various pieces of research based on institutional economics have focused on
formal institutions, defined as those laws or rules that establish economic relations
between individuals (Chrisman, Hoy, & Robinson, 1987; Lerner & Haber, 2001;
North et al., 2001). In empirical research, Alvarez et al. (2011) observed that
commercial and services infrastructure and intellectual property rights (formal
institutions) have a significant influence on entrepreneurial activity. The other for-
mal institutions, such as finance, research and development transfer and physical
infrastructure, do not have associations with entrepreneurial propensity. Some stud-
ies have discussed the influence of education and training as formal factors affecting
entrepreneurial activity. Various authors suggest that education has a favorable
effect on the creation of new ventures (Coleman, 2007; Wilson, Kickul, & Marlino,
2007; and others). Fairlie and Robb (2009) observed the existence of a positive
relationship between education, entrepreneurship and economic performance.
On the other hand, Grilo and Irigoyen (2006) studied the effect of gender and
educational level on latent entrepreneurship, finding that the venture is not affected
by educational level or gender.
Moreover, some authors such as Kirby (2004) and Chia (1996) suggested that
developing entrepreneurs in the classroom is about developing an enterprising envi-
ronment and approaches to learning in which entrepreneurial aptitudes and capabili-
ties can flourish, alongside business acumen and understanding. For instance, Rae
(1997) proposed that the traditional skills taught in business schools are important
for becoming an entrepreneur, but are not sufficient for creating a successful busi-
ness; entrepreneurs should also have skills in such areas as communication, persua-
sion, leadership, and negotiation. It is important to emphasize that it is necessary to
create a learning environment that strengthens such skills. Also, it is proposed that,
to have a greater impact on entrepreneurial activity, a system of learning should be
developed that complements the traditional system and develops in its students the
skills, attributes and behavior which feature in an enterprising or entrepreneurial
individual (Kirby, 2004). Considering the literature reviewed and even though some
different positions are observed, we suggest:
P2: Formal factors positively influence entrepreneurial activity.
P2a: Education promotes entrepreneurial activity.
Obtaining financial support, access to capital, management skills and education
of the available workforce and future entrepreneurs have been seen as major barriers
to entrepreneurial development (Castrogiovanni, Urbano, & Loras, 2011). A sup-
port organization that offers consultancy programs appears to offer tools that
may be employed as a strategy for overcoming the management skills barriers
1 A Cultural Perspective on Entrepreneurship and Regional Development: The Case… 7

(Chrisman et al., 1987). Sarder, Ghosh, and Rosa (1997), in empirical research,
found that, in Bangladesh, firms assisted by governmental and non-governmental
support organizations performed significantly better than non-assisted firms. Also
some evidence suggests that society judges an organization as appropriate partly on
the basis of its past performance. Established organizations can use their perfor-
mance records to acquire legitimacy and access resources. A new venture cannot
do so as there is no existing record of its performance (Bruton et al., 2010).
According to these results, entrepreneurs have an additional barrier to developing a
new venture.
In research conducted in Catalonia it was observed that the most relevant factors
for the development of entrepreneurial activity are government support, access to
finance and new technology. However, factors that are perceived as barriers to start-
ing up a new venture are lack of initial capital, competition, a tax burden and bureau-
cracy (Urbano, 2006). It is important to observe that ventures that have been
supported may show better performance. Lerner and Haber (2001) studied the envi-
ronmental factors and business and personal factors associated with the success of
tourism ventures. They observed that those tourism ventures that are financially
supported by external sources perform better than those ventures that are not.
However, when there is advisory support from a governmental tourism advisor, it is
precisely the non-assisted ventures that achieve better performance. In another
empirical study in Ireland, the evidence showed that those firms that were supported
financially by external sources were larger and attained a higher level of revenues
(O’Farell, 1986). In both cases we can observe that ventures that have financial
support have better performance than ventures that are not assisted. Based on the
literature review, we suggest the following proposition:
P2b: Financial support positively stimulates entrepreneurship.
Some elements of entrepreneurship observed in more successful regions are
dynamic, self-reinforcing and productivity-raising qualities. These qualities have an
effect in two ways. The first is by improving the innovativeness of existing assets,
increasing the scope of entrepreneurial networks and allowing other participants to
benefit from those networks (Benneworth, 2004). The second way occurs because
informal factors like families, social milieus or groups are the basis for role models
for entrepreneurs and the general attitude in society imitates this (Simonton, 1975).
The different factors that are mainly considered to influence regional development
are information exchange and cognitive representations influenced by proximity;
regional networks add some important insights. However, it is important to note that
general environmental conditions are not sufficient to explain differences and
changes in entrepreneurial activity (Fornahl, 2003). It is important to understand
that the formation of a new business by definition creates new jobs; this direct
employment effect cannot be negative. The effect of a new venture cannot be
expected to be identical in all regions, but rather it should be considerably different
(Fritsch, 2008). However, the impact of entrepreneurial activity on economic devel-
opment is difficult to observe, and for this reason some authors suggest that the
lack of clarity on the impact of new businesses on regional development may be
8 D. Gimenez et al.

Fig. 1.1 Proposed model

attributed to the relatively long time lags that are required for the main effects of the
new entries to become evident (Audrertsch & Fritsch, 2002), and to the fact that
employment gains are in subsequent years are more than compensated for by
declines in existing capacities due to crowding-out effects and failing newcomers;
however, the net employment effect of the entry processes over the first six or seven
years may be negative (Fritsch & Mueller, 2004).
According to Fornahl (2003), national variables have an influence on entrepre-
neurial activity, but regional specifications stimulate this activity and cause new
ventures to be created. Fritsch (2008) also considered that the employment effect is
probably positive in high productivity regions with high quality entries, abundant
resources and a well-functioning innovation system. In contrast, low productivity
regions, with low quality entries, scarcity of relevant resources and low quality
innovation systems, will show lower or negative effects on the employment rate.
In an empirical research, Van Stel and Kashifa (2008) observed in the Netherlands
that the overall employment impact of new start-up firms is positive but that the
immediate employment effects may be small. Moreover, they found that the employ-
ment impact of new firms is stronger in the manufacturing sector and in areas with
a higher degree of urbanization. This leads us to say that the impact of new business
formation depends on the region or country where the entrepreneurial activity is
developed. Thus, we propose:
P3: Entrepreneurial activity has a positive influence on regional development.
Therefore, based on the literature review, we proposed the following model which
relates institutions, entrepreneurial activity and regional development (see Fig. 1.1).

1.3 Methodology

This chapter is based on a multiple case design that allows replication logic to
be used. The series of cases is treated as a series of experiments, each serving to
confirm or counter the inferences or propositions drawn from the others (Yin, 1994).
1 A Cultural Perspective on Entrepreneurship and Regional Development: The Case… 9

In this chapter we employ an embedded design, with multiple levels of analysis

focusing on each organization at one level, the institutional environment (informal
and formal) according to the institutional approach. Although the method is com-
plex, it permits the induction of rich and reliable models (Yin, 1994). The organiza-
tions analyzed were classified into support organizations (organizations that give
incentives and support entrepreneurial activity in the region of Bages) and firms.

1.4 Data Collection and Data Analysis

The fieldwork was conducted in April–June 2012 using several data collection
methods. Qualitative data were obtained through in-depth interviews and were
gathered from questionnaires. The questions focused on the propositions and the
theoretical framework, such as informal and formal institutions. Two different ques-
tionnaires were used, one for firms and the other for support organizations (for
further detail, see Appendices 1 and 2).
Observations were conducted, and data about the profile of the organizations,
such as their background and their financial statements, and about the development
of the region, was collected from the Internet in order to obtain wider view of the
region, the industry and the firms.
Interviews were conducted with the public relations teams, one CEO, one director
and one professor. The average length of the interviews was approximately 1 h. There
were two data sources: (1) semi-structured interviews with each of the informants;
and (2) secondary sources.
Support organization interviews: Interviews using the same semi-structured
format were conducted. The interview began by explaining the propositions to the
organization. Then, the interviewer asked the following questions about the insti-
tutional approach: How did the support organization encourage entrepreneurial
activity in the region of the Bages? What kind of support was offered to new busi-
nesses? How did the organization get funding to support entrepreneurs? How was
the organization promoted to entrepreneurs? How were creativity and innovation
stimulated? (for further information, see Appendix 1).
Firm Interviews: Semi-structured interviews were conducted with an executive in
the firm. The interviews consisted of 15 questions and typically lasted from 1 to 3 h.
The interviews with the ventures were conducted in Spanish. The interviewees began
by introducing the firm and explaining their entrepreneurial experience. Then ques-
tions were asked to enable answers to the propositions to be found. The questions
covered the difficulties faced in finding funding, the different sources of funding
used, the support from the environment (institutions) to address business risk, the
stimulation from the environment (institutions) to create and innovate, the support
from government institutions to create the new business, how the government
encourages entrepreneurial activity in the region, the level of promotion of the
support organization to the entrepreneurs, and the impact of social networks on
the creation of ventures (for further detail, see Appendix 2). The interviews were
recorded, transcribed and codified.
10 D. Gimenez et al.

Furthermore, a database was created containing the information collected, in

order to get a higher reliability for the research (Yin, 1994). This information was
then measured as recommended by Yin (1994) and Eisenhardt (1989), by carrying
out an analysis of the cases, the analysis of the information coming directly from
crossing the cases.

1.4.1 Research Setting: Characteristics

of the Bages (Catalonia)

The data were analyzed as follows. First, we analyzed the theoretical framework
and suggested a proposition based on the institutional approach, and then the data
was combined this proposition to design a model for entrepreneurial activity and
how it is related to regional development. Thus, the interviews were conducted to
answer the proposition we had established, then using the transcription we could
obtain the findings for the suggested model. We utilized the methodology suggested
by Yin (1994) for case studies. In order to analyze the findings, it is important to
explain the regional context and situation.
The region where the organizations are located is the Bages (Catalonia). The Bages
is located in the inner center of Catalonia (in the northeast of Spain). It borders five
other counties, namely Anoia, Baix Llobregat, Vallès Occidental, Vallès Oriental
and Osona, so constituting a political communication junction. Administratively, it
belongs to the functional area of the central counties, so its development planning is
done in conjunction with these other areas. It has a population of 185,117 (January
1st, 2010), and it accounts for an area of 1,299.08 km2. It is made up of 35 munici-
palities, the sizes of which vary between 5.53 km2 and 102.93 km2. The local topog-
raphy is mainly defined by the flatlands around the town of Manresa, which are
surrounded by plateaus and mountains. The most important infrastructure in the
Bages are l’Eix del Llobregat and l’Eix Transversal, which are part of the “Trans-
European Road Network”. The former crosses the county from north to south and
connects with Barcelona and with other coastal counties of the central region;
the latter crosses from east to west, communicating mainly with Girona and Lleida.
The railway routes are almost exclusively from Barcelona (Ferrocarrils Catalans
and RENFE), and also link with Lleida. There is also a freight transport line to the
interior municipalities (Sallent) and Girona.
The Bages has 90 polygons of economic activity (2010). Approximately 1,639
firms have already been set up there, and more than 21,600 employees work there.
All municipalities except nine are equipped with at least one polygon (2010).
The county occupies 620 ha, 512 of which are industrial land (254 polygons). This
industrial land is concentrated on the flatter areas of the county with better commu-
nications, particularly the areas along l’Eix del Llobregat.
Economically, Manresa and its vicinity are the main parts of the Bages, with the
more peripheral areas subordinated to a secondary role. This leads to the situation that
only six municipalities account for approximately 75 % of the turnover of the region.
1 A Cultural Perspective on Entrepreneurship and Regional Development: The Case… 11

It is important to emphasize that 99 % of firms are either micro or SMEs; and 98 %

(which employ the 56 % of the overall workforce) are micro or small enterprises.
More than 75 % of firms in the county employ fewer than five workers (2009 data).
Only 18 firms (0.3 % of the total) employ more than 250 workers.
Nowadays, firms are most vulnerable to financial factors (high debt and low
capitalization, in a context of lack of credit). There is a need for information on
financial instruments, particularly those that may help firms to increase their degree
of financial sophistication. Also there are barely exploited sources of efficiency, e.g.
energy. Firms managing their energy use efficiently will most likely survive.
Therefore energy management is to be considered as a possible source of competi-
tive advantage. Other productivity sources are not exploited much either: networks
have proved to be necessary for survival, so firms need to build up a presence and a
strategy to manage this. Internationalization, innovation and infrastructure are lines
of action to increase the competitive level of the Bages. The link with the
Mediterranean corridor is its top priority (both to reinforce the industrial sectors and
for the employment that this would bring).

1.4.2 The Case Studies

Case 1
Firm 1 is an organization that intends to sustain and consolidate its growth by
maintaining its profitability and including the advantages and flexibility of being
a family business. Firm 1 plans to grow through its internationalization strategy,
and to increase and strengthen its presence in countries where it is located.
Similarly, the firm proposes an improvement in management processes and
operational efficiencies that will allow an increase in its benefits. Firm 1’s mis-
sion is to satisfy customers by introducing a new concept different from tradi-
tional jewelry: the jewel-fashion. The number of employees is approximately
1,850. The company was founded in 1920 and became international in 1992.

Case 2
Firm 2 is an industrial company, the leading firm in dental implants and
prosthetics in Catalonia and Spain. It was founded in 2006. Scientific research
is the lifeblood of its system of implants and prosthetics division custom
technology. Firm 2 is an innovative organization at a national level and is an
internationally recognized firm. It exports to Great Britain and Portugal, and
is in the process of expanding to other countries in Europe, Asia and Oceania;
the year it became international was 2009. The number of employees is 180.
12 D. Gimenez et al.

Case 3
Support Organization 1 was created to broaden, deepen and consolidate the
supply of higher education in Central Catalonia. Support Organization 1 has
two distinct schools: the School of Health and the School of Social Science.
All courses offered are attached to the Universitat Autònoma de Barcelona.

Case 4
Support Organization 2 encourages and promotes the entrepreneurial culture.
It is a support service for business creation and local production, and the
development of the information society. Moreover, this organization imple-
ments entrepreneurship programs for high school and university students to
motivate young people to create new ventures.

1.5 Findings and Discussion

In this section we describe the case studies in the context of the Bages region. Also,
the main findings are related to literature review, concretely the institutional
approach, in order to answer our main research questions and discussed the research
propositions.

1.5.1 Which Institutions Affect Entrepreneurial Activity

in the Bages?

The CEO of Firm 2 associated culture with innovation, and some of the observations
show that informal institutions can positively influence entrepreneurial activity. Also,
there was an emphasis on regional development and informal institutions; during the
interviews it was observed that entrepreneurs from the region are more likely to stay
in the Bages because of family, social networks and cultural issues.
“I think it’s very cultural, that is, no such decisions, it is not, we are a company
that is flat, and then there is a decision that seemed fanciful. There are many imagi-
native, aren’t there? And are very used to come out this, right? We think that to see
what happens, and here we have focused.”
Bruton et al. (2010) found that broad cultural characteristics are associated with
the national level of entrepreneurship. High individualism, low uncertainty avoid-
ance and high power distance, in particular, have been found to be correlated with
the national rate of innovation. As Thornton et al. (2011) stated, institutions are
constituted by culture and social relations, and because human, social and cultural
1 A Cultural Perspective on Entrepreneurship and Regional Development: The Case… 13

capital are often antecedents to acquiring financial capital and the other resources
needed to start a business, an institutional approach with its broad meta-theory
holds out the promise of developing future entrepreneurship research, a finding in
line with the literature.
Moreover, the perception of the entrepreneurs about their families and social
networks, and how entrepreneurs perceive themselves, increases the likelihood of
entrepreneurial activity in the region. Entrepreneurial activity is related to regional
development because, as we stated above, local people prefer to stay in the region
because of their families, culture and social networks, and we also observed that
people from the Bages are highly involved in their traditions. Most of the four
interviewees explained these issues, and we also found a positive relationship with
informal institutions. As an example that could support this conclusion, Firm 1’s
manager gave the following explanation:
As a matter of proximity and of a little love for the land, in some way. It is a family business,
the family lives here in Manresa, the daughters who also belong in the family business live
here and also a way to bet on the territory and make it comfortable.

The family issue was also observed in the interviews with the support
organizations. The culture attracts people to stay in the region or, in their own words
“but here are people who want to stay in the territory lifestyle because of the family,
because it has the company so they are hard to compete with anything else that is
there is not going away”.
These findings are aligned to the results observed by Alvarez et al. (2011) who found
that four informal institutions (primary education, cultural and social norms, opportuni-
ties for starting up businesses and the social image of entrepreneurs) have a strong
influence on entrepreneurial activity. Thus, P1a (Cultural factors have a positive influ-
ence on entrepreneurial activity) is supported, based on the findings of this research.
Social networks could be important for a decision to stay in the region, and could
also be involved with family decisions. However, we found some differences
between the organizations; in one case it was believed that social networks are very
important. This can be related to Anderson and Jack’s (2002) definition of social
networks as a set of relationships that can define the perception of a community,
whether a business community or a more general notion of community in society.
Also Firm 2 is very active in getting involved in more social networks such as
universities, congress, and professional magazines, because in this way the company
gets more recognition and more contacts for the business. The CEO of Firm 2 stated
“magazines, exhibitions and competitions, workshops, internal training, external
presence around the world, this is nationwide, at conferences, what you were saying
before the conference, professionals”. Burt (1992) defined social networks as the
relationships through which one receives opportunities to use one’s financial and
human capital; the network is not solely the property of an individual, but is jointly
owned by the members of the network.
Thus, the cases show that social networks have a positive relationship with entre-
preneurial activity in the Bages. As we observed, there is some degree of conver-
gence between the ideas of the old institutionalisms and social networks (Veciana &
Urbano, 2008). These arguments therefore support proposition P1b (Social networks
14 D. Gimenez et al.

positively influence entrepreneurial activity). Therefore, for this research we can

conclude that P1 (Informal factors promote entrepreneurial activity) is supported by
the findings.
In our research we observed that role models were important for both firms.
For example, to the owners of Firm 1 are from families who had been entrepreneurs,
and despite the fact that almost the whole family was working in the firm, one
member of the family had created his own venture. Also the lady who became part
of the business after she married Firm 1’s owner came from an entrepreneurial envi-
ronment even though this was in another economic sector. Moreover, Firm 2 is a
family business and acts as a role model for entrepreneurs. This finding is aligned to
Fornahl’s (2003) suggestion that institutional factors influence entrepreneurial
activity; the roles of entrepreneurs are examples of how the environment can be a
positive influence in a certain context, and in this case we can count family as an
informal factor.
Firm 2, which is part of a group of firms, suggests that innovative behavior and
the willingness to start up a new business act as influences on the entrepreneurial
activity of the team members. In the interview, they explained the challenges that
the group had faced over time, and how innovation processes had developed in the
group; therefore they consider that Firm 2 has learned the reason for developing a
highly innovative company and Firm 2 is developing a high technology division.
This observation is similar to Welter and Smallbone’s (2011) suggestion that entre-
preneurship is a result of the creativity, drive, and commitment of individuals; in this
way the business environment can influence the nature and spread of entrepreneur-
ship and the behavior of entrepreneurs. Also Anderson (1980) proposed that a factor
that influences the processes of individuals is that information must fit into already
existing patterns or may be easily linked, and also that it is conducted through cog-
nitive cues. Moreover, both findings are aligned to Aidis et al.’s (2008) results that
suggested that knowing other entrepreneurs plays an important and positive role in
the activity. Based on our results and the literature reviewed, we support P1c (Role
models encourage entrepreneurship).
Entrepreneurship education is also highly important in the region. At university,
students could take subjects related to the creation of new ventures, focusing on
innovation and creativity. Education is a formal institution. We observed that highly
educated people are probably less likely to be entrepreneurs; for example, one of the
informants from the support organizations stated that “the entrepreneur is usually
not a good student is much focused people to participate and creativity but those
who are good students who get only ten entrepreneurs rarely that I can tell”. The
informant from Support Organization 2 stated that the key to success was the inno-
vative human capital that Manresa offered. These results are aligned to Fairlie and
Robb’s (2009) findings, which related education, entrepreneurship and economic
performance. The development of skills is also important for becoming an entrepre-
neur; we observed that the CEO of Firm 2’s CEO did not have a professional career
specifically in the business sector, but had good education and the skills and abilities
to develop this venture. This finding matches Rae’s (1997) suggestion that the tradi-
tional skills taught in business schools are important for an entrepreneur but that
1 A Cultural Perspective on Entrepreneurship and Regional Development: The Case… 15

they are not sufficient for making a business a success; entrepreneurs should have
skills such as communication, persuasion, and leadership, among others. Therefore
our findings support P2a (Education promotes entrepreneurial activity).
In the case of financial support we observed some discrepancies between the
firms. The CEO of Firm 2 explained the importance of government support for start-
ing up the new venture, although the manager in Firm 1 stated that his company had
not received any support and had used its own funding for growth. We asked if Firm
1 had received funding or grants from government agencies, and the answer was
that Firm 1 has its own resources for the supply of necessities. This result is aligned
to Chrisman et al.’s (1987) suggestion that access to capital, management skills and
the education of the available workforce and future entrepreneurs have been
observed to be the major barriers to entrepreneurial development. Also some evi-
dence reflects that established organizations could use their performance record to
acquire legitimacy and access resources. However, for news ventures is very com-
plicated to have records of its performance (Bruton et al., 2010).
In the case of the findings for Firm 2, there is high managerial experience because
the owners have also had a long history in industry but in another sector, so access
to financial aid has been faster in this case as the government and banks know
this history. This is aligned to the evidence in Ireland that those firms that were sup-
ported financially by external sources were larger and attained a higher level of
revenue (O’Farell, 1986). In research conducted by Urbano (2006) in Catalonia, it
was observed that the most relevant factors for the development of entrepreneurial
activity are government support, access to finance and new technologies in the case
of financial support. We cannot support P2b (Financial support positively stimulates
entrepreneurship), as one of the firms has not received financial support, which
means that it has the resources to grow without support.
Based on this finding, we cannot completely support P2 (Formal factors positively
influence entrepreneurial activity) as our findings in this research have differences
from our propositions and the literature review.

1.5.2 How Does Entrepreneurial Activity Influence

Regional Development?

In order to answer our second research question, we observed that both firms
stayed in the region because they are committed to their own people and territory.
For example, most of the staff of Firm 1 come from Manresa, and if the firm needs
an employee with a special profile they look around Catalonia. This helps to improve
the employment rate and regional development. This is important to highlight
because of the similarities of these findings to Fritsch’s (2008) suggestion that the
formation of a new business by definition creates new jobs, and that this direct
employment effect cannot be negative. From this statement we can also observe the
importance of informal institutions and the relationship with regional development.
The CEO of Firm 2 stated “if I can do this here and is in my territory and we grow
this big and we do, and you are responsible for it”.
16 D. Gimenez et al.

Support Organization 2 explained that to stimulate an entrepreneurial culture is

difficult as political issues are combined in this topic, and the variation or growth of
the domestic product of the region is seen in the long term, not in the short term.
Regarding this, Audrertsch and Fritsch (2002) suggested that the lack of clarity with
regard to the impact of new business formation on regional development may be
attributed to the relatively long time lags that are required for the main effects of the
new entries to become evident. In fact, the net employment effect of the entry pro-
cesses over the first six or seven years may be negative (Fritsch & Mueller, 2004).
Also Firm 1 explained that the majority of products are created near the value
chain, which is located in Manresa, so they prefer to make the products close to the
highly developed value chain, even though the production price may be higher than
in other places. This finding is similar to Fritsch’s (2008) suggestion that the
employment effect is probably positive in high productivity regions with high qual-
ity entries, abundant resources and well-functioning innovation systems; in our
findings we observe that the value chain is highly developed for Firm 1 and this
positively stimulates economic development in the region.
We observe some differences between the perspectives of Support Organiza-
tion 1 and Support Organization 2. Support Organization 1 stated that it can be
dangerous to stimulate the formation of ventures with such things as company
factories, because every entrepreneur has his own time to start up a business.
However, Support Organization 2 was expecting to create 30 new ventures that
would create 1,500 new jobs in the Bages. Actually, this support organization
explained this as follows: “Today, internationally recognized firms set up their
offices in this area, investing in local human capital, helping to create a city unit
and well positioned in Europe as a whole. Manresa is designing its future as a
creative and competitive city”. Hence this is similar to what Van Stel and Kashifa
(2008) observed in the Netherlands, that the overall employment impact of new
start-up firms is positive, but that the immediate employment effects may be
small. Moreover, they found that the employment impact of new firms is stronger
in the manufacturing sector and in areas with a higher degree of urbanization.
In fact, a consideration of information exchange and cognitive representations
influenced by proximity and regional networks add some important insights on
how, in this way, entrepreneurial activity in the region may rise (Fornahl, 2003).
Therefore, P3 (Entrepreneurial activity has a positive influence on regional devel-
opment) is supported by the findings of this research.

1.6 Conclusions

This chapter has focused on an analysis of the relationship between institutional

factors, entrepreneurial activity and regional development, through a comparative
case study of two companies and two support organizations located in the Bages
(Catalonia). As it was described in the section on the conceptual framework, the
1 A Cultural Perspective on Entrepreneurship and Regional Development: The Case… 17

research was based on the application of institutional economics (North, 1990, 2005)
for the study of entrepreneurship determinants (Alvarez et al., 2011; Thornton et al.,
2011; Veciana & Urbano, 2008; among others).
The research methodology utilized was qualitative, and led us to have a wider
and deeper knowledge of each of the case studies we analyzed and its institutional
environment. We suggested a set of research propositions based on the previously
developed literature review and on a model that described the relationship between
institutions and entrepreneurial activity and also, the influence of entrepreneurship
on regional development in the specific context of the Bages.
The most important evidence from this chapter demonstrates that informal
institutions have the most relevant influence on entrepreneurial activity in the
Bages. We observed that culture and family can positively influence entrepreneur-
ship. Also, on one hand, during the interviews a link between entrepreneurship and
informal institutions was observed, and we found that entrepreneurs in the region
are more likely to stay in the Bages because of family, social networks and cultural
issues. On the other hand, the importance of role models was observed, and we saw
how these influence entrepreneurial activity in the region, observing in this family
firm case, innovation behavior and creativity as relevant role models.
Moreover, we observed that formal education in entrepreneurship subjects is
important in the Bages. At university, students could take subjects relating to the
creation of new ventures, which focused on innovation and creativity. However, our
results did not support the proposition that financial aids promote entrepreneurial
activity in the context of the Bages. This is a crucial finding, as we could not com-
pletely support the view that formal factors positively stimulate entrepreneurship
in the Bages, even though 99 % of firms in the Bages are SMEs. Thus, we may
consider that informal institutions have a greater influence than formal institutions,
as our results completely supported the view that informal institutions promote
entrepreneurial activity in the Bages.
Regarding our second research question on the influence of entrepreneurial
activity on regional development, it was important to observe that firms feel a
responsibility towards the Bages, so most of the company’s staff comes from the
Bages, creating new jobs and thus stimulating regional development. Thus, our
findings are in line with the literature (Fritsch, 2008; Fritsch & Mueller, 2004)
which states that regional development is seen in the long term, not over a short
time. Another result suggests that special conditions, such as the well-developed
value chain in the Bages, may have an impact on the economic development of a
region. This shows that our research question of how entrepreneurial activity influ-
ences regional development has been answered by our findings on the environmen-
tal conditions of the Bages. It is important to observe, as was demonstrated in the
results, that the Bages has a particular advantage in human resources, yet it lacks
efficient financial access to turn entrepreneurship aspirations or intentions into
actual actions.
In future research the number of case studies could be increased and thus capture
more companies from different sectors and regions in order to compare the results
in the light of institutional approach. Also, a quantitative methodology with data
18 D. Gimenez et al.

from the region of the Bages could be used to triangulate the current information
and improve the analysis in an extension of this study. Finally, other more accurate
institutions (informal and formal) could be used to better analyze the entrepreneur-
ial activity in the Bages.

Acknowledgments The authors acknowledge the financial support from the projects ECO2013-
44027-P (Spanish Ministry of Economy & Competitiveness), ECO/2663/2013 (Economy &
Knowledge Department, Catalan Government) and PAID-06-12 (Sp 20120792) from Universitat
Politècnica de València. Also, the authors recognize the support by Marc Bernadich as a coordina-
tor of the fieldwork research (April–June 2012) in the Bages (Catalonia) and the involvement
of the PhD students in the course “SMEs in Economic and Regional Development” (2011–2012
academic year) (International Doctorate in Entrepreneurship and Management (IDEM), Auto-
nomous University of Barcelona).

Appendix 1. Firm Questionnaire

1. Did you have previous experience as an entrepreneur before starting this

company? What about the founding team? (Information from previous
entrepreneurship)
2. Do you think there are some environmental variables that helped create the
company? (Family, cultural, etc.)
3. Do you think there are good opportunities for new businesses? Why?
4. What did you use to create your business? How did you assess your business
idea? What criteria did you use?
5. How do you think society values business? (The Bages & Catalonia)
6. Has it been difficult to find funding? What difficulties have you had?
7. What kind of different sources of funding did you use?
8. Do you consider your environment (family, friends and institutions) has
supported you in addressing business risks?
9. Does your environment (family, friends and institutions) stimulate your cre-
ativity and innovation?
10. Have you received help or support from government institutions to create your
business?
11. Do you think the government gives incentives for and encourages entrepre-
neurship in the Bages? How? Does it do enough?
12. What do you know about agencies that support entrepreneurship in the region?
How has known and what is your opinion?
13. What are the social networks in the Bages that you know? What were the useful
networks (personal, professional or both) for creating your business? Are they
still useful?
14. (What are the strengths of the region?) Do you think the Bages has adequate
infrastructure (accessibility), sufficient administrative support, training and
information for your company, etc.?
15. Did you use the CEDEM, the FUB or another support agency to build your
business? What sources did you use?
1 A Cultural Perspective on Entrepreneurship and Regional Development: The Case… 19

Appendix 2. Support Organizations Questionnaire

1. What traits or characteristics should an entrepreneur who wants to do business

have, in your experience?
2. What technical and business training do entrepreneurs have, in general?
3. Do employers have business experience before starting your business plan?
What percentage of them?
4. What knowledge and skills do you think are needed to start and run a
business?
5. How should entrepreneurship be encouraged in the Bages region?
6. What kind of support is offered to businesses? Detail and explain.
7. Where do you get funding to help entrepreneurs?
8. How do you advertise to entrepreneurs? How do you promote yourselves?
What is your marketing strategy?
9. What support mechanisms do you provide to entrepreneurs to reduce risk?
10. How should entrepreneurs’ creativity and innovation be stimulated?
11. What are the strengths of the region? Do you think the Bages has adequate
infrastructure (accessibility), sufficient administrative support, training and infor-
mation for companies, etc.?
12. Do you think that there are sufficient and qualified personnel (talent) in the
Bages?
13. What type of company uses your support services? And what services are they
primarily seeking (financial, information/training, networking, etc.)?

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Chapter 2
Entrepreneurship and Location: The Cultural
Differences Between Two Countries

João J. Ferreira and Cristina I. Fernandes

Abstract How do regional business cultures affect the local entrepreneurship

process? This question has not only received substantial coverage in the literature
but also attracted the attention of various researchers. Correspondingly, this study
seeks to explore the relationship between culture and entrepreneurship based upon
analysis of the factors resulting in the decisions taken by entrepreneurs over the
location of their companies in specific regions. Based upon a questionnaire answered
by a sample of companies in two companies (Portugal and Brazil), we identified the
factors underpinning such decisions on location and the differences existing between
these two countries. The results highlight some evidence of a cultural influence as
the cause of the differences reported between these two countries. Hence, we verify
differentials in the decision making processes taking place in these countries that
reflect more emotional and cultural influences revolving around whether or not
entrepreneurs were born and raised in their surrounding environments.

2.1 Introduction

It was actually only after the 1980s that interest began to crystallise around the role
of entrepreneurship in economic development in no small part due to the revolution
in endogenous growth studies (Low & MacMillan, 1988). This academic trend
resulted in a new wave of research this time placing the individual capacity to cope
with risk at the centre of economic analysis (Groot, Nijkamp, & Stough, 2004).
Furthermore, this ability to deal with risk had very early on been studied as one of

J.J. Ferreira (*)

Management and Economics & NECE - Research Unit in Business Sciences,
University of Beira Interior, Estrada do Sineiro, Polo IV, Covilhã 6200-209, Portugal
e-mail: jjmf@ubi.pt
C.I. Fernandes
NECE - Research Unit in Business Sciences, UBI and Castelo Branco Polytechnic Institute,
Sitio do Vale, Belmonte 6250-076, Portugal
e-mail: cristina.fernandes@ipcb.pt

© Springer International Publishing Switzerland 2015 23

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_2
24 J.J. Ferreira and C.I. Fernandes

the characteristics of entrepreneurship (Jovanovic, 1982; Kahneman & Tversky,

1979; Kihlstrom & Laffont, 1979; Knight, 1921; Lucas, 1978; Parker, 1996, 1997).
Hence, entrepreneurial activities, in conjunction with all of the factors behind
their existence, as well as their influence on regional economic development, have
been subject to study by a wide range of authors (Arauzo & Manjón, 2004; Birley,
1985; Kirchoff & Phillips, 1988; Storey, 1994). As far as the relationship between
entrepreneurship and economic growth is concerned, many authors have deemed
it a fundamental factor to economic growth and perceiving the role of entrepre-
neurs as highly important in the creation of employment and fostering innovation
(Thurik & Wennekers, 2004; van Stel, 2006; Welter & Lasch, 2008; Wennekers &
Thurik, 1999).
Entrepreneurship has recently been defined as the design and launch of new
economic activities. While entrepreneurs may be analysed individually, they oper-
ate at the organisational (Shane & Venkataraman, 2000), economic, social and insti-
tutional levels (Veciana & Urbano, 2008).
Underlying the issue of the importance of entrepreneurship to regional deve-
lopment, attention is inevitably drawn to issues related to location and the cultural
factors behind the decisions taken by business founders (bringing about the entre-
preneurial activities) in choosing a specific location for their company (Alonso &
Trullén, 2001; Autant-Bernard, Mangematin, & Massard, 2006; Christaller, 1933;
Ferreira, Marques, & Fernandes, 2010; Lafuente, Vaillant, & Serarols, 2010; Hayter,
1997; Parker & Marshall, 1890; Parker, 2004; Van Praag & Versloot, 2007; Von
1966; Weber 1928). Culture has arisen as an important concept within the entrepre-
neurship literature serving as a means of explaining differences in the nature of the
entrepreneurship process perceived between industries, regions and countries.
In this chapter, we explore the relationship between culture and entrepreneurship
and answer the question: how do regional business cultures affect the local entrepre-
neurship process? Furthermore, this chapter seeks to highlight important implica-
tions for regional policies and firm strategies.

2.2 Literature Review

2.2.1 Culture and Entrepreneurship and Factors of Location

There is a popular belief that culture holds a very significant influence over economic
performance. Identifies four patterns of human thought in decision making: (1)
instrumental rationality, (2) belief based values and rationality, (3) habits and tradi-
tions, and (4) the emotions. Weber also describes ideal types and proposes how any
concrete action normally incorporates a combination of these constructions. As a
consequence of instrumental rationality neither being unique nor even the most
important influence over human action, culture therefore requires recognition as a
significant social phenomenon within the framework of economic issues. Defines
2 Entrepreneurship and Location: The Cultural Differences Between Two Countries 25

culture as the social norms that sustain beliefs and equilibrium at the individual
level that Nash proposes as the focal points in social changes. This definition identi-
fies culture as the sum of the norms prevailing, which results in individual strategic
preferences enacted through long term social exchanges. In Greif’s models, culture
does not get differentiated but rather forms part of institutions. However, defends cul-
ture as a distinct concept needing separation from the notion of social systems, such
as institutions, in order to ensure significant analysis. Taking a similar approach, and
consider that culture holds a direct influence on individual behaviours through values
and preferences. Suggests that culture does influence the economy both through the
direct mechanism of the beliefs, values and traditions that shape human actions and
indirectly through formal and informal institutional structures. Many researchers per-
ceive culture as a vague concept but susceptible to successful operational implemen-
tation through a clear definition and, according to, the general beliefs and values held
by ethnic groups, religious and social groups are handed down from generation to
generation remain broadly unaltered. Come out in favour of the same definition.
According to Engelen, Flatten, Thalmann, and Brettel (2014), an organizational
culture that is an adhocracy is most effective in advancing entrepreneurial orienta-
tion, especially in national cultures that are characterized by strong individualism
and low power distance, whereas a hierarchical organizational culture is generally a
barrier to entrepreneurial orientation. The authors also refer to how organisational
culture proves determinant to entrepreneurial orientations as well as maintaining
that the strengths in the relationships between types of organisational culture
and their entrepreneurial orientations may be dependent on national cultural
characteristics.
What factors determine the choice of company location on behalf of entrepreneurs?
This question and its contributions to local economies have been subject to analysis
by diverse researchers (Coffey & Shearmur, 1997; Gong, 2001; OhUallachain & Reid,
1991). The location within the urban system, the level of sensitivity to the general
agglomeration of economies (Eberts & Randall, 1998; Poehling, 1999; Wernerheim &
Sharpe, 2003) gets documented through recourse to a range of methodological tools.
A large proportion of these studies stem from the relevance of researching local
economic dynamics, regional development and the reasons some regions experience
faster economic growth than others (Moyart, 2005).
According to Silva (2006), the spatial distribution of economic activities results
from the location opportunities and strategies designed in accordance with certain
specific objectives. Furthermore, decision making processes prove complex and
involve an important economic component given that the vast majority of human
activities incorporate the utilisation and sharing of limited resources.
Hayter (1997) proposes the analysis of economic activity locations through
distinct approaches: (i) the neoclassical and in the main dedicated to location theory
and focusing its analysis on strategies to maximise profits and minimise costs (for
example, transport costs, labour costs and external economies; (ii) the institutional
in affirming the importance of not only considering the company as it searches for
an appropriate site but also the institutional surroundings faced (clients, suppliers,
26 J.J. Ferreira and C.I. Fernandes

commercial associations, regional systems, government entities and other compa-

nies); and (iii) the behavioural that takes into account situations of uncertainty and
information failings. Within the literature review focusing on the factors of location
of technologically based companies, we opt here to following the theoretical clas-
sification Hayter (1997) proposes. This author maintains that these three approaches
serve to demonstrate the complexity of the reasons underpinning the location based
decisions of any economic activity and thereby enabling the analysis of factors of
location at a more “micro” level. Hayter (1997) suggests a clearer definition of the
borders between these approaches as he finds that they otherwise suffer from a
lack of clarity in the literature hitherto published. Hence, in Table 2.1 we set out
the factors deployed in our study in accordance with Hayter (1997) as well as the
authors corroborating the different items.
The general conditions for entrepreneurship would seem to favour western cul-
tures as the type of culture relates to equality of opportunity and more congruent
with high levels of individualism and the lack of influence of distance more charac-
teristic of western countries than their Asian counterparts (Engelen et al., 2014).
These authors advocate how it proves easier to foster organised entrepreneurship in
western countries while Asian societies frequently encounter “natural barriers”.

2.3 Methodology

2.3.1 Sample and Data

With the objective of exploring the relationship between culture and entrepreneurship,
our study seeks to identify the factors explaining the decisions of entrepreneurs over
locating their companies in specific regions and evaluate the extent to which cultural
factors form the foundations for such decisions. Hence, our study takes in a sample of
technology based companies (TBCs), both Portuguese (500 companies) and Brazilian
(203 companies). In both countries, we collected the data by questionnaire.
In the Portuguese case, we may report that 76.9 % of entrepreneurs are male and
with higher education qualifications (85 %). The average age of entrepreneurs lies
in the interval between 41 and 50 years of age. In the Brazilian case, we find 82.9 %
of entrepreneurs are male and that 29.2 % of entrepreneurs are aged between 31 and
40 years of age. In terms of academic qualifications, 41.8 % of entrepreneurs gradu-
ated from university. In Table 2.2, we put forward the characteristics of the business
owners in each country.
As seen, based upon these descriptive statistics, clear differences emerge in the
personal characteristics of Brazilian and Portuguese business owners and entrepre-
neurs. The Portuguese contain a larger number of females while the Brazilians are
younger. As regards academic qualifications, Portugal contains a higher percentage
of entrepreneurs with degrees. With Brazil having experienced significant economic
growth, there are greater opportunities and incentives for young persons to set up
their own businesses.
2 Entrepreneurship and Location: The Cultural Differences Between Two Countries 27

Table 2.1 Hayter’s location approaches

Approaches Factors Studies
Behavioural (B) B1: The founder, managers and Elgen, Goottschalk, and
employees want to live in this Rammer (2004); Meyer (2003);
location Audretsch, Lehmann,
B2: Proximity to the founder’s and Warning (2005);
residence Autant-Bernard et al. (2006);
B3: Climate Hayter (1997); Ferreira et al.
(2010); Lafuente et al. (2010);
B4: Good housing standards
Parker (2004); Van Praag and
B5: Local community attitude to Versloot (2007)
business
B6: Recreational and leisure
activities
B7: The founder was born in the
community
B8: Good means of access
B9. Entrepreneur financial capacity
Neoclassical (N) N10. Distance between the Grimes (2000); Ouwersloot
company and urban centres and Rietveld (2000); Holl
N11. Distance to markets and the (2004); Costa, Segarra, and
cluster scale Viladecans (2004); Hayter
N12. Road infrastructures (1997); Ferreira et al. (2010);
Lafuente et al. (2010)
N13. Geographic specialisation
N14. Human resource skills and
qualifications
N15. Industrial real estate costs
N16. Costs of labour
N17. Population density
N18. Level of local economic
activity in the company location
N19. Other physical infrastructures
(railroads, airports,
telecommunications, etc.)
N20. Proximity to raw materials
N21. Proximity to services
Institutional (I) I22. Company incubator Galbraith (1985); Arauzo and
I23. Access to knowledge Viladecans (2006); Felsenstein
generated by universities or (1996); Hayter (1997); Ferreira
research centres et al. (2010); Lafuente et al.
I24. Location close to (2010)
administrative centres
I25. Access to science parks
I26. R&D incentives, employment
creation or other incentives
I27. Proximity to teaching
institutions
I28. Technological fairs
I29. Renowned business leaders
in the region
28 J.J. Ferreira and C.I. Fernandes

Table 2.2 Entrepreneur socio-demographic characteristics

Brazil Portugal
Entrepreneurs Entrepreneurs
Characteristics N % N %
Gender
Female 34 17.1 115 23.1
Male 169 82.9 383 76.9
Age
25–30 50 24.6 50 10
31–40 59 29.2 80 16
41–50 49 23.8 225 45
51 years or more 45 22.3 145 29
Education
Primary school 11 5.3 20 4
Secondary school 20 9.9 50 10
Professional training school 59 29.3 5 1
Degree 85 41.8 425 85
Master’s degree 27 13.3 0 0
Doctoral degree 1 0.4 0 0

2.4 Results Discussion

2.4.1 TBC Locations: Determinant Factors

Within the framework of identifying the factors contributing to the choice and
decision over locations made by TBCs in the two countries, the business leaders
filled in a questionnaire containing a set of 29 factors explaining the choice of
location for their business according to a rising five point scale of importance
(Likert scale). We then applied the Factorial Analysis (FA) technique to group these
29 variables (with the same method for both countries) into a reduced group of
factors enabling the identification of structural relationships between these vari-
ables. In both cases, the means of evaluating data quality, thus the variable homoge-
neity, involved recourse to the KMO (Kaiser-Meyer-Olkin) measure and the Bartlett
test with the results set out below.
In both the Portuguese and the Brazilian cases, we calculated our scores in accor-
dance with the weighted least squares method. This eliminated from the matrix any
components with variables reporting factors lower than 0.40 (as an absolute value).
We furthermore removed from the analysis any variables with factorial weightings
close to different other factors (difference below 0.1). Furthermore, for both two
cases, we opted to remove variable 26 from the analysis before once again running
the factorial solution process. We then applied the principal components method to
extract the factors before deploying the Varimax rotation method to obtain the facto-
rial solution.
2 Entrepreneurship and Location: The Cultural Differences Between Two Countries 29

Table 2.3 Factorial analysis: summary of the latent factors for Portugal
Cronbach’s alpha Explained
Factor designation Item identification no. (No. items) variance (%)
Local economic conditions B8; B9; N10; N11; 0.905 (16) 33.7
and infrastructures N13; N14; N15; N16;
N17; N18; N19; N20;
N21; N15; I25
Access to higher I23; I27; I28; I29 0.666 (4) 8.2
technological knowledge
Individual motivations B1; B2; B3; B6 0.578 (4) 6.5
Locally related motivations B4; B5; N16; B7 0.506 (4) 6.5

2.4.1.1 Portugal

For Portugal, the KMO value returned was 0.917, which reflects a very good
adaptation to this technique (Maroco, 2007). The Bartlett test (p = 0.000 < 0.05) also
demonstrates that the variables all correlate significantly. Table 2.3 displays the
grouping of the 28 variables by the four latent factors, the internal consistency and
the variance explained by each factor.
The analysis of the consistency of each factor reveals alpha values acceptable
for all factors, hence, values in excess of 0.5. Factor F1 returns the highest level of
explained variance (33.7 %) in comparison with the other factors, a fact which
stems directly from the applied rotation method. Following analysis of the variable
groupings, the factors reported are susceptible to the following interpretation: eco-
nomic conditions and local infrastructures ease of access to specialised higher
knowledge, individual motivations and motivations interrelating with the location.

2.4.1.2 Brazil

In the Brazilian case, the KMO result was 0.759. According to, despite the KMO test
lacking any rigorous results, in general terms, when results come in within the inter-
val [0.7–0.8], they fall within the range of recommended averages for the application
of FA. The Bartlett test presents a p-valor (0.000) ≤ 0.05 and hence concluding that
all the variables correlate significantly. Table 2.4 provides the grouping of 28 vari-
ables distributed by the four latent factors, the internal consistency and the variance
explained by each factor.
Analysis of the internal consistency of each factor revealed acceptable alpha
results for all factors with the exception of factor 5 that came in with an alpha value
(0.386) and below the recommended 0.5. Hence, analysing the factor groupings of
the variables results in the following interpretation: factor 1 is related with the per-
sonal motivations of the company founder (residence options of the workers and
founders, residence close to the company location and place of birth). Factor 2
relates to the level of innovation (company incubators, proximity to universities,
30 J.J. Ferreira and C.I. Fernandes

Table 2.4 Factorial analysis: summary of the latent factors for Brazil
Cronbach’s alpha Explained
Factors Items (No. items) variance (%)
Personal motivations B1, B2, B3 and B5 0.859 (4) 22.45
Innovation and company N15, N16, N17, 0.768 (5) 16.768
start-up incentives N18 and N19
Location characteristics B8, B9 and N11 0.575 (3) 8.57
Economic expansion in the N10, N12 and N13 0.582 (3) 7.13
region
Surrounding environmental B4, B6, B7 and 0.386 (4) 6.77
conditions N14

technological fairs), benchmark reference regional business leaders and company

start-up incentives. Factor 3 refers to the characteristics of the location (community
attitude towards new businesses and the level of the infrastructures). Factor 4 refers
to the scope for economic expansion provided by the region (highway infrastruc-
tures, real estate costs and the level of economic activities). Factor 5 approaches the
conditions prevailing in the surrounding environment (good housing conditions,
opportunities for recreation, the climate, specialist companies in the region).
We encounter here evidence testifying to differences in the factors of location.
In the Brazilian case, the greatest weighting goes to personal motivations and hence
decision makers are very focused on locating near their families and roots in
personal terms. Meanwhile, their Portuguese peers attribute greater importance to
economic factors and local infrastructures.
The results obtained clearly demonstrate that cultural aspects do play a role
in the choices determining the location of companies. Furthermore, the results
conclude that behavioural factors most characterise the profile of Brazil business
owners while their Portuguese counterparts decide in accordance with neoclassical
factors.

2.5 Final Considerations

The literature clearly identifies the importance of entrepreneurship to regional

development (Arıkan, 2010; Audretsch, 2004). Based on a two-country comparison,
this article analyses one of the aspects most crucial to regional development and
entrepreneurship, company location. Regional and local company differences have
gained recognition in many countries with the local characteristics (Kangasharju,
2000) as well as the cultural dimension (Engelen et al., 2014) shaping the probabi-
lity of business start-ups.
These results hold implications for both academics and policymakers. Generally,
dynamic regions feature the characteristically simultaneous presence of several fac-
tors of location (Falck & Heblich, 2008). In practice, different regions are capable of
2 Entrepreneurship and Location: The Cultural Differences Between Two Countries 31

different combination of location factors that broadly determine their performance

and their respective propensity to attract new business (Lee, Florida, & Acs, 2004).
The majority of the literature holds that such business location decisions primarily
result from economically calculating and rational decisions. However, recent
research findings have pointed to other reasons shaping the decision making process
on location, in particular, the respective national cultural factors (Engelen et al.,
2014). Furthermore, more innovative companies display a greater propensity to
locate in areas already benefitting from innovation based success and with the tacit
knowledge present in the region reducing the uncertainty surrounding innovative
activities alongside facilitating the mobilisation of vital resources (Feldman, 1994).
This study conveys how the decisions taken by business leaders and entre-
preneurs over their choice of location not only does not simply stem from this
economically calculating and rational thinking but also apparently fails to take into
account the potential benefits arising out of institutional spillovers or public incen-
tives. Instead of this, the results identify differences in the decision making pro-
cesses between these two countries and that is more emotionally and culturally
based revolving around whether or not the respective business owner was born or
raised in the surrounding community and the attitudes towards the local companies
founded by these entrepreneurs.
The government holds a role to play in revitalising the bonds between the private
sector and universities and in the development of regional policies for learning and
grasping how best to control some of the economic variables, such as structural
funding at the regional level. Hence, the lack of regional governments in Portugal
may represent a heavy restriction as the CCRs (Coordination Commissions for
Regional Development) lack the political and legislative autonomy to appropriately
tailor the strategies undergoing implementation (Pinto & Guerreiro, 2010). These
aspects convey the need to evaluate the regional policies in order to guarantee sus-
tainable economic conditions into the long term and correspondingly deepening
cooperation between R&D units, universities and companies.
The present study reflects certainly limitations that, in turn, prove useful paths
for future research. Firstly, the factors of location stemmed from the Hayter model
and this theoretical model was empirically tested by data from respondents in only
two countries: Portugal and Brazil. Therefore, the difference found between these
countries are not susceptible to generalisations to other realities that may not dis-
play the same differences in their choices over factors of location.
Future studies should broaden the range of national cultures in order to obtain
more refined results as to the dimensions and in addition to integrating more location
related determinants. Furthermore, studies might replicate our study of the relation-
ships between culture and factors of location. There would also be relevance in
analysing the different types of knowledge based entrepreneurship and whether
different sectors of activity would return the same results.

Acknowledgments This research was supported by the Portuguese Science Foundation through
NECE—Research Unit in Business Sciences (Programa de Financiamento Plurianual das Unidades
de I&D da FCT—Fundação para a Ciência e Tecnologia, Ministério da Ciência, Tecnologia e Ensino
Superior/Portugal).
32 J.J. Ferreira and C.I. Fernandes

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Chapter 3
Entrepreneurship and the Influence
of History: How Much Impact Do
Country-Specific Historical Factors
Have on Entrepreneurship Initiatives?

Inés Alegre and Jasmina Berbegal-Mirabent

Abstract The elements that enhance entrepreneurship have been widely studied.
There are factors at different levels: (i) institutional factors such as some governmen-
tal policies, or the access entrepreneurs have to financial support; (ii) cultural and
social factors such as national culture or networking opportunities; and (iii) individ-
ual factors that take into consideration personality traits of the entrepreneur. This
chapter reviews the various influences and adds a new one: the historical perspective.
Based on historical data (nineteenth and twentieth century) about the number and
types of companies in a country, and comparing this data with the current number of
entrepreneurship initiatives (2011), we explore the weight historical clusters have on
current entrepreneurship.

3.1 Introduction

Ultramagic is the second largest air balloon manufacturer in the world, producing
between 80 and 120 air balloons annually. It is located in Igualada, in the Anoia
region, a Spanish region of approximately 110,000 inhabitants and 130 inhabitants
per square kilometer, where entrepreneurial activity is scarce. However, Ultramagic
is not the only successful company founded in the area. Buff, a company that manu-
factures neck warmers (circular scarves), is also based in the Anoia, as is the fashion
producer Sita Murt, the underwear manufacturer Punto Blanco, and the fashion acce-
ssories manufacturer Pick-it.

I. Alegre (*) • J. Berbegal-Mirabent

Departament d’Economia i Organització d’Empreses, Universitat Internacional de Catalunya,
22 C/Immaculada, Barcelona, Barcelona 08017, Spain
e-mail: ialegre@uic.es; jberbegal@uic.es

© Springer International Publishing Switzerland 2015 35

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_3
36 I. Alegre and J. Berbegal-Mirabent

All these companies have something in common; they are all related to the textile
industry, which has been present in the region for centuries and had its biggest
expansion in the nineteenth century and the beginning of the twentieth century.
Currently, the region is not a reference point for entrepreneurs; it has suffered from
a loss of population, an economic downturn and rising unemployment. However,
textile entrepreneurs are present and continue to flourish.
The observation of this phenomenon as well as similar cases in other regions of
Spain poses an under-researched question: how much does the historical back-
ground of a territory influence entrepreneurial activity? What influence does history
exert on entrepreneurship? To answer these questions we compare some historical
industrial clusters, namely textile and industrial cluster, with current entrepreneurial
activity by region, and run a fuzzy-set qualitative comparative analysis. Results con-
firm that historical background is indeed an important entrepreneurship enhancer.
The most popular definition of entrepreneurship is that of Shane and Venkataraman
(2000) who define entrepreneurship as the examination of how, by whom and with
what effects opportunities to create future goods and services are discovered, evalu-
ated and exploited. However, most authors acknowledge that the term ‘entrepre-
neurship’ is multi-faceted and propose more comprehensive definitions, combining
opportunity recognition and exploitation with individual motivation and resource
availability (Erikson, 2001).
The field of entrepreneurship has received considerable attention in recent
decades. Some researchers have focused on the individual entrepreneur, identifying
the characteristics that an individual should have to become an entrepreneur. Other
researchers have pinpointed the importance of environmental factors such as
national culture or institutions.
Research on individual factors that enhance entrepreneurship has suggested
some attributes that define the entrepreneur, such as motivation (Collins, Hanges, &
Locke, 2004), internal locus of control (Gatewood, Shaver, & Gartner, 1995), or
creativity (Ko & Butler, 2007).
Factors at the macro level, representing the economic development of a region or
country, have been largely studied, including indicators such as GDP per capita,
industry characteristics or geographic environment. Similarly, at the meso level, cul-
tural and social factors have also been investigated as entrepreneurship enhancers
(Cuervo, 2005; Shane, Locke, & Collins, 2003).
However, literature fails in not going far enough when investigating cultural and
social factors. As highlighted above, the existence of a consolidated industrial fabric
in the past may influence current entrepreneurial activities. Aiming at filling this
gap, this chapter aims at contributing to the existing literature by means of an empir-
ical study where economic and cultural factors are examined alongside the effect of
historical clusters.
The remaining part of the chapter is organized as follows. Firstly, the conceptual
framework is presented. In that section the main factors that enhance entrepreneur-
ship at the country level and the institutional level are reviewed and the proposition
is stated. Then data and methodology are explained, and finally the findings are
discussed and the main conclusions are underlined. The limitations of the study and
recommendations for future research are also provided in this final section.
3 Entrepreneurship and the Influence of History: How Much Impact Do… 37

3.2 Conceptual Framework

3.2.1 Economic Factors

Entrepreneurial activity is considered a positive phenomenon. It contributes to

economic growth, generates a dynamic environment, fosters creativity and creates
new job opportunities. In recent decades research on the factors that enhance entre-
preneurship has been abundant. Differences in the level of entrepreneurship between
countries have motivated some researchers to focus on macro-level indicators such
as GDP per capita, level of corruption in the country or unemployment.
The level of entrepreneurship of a country has been measured in various ways. Some
authors use the number of business owners relative to the labor force (Wennekers, Van
Wennekers, Thurik, & Reynolds, 2005), while others use the number of self-employed
people or the number of patents (Harbi & Anderson, 2010). Either way, country-level
indicators have proved to be powerful indicators of entrepreneurial activity.
Per capita income, for example, has a U-shape relationship with the level of
entrepreneurship. Countries with a lower per capita income have a greater number
of ‘necessity entrepreneurs’ while more developed countries have a greater number of
‘opportunity entrepreneurs’ (Wennekers et al., 2005). Necessity entrepreneurs are
those that start their own business because there are no other opportunities to meet
their basic needs, while opportunity entrepreneurs are those that start a business
because they perceive there is an attractive market opportunity to exploit.
Income inequality also affects the level of entrepreneurial activity, with countries
with relatively higher inequality showing higher levels of entrepreneurial behavior
(Simón-Moya, Revuelto-Taboada, & Guerrero, 2014).
In addition, unemployment level has a strong correlation with entrepreneurship,
although the relationship between the two is not yet clear as high unemployment
fosters new venture creation but, at the same time, is usually a consequence of low
economic growth which, in turn, negatively affects entrepreneurial activity (Baptista &
Preto, 2007). Education is another factor that positively influences entrepreneur-
ship, with better-educated countries showing a higher level of entrepreneurial inten-
tions (de Clercq & Arenius, 2006).
Although all these country-level factors do have a significant influence on the
level of entrepreneurship of the country, there are countries with similar economic
conditions and similar education level that have important differences in the number
of entrepreneurs present in the country. For that reason, researchers have moved
from the macro level of economic indicators to the meso level of institutions.

3.2.2 Formal Institutional Factors

Entrepreneurs are both constrained and enabled by their institutional environment

(Bruton, Ahlstrom, & Li, 2010). Formal institutional factors, such as regulations
and laws, do have an influence on the level of entrepreneurial activity of a country
(Harbi & Anderson, 2010).
38 I. Alegre and J. Berbegal-Mirabent

The World Bank underlined three characteristics as among the most important
indicators of the ease of doing business in a region. These are: registering property,
enforcing contracts and dealing with licenses. The Harvard Business Review
(Can start-ups help turn the tide? 2012) also points to the number of days it takes to
legally register a new business as one important indicator of the number of
entrepreneurs.
Conscious of their influencing role, many governments and public institutions
worldwide have put in place new governmental policies to simplify the process of
starting a business and to facilitate access to finance, another important drawback
for entrepreneurial activity.

3.2.3 Cultural Factors

Some authors stress the importance of informal institutional factors, as being even
more important than formal ones (Engle, Schlaegel, & Dimitriadi, 2011). Informal
institutional factors encompass cultural and social norms embedded in society
(Hayton & Cacciotti, 2013). National culture has been explored as one of the ante-
cedents of entrepreneurial activity. Liñán and Fernandez-Serrano (2014) for instance,
compare the level of entrepreneurship among the European Union countries. They
argue that with European integration, the policies and regulations between countries
have been widely standardized, thus differences in entrepreneurial activity do not
appear due to differences in the formal institutional environment, but due to coun-
try-specific cultural differences. Their study, using the cultural value dimensions of
Schwartz (1994), concludes that differences in culture (embeddedness vs. auton-
omy, hierarchy vs. egalitarianism and mastery vs. harmony) do have a significant
influence on entrepreneurship.
In addition to national culture, institutional researchers have emphasized the role
of legitimacy in enhancing entrepreneurship (Thai & Turkina, 2014). The social
image of entrepreneurs, whether they are admired and presented as national heroes
or, conversely, not much appreciated (Spencer & Gómez, 2004), greatly influences
entrepreneurial intentions, a key antecedent of entrepreneurial activity.
Finally, the presence of a network of entrepreneurs is also an important anteced-
ent. This is the role of many business incubators that have appeared in the last few
decades as a way to support entrepreneurs. An entrepreneur needs a tight network
of business contacts, friends and other entrepreneurs to be able to succeed (Klyver
& Foley, 2012). The network that enriches entrepreneurial experience and aids
entrepreneurial success is often formed by friends and other entrepreneurs, but in
many cases is also formed by other businesses in the same sector or area of exper-
tise, that helps entrepreneurs develop. It is in this sense that we aim to introduce the
concept of historical weight.
3 Entrepreneurship and the Influence of History: How Much Impact Do… 39

3.2.4 Historical Weight

After reviewing the macro- and meso-level factors that affect the level of entrepre-
neurial activity, the aim of this paper continues to be: how much does the historical
background of a territory influence entrepreneurial activity? When a certain city,
region or country has been strong in a specific economic sector, such as textiles,
even if the industry flourished more than a century ago, there are several factors that
remain.
Firstly, some know-how remains as it becomes embedded in the local culture.
In the case of the balloon manufacturer Ultramagic, briefly mentioned above, the
great-grandfather of the current entrepreneur owned a textile factory. Since child-
hood, he heard stories about the textile industry his family used to have; they still
kept some of the machines used in the factory. He visited the local textile museum
several times when he was at primary school. Everyone who has grown up in the
area has some level of knowledge of the textile industry, because it is embedded in
the local environment.
Secondly, frequently the industry that was important some centuries ago has not
completely disappeared; there are still some factories, shops or manufacturers that
remain. This creates a network that, although small, is invaluable for the creation of
new businesses in the same sector.
If education and network are two important drivers of entrepreneurial activity,
historical weight conveys both the culture embedded in the local community, which
gives some know-how and education to people in the region, and a local network of
industries. We therefore make the following proposition:
P1: Historical weight, measured as the existence of industrial clusters of a certain
sector in a region during the nineteenth and twentieth century, will have a posi-
tive influence on the level of entrepreneurial activity in that sector of the region.
We will concentrate on two important Spanish industries: the industrial sector
that includes manufacturing, assembly and sales of industrial, electrical and elec-
tronic components, and the textile sector, including textile production and clothes
and footwear manufacturing.

3.2.4.1 The Industrial Sector

The industrialization of Spain was slow and it started later than in other European
countries. At the beginning of the nineteenth century Spain mainly relied on
agriculture and some newly-emerging textile industry. Nonetheless, the industrial-
ization process occurring all over Europe also arrived in Spain. Some machines
to facilitate textile processing appeared, together with two critical signs of industri-
alization: the train and the steamboat.
40 I. Alegre and J. Berbegal-Mirabent

The first Spanish train appeared in Catalonia at the end of the nineteenth century
and was soon followed by others in the northern region of Spain, dedicated mainly
to transporting coal and steel from the northern-Spanish mines to other areas of the
country. The train greatly influenced industrial development, not only because
areas that were far from the coal mines could then have easier access to this source
of energy, but also because the train required educated people that knew how to
construct it, repair it and use it, and as a consequence a network of mechanical
workshops was generated that was the seed for the development of an industrial
sector.
The industrial sector was concentrated in some specific areas: (i) Galicia and
Cantabria produced coal and steel and specialized in the construction of boats;
(ii) Catalonia and Valencia started mechanizing the textile industry; (iii) the
Basque country received coal and steel from the nearby areas of Asturias and
Rioja and specialized in trains and large machinery and (iv) Madrid concentrated
on some small industrial development of machines for the editorial and paper
sectors.

3.2.4.2 The Textile Sector

The textile sector, together with agriculture, is one of the sectors with the longest
history in the Spanish economy, with registers about cotton and wool manufacturing
dated earlier than 1600 AD. Spain did not grow cotton so the raw material was
imported. This fact influenced the location of the textile workshops, which appeared
in regions where there was easy access by sea and where an energy source to sup-
port the transformation process was available. These conditions were fulfilled in
several areas. In northern Spain coal mines were exploited and coal was used for
energy generation. In contrast, in eastern Spain, particularly Catalonia and Valencia,
autonomous communities did not have easy access to coal, so they developed alter-
native methods of energy generation. Hydroelectric power stations appeared in
Spain for the first time in Catalonia and Valencia. The power stations had to be
located close to rivers; this fact transformed the location of the textile workshops,
which moved from areas close to the sea to more inland areas, closer to the electric-
ity generation stations.
Although textile workshops were present all over Spain, many were small and
produced cloth for their owners’ personal use or that of their surrounding communi-
ties. In 1950, only a few areas stand out as textile producers and were important
enough to export cloth to other countries. Those areas were Catalonia, Valencia,
Rioja and Galicia.
In addition to the flourishing textile industry, around 1900 the Balearic Islands
developed an important industry of leather and footwear. Shoes were initially made
of cloth but soon evolved into leather. The shoe industry grew significantly during
the first half of the twentieth century but slowed down during the Spanish Civil War
1936–1939. The war was slightly milder in the Balearic Islands, which suffered less
3 Entrepreneurship and the Influence of History: How Much Impact Do… 41

than other areas of the country. This fact allowed for a quick recuperation by the
industry after the war, and a healthy footwear sector developed in the second part of
the twentieth century.

3.3 Data and Methodology

3.3.1 Data Collection

We collected data on the 17 Spanish autonomous regions corresponding to the

NUTS-2 level of the European Union (Nomenclature of the Territorial Units for
Statistics). By concentrating on one country we minimized the variance originated
by formal institutional factors, such as law and regulations. Data was extracted from
the European Bureau of Statistics, Eurostat, and the Spanish Bureau of Statistics,
INE. Both organizations have recent data about economic growth, population, num-
ber of new ventures created, etc. but their databases only go back to 1970. For that
reason, historical data on the existence of industrial clusters in the nineteenth
and twentieth century was gathered through other documentation, such as history
journals (Deu i Baigual & Llonch-Casanovas, 2008; Martínez-Carrión, 2013;
Sáez-García, 2014) or books (Carreras & Tafunell, 2005).
The limitation of the study to the 17 autonomous Spanish regions also restricts
the number of variables that can be included in the analysis. With such a small
number of observations, only two or three variables could be considered. Informa-
tion about educational levels or unemployment could have been obtained, but we
restricted the measures to one economic indicator (GDP per capita) and one cultural
indicator (the total number of businesses in the region). According to the literature
review, GDP per capita is one of the most widely-used measures to represent eco-
nomic activity. The total number of businesses in the region is one measure that
indicates the extent of the network that is accessible to the entrepreneur. Table 3.1
presents a summary of the data collected.
The first column of Table 3.1 shows the total number of new ventures created in
each of the regions. The second column is the GDP per capita, a measure of the eco-
nomic factors that affect the level of entrepreneurship. The third column is the total
number of businesses and industries present in the region. This measure is a proxy of
the industrial network present in the region, one of the cultural factors that has proven
to have an impact on the level of entrepreneurship. The fourth and fifth columns
are the number of new ventures created specifically in the two sectors under study: the
textile sector and the industrial sector. Finally, the last two columns show the existence
or non-existence of a textile or industrial cluster in the nineteenth century. To have a
measure of the strength of historical weight, this variable has three possible outcomes:
0 signifies that there was no presence of the sector in the area in the nineteenth century;
2 represents that the sector has a long history of presence in the area, with evidence of
existence of the sector in both 1900 and 1950; 1 means that the sector was developed
later, there was no evidence in 1900 but there was in 1950.
 42

Table 3.1 Description of the data

Number of Number of Number of Existence of Existence of
Number of GDP per businesses new ventures new ventures textile cluster industrial cluster
new ventures capita in the region textile sector industrial in nineteenth in nineteenth
Region created (2011) (2011) (2011) (2011) sector (2011) century century
Andalucía 15,442 16,666 49,147 149 147 0 0
Aragón 2,037 24,732 7,192 24 30 0 0
Asturias, Principado de 1,370 20,591 6,030 26 20 0 0
Balears, Illes 2,800 23,446 8,350 17 75 2 0
Canarias 3,451 18,873 13,328 16 41 0 0
Cantabria 805 21,550 3,122 5 11 0 1
Castilla y León 3,178 21,879 12,430 48 36 0 0
Castilla-La Mancha 3,131 17,780 10,876 57 38 0 0
Cataluña 17,796 26,666 55,651 347 334 1 1
Comunitat Valenciana 11,116 19,502 33,524 173 184 1 1
Extremadura 1,147 15,026 5,318 8 8 0 0
Galicia 4,298 20,399 16,326 112 76 1 1
Madrid, Comunidad de 19,765 28,915 42,923 168 85 0 1
Murcia, Región de 2,900 17,901 8,402 36 42 0 0
Navarra, Comunidad 824 28,358 2,950 7 31 0 0
Foral de
País Vasco 3,223 29,959 9,628 36 86 0 2
Rioja, La 411 25,277 1,792 3 7 1 0
I. Alegre and J. Berbegal-Mirabent
3 Entrepreneurship and the Influence of History: How Much Impact Do… 43

3.3.2 Methodology

Not all relationships between factors or variables are linear and complementary, so
correlation and multiple regression analysis are not always the most suitable tech-
niques for data treatment and analysis (Fiss, 2011; Ragin, 2008). Acknowledging
the importance of the analysis of asymmetric set relations in social sciences
(Woodside & Zhang, 2012), the present study goes beyond the calculation of the
net effects of independent variables in linear models from a symmetric perspective.
We use qualitative comparative analysis (QCA) in its fuzzy-set variant (fsQCA).
QCA is a relatively new strategy that is increasingly gaining adepts in a number
of fields, but in the areas of business and management in particular. One of the main
advantages of QCA is that it offers valid responses in studies with small samples.
According to Fiss (2007), 10–50 cases are necessary to perform QCA, although a
number of studies apply QCA to larger samples (Fiss, 2011). Given the particulari-
ties of the case under analysis, which comprises 17 regions, the use of QCA is
deemed as suitable as it overcomes the problem of having a small sample, although
it represents the whole population (all the regions into which Spain is divided).
Rather than estimate the net effects of single variables, QCA employs Boolean
logic algebra to examine the relationship between an outcome and all binary com-
binations of multiple predictors. That is, given an outcome set Y and causal condi-
tions (also referred to as antecedent conditions or factors) A and B, QCA examines
which combinations of causal conditions A and B are most likely to produce Y.
The result is a number of distinct combinations of conditions, called configurations
or causal recipes, which suggest different theoretical pathways to produce the out-
come under analysis (Longest & Vaisey, 2008).
As QCA assumes complex causality and focuses on asymmetric relationships, each
configuration includes the minimum necessary and/or sufficient combination of con-
ditions for obtaining an outcome (Meyer, Tsui, & Hinings, 1993; Woodside, 2013).
Due to this fact, configurations not only mean combinations of conditions (either
positive or negative) but also their absence (Wu, Yeh, Huan, & Woodside, 2014).
QCA proceeds in several steps. Before the analysis can take place, the QCA
requires the transformation of outcomes and antecedent conditions into sets. This
process is known as calibration, and aims at categorizing meaningful groupings of
cases (Ragin, 2008). Each variable is transformed to represent the individual’s level
of membership in a given condition. Set membership values in fsQCA range from
full membership (1) to full non-membership (0.0), including the crossover point
(0.5) indicating “neither in nor out” of the set. Determination of the breakpoints
permits calibration of all original values into membership values. The breakpoints
include 0.05 for the threshold of full non-membership, 0.50 for the crossover point,
and 0.95 for the threshold of full membership. Sets are labeled according to a
convention. Uppercase letters represent the level of set membership (e.g. value
of A), while lowercase letters are equal to 1 minus the set membership (e.g. 1 − A).
The operator “·” stands for the Boolean “and”.
44 I. Alegre and J. Berbegal-Mirabent

Because of this practice of calibrating, QCA combines both qualitative and

quantitative approaches (Vink & Vliet, 2009; Vis, 2012). On the one hand, in estab-
lishing membership of the set, the selection of the characteristics deemed as impor-
tant and their calibration require familiarity with cases, which in turn demand a
theoretical and substantive in-depth knowledge (Fiss, 2007; Ragin, 2000; Woodside,
2013). On the other hand, QCA also involves an exhaustive domain of quantitative
analysis in order to pinpoint decisive cross-case patterns.
The next step is to construct a truth table using the measures specified in the
previous stage. This table sorts cases by the combinations of causal conditions they
exhibit. All logically-possible combinations of conditions are considered, even those
without empirical instances (Ragin, 2008). This data matrix has 2k rows, where k is
the number of causal conditions used in the analysis. The range of conditions in the
analysis defines a property space with k dimensions. Each column represents a con-
dition. The empirical cases are sorted into the rows of this truth table on the basis of
their values on these attributes (Fiss, 2011; Schneider & Wagemann, 2012).
Boolean algebra is then used to determine commonalities among the configura-
tions that lead to the outcome, generating a logical reduction of statements. Although
a number of algorithms exist for carrying out the logical minimization of the truth
table, with fsQCA the Quine-McCluskey algorithm is usually chosen (Fiss, 2007;
Quine, 1952, 1955).
Rows are reduced taking into account two criteria: (a) the minimum number of
necessary cases in order to consider a potential solution (coverage); and (b) the mini-
mum consistency level of a solution. Coverage gives an indication of “the degree to
which a cause or causal combination [accounts for] instances of an outcome” (Ragin,
2008, p. 44). Consistency indicates how well the solution corresponds to the data.
This measure ranges from 0 to 1. According to Ragin (2008) a minimum consistency
of 0.8 is sufficient to indicate goodness of fit. The resulting set of this reduction
process is a set of combinations of causal conditions that are minimally sufficient
for producing the outcome.
For the purpose of this paper the fuzzy program in the STATA software package
is used.

3.4 Findings and Discussion

Table 3.2 shows a summary of the outcomes and antecedent conditions in fuzzy
terms. To facilitate the readability of the tables presented in the next subsections,
each variable has been coded. Following Longest and Vaisey (2008), all variables
have been transformed into sets using the standardized rank transformation.
As shown in the table, the distribution of cases has not changed, but the scale has
been “fuzzified” to range between 0 and 1. This way, values represent the level of
membership in the set.
3 Entrepreneurship and the Influence of History: How Much Impact Do… 45

Table 3.2 Distribution of each variable and its corresponding set

Variable Coding Original range Original mean Set mean
GDP per capita (2011) G 15,026–29,959 22,207.0600 0.5000
Number of businesses in the N 411–19,765 5,511.4120 0.5556
region (2011)
Industrial new ventures relative I 0.0015–0.0105 0.0047 0.5033
to total new ventures (2011)
Historical industrial cluster C 0–2 0.3529 0.2430
(1900 and 1950)
Textile new ventures relative to T 0.0012–0.0069 0.0035 0.5392
total new ventures (2011)
Historical textile cluster (1900 H 0–2 0.3529 0.2430
and 1950)

Table 3.3 Coincidence matrix

I G N C
I 1
G 0.766 1
N 0.711 0.701 1
C 0.827 0.719 0.769 1

3.4.1 Industrial Sector

Tables 3.3 and 3.4 show the relationship between the outcome (proportion of indus-
trial new ventures created in 2011 relative to total new ventures for the same year)
and the antecedent conditions. From Table 3.3 it can be inferred that all causal con-
ditions considered are somehow related to the outcome variable, as the coincidence
scores are above 0.6. On the other hand, Table 3.4 reveals that the presence of a
historical cluster in the region is the single set that (alone) is most sufficient for
predicting the outcome (consistency = 0.827). This initial result seems to support
our hypothesis that the existence of previous economic activity in a region influ-
ences its current entrepreneurial activity.
Seeing that the variable sets are indeed related, we further continue with the
analysis by examining the consistency of different configurations when causal con-
ditions are combined. To achieve this, we first look for configurations that have y
consistencies (positive outcome) significantly greater than their n consistencies
(negation of the outcome). Based on the results displayed in Table 3.5, only two
configurations (gNC and GNC) can be considered, where factors in lowercase
letters indicate the absence of that condition, and uppercase letters its presence.
Following this convention, configuration “gNC” can be interpreted as low GDP per
capita, but a strong industrial fabric (high number of businesses in the region),
and the existence of a previous cluster in this particular sector. As for the “GNC”
configuration, the simultaneous presence of all three antecedent conditions is found
to also explain current entrepreneurial activity in the industrial sector.
46 I. Alegre and J. Berbegal-Mirabent

Table 3.4 Sufficiency and necessity matrix

I G N C
I 1 0.761 0.711 0.399
G 0.766 1 0.701 0.349
N 0.644 0.631 1 0.336
C 0.827 0.719 0.769 1

Table 3.5 Sufficiency and necessity matrix

Y-consistency vs. N-consistency
Set YCons NCons F P
gNC 0.992 0.613 11.94 0.003
GNC 0.998 0.500 9.22 0.008
Y-consistency vs. set value
Set YConsist Set value F P
gnC 0.912 0.800 4.85 0.043
gNC 0.992 0.800 853.36 0
GnC 0.935 0.800 8.24 0.011
GNC 0.998 0.800 14,707.11 0
Common sets
gNC GNC

Additionally, we also determine which configurations have y consistency levels

significantly higher than the threshold value of 0.800. Figures on Table 3.5 indicate
that for the given input, four configurations (gnC, gNC, GnC and GNC) are consis-
tent at the 0.05 level of significance.
The next step consists of selecting only those configurations that passed both
tests. Two common sets are found: gNC and GNC. However, they may still overlap.
Using the Quine-McCluskey algorithm we can perform the reduction. Indeed, when
performed, this algorithm returns only one configuration: NC, with a total coverage
of 0.344 and consistency of 0.927, meaning that configurations gNC and GNC are
collapsed into one.
This result indicates that the entrepreneurial activity in the industrial sector of a
particular region is positively influenced by the GDP per capita of the region as well
as by the existence of a historical cluster in the past. In other words, our findings for
the industrial sector indicate that both economic and historical factors do shape the
current level of entrepreneurial activity of a region. However, our findings prevent
us from confirming our hypothesis stating that cultural factors also play a role, as
this antecedent condition is not included in the final recipe.
3 Entrepreneurship and the Influence of History: How Much Impact Do… 47

Table 3.6 Coincidence matrix

T G N H
T 1
G 0.668 1
N 0.821 0.701 1
H 0.689 0.689 0.702 1

Table 3.7 Sufficiency and necessity matrix

T G N H
T 1 0.620 0.821 0.311
G 0.668 1 0.701 0.335
N 0.797 0.631 1 0.307
H 0.689 0.689 0.702 1

3.4.2 Textile Sector

Following the same procedure as described for the industrial sector, we proceed with
the analysis of the textile sector. Tables 3.6 and 3.7 report both the coincidence and the
sufficiency and necessity matrices. Once again, we note that the relationship between
the proportion of new textile ventures created in 2011, relative to total new ventures
(created during the same period) and the antecedent conditions, is greater than 0.6,
indicating a moderate association. In particular, for the textile sector we observe that
the lowest relationship appears between the outcome and the economic factor (GDP
per capita). Likewise, when considering antecedent conditions in isolation, they pre-
dict the outcome with a consistency level equal to or higher than 0.668.
After corroborating that antecedent conditions are indeed related to the outcome,
we can next analyze which combination of antecedent conditions can be used to
explain the actual entrepreneurial level in the textile sector. As shown in Table 3.8,
two configurations (gNH and GNh) exhibit a y consistency greater than the n con-
sistency, with a confidence interval of 95 %. However, when testing which configu-
rations have a consistency level higher than the cut-off value of 0.800 suggested by
Ragin (2008), we only obtain one valid configuration, gNH. This recipe corresponds
to a high GDP per capita, a high number of businesses in the region, and the exis-
tence of a historical cluster in the textile sector in the previous two centuries.
Contrary to what we find in the industrial sector, in the case of the textile sector,
there is only one configuration that accomplishes the two aforementioned criteria
used to build Table 3.8; therefore, no reduction is necessary. Thus, we can affirm
that there is only one configuration (gNH) that helps explain the current level of
entrepreneurial activity in the textile sector: low levels of GDP per capita, high
number of businesses in the region, and the previous existence of a textile cluster.
This configuration has a total coverage of 0.206 and a consistency level of 0.951.
48 I. Alegre and J. Berbegal-Mirabent

Table 3.8 Sufficiency and necessity matrix

Y-consistency vs. N-consistency
Set YCons NCons F P
gNH 0.951 0.343 7.32 0.016
GNh 0.871 0.670 6.18 0.024
Y-consistency vs. set value
Set YConsist Set Value F P
gNH 0.912 0.800 4.85 0.043
Common sets
gNH

Similar to the results observed in the industrial sector, because entrepreneurial

activity is embedded in the region, the historical background of a territory (in terms
of specialization in a productive economic sector of activity) is found to be a deter-
minant factor. Cultural factors are also critical. The existence of a large business
structure triggers economic activity and facilitates networking between firms, which
in turn encourages the creation of new ventures.
Economic factors, proxied by the GDP per capita, are found to enter into the final
recipe in a negative form. While at first glance this finding might be disconcerting,
it can be easily explained by the U-shaped relationship that is usually found between
entrepreneurship and level of income per capita. According to Wennekers, van Stel,
Carree, and Thurik (2010) there is an income threshold value above which income
per capita is associated with increasing entrepreneurship. Interpreting this result in
the light of Maslow’s Hierarchy of Needs theory, we observe that above a certain
income threshold, as people’s basic needs are satisfied, entrepreneurship becomes
an attractive alternative to traditional paid employment. People therefore are more
willing to assume risk (becoming self-employed) in order to achieve more auton-
omy and self-fulfillment. Nevertheless, low levels of income per capita may
also lead to high levels of entrepreneurship. In this case, productive employment is
limited and people, guided by survival motives rather than opportunity causes, are
forced to embark on entrepreneurial activities in order to earn some income.

3.5 Conclusions

Entrepreneurial activity has been widely studied from different perspectives. Recent
approaches have concentrated on cultural issues, and their influence on entrepre-
neurial activity, as well as on the entrepreneur. Nevertheless, very little attention has
been paid to the role that the historical background of a territory has in influencing
its entrepreneurial activity.
This chapter has aimed to shed some light on this matter, by means of an empirical
approach. We have first reviewed the literature on those factors that, based on previ-
ous studies, help explain entrepreneurial activity: economic, institutional and cultural
factors. A fourth factor has been added, to account for the historical background.
3 Entrepreneurship and the Influence of History: How Much Impact Do… 49

We then introduced the two cases under analysis, the industrial sector and the
textile sector. For the purpose of this study, the Spanish landscape is chosen. Both
sectors have a strong tradition in the historical evolution of the Spanish industry and
are widely documented as historical clusters in the national literature. Therefore,
abundant information was available and it was possible to gain substantial knowl-
edge on how these clusters were shaping and determining the industrial fabric of
Spain over time.
To further empirically corroborate the validity of our proposition regarding the
influence of historical weight on current entrepreneurial activity, a method that
combines both quantitative and qualitative approaches was chosen. The qualitative
comparative analysis in its fuzzy-set version was used (fsQCA). This method
resolves one of the major limitations of probabilistic techniques, namely restrictions
on the study sample. Accordingly, even studies with small data samples can yield
conclusions generalizable to the broader population. Using this approach two inde-
pendent analyses have been carried out, one for each sector. Recipes obtained in
both configurations reveal that historical clusters do have an influence on current
entrepreneurship.
Human capital cannot be taken away from the individual, as tangible assets and
financial capital can. Something similar applies to the historical background of a
territory, which cannot be easily forgotten. The existence of a cluster in the past
influences the current activities performed in a given region. This effect is mani-
fested in infrastructure and machinery, but particularly in terms of the establishment
of networks and the availability of know-how which, transmitted from generation to
generation, is determining how things are done and life is conceived.
At this point, it is however important to highlight that historical heritage and
memories of earlier activities may also hinder the development of new economic
activities, in the sense that they do not allow inhabitants to find alternative ways to
earn a living. Fear of changing traditional ways of operating can lead to stagnation
and thus to the deterioration and aging of the region’s production system. In this
context, innovation plays a key role. Achieving a balance between traditional and
new ways of doing things is one of the keys to success.

3.6 Limitations and Further Studies

Although we believe that this study provides important and useful insights into the
current literature on culture and entrepreneurship, it is important to note that we
identified some limitations that clearly represent future research lines.
Probably the main limitation of this study relates to the specific analysis of Spain,
and particularly of only two sectors of activity: industrial and textile. Although
these two sectors can be considered the backbone of the Spanish economy in recent
centuries, other industries have also contributed in diversifying economic activity
and self-supplying the needs of the country. In this sense, it would be of great
interest to expand the current analysis into other areas of economic activity and see
50 I. Alegre and J. Berbegal-Mirabent

whether what we called the “historical weight” is also found to be determinant in

other sectors. Similarly, further research is necessary to confirm if our results regard-
ing the influence of the historical weight are particular to the case of Spain, or if they
are valid in other geographic settings. In this respect, cross-country studies by sec-
tors could also represent another research stream. However, we are aware of the
difficulties in obtaining homogeneous data, as information tends to be country-
specific, responding to national criteria.
Another recommendation for further studies relates to the sample. We are aware
that the sample used is relatively small, although it comprises all the regions in
which Spain is divided at NUTS-2 level. Future studies might consider the appro-
priateness of using provinces (the NUTS-3 level division) instead of regions.
Regardless of the potential deficiencies identified in our empirical applications,
the results of this chapter are a first step in the analysis of how the reminiscences
of earlier activities in a given territory are conditioning the current development of
entrepreneurial activity in the region.

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Chapter 4
Understanding the Role of Culture
and Economic Conditions
in Entrepreneurship

Francisco Liñán, Inmaculada Jaén, and Francisco J. Ortega

Abstract  This chapter focuses on the joint influence that cultural values (relatively
stable informal institutions) and the (more rapidly changing) economic conditions
play in explaining the total entrepreneurial activity (TEA) in countries with differ-
ent levels of development. Data for 55 countries coming from the Global
Entrepreneurship Monitor (GEM) and the Schwartz Value Survey (Individualism
and collectivism. Theory, method, and applications, Thousand Oaks, CA, 85–119;
Comparative Sociology 5:137–182, 2006) are analyzed. General results indicate
that the income level is negatively related to entrepreneurship, while the relation is
positive for the income growth. Regarding culture, the results show that only in
higher income countries, Autonomy values boost entrepreneurial activity.
Additionally, higher entrepreneurship is found in countries where Egalitarianism
predominates, and the effect becomes stronger as income level rises.

4.1  Introduction

Considerable attention has been paid in the literature to the relationship between
economic development and the entrepreneurial activity rate. However, these
attempts to explain the differences in the level of entrepreneurial activity between
countries have not been completely successful. Previous research in this respect has
found a U-shaped relationship between economic activity and entrepreneurship
(Carree, van Stel, Thurik, & Wennekers, 2002; Sternberg & Wennekers, 2005;
Wennekers, van Stel, Thurik, & Reynolds, 2005). Above a certain level of GDP per
capita, which some authors set around US$7,000 (Pinillos & Reyes, 2011), increased
income leads to higher start-up rates. The reason may be that wealthier countries
have a more complex economic system and also a greater demand for new and dif-
ferentiated consumer goods, both leading to increased opportunities (Shane, 1993).

F. Liñán (*) • I. Jaén • F.J. Ortega

Applied Economics I, University of Seville, Av. Ramon y Cajal 1, Seville 41018, Spain
e-mail: flinan@us.es; inmajaen@us.es; fjortega@us.es

© Springer International Publishing Switzerland 2015 53

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_4
54 F. Liñán et al.

An alternative and complementary research path consists of the study of the role
of societal context and institutions in explaining entrepreneurial activity (Blackburn
& Kovalainen, 2009). Institutional economic theory provides a useful framework
for understanding such effects, since it specifically suggests that human behavior is
influenced by the institutional environment (North, 1990, 2005). Therefore, placing
entrepreneurship studies in their context is necessary to more comprehensively cap-
ture the diversity of entrepreneurial activity (Zahra, 2007).
The social context surrounding the individual is bound to have an influence on
the person’s motives, cognition, intention and action (Welter, 2011). In this sense,
people’s start-up decisions may be influenced by the predominant values in the
social context in which they are embedded (Hayton, George, & Zahra, 2002; Pinillos
& Reyes, 2011). The societal value structure that shapes culture would thus play a
significant role in determining the entrepreneurial activity of their members.
Nevertheless, the mechanisms through which these effects are exerted are far from
clear. Though a number of contributions have already stressed the influence of cul-
ture on entrepreneurship (Davidsson, 1995; Davidsson & Wiklund, 1997;
Frederking, 2004), research on this topic is still limited.
Some authors have analyzed the institutional dimensions in the field of entre­
preneurship (Urbano & Alvarez, 2014). Busenitz, Gómez, and Spencer (2000)
introdu­ ced and validated a measure of the country institutional profile for
entrepreneur­ship. This research has been replicated in subsequent studies (Gupta
et al., 2012; Manolova et al., 2008; Spencer & Gomez, 2004). However, very few
attempts have so far been made to analyze the impact of institutional dimensions on
entrepreneurial activity using cross-national data (Urbano & Alvarez, 2014). In this
sense, some institutional elements (notably the informal factors such as culture) are
relatively stable and only change slowly over long periods of time. In contrast, the
short term economic situation is also certain to affect the individuals’ decision to
start a venture.
This study is focused on the role of both cultural attitudes and economic condi-
tions (in the form of income level and income growth) on entrepreneurship. It aims
at contributing to filling the existing gap in the literature by analyzing the complex
relationship between development, culture and entrepreneurship. Specifically, the
present study proposes a theoretical framework in which the cultural values (stable
informal institutions), and the level of economic activity (changing more rapidly)
jointly explain entrepreneurship in a country. In particular, the paper also analyzes
an interaction effect between cultural values and per capita income. The empirical
analysis tests this core hypothesis with data from 55 countries over 12 years, using
a data-panel design.
This chapter is organized as follows: after this introduction, the next section
outlines the relevant theory and the hypotheses derived from it. Section 4.3 describes
the empirical analysis and presents the results, which are further discussed in
Sect. 4.4. The paper ends with a brief conclusion section.
4  Understanding the Role of Culture and Economic Conditions in Entrepreneurship 55

4.2  Theory and Hypotheses

Institutions represent the set of rules that articulate and organize the economic, social
and political interactions between individuals and social groups, with consequences
for entrepreneurial activity and economic development (Liñán, Urbano, & Guerrero,
2011; Thornton, Ribeiro-Soriano, & Urbano, 2011; Urbano & Alvarez, 2014). It has
been argued that institutions may be formal (such as political and economic rules
and contracts), or informal (such as codes of conduct, conventions, attitudes, values
and norms, or rather the culture of a specific society) (North, 1990, 2005).
While it is often relatively easier to modify formal economic institutions by pol-
icy action, informal institutions are likely to resist change and take time to evolve
toward new social norms (Thornton et al., 2011). Attention will be paid to this differ-
ent time perspective in this section. Thus, we first succinctly analyze the relationship
between economic conditions and entrepreneurship. After that, the operationaliza-
tion of culture and its role in economic development and entrepreneurship is studied.
Finally, the existence of an interaction effect between culture and income level is
considered. The research hypotheses are presented throughout the section. Our
research model and hypotheses is presnted in Fig. 4.2.

4.2.1  Economic Development and Entrepreneurship

Entrepreneurship plays a very important role in the process of economic develop-

ment. It increases employment opportunities, enhances the level of technical inno-
vations, and promotes economic growth (Audretsch & Fritsch, 1999; Fritsch &
Mueller, 2004; Reynolds, Bygrave, Autio, & Hay, 2002; van Stel & Storey, 2004).
From a dynamic perspective, entrepreneurs are agents of change since entrepreneur-
ship implies starting new businesses, experimenting with new techniques and a new
organization of production, introducing new products or even creating new markets
(Wennekers, Uhlaner, & Thurik, 2002).
At the same time, Minniti, Bygrave, and Autio (2006) and Lee and Peterson
(2000) found the income level to have an effect on entrepreneurial activity. In particu-
lar, the rate of growth in income has been found to have an influence on entrepreneur-
ship rates (Armington & Acs, 2002; Lee, Florida, & Acs, 2004). Similarly, the income
level, if measured as per capita GDP, has a positive effect on entrepreneurship as
well, at least for industrialized economies (Fishman & Sarria-Allende, 2004; Parker
& Robson, 2004). Economic development induces new firm formation since the
opportunities and expected rewards of starting a business are higher (Carree et al.,
2002; Reynolds, Storey, & Westhead, 1994). Furthermore, the level of income and
wealth determines the variety of consumer demand. A high differentiation in demand
favors the suppliers of new and specialized products and diminishes the scale advan-
tages of large incumbent firms (Jovanovic, 1993; Wennekers et al., 2002). For this
reason, a higher rate of economic growth will imply the existence of additional
opportunities for new entrepreneurs, leading to additional ventures being created.
56 F. Liñán et al.

However, development is generally accompanied by an increase in real wages,

thus raising the opportunity costs for self-employment. Consequently, growth in
GDP per capita could reduce the entrepreneurial activity (Bjornskov & Foss, 2006;
Noorderhaven, Thurik, Wennekers, & van Stel, 2004). In this sense, some authors
(van Stel, Wennekers, Thurik, & Reynolds, 2003; Verheul, Wennekers, Audretsch,
& Thurik, 2002) have found a significant negative effect of GDPpc, together with a
significant positive effect of squared GDPpc, suggesting a U-shaped impact of
income on entrepreneurship. Thus, a generally negative relationship between
GDPpc and entrepreneurship should be expected, although it would become posi-
tive for higher levels of income (Liñán, Fernández-Serrano, & Romero, 2013).
A first concern when analyzing entrepreneurial activity across nations is the
comparability of the different indicators. In this sense, the Global Entrepreneurship
Monitor (GEM) offers a standard and homogenous measure of entrepreneurial
activity by country since, at least, the year 2000 (Reynolds et al., 2002). For this
reason, the Total Entrepreneurial Activity (TEA) from the GEM reports will be used
in this study.
Based on the theory reviewed above, the following hypotheses, referring to the
relationship between economic development and entrepreneurship, are formulated
to be tested in the empirical analysis (see Fig. 4.2):
H1: The rate of TEA is negatively correlated with GDP per capita: higher income is
associated with lower entrepreneurship rates.
H2: The rate of TEA is positively correlated with GDP growth: faster economic
growth is associated with higher entrepreneurship rates.

4.2.2  Culture and Entrepreneurship

Studying culture is difficult due to the lack of a precise and commonly understood
definition of culture (McGrath, MacMillan, Yang, & Tsai, 1992; Thornton et al.,
2011). Thus, Inglehart (1997) defines culture as the set of basic common values
which contributes to shaping people’s behavior in a society. Cultural values oper-
ate unconsciously, since they are deeply rooted within the political institutions
and technical systems. Therefore, these values and beliefs are continuously rein-
forced (Pinillos & Reyes, 2011). Culture shapes the individual’s cognitive
schemes, programming behavioral patterns consistent with the cultural context
(Hofstede, 1991, 2003).
Culture may influence entrepreneurship through two main mechanisms
(Davidsson, 1995). Firstly, a supportive culture would lead to social legitimation,
making the entrepreneurial career more valued and socially recognized in that cul-
ture, thus creating a favorable institutional environment. Therefore, more people
will try to start their ventures, irrespective of their personal beliefs and attitudes
(Etzioni, 1987). Secondly, a culture sharing more pro-entrepreneurial values and
patterns of thinking would lead to more individuals showing psychological traits
4  Understanding the Role of Culture and Economic Conditions in Entrepreneurship 57

and attitudes consistent with entrepreneurship (Krueger, 2000, 2003; Liñán, Santos,
& Fernández, 2011). Thus, more people will try to become entrepreneurs (McGrath
et al., 1992; Mueller & Thomas, 2001). In this sense, it has been suggested that a
high perceived valuation of entrepreneurship in a society will lead to more positive
attitudes and intentions by individuals (Krueger & Carsrud, 1993; Liñán, Urbano
et al., 2011).
The first and most common classification of cultures distinguishes between indi-
vidualist and collectivist ones (Hofstede, 1980; Schwartz, 1999; Triandis, 1995).
However, alternative characterizations have also been made. From an empirical
point of view, Hofstede’s cultural dimensions (Hofstede, 1980, 1991, 2003) have
often been used as a reference in research works about the influence of culture on
entrepreneurship (Hayton et al., 2002; Liñán & Chen, 2009; McGrath & MacMillan,
1992; Mitchell, Smith, Seawright, & Morse, 2000; Mueller & Thomas, 2001;
Mueller, Thomas, & Jaeger, 2002; Shane, Kolvereid, & Westhead, 1991). Results
have confirmed their influence on national start-up rates, innovation or entrepre-
neurial intentions. However, Hofstede’s measures have been criticized as having
methodological weaknesses (Jabri, 2005; Tang & Koveos, 2008).
An alternative approach to culture has been proposed by Schwartz (1990).
According to this, values shape the individual’s motivational goals. A circular struc-
ture of values is proposed (see Fig. 4.1) representing the dynamic relationships
between values according to principles of compatibility and logical contradiction.
Following this circular structure, the pursuit of adjacent values is compatible, whilst
the pursuit of opposing values would generate conflict (Schwartz, 1999, 2004, 2006b).
In the present study, Schwartz’s theory will be followed. This considers cultural
values as averaged individual values (Schwartz, 1994, 1999, 2004, 2006b). This
theory is strongly based on a universal system of values that guides human behavior.
Specific cultural contexts make some of them prevail over others (Schwartz, 2006a,
2008). This mechanism works through social institutions and their actions (through
legislation, government directives, the education system, etc.), selecting and priori-
tizing some values more than others. In this sense, people tend to carry out what
they believe is socially appropriate behavior (Bourdieu, 1991; Markus & Kitayama,
1991; Schwartz, 1994).
At the aggregate level, seven types of cultural value orientations may be identi-
fied (Schwartz, 1994): Embeddedness, Intellectual Autonomy, Affective Autonomy,
Hierarchy, Egalitarianism, Mastery and Harmony. They may be grouped into three
bipolar dimensions (Fig. 4.1).
• Autonomy (intellectual and affective) vs. Embeddedness: This dimension covers
the troubled relationship between the individual and the group. At the embedded-
ness end, the person is seen as an entity that is included in the community (exam-
ples of values may be social order, respect for tradition, family security or
wisdom). Meanwhile, at the other end, people are autonomous bodies that find
meaning in their own difference (to be curious, open-minded or creative are val-
ues within the intellectual autonomy; pleasure, a varied life or an exciting life are
affective autonomy values). Of course, the relative strength of affective and intel-
lectual autonomies may make a difference at the cultural level (see Schwartz &
58 F. Liñán et al.

HARMONY
Unity with nature,
World at Peace
EMBEDDEDNESS
Social Order, Obedience,
EGALITARIANISM Respect for tradition
Social Justice,
Equality

INTELLECTUAL
AUTONOMY HIERARCHY
Broadmindedness, Authority, Humble
Curiosity

AFFECTIVE MASTERY
AUTONOMY Ambition, Daring
Pleasure, Exciting life

Fig. 4.1  The circular structure of values. Source: Schwartz (2004)

Ros, 1995, for a comparison of western countries). Many theorists associate indi-
vidualism with the self-interested pursuit of personal goals (Triandis, 1995).
However, self-interest is equally present on both sides of the Autonomy-­
Embeddedness dimension (Schwartz, 2004, 2006b).
• Egalitarianism vs. Hierarchy: The second societal problem is to guarantee
responsible behavior that preserves the social fabric. People must be induced to
consider the welfare of others, to coordinate with them, and thereby manage their
unavoidable interdependencies. This addresses the responsible, cooperative
behavior that will get societal tasks done, either by differentiating roles, or by
internalizing commitment and voluntary cooperation (Schwartz, 1994). At the
Egalitarianism end of this dimension, the members of society are considered as
equal beings who share a commitment to cooperate with others and pursue the
common good (social values such as justice, freedom, responsibility, honesty).
Meanwhile, at the Hierarchy end the unequal distribution of power, roles and
resources is considered legitimate (social values such as power, authority, humil-
ity, wealth).
• Harmony vs. Mastery: This dimension helps regulate people’s treatment of
­natural and human resources. It solves the problems of the relations between
persons, and between person and nature. Those cultures heavily sided toward the
Mastery pole are seeking personal gain through the exploitation and domination
of nature (ambitious, successful, competitive, risk-takers). On the Harmony side,
4  Understanding the Role of Culture and Economic Conditions in Entrepreneurship 59

on the other hand, cultures that seek individuals fitting in harmoniously with
nature are placed (unity with nature, protecting the environment, a world at
peace, etc.).
These cultural value orientations also present a framework of cultural compat-
ibility and opposition (Schwartz, 1994, 1999), since some of them share common
basic assumptions. For instance, Hierarchy and Embeddedness are positively
related, sharing the idea that personal roles and obligations to collectivities are
more important than individual ideas and aspirations. These values, therefore, are
more present in collectivist countries. A similar relationship is also found with
respect to Egalitarianism and Intellectual Autonomy. They share the idea of a
social actor who takes individual responsibility and makes personal decisions
based on his/her understanding of situations. Thus, these values predominate in
individualist countries (Schwartz, 1994, 1999). In practice, high Egalitarianism
and Intellectual Autonomy are usually found together, as in Western Europe
(Schwartz & Ros, 1995).
The shared and opposing assumptions inherent in cultural values yield a coher-
ent circular structure of relations between them (Schwartz, 1999). As shown in
Fig. 4.1, the structure reflects the cultural orientations that are compatible (adjacent
in the circle) or incompatible (distant around the circle). This conception of cultural
dimensions as forming an integrated system, derived from a priori theorizing, dis-
tinguishes this approach from others. Thus, Hofstede (1980, 2003) conceptualized
his dimensions as independent, while Inglehart (1997) empirically derived two
broad cultural components.
As may be expected, a considerable interdependence between culture and eco-
nomic development is found (Mueller et al., 2002; Ros, 2002; Shane, 1993). Less
developed countries are typically characterized by a predominance of Embeddedness
and Hierarchy, while Autonomy and Egalitarianism tend to prevail in developed
countries (Schwartz, 2008). In particular, Autonomy seems to be more strongly
associated with economic growth, while Egalitarianism is more strongly linked to
social change (Schwartz, 2004). Regarding the relationship between Harmony/
Mastery and economic development, no strong evidence is found (Schwartz, 2004;
Schwartz & Ros, 1995). Nevertheless, this Harmony concept has been related to
Inglehart’s (1997) postmaterialism and is found to be relatively higher in most
developed countries. In particular, this cultural orientation is highest in Western
Europe (Schwartz & Ros, 1995), while in English-speaking (especially in the USA)
and Confucian countries, Mastery is prevalent (Schwartz, 2008).
Regarding Autonomy, an overall negative relationship with the entrepreneurial
activity should be expected. That is, Embeddedness would favor entrepreneurship.
In countries where Embeddedness prevails, the sense of community would facilitate
support for nascent entrepreneurs and, in particular, for small-scale necessity
initiatives.
In turn, Egalitarianism (versus Hierarchy) would have a positive influence on
entrepreneurial activity. In countries where Hierarchy prevails, more people adopt a
60 F. Liñán et al.

passive role, accepting the social order and their economic situation (Schwartz,
2006b). However, in egalitarian societies people are considered as equal beings who
might cooperate with others to pursue certain objectives, and improving their social
and economic status might be among these possible goals (Schwartz, 2006b). In this
respect, entrepreneurship can pose a powerful path to vertical mobility within a
society which might be more acceptable in egalitarian societies, while in hierarchi-
cal societies it would not be tolerated.
Societies where Mastery prevails (instead of Harmony) tend to encourage active
self-assertion in order to master, direct and change the natural and social environ-
ment to attain own goals (Schwartz, 2006b). Therefore, since entrepreneurship rep-
resents changes in economic and competition conditions in the market, it would be
favorably viewed in these societies. In turn, the predominance of Harmony pro-
motes the acceptance of the world (nature and society) as it is, trying to understand
and appreciate it, rather than to change it. This would be associated with lower
entrepreneurial activity.
Therefore, with respect to the relation of culture to entrepreneurship, the follow-
ing hypotheses may be proposed (Fig. 4.2):
H3a: The Autonomy-Embeddedness dimension is negatively related to the entrepre-
neurship rate.
H3b: The Egalitarianism-Hierarchy dimension is positively related to the entrepre-
neurship rate.
H3c: The Harmony-Mastery dimension is negatively related to the entrepreneurship
rate.

Fig. 4.2  Stable and volatile elements explaining entrepreneurship

4  Understanding the Role of Culture and Economic Conditions in Entrepreneurship 61

4.2.3  T
 he Interaction Between Culture and Income
in Explaining Entrepreneurship

The influence of cultural values on entrepreneurial activity may be different in coun-

tries with different income levels. Thus, previous evidence suggests that in low-income
countries, high entrepreneurship tends to be associated with a collectivist culture
(Pinillos & Reyes, 2011; Wennekers, Thurik, van Stel, & Noorderhaven, 2007).
Moreover, a higher rate of necessity entrepreneurship is found in these countries. Thus,
in countries where the income level is lower, cultural values such as Embeddedness
(versus Autonomy) may be associated with higher overall entrepreneurial activity. In
these countries, the sense of community would facilitate social support for the entre-
preneurs starting mainly small-scale businesses to sustain their families.
In contrast, in developed countries, higher individualism is linked to increased
entrepreneurial activity (Busenitz & Lau, 1996; Mueller et al., 2002). In this sense,
Schwartz (1999) finds individualism as positively associated with Autonomy and
Egalitarianism, while it is opposed to Embeddedness and Hierarchy. This result has
been confirmed by Ros (2002). Thus, in the case of developed countries, Autonomy
(versus Embeddedness) should be positively related to entrepreneurial activity. In
this type of countries, the economic and institutional environment is favorable to
those trying to exploit a business opportunity. So, in these countries Autonomy and
Egalitarianism could particularly stimulate the emergence of entrepreneurs moti-
vated by their desire of autonomy or self-realization. Conversely, the opposed val-
ues of Embeddedness and Hierarchy should have an especially negative impact on
entrepreneurship in high-income countries.
Finally, regarding the Harmony-Mastery dimension, as explained above the
prevalence of Mastery should be linked to higher entrepreneurial activity, irrespec-
tive of the income level. Therefore, no interaction effect is expected here.
Thus, the following hypotheses about the interaction of culture and income on
entrepreneurship may be proposed (Fig. 4.2):
H4: In countries with higher levels of income:
H4a: A stronger prevalence of Autonomy leads to an even higher entrepreneur-
ship rate.
H4b: A stronger prevalence of Egalitarianism leads to an even higher entrepre-
neurship rate.
H4c: The prevalence of Harmony has no specific effect on the entrepreneurship
rate.

4.3  Empirical Analysis

The empirical analysis will be carried out on a total sample of 55 countries with
very different income levels (Annex 1) over the period 2001–2012. The selection of
countries has been made based on the available data (countries participating in both
62 F. Liñán et al.

the GEM project and the Schwartz Value Survey—SVS—study were included).
A non-balanced panel design is used, since there are some missing observations for
specific periods and countries. Overall, 423 complete observations have been used
in this study.

4.3.1  Methodology

The proposed model explains entrepreneurship as a function of the income level,

economic growth, and cultural values. The variables used in the analysis are the
following:
• For entrepreneurship, data come from the Global Entrepreneurship Monitor
(GEM) statistics1:
–– Total Entrepreneurial Activity (TEA): percentage of population aged 18–64
who are either a nascent entrepreneur (starting a venture, or have just started
one with no more than 3 months of existence) or who is an owner-manager of
a new business (i.e., owning and managing a running business that has paid
salaries, wages, or any other payments to the owners for more than three
months, but not more than 42 months). Since countries participating in the
GEM study change from year to year, we have selected a longer time frame to
maximize the number of countries with meaningful observations.
• For economic variables data come from the World Development Indicators of the
World Bank:
–– Gross Domestic Product per capita (GDPpc). Annual data at current US dol-
lars (in thousands).
–– Growth Rate in Gross Domestic Product (GR-GDP). Annual percentage
change over the previous year.
• For cultural values, the Schwartz Value Survey (SVS) has been used (Schwartz,
2006b). The SVS consists of 57 items which represent seven value orientations
at the cultural level. The data are available for more than 60 countries from sur-
veys conducted in different years within the period 1985–2005. The full sample
includes over 75,000 individuals. The average for each country has been
­computed for the 57 value-items. These national-level scores were then averaged
into the seven cultural orientations (Schwartz, 2004; Schwartz & Ros, 1995).
Finally, following Schwartz (2006b), the seven cultural values were grouped
again into three latent bipolar cultural dimensions computing the difference
between the first value orientation (Autonomy, Egalitarianism, Harmony) and

1
 Since 1999, the GEM project measures and compares the entrepreneurship levels for different time
periods and countries. Available from the GEM consortium web page: http://www.gemconsortium.
org/key-indicators.
4  Understanding the Role of Culture and Economic Conditions in Entrepreneurship 63

the second orientation (Embeddedness, Hierarchy, Mastery). These three dimen-

sions will be the variables used in the empirical analysis:
–– Autonomy2 vs. Embeddedness (AUTO-EMB): A positive value represents the
predominance of the Autonomy element, whereas a negative value reflects
the predominance of the Embeddedness value orientation.
–– Egalitarianism vs. Hierarchy (EGAL-HIER): A positive value represents the
predominance of Egalitarianism values, whereas a negative value reflects
the predominance of Hierarchy.
–– Harmony vs. Mastery (HAR-MAS): A positive value reflects the predomi-
nance of the first element (Harmony), whereas a negative value represents the
predominance of Mastery values.
To test the hypotheses, a panel-data regression model will be estimated. The
estimation procedure has been adapted to the characteristics of the data available.
Firstly, since cultural variables are considered as stable over longer periods of time,
a single value is used to represent these variables in each country for the whole
period under analysis. This fact makes it impossible to estimate a fixed-effects
model (Wooldridge, 2009). Additionally, this is a non-balanced panel. That is, the
number of temporal observations available for each country ranges from a maxi-
mum of 12 observations for several countries such as Argentina, to a minimum of
only 2 observations for Bolivia, or 1 observation for the Philippines. These differ-
ences can be explained by the irregular participation of each country in the GEM
yearly surveys. When non-balanced panels are used, the random effects model
implies additional difficulties (Greene, 1997).
Despite these limitations, the use of panel data always provides an increase in the
accuracy of estimators as a consequence of the enlarged sample size and the higher
variability of the explaining variables. Therefore, it is preferable to exploit these
advantages whenever possible, which is what we have done here. To estimate the
models, the Eviews 7.1. software has been used. Table 4.1 shows the descriptive
statistics for the variables used in the analysis.
In the next section the results of two models are presented. The first one includes
only the main effects (Model 1), to test hypotheses H1 to H3.

Table 4.1  Descriptive statistics

TEA GR_PIB GDP_PC AUT_EMB EGA_HIE HAR_MAS
Mean 9.069 3.288 20.070 0.276 2.322 0.021
Median 6.900 3.403 12.725 0.220 2.380 0.030
Maximum 40.300 18.287 99.636 1.800 3.560 1.140
Minimum 1.500 −17.955 0.233 −1.475 0.740 −0.800
Std. Dev. 6.471 3.736 18.985 0.746 0.677 0.466
Observations 423 660 660 55 55 55

 Following Schwartz (2006b), Autonomy is operationalized as the average of Intellectual and

2

Affective Autonomy.
64 F. Liñán et al.

TEAit = a + b1 ( GR - GDP )it + b 2 ( GDP - pc )it + g 1 ( AUTO - EMB )i

+ g 2 ( EGAL - HIER )i + g 3 ( HAR - MAS )i + uit

Where the sub-index i refers to countries, while the sub-index t refers to years.
A second model is also estimated (Model 2) including three interaction effects
between GDPpc and the three cultural dimensions, to test hypothesis H4. The model
is as follows:

TEAit = a + b1 ( GR - GDP )it + b 2 ( GDP - pc )it + g 1 ( AUTO - EMB )i + g 2 ( EGAL - HIER )i

+ g 3 ( HAR - MAS )i + d1P1it + d 2 P 2it + d 3 P 3it + uit

As above, the sub-index i refers to countries, while the sub-index t refers to years.
The interactions effects are:

P1 = ( GDP - pc ) * ( AUTO - EMB )

P2 = ( GDP - pc ) * ( EGAL - HIER )

P3 = ( GDP - pc ) * ( HAR - MAS )

4.3.2  Results

As a first preliminary analysis, Table 4.2 presents the correlation matrix between all
the explanatory variables used in the model. It is interesting to highlight the correla-
tions between cultural and economic variables. The three cultural variables are posi-
tively correlated to GDPpc. That is, in high-income countries the cultural values of
Autonomy, Egalitarianism and Harmony prevail (over Embeddedness, Hierarchy
and Mastery, respectively). This is clearly in line with the theory (Schwartz, 2008;

Table 4.2 Correlations
1. 2. 3. 4. 5. 6. 7. 8.
1. GR-GDP  1.000
2. GDPpc −0.349 1.000
3. AUTO-EMB −0.341 0.683 1.000
4. EGAL-HIER −0.422 0.577 0.575 1.000
5. HAR-MAS −0.290 0.280 0.314 0.695 1.000
6. P1 −0.324 0.840 0.762 0.613 0.332 1.000
7. P2 −0.357 0.965 0.684 0.693 0.394 0.879 1.000
8. P3 −0.207 0.351 0.312 0.574 0.800 0.460 0.505 1.000
4  Understanding the Role of Culture and Economic Conditions in Entrepreneurship 65

Schwartz & Ros, 1995). In turn, cultural values are negatively related to GR-GDP,
which is in accordance with the negative relation between GDPpc and GR-GDP
(richer countries tend to grow more slowly). As may also be seen, correlations are
not excessively high. However, as is often the case, interaction terms do present
stronger correlations in some instances. This is the case, particularly, with P2.
In order to estimate both Models 1 and 2, we have used the Estimated Generalized
Least Squares (EGLS) panel method (cross-section weights) implemented in Eviews.
In particular, we have also included White’s correction for the variance-­covariance
matrix. This method estimates a model of constant coefficients for all countries and
periods, introducing a correction of weights to avoid any problems that may derive
from the presence of cross-sectional heteroskedasticity (Wooldridge, 2002).
The selection of this estimation method is justified because the Hausman’s
econometrics test clearly rejects (with a p-value < 0.001) the use of a random
effects method (Hausman, 1978; Wooldridge, 2009). That is, the necessary condi-
tion that individual effects are not correlated to explanatory variables is not met.
Thus, any estimations from the random effects model would be inconsistent
(Wooldridge, 2002). Additionally, as indicated above, the presence of variables
that are fixed in time (cultural dimensions) prevents us from using the fixed effect
method. Finally, the correction of weights has been introduced to solve the pres-
ence of some heteroskedasticity problems that were found in the constant coeffi-
cients model.
The main results from the estimation of Model 1 are presented in Table 4.3.
As may be observed, the model is clearly significant. Similarly, all explanatory
variables are highly significant (p < 0.001), supporting the hypotheses proposed.
The estimated coefficient for the variable GDPpc is negative. Therefore, hypoth-
esis H1 is confirmed, and we can conclude that higher income is associated with
lower entrepreneurship rates. In contrast, the coefficient for GR-GDP is positive.
This provides support for hypothesis H2, meaning that higher economic growth
implies an increased entrepreneurship rate.
Regarding cultural variables, the coefficients are all in accordance with the
hypotheses H3a, H3b and H3c. Therefore, we find confirmation for the three of
them in our analysis.

Table 4.3  Model 1 including direct effects

Variable Coefficient STd. Error Prob
C  4.8913 0.6687 0.0000
GR-GDP  0.1087 0.0313 0.0006
GDPpc −0.4458 0.0921 0.0000
AUTO-EMB −4.2938 0.1879 0.0000
EGAL-HIER  2.8128 0.3022 0.0000
HAR-MAS −4.6355 0.3860 0.0000
R2 = 0.5518
F-statistic = 102.6666
Prob (F-statistics) = 0.0000
66 F. Liñán et al.

Table 4.4  Model 2 including interaction effects

Variable Coefficient Std. Error Prob
C  8.1630 0.9559 0.0000
GR-GDP  0.0735 0.0295 0.0132
GDPpc −1.8036 0.3100 0.0000
AUTO-EMB −6.1731 0.4791 0.0000
EGAL-HIER  1.9424 0.3997 0.0000
HAR-MAS −4.7779 0.7208 0.0000
P1  1.1028 0.1657 0.0000
P2  0.1786 0.0894 0.0464
P3  0.2501 0.1594 0.1173
R2 = 0.5128
F-statistic = 54.4583
Prob (F-statistics) = 0.0000

Model 2 has been estimated to be able to test the hypotheses H4a, H4b and H4c.
This model builds upon Model 1 by including the interaction terms between GDPpc
and the three cultural dimensions. The results from the estimation of Model 2 are
presented in Table 4.4. It may firstly be said that all the coefficients of the variables
included in Model 1 keep their signs and are still significant. In this sense, there is
no evidence that the inclusion of interaction terms causes collinearity problems.
The coefficients for the variables P1 (GDPpc  * AUTO-EMB) and P2
(GDPpc * EGAL-HIER) are positive and significant. Therefore, hypotheses H4a and
H4b are confirmed. In the case of the Autonomy-Embeddedness dimension, evidence
of a non-linear relationship with the entrepreneurship level is found. In higher income
countries Autonomy (instead of Embeddedness) can boost the levels of entrepreneur-
ship. In contrast, the predominance of Egalitarianism (instead of Hierarchy) is always
associated with higher entrepreneurial activity. But this relationship becomes stron-
ger when high income and high Egalitarianism are found together.
In turn, the coefficient for P3 (GDPpc * HAR-MAS), although positive, is not
significant. In this sense, this is in accordance with our hypotheses H4c, which
stated that there was no specific interaction effect between the Harmony-Mastery
cultural dimension and the income level in explaining the entrepreneurship rate.

4.4  Discussion

The most important contribution of this study is, we believe, that it sheds light on the
way informal (more stable) institutions influence entrepreneurial activity, once the
effect of the short-term economic situation has been considered. Previous work had
found that cultural values influenced entrepreneurship, but they had typically
used cross-sectional data, or country averages (Liñán et al., 2013). In contrast, we
analyze the effect of both economic and cultural variables using a data-panel
4  Understanding the Role of Culture and Economic Conditions in Entrepreneurship 67

research design over a period of 12 years and 55 countries. This allows a higher
accuracy of the estimated parameters, and it also explains over 50 % of the variance
in yearly TEA level by country.
Considering first the economic variables, different studies have shown that
­entrepreneurship can significantly contribute to economic growth, job creation and
innovation (Carree et al., 2002; Reynolds et al., 2002). There may be a role for
policy action to improve people’s inclination toward developing new entrepreneur-
ial initiatives (Organisation for Economic Co-operation and Development [OECD],
1998). Some countries (such as those in the European Union) have attempted to
achieve this objective through short-term policies focused on eliminating barriers
to the development and growth of businesses. In this sense, the present study sup-
ports the notion that an accelerated economic growth contributes to increasing
the ­entrepreneurial activity level as a result of increased demand and expanded
­economic opportunities. This could be labeled as a short-term effect, since it is
bound to vary as the country’s economy moves through the different stages of the
economic cycle.
The income level is, in turn, relatively more stable. Although it undoubtedly
changes from year to year, these annual changes are comparatively smaller than
may be the case for the growth rate in GDP. The negative relationship between
income and entrepreneurship is once again confirmed (Bjornskov & Foss, 2006;
Liñán et al., 2013; Noorderhaven et al., 2004; van Stel et al., 2003; Verheul et al.,
2002). This result strongly suggests that the more sophisticated economic condi-
tions in richer countries allow for a wider set of alternatives in the labor force, and
less people feel they have to become entrepreneurs to earn a living. That is, the
opportunity costs of entrepreneurship are higher in rich countries.
To try to take into account the potential effect of cultural values, this study
includes a multidimensional concept of culture. Previous research has associated
individualistic values with entrepreneurial activity (Pinillos & Reyes, 2011).
Autonomy and Egalitarianism can be linked to individualism. Nevertheless, indi-
vidualism may be too simplistic a concept to explain the effect of culture on entre-
preneurship. In this paper, evidence has been provided about the positive influence
of Egalitarianism on entrepreneurship.
However, Autonomy seems to have an initially negative effect on entrepreneur-
ial activity. On the one hand, this is a clear indication that the influence of culture
­cannot be accounted for by the simplistic distinction between individualism and
collectivism. On the other hand, this general result regarding the Autonomy-
Embeddedness dimension points out the complexity of the relationship between
economic ­development, culture and entrepreneurship. Thus, the effect of the same
cultural values on entrepreneurial activity could be different depending on the coun-
tries’ level of development. The results of this paper show that in low-income
­countries Embeddedness could favor entrepreneurial activity, whereas in higher-
income countries Autonomy can stimulate entrepreneurial activity.
In the case of the second cultural dimension of Egalitarianism, this value orienta-
tion promotes responsibility, equal opportunities, and support for less powerful actors.
68 F. Liñán et al.

Thus, it tends to create a social environment in which people are more willing
to pursue the opportunities they are aware of (Liñán et al., 2013). It is interesting
to note that this effect is valid in both developed and developing countries, but it is
even stronger for those with a high-income (as the significant interaction effect in
Table 4.4 shows).
Regarding the Harmony/Mastery dimension, this is the least significant cultural
dimension. But even in this case its influence may be more relevant than could be
initially thought. Some previous results suggest that developed countries are divided
between Western Europe (where Harmony prevails) and English-speaking and
Confucian countries (where Mastery prevails) (Schwartz, 2008). Therefore, the dif-
ferences in entrepreneurial activity between these two groups of countries could be
partly due to the stress they place on each bipolar element of this dimension (Liñán
& Fernandez-Serrano, 2014). This may also account for the lack of significance in
the present study.
Overall, then, income differences are associated with different relative value
priorities for the three cultural dimensions considered. Rather than a pure causa-
tion effect, it may be more reasonable to think about the existence of interdepen-
dence. That is, income and culture tend to change jointly. In particular, this
relationship is more intense for the Autonomy-Embeddedness and Egalitarianism-
Hierarchy dimensions. In high-income countries, Autonomy and Egalitarianism
tend to prevail, whereas in low income countries Embeddedness and Hierarchy
predominate.
The present study, then, adds another explanation—complementary to others
previously provided in the literature—for the U-shaped relationship between
national GDP per capita and entrepreneurial activity. In high-income countries,
there are more opportunities that may be taken advantage of. But people will act
more often to reap that opportunities when the society strongly emphasizes indi-
vidual responsibility and personal decision and action (Schwartz, 1994, 1999). As
previously said, during the development process, a cultural change occurs toward
Autonomy and Egalitarianism values. The movement toward Autonomy, within the
bipolar dimension Autonomy-Embeddedness, could have an initial negative effect
on entrepreneurship in developing countries. The sense of community can be dete-
riorated by economic and cultural changes and, as a consequence, the family and
social support for new entrepreneurs could diminish. However, in later stages of the
development process, high-income countries benefit from a cultural environment
characterized by Autonomy and Egalitarianism which stimulate the pursuit of
opportunities by means of entrepreneurial activities.
The theoretical framework proposed in this paper has allowed us to delve into the
complex role of cultural values as a mediating factor in the relationship between the
level of development and the entrepreneurial activity. However, the paper is not
without limitations. In particular, the lack of some data (especially in the case of
GEM data) may have affected the results. Of course, additional work is needed—
and called for—to confirm or refute these findings.
4  Understanding the Role of Culture and Economic Conditions in Entrepreneurship 69

4.5  Conclusion

This chapter has focused on the role of informal institutions (and specifically that of
culture) in explaining entrepreneurial activity. To do so, it has jointly considered the
influence of these more stable institutions, together with the more rapidly changing
economic conditions. The paper is also novel in that it uses a theory-based cultural
value structure. This may contribute to a more thorough understanding of the com-
plex interaction between economic development and culture, and how these two
groups of variables affect entrepreneurial activity.
Based on the review of theory and research, this paper has shown evidence of the
existence of relevant interactions between economic development, entrepreneurship
and cultural values. Despite its tentative character, this study offers very promising
insights about the nature of the relationships between culture and entrepreneurship.
The implications for academics and policy makers may be substantial. If a better
understanding of the effect of culture on entrepreneurship is gained, measures and
programs to promote the desired cultural values may be devised. In developing
countries, a certain combination of cultural values should be associated with spe-
cific policies to promote income growth and entrepreneurial activity.

Annex 1. List of Countries Analyzed

In brackets, years in which the SVS data were obtained

Argentina (1993, 1995) Jordan (2002)
Australia (1988, 1990, 1992, 1996, 1999) Latvia (1998)
Austria (1996, 1998) Malaysia (1989, 2003)
Belgium (1991, 1995, 2002) Mexico (1990, 1996)
Bolivia (1993) Netherlands (1988, 1996, 1998)
Bosnia-Herzegovina (2002) New Zealand (1988, 1994, 1998)
Brazil (1989, 1991, 1993, 1995) Norway (1994)
Canada (1992, 2001, 2002) Peru (1996, 2002, 2003)
Chile (1994, 1995, 1997, 1998) Philippines (1996, 1997, 2000)
China (1988, 1989, 1995) Poland (1988, 1990, 1997, 2003)
Costa Rica (2002, 2003) Portugal (1989, 1993)
Croatia (2002) Romania (1996)
Denmark (1991, 1995) Russia (1993, 1995, 1996, 1999, 2002)
Egypt (2004) Singapore (1991, 1995, 1997)
Finland (1989, 1991–1993, 1995, 1997, 1998, 2001) Slovenia (1992)
France (1991, 1994–1996, 1998) South Africa (1992, 1994, 1996, 2003)
Germany (1989–1991, 1994, 1996) South Korea (1993, 2002)
Ghana (1995) Spain (1988, 1996, 2002)
Greece (1989, 1996) Sweden (1992–1994, 1998)
Hong Kong (1988, 1996, 2001) Switzerland (1990, 1996)
(continued)
70 F. Liñán et al.

(continued)
Hungary (1990, 1995) Thailand (2005)
India (1991, 1992) Turkey (1990, 1993, 1995, 2000)
Indonesia (1992, 1995) Uganda (1995)
Iran (2000) United Kingdom (1990, 1995)
Ireland (1995, 2000) USA (1988, 1989, 1991–1996, 2000)
Israel (1989, 1990, 1994, 1995, 1996) Venezuela (1989, 1991, 1993, 1994)
Italy (1989, 1991, 1997, 2002) Yemen (2003)
Japan (1989, 1990)

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Chapter 5
The Effect of Cultural Factors
on Social Entrepreneurship: The Impact
of the Economic Downturn in Spain

Elisabeth Ferri, Maria Noguera, and David Urbano

Abstract  The purpose of this chapter is to analyze the influence of cultural factors on
social entrepreneurship in Spain in the context of the recent economic crisis. Data
from Global Entrepreneurship Monitor (GEM) and Spanish Statistics Institute (INE)
for the period 2005–2010 are used as the main sources of information and a panel data
analysis is applied in the empirical part of the research. Through the lens of institu-
tional economics, the main findings of the study suggest that informal factors such as
cultural factors “perceived opportunities to create a start-up” and “entrepreneur’s
social image” are key drivers of social entrepreneurship during the depression period.
This study contributes for the design of policies to foster social entrepreneurial activ-
ity as well as for the development of the literature in the social entrepreneurship field.

5.1  Introduction

The first great economic downturn of the twenty-first century produced a consider-
able global impact, not only because of its scale (mainly in developed countries such
as the United States [US] and in Europe) but also because of the fact that it caused
many to question the basic premises of the current economic system. The deepening
economic crisis profoundly impacted children, youth and families, and was charac-
terized by high unemployment, falling average incomes, increased inequality,
higher government borrowing and changes in public policies (particularly social
policies). As a consequence of this negative economic outlook, high expectations
were placed on social entrepreneurs as one of the key agents to tackle social chal-
lenges and to respond to them when private companies and the public sector could
not (Bornstein, 2004; Dees, 2001; Weerawardena & Mort, 2006). However, there

E. Ferri (*) • M. Noguera • D. Urbano

Department of Business, Autonomous University of Barcelona
Campus UAB, Building B, Bellaterra, Cerdanyola del Vallès, Barcelona 8193, Spain
e-mail: elisabet.ferri@uab.cat; maria.noguera@uab.cat; david.urbano@uab.cat

© Springer International Publishing Switzerland 2015 75

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_5
76 E. Ferri et al.

are few studies that analyse social entrepreneurship in the context of the economic
crisis.
The Global Entrepreneurship Monitor (GEM) Report provides an initial analysis
of the impact of the 2008–2009 global recession on entrepreneurship initiatives.
The main results point out that more than half of the entrepreneurs questioned stated
that it was more difficult to start a new business in 2009 than in 2008, and a majority
of entrepreneurs saw fewer opportunities for their businesses. In the case of estab-
lished entrepreneurs, they tended to be the most pessimistic. On the other hand, the
GEM Report points out that characteristics and sentiments also changed; in many
countries the recession prompted an increase in ‘necessity-driven’ start-up entrepre-
neurs and a decrease in the proportion of people who saw good opportunities for
new start-ups. Hence, we can expect that this global economic downturn also
affected social entrepreneurship.
Social entrepreneurs are focused on social problems. They create innovative ini-
tiatives, build new social arrangements and mobilize resources in response to prob-
lems rather than market criteria (Desa, 2012; Mair & Marti, 2006). From this
perspective, social entrepreneurship is part of the solution to economic crisis, as it
explicitly aims to provide innovative solutions to unsolved social problems, putting
social value creation at the heart of its mission in order to enhance communities and
improve individuals’ lives and increase their well-being.
In this chapter institutional approach is adapted to analyse the influence of cul-
tural factors on social entrepreneurship in Spain in the context of the recent eco-
nomic crisis for the period 2005–2010. Moreover, panel data is applied to explore
the evolution of social entrepreneurial behaviour before and during the crisis, based
on data from Global Entrepreneurship Monitor (GEM) and Spanish Statistics
Institute (INE). The main findings suggest that the crisis had a statistically signifi-
cant impact on social entrepreneurship phenomena. In particular, if we compare the
periods before and during the crisis, we find that perceived opportunities to create
start-ups as well as entrepreneur’s social image were key drivers of social entrepre-
neurial activity during the depression period; only perceived opportunities to create
start-ups were found as significant in the period before the economic downturn.
After this brief introduction, the chapter is organized as follows. In Sect. 5.2, we
give an overview of the relevant literature and empirical evidence on the institu-
tional determinants of social entrepreneurial activity. Section 5.3 presents the data,
variables and methods applied in our study. Section 5.4 discusses the main empiri-
cal findings. Finally, Sect. 5.5 shows the conclusions, the implications and the rec-
ommendations for further research.

5.2  Conceptual Framework

At the turn of the twenty-first century, the Spanish economy experienced a period of
rapid growth followed, in 2008, by a period of recession, as in other European coun-
tries. During the period of economic prosperity leading up to the financial crisis, the
annual growth rate of Spanish household disposable income was approximately
5  The Effect of Cultural Factors on Social Entrepreneurship… 77

6–7 % (in nominal terms), whereas in 2010 Spanish households experienced an

average decrease in their disposable income of approximately 4.8 %.
As mentioned in the introduction, our research uses the institutional theory as the
conceptual framework. Institutional economics develops a broad concept of institu-
tions, understood as implicit or explicit rules governing decision-making by indi-
viduals in a society. North (1990) distinguishes between two types of institutions:
formal (laws, regulations and government procedures) and informal (beliefs, values
and attitudes). Based on North’s perspective (1990, 2005), in our study we consider
four informal factors: perceived opportunities to create start-ups, entrepreneurial
culture, entrepreneur’s social image, and media impact.
Literature on entrepreneurship considers the relevance of perceived opportuni-
ties for both to create start-ups and to develop entrepreneurial processes within
firms (Castrogiovanni, Urbano, & Loras, 2011). In the social entrepreneurship area,
Perrini, Vurro, and Costanzo (2010) describe how social entrepreneurial opportuni-
ties are identified, evaluated, exploited and scaled up. According to the study con-
ducted by Roy, Brumagim, and Goll (2014), perceived opportunity is negatively
correlated with social entrepreneurship at country level. Additionally, several
authors point out the relevance of the ability to embrace opportunities in the social
entrepreneurial process (Austin, Stevenson, & Wei-Skillern, 2006; Corner & Ho,
2010; Dorado & Ventresca, 2013; Haugh, 2005; Mair & Marti, 2006; Zahra,
Rawhouser, Bhawe, Neubaum, & Hayton, 2008). As noted by Lehner and Kaniskas
(2012, p. 25), perception is vital in finding opportunities. Accordingly, patterns can
be negative (not-feasible opportunity) or positive (suggesting that this opportunity
can be a business opportunity). Hence, it is important to note that these perceived
opportunities are related to entrepreneurial intentions (Reed, Storrud-Barnes, &
Jessup, 2012), and are vital in the decision to start a new entrepreneurial project,
especially during economic downturns (Tominc & Rebernik, 2007). Therefore, the
following hypothesis is proposed:
H1: The impact of opportunities to create start-ups on social entrepreneurship is
positive, but higher during the economic crisis.
As noted by the OECD (2010), promoting entrepreneurial awareness and positive
attitudes towards entrepreneurship are high on the policy agenda of several econo-
mies. Their study suggests that the formation of different cultural values in different
societies influences the decision to create new businesses (Bruton, Ahlstrom, & Han-
Lin, 2010); therefore, not all societies foster entrepreneurial activity (social and com-
mercial) with equal effectiveness. Shapero and Sokol (1982) observed how business
formation rates vary from society to society. They argue that these differences occur
due to different cultures holding different beliefs about the desirability and feasibility
of beginning a new project or organization. Similarly, Freytag and Thurik (2007) and
Hayton and Cacciotti (2013) suggest that beliefs, values and attitudes of a society
determine the behavior of individuals and that these can significantly affect the deci-
sion to become an entrepreneur. In contrast, Stuetzer, Obschonka, Brixy, Sternberg,
and Cantner (2014) do not find a direct relationship between an entrepreneurial cul-
ture, individual business start-up intentions and entrepreneurial activity. However,
their findings point to the importance of an indirect effect between these factors.
78 E. Ferri et al.

Hence, in economic crises, characterized by higher levels of unemployment and

lower employment opportunities, the transition of employable people to entrepre-
neurship could be facilitated by an entrepreneurial culture. Therefore, we posit the
following hypothesis:
H2: The impact of entrepreneurial culture on social entrepreneurship is positive,
but higher during the economic crisis.
The high level of status and the respect for the entrepreneurial career (Alvarez,
Urbano, Coduras, & Ruiz, 2011; Guerrero & Urbano, 2012; Levesque, Shepherd, &
Douglas, 2002; Pihie, 2009; Urbano, Toledano, & Ribeiro, 2011) is also important
on the decision to be entrepreneur. These perceptions assess the visibility and attrac-
tiveness of entrepreneurship. Positive views on these measures can influence the
willingness of individuals to become entrepreneurs. In the case of social entrepre-
neurship, perceptions tend to be associated with economic development and the
well being of society. The social image of social entrepreneurs is relevant to decide
to lunch a firm; usually they are considered heroes and resourceful people that can
cope with complex problems, aiming to benefit society rather than their individual
goals (Dees, 2001; Dhesi, 2010). Consequently, this positive social image could
foster more people to start new social organizations, even more during economic
downturns. However, it is important to note that differences in the socio-cultural
context may influence, among other things, the status and social recognition of
social entrepreneurs, promoting or inhibiting entrepreneurial career choice (Jaén &
Liñán, 2013). Then, we state:
H3: The impact of entrepreneur’s social image on social entrepreneurship is posi-
tive, but higher during the economic crisis.
Media also could affect entrepreneurial activity. Stories reported by the media
can play a critical role in the processes that enable new businesses to emerge. Stories
that are told by or about entrepreneurs define a new venture in ways that can lead to
favourable interpretations of the wealth-creating possibilities of the venture; this
enables resource flows to the new enterprise. In countries with ample media atten-
tion for successful business activities we expect to find a more positive attitude
towards entrepreneurship. A similar assumption can be made for those countries
where individuals starting a business receive a high level of respect and where it is
considered a desirable career choice to start a business. Therefore, the intention to
start a new entrepreneurial project is underpinned by the perceptions society holds
of entrepreneurs; consequently, if the media positively represents entrepreneur-
ship’s role in society it could foster more people to desire to become social entrepre-
neurs. According to Maclean, Harvey, and Gordon (2013), these stories can be
helpful to potential social entrepreneurs, venture capitalists and other institutional
actors (such as investment banks, foundations, innovative organizations, etc.) and
these are more relevant during economic downturns. Therefore, we posit:
H4: The impact of the media on social entrepreneurship is positive, but higher
­during the economic crisis.
5  The Effect of Cultural Factors on Social Entrepreneurship… 79

5.3  Methodology

While empirical evidence shows that social entrepreneurship is growing in many

countries, measuring it—like measuring the social economy, the third sector and the
non-profit sector—is difficult (Mair & Marti, 2006; Short, Moss, & Lumpkin,
2009). This is due not only to the variety of entities belonging to the field, but also
to the fact that these entities vary according to geographical context and that coun-
tries recognize social entrepreneurship differently (Smith & Stevens, 2010).
Additionally, different types of ventures have started in a variety of areas, notably
education, health, culture, economic development and the environment.
We use data from the GEM (many articles in this field of research have utilized
GEM data in the empirical section—Alvarez & Urbano, 2011) and INE of Spain,
for the period 2005–2010. As is known, the economic and financial crisis started in
the US in September 2007, and quickly spread out to the European region at the end
of 2008, especially in Portugal, Italy, Greece and Spain. For this reason, we divide
our sample into two phases: before the economic crisis (2005–2007) and during the
economic crisis (2008–2010).
We used panel data to estimate our model in order to control regional heteroge-
neity in Spain. This issue is very important in our analysis since it is clear that
regions are heterogeneous; each has its own particular behavior and entrepreneurial
culture. Our analytic approach was to conduct panel regression on explanatory vari-
ables. Usually, either a fixed-effects model or a random-effects model is appropriate
depending on the match between strength and situational factors. We opted to use a
random-effects model as the Hausman test revealed a non-significant difference
between the fixed-effects and random-effects models. In this situation, a random-­
effects model produced unbiased estimates that were more efficient than those pro-
duced using a fixed-effects model (Hausman, 1978).
Table 5.1 presents the description of the variables used in this study, including
their sources. Our final sample consisted of an unbalanced panel with data on 106
observations and 18 regions.1
As noted previously, social entrepreneurial activity is influenced by informal
institutions, measured through perceived opportunities to create start-ups, entrepre-
neurial culture, entrepreneur’s social image and media impact. Therefore, we pro-
posed the following general model:

SEA it = α + β1 II it + β2 CVit + ε it

Where i = 1, 2…, 18 identifies the region and t = 1, 2…6 refers to a given time period
between 2005 and 2010.

1
 Regions: Andalusia, Aragon, Principality of Asturias, Balearic Islands, Basque Country, Canary
Islands, Cantabria, Castile-La Mancha, Castile and León, Catalonia, Extremadura, Galicia, La
Rioja, Madrid, Region of Murcia, Navarre, Valencian Community and Ceuta and Melilla.
80 E. Ferri et al.

Table 5.1  Description of variables

Variables Description Source
Dependent Social Number of cooperative and INE (2005–2010)
variables entrepreneurship (SE) non-governmental organization.
Independent Opportunities Percentage of the 18–64 population GEM (2005–2010)
variables: to start up who agree with the statement that in
institutional the next six months, there will be
factors good opportunities for starting a
business in the area where they live.
Entrepreneurial Percentage of the 18–64 population GEM (2005–2010)
culture who agree with the statement that
in their country, most people
consider starting a business as a
desirable career choice.
Entrepreneur’s Percentage of the 18–64 population GEM (2005–2010)
social image who agree with the statement that
in their country, those successful at
starting a new business have a high
level of status and respect.
Media impact Percentage of the 18–64 population GEM (2005–2010)
who agree with the statement that
in their country, it will often see
stories in the public media about
successful new businesses.
Control Total enterprises Number of enterprises in Spain (all INE (2005–2010)
variables legal forms).
GDP-PPP Natural Logarithm of Gross INE (2005–2010)
Domestic Product (GDP) per
capita in the Spanish regions.
GEM—Global Entrepreneurship Monitor. http://www.gemconsortium.org/
INE—Spanish Statistical Office. www.ine.es

The dependent variable is the social entrepreneurial activity of each region. The
IIit represents each explanatory variable corresponding to our informal institutions
and CVit represents our control variables. βj are the coefficients. Finally, εit is a
random disturbance, which is assumed to have zero mean and constant variance.

5.4  Results and Discussion

Table 5.2 reports the descriptive statistics for the variables included, divided by the
different periods that we wanted to test: a) all periods (2005–2010); b) before
the crisis period (2005–2007); and c) during the economic downturn period
(2008–2010). As it can be seen, all variables started to decrease in 2008 except
GDP at purchasing power parity (PPP), which reduced in the following years
(GDP-PPP growth 2009 vs. 2008, −5 %).
5  The Effect of Cultural Factors on Social Entrepreneurship… 81

In Table 5.2, the descriptive statistics indicated that, on average and for all peri-
ods (2005–2010), there were 9,899 social entrepreneurs: 27 % saw good opportuni-
ties to start a firm in the area in which they lived; 68 % considered starting a business
as a desirable career choice; 60 % considered that successful entrepreneurs who
start a new business have a high level of status and respect; and 43 % stated that
often they see stories in the public media about successful new businesses. Also, the
average total enterprise number was 185,186 and average GDP-PPP was 22,414
euros. Finally, the results suggest that social entrepreneurial activity was lower
before the economic crisis (mean = 9.369) than during it (mean = 10.765).
Table 5.3 presents the correlations matrix where it can be seen that some vari-
ables may be highly correlated. We conducted a multicollinearity diagnostic test,
examining the VIF of all variables in the analysis, and found that multicollinearity
is not likely to be a problem for our dataset.

Table 5.2  Descriptive statistics

Mean Mean Mean Mean Mean Mean
Variables 2005 2006 2007 2008 2009 2010
Social entrepreneurship (SEA) 8.512 9.492 10.153 10.180 10.432 10.615
Opportunities to start up 0.336 0.340 0.338 0.274 0.158 0.170
Entrepreneurial culture 0.717 0.704 0.703 0.680 0.612 0.643
Entrepreneur’s social image 0.601 0.608 0.609 0.589 0.540 0.638
Media impact 0.390 0.459 0.466 0.444 0.368 0.424
Total enterprises 170.229 186.296 195.836 190.124 186.435 182.848
GDP-PPP 20.605 22.096 23.312 23.557 22.487 22.457

All period Before the crisis During the crisis

(2005–2010) (2005–2007) (2008–2010)
Variables Mean Std. Dev. Mean Std. Dev. Mean Std. Dev.
Social entrepreneurship (SEA) 9.899 11.567 9.369 10.765 10.409 12.370
Opportunities to start up 0.268 0.090 0.338 0.054 0.201 0.063
Entrepreneurial culture 0.676 0.057 0.708 0.044 0.645 0.050
Entrepreneur’s social image 0.597 0.051 0.606 0.046 0.589 0.055
Media impact 0.425 0.060 0.438 0.055 0.412 0.063
Total enterprises 185.186 177.047 183.853 172.946 186.469 182.524
GDP-PPP 22.414 4.267 21.978 4.265 22.834 4.266

Table 5.3  Correlation matrix

Variables 1 2 3 4 5 6 7
1 Social entrepreneurship (SEA) 1
2 Opportunities to start up 0.004 1
3 Entrepreneurial culture −0.187* 0.692*** 1
4 Entrepreneur’s social image −0.142 0.196** 0.399*** 1
5 Media impact −0.15 0.448*** 0.408*** 0.414*** 1
6 Total enterprises 0.918*** 0.0628 −0.1203 −0.0946 −0.0882 1
7 GDP-PPP 0.236** −0.1079 −0.229** −0.277*** −0.0165 0.182* 1
***p < 0.001, **p < 0.05, *p < 0.10
82 E. Ferri et al.

Table 5.4  Results of panel data

Before the crisis During the crisis
All period (2005–2007) (2008–2010)
Model 1 Model 2 Model 3
Coef. Std. Err. Coef. Std. Err. Coef. Std. Err.
Institutional factors
Opportunities to start up 0.518*** 0.098 0.053 0.170 0.424** 0.199
Entrepreneurial culture −0.125 0.155 −0.057 0.188 0.043 0.262
Entrepreneur social image 0.151 0.129 −0.140 0.200 0.350** 0.170
Media impact 0.117 0.124 0.079 0.180 0.052 0.244
Control variables
Total enterprises 0.000*** 0.000 0.000*** 0.000 0.000** 0.000
GDP-PPP 0.509*** 0.139 0.555 0.173 −0.443 0.339
Constant 3.085** 1.358 2.511 1.648 12.127*** 3.350
Number of obs. 106 52 54
Number of groups 18 18 18
Prob > chi-square 0.000 0.000 0.000
R-squared 0.684 0.694 0.679
***p < 0.001, **p < 0.05, *p < 0.10

The results of the panel regression explaining social entrepreneurship are

­presented in Table  5.4. For this chapter, given the availability of data from 2005 to
2010 (18 Spanish regions), we started with the simplest approach to analysing the
data panel, a pooled regression, which omits the dimensions of space and time in the
data, calculating an ordinary least squares regression. Later, we estimated random—
and fixed-effects models and used the Hausman specification test in order to verify
the choice of the fixed—or random-effects model. As mentioned previously, the test
revealed a non-significant difference between fixed-effects and random-effects
models but more efficient unbiased estimates using random-effects. Thus we
decided to adopt a random-effects model.
In Table 5.4, Model 1 presents the results for all the years in the sample (2005–
2010); Model 2 includes information corresponding to the period before the crisis
(2005–2007); and Model 3 provides information for the economic crisis period
(2008–2010). Model 1 shows that only the variable that measures perceived oppor-
tunities has a significant and positive impact on social entrepreneurial activity.
Other informal institutions, namely entrepreneurial culture, entrepreneur’s social
image and media impact, do not have a significant influence on social entrepreneur-
ship. Finally, control variables (total enterprise number and per capita income) have
a positive significant impact on social entrepreneurial activity.
Model 2 and Model 3 empirically assess the impact of institutional factors on the
rate of social entrepreneurship, evaluating the influence of the economic crisis on
that relationship: before (2005–2007) and during the economic downturn (2008–
2010). Table 5.4 shows that in the period before the crisis there is no significant
5  The Effect of Cultural Factors on Social Entrepreneurship… 83

institutional factor which could affect social entrepreneurial activity (see Model 2).
In contrast, during the economic crisis, the coefficient of opportunities to start new
business is positive and statistically significant (p ≤ 0.05), as is the entrepreneur
social image variable.
Regarding hypothesis testing: Hypothesis 1 posited that the impact of opportuni-
ties to create new start-ups on social entrepreneurship is positive, but higher during
the economic crisis. In all models the coefficient estimate for the opportunity to create
start-ups is positive, however is significant in Models 1 and 3. Likewise, the coeffi-
cient is higher in Model 3 (during crisis period). Hypothesis 1, then, is partially sup-
ported. According to our results, during the crisis the influence of perceived
opportunities on social entrepreneurship increased 37 % compared with the period
before the crisis. Similar to previous results (Lehner & Kaniskas, 2012; Roy et al.,
2014; Tominc & Rebernik, 2007), perceived opportunities are found to be related to
entrepreneurial intentions and are a key driver in the decision to start a new business.
Hypothesis 2 predicted that entrepreneurial culture has a positive effect on social
entrepreneurship, but higher during the economic crisis. Contrary to expectations, the
coefficient is negative in Model 1 and Model 2, and is only positive in Model 3.
Likewise, there is no statistical significance in any of the models. As such, our data do
not support Hypothesis 2. Our results are in line with Stuetzer et al. (2014), who found
no direct relationship between entrepreneurial culture and entrepreneurial activity.
Hypothesis 3 posited that entrepreneur’s social image has a positive influence on
social entrepreneurship, but that this impact was higher during the economic crisis.
We found a weak support for Hypothesis 3, due to the fact that only during the eco-
nomic crisis (Model 3) is the coefficient positive and significant (p ≤ 0.05). As we
expected, for all years (Model 1) we found a positive effect; however there is no
statistical relationship. In addition, and contrary to our own predictions, before the
economic downturn the coefficient is negative and non-significant. A possible
explanation for this result could be that before the economic crisis, and in particular
in Spain, the social image of the business class was not well received. People linked
entrepreneurship with personal enrichment, and those who perhaps do not focus on
their contribution to society. However, this situation changes when unemployment
rates increase and socially complex problems appear in our societies, pointing out
the importance of social entrepreneurs as key agents in the process of economic
recovery (Bornstein & Davis, 2010; Maclean et al., 2013).
Finally, Hypothesis 4 proposed that media has a positive impact on social entre-
preneurship, but higher during the economic crisis. The coefficients are positive,
however they are not significant in any models. Therefore, Hypothesis 4 is not sup-
ported. Regarding control variables, the number of total enterprises has a positive
effect and is statistically significant (p ≤ 0.001) in all models. In contrast, per capita
income only has a positive effect in Model 1, and during the crisis period (Model 3)
the coefficient is negative but is a non-significant variable.
Overall, the present results contribute to social entrepreneurship literature that
explores the effect of institutional factors, and specifically informal institutions
(e.g. beliefs, attitudes, values, among others). In general terms, the findings indicate
84 E. Ferri et al.

that informal institutions have an influence on social entrepreneurship, especially

during economic crisis. We highlighted the role of the perceived opportunity to
­create start-­ups and the importance of the social image that entrepreneurs have.
Alternately, the fact that entrepreneurial culture and the impact of media on social
entrepreneurship do not appear as significant issues do not mean that they are not
important. In fact, other studies such as Stuetzer et al. (2014) and Felício, Martins
Gonçalves, and da Conceição Gonçalves (2013) show the influence that institu-
tional contexts may have on social entrepreneurship through indirect relationships.
In any case, the outcome of the study supports the importance of institutional fac-
tors for the study of social entrepreneurship phenomena (Estrin, Mickiewicz, &
Stephan, 2013; Mair & Marti, 2009; Urbano, Toledano, & Soriano, 2010).

5.5  Conclusions

Social entrepreneurship is increasingly recognized as an element of the economic,

social and environmental contribution to society. In recent years, researchers and
policy-makers have been more interested in the idea that social entrepreneurs are
important for societies. Particularly, some researchers note that social entrepreneur-
ial activities affect both economic growth and society development, through reduc-
ing poverty and improving large-scale economic development. At the same time,
relevant foundations have been created, such as the Schwab Foundation, the Skoll
Foundation or Ashoka, which encourage and promote social entrepreneurial activi-
ties around the world by highlighting the achievements of successful social
entrepreneurs.
Using GEM and INE sources of information for Spain (18 regions) for the period
2005–2010 and applying panel data analysis, this chapter studies the influence of
cultural factors on social entrepreneurship in the context of the economic crisis.
In order to make progress in this field of study, the current chapter has taken a
theoretical framework of the institutional perspective, and specifically considers the
contributions of economist Douglass C. North (1990, 2005). The selection of insti-
tutional economics as the theoretical framework was mainly made because, in gen-
eral, this theory can be adapted to the study of the determinants of social
entrepreneurship and, in more specific terms, North’s approaches (1990, 2005) can
assist in considering the institutional factors (including cultural ones) in the analysis
of environmental factors as determinants of social entrepreneurial activities.
Furthermore, some researchers (e.g. Mair & Marti, 2006) have placed an emphasis
on the need to develop a theoretical basis in order to understand the many forms that
social entrepreneurial activities take.
Therefore, through the lens of institutional economics, the results show that
informal factors such as opportunities to start new businesses and entrepreneur’s
social image played an important role during the economic crisis. On the other
hand, entrepreneurial culture and the effect of the media were not significant factors
before and during the crisis.
5  The Effect of Cultural Factors on Social Entrepreneurship… 85

Implications of the study are theoretically for the development of the literature
on the social entrepreneurship from the institutional perspective and practically, for
the design of policies to foster social entrepreneurial activity.
Many future research lines could be develop based on this chapter. Firstly, the
research could be replicated in developing countries, comparing different types of
settings and analysing differences and similarities between modern market econo-
mies and developing countries. Secondly, the effect of the institutional factors on
social entrepreneurial activity could be studied including some moderator variable.
Finally, the ways in which institutions interact with the social entrepreneurial pro-
cess could be extended.

Acknowledgments  The authors acknowledge the financial support from the projects ECO2013-
44027-­
P (Spanish Ministry of Economy & Competitiveness), ECO/2663/2013 (Economy &
Knowledge Department—Catalan Government).

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Chapter 6
The Entrepreneur’s Values and the Growth
Expectations of New Ventures

Alejandro Campos, Esther Hormiga, and Alba Sánchez

Abstract In this chapter, personal values are analyzed as factors that play an
important role when the founders of new high-technology ventures design a strategy
of growth for the company, according to what they consider important in life. This
work analyzes on the one hand, how values interfere when the founder sets expecta-
tions of growth in technology-based new ventures and on the other hand this work
explores the role of values in the level of satisfaction of the entrepreneurs regarding
the actual performance of their companies.

6.1 Introduction

To conduct this analysis, it is necessary first to explore a theory that might be helpful
for explaining the logic and the importance of the study. In order to analyze the rela-
tion between entrepreneurs’ personal values and the expectations of growth and
levels of satisfaction within a new venture, it is necessary to take a quick look at the
congruence theory developed by Nightingale and Toulouse (1977).
Empirical studies have found that during the startup phase of new firms, entrepre-
neurs make recruitment decisions based mainly on mutually compelling interests
among team members or their common aspirations to start a venture (Chandler &
Hanks, 1998; Kamm & Nurick, 1993). Rather than just having a clear business vision
as a common ground, entrepreneurs and their team members are being drawn to each
other based on similar beliefs, interests, and personal chemistry (Bird, 1988).

A. Campos (*)
Servicios Académicos. CERI p.baja, Universidad de Guadalajara,
Periférico Norte 799, Zapopan, Guadalajara, Jalisco 45100, Mexico
e-mail: a.campos@cucea.udg.mx
E. Hormiga • A. Sánchez
Economia i Organització d’Empreses, Universitat de Barcelona
Avinguda Diagonal 690 T2-P3, Barcelona Barcelona 8034, Spain
e-mail: ehormiga@ub.edu; asanchezna@acc10.cat

© Springer International Publishing Switzerland 2015 89

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_6
90 A. Campos et al.

As firms move to the growth phase, business vision and strategic goals become
more well-defined and stable (Lewis & Churchill, 1983) but common values, interests
and beliefs remain. In this sense, it is common for those entrepreneurs who share
common values, to also share the perception of success and good performance of
the company, hence the levels of satisfaction with the results of the company will be
shared too regardless the financial situation.
In Chap. 2 personal values have been extensively defined and one of these con-
ceptions is proposed by Rokeach (1973, p. 5), who defines a value system as “an
enduring organization of beliefs concerning preferable modes of conduct or end-
states of existence along a continuum of relative importance”. In this chapter we
analyze how these desires for end-states (personal values) shared within technology-
based new firms, work.
In the same Chap. 2 the classification of personal values according to the
role they play in human lives developed by Gouveia et al. (2010) was pre-
sented. The Functional Theory of values recognizes the existence of two func-
tional dimensions of personal values, giving place to two principal lines in the
values structure. The horizontal axis belongs to the function of values that
guide human actions, represented by the dimension type of orientation (per-
sonal or social), while the vertical axis represents the role of values as a guide
to human needs, represented by the dimension type of motivation (material or
humanistic values).
Congruence theory and Functional theory of values will set the frame for the
analysis of the cases in this work. Under these circumstances, the objective of this
research is to identify how entrepreneurs’ values lead motivations to define the pro-
cess of growing new technology-ventures.
Following this introduction, the next section presents the theoretical frame-
work and the propositions. The first theoretical approach reflects on the impor-
tance of the topic of knowledge in the field of entrepreneurship and especially in
the context of new technology ventures. This reflexion is followed by a theoretical
approach to the role of personal values in the life and beliefs of an entrepreneur.
The methodology of the empirical study is described next. The main results
obtained from the case study analysis are then presented. The study concludes
with a summary of the main findings, implications and limitations of this work,
and ideas for future research topics.

6.2 Theoretical Framework

Due to the important role of entrepreneurs’ knowledge during the first years of life
of new high-technology ventures, and the importance of this intangible asset in the
selected cases, a literature review of this work will start precisely by approaching
the topic of knowledge.
6 The Entrepreneur’s Values and the Growth Expectations… 91

6.2.1 Knowledge in the Context of New High-Technology Ventures

Firms are considered by a great number of researchers, as sets of resources system-

atically exploited and inter-related for producing and trading goods or services. For
more than two decades now, scholars have explored the phenomena of firms and
organizations basing their researches on the analysis of resources (Barney, 2001;
Conner & Prahalad, 1996; Grant, 1991; Wernerfelt, 1984).
From the wide variety of resources and capabilities that give birth to a firm,
knowledge is undoubtedly one of the most explored assets in academic literature. In
the last few years, knowledge has been strongly related to the study of business cre-
ation and performance in several ways, and nowadays there exist as many academic
papers on this issue, as on topics relating human beings and entrepreneurship.
Knowledge related topics in entrepreneurship have been studied at different lev-
els; the entrepreneur’s knowledge at the individual level (Arthurs & Busenitz, 2006;
Dimov & Shepherd, 2005; Parker, 2006), knowledge at the level of a group of entre-
preneurs (West, 2007; Friar & Meyer, 2003; Watson, Stewart, & BarNir, 2003),
knowledge within the organization—at organization level (Collinson, 2000; Corbett,
2007; Deeds, De Carolis, & Coombs, 2000; Junkunc, 2007; Palacios, Gil, &
Garrigos, 2009; Sharder & Siegel, 2007; Van Geenhuizen, 2008) and at the inter-
organization level, referring to the knowledge flowing and being constructed
amongst groups of organizations (Biggiero, 2006; O’Gorman & Kautonen, 2004;
Schildt, Maula, & Keil, 2005). Particularly, the study of the entrepreneur’s knowl-
edge—at the individual level—is the dominant topic in academic literature of the
field during the last decade. Individual level as the name implies, will refer to the
creation or exploitation of all kinds of knowledge or sources of knowledge per-
formed by an individual.
Undoubtedly, the entrepreneur’s knowledge has been a reference topic for
researchers when measuring variables related to the performance and growth of
nascent business. Most of the times factors of success and growth of new businesses
have been strongly related to the possession, acquisition, development and imple-
mentation of entrepreneur’s knowledge indicators such as skills, information, for-
eign language mastery and the most common knowledge indicators, education and
experience (Almor & Lerner, 2002; Dutta & Thornhill, 2008; Kundu & Katz, 2003;
Poon, Ainuddin, & Junit, 2006; Van Gelderen, Thurik, & Bosma, 2005; West &
Noel, 2009; Williams & Chaston, 2004).
As mentioned, knowledge and knowledge indicators are topics closely related to
different phases of the entrepreneurial process and there are researches of all kinds that
have been developed during the last years on this subject; as a result, a systematic
review of works consulted during the development of this thesis will be presented, with
a taxonomy of the articles relating knowledge to entrepreneurship (see Appendix III).
On the other hand, New technology-based firms (NTBFs) play a key role in the
development and competitiveness of regions (Audretsch, 1995; Colombo & Grilli,
2010). This reason has led scholars to be interested in studying the main factors
92 A. Campos et al.

behind the growth and success of this type of companies; in fact one of the drivers
of growth most studied in academic literature is the role of the entrepreneur.
Although growth is generally agreed to be a good indicator of success and one of the
aims of all the firms, not all new ventures choose to grow (Edelman, Brush,
Manalova, & Greene, 2010; Wiklund & Shepherd, 2003).
In this sector, companies are created by a particular type of entrepreneur, usually
with very high levels of technical knowledge and skills and as stated previously with
common perceptions of several issues regarding the firm. Sometimes it is even
scholars and researchers who create spin-off companies (Prodan & Drnovsek,
2010). In this line, Oakey (2003) argued that technical entrepreneurs need a correct
combination of technical and managerial skills in order to be able to exploit such
expertise. When the company starts growing it is crucial that the founder has sup-
port in finance, marketing and personnel areas (Oakey, 2003).
It has been well discussed that knowledge plays a critical role in business cre-
ation, life and survival in the market; actually there are certain sectors where spe-
cialized knowledge determines the length and breadth of the life cycle of a new
venture. Technology-based businesses require by their very nature greater and more
specialized amounts of knowledge to be created and to be managed. In fact, there
has been a debate in academic literature about the real need for technological entre-
preneurs to acquire business management skills or not and if so, to what extent.
In this sense, Oakey (2003) argues that it is not the best choice for scientist entre-
preneurs with strong technical expertise who have succeed in the market so far, to
refuse to acquire management training in order to grow the business. This author
considers it important for entrepreneurs either to acquire such knowledge or even
better, to hire or associate with someone who holds specialized business manage-
ment skills, especially if financial assistance becomes an unavoidable need.
In the high-technology sector, companies are mostly created by a particular type of
entrepreneur, usually with high levels of technical knowledge and skills. Sometimes it
is even scholars and researchers who create spin-off companies (Prodan & Drnovsek,
2010). Oakey (2003) argued that technical entrepreneurs need a correct combination
of technical and managerial skills in order to be able to exploit such expertise.
But, is it managerial knowledge that can really make the difference between the
success and non-success of technological entrepreneurs? In order to answer this ques-
tion it is important to consider what lies behind it, and if the entrepreneur’s desire to
make his business grow and the ability to do it rely only on the amount and specializa-
tion of technical and/or managerial knowledge that the entrepreneur possess.

6.2.2 Entrepreneurs’ Values and the Growth

of New Technology-Ventures

In addition to the entrepreneur’s knowledge we consider that values are relevant

indirect determinants of entrepreneurial activity in technological industries; but if
we talk about the perception of success and levels of satisfaction with the
6 The Entrepreneur’s Values and the Growth Expectations… 93

performance of the firm, the effect of personal values is eminently direct. Usually,
entrepreneurs in this sector possess high-technical training; in many cases they
come from university environments and have been researchers for many years.
In the case of Spain, many research centers and universities provide funding to
researchers in order to turn the patents and innovations they are working with into
real business projects. However, it is not unusual for these researchers never to have
thought about funding a company themselves, only then they find this option may
be the only way to continue developing their professional career. In this sense,
Elizur and Sagie (1999) highlighted the importance of compatibility between life
and work values.
There has been substantial investigation related to why individuals create a busi-
ness (Cassar, 2007). The motive that drives founders to develop business projects
can either mean added value for the firm or it can have a negative effect. Various
authors have studied the influence of motivations on the subsequent success of the
firm and on organisational processes (Van Praag, 2003; Peña, 2004). Most of these
authors draw the conclusion that the fact the owner is driven by intrinsic motiva-
tion—putting a personal idea into practice—, or by the need to be his/her own boss
is an asset for the firm, which will have greater chances of surviving and obtaining
future utilities than if he/she is driven by the impossibility of finding a job.
In previous chapters the influence of personal values on the intention to create a
business has been proved, and now it is necessary to explore how these personal
values guide the founders’ expectations of growth in the company and how this
influence works.
Rokeach (1973, p. 5) defines values as “an enduring belief that a specific mode of
conduct or end-state of existence is personally or socially preferable to an opposite
or converse mode of conduct or end-state of existence”. García and Dolan (2003,
p. 63) assume that “relatively stable strategic learning about a way of acting is better
than the opposite to obtain our goals or to make the things go well”. Depending on
the level of analysis, we can find different levels (Roe & Esther, 1999) such as: coun-
try, group, and individual. Cultural values represent the implicitly or explicitly
shared abstract ideas about what is good, right, and desirable in a society (Williams,
1970). Although cultural values will influence individual values, in this research we
will focus on the individual level, specifically on the figure of the entrepreneur.
It is important to understand what the precedence of these values is and how they
influence behaviors. Beliefs are structures of thinking, developed through a learning
process that helps individuals to explain reality. Attitudes are consequences of the
values and are tendencies to evaluate, positively or negatively, a person, thing or
fact. Attitudes predict our tendency to act in a specific way (García & Dolan, 2003).
In this sense, to modify behaviors it is necessary to change beliefs and values rather
than only the attitudes (García & Dolan, 2003).
There are many theories that have tried to explain the motivational process.
Theories focused on expectancy of success, theories focused on task value or theo-
ries that integrate expectancy and values (Eccles & Wigfield, 2002). In the last
group of theories we found a modern expectancy value theory in which both these
components—expectancy and value—are more related to social/cultural determi-
94 A. Campos et al.

Social Central Personal

Dimension 1. Type of orientation

Humanitarian
(idealist)

Dimension 2. Type of motivator

Interactive Suprapersonal Excitement

Normative Existence Promotion

(pragmatic)
Materialist

Fig. 6.1 Facets, dimensions and sub functions of basic values. Source: Gouveia et al. (2010, p. 205)

nants and positively related to each other (Feather, 1988, 1995). Feather’s work on
values is an extension of Atkinson’s original expectancy-value model, developed in
important ways by broadening the conceptualization of value. He argued that values
are one class of motives that lead individuals to perform acts they think should be
done (Feather, 1995). This author assumes that values function like needs to influ-
ence goal directed behaviour and can influence the choices that are made between
alternative activities and the way situations are constructed.
Gouveia (1998, 2003) has used the Functional theory of values for developing a
new structure and domain of human values. As stated, Gouveia (1998, 2003) and
Gouveia et al. (2010) identified two functions of terminal values in the literature:
(a) Values as guide to human actions, and (b) values as expressions of human
needs. A combination of these two functions yields six sub functions of values—
see Fig. 6.1.

6.2.3 Values as Guide for Human Actions

Humans have to survive in an uncertain environment that may often be hostile.

Thus one of the main targets of individuals is to make personal decisions about
one’s personal survival (Fischer, Milfont, & Gouveia, 2011). In order to look for the
best options for survival we find people that put an emphasis on the group or else
on oneself as the principal unit of survival (Fischer et al., 2011; Gouveia, 2003;
Mueller & Wornhoff, 1990; Rokeach, 1973). People guided by social values are
oriented toward the society or interpersonal relationships. In contrast, people pri-
marily guided by personal values are self-centered or intrapersonal in focus.
6 The Entrepreneur’s Values and the Growth Expectations… 95

Thus this functional dimension refers to the type of orientation values assume when
guiding human actions.
Based on this function Gouveia (2003) proposed three types of values: social,
personal or central. An intermediate set of values along this functional dimension
can be empirically identified that is neither completely or exclusively social nor
personal (Gouveia, 2003; Gouveia, Andrade, Milfont, Queiroga, & Santos, 2003;
Mueller & Wornhoff, 1990). In this respect, Fischer et al. (2011) propose that this
set of values is located between social and personal because it is not focused exclu-
sively on either one of the two ends but rather is congruent with social and personal
orientations. They argued that these values are both society-centered and
self-centered.

6.2.4 Values as Expression of Human Needs

The second functional dimension is associated with the expression of needs and
refers to the type of motivator values fulfill (Fischer et al., 2011; Gouveia, 2003). On
the one hand, it is the materialistic needs, which refers to those needs that have to be
satisfied to ensure the survival of the individual, the immediate social group, and the
species (basic biological and social needs such as food and control) (Fischer et al.,
2011). On the other hand, there are the needs that appear when the basic needs have
been satisfied (Maslow, 1954; Welzel & Inglehart, 2003). These needs include the
need for information, for intellectual, and emotional stimulation and the aspiration
to obtain positive self-esteem (Baumeister, 2005; Fischer et al., 2011).
Hence, humanitarian or idealistic values are less oriented to concrete aims and have
a universal orientation, empathizing with abstract principles and ideas. And materialistic
values have an orientation toward specific goals, empathizing with preoccupation for
conditions of survival, personal stability and security (Fischer et al., 2011).
Based on this function, values are classified as materialistic (pragmatic) or
humanitarian (idealistic). Functional theory will be the framework to perform the
analysis of the cases in this research.

6.2.5 Values Under the Perspective of the Congruence Theory

Among other assumptions, the congruence theory proposed by Nightingale and

Toulouse (1977) states that the essence of person-organization fit lies in value and
goal congruence between the person and the organization (Chatman, 1989), within
which the fit content may also change over time. This theory has been also explored
by in order to highlight the situational congruence between some sets of aspects
such as (1) vocational interests and occupational choices as a dichotomy of fit vs.
nonfit, (2) the level of congruence between vocational interests and occupational
96 A. Campos et al.

choices—both along an occupational structure, (3) environmental congruence, and

(4) within-occupation congruence.
As stated previously, congruence theory (along with functional theory) will be
followed to analyze the findings reached during the interviews with participants.

6.3 Methodology (Selection of Participants,

and Data Collecting)

Six entrepreneurial stories for this study were selected in order to make a deep
analysis of the eight entrepreneurs leading their new technology ventures. Due to
the nature of the industry, all the participants in the cases studied possess great lev-
els of technical and managerial knowledge; so the participant companies were
selected following these criteria: (1) all companies must belong to the high-
technology sector, (2) the founder or entrepreneurial team possess high levels of
technical knowledge and some knowledge of management as well (3) all are com-
panies offering new products or services with growing high potential in market.
Specifically, some characteristics of the companies and participants in this study are
the following (Tables 6.1 and 6.2):
First contact with the participants was made by telephone. During the initial
telephone discussion with at least one of the companies’ founders, the aims and
objectives of the case study were outlined. Also our requirements about who should
be interviewed and the approximate duration of the interview were explained. Some
of the participants were concerned about confidentiality issues, while others had no
problem talking about their personal stories. Our interest in using the case study for
publication was also revealed at the first contact, preserving at all times the anonym-
ity of the companies and the confidentiality of information. At this point we made
sure the participants matched the requirements of the sample, and we left out those
who did not. Our data collection consisted of deep personal interviews conducted
using semi-structured questionnaires as a guide. As mentioned, the interview con-
tent was drawn from academic literature and also guided by previous studies.
The interviews included questions about the general characteristics of the com-
pany and the personal characteristics of participants. Through the exercise of these
deep interviews we gathered information relating to their skills, and personal values
and how these values were affecting the management of the new venture and their
growth expectations. Besides, the participants were asked about their perceptions of
growth and how they planned to grow in their companies.
During the visit to the companies in July 2010, extended interviews were con-
ducted with at least one or two of the founders of each company. Each case study
lasted approximately 2 h. In addition to the interviews, we used secondary sources
to verify the statements and to obtain supplementary information. The informa-
tion gathered from each organisation was written up as a case study and the prin-
cipal observations extracted.
6 The Entrepreneur’s Values and the Growth Expectations… 97

Table 6.1 Company profiles

Firm Year Sector Sub-sector Employees
Company I 2004 High-technology Bio-Chemistry 16
Company II 2003 High-technology IC Technologies 27
Company III 1999 High-technology Telecommunications 14
Company IV 2004 High-technology Software 22
Company V 2005 High-technology Health-technologies 6
Company VI 2006 High-technology Health-technologies 4

Table 6.2 Participant demographics

Participants Gender Nationality Number of founders
P1 Male Spanish 2
P2 Male Spanish 2
P3 Female Spanish 1
P4 Male Spanish 2
P5 Male Spanish 2
P6 Male Spanish 1
P7 Female Spanish 1
P8 Male Italian 1

6.3.1 Research Design

According to several qualitative methodologists, multiple case-based research may

serve as a basis for either empirically testing previous theories or building new theo-
retical explanations of the phenomenon being researched (Eisenhardt, 1989; and
Yin, 1989).
Our intention was to explore the personal values of nascent entrepreneurs in New
technology-based firms (NTBFs) in relation to their start-up behavior. We were par-
ticularly interested in the way our participants’ personal values influenced how they
understood the growth of their company.
Following Gouveia et al. (2010), we recognize the existence of two functional
dimensions of personal values, giving place to two principal lines of the values struc-
ture. The horizontal axis belongs to the function of values that guide human actions,
represented by the dimension type of orientation (personal or social), while the ver-
tical axis represents the role of values as a guide to human needs, represented by the
dimension type of motivation (material or humanistic values).
Semi-structured interviews were chosen as the technique for gathering this infor-
mation, as these can address the “complex, sensitive or very personal” dimensions
of a subject’s motivations and experiences (Orhan & Scott, 2001).
We asked participants to define the term ‘entrepreneur’ and to confirm whether
they saw themselves as entrepreneurs and then account for what motivated them to
start a business and how they approached the risks of their business start-up.
98 A. Campos et al.

All interviews were transcribed so that the analyses could take into account the
language used. The first analysis involved coding those sections of each interview
that addressed the personal values of participants and how they understand their
company’s growing process. When this analysis suggested the need for clarifica-
tion, or additional background information was required, then participants were
questioned via e-mail.
To achieve the objectives of the research we followed a qualitative methodol-
ogy—case study—(Eisenhardt, 1989; Yin, 1989), following different steps. First,
the theoretical framework of the research was developed from a review of the litera-
ture. Second, we used this framework as a guide to organize our data collection and
to analyze the data collected. In this sense, the relationship between the theoretical
perspective and the empirical findings is very close (Yin, 1989). To obtain the data
we used primary and secondary sources. Through holding deep interviews we gath-
ered information related to the participants’ levels of technical and managerial
knowledge and used different questions to establish the presence of certain personal
values and show how these two factors could exert some kind of influence on the
participants’ perceptions of their ventures’ growth.
By adopting the founder/s as the main unit of analysis, our empirical research is
based upon a systematic application of the multiple-holistic case study approach to
a new technology context in which six new ventures created in Catalonia (Spain)
were first judgmentally—not randomly—chosen and then comparatively examined.
This conceptual sampling design allowed us to introduce some degree of variance
in our case selection criteria by including differences in the entrepreneur’s gender
and origin and to compare individual entrepreneurs with entrepreneurial teams.
However, to be consistent with previous research on entrepreneurial firms which are
typically regarded as young and small in size (Zacharakis & Shepherd, 2001), all
firms in the purposeful sample had to be small, and independently managed.

6.4 Results, Findings and Discussion

This study finds considerable congruence between participants’ articulated self val-
ues and the way they decided to make their company grow and manage its growth.
As mentioned previously, the main question to answer in this work is: how do entre-
preneurs’ personal values guide the way they understand and perceive growth in
their companies?
Personal values as guides to attitudes and hence behavior will set the way in
which entrepreneurs understand and conceive of growth, and this will condition
their expectations for future growth and other related aspects such as the satisfaction
level with the actual performance of their companies.
According to Gouveia’s classification of personal values and following the func-
tional theory, we identified entrepreneurs’ values that belong to four different
dimensions in our study: Suprapersonal, Existence, Excitement and Promotion (see
Table 6.3).
6 The Entrepreneur’s Values and the Growth Expectations… 99

Table 6.3 Dimensions of personal values according to the functional theory

Dimensions Social Personal
Idealist Suprapersonal: beauty, knowledge, Excitement: emotion, pleasure,
maturity sexuality
Pragmatic Existence: health, personal stability, Promotion: power, reputation,
survival prestige, success
Adapted from Gouveia et al. (2010)

Types of entrepreneurs’ values in the distinct quadrants of the graphic, as well as

the relation of these characteristics to the companies’ growth are explained next:
1. Suprapersonal—Individuals in this dimension tend to be more pro-social and
idealistic. For entrepreneurs with this type of values and interests, the company’s
growth is only a means to achieve superior goals. They refer to the growth of
their company as something necessary but are always seeking for goals con-
ceived of from a more social point of view.
Due to the pro-social profile of this type of entrepreneurs, company growth is
the perfect way to give value to their community through the employment of a
greater number of people. They pursue for example, gender equality through
their entrepreneurial activity, or look for the user’s benefit with the product or
service they develop.
2. Promotion—In this quadrant of the graphic, entrepreneurs tend to be pragmatic
and individualists. Entrepreneurs conceive of growth as a means to an end as
well, but the aim is to achieve personal growth and social recognition. However
this recognition is due more to the dimensions of the achievements and the suc-
cess of the projects. In their speech, the activity they develop and the originality
of their products are topics of secondary importance. They focus more on the
achievement of growth. New products and services are considered means to
growth and expansion.
At the personal level these entrepreneurs conceive of the growth of their com-
pany as an indicator of personal success. If the company grows they define them-
selves as successful.
Entrepreneurs with these characteristics have no need for total control over
the company, and they do not mind transferring part of the company in order to
achieve faster growth. They are more pragmatic and pro-individual.
3. Excitement—Individuals with these peculiarities are more individualistic and
pragmatic. In this case, the company’s growth is considered also to be a means
for competitiveness in the market. However, the entrepreneurs focus more on the
satisfaction of doing what they love to do; in this case, growth is the means that
guides entrepreneurs to the end state of doing what they like, in most of the cases
a scientific activity.
This type of value is mostly recognized among researchers and scientists.
These professionals really care about the product they work on. They control
every single detail of the research; in the high technology field they consider the
company as a way to continue developing their research.
100 A. Campos et al.

4. Existence—Individuals who tend to value existence are more pro-social but at

the same time are pragmatic. In these cases the entrepreneur conceives of growth
as the only way to survive. They recognize that the existence of the company
depends on constant and continuous growth; survival of the company is in dan-
ger if there is not sustained growth. All the efforts of the company must be ori-
ented to growing up no matter with what or how.
Due to his pro-social profile, the entrepreneur seeks for equilibrium between
professional and personal life. Every single action within the company is moti-
vated and justified under the premise that it is the only way to keep the firm alive.
During the semi-structured interview, several questions were put to the partici-
pants regarding different aspects of their personal life and the company. Among
them, key questions were asked such as: What is growth for you? Why do you want
your company to grow? What does the growth of your company mean to you? Why
is the growth of your company so important to you? What is in it for you? What is
the role of your employees during the first years? How is your relationship with
your context?
Table 6.4 presents evidence to reflect the profile of each entrepreneur participat-
ing in the study.

Table 6.4 Entrepreneurs’ value categories

Participant Value categories Illustrating central themes
P1 Promotion Company_Growth—There is no limit for growing; we need
to grow up to attract more investors
Personal_Growth—Since I was nine, I knew I wanted to give
jobs not receive one. Those who fail are those who depend on
someone else
Entrep—In our company we don’t look for entrepreneurs but
for workers. We are the only entrepreneurs. Persons wishing
to have children fit well here, they tend to be more stable
P2 Promotion Company_Growth—We need to keep offering products that
bring money
Personal_Growth—It is important to understand the culture
of effort, someday I’ll be able to spend time with my loved
ones
Entrep—We can lose our employees, that’s very expensive.
That’s why we choose the best
P3 Suprapersonal Company_Growth—To make a bigger company implies
greater expertise, more quality and better possibilities of
professional and personal development
Personal_Growth—If my company grows until I don’t need
to be in charge, I’ll be able to create a fund for other
entrepreneurs and enjoy more free time for myself
Entrep—A key point for us in the company is the existence
of congruence between employees’ personal values and the
company’s corporate values
(continued)
6 The Entrepreneur’s Values and the Growth Expectations… 101

Table 6.4 (continued)

Participant Value categories Illustrating central themes
P4 Promotion Company_Growth—I created my company to do something
big and important, to reach a superior achievement
Personal_Growth—I never rest, for me the company is
always first. I always wanted to be an entrepreneur
Entrep—Our people (employees) must be the best, I want a
big and dynamic company
P5 Promotion Company_Growth—If the company grows, we will be more
recognized and rewarded. The results are the most important
factor, we need to be pragmatic
Personal_Growth—For me, to be recognized was really
important. Nowadays it is different but at that time I wanted
to see myself as a successful professional
Entrep—We need to attract the best person in each field and
have them working for us
P6 Existence Company_Growth—This (creating a business) is a marathon,
not a 100 m race
Personal_Growth—My family is my vital balance; my wife
has been a key for all this. It is important to enjoy life, I never
answer the cell phone while I’m at home
Entrep—It is important to gain the fidelity of our employees,
they are the ones who put in the knowledge that makes us
different and keeps us alive in the market. For me it is basic
not to lose control of the company
P7 Suprapersonal Company_Growth—I was enormously worried about the
pain of patients. Nobody cares about the post-surgery phase
but I do. We should spread this concern
Personal_Growth—Money is only a means. I seriously try to
enjoy life and travel. I try to make the company grow, this
allows me to do what I really like
Entrep—We are unique in the market so we need the best
people on our side
P8 Excitement Company_Growth—We need more projects to increase the
incomes of the firm and keep working at what we love
Personal_Growth—For me, the company’s growth means
intellectual stimulation and freedom. I’m obsessed with work,
I just can’t stop working

6.5 Conclusions

In this work we have classified the types of entrepreneurs, among eight founders of
new ventures in the high technology sector, according to the functional theory of
values proposed by Gouveia et al. (2010). Results were explored following the
dimensions personal-social and idealist-pragmatic, giving place to the four types of
entrepreneur we took into account to analyze the findings of the interviews con-
ducted. These types are: Suprapersonal, Promotion, Excitement, Existence, all of
which were explained and discussed previously.
102 A. Campos et al.

Promotion: We identified some participants who possess values that allocate them
in the promotion category (P1, P2, P4, P5). As stated before, entrepreneurs of this
type have values that make them conceive of growth as a means to achieving per-
sonal recognition; participants declare that they care about the social status of being
“successful”; they feel the need to be rewarded or recognized either in a personal
way or as the best company.
Suprapersonal: Another group of participants (P3, P7) highlighted characteristics
related to the group of values called suprapersonal. These values tend to prioritize
social issues rather than the personal. These participants care about others; about the
welfare of the community they interact with. They conceive of the company’s
growth as a means to promote development of the community as well as the per-
sonal and professional development of community members.
Existence: One of the participants (P6) claimed to have interests related to balance
in personal life, but also conceived of the company’s growth as a long distance race,
so in order to survive in the market there must be constant unflagging growth.
He also cares about maintaining control over the company at all times and gaining
the loyalty of high-skilled workers; they put their knowledge into the company and
keep it alive in the market. These values belong to the category existence.
Besides all this, P6 says he has a great interest in keeping a good atmosphere at home
with the family and loved ones. He recognizes the importance of growth but also realizes
that it is the family that keeps him focused and ready to continue. Growth is important
but not so urgent as to put at risk personal and family balance. He tends to have every-
thing in order in the company so he never has to answer the cell phone at home.
Excitement: Participant 8 presents values related to the category excitement. The
satisfaction that comes from doing what you love is greater than the need for growth
whether economic or in size. He seeks to achieve growth in the company as a way
to keep doing what he loves to do and to feel the satisfaction of exploiting his own
intellectual capacities.
P8 declared he was most interested in applying the knowledge and expertise acquired
during his life, to some real project. As long as the company grows and stays in the
market, he will be able to keep doing what he likes, which is what really matters for P8.
As stated before it is common to find in this category, researchers and high-
skilled founders looking for ways to apply their knowledge in real situations and
projects. P8 finds work completely exciting and conceives of growth as the source
of new projects. He desires to grow as a company in order to start new and innova-
tive challenges.
Another characteristic identified is that those entrepreneurs with more social-
oriented values (P3, P6 y P7) tend to consider it important not to lose control of the
company. During the interviews they mention the importance of growing but using
only their own capital as much as possible (P6: It’s important to grow with our own
capital; we cannot lose control).
Another important aspect for these “social-oriented” founders is the role that
informal relations (especially the family and the couple) play in all the growing
process. They all recognized the key role of their marriage in the development of
6 The Entrepreneur’s Values and the Growth Expectations… 103

their activity (P6: my family is my balance and have made all this possible, they
have been really important in this process; P3: My first concern is to take care of my
loved ones and the work comes after that. If you don’t enjoy your family, how can
you really work properly?).
On the other hand, those entrepreneurs with a more individualistic orientation
describe a different role for the family in respect of the company’s development. In
these cases (P1, P2, P4, P5, P8) entrepreneurs recognize that they would like to spend
more time with the family but only once the company has grown enough to let them
have more free time; at this moment the company’s growth is the priority (P1: I’ve been
my whole life preparing myself to be an entrepreneur and now I understand the sacrifice
of that; I haven’t stepped in a discotheque since I was 24; P4: The company is always
first and that’s it; P5: It’s complicated to make company and family compatible but if
you want the firm to grow you have to choose; P8: My wife doesn’t interfere in my work,
I think I’m obsessed with work, I get really mad when I don’t finish something at work.
75 % of the times I take work home; my wife is independent so she can handle that).
The common characteristic of entrepreneurs with idealist values is that they
understand the growth of their companies as a means to achieving superior goals,
either of a social or individual nature. In the cases of P3 and P7 we observe how
their motivations to make the company grow are clearly focused on having a really
good impact on society and to make it better (P3: Our company is a small change
agent for giving society the same opportunities in a sector as complicated as the
technology one; P3: with our company’s growth we will be able to support women
entrepreneurs so they can realize their projects; P7: Our product will provide a bet-
ter quality of life to many patients; at the end of the day the most important thing is
to take the product to them).
Another example of this is P8 who clearly emphasizes the importance of the
intellectual stimulation and the satisfaction that developing his activity produces on
him (P8: The atmosphere in which I work is intellectually stimulating and that
makes me feel free, makes me feel alive).
Entrepreneurs with a more pragmatic orientation are defined by the motivation to
grow in a materialistic way; much more than those entrepreneurs with an idealistic
orientation. This group of entrepreneurs cares more about, for example, social or
personal recognition.

6.5.1 Implications, Limitations and Future Lines of Research

This chapter has analyzed how personal values play an important role when we try
to understand the motivations of entrepreneurs to make a company grow up.
Different theories have been used to explain and contextualize the personal val-
ues of entrepreneurs and how these values relate to the importance given by the
entrepreneurs to their companies’ growth over other aspects of their lives.
Despite the theoretical and practical contributions of this work, some limitations
must be recognized. On the one hand we must be aware that this study focuses only
104 A. Campos et al.

on companies that belong to a sector with particular characteristics such as those in

the business of high technology.
Entrepreneurs in this sector possess a very particular profile (mostly in terms of
knowledge) so this makes it difficult to extend the conclusions to other sectors. It
would be interesting to see results of the same type of study made in other economic
sectors. The nature of this sector (high-technology) often makes entrepreneurs think
in a more individualistic way, which means they are less pro-social, but would it be
different in another kind of sector, like the cultural sector?
Besides, as stated in the theoretical remarks, personal values are strongly dic-
tated and influenced by cultural values and due to the nature of this sample it was
not possible to explore possible differences between cultures.
As a result of this research, some other lines of research should be considered. On
the one hand it would be important to perform an analysis of the different personal
values among the entrepreneurial team members. In the two cases we approached
the compatibility was good among members (when they are categorized in the same
dimension of entrepreneur profile); however it is important to investigate to what
extent this is important for the expectations and plans of growth in the company.
In this line it is important to conduct studies about companies’ growth depending on
how it is conceived of by the entrepreneurs. In this work it is demonstrated that growth
does not mean the same for all founders, so more research should be done in terms of
the type of growth that companies have according to their founders’ personal values.
Until now, growth in new ventures has been commonly studied in terms of num-
bers and financial indicators (Friar & Meyer, 2003; Sapienza, Parhankangas, &
Autio, 2004; West, 2007) however, in this work we conclude that the way of grow-
ing and the intensity of a company’s growth is closely related to the values and
motivations of those who lead this growing process.
The way in which participants conceive of growth in the company corresponds
to the level of importance they give to other aspects of their lives and these percep-
tions are guided by certain types and orientations of personal values.
This is a topic that must be clearly understood by government agencies or public
administration offices: governments commonly have programs that reward com-
pany growth (economically and financially); however they must include in their
concept of a company’s growth aspects that are not only directly related to financial
and economic indicators such as the social impact that companies have through
their services or products.
Among theoretical implications, this is a new work that provides researchers
information about the role that entrepreneurs’ personal values play in the manage-
rial style of new ventures. There are authors that have previously worked on this
topic (Schein, 2010; Gentile, 2010; Moriano, Trejo, & Palací, 2001) but it is clear
that the topic has not been explored enough through research, especially in the
entrepreneurship field.
The next chapter will present a case study that makes a deeper approach to the
personal values of an entrepreneur and shows how they condition the managerial
style of new venture founders and hence the company’s growth.
6 The Entrepreneur’s Values and the Growth Expectations… 105

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Chapter 7
Entrepreneurship Policy and Its
Impact on the Cultural Legitimacy
for Entrepreneurship in a Developing
Country Context

Vesna Mandakovic, Boyd Cohen, and José Ernesto Amorós

Abstract In Chile, during the past two decades several reforms have been
­implemented with a goal of dismantling institutional barriers constraining equity
funding along with the allocation of government investment in public financing
programs. The purpose of this chapter is to analyze how public policy may influence
the cultural legitimacy of entrepreneurship in a region. Understanding how entrepre-
neurship policy and programs, and specifically the unique Start Up Chile initiative, may
impact the culture towards entrepreneurship and the perception of entrepreneurship as
a career choice. The main findings suggest that the introduction of Startup Chile resulted
in a spike in interest in Chile as an entrepreneurial ecosystem.

7.1  Introduction

Entrepreneurship policy seeks to influence the level of entrepreneurial activity in a

particular region (Lundstrom & Stevenson, 2005) since increased levels of entre-
preneurship have been found to support job growth (Birch, 1979) and country com-
petitiveness (Amorós, Fernandez, & Tapia, 2012). Researchers continue to pursue
the question of what factors, and which entrepreneurship policies are actually
­successful in stimulating rates of entrepreneurship and country competitiveness
(Acs & Amorós, 2008).
Recently, entrepreneurship researchers have begun to focus on the efficacy of
entrepreneurship policy in different contexts. In 2007, Small Business Economics
published a special issue on the topic of “Entrepreneurship, Economic Growth and
Public Policy”. Leveraging results from the Global Entrepreneurship Monitor
(GEM) research consortium, eight papers explored relevant topics associated with

V. Mandakovic (*) • B. Cohen • J.E. Amorós

Universidad del Desarrollo, Santiago, Chile
e-mail: vmandakovic@udd.cl

© Springer International Publishing Switzerland 2015 109

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_7
110 V. Mandakovic et al.

public policy for entrepreneurship, ranging from immigration policy, reducing

entrepreneurship entry barriers and the importance of policies focused on human
capital and upgrading technology in emerging economies (Acs & Szerb, 2007).
Governments create and regulate the playing field for innovation and entrepre-
neurship (Minniti, 2008) by exercising varying degrees of economic and political
control to stimulate technological innovation in their jurisdictions (Mahmood &
Rufin, 2005). However, extant research has been inconclusive in regards to how, and
under what circumstances, governments can positively influence entrepreneurial
activity (Capelleras, Kevin, Greene, & Storey, 2008). In fact Shane (2009) suggests
that entrepreneurship policy aimed at improving the rate of entrepreneurship is
flawed because so many of these early-stage startups fail and most of them will fail
to actually generate employment or improve local economic conditions. He implores
policy makers to shift their attention and resources towards high-potential and high-­
growth ventures. In this line many scholars highlight that in developing regions such
as Africa and Latin America (Shane, 2009 also points to these two regions) many
“new ventures” are founded out of necessity (for survival) due to the failures in for-
mal labor markets, and conclude that these types of entrepreneurs make little contri-
bution to poverty mitigation and economic growth overall. Others have also been
dismissive of developing country entrepreneurship and thus of support to micro and
small enterprises, MSE. For example Schramm (2004, p. 105), describes MSE sup-
port programs as involving “cottage industries that add little to the economy in terms
of productivity or growth” and Baumol, Litan, and Schramm (2007, p. 3) seems to
refute any notion of MSEs as growth engines, stating that “if economic growth is the
object of interest, then it is the innovative entrepreneur who matters”.
Even thought Latin America has showed a sustained economic growth in the last
few years,1 the region has been less successful improving its competitiveness and
economic performance compared to other emerging markets and faces structural prob-
lems in labor markets and infrastructure (López-Claros, Altinger, Blanke, Drzeniek, &
Mía, 2006; WEF, 2014). Additionally, the region needs to improve the entrepreneurial
activities and competitiveness—innovative entrepreneurs—because many of the new
firms cannot grow at sustainable rates. Amorós and Cristi (2008, p. 385) argues:
Generally, Latin American countries present features of a “managed economy”, in which
most of the small-scale production firms have minor significance in innovation, and the
products manufactured and the services provided are of discreet value added in comparison
with the large and concentrated companies. Latin-American economies have a limited num-
ber of nascent ventures under the model of “entrepreneurial economy” because of the many
restrictions present to create knowledge-based businesses.

The recognition of the importance of the entrepreneur and the necessity of the
markets in which the entrepreneur operates has led many countries to begin to
work on improving their markets by eliminating barriers to entrepreneurship and
other market failures. This is evidenced by the renewed focus of international

1
 The International Monetary Fund expects the region to grow around 3.0 % in 2014 that is better
than Europe and North America.
7  Entrepreneurship Policy and Its Impact on the Cultural Legitimacy… 111

development organizations on private sector development, improvements in the

business environment and small and medium enterprise policies (Autio, 2007; Van
Stel, Carree, & Thurik, 2005; Wennekers, Van Stel, Thurik, & Reynolds, 2005).
In particular, we analyze the case of Chile which has experienced a successful
transition from a centralized economic regime to a high performing market econ-
omy. The Chilean economy also shows a recognized track of sustained growth,
strong policy leadership, solid institutions and international orientation (IMF, 2011),
necessary conditions to foster and consolidate entrepreneurial activity. Chile pro-
vides an interesting case study as it presents one of the most dynamic entrepreneurial
ecosystems among Latin American economies (Amorós & Bosma, 2014; Amorós
et al., 2012). In addition, Chilean smaller firms represent 99 % of all firms in the
country and generate 75 % of the employment. But at the same time these types of
firms do not have sufficient resources and also have limited access to financial ser-
vices and sources of innovation, reducing the opportunities to be fully inserted on the
global competitiveness scenario (OECD, 2009). More recently during the govern-
ment of former President Sebastian Piñera (2010–2014), a successful entrepreneur
himself, the government placed special emphasis on the promotion of entrepreneur-
ial programs, policies and initiatives aiming to improve the social perception and
positive impact of entrepreneurship through incentives for business start-ups.
This research seeks to explore entrepreneurship policy from a different perspec-
tive. Instead of focusing specifically on how entrepreneurship policy may impact
the rate or quality of startups in a region, we are particularly focused on how entre-
preneurship policy may impact the cultural perception of entrepreneurship in a
region. While changing a culture, whether it be within a corporation or within soci-
ety, is incredibly challenging, we posit that improving the perception of entrepre-
neurship as a career path in a society has the potential to lead to long-term benefits
for the entrepreneurial ecosystem, particularly in the case of developing countries.
For this chapter we are particularly interested in the role that a collection of entre-
preneurship policies can have on the legitimacy of entrepreneurship as a viable
career path in developing economies. Leveraging social identity theory, we explore
how entrepreneurship policies impact international and domestic legitimacy for
entrepreneurship.

7.2  Literature Review

7.2.1  Cultural Legitimacy and Entrepreneurship

Suchman (1995) defines legitimacy as “a generalized perception or assumption that

the actions of an entity are desirable, proper, or appropriate within some socially
constructed system of norms, values, beliefs, and definitions” (p. 574). Scholarly
work in legitimacy and institutional theory has a long history in entrepreneurship
research (Hannan & Freeman, 1989; Zucker, 1989). Zimmerman and Zietz (2002)
summarized and elaborated extant legitimacy research to demonstrate how new
112 V. Mandakovic et al.

ventures may utilize four unique strategies (conformance, selection, manipulation

and creation) in order to achieve one of three previously established types of legiti-
macy: sociopolitical regulatory, sociopolitical normative and cognitive (Hunt &
Aldrich, 1996). Cohen and Dean (2005) demonstrated links between the legitimacy
of top management teams and initial public offering (IPO) success. Researchers
have also explored how entrepreneurship policy itself can be legitimized in one
country and adopted by others via isomorphic processes (Klyver & Bager, 2012).
Entrepreneurship scholars have also sought to integrate concepts of legitimacy
with the construct of cultural entrepreneurship. Lounsbury and Glynn (2001,
p. 545), define cultural entrepreneurship as “the process of storytelling that medi-
ates between extant stocks of entrepreneurial resources and subsequent capital
acquisition and wealth creation.” They demonstrated that the use of storytelling in
new ventures may support the conferring of venture legitimacy through cultural
entrepreneurship. Yet most of this research has been focused on how individual
ventures can enhance their legitimacy with key stakeholders such as customers,
investors and other industry players.
The current research is particularly concerned with how public policy may influ-
ence the cultural legitimacy of entrepreneurship in a region. Significant extant
research has explored the relationship between national culture and entrepreneurial
attitudes and behaviors (Hayton, George, & Zahra, 2002; Thomas & Mueller, 2000).
Unfortunately much of the early research was based in traits research and relied on
Hofstede’s (1984) national culture dimensions (Hayton et al., 2002). Extant entre-
preneurship research has under-explored the importance of public policy on the
culture for entrepreneurship in different countries (Hayton et al., 2002; Zahra &
Wright, 2011).
Cultural legitimacy of entrepreneurship can be defined as “the perceived status
and respect for entrepreneurs and entrepreneurship” in a given country (Klyver &
Thornton, 2010, p. 16). Cultural legitimacy of entrepreneurship in a country may
have a direct impact on entrepreneurial intentions and actual decision to engage in
entrepreneurship (Klyver & Thornton, 2010). This in and of itself is of course a
relevant line of research given policymaker’s tendencies to promote new venture
creation. However, the mixed results on the impacts of public policy on new venture
formation and eventual improvement in local economic conditions (Shane, 2009),
led us to explore a new line of research.
What if public policy initiatives served to improve the cultural legitimacy of
entrepreneurship in society resulting in reduced failure rates and increased support
for those in society who already possess an entrepreneurial orientation? (Lumpkin
& Dess, 1996) This question is at the core of our current research. Therefore we
were not concerned with measuring the relationship between different entrepreneur-
ship policies and programs and entrepreneurial intentions or increases in entrepre-
neurship activity. Instead, our interest lies in understanding how international and
domestic entrepreneurship policies and programs may relate to the cultural
­orientation towards entrepreneurship and the perception of entrepreneurship as a
career choice.
7  Entrepreneurship Policy and Its Impact on the Cultural Legitimacy… 113

7.2.2  Policy for Supporting Transnational Entrepreneurship

While entrepreneurship research has explored how tax breaks, grants and research
and development funding may help regions develop a successful entrepreneurial
ecosystem (e.g., Squicciarini, 2009; Van de Ven, 1993), little research has explored
how government policy regarding immigrant entrepreneurship impacts host country
entrepreneurial ecosystems (Levie, 2007; Williams, Balaz, & Ward, 2004). This
question is pertinent to our research because we sought to explore the potential
implications of programs designed to entice immigrant entrepreneurs on the cultural
legitimacy of entrepreneurship in the host country, in this case, Chile. Specifically,
one aspect of our research focuses on how the introduction of programs designed to
recruit immigrant entrepreneurs, such as Startup Chile may serve to increase the
cultural legitimacy of entrepreneurship in the host country.

7.3  Context

In 2010, Sebastian Piñera became President of Chile. The billionaire businessman

predictably began inserting pro-business policies including several programs aimed
at improving the rate of entrepreneurship in the country, which, along with innova-
tion, was one of the government’s key pillars of economic growth. Some of the
programs introduced by the government in this period include a radical redefinition
about public seed-capital for startups now managed by private–public agencies and
institutions like business accelerators, new lines of low-cost credit for early stage
entrepreneurs (such as “Capital Abeja” [honeybee-capital] for women entrepre-
neurs), the introduction of an online portal enabling company formation within 24 h
at zero cost, establishing 2012 as the year of entrepreneurship and 2013 as the year
of innovation, passing legislation to make the bankruptcy process less bureaucratic,
and the introduction of the innovative program, Startup Chile.2
Startup Chile is a program still running, which is administered by the Chilean
Economic Development Agency, known as CORFO. The program seeks to attract
entrepreneurs with scalable venture ideas to Chile from around the globe. The stated
goal of Startup Chile is to “convert Chile into the definitive innovation and entrepre-
neurial hub of Latin America.” The World Economic Forum highlighted this fact
(WEF, 2014, p. 8):—“Chile is attracting entrepreneurs from all over the world
to build a culture of risk-taking and innovation and to create a Latin American
­entrepreneurship hub. The government’s Start-Up Chile program offers start-ups
access to investors, business or marketing executives, and local entrepreneurs.

 See more information about the program here http://www.startupchile.org

2
114 V. Mandakovic et al.

In 2014, 1,715 companies from 64 countries applied to the programme. Not surpris-
ingly people inside and outside of Chile have suggested it is Chile’s attempt to cre-
ate their own Silicon Valley. In fact, Startup Chile and the country as a whole was
recently dubbed by the Economist as Chilecon Valley (Giles, 2012).
Startup Chile consists of several key features including, a $40,000 (USD) grant
(non-reimbursable, non-diluting) from the Chilean government to entrepreneurs
accepted into the program. Aside from the free money, entrepreneurs receive a work
visa for 1 year as well access to shared office space, mentors and networking events.
During their stay in Chile these entrepreneurs share their knowledge at universities
and colleges while participating in community initiatives. Entrepreneurs are not
required to stay in Chile after the first 6 months. The pilot phase of Startup Chile
began in 2010 with 22 startups from 14 different countries. By the end of 2011 the
program had serviced approximately 500 startups and it is on track to reach the
government’s stated goal to support a total of 1,000 entrepreneurs from around
the globe by the end of 2014.
Endeavour highlights the contribution of Startup Chile to the entrepreneurial
ecosystem, in an interview with the former executive Director of Startup Chile
Horacio Melo3: “Because of the social objective, the government is not expecting a
short-term economic impact, if you see Start-Up Chile in a big perspective, we
attract entrepreneurs from all over the world to start their businesses here, we ask for
some help, because we want to make sure that they create a cultural impact, short-­
term or mid-term. And because of that cultural impact, we want Chileans living a
long-term economic impact.”

7.4  Hypotheses

We have developed a series of hypotheses in order to empirically test our research

question: Can entrepreneurship policies influence the international and domestic
legitimacy of entrepreneurship?

7.4.1  T
 ransnational Entrepreneurship and International
Legitimacy

Transnational entrepreneurship is an emerging discipline within the entrepreneur-

ship literature focusing on entrepreneurs who have simultaneous activities in their
home country while actively developing a new business in a separate, host country.
Drori, Honig, and Wright (2009, p. 1001) defined transnational entrepreneurs as:
“social actors who enact networks, ideas, information, and practices for the purpose

 http://www.ecosysteminsights.org/start-up-chile-heading-toward-failure-or-success/
3
7  Entrepreneurship Policy and Its Impact on the Cultural Legitimacy… 115

of seeking business opportunities or maintaining businesses within dual social

fields, which in turn force them to engage in varied strategies of action to promote
their entrepreneurial activities.” However it is clear that immigration policies from
the host country can have a big impact on the ability to attract transnational entre-
preneurs (Chen & Tan, 2009).
Transnational entrepreneurs leverage networks in their home countries to improve
their likelihood of success in their host countries (Drori, Honig, & Wright, 2009).
Since transnational entrepreneurs maintain their home country relationships, transna-
tional entrepreneurs have the potential to raise awareness through their home country
networks and media regarding the host country’s entrepreneurial ecosystem.
While Lounsbury and Glynn (2001) explored the role of storytelling in confer-
ring legitimacy on specific ventures, Wry, Lounsbury, and Glyn (2011) suggest that
nascent entrepreneurial activity in a country may gain legitimacy by external audi-
ences when similar and consistent stories are told about the entrepreneurship com-
munity. The Startup Chile program, by its very nature, had a largely international
focus. Not only do about 75 % of the program participants come from foreign loca-
tions, but Startup Chile has purposely engaged in significant outreach activity to
promote the program to prospective entrepreneurs around the globe. The stories
being told by Startup Chile staff, by the international media and the founding teams
participating in Startup Chile are predicted to have an impact on the international
legitimacy of the entrepreneurship ecosystem in Chile.
In fact, in 2012, the international branding consultancy, Future Brand, conducted
a survey of 3,600 business and leisure travelers from 18 countries in order to develop
a list of countries on the rise as far as public perception. Chile came in second behind
the United Arab Emirates and ahead of countries like Malaysia, China and Brazil.
Hypothesis 1: The successful introduction of transnational entrepreneurship policy
in developing countries leads to increased international legitimacy for entrepre-
neurship in the host country.
One of the most likely impacts of attracting a significant influx of transnational
entrepreneurs into a region is to increase the level of awareness and legitimacy of
entrepreneurship in the host country (Perse, 2001). This is even more likely if
Hypothesis 1 is supported. Furthermore, we posit that the collective increase in
public policy and programs for entrepreneurship during the Piñera administration,
including making 2012 the “Year of Entrepreneurship” also served to boost the
legitimacy for entrepreneurship in Chile.
Hypothesis 2: The combination of public policy promoting transnational entrepre-
neurship along with the introduction of domestic-focusing policy and programs
increases the domestic legitimacy of entrepreneurship.
It follows that if entrepreneurship gains legitimacy in a country, the status pro-
vided to those who have made entrepreneurship a career choice will also rise (Klyver
& Thornton, 2010). Therefore we posit that the accumulated impact of the numer-
ous support programs introduced in Chile since 2010 will have a positive impact on
the status afforded entrepreneurs in the country.
116 V. Mandakovic et al.

Hypothesis 3: Increasing levels of entrepreneurship legitimacy leads to an increase

in the status afforded entrepreneurs in the country.
To summarize, leveraging social identity and legitimacy theory, our three hypoth-
eses suggest that a combination of successful transnational entrepreneurship recruit-
ment and domestic entrepreneurship policy introduction will achieve international
and domestic legitimacy, resulting in an increased status for entrepreneurs in the
host country. Thus, we are not suggesting that these policies will necessarily impact
the rate, nor the quality of startups in a country, but rather that they may improve the
reception host country entrepreneurs receive during their venturing activity.

7.5  Methodology

7.5.1  Data
7.5.1.1  International and National Legitimacy

Our theoretical framework posits that public policies directly promoting entrepre-
neurship implemented by the Chilean government agencies had a positive effect on
local and international legitimacy of the entrepreneurial activities in Chile. Therefore,
our interest is focused on variables that measure the local and international legiti-
macy of entrepreneurship in Chile between 2008 and 2013, prior to and after the
entry of the new entrepreneurship policy and programs from the Piñera government.
As discussed in our literature review, legitimacy is a complex construct and has
been measured in numerous robust ways entailing structural equation modeling,
multivariate analysis and several other empirical approaches. For this study we
chose to utilize a relatively simplistic approach, but one which has justification in
extant literature on cultural legitimacy for entrepreneurship. A proxy for cultural
legitimacy for entrepreneurship is a measure of the change in media count related to
entrepreneurship (Klyver & Thornton, 2010).
We used Proquest4 to perform media counts of International and Chilean press
that contained the keywords “Entrepreneurship” and “Chile” or “Entrepreneur” and
“Chile”, to obtain the number of media articles that mentioned the previous key-
words between 2008 and 2013. The average number of total media appearances
(national and international) during the study period was 134. As predicted, prior to
2010 the number of appearances was under the mean while after 2010, the media
appearances where over the mean. Prior to presenting the results of our hypotheses
testing, we first present a summary of the relevant descriptive statistics.
Figure 7.1 shows the evolution of the media counts, considering the national and
international media separately. 2010 is the year where the tendency of media appear-
ances clearly changed, and increased significantly, particularly in the international media.

 http://www.proquest.com/
4
7  Entrepreneurship Policy and Its Impact on the Cultural Legitimacy… 117

Fig. 7.1  Evolution of internal and external legitimacy (media count)

Table 7.1  Evolution of variables associated with internal legitimacy of entrepreneurship

New business good New business leads to Lots of media coverage of new
Year of career (% of individuals status (% of individuals business (% of individuals that
survey that answer YES) (%) that answer YES) (%) answer YES) (%)
2008 70.7 69.5 71.2
2009 72.7 70.6 70.4
2010 97.7 94.5 94.1
2011 98.8 96.7 98.1
2012 98.0 95.3 97.9
2013 97.8 95.4 97.8
Source: Adult Population Survey, GEM Chile

As can be seen, Chile was not really on the map as part of the global conversation regard-
ing vibrant hotspots for entrepreneurship.
Another measure of internal legitimacy of entrepreneurship is reported in the
Adult Population Survey (APS) from the Global Entrepreneurship Monitor (GEM).
While it has its share of critics, the GEM is one of the most important longitudinal
research projects ever created to study the entrepreneurship phenomenon in a global
context. Data from GEM have been used in hundreds if not thousands of peer-­
reviewed publications (Bosma, 2013). Three questions included in the survey are
associated with internal legitimacy of entrepreneurship; (1) New business is a good
career choice, (2) New business leads to status and (3) Lots of media coverage of
new business in the local media. Table 7.1 shows the evolution of the previous three
questions during the study period. The data shows a similar pattern with the media
count internal legitimacy measure, while the breaking point that increases the
­perception of the legitimacy of entrepreneurship occurs in 2010.
118 V. Mandakovic et al.

Fig. 7.2  Evolution of propensity of adult population to be involved in entrepreneurship activities.

Source: Adult Population Survey, GEM Chile

In addition to these attitudinal variables, APS measures the propensity of the

adult population to be involved in entrepreneurship activities in the future. One
question is related to the expectation of individuals to start a new firm in the next
3 years. Figure 7.2 shows how the evolution of this indicator trended since 2007.
The growth of affirmative answers that can be extrapolated to a percentage of the
adult population (18–64 years old) in the country, which peaked in 2011 is note­
worthy, 1 year after the introduction of several pro-entrepreneurship policies.

7.5.1.2  E
 volution in Chilean Innovation and Entrepreneurship
Policies and Programs

To measure the evolution in Chilean innovation and entrepreneurship policies and

programs we use data from the Global Entrepreneurship Monitor (GEM) National
Experts survey (NES). The NES provides insights into the entrepreneurial start up
environment in each economy, with regard to nine entrepreneurial framework con-
ditions, we focus mainly in two of them: (a) Governmental policies and (b)
Governmental programs. A particularity about NES in Chile pertains to the rela-
tively large sample of key informants because GEM Chile has collected data across
different regions in the country since 2007. As a consequence, there are up to 400
experts each year providing accurate and consistent information about the entrepre-
neurial framework conditions. Figure 7.3 illustrates the evolution of the experts’
opinion on government policy and programs, both of which reflect an increasing
trend. Since 2010 government entrepreneurship policies have experienced a sus-
tained growth.
7  Entrepreneurship Policy and Its Impact on the Cultural Legitimacy… 119

Fig. 7.3  Evolution in experts’ evaluation of governmental policies and governmental programs on
innovation and entrepreneurship

Table 7.2  Correlation matrix for international media exposure and governmental policies and
programs variables
International Governmental Governmental
media programs policies
International media 1
Governmental programs 0.735** 1
Governmental policies 0.804*** 0.783*** 1
***p < 0.01, **p < 0.05, *p < 0.1

7.5.2  Results

7.5.2.1  Hypothesis 1

In regards to H1, we evaluated the effect of supportive government policies in the

international legitimacy of Chilean entrepreneurship. We obtained the pair-wise
correlation between the relevant variables and observed that the correlation is sig-
nificantly different from zero at conventional levels as shown in Table 7.2.
The coefficient of correlation between international media and governmental
policies is positive and significant as the coefficient of correlation raises to 0.8. Also
governmental programs and international media have a positive and significant
coefficient of correlation (0.74). Therefore the increasing government programs and
policies introduced by the Chilean government are associated with increased inter-
national legitimacy of entrepreneurship in Chile. This confirms hypothesis 1.
120 V. Mandakovic et al.

Table 7.3  Correlation matrix

Governmental National Governmental Good
programs media policies Status career
Governmental programs 1.000
National media 0.434** 1.000
Governmental policies 0.783*** 0.374 1.000
Status 0.648** 0.673* 0.620** 1.000
Good career 0.646** 0.687* 0.604** 0.999*** 1.000
***p < 0.01, **p < 0.05, *p < 0.1

7.5.2.2  Hypothesis 2

Table 7.3 shows the pairwise correlation matrix between the variables from the GEM
we use to measure internal legitimacy (status and career choice), National Media mea-
sured as media count in the local press and Governmental programs and policies.
The first item to highlight is that national media is only correlated significantly
with government programs and not policies. Therefore programs like Startup Chile
have an influence in the internal legitimacy.
The correlation of status and career choice is positive and significant when
related to governmental programs and policies. This confirms hypothesis 2.

7.5.2.3  Hypothesis 3

We tested the relationship between increased entrepreneurship legitimacy in a coun-

try and the status provided to those who have made entrepreneurship a career choice
(Klyver & Thornton, 2010). The accumulated impact of the numerous support pro-
grams introduced in Chile since 2010 were posited to have a positive impact on the
status afforded entrepreneurs in the country.
We estimated the following Probit model:
Career choicei = α 0 + α1Statusi + α 2Genderi + α 3 AGEi + α 4 Edvci
(1)
+ Time dummies + interaction + ε i

Table 7.4, shows the marginal effects of a Probit estimation, where the dependent
variable is the perception that entrepreneurship is a good career. We use APS GEM
data between 2008 and 2013, accounting for 33,515 observations of Chilean indi-
viduals. We use traditional controls such as age, gender and educational level. Our
main mechanism of interest is the effect of entrepreneurship status on the probabil-
ity of considering that creating a new business is a good career choice.
Model 1 in Table 7.4 is the estimation of Eq. (1) without considering the interac-
tion effects. We find that the likelihood that entrepreneurship is considered a good
career choice increases 3.4 percentage points in Chile for those who also consider
entrepreneurs to have high legitimacy in society.
7  Entrepreneurship Policy and Its Impact on the Cultural Legitimacy… 121

Table 7.4  Marginal effect Variables Model 1 Model 2

of status on the probability
Status 0.34824*** 0.27999***
of considering creating
a new business is good (0.017) (0.017)
career choice Status X 2010 0.44346***
(0.026)
Gender −0.08970*** −0.08155***
(0.016) (0.016)
Age 0.00412*** 0.00401***
(0.000) (0.000)
Educ 0.19738*** 0.19822***
(0.016) (0.016)
Constant 0.12822*** 0.30990***
(0.031) (0.027)
Observations 33,515 33,515
Pseudo R2 0.043 0.029
Prob > chi2 0.000 0.000
Standard errors in parentheses
***p < 0.01, **p < 0.05, *p < 0.1

Model 2 includes an interaction effect of the status variable and a dummy that
takes value 1 if the year of analysis is 2010, the interaction coefficient is positive
and significant. This means that the likelihood that entrepreneurship is considered a
good career choice is accentuated if the year of analysis is 2010. Indeed it increases
7.8 percentage points for those who also consider entrepreneurs to have high legiti-
macy in society in 2010, since government support in 2010 resulted in a positive
impact on the status afforded entrepreneurs in the country. Thus our third and final
hypothesis was also supported.

7.6  Conclusions

This is a very preliminary effort to explore the role of entrepreneurship policy and
programs in a new way. Given the persistent criticism and lack of consistent find-
ings related to public policy and the rate and, arguably more importantly, the suc-
cess of entrepreneurship in a region (Lerner, 2009; Parker, 2007; Shane, 2009), we
believe new approaches to studying the impact of public policy are necessary. We
have no desire to argue that there is no benefit to public policy that supports entre-
preneurship. Rather, with this research, we aim to begin the dialog regarding alter-
native objectives of public policy, particularly in the context of developing countries.
Our methodology in this study is quite elementary and exploratory in nature. We
have used oversimplified proxies for legitimacy and in general we lack sufficient
data to draw significant conclusions. However preliminary results do suggest that
some of the policies introduced by Chilean government served to enhance the cul-
tural legitimacy of entrepreneurship.
122 V. Mandakovic et al.

In general public policy could play a significant role in terms of the design of
appropriate institutional and regulatory conditions to support entrepreneurship, espe-
cially in developing countries (Acs & Szerb, 2007; Amorós, Felzensztein, & Gimmon,
2013). We believe one aspect of public policy in a developing country worth explor-
ing more is how certain programs can enhance the domestic legitimacy for entrepre-
neurship via enhancing the international legitimacy of entrepreneurship in the country.
In the case of Chile, during the past two decades several reforms have been imple-
mented with a view towards dismantling institutional barriers constraining equity
funding, and many resources have been oriented towards public financing programs.
But just recently with a relatively radical and innovative set of programs and polices,
the Chilean entrepreneurship ecosystem has been experimenting a significant growth
in terms of quantity and quality (Amorós & Acha, 2014). Start Up Chile appears to be
one such program which has had important impacts on the international and domestic
perception of Chile as a desirable country for entrepreneurial activity. This program
has now been replicated in numerous countries around the world, including more
developed countries. Just as consumers in developing countries tend to emulate mate-
rialistic tendencies of consumers in developed countries (Wilk, 2001), it is likely that
citizens in developing countries may be more affected by increases in positive per-
ceptions of the entrepreneurial ecosystem from international, more developed coun-
tries than perhaps programs to promote the status of entrepreneurs within the
developing country. This of course requires much more research.
One future research avenue that could be fruitful may be to utilize punctuated
equilibrium approaches (True, Jones, & Baumgartner, 2007) to explore changes in
host-country legitimacy of entrepreneurship before and after the introduction of an
externally legitimated program for attracting transnational entrepreneurs. In this
case, we do believe, and preliminary analysis supports this belief, that the introduc-
tion of Startup Chile, resulted in a spike in interest in Chile as an entrepreneurial
ecosystem. In fact, Santiago was recently named a top 20 ecosystem in the world5
and credible international such as the Economist began referring to Chile as
Chilecon valley (Giles, 2012).
While this research was exploratory in nature and has its share of shortcomings
we are hopeful it can serve to generate awareness amongst researchers and policy
makers that there may in fact be profound impacts from entrepreneurship policy
which have not been fully considered. Particularly in the case of developing coun-
tries, if further research confirms our preliminary findings related to transnational
entrepreneurship and host country legitimacy and attitudes towards entrepreneur-
ship, this could become a fruitful line of research that also has important implica-
tions for entrepreneurship policy. Furthermore, it could lead to interesting debates
regarding the need for immigration form. This argument has already begun in the
U.S. where many have been calling for changes to immigration policy to support the
recruitment and attraction of transnational entrepreneurs (Quittner, 2014).

5
 http://techcrunch.com/2012/11/20/startup-genome-ranks-the-worlds-top-startup-ecosystems-
silicon-valley-tel-aviv-l-a-lead-the-way/
7  Entrepreneurship Policy and Its Impact on the Cultural Legitimacy… 123

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Chapter 8
The Role of Normative Legitimacy
in the Development of Efficiency-Driven
Countries

Emilio Díez, Camilo Prado-Román, Francisco Díez-Martín,

and Alicia Blanco-González

Abstract Within the framework of institutional theory, legitimacy is a key factor

for organizational and—more specifically—entrepreneurial success. Similarly,
legitimacy is seen as an essential component of a country’s development. The goal
of the present study is to better understand the role of a country’s legitimacy on its
entrepreneurial activity and overall development. Furthermore, the authors research
the influence of cultural resources on country-wide legitimacy perceptions. A case
study is performed on the effect of normative legitimacy in efficiency-driven coun-
tries. The results suggest parallel behaviors between normative legitimacy and
entrepreneurial activity. Nevertheless, unexpected relationships were discovered in
the link between legitimacy, cultural resources, and development.

8.1 Introduction

The study of entrepreneurial activity at a nation-wide level dates back to the first
half of the Twentieth Century (Schumpeter, 1934). Scientists then were puzzled by
the differences in entrepreneurial activity among different countries. Since then,
research on these issues has taken several distinct approaches.

E. Díez
Universidad de Sevilla and European Academy of Management and Business Economics,
1, Avda. Ramón y Cajal, Sevilla 41018, Spain
e-mail: diez@us.es
C. Prado-Román (*) • F. Díez-Martín • A. Blanco-González
Universidad Rey Juan Carlos and European Academy of Management
and Business Economics, Paseo de los Artilleros, Madrid 28032, Spain
e-mail: camilo.prado.roman@urjc.es; francisco.diez@urjc.es; alicia.blanco@urjc.es

© Springer International Publishing Switzerland 2015 127

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_8
128 E. Díez et al.

The neoclassical economic or psychological theories argue that some people

have an entrepreneurial bent while other do not (Kihlstrom & Laffont, 1979). In this
case, differences in entrepreneurial activity among countries would be associated
with factors such as culture, resources, or individual perceptions. In this line of
thought, Blanchflower and Oswald (1998) showed that entrepreneurs are happier
than salaried employees and that the determining factor to start a business is the
availability of financial resources. On the other hand, economists that defend
Austrian theories suggest that not everyone has access to the same information
(Hayek, 1945) and that this causes some individuals to be able to see entrepreneur-
ial opportunities where others do not. In other words, entrepreneurs come across
entrepreneurial opportunities through their previous experiences and knowledge
(Shane, 2000). According to these authors, a country’s level of entrepreneurial
activity would depend on factors related to an individual’s knowledge which allows
them to discover business opportunities, such as training or access to information
(Kirzner, 1973).
The abundance of elements to explain entrepreneurial activity in a country has
originated new approaches that strive to provide a unified theoretical framework.
Institutional theory has been one of these. This approach suggests that varying
entrepreneurial rates depend on each country’s institutional conditions. Since insti-
tutional conditions influence national economic behavior (Peng, Sun, Pinkham, &
Chen, 2009), it would be logical that differences among these conditions lead to
different rates of entrepreneurial activity (Levie & Autio, 2008; Stenholm, Acs, &
Wuebker, 2013).
One of the key elements of institutional theory is the concept of legitimacy.
Legitimacy is a condition reflecting cultural alignment, normative support, or
consonance with relevant rules or laws (Scott, 1995). If an organization’s activi-
ties are seen as acceptable and desirable, it will be able to access the necessary
resources to survive and grow (Zimmerman & Zeitz, 2002). Within this context,
if we consider a country to be an organization, its level of legitimacy will influ-
ence its development and growth. Analogously, it should also influence its entre-
preneurial activity.
Past research has brought to attention the importance of cultural aspects on entre-
preneurial activity (Hayton, George, & Zahra, 2002). This is mainly because of the
positive effect of social legitimacy (Liñán & Santos, 2007). Despite the importance
of cultural resources on economic development (Ger, 1999), there are few studies
that analyze this relationship.
The main goal of this study is to deepen our knowledge of the effect of legiti-
macy on entrepreneurial activity at a nation-wide level. There are many different
types of legitimacy (see Bitektine, 2011) according to the type of mental schema
they model. These include perceptions of regulatory, normative, moral, pragmatic,
or cognitive legitimacy. In our research, we make use of normative legitimacy—
which refers to congruence with social and cultural values. This permits the inclu-
sion of a secondary goal: the study of cultural resources as a factor influencing
national legitimacy.
In order to advance toward these goals, this chapter is structured as follows. First,
we describe the concept of normative legitimacy as it relates to cultural resources,
8 The Role of Normative Legitimacy in the Development of Efficiency-Driven… 129

entrepreneurial activity and development. Later, we present the methodology used

and the results of our analysis of efficiency-driven countries. Finally, we discuss the
implications of these results, their limitations, and areas for future research.

8.2 Theoretical Framework

The concept of legitimacy takes shape in the mid-1990s when a number of research-
ers ask: how do organizations acquire, utilize, and manage their legitimacy? The
most detailed definitions of the term arise at this time. In his book Institutions and
Organizations, Scott states that “legitimacy is not a commodity to be possessed or
exchanged but a condition reflecting cultural alignment, normative support, or con-
sonance with relevant rules or laws” (1995). That same year, Suchman publishes an
exhaustive article where he puts forth one of the most widely-accepted definitions:
“legitimacy is a generalized perception or assumption that the actions of an entity
are desirable, proper, or appropriate within some socially constructed system of
norms, values, beliefs, and definitions” (1995, p. 574).
A common thread in the study of legitimacy is the identification of the source of
legitimacy. In other words, where does legitimacy come from in an organization
(Deephouse & Suchman, 2008)? Suchman (1995) considers that the source of legiti-
macy is not restricted to a specific group of people but depends rather on the research-
er’s focus. The literature identifies numerous sources of legitimacy (see Bitektine,
2011). One of the most precise definitions states that the sources of legitimacy are the
internal and external audiences that observe an organization and evaluate its legiti-
macy (Ruef & Scott, 1998). Under this interpretation, the source of legitimacy for a
country would be all those that evaluate the actions of its government. Legitimacy is
essential for organizations. It improves access to the indispensable resources it needs
to survive and grow (Meyer & Rowan, 1977; Zimmerman & Zeitz, 2002; Zucker,
1987). A number of studies have demonstrated this relationship (Baum & Oliver,
1992; Cruz-Suarez, Prado-Román, & Prado-Román, 2014; Díez-Martín, Prado-
Román, & Blanco-González, 2013a; Hannan & Carroll, 1992; Li, Yang, & Yue,
2007; Ruef & Scott, 1998). In the case of entrepreneurs, this is especially important
(Bruton, Ahlstrom, & Li, 2010) because it allows them to overcome the liability of
newness (Aldrich & Fiol, 1994). Legitimacy is a necessary condition for easy access
to resources, restricted markets, and long-term growth (Brown, 1998).
Countries also need legitimacy to improve access to resources (i.e. foreign
investment) and improve their economic results (i.e. entrepreneurial activity). Over
the last few decades, governments have been working to promote entrepreneurial
activity in their countries because of its effect on regional and national growth. This
link between entrepreneurial activity and economic development has been amply
documented (Acs, 2006; Carree, Thurik, Acs, & Audretsch, 2010). Thus, countries
should behave in the same way that organizations do to create an image of viability
and legitimacy prior to receiving external support (Starr & MacMillan, 1990).
Proposition 1: Countries with greater legitimacy have greater economic development.
Proposition 2: Countries with greater legitimacy have greater entrepreneurial activity.
130 E. Díez et al.

Recent approaches to the concept of legitimacy suggest that organizations can

develop strategies to modify the type and amount of legitimacy that they possess
(Scott, 1995; Suchman, 1995). Organizations are not passive players in the legiti-
macy process. They can actively influence and manipulate the perceptions around
them (Deeds, Mang, & Frandsen, 2004; Elsbach & Sutton, 1992; Oliver, 1991).
While legitimacy cannot be bought, it can be managed; thus its relevance in the field
of strategic management. Various studies have shown that there is a positive rela-
tionship between strategic actions to improve legitimacy and organizational success
(Alcantara, Mitsuhashi, & Hoshino, 2006; Díez-Martín, Prado-Román, & Blanco-
González, 2013b; Frydrych, Bock, Kinder, & Koeck, 2014; Kannan-Narasimhan,
2014; Kistruck, Webb, Sutter, & Bailey, 2014; Tornikoski & Newbert, 2007). This
research shows that organizations with greater legitimacy have more chances of
being successful. It is therefore critical to understand the mechanisms that facilitate
legitimacy management.
A number of authors have identified strategic actions that will improve the legiti-
macy of an organization (Beelitz & Merkl-Davies, 2011; Deephouse, 1996;
Lamberti & Lettieri, 2011; Suchman, 1995). Suchman (1995) groups them into
three categories: (a) strategies to obtain legitimacy, (b) strategies to maintain legiti-
macy, and (c) strategies to recover lost legitimacy. This conception of legitimacy
assumes that organizations can proactively take action to maintain or even repair
their legitimacy. For instance: by modifying their business models to adapt to new
social mores, by using advertising to change regulations, or by simply being percep-
tive and responsive to changes in their environment.
Improving a government’s legitimacy to improve its nation’s entrepreneurial
activity (and therefore, economic activity) would require specific action steps. In
this case, the legitimating audience would be made up of those individuals that are
potential entrepreneurs. Some researchers suggest that only a few high-impact
entrepreneurs really have an effect on competitiveness and improve national eco-
nomic growth (Acs, 2008). In consequence, some have suggested that governments
must work to strengthen the factors that motivate entrepreneurs to start new ven-
tures (Liñán, Santos, & Fernández, 2011).
Institutional characteristics influence a country’s entrepreneurial activity (Bruton
& Alhstrom, 2003; De Clercq, Danis, & Dakhli, 2010; North, 1990; Stenholm et al.,
2013; Veciana & Urbano, 2008). Therefore, governments could implement pro-
grams to improve access to financing or that reduce the risk of starting a new ven-
ture. They could also generate resources that favor legitimacy, such as cultural
resources. Culture has been shown to be a key factor in explaining entrepreneurial
activity and countries with greater cultural resources have greater rates of entrepre-
neurial activity (Hayton et al., 2002).
A country’s cultural resources can be seen as a differentiating factor with a direct
economic impact. This impact is greater when cultural resources are institutionally
validated (Ger, 1999). This implies that countries with cultural resources can
increase their legitimacy and therefore their entrepreneurial activity.
Proposition 3. Countries with more cultural resources have greater legitimacy.
8 The Role of Normative Legitimacy in the Development of Efficiency-Driven… 131

8.3 Methodology

8.3.1 Sample

The above-stated hypotheses were tested on a group of efficiency-driven countries.

This nomenclature is used by the World Economic Forum (WEF) to classify coun-
tries according to their level of development. These are countries that are in devel-
opment phase 2 out of 3 possible phases. In 2013, there were 31 countries in this
classification. In order to augment the sample, we included 20 transitional countries
between phase 1 (factor-driven countries) and 2 (efficiency-driven countries).
Additionally, we included 22 transitional countries transitioning from phase 2
(efficiency-driven countries) to 3 (innovation-driven countries). A group of 73
countries was thus identified with similar challenges and levels of development. Of
these, adequate data was available for 22 countries (see Table 8.1 for the list of
countries included in the sample).

8.3.2 Data and Variables

To study the relationship between cultural resources, legitimacy, entrepreneurial

activity, and level of development, the variables identified in Table 8.2 were utilized.
The analysis was performed for the 2011–2013 time period.

8.3.2.1 Legitimacy

Measurement is one of the main challenges in this field of study (see Díez-Martín,
Blanco-González, & Prado-Román, 2010). Among other reasons, due to the numer-
ous types of legitimacy (see Bitektine, 2011) and its varying effect on different

Table 8.1 Countries Transition from Efficiency-driven Transition from

included in the sample stage 1 to stage 2 countries: stage 2 stage 2 to stage 3
Algeria Bosnia and Herzegovina Argentina
Iran, Islamic Rep China Barbados
Colombia Brazil
Guatemala Chile
Jamaica Croatia
Peru Hungary
Romania Malaysia
South Africa Mexico
Thailand Poland
Russian Federation
Uruguay
132 E. Díez et al.

Table 8.2 Variables and data source

Dimension Variable Description Source
Cultural resources Cult Country Cultural Resources, Pillar 14 from WEF
Travel and Tourism Competitiveness Index
Legitimacy Leg1 Media Attention for Entrepreneurship GEM
Leg2 High Status Successful Entrepreneurship GEM
Entrepreneurial activity TEA Total Entrepreneurial Activity GEM
Country development HDI Human Development Index UNDP
GDP Gross D’omestic Product WB
WEF World Economic Forum, GEM Global Entrepreneurship Monitor, UNDP United Nations
Development Programme, WB World Bank

organizations (Cruz-Suárez, Díez-Martín, Blanco-González, & Prado-Román,

2014). This study measured normative legitimacy, which is one of the three types
identified by Scott (1995) along with regulatory and cognitive legitimacy types. The
normative dimension of legitimacy references congruence with general social val-
ues and beliefs (Busenitz, Gomez, & Spencer, 2000; Scott, 1995). These have been
shown to influence the intention to start a new venture (Krueger, Reilly, & Carsrud,
2000; Stenholm et al., 2013).
Normative legitimacy is related to an organization’s culture and is an essential
component of it (Brown & Toyoki, 2013; Drori & Honig, 2013; Ruebottom, 2013;
Treviño, den Nieuwenboer, Kreiner, & Bishop, 2014). It is similarly important in
explaining entrepreneurial activity (Gatewood, Shaver, & Gartner, 1995; Hayton
et al., 2002; Liñán et al., 2011).
Each country’s normative legitimacy was evaluated from the point of view of the
entrepreneur using two variables from the Global Entrepreneurship Monitor. This
first is media attention for entrepreneurship and the second high status successful
entrepreneurship. Media attention paid to entrepreneurship was measured through
the percentage of 18–64 population who agree with the statement that in their coun-
try, you will often see stories in the public media about successful new businesses
(Liñán et al., 2011; Stenholm et al., 2013). The status of successful entrepreneurs
was measured through the percentage of 18–64 population who agree with the state-
ment that in their country, successful entrepreneurs receive high status (Liñán et al.,
2011; Stenholm et al., 2013).

8.3.2.2 Entrepreneurial Activity

Nation-wide entrepreneurial activity was measured with the Total Entrepreneurial

Activity indicator from the Global Entrepreneurship Monitor. It is used to assess the
percent of working age population both about to start an entrepreneurial activity,
and that have started one from a maximum of 3 years and half.
8 The Role of Normative Legitimacy in the Development of Efficiency-Driven… 133

8.3.2.3 Level of Development

National development level was tracked with two indicators: the Human
Development Index and each country’s Gross Domestic Product. The first measure-
ment is published by the United Nations Development Program. It was created to
emphasize that people and their capabilities should be the ultimate criteria for
assessing the development of a country, not economic growth alone. The second
was taken from the World Bank databank.

8.3.2.4 Cultural Resources

The cultural resource variable was taken from pillar 14 of the Travel and Tourism
Competitiveness Index (TTCI). This Index is offered by the World Economic Forum
on a biannual basis as a dialog platform among the stakeholders that have an interest
in improving the Travel and Tourism industry and international economic develop-
ment. It is made up of 14 over-arching pillars, with the last measuring cultural
resources. Among other variables, it includes the number of international fairs and
exhibitions in the country, as well as a measure of its creative industries exports,
which provides an indication of cultural richness.
Case study methodology was utilized to analyze this data. This methodology is
especially adequate for situations in which it is desirable to develop theory induc-
tively (Eisenhardt & Graebner, 2007). In the present study, each country case serves
as a distinct experiment that stands on its own as an analytic unit. Similarly to the
approach taken with multiple related laboratory experiments, each case is a discrete
experiment that can be used to contrast and replicate new theories (Yin, 2009).
Given the small size and available data for this sample, the use of another technique
would not have been reliable or significant enough to provide adequate results.

8.4 Findings

Results for cultural resources, legitimacy, entrepreneurial activity, and economic

development have been collected in Table 8.3. This table displays the variation exper-
imented by each country between 2011 and 2013 in the following areas: cultural
resources, total entrepreneurial activity, media attention for entrepreneurship, high
status successful entrepreneurship, human development index, and gross domestic
product. On average, the results show an increase in cultural resources, total entrepre-
neurial activity, high status successful entrepreneurship, and gross domestic product.
Table 8.4 offers a case study analysis showing the percentage of countries that
have shown the expected interaction among each variable.
In 64 % of the countries under study, as media interest in entrepreneurship increases
so does the entrepreneurial activity. Similarly, 64 % of the countries in the sample also
134 E. Díez et al.

Table 8.3 Variable results

Country varCult varTEA varLeg1 varLeg2 VarHDI VarGDP
Algeria 0% −47 % 2% −8 % 0% 2%
Argentina −7 % −24 % 0% 8%
Barbados −3 % 171 % 13 % 24 % 1%
Bosnia and Herz. −2 % 27 % 1% −9 % −6 % −2 %
Brazil −2 % 16 % −5 % 2% 15 % −11 %
Chile −1 % 3% −3 % 2% −12 % 8%
China 0% −42 % 1% −7 % 0% 25 %
Colombia 7% 11 % −10 % 1% −31 % 10 %
Croatia −1 % 14 % −9 % 5% 0% −6 %
Guatemala 196 % −36 % 4% −11 % −37 % 7%
Hungary −2 % 54 % −5 % −18 % 10 % −5 %
Iran 8% −15 % 12 % 3% −12 % −32 %
Jamaica 0% 1% −1 % 8% 25 % −1 %
Malaysia 4% 35 % −12 % −15 % −9 % 5%
Mexico −4 % 54 % 7% 6% −16 % 5%
Peru 0% 2% −13 % −9 % −9 % 16 %
Poland −1 % 3% −6 % 2% −1 % 0%
Romania −1 % 2% 6% 7% −1 % 5%
Russia −6 % 26 % 5% −11 % −35 % 10 %
South Africa −7 % 16 % 4% 5% −15 %
Thailand −7 % −9 % −5 % −8 % 2% 11 %
Uruguay −2 % −16 % −5 % 76 % −16 % 17 %
Media 0.077 0.112 −0.009 0.022 −0.062 0.027
s.d. 0.423 0.449 0.074 0.195 0.153 0.123
varCult cultural resource variation, varTEA total entrepreneurial activity variation, varLeg1 legiti-
macy 1 variation, varLeg2 legitimacy 2 variation, VarHDI human development index variation,
VarGDP gross domestic product variation

Table 8.4 Case study

Expected Not expected
Variable interaction behavior (+,+) (%) behavior (+,−) (%) Others (%)
Legitimacy1 → TEA 64 32 5
Legitimacy2 → TEA 64 32 5
Legitimacy1 → HDI 32 45 23
Legitimacy2 → GDP 36 55 9
Cultural resources → Legitimacy1 36 41 23
Cultural resources → Legitimacy2 27 55 18
TEA → HDI 32 45 23
TEA → GDP 36 55 9
n = 22
Others percentage of countries with null or nonexistent data
8 The Role of Normative Legitimacy in the Development of Efficiency-Driven… 135

show a parallel relationship between high status successful entrepreneurship and total
entrepreneurial activity. In these countries, as the status accorded to entrepreneurs
grows, so does entrepreneurial activity.
The links between legitimacy and country development do not match the
expected hypotheses. The link between variation in media interest of entrepreneur-
ial activity and the human development index shows a positive relationship in only
32 % of the sample countries with a negative link in 45 %. In addition, the variables
high status successful entrepreneurship and gross domestic product also show a
negative link in 55 % of the sample countries.
Once again, more countries than not demonstrate a negative relationship bet-
ween cultural resources and legitimacy. This happens both for media attention for
entrepreneurship and high status successful entrepreneurship variables. With only
36 and 27 % of the case study countries showing parallel behavior, this was an
unexpected result. It is worth noting that these results are very similar to those
between legitimacy and development.
Finally, the relationship between total entrepreneurial activity and development
also shows a greater number of results that do not conform to expectations. In these
situations, when total entrepreneurial activity is lessened, the human development
index and gross domestic product goes up. Only 32 % of the countries show positive
links between entrepreneurial activity and the human development index. Similarly,
36 % of the sample countries exhibit parallel growth in entrepreneurial activity and
their gross domestic product.

8.5 Implications and Discussion

The present study set out to better understand the role of a country’s legitimacy on
its entrepreneurial activity and level of development; as well as the effect of cultural
resources on legitimacy. With this purpose, 22 countries were studied by relating
variations in normative legitimacy with changes in cultural resources, entrepreneur-
ial activity, and country development during the 2011–2013 period.
The results suggest similar direction of variation for legitimacy and entrepre-
neurial activity. This is consistent with the tenets of institutional theory (DiMaggio
& Powell, 1983; Meyer & Rowan, 1977) as well as with studies that relate legiti-
macy with entrepreneurial results (Aldrich & Fiol, 1994; Baum & Oliver, 1991;
Deephouse & Carter, 2005; Díez-Martín et al., 2013a; Young, Tsai, Wang, Liu, &
Ahlstrom, 2014). In this aspect, the findings deepen the body of knowledge on the
effect of culturally-based legitimacy on entrepreneurial activity. Academic scrutiny
of this relationship has been intense (Thornton, Ribeiro-Soriano, & Urbano, 2011)
and is congruent with previous studies on the influence of normative institutional
factors on a country’s rate of entrepreneurial activity (Stenholm et al., 2013).
At the same time, the study also discovered common behaviors in the interaction
of legitimacy, development, and cultural resources. Nevertheless, these behaviors
do not conform to the hypotheses previously set forth. A positive link was expected
136 E. Díez et al.

to be found between legitimacy and development; but the observed relationship—in

the majority of cases studied—was the opposite. As legitimacy increased their level
of development decreased. Legitimacy and cultural resources showed similar
behaviors. While it was expected that legitimacy would augment or diminish in
conjunction with cultural resources, this did not occur in the majority of cases.
There are multiple possible reasons for this discrepancy.
First, although cultural resources may influence entrepreneurial activity (Hopp
& Stephan, 2012), this may not be as important a factor as economic risk or access
to financing. Second, the emphasis placed in this study on normative legitimacy
does not imply that a country’s legitimacy has no influence at all on its develop-
ment. It is possible that other types, such as regulatory or cognitive legitimacy, do
behave in the expected direction. Not all legitimacy types exhibit the same behav-
iors or have the same effects (Cruz-Suárez et al., 2014; Díez-Martín et al., 2010;
Suchman, 1995). Third, the indicator for cultural resources from the Travel and
Tourism Competitiveness Index include four cultural variables, which may not be
the most relevant to explain legitimacy.
The results also offer some managerial implications. In a nutshell, governments
should begin to actively manage their country’s legitimacy. Taking the findings liter-
ally, at the very least they should consider the effect of normative legitimacy which
has been shown to vary in the same direction as entrepreneurial activity. It is not
sufficient to remain passive. Governments must be active players in this process
(Oliver, 1991). One way of achieving this would be to consider legitimacy as a stra-
tegic goal and implement actions to establish legitimacy (Suchman, 1995).
Finally, there are some limitations that suggest areas for future research. The use
of case study methodology has some inherent restrictions. Results obtained by such
a study cannot be considered significant. Thus, they must be interpreted with cau-
tion as approximations until the model is confirmed by further empirical study. To
validate the hypotheses, a larger sample size is needed on which to apply statistical
tools that can confirm reliability and validity. In the future, different variables could
be used to measure other types of legitimacy and identify their relationships with
the currently used variables. The typologies laid forth by Bitektine (2011) would be
an excellent starting point for this work. It would then be possible to examine which
type of legitimacy has a greater effect on a country’s entrepreneurial activity.
Similarly to how reputation rankings are built, a legitimacy ranking could also be
created. This was already suggested by Suchman (1995).

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Chapter 9
Cultural Influences on the Entrepreneurial
Intentions of University Students:
A Comparative Study Between Spain
and Portugal

Joao J. Ferreira, Cristina I. Fernandes, Mário L. Raposo,

Jose C. Sanchez, and Brizeida R. Hernandez-Sanchez

Abstract The present work attempts to examine the different cultural patterns and
factors of Spanish and Portuguese university students in terms of their respective inten-
tions either to become self-employed or to launch their own businesses. As tested in
numerous studies, entrepreneurial intentions stem from various different psychologi-
cal and socio-cultural factors that collectively shape such motivations. Thus, whilst
aware that entrepreneurship and employment rates prove very unfavorable in Portugal
and Spain, we seek to establish whether the factors subject to study in the scientific
literature illuminate and portray differential patterns between these two countries.

9.1 Introduction

Entrepreneurship represents one of the main drivers of innovation, competitiveness

and growth in any national economy (Baron & Shane, 2008; GEM, 2011; Wong,
Ho, & Autio, 2005). The literature reports a positive and robust correlation between
entrepreneurship and economic performance in terms of growth, firm survival,
innovation, job creation, technological change and productivity growth (Acs, 2006;
Audretsch, Keilbach, & Lehmann, 2006; Veeraraghavan, 2009).

J.J. Ferreira (*) • M.L. Raposo

Management and Economics Department & NECE - Research unit in Business Sciences,
University of Beira Interior, Estrada do Sineiro, Polo IV, Covilhã 6200-209, Portugal
e-mail: jjmf@ubi.pt; mraposo@ubi.pt
C.I. Fernandes
NECE - Research unit in Business Sciences, UBI and Castelo Branco Polytechnic Institute,
Sitio do Vale, Belmonte 6250-076, Portugal
e-mail: cristina.fernandes@ipcb.pt
J.C. Sanchez • B.R. Hernandez-Sanchez
Department of Social Psychology, University of Salamanca, Salamanca 37005, Spain
e-mail: chez@usal.es; brizeida@usal.es

© Springer International Publishing Switzerland 2015 141

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_9
142 J.J. Ferreira et al.

Intentions to start-up companies have also been widely researched (Carr &
Sequeira, 2007; Kautonen, Luoto, & Tornikoski, 2010; Sánchez, 2010; Sánchez
et al., 2005). However, while most studies rely on the Theory of Planned Behavior
methodology proposed by Ajzen (1991) (Tkachev & Kolvereid, 1999; Autio,
Keeley, Klofsten, Parker, & Hay, 2001, 1996; Fayolle, Gailly, & Lassas-Clerc,
2006; Liñán, 2004; Moriano, Palací, & Morales, 2006), they do not all consider the
same variables. Ajzen (1991) brings into play three determining factors for such
intentions: attitude, norms and perceived control, however, some studies have
extended the model incorporating certain variables not considered in the studies
cited above, such as personality traits, socio-cultural and regional influences (Gurel,
Altinay, & Daniele, 2010; Hopp & Stephan, 2012; Prabhu, McGuire, Drost, &
Kwong, 2012). Shapero and Sokol (1982) contribute to the analysis of entrepreneur-
ial intention as a determinant by considering the feasibility or the fact that start-ups
are feasible within a given context.
Meanwhile, different studies have shown how personality traits behave as predic-
tive variables for entrepreneurial intention. Individuals with a degree of self-efficacy,
internal locus of control and proactiveness are more likely to undertake such paths
and remain more committed to carrying out entrepreneurial activities (Gurel et al.,
2010; Koh, 1996; Mauer, Neergard, & Kirketerp, 2009; Prabhu et al., 2012).
However, personality traits as factors in play within the scope of Planned
Behavior Theory only partially explain entrepreneurial intention. These studies do
not consider the direct influence exercised by society in the background and no
study has approached analysis of these variables on a global basis and making a
comparison between these two countries. Hence, these limitations convey how the
determinants shaping entrepreneurial intentions still remain unclear whilst allowing
us to determine differential degrees to entrepreneurship patterns.
The main objective of this paper involves analyzing and exposing the role of
personal, attitudinal, social and cultural factors that underpin the configuration of
university student entrepreneurial intentions in order to assess the entrepreneurial
potential of the country. In short, approaching from the psychological analytical
perspective, we aim to elucidate this phenomenon, identifying the underlying differ-
ences among the university students of both countries, furthermore considering the
factors interrelated with the intention to set up businesses and in addition to the typi-
cal profiles in this field even while the student samples belong to similar cultures.

9.2 Theoretical Background

Covin, Green, and Slevin (2006) defend that an entrepreneurial orientation positively
relates with organizational performance in contexts specific to countries and regions.
There is however no generally accepted interpretation of culture as a determinant of
entrepreneurship (Wennekers & Thurik, 1999). As there is a bond between values,
beliefs and behaviours, we may expect that different national cultures provide the
framework for the development of these values and beliefs and thereby influencing a
wide range of behaviours, including decisions such as starting out on one’s own rather
than working for a third party (Mueller & Thomas, 2000). Within a similar line of logic,
9 Cultural Influences on the Entrepreneurial Intentions of University Students... 143

various studies have explored the interrelationship between different facets of culture
and the entrepreneurial practices in effect in diverse and different cultures (Autio,
Pathak, & Wennberg, 2010; Busenitz, Gomez, & Spencer, 2000; Lee & Peterson, 2000;
McGrath & MacMillan, 1992; Mueller & Thomas, 2000; Stephan & Uhlaner, 2010).
In general, there are two line of theoretical interpretation as to just how culture
interplays in business related activities. The first, largely stemming from the field of
psychology, holds that culture generates a direct impact on the behavior of peoples
belonging to a specific culture (Hofstede, 1980). Culture influences the personal
values of individuals and, furthermore, their behaviors. Thus, national culture may
either support or hinder entrepreneurial behaviours at the individual level (Hayton,
George, & Zahra, 2002). This reflects in the way culture indicates the level at which
a particular society considers business related behaviours, such as the taking of risks,
the orientation towards growth and expansion, the capacity for innovation, the rec-
ognition of opportunity as well as the willingness to explore new ideas. We may state
that all of this to a greater or lesser extent is synonymous with “national culture”. In
this point of view, a culture that is entrepreneur friendly produces more persons with
entrepreneurial potential and, as a consequence, more entrepreneurial activities. The
second line of research broadly rests upon institutional theory and assumes that cul-
ture as an informal institution forms the basis of formal institutions (North, 2005).
Culture shapes formal institutions over the long term. Hence, in some countries,
there are institutional conditions better adapted to supporting entrepreneurial activi-
ties, for example, fostering free and competitive markets, providing clear protection
to private property, running merit based, open and innovation education systems and
so forth, which collectively serves to produce more activities in these countries.
This therefore assumes the need to establish a culture in which entrepreneurship
plays a leading role as it constitutes a factor favoring social cohesion and represents the
scope for personal development as well as providing the mass opportunity to improve
one’s employment status. In the case of Spain, this proves particularly relevant as the
unemployment rate stands at around 27 %, which reflects 6 million unemployed per-
sons with 56 % of the population aged under 25 being unemployed (INE, 2013) with
the entrepreneurial activity rate at 5.8 % against a European average of 7.5 %. On the
other hand, Portugal, whilst displaying a lower socioeconomic status, attains a priori
more favorable rates with 18 % unemployed and with 38 % overall unemployment in
the under 25 age group but with an entrepreneurial activity rate back on 4.5 % (GEM,
2010). These issues pose certain questions in relation to the profiles of potentially
entrepreneurial people in these countries; therefore, we seek to clarify just which dif-
ferences establish the various factors that shape intentions to starting businesses.

9.3 Methodology

9.3.1 Measuring Instruments and Methodology

The instrument applied was the Entrepreneurial Orientation Questionnaire (EOQ)

(Sánchez, 2010), an academic schedule administered equally to all individuals. This
involved the measuring of the following traits on a Likert scale of 1–7: Internal
144 J.J. Ferreira et al.

Table 9.1 Sample Country

characterization
Spain Portugal
(N = 140) (N = 153)
N % N %
Gender Male 36 26.3 50 32.7
Female 101 73.7 103 67.3
Age M ± SD 24.9 ± 2.0 26.3 ± 7.0
Employment Self-employed 35 26.9 18 12.9
father Private company 33 25.4 71 51.1
Public company 40 30.8 22 15.8
Not working 22 16.9 28 20.1
Employment Self-employed 16 12.1 19 12.8
mother Private company 33 25.0 51 34.5
Public company 43 32.6 42 28.4
Not working 40 30.3 36 24.3

Locus of Control (11 items), Self-efficacy (9 items) Proactiveness (10 items),

Entrepreneurial Intention (12 items), Personal Attitude (5 items), Perceived Control
(6 items), Standard (3 items), Feasibility (9 items). The control variables were gen-
der, date of birth, education, hometown, profession of father, profession of mother.
We undertook the following statistical analysis procedures to examine our perti-
nent objectives: T test mean difference and multiple regression analysis (general
and divided) in which the predictors were personal traits (LCI, self-efficacy, proac-
tiveness) and attitude (attitude, norm, perceived control, feasibility) with
Entrepreneurial Intention serving as the dependent variable.

9.3.2 Sample

The study sample featured 293 students, 140 Spanish students and 153 Portuguese
students (Table 9.1). In terms of gender, 73.7 % of the Spanish students were female
while this proportion stood at 67.3 % among Portuguese students that returned an
average age of 26.3 ± 7.0 with their Spanish peers on average younger at 24.9 ± 2.0.
As regards the Spanish students 30.8 % and 32.6 % of the fathers and mothers
worked for state run entities with 26.9 % and 12.1 % of the fathers and mothers
respectively self-employed professionals. In terms of the Portuguese students,
51.1 % of their fathers worked for private firms while 12.9 % were self-employed
with those frequencies 34.5 % and 12.8 % respectively as regards their mothers.

9.4 Discussion of Results

This section evaluates the differences reported by the diverse constructs under study.
Analyzing the differences between the two countries encounters the existence of
significant differences in the psychological variables Locus of Internal Control
9 Cultural Influences on the Entrepreneurial Intentions of University Students... 145

Spain Portugal

7
5.6 5.5 5.6 5.8
6 5.3 5.2 5.3
4.6 4.8 4.5 4.7
5 4.1 4.1
4 3.3
3
2
1
0
Internal Locus Self-efficacy Pro-activeness Personal Perceived Standard Feasibility
of Control Attitude Control

Fig. 9.1 Psychological variable construct averages

Spain Portugal

7
5.7 6.0
6 5.0 5.2
4.8 5.1 5.0 4.9 4.8
4.4 4.8 5.1
5 4.1
4
3.7 3.7 4.0
3
2
1
0
Motivations Important Important Importance Labor Entrepreneurial Social Value of Specific
for Setting up Resources for Obstacles for of Setting up Intention Intention Entrepreneurship Capacities to
a Company Setting up a Setting up a a Company Becoming an
Company Company Entrepreneur

Fig. 9.2 Entrepreneurial motivation construct averages

(t = −4.24, P < 0.001), Self-efficacy (t = −6.40, P < 0.001), Proactiveness (t = −7.90,

P < 0.001), Personal Attitude (t = −5.40, P < 0.001), Perceived Control (t = −5.12,
P < 0.001) and Feasibility (t = −4.63, P < 0.001) (Fig. 9.1). In all of these constructs,
Portuguese students return significantly higher scores.
As regards the different motivations underlying entrepreneurship (Fig. 9.2), we
report the existence of significant differences between the constructs Motivations
for Setting up a Company (t = −2.83, P = 0.005), Important Resources for Setting up
a Company (t = −4.72, P < 0.001), Importance of Setting up a Company (t = −2.72,
P = 0.007), Labor Intention (t = 6.18, P < 0.001), Entrepreneurial Intention (t = −4.83,
P < 0.001), Social Value of Entrepreneurship (t = −3.38, P = 0.001) and Specific
Capacities to Becoming an Entrepreneur (t = −2.58, P = 0.010).
In the construct referring to Labour Intention, Spanish students turned in the high-
est scores and denoting a preference for working for third party entities while in all
the remaining constructs the Portuguese students return significantly higher scores.
In relation to the individual values, we again encounter significant differences
between the constructs for Stimulation (t = −6.22, P < 0.001), Effort (t = −3.12, P = 0.002),
and in individual values generally (t = −3.63, P < 0.001), observing how in all these
constructs Portuguese students return statistically significant higher scores (Fig. 9.3).
146 J.J. Ferreira et al.

Spain Portugal
7
6 5.6 5.4 5.5 5.7 5.7
5.3 5.2
4.8 4.8 4.9
5
4 3.7
3.4
3
2
1
0
Self-direction Hedonism Stimulation Effort Power Individualist

Fig. 9.3 Individual value construct averages

Spain Portugal
7
6
5 4.5 4.3 4.2
3.9 4.0
4 3.7

3
2
1
0
Conformity Tradicion Collectivist

Fig. 9.4 Collective value construct averages

As regards collective personal values (Fig. 9.4), there are no statistically signifi-
cant differences (P > 0.05) between the Portuguese and the Spanish students.
In terms of the mixed dimension reflected by personal values (Fig. 9.5), we again
return statistically significant differences between the Portuguese and the Spanish
students in the factors of Universalism (t = −3.50, P = 0.001) and in the mixed values
in general (t = −2.53, P = 0.012). In both cases, the personal value scores registered
by Portuguese students proved significantly higher than their Spanish counterparts.

9.4.1 Factors Influencing Entrepreneurship

We furthermore calculated diverse regression models with the objective of i) evalu-

ating just which factors influence the option of working for a third party and com-
paring these factors between Portugal and Spain; and ii) calculating just which
factors hold influence over the preference expressed in terms of becoming an
entrepreneur and again comparing these factors between the two countries.
9 Cultural Influences on the Entrepreneurial Intentions of University Students... 147

Spain Portugal
7 6.0
5.7 5.3 5.6
5.0 5.1
5

-1 Universalism Safety Mixed

Fig. 9.5 Mixed value construct averages

In the models estimated, we deployed gender, age and the presence of the father
or mother working as a self-employed professional, psychological variables, vari-
ables encapsulating entrepreneurship and facets relating to personal values as the
control variables. Additionally, in the case of personal variables, we estimated mod-
els with both disaggregate and aggregate dimensions.
As regards the factors influencing the preference for working for third party enti-
ties (Table 9.2) in the overall sample, we would highlight how the Portuguese stu-
dents (β = −0.28; p < 0.001) report a significantly lower preference as regards
working for such third parties.
The older the student (β = −0.14 and β = −0.15; p < 0.05), the lesser the preference
for working for third parties. Students with mothers who are either business manag-
ers or self-employed professionals (β = −0.12 and β = −0.13; p < 0.05) also display a
lower level of preference as regards working for third parties. Furthermore, the
greater the perception as regards the ease of starting up a company (β = −0.31 and
β = −0.28; p < 0.05), the lower the preference for working for third party entities. In
terms of the motivations present for launching a business (β = 0.15; p < 0.05), the
higher they are then the greater the preference over the option to work for third par-
ties. In the Spanish sample, we report that male respondents (β = −0.21 and β = −0.22;
p < 0.05) state a lower level of preference as regards working for third parties.
Students with mothers who run businesses or are self-employed (β = −0.28 and
β = −0.28; p < 0.05) again report lower levels of preference about working for third
parties. In addition, in terms of the variable for perceived ease of launching a com-
pany (β = −0.40; p < 0.05), the higher this rises, the lower the level of preference for
working for third party entities. Indeed, the greater the level of motivation over
launching a business (β = 0.27; p < 0.05), the greater the preference for working for a
third party. Finally, the higher the level of importance attributed to resources (β = 0.25
and β = 0.23; p < 0.05), the greater the preference for working for a third party.
As regards the factors influencing preferences in terms of becoming an entrepre-
neur (Table 9.3), the sample overall emphasizes that Portuguese students (β = 0.09;
p < 0.05) return a significantly greater preference over the option of becoming an
entrepreneur.
 148

Table 9.2 Beta estimates (T-statistics)

Overall Spain Portugal
Portugal −0.28 (−3.85)*** −0.28 (−4.09)*** NA NA NA NA
Male −0.1 (−1.74) −0.09 (−1.64) −0.21 (−2.24)* −0.22 (−2.46)* −0.03 (−0.28) −0.01 (−0.11)
Age (years) −0.14 (−2.36)* −0.15 (−2.59)** −0.16 (−1.68) −0.14 (−1.55) −0.23 (−2.35)* −0.23 (−2.58)*
Mother self-employed −0.12 (−2.01)* −0.13 (−2.19)* −0.28 (−2.8)** −0.28 (−2.96)** −0.06 (−0.71) −0.07 (−0.79)
Father self-employed −0.01 (−0.16) −0.01 (−0.21) 0.08 (0.8) 0.07 (0.75) −0.07 (−0.82) −0.06 (−0.73)
Internal locus of control 0.09 (1.16) 0.1 (1.3) 0.09 (0.82) 0.08 (0.77) 0.08 (0.59) 0.09 (0.73)
Self-efficacy 0.02 (0.19) 0.01 (0.06) 0.19 (1.39) 0.2 (1.51) −0.24 (−1.43) −0.26 (−1.65)
Pro-activeness −0.05 (−0.47) −0.05 (−0.55) −0.12 (−0.89) −0.18 (−1.4) 0.24 (1.53) 0.24 (1.6)
Personal attitude −0.13 (−1.47) −0.14 (−1.57) −0.21 (−1.46) −0.17 (−1.23) −0.11 (−0.82) −0.12 (−0.95)
Perceived control 0.02 (0.22) 0.03 (0.25) −0.01 (−0.04) −0.02 (−0.13) 0.14 (0.82) 0.15 (0.91)
Norm −0.1 (−1.56) −0.11 (−1.72) −0.01 (−0.09) −0.04 (−0.43) −0.17 (−1.6) −0.17 (−1.81)
Feasibility −0.31 (−2.59)** −0.28 (−2.44)* −0.24 (−1.41) −0.27 (−1.65) −0.4 (−2)* −0.4 (−2.14)*
Motivations for starting a business 0.13 (1.78) 0.15 (1.98)* 0.06 (0.53) 0.06 (0.57) 0.23 (1.94) 0.27 (2.4)*
Important resources to create a company 0.1 (1.37) 0.09 (1.28) −0.08 (−0.73) −0.06 (−0.58) 0.25 (2.25)* 0.23 (2.14)*
Important obstacles to create a company −0.11 (−1.57) −0.11 (−1.62) −0.07 (−0.64) −0.11 (−1.04) −0.08 (−0.65) −0.1 (−0.9)
Importance of creating a company 0.04 (0.52) 0.04 (0.53) 0.11 (0.97) 0.09 (0.87) −0.09 (−0.75) −0.08 (−0.67)
Social value of entrepreneurship 0 (0.01) 0 (−0.05) 0.05 (0.48) 0.05 (0.47) −0.02 (−0.14) −0.01 (−0.11)
J.J. Ferreira et al.
 9

Specific skills to be an entrepreneur 0.07 (0.71) 0.09 (0.98) 0.12 (0.92) 0.11 (0.91) 0.06 (0.38) 0.1 (0.66)
Conformity 0.11 (1.58) −0.05 (−0.42) 0.16 (1.5)
Tradition −0.06 (−0.94) −0.15 (−1.27) 0.03 (0.3)
Collectivist 0.05 (0.7) −0.18 (−1.84) 0.16 (1.75)
Stimulation 0.05 (0.62) −0.07 (−0.6) 0.06 (0.48)
Hedonism 0.03 (0.42) 0.17 (1.47) −0.04 (−0.35)
Self-direction 0.01 (0.08) 0.05 (0.39) −0.06 (−0.58)
Power −0.03 (−0.39) −0.16 (−1.26) 0 (−0.02)
Shame 0.02 (0.34) 0.17 (1.5) 0 (0.01)
Individualist 0.04 (0.56) 0.12 (1.13) −0.04 (−0.39)
Safety 0.04 (0.7) 0.05 (0.46) 0.05 (0.46)
Universalism 0 (−0.03) 0.07 (0.59) −0.01 (−0.05)
Mixed 0.04 (0.65) 0.11 (1) 0.04 (0.36)
R2 33.2 % 32.3 % 37.9 % 35.9 % 31.1 % 30.0 %
Adjusted R2 25.2 % 26.1 % 20.4 % 22.8 % 14.3 % 17.5 %
Dependent variable: preference over working for third party
NA Not applicable; *p < 0.05, **p < 0.01; ***p < 0.001
Cultural Influences on the Entrepreneurial Intentions of University Students...
149
 150

Table 9.3 Beta estimates (T-statistics)

Overall Spain Portugal
Portugal 0.08 (1.68) 0.09 (2.1)* NA NA NA NA
Male 0.03 (0.71) 0.02 (0.5) 0.06 (0.98) 0.07 (1.21) −0.01 (−0.22) −0.03 (−0.54)
Age (years) 0.04 (0.95) 0.05 (1.26) 0.13 (2.07)* 0.12 (2.06)* 0.03 (0.64) 0.06 (1.18)
Mother self-employed −0.01 (−0.18) 0 (−0.11) 0.13 (2.1)* 0.12 (1.93) −0.04 (−0.89) −0.04 (−0.84)
Father self-employed 0.04 (1.03) 0.04 (1.06) 0.11 (1.78) 0.1 (1.64) −0.03 (−0.58) −0.03 (−0.56)
Internal locus of control 0 (−0.06) −0.01 (−0.26) −0.09 (−1.28) −0.07 (−1.09) 0.12 (1.69) 0.1 (1.35)
Self-efficacy 0 (−0.01) 0.02 (0.25) −0.08 (−0.91) −0.08 (−0.97) 0.14 (1.56) 0.19 (2.08)*
Proactiveness 0.03 (0.4) 0.04 (0.65) 0.17 (1.96) 0.18 (2.22)* −0.2 (−2.37)* −0.23 (−2.73)**
Personal attitude 0.21 (3.63)*** 0.21 (3.65)*** 0.23 (2.51)* 0.25 (2.74)** 0.13 (1.79) 0.15 (1.99)*
Perceived control 0.08 (1.17) 0.07 (0.99) 0.14 (1.5) 0.15 (1.66) −0.08 (−0.83) −0.1 (−1.03)
Norm −0.01 (−0.29) −0.02 (−0.41) 0 (−0.06) 0 (0.04) −0.01 (−0.15) −0.02 (−0.34)
Feasibility 0.48 (6.34)*** 0.48 (6.38)*** 0.44 (4)*** 0.42 (3.96)*** 0.57 (5.27)*** 0.57 (5.44)***
Reasons for starting a business 0.01 (0.12) 0 (0.04) 0.02 (0.26) 0.05 (0.77) −0.04 (−0.62) −0.05 (−0.82)
Important resources to create a company −0.07 (−1.49) −0.05 (−1.17) −0.02 (−0.28) −0.01 (−0.19) −0.16 (−2.62)** −0.14 (−2.28)*
Important obstacles to create a company 0.03 (0.64) 0.03 (0.64) 0.1 (1.28) 0.1 (1.4) −0.02 (−0.25) −0.01 (−0.24)
Importance of creating a company −0.08 (−1.8) −0.08 (−1.8) −0.04 (−0.6) −0.06 (−0.86) −0.03 (−0.38) −0.03 (−0.47)
J.J. Ferreira et al.
 9

Social value of entrepreneurship 0.12 (2.65)** 0.12 (2.73)** 0 (−0.05) 0.02 (0.26) 0.2 (3.4)** 0.2 (3.4)**
Specific skills to be an entrepreneur 0.07 (1.09) 0.06 (1.05) −0.07 (−0.85) −0.09 (−1.15) 0.19 (2.23)* 0.17 (2.11)*
Conformity 0 (−0.01) 0.17 (2.09)* −0.06 (−1.06)
Tradition 0.12 (2.92)** 0.07 (0.97) 0.14 (2.45)*
Collectivist 0.1 (2.43)* 0.18 (2.85)** 0.07 (1.29)
Stimulation 0.03 (0.68) −0.01 (−0.18) 0.05 (0.76)
Hedonism −0.03 (−0.6) −0.13 (−1.74) 0.01 (0.19)
Self-direction −0.01 (−0.2) 0.02 (0.28) −0.01 (−0.18)
Power 0.03 (0.72) 0.06 (0.76) 0.02 (0.36)
Sham −0.02 (−0.53) −0.07 (−0.99) 0.03 (0.48)
Individualist 0 (−0.05) −0.1 (−1.44) 0.07 (1.17)
Safety −0.04 (−1.02) −0.05 (−0.64) −0.07 (−1.21)
Universalism 0.04 (0.89) 0.08 (1.1) 0.03 (0.5)
Mixed −0.03 (−0.58) 0 (−0.02) −0.06 (−1.12)
R2 72.4 % 71.6 % 74.5 % 72.9 % 79.3 % 78.0 %
Adjusted R2 69.1 % 69.0 % 67.3 % 67.3 % 74.3 % 64.7 %
Dependent variable: preference over becoming an entrepreneur
*p < 0.05, **p < 0.01; ***p < 0.001
Cultural Influences on the Entrepreneurial Intentions of University Students...
151
152 J.J. Ferreira et al.

We would furthermore highlight that the predictive variables explain a greater

proportion of variability (R2 ≥ 71.6 %) in the preference over becoming an entrepre-
neur than the preference for working for a third party entity (R2 ≥ 30.0 %).
The higher the level of Personal Attitude (β = 0.21; p < 0.001), the greater the
preference of students over becoming an entrepreneur. In the case of the perceived
ease of launching a company (β = 0.48; p < 0.001), the greater the importance attrib-
uted to this variable, the greater the preference over becoming an entrepreneur.
Additionally, the greater the level of perception in terms of the social value of entre-
preneurship (β = 0.12; p < 0.05), the greater the preference for becoming an entrepre-
neur. In the case of the collective values (β = 0.10; p < 0.05), in particular tradition
(β = 0.12; p < 0.05), the higher the level of this factor, the higher the level of
preference over becoming an entrepreneur.
In Spanish students, we find that the older the student (β = 0.13 and β = 0.12;
p < 0.05), the greater the preference over becoming an entrepreneur. In the case of
students with mothers either running businesses or working as freelance profession-
als (β = 0.13; p < 0.05), they return higher levels of preferences over becoming entre-
preneurs. Furthermore, the higher the levels of Proactiveness (β = 0.18; p < 0.05),
Personal Attitude (β = 0.23 and β = 0.25; p < 0.05) and the Perceived Ease of
Launching a Company (β = 0.44 and β = 0.43; p < 0.001), the greater the preference
over becoming an entrepreneur. The higher the level of the collective values in gen-
eral (β = 0.18; p < 0.01), and in particular conformity (β = 0.17; p < 0.05), the greater
the preference in favor of becoming an entrepreneur.
As regards Portuguese students, we find that the higher the level of Self-efficacy
(β = 0.19; p < 0.05), Personal Attitude (β = 0.13; p < 0.05), the Perceived Ease of
Launching Companies (β = 0.57; p < 0.001), the Social Value of Entrepreneurship
(β = 0.20 and β = 0.20; p < 0.05), the Need for Specific Entrepreneurial Skills (β = 0.19
and β = 0.17; p < 0.05) and the value of Tradition (β = 0.14; p < 0.05), the greater the
preference over becoming an entrepreneur. The higher the level of Proactiveness
(β = −0.20 and β = −0.23; p < 0.05) and the importance attributed to the Resources
Necessary to starting up a company (β = −0.16 and β = −0.14; p < 0.05), the lower the
preferences over becoming an entrepreneur.

9.5 Final Considerations

The differences between potential Spanish and Portuguese entrepreneurs explain

the social reality of these two countries in terms of performance and self-
employment. Spain currently suffers from a high rate of unemployment generated
by a structural deficit in the employment chain. Economic and financial recession
cast light on these shortcomings and the deficiencies in terms of the low rate of
entrepreneurial activity. Entrepreneurship, as a social phenomenon, is immersed in
the social structures, culture and networks that all shape affect it. Culture has arisen
as an important concept within the entrepreneurship literature as a means of explain-
ing differences in the nature of the entrepreneurship process as perceived between
industries, regions and countries.
9 Cultural Influences on the Entrepreneurial Intentions of University Students... 153

In this chapter, we examined the different cultural patterns and factors of Spanish
and Portuguese university student intentions to become self-employed or to start
their own business. The results demonstrate the education process has neither
enhanced the collective consciousness of entrepreneurship nor has it fostered inno-
vative and creative powers for developing and investing in sustainable entrepre-
neurial strategies.
In Portugal, entrepreneurship and employment indicators are more encouraging
although the outlook for growth and economic welfare remains less optimistic at the
present time. Our study has shown that the Portuguese psychosocial profile of stu-
dents corresponds to a pattern of innovation and entrepreneurship better than
Spanish students. On business focused degree programs, this trend is observed but
with greater confidence and better perspective than Spanish students. Moreover, the
regression models applied generated showed a high predictive power. To the extent
that all students involved attended entrepreneurship related subjects, the high values
obtained for the variables under study, reveal the culture has arisen as an important
concept within the entrepreneurship literature as a means of explaining differences
in the nature of the entrepreneurship process as perceived between industries,
regions and countries.
Our results lead us to consider that promoted in both countries able to explain these
differences and the potential sources of influence at play. This requires comprehen-
sive research but common sense enables us to infer that the first step involves working
on policies that favor and in no way hinder entrepreneurship in society and stimulate
creative, innovative and entrepreneurial attitudes. In this sense, policies should also
invest in broader cooperation between these countries with some such policies already
undergoing implementation. Indeed, this study represents one example in a partner-
ship between Spanish and Portuguese universities to analyze and subsequently
enhance the factors of entrepreneurship among young, university graduates.

Acknowledgments This research was supported by the Portuguese Science Foundation through
NECE—Research Unit in Business Sciences (Programa de Financiamento Plurianual das
Unidades de I&D da FCT—Fundação para a Ciência e Tecnologia, Ministério da Ciência,
Tecnologia e Ensino Superior/Portugal).

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Chapter 10
Social Entrepreneurship and Social
Entrepreneurs: The Influence of Cultural
Context

Antonio Ariza-Montes, Emilio J. Morales-Fernández, and Antonio Sianes

Abstract The current growth of the social sector is undeniable. Just as the business
sectors have experienced a great increase in productivity over the past century, the
citizen sector is experiencing a similar transformation, with the number and sophis-
tication of citizen organizations increasing radically. In this sense, the social entre-
preneurship topic has aroused great interest in recent years and has developed into
a cultural, economic and social phenomenon. This chapter analyzes the influence of
cultural context on the emergence of social entrepreneurship and on the characteris-
tics of social entrepreneurs. To test this influence, we rely on the Eurobarometer
Entrepreneurship in the EU and Beyond to compare two different cultural contexts:
the Latin European context and the Northern European context. On one hand, the
main findings suggest that cultural context has a significant influence on the rate of
social entrepreneurship. On the other hand, the results highlight that constituent
variables, such as age, location, risk aversion and the capacity to respond to the
opportunities in the environment, have a cultural bias.

10.1 Introduction

The topic of social entrepreneurship has expanded exponentially in recent years,

becoming a cultural, economic and social phenomenon (Lepoutre, Justo, Terjesen,
& Bosma, 2013; Short, Moss, & Lumpkin, 2009; Robert & Woods, 2005).
Nevertheless, interest in social enterprise is not new. Literature generally refers to

A. Ariza-Montes (*) • E.J. Morales-Fernández

Business Organizations, Loyola University Andalusia,
Escritor Castilla Aguayo, 4, Córdoba 14004, Spain
e-mail: ariza@uloyola.es; emorales@uloyola.es
A. Sianes
ETEA Foundation for Development and Cooperation, Loyola University Andalusia,
Escritor Castilla Aguayo, 4, Córdoba 14004, Spain
e-mail: antonio.sianes@fundacionetea.org

© Springer International Publishing Switzerland 2015 157

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_10
158 A. Ariza-Montes et al.

1993 as the starting point, when Harvard University launched its Social Enterprise
Initiative.
Since that time, numerous programs have emerged from the patronage of univer-
sities and private foundations to support training and strategic consulting for social
entrepreneurial managers.
Europe has also witnessed its own emerging process of developing social businesses,
particularly in countries such as Portugal, Italy and Spain. The deficiency in the
provision of certain public services in these countries has encouraged the development
of a significant “social economy” (Ariza-Montes & Muñiz-Rodríguez, 2013).
However, social entrepreneurs have always existed. The term refers to those
people who navigate the turbulent waters of the balance between economic survival
and social objectives of questionable financial viability, entrepreneurs who, accord-
ing to Pamela Hartigan, Director of the Skoll Centre for Social Entrepreneurship at
Oxford University, are a combination of Richard Branson and Mother Teresa of
Calcutta. The most famous social entrepreneur is likely Muhammad Yunus, the
founder of Grameen Bank (Bornstein, 2004); however, also well-known are Michael
Young (Open University), Abbé Pierre (Ragpickers Emmaus), Vicente Ferrer
(Fundación Vicente Ferrer) and Anita Roddick (The Body Shop) (Morales-
Gutiérrez, 2007).
Although social entrepreneurship is not a new phenomenon, some recent factors
are placing the issue at the center of the debate: the global crisis threatening national
economies around the world, the creation of new businesses focused on social value
creation, and the commitment to the development of local communities. These ele-
ments have only increased the relevance of social enterprises, which can now be
considered a vital part of societal and economic systems and a possible solution to
the crisis.
As noted by Porter and Kramer (2011), enterprises must reconnect prosperity
with social progress. This mix is not an issue of social responsibility, philanthropy or
even sustainability but rather a new way to achieve economic success. Creating
shared value is not on the margins of companies’ actions but instead at the center. We
believe that it can give rise to the next major transformation of business thinking.
The ability of these companies to address global problems (e.g., poverty, immi-
gration, childcare, aging, climate change) from a local perspective makes them key
players in social and territorial cohesion. For this reason, the concept of social entre-
preneurship has been broadly studied by scholars and academics, not only from the
approach of business research but also for insights into education, anthropology,
political science and sociology, among other areas. As we will see in the next sec-
tion, researchers in many different fields have aimed to create a definition of social
entrepreneurship and identify its main traits (Santos, 2012; Austin, Stevenson, &
Skillern, 2006; Alvord, Brown, & Letts, 2004; Mair & Noboa, 2003; Dees, 1998).
However, despite much excellent work on this theme, there is a lack of quantitative
and empirical research that allows authorizing and justifying the phenomenon,
generalizing data and making it reliable by defining boundaries and resolving uncer-
tainty (Nicolás & Rubio, 2012).
10 Social Entrepreneurship and Social Entrepreneurs… 159

Bearing in mind the aforementioned challenge in defining the field, this paper
seeks to stimulate research in social entrepreneurship, shedding light on the topic
through quantitative research.
The scope of this study is to analyze whether cultural context can be considered
a factor that affects both social entrepreneurship activity and the characteristics of
social entrepreneurs themselves.
The chapter is organized as follows. First, we examine the phenomenon of social
entrepreneurship as a main focus of interest and a source of opportunities to
catalyze social change and address social needs. Next, we establish the model of
analysis, eliciting the sources of data and the hypothesis that will be tested—whether
we can consider cultural context to influence social entrepreneurial activity and
social entrepreneurs themselves. We then present the GLOBE study, which allows
us to choose two different clusters of countries according to their values, norms and
traditions. We next present the main results of our empirical analysis, which suggest
that there is a relationship between cultural context and social entrepreneurship.
We conclude by discussing the broader significance of the results and suggesting
some directions for future work.

10.2 Social Entrepreneurship and Social Entrepreneurs

The current growth of social sector is undeniable. Just as the business sectors
experienced a great increase in productivity over the past century, the citizen sector
is experiencing a similar transformation, with the number and sophistication of citi-
zen organizations increasing radically. In this context, social entrepreneurs play a
central role in promoting societal change. With this in mind, an ecosystem focused
on encouraging and supporting the development of social enterprise is emerging.
The Italian Parliament used the term Social Entrepreneurship in this sense for the
first time in Europe in 1991, linked to the nascent cooperative movement that
resulted from the neglect of social issues in the country (Nyssens, 2006). Next came
the extension of the term throughout Europe, peaking around 2000 because of
broader acknowledge of both the third sector and the need to create new forms of
business. With the adoption of the Single Market Act on April 13, 2011, the European
Commission presented a detailed strategy to relaunch the Single Market inter alia
by placing social enterprises and the social economy at its heart. For example,
proposal 36, to promote innovative social enterprise, states that the Commission
will propose a new initiative to support social enterprise development through the
inclusion of social objectives in public procurement rules, promoting ethical and
ecological labeling. To encourage greater cross-border activity, the Commission
will consider the establishment of a European statute for organizations that contribute
to the social economy, such as cooperatives and mutual societies, and propose a
regulation to create a European Foundation Statute. Social innovation is present in
a wide range of policy initiatives of the European Commission, including the
European platform against poverty and social exclusion, the Innovation Union, the
160 A. Ariza-Montes et al.

Social Business Initiative, the Employment and Social Investment packages, the
Digital Agenda, the new industrial policy, the Innovation Partnership for Active and
Healthy Aging, and the Cohesion Policy. In these fields, there are many opportuni-
ties for social entrepreneurs to bridge the gap between pressing social needs and
development and implementation of new ideas and solutions (products, services
and models).
Nevertheless, support for social entrepreneurship does not come exclusively
from the public sphere. Numerous private initiatives have sprung up around this
phenomenon. The best reflections of the increasing importance of fostering and
promoting social entrepreneurial activity in recent years are the Skoll Foundation
and Ashoka. Both entities are global non-profit organizations that support social
entrepreneurs by providing funds to allow them to engage in full-time social projects
and become “changemakers” within any social sphere “from education, youth
development, health care, environment, human rights, access to technology and
economic development” (Robert & Woods, 2005). The work of Morales-Gutiérrez
et al. (2012) shows a set of initiatives that seek to develop an ecosystem conducive
to the development of social enterprises.
Although social entrepreneurship has become a main focus of interest, there is
still no academic consensus about the boundaries that define a social enterprise. In
a broad sense, the term “social economy” is used to define a specific part of the
economy—a set of organizations (historically grouped into the four major catego-
ries of cooperatives, mutual societies, associations and, more recently, foundations)
that primarily pursue social aims and are characterized by participative governance
systems (EU, 2013). According to O’Byrne and Lean (2014), there are two bodies
of thought governing social enterprises and their relationship to the third sector and
the social economy. The first identifies social enterprise within the third sector at the
boundary between cooperatives and non-profits and characterizes them as sub-
groups of the social economy (Defourny, 2001). In contrast, US thinking places
social enterprises nearer to the private and public sectors rather than at the core of
the third sector (Westall, 2001). An additional perspective judges the central crite-
rion for situating organizations within this sector to be “the fact that the organization
is governed in a way that ensures that the potential surplus is used and reinvested
alongside social criteria […] such organizations would then not have to be non-
profit, but they would have to be not-for-profit” (Evers, 2012).
Regarding the definition of social entrepreneurship, a review of the literature
shows that settling the boundaries of the concept has challenged and is still
challenging authors. This attempt at conceptualization has been attempted from
different perspectives according to the main points that different scholars assert.
Using the classification by Short et al. (2009), many different approaches can be
found. On one hand, concerning the organization type, there are definitions that
limit social entrepreneurship to non-profit organizations (Lasprogata & Cotton,
2003). Others describe social entrepreneurship as non-profit organizations con-
trolled by regular businesses (Wallace, 1999) or organizations that create firms at a
financial loss (Baron, 2007). On the other hand, in relation to philanthropy, academics
set definitions establishing the creation of social value as the main goal of the
10 Social Entrepreneurship and Social Entrepreneurs… 161

organization (Short et al., 2009). Furthermore, other authors identify the innovative
nature of social entrepreneurship as the fundamentally distinctive characteristic
of the phenomenon (Austin et al., 2006).1
As asserted by Mair and Martí (2006), the concept of social entrepreneurship
would involve the following:
First, we view social entrepreneurships as a process of creating value by combining
resources in new ways. Second, these resource combinations are intended primarily to
explore and exploit opportunities to create social value by stimulating social change or
meeting social needs. Third, when viewed as a process, social entrepreneurship involves the
offering of services and products but can also refer to the creation of new organizations.
Importantly, social entrepreneurship, as viewed in this article, can occur equally well in a
new organization or in an established organization, where it may be labeled “social entre-
preneurship”. Like entrepreneurship in the business sector, social entrepreneurship can
refer to either new venture creation or entrepreneurial process innovation.

In this definition, Mair and Martí (2006) gather scholars’ different approaches to
what makes entrepreneurship social: (a) its innovative character, because they
describe it as a process of creating value by combining resources in new ways2; (b)
its emphasis on the intention to create social value as its distinctive key point; and
(c) its independence from resource mobilization and sources of income.
In this chapter, we adopt the point of view of Mair and Martí (2006). Rather than
profit versus not-for-profit, we argue that the main difference between entrepreneur-
ship in the business sector and social entrepreneurship lies in the relative priority
given to social wealth creation versus economic wealth creation. While in business
entrepreneurship, social wealth is a by-product of the economic value created, in
social entrepreneurship, the major focus is on social value creation3. This does not
mean that social entrepreneurial initiatives should not include an “earned income”
strategy—quite the opposite.
No matter the approach we take, it is clear that social entrepreneurs offer innova-
tive solutions to social and environmental needs that manifest in their closest

1
As noted by Yunus (2011), we must recognize the economic subject as a multidimensional person,
a person who is both self-interested and selfless at the same time. In this approach, there are two
types of enterprises: one to gain personal benefits and another to help others. The mission of the
former is to maximize profits for owners; that of the latter is to assist others and in no case
the owners—simply the pleasure of serving humanity. This second choice of business, built on
the selfless human nature, is what Yunus (2011) called social enterprise, a company without loss or
dividends, fully dedicated to achieving a social objective.
2
Elkington and Hartigan (2008) suggest that social entrepreneurs are innovators who observe
social problems and see opportunities for transformational change; they also tend to be pragmatic
and visionary and direct their visions in a collaborative manner, thus achieving the involvement
and commitment of various stakeholders. In any case, a social entrepreneur should abide by the
ethos of social enterprise. This distinctive nature is based on principles of voluntarism, ethical
behavior and a mission with a social cause (Chell, 2007).
3
At this point and bearing in mind the aim of social entrepreneurship, it is important to emphasize
that social entrepreneurial activity is the generation of wealth and focuses not only on social necessities
but also on environmental issues. Consequently, these organizations are built and developed in
response to market and public service failures (Austin et al., 2006).
162 A. Ariza-Montes et al.

surroundings. Consequently, a developing field of study is being addressed—the

influence of cultural context on the prevalence of social entrepreneurship and the
characteristics of social entrepreneurs themselves.
To date, scholars have analyzed whether cultural context has an impact on
business entrepreneurship. In fact, many authors consider cultural factors to shape
entrepreneurial attitudes and intentions, influencing the individual career choice of
whether to be an entrepreneur (e.g., Wilson, Marlino, & Kickul, 2004; Noorderhaven,
Thurik, Wennekers, & van Stel, 2004; Wennekers, Thurik, van Stel, & Noorderhaven,
2007; Thornton, Ribeiro-Soriano, & Urbano, 2011; Shinnar, Giacomin, & Janssen,
2012).
However, the impact of cultural context on social entrepreneurship has not been
sufficiently addressed. Some authors suggest that there are no idiosyncratic or
cultural backgrounds that characterize social entrepreneurs. Along these lines,
Alvord et al. (2004) maintain, for example, that the founders of social initiatives
come from rich and poor backgrounds and from industrialized and developing
countries and are individuals and teams and men and women. Therefore, there are
no immediately obvious and highly visible characteristics that distinguish these
leaders by background, country of origin, gender, occupation, or even as individuals
or groups.
However, evidence is still lacking on this topic, partly because there is not enough
information on social entrepreneurs. Researchers must refer to generic surveys
about entrepreneurship or rely on the scarce data that are based on social entrepre-
neurship. In any case, additional effort is needed to understand why some cultural
contexts promote the existence of social entrepreneurs, while others seem to be
hindering them.

10.3 Purpose and Hypothesis of the Study

Academic literature has identified contextual, educational and psychological aspects

as key factors that influence the appearance and consolidation of social entrepre-
neurial activity (e.g., Hemingway, 2005; Cho, 2006; Huybrechts & Nicholls, 2012;
Baum, Frese, & Baron, 2014; Omorede, 2014). Therefore, issues such as the num-
ber and complexity of social problems, the existence of an educational system that
promotes entrepreneurialism, or the innate motivation and passion to address social
problems are considered to be drivers that enhance or hinder the emergence of
social entrepreneurs in a given place.
In recent years, academic literature has begun addressing a key question: Do
these drivers have a cultural basis or background? Many studies (e.g., García-
Cabrera & García-Soto, 2008; Mair, 2010; Hopp & Stephan, 2012; Estrin,
Mickiewicz, & Stephan, 2013) have sought to determine whether we can assert that
while some cultural contexts are facilitating the emergence of social entrepreneurs,
others could be hindering it. The first results suggest that there could indeed be a
cultural bias when promoting or hindering social entrepreneurial activity; however,
this assertion requires more evidence to be maintained.
10 Social Entrepreneurship and Social Entrepreneurs… 163

The aim of this study is to contribute to this debate by addressing two

hypotheses:
• Hypothesis 1: Cultural context has a greater influence over the prevalence of
social entrepreneurship activities than over the prevalence of entrepreneurial
activities in general.
• Hypothesis 2: The characteristics of social entrepreneurs differ according to the
cultural context in which they are acting and where they are located.
To test these hypotheses, the following are needed: first, a criterion on what we
consider social entrepreneurship; second, a definition of social entrepreneurs and
the variables considered to be their constituent characteristics; finally, a certain
classification of countries according to the cultural context to which they can be
considered to belong.

10.4 Data

10.4.1 Identification of Social Entrepreneurship

Today, there exist different studies addressing business entrepreneurship. While

some already include an ad hoc module specifically oriented to analyzing social
entrepreneurs, such as the 2009 Global Entrepreneurship Monitor (GEM) survey,
other studies take a broader approach to analyzing entrepreneurship. The main
advantage of the latter type of research surveys is that the interviewee is not presenting
himself—and so answering—as a social entrepreneur but rather as a business
entrepreneur. Consequently, the answers are less biased.
One of the most omni-comprehensive studies in the field of entrepreneurship is
the Eurobarometer: Entrepreneurship in the EU and Beyond. This study covers the
27 countries then comprising the European Union (EU) and 13 countries from out-
side the EU. The latest edition dates from 2012, when over 42,000 respondents from
different social and demographic groups were interviewed.
To determine whether an entrepreneurial activity can be considered social, we
focus on the following question: Please tell me if the following was very important,
fairly important, not very important or not important at all in your decision to take
steps to start a new business or take over an existing one: Addressing an unmet
social or ecological need.
Most academic literature does not consider it contradictory to have other motiva-
tions (e.g., economic, financial) when starting a business. Following Mair and Martí
(2006), we argue that what makes an entrepreneurial activity social is, exclusively,
the desire to address an unmet social need. Consequently, we identify as social
entrepreneurial activities those promoted by those interviewees who have given the
maximum value to this question, even if linked questions regarding other motiva-
tions for entrepreneurialism also receive the maximum value.
From this point of view, Fig. 10.1 shows the total number of entrepreneurs
(11,232) among the total interviewees (42,080) and classifies the former according
to whether they can be considered social (3,478) or not (7,754).
164 A. Ariza-Montes et al.

Fig. 10.1 Ratio of social entrepreneurship to business entrepreneurship. Source: Personal research
based on Eurobarometer 2012

10.4.2 Constituent Characteristics of Social Entrepreneurs

Academic literature has identified the constituent characteristics that influence the
tendency of entrepreneurs to address social needs rather than exclusively business
opportunities (Mair & Martí, 2006; Austin et al., 2006). To analyze whether some of
these present a cultural bias, we have developed the following model to group the
constituent variables.
• Personal characteristics: This group of variables will include age, sex, familial
antecedents (having a father and/or mother entrepreneur) and the location of the
entrepreneur (rural or urban).
• Training: This variable will include both specific training in entrepreneurship
and the contribution of general education to promoting entrepreneurship.
• Risk aversion: This variable will take into consideration not only aversion to
risk-taking but also the personal preference to start a new business or buy an
existing one.
• Reasons for becoming an entrepreneur: This variable will include variables
referring to reasons, motivations and structures that helped the interviewee start
a new business and also barriers to entrepreneurial activities.
• Personal opinions: This variable will examine entrepreneurs themselves and
their positions in society.
Table 10.1 shows the variables considered and their codes in the Eurobarometer
2012.
 10

Table 10.1 Definition of constituent variables of social entrepreneurs

Eurobarometer
Construct Variable code Range
Personal Age D1 1–99
characteristics Gender D2 0 = Female
1 = Male
Location D13 0 = Rural
1 = Urban
Familial antecedents (father and/or mother entrepreneur) D7 (1–2) 0 = No
1 = Yes
Training Specific training at school or university Q10 0 = No training
1 = Training
Effects of school education on Q11 (1–4) 1 = Minimum to 4 = Maximum
1. Sense of initiative and entrepreneurial attitude
2. Understanding the role of entrepreneurs in society
3. Interest in becoming an entrepreneur
Social Entrepreneurship and Social Entrepreneurs…

4. Skills and know-how to enable to run a business

Risk aversion Type of entrepreneur Q16 0 = Reactive
1 = Proactive
Reasons to start a new business Q15 (1–5) 1 = Minimum to 4 = Maximum
1. Dissatisfaction with previous work situation
2. A promising business idea
3. Contact with an appropriate business partner
4. Obtaining the necessary financial resources
5. A role model
(continued)
165
Table 10.1 (continued)
166

Eurobarometer
Construct Variable code Range
Reasons for Preference for entrepreneurial activity Q20 0 = Non preference
becoming an 1 = Preference
entrepreneur Preference for starting a new business Q17 0 = Start a new business
1 = Take over an existing
business
Opinion about the barriers to entrepreneurship Q21 (1–5) 1 = Minimum to 4 = Maximum
1. Creating a business is difficult due to the lack of available financial support
2. Creating a business is difficult due to the complex administrative procedures
3. It is difficult to obtain sufficient information on how to start a business
4. One should not start a business if there is a risk it might fail
5. People who have started and failed should be given a second chance
Opinion about the risks of entrepreneurship Q18 (1–6) 0 = Unafraid
1. Irregular/non-guaranteed income 1 = Afraid
2. The lack of job security
3. The risk of losing one’s property/home
4. The need to devote too much energy or time to it
5. The possibility of suffering personal failure
6. The possibility of bankruptcy
Personal Opinion about entrepreneurs. Entrepreneurs Q12 (1–4) 1 = Minimum to 4 = Maximum
opinions 1. Create new products and services that benefit all of us
2. Only think about their own pockets
3. Are job creators
4. Take advantage of other people’s work
Overall opinion about entrepreneurs (versus self-employed and business owners) Q19 (1) 1 = Minimum to 4 = Maximum
Source: Personal research
A. Ariza-Montes et al.
10 Social Entrepreneurship and Social Entrepreneurs… 167

10.4.3 Cultural Clusters of Countries

According to Northouse (2012), culture can be defined as the learned beliefs, values,
rules, norms, symbols, and traditions that are common to a group of people. The
hypothesis of our study is that cultural context has an influence over social entrepre-
neurship and the characteristics of social entrepreneurs. To test it, we must choose
at least two cultural contexts.
To make this selection, taking two cultural contexts that are excessively different
from one another can render the study valueless, because few conclusios could be
drawn. Conversely, if the contexts are too culturally similar, there would be diffi-
culty justifying any divergences that emerged. In our study, we will confront the
following two cultural contexts, which are linked by both belonging to the EU but
that also significantly differ from each other: On one hand, the Latin European con-
text, which generally includes the countries surrounding the Mediterranean Sea, and
on the other hand, the Northern European context, which is commonly understood
to comprise the Germanic and Nordic countries. This selection has been made with
success in other studies in the field (Fernández, Liñán, & Santos, 2009)
To determine the countries that will be actually considered during the analysis,
we will follow the classification of countries developed in the framework of the
“Global Leadership and Organizational Behavior Effectiveness” (GLOBE) Research
Program (House, Hanges, Javidan, Dorfman, & Gupta, 2004). The GLOBE study
was conceived in 1991 by Professor Robert J. House of the Wharton School of
Business at the University of Pennsylvania.
Although the GLOBE study was initiated to investigate how culture is related to
leader behavior and effectiveness, in recent years, its results have been used to com-
pare cultures in terms of their values and practices, related both to business and
other affairs (e.g., Gupta, MacMillan, & Surie, 2004; De Hoogh et al., 2005;
Maseland & Van Hoorn, 2009; Zhao, Li, & Rauch, 2012).
The GLOBE study is a suitable instrument to allow these comparisons. It has
established nine cultural dimensions that make it possible to capture the similarities
and/or differences in norms, values, beliefs and practices among societies. The com-
bination of these nine dimensions allows the placement of a total of 62 societies into
ten culture clusters, as shown in Fig. 10.2.
According to the GLOBE methodology, cultural similarity is greatest among
societies that constitute a cluster, and cultural difference increases with the distance
between clusters. For example, the Sub-Sahara cluster is most dissimilar from the
Latin America cluster, while Confucian Asia and Southern Asia are the most
similar.
For the scope of our study, we have chosen two clusters of countries following
the GLOBE classification:
• The Latin European Cluster, which includes the countries surrounding the
Mediterranean Sea. This cluster comprises the unflatteringly named PIGS
168 A. Ariza-Montes et al.

Fig. 10.2 Cultural clusters according to GLOBE study. Source: GLOBE study (House et al.,
2004)

countries, composed of Portugal, Italy, Greece and Spain. These countries have
suffered the greatest effects of the crisis, and the high levels of their public debt
have pushed their governments to abandon such public programs as healthcare,
education, development cooperation and social integration, among others. The
relative abandonment of these programs has threatened the welfare states in
these countries, increasing the risk of the social exclusion of their citizens.
• The Northern European Cluster, which includes Nordic countries (Denmark,
Finland, Sweden) and Germanic countries (Germany, Switzerland, Austria and
the Netherlands). These countries are the most developed within the EU, and
they have managed the financial crisis with more autonomy. Their relative success
has allowed the guarantee of the welfare state, which in turn has allowed their
citizens to maintain the levels of security and integration that were common to
the entire EU only a few years ago.
10 Social Entrepreneurship and Social Entrepreneurs… 169

10.5 Methodology and Results

10.5.1 Does Cultural Context Have an Influence on Social

Entrepreneurship Activities?

In hypothesis 1, we proposed that cultural context could have a greater influence

over the prevalence of social entrepreneurship activities. To test this hypothesis, we
will compare Latin European Cluster (LEC) countries and Northern European
Cluster (NEC) countries in two aspects: the percentage of business entrepreneurship
activities among total interviewees and the percentage of social entrepreneurship
activities among total business activities. The results can be found in Table 10.2,
which is ordered according to the percentage of social entrepreneurship activities.
We can draw two conclusions from the results presented in Table 10.2:
• In the overall Eurobarometer sample, 26.69 % of the interviewees can be
considered entrepreneurs. Taking into account only the LEC and NEC clusters,
this mean drops to 25.07 %. The reason for this drop is that countries such as the
United States of America (USA) and Korea show a significantly higher level of
entrepreneurship than most countries worldwide.
• If we analyze the percentage of business entrepreneurship activities in LEC and
NEC countries, we can observe that there are no significant differences in terms
of overall business entrepreneurship: 25.05 % of the interviewees in LEC

Table 10.2 Data on business and social entrepreneurship

% Business % Social
Inter- Entre- entre- Social entre- entre-
Country viewees preneurs preneurship preneurs preneurship
Portugal 1,000 219 21.90 86 39.27
Mean LEC 4,004 1,003 25.05 353 35.19
Greece 1,000 335 33.50 117 34.93
Italy 1,003 185 18.44 63 34.05
Spain 1,001 264 26.37 87 32.95
Eurobarometer 42,080 11,232 26.69 3,478 30.97
Mean 1,001 251 25.07 59 23.57
LEC + NEC
Austria 1,000 236 23.60 55 23.31
Switzerland 1,005 266 26.47 54 20.30
The Netherlands 1,003 298 29.71 60 20.13
Mean NEC 7,010 1,758 25.08 299 17.01
Denmark 1,001 255 25.47 43 16.86
Sweden 1,000 242 24.20 38 15.70
Germany 1,001 208 20.78 28 13.46
Finland 1,000 253 25.30 21 8.30
Source: Personal research based on Eurobarometer 2012
170 A. Ariza-Montes et al.

countries can be deemed business entrepreneurs, while 25.08 % in NEC

countries can be deemed business entrepreneurs.
• If we now consider the percentage of social entrepreneurship in the overall
Eurobarometer, 30.97 % of business entrepreneurship activities can be deemed
social according to the approach adopted as the methodological framework in
this study. Further examination this ratio shows significant oscillations depending
on the cultural context. In fact, the ratio of social entrepreneurship in LEC
countries (35.19 %) is more than double the ratio in NEC countries (17.01 %).
These results seem to confirm hypothesis 1—that cultural contexts have a greater
influence over the prevalence of social entrepreneurship than over the prevalence of
entrepreneurial activities in general.
However, this difference could be explained through indirect reasons, the most
obvious being the differences in the Human Development Index (HDI), arguing that
social entrepreneurship will arise in those contexts with more social needs.
To discard this idea, we need further information about the HDI in each of the
considered clusters.
On one hand, 35.19 % of LEC entrepreneurs can be considered social, and the
mean HDI in these four countries is 0.854. On the other hand, only 17.01 % of NEC
entrepreneurs can be considered social, and the mean HDI in these seven countries
is 0.899.
These results suggest that there is some correlation between HDI and the
percentage of social entrepreneurship.
However, if we introduce a new group of countries to enrich the analysis, the
conclusions differ significantly. For example, if we consider adding the Baltic coun-
tries (Estonia, Latvia and Lithuania), the USA and Korea, we find that there is no
correlation between HDI and the percentage of social entrepreneurship; while
40.81 % of entrepreneurs in the USA and Korea can be deemed social, only 18.6 %
of Baltic entrepreneurs start business to address social or environmental needs.
However, the HDI levels of these groups of countries differ even more, although in
the opposite sense: the USA and Korea present an HDI of 0.903, and the Baltic
countries of only 0.828.
Consequently, we can confirm hypothesis 1, that cultural context has a signifi-
cant influence over the number of social entrepreneurship activities beyond its
influence on overall business entrepreneurship or the influence or other related
dimensions, such as Human Development, on the country.

10.5.2 Does Cultural Context Influence the Characteristics

of Social Entrepreneurs?

According to the data, there appears to be a higher correlation between the number
of social entrepreneurship activities and the cultural context in which these activi-
ties take place. While some contexts promote the appearance of more social entre-
preneurship activity, others seem to be hindering it.
10 Social Entrepreneurship and Social Entrepreneurs… 171

The question now is whether these cultural contexts also influence the charac-
teristics of social entrepreneurs? In other words, do social entrepreneurs have the
same characteristics in both contexts? Are the contextual factors the only ones pro-
moting or hindering the social approach to entrepreneurship? Or do they present
different constituent variables in terms of training, opinions, risk aversion and so
on? These are the precise questions we posed in hypothesis 2.
To answer these questions, the two profiles of social entrepreneurs in the LEC
and NEC clusters have been studied separately (Table 10.3). A t-test for equality of
means in independent samples has been applied to probe the statistical significance
of the differences between the profiles. Because the samples are independent, the
application of the Levene test was necessary to evaluate the similarity or difference
of variances.
Regarding the group of variables related to personal characteristics, the most
distinguishing factors between the two groups are the ages and the locations of
social entrepreneurs. LEC entrepreneurs are 8.8 years younger than NEC ones, and
the former are significantly more located in urban areas (75.07 %) than the latter
(54.52 %). This combination of values for these variables fits with previous litera-
ture on the topic. Many authors highlight that social entrepreneurs are more likely
to be younger and live in large cities (Harding, 2006; Van Ryzin, Grossman,
DiPadova-Stocks, & Bergrud, 2009).
The differences between LEC and NEC social entrepreneurs’ personal character-
istics can be partly explained by their historic migratory flows. The internal migra-
tion from rural areas into urban areas occurred later in LEC countries, which in the
past few years have experienced an influx of young people into urban areas from
rural areas attracted to better employment opportunities (European Environment
Agency, 2007). This tendency has resulted in an increase in the average age of the
population in rural areas, which could explain the significant variances in the demo-
graphic profiles of social entrepreneurs in both contexts.
Significant differences were also observed in the characteristics related to
training. Only 29 % of LEC social entrepreneurs received any specific training in
entrepreneurship during their school or university period, compared with 41 % of
NEC ones. This difference could be due to differences in the availability of these
programs, which were more recently included in the curricula in LEC countries
(Achleitner, Kaserer, Jarchow, & Wilson, 2007). This finding is relevant and coun-
terintuitive because specific education has traditionally been considered a strong
predictor of social entrepreneurial activity (Harding, 2006). However, the finding
could be explained by the fact that entrepreneurship training in the EU is still in its
infancy. As Wilson (2008) argues, entrepreneurship education is still trying to find
its home in Europe. Even if training activities are taking place across Europe, entre-
preneurial efforts are often driven by external factors rather than the education sys-
tem itself.
With features related to risk aversion, the differences between the two groups are
accentuated. LEC social entrepreneurs are more likely to be reactive to external
incentives (such as inheritance or the acquisition of an already-existing business)
than NEC social entrepreneurs (54–43 %). In other words, 57 % of NEC social
entrepreneurs are proactive in starting a new business when an opportunity arises,
Table 10.3 Descriptive statistics and T-test for equality of means
Social entrepreneurs of
LEC NEC Levene test of equality
countries countries of variances T-statistics for equality of means
Sig. Mean
Variable Mean S.D. Mean S.D. Variances F Sig. t DF (bilateral) difference
Personal D1 47.45 13.71 56.25 15.184 Unequal var. 4.261 0.039 −7.709 606.738 0.000a −8.801
characteristics D2 0.53 0.5 0.49 0.501 Equal var. 0.869 0.352 1.127 650 0.260 (n.s.) 0.044
D13 0.75 0.431 0.54 0.499 Unequal var. 95.222 0.000 5.723 590.969 0.000a 0.211
D7_1 0.37 0.484 0.38 0.486 Equal var. 0.128 0.721 −0.179 650 0.858 (n.s.) −0.007
D7_2 0.21 0.41 0.22 0.415 Equal var. 0.260 0.610 −0.255 650 0.799 (n.s.) −0.008
Training Q10 0.29 0.492 0.41 0.513 Unequal var. 16.480 0.000 −2.950 623.310 0.003a −0.117
Q11_1 2.76 1.241 2.86 1.182 Equal var. 3.681 0.055 −1.022 650 0.307 (n.s.) −0.097
Q11_2 2.63 1.238 2.73 1.192 Unequal var. 3.946 0.047 −0.956 639.456 0.339 (n.s.) −0.091
Q11_3 2.48 1.277 2.29 1.187 Unequal var. 10.672 0.001 1.973 644.426 0.049a 0.191
Q11_4 2.72 1.281 2.7 1.157 Unequal var. 11.058 0.001 0.185 647.311 0.853 (n.s.) 0.018
Risk aversion Q16 0.46 0.499 0.57 0.496 Equal var. 1.954 0.163 −2.825 608 0.005a −0.114
Q15_1 2.97 1.219 2.59 1.321 Unequal var. 10.640 0.001 3.760 612.790 0.000a 0.377
Q15_2 3.78 0.548 3.73 0.687 Unequal var. 13.122 0.000 1.061 566.421 0.289 (n.s.) 0.052
Q15_3 3.08 1.183 3.28 1.021 Unequal var. 8.159 0.004 −2.369 649.783 0.018a −0.204
Q15_4 3.61 0.795 3.43 0.922 Unequal var. 15.669 0.000 2.618 592.491 0.009a 0.178
Q15_5 3.39 0.93 3.03 1.141 Unequal var. 12.654 0.000 4.450 573.872 0.000a 0.367
Reasons for Q20_1 0.35 0.476 0.15 0.361 Unequal var. 147.628 0.000 5.837 642.527 0.000a 0.192
becoming an Q17 0.09 0.593 0.13 0.705 Unequal var. 19.236 0.000 −0.717 584.888 0.474 (n.s.) −0.037
entrepreneur Q21_1 3.71 0.653 3.23 1.022 Unequal var. 76.496 0.000 7.047 490.213 0.000a 0.483
Q21_2 3.45 0.979 3 1.128 Unequal var. 6.060 0.014 5.322 594.674 0.000a 0.444
Q21_3 3.19 1.12 2.47 1.283 Unequal var. 17.039 0.000 7.516 596.520 0.000a 0.715
Q21_4 2.65 1.33 2.5 1.241 Unequal var. 5.995 0.015 1.431 643.956 0.153 (n.s.) 0.144
Q21_5 3.58 0.815 3.35 0.927 Unequal var. 10.903 0.001 3.420 598.827 0.001a 0.236
Q18_1 0.35 0.478 0.35 0.478 Equal var. 0.000 0.996 0.003 650 0.998 (n.s.) 0.000
Q18_2 0.2 0.397 0.16 0.368 Unequal var. 5.439 0.020 1.165 644.839 0.244 (n.s.) 0.035
Q18_3 0.37 0.485 0.27 0.443 Unequal var. 34.168 0.000 2.925 646.099 0.004a 0.106
Q18_4 0.1 0.295 0.22 0.413 Unequal var. 80.1 0.000 −4.233 528.162 0.000a −0.121
Q18_5 0.14 0.352 0.14 0.351 Equal var. 0.002 0.962 0.024 650 0.981 (n.s.) 0.001
Q18_6 0.43 0.496 0.3 0.461 Unequal var. 41.485 0.000 3.366 644.391 0.001a 0.126
Personal Q12_1 3.2 0.97 3.39 0.826 Unequal var. 6.653 0.010 −2.710 649.979 0.007a −0.191
opinions Q12_2 2.62 1.24 2.17 1.109 Unequal var. 19.003 0.000 4.889 648.079 0.000a 0.450
Q12_3 3.51 0.809 3.64 0.638 Unequal var. 13.643 0.000 −2.264 646.810 0.024a −0.128
Q12_4 2.84 1.185 2.66 1.197 Equal var. 0.038 0.845 1.980 650 0.048a 0.185
Q19_1 1.5 0.72 1.39 0.605 Unequal var. 12.603 0.000 2.078 649.964 0.038a 0.108
Source: Personal research
n.s. not significant
a
Significant difference to 95 % of confidence
174 A. Ariza-Montes et al.

which occurs with only 46 % of LEC entrepreneurs. This contrast could be attributed
to the predominance of rural entrepreneurs in NEC countries, who tend to be more
proactive than urban ones (Harding, 2006). However, this lower risk aversion of
NEC social entrepreneurs fits with the patterns of business entrepreneurs (Fernández
et al., 2009).
In any case, it is worth noting that these figures are lower than in other contexts.
In fact, Europeans have traditionally been considered to be more risk-averse than
North Americans (Grilo & Thurik, 2008). This risk aversion is attributed to a chronic
failure to encourage entrepreneurial ambition in the EU, which is even more accen-
tuated in Southern European countries (Liñán & Fernandez-Serrano, 2014).
Linking risk aversion with reasons for becoming an entrepreneur, it is notewor-
thy how LEC social entrepreneurs express a significantly greater preference for
entrepreneurial intention (35 %) than NEC ones (15 %). Because this question
concerns opinions, it does not reflect real entrepreneurial activities but rather the
propensity to initiate entrepreneurial activities.
We can link this willingness to become an entrepreneur with the comparatively
fewer options of Southern Europeans, who are more affected by the crisis and its
consequences. In fact, when asked about the most important reason for undertaking
a new business, LEC social entrepreneurs attribute significantly higher importance
to having a contact with a suitable business partner, while NEC social entrepreneurs
highlight having a promising business idea.
Additionally, concerning barriers to entrepreneurship, LEC social entrepreneurs
attribute more importance than NEC entrepreneurs to the lack of available financial
support, the complex administrative procedures and the difficulty in obtaining suf-
ficient information on how to start a business. However, the main fear of entrepreneurs
in LEC countries is the possibility of bankruptcy (43 %) and the risk of losing their
property or home (37 %), in front of the main risk of NEC ones, the need to devote
too much energy or time to entrepreneurship action. These facts also indicate the
differences in economic, financial and administrative terms, more favorable in NEC
than in LEC countries.
Finally, personal opinions also highlight these cultural differences; while LEC
social entrepreneurs themselves note that entrepreneurs only think about their own
pockets and take advantage of other people’s work, NEC entrepreneurs note the
creation of social value by entrepreneurs, who are viewed as creators of jobs and
new products and services that benefit the entire community. This difference of
opinion clearly indicates a difference in perception that is based on the cultural dif-
ferences identified above.

10.6 Conclusions and Future Lines of Research

In recent years, social entrepreneurship has become a trending topic around the
world. Social entrepreneurs are already playing a central role in different contexts,
promoting societal changes through innovation, social value creation and
10 Social Entrepreneurship and Social Entrepreneurs… 175

commitment to local development. In this chapter, we have analyzed how different

cultural contexts influence both the emergence of social entrepreneurship activities
and the characteristics of social entrepreneurs themselves. These findings help
describe social entrepreneurship and social entrepreneurs, enriching the knowledge
about the same by incorporating a new dimension of analysis. The identification of
the effects of cultural context in this area could help identify, understand and per-
haps cultivate higher levels of social entrepreneurial activity in different contexts.
The findings of the study introduce new questions to the field of study. What
characteristics of cultural contexts explain the divergence on the level and charac-
teristics of social entrepreneurship activity? If background is so important, is it
possible to replicate practices and transfer initiatives across different contexts? And
why does social entrepreneurship differ among countries? Do differences occur
according to countries’ level of development? Their traditional culture? Or is there
a geographical distribution where higher levels of social entrepreneurial activity
emerge? In essence, what explains the emergence of these cultural clusters? These
and other questions will be addressed in future research.

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Chapter 11
Understanding Entrepreneurship Through
the Enrichment of Institutional Theory
by Ethics

Alexis J. Bañón-Gomis

Abstract This work offers a deeper evaluation of entrepreneurship through

institutional theory understanding, in which the technical-economic sphere is not
only complemented by a social perspective, but also structured and governed in an
ethical manner. Based on a hermeneutic approach, it argues there are primarily three
distinct logics or rationalities (technical-economic, psycho-social and ethical-
anthropological) which are nonetheless compatible and united in one sole agent and
in one unique human action. This proposal is an essential complement to institu-
tional theory findings related to entrepreneurship, allowing a sound dialog between
technical, social and ethical aspects of entrepreneurship where profit is not excluded,
but, rather, considered as a means for achieving human and social ends—thereby
radically eliminating the purely instrumental perspective of the human being. The
review of the category of entrepreneurship, based on institutional theories, evi-
dences the need to incorporate anthropology and ethics which is explicitly done
through an open dialogue that contemplates and integrates all of them.

11.1 Introduction

Institutional theory has been approached from several perspectives. Veblen aimed to
establish institutional cultural bases from a cultural perspective. Commons tried to
legislatively transform the institutional economy through a program for social
reforms focused on a legislative perspective. Clark sought for harmony between busi-
ness and social efficiency based on a social perspective. Mitchell tried objectively to
deal with pecuniary institutions and fluctuation in business and economy from a

A.J. Bañón-Gomis (*)

IECO, Valencia, Spain
Department of Business Organisation, Universitat Politècnica de València,
Camino de Vera, s/n, Valencia 46022, Valencia, Spain
e-mail: albaogo@upvnet.upv.es

© Springer International Publishing Switzerland 2015 179

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_11
180 A.J. Bañón-Gomis

quantitative and statistical perspective. Ayres and his technological determinism

believed that technology is the main determinant of human behavior and of social
structure. Hobson aimed to reform society based on an ethical perspective (Ramos-
Gorostiza, 2013; Urbano-Pulido, Diaz-Casero, & Hernández Mogollón, 2007).
All these perspectives have enriched entrepreneurship understanding and its
viewpoints, complementing the economic perspective with other perspectives such
as psychology and sociology. As such, entrepreneurship research is no longer based
on the attributes of particular people capable of explaining the phenomenon of
entrepreneurship (Veciana, 1999, 2007). There is still another aspect which remains,
one consisting of integrating all of the above mentioned perspectives.
This chapter aims to integrate all these perspectives together to respond to a
unique reality. The challenge is to distinguish the existence of different dimensions
or perspectives from which to approach reality with the existence of multiple reali-
ties associated with each of the perspectives. The aim is to aggregate the above-
mentioned approaches rooted in a humanistic perspective of entrepreneurship based
on human action. We will associate in one reality the economic logic with the above
logics—social, psychological and ethical—based on a human-action perspective. It
is a challenging exercise of integration in a context in which the technical-economic
sphere is evidently the preponderant part and parcel of human activity.
The purpose of this chapter is to complement this perspective with the help of
anthropology and ethics in order to complement the sociological understanding of a
person with an ethical one that admits and respects its individuality as well. The
study is structured in three main parts. Firstly, it explains the concept of entrepre-
neurship and specifically as based on the institutional theory perspective. Secondly,
the paper proposes a notion of entrepreneurship complementary to previous aca-
demic perspectives in business literature by explicitly considering them as “human
acts” that are neither merely mechanical nor only affective, but, rather, complex,
dynamic interpersonal actions with technical, affective, social and moral dimen-
sions. Thirdly, a concept of humanistic entrepreneurship capable of offering an in-
depth explanation of the content and evolution of entrepreneurship between
entrepreneurs and their social reality is presented. Fourthly, it concludes by indicat-
ing the advantages of this new category of entrepreneurship for theoreticians and
practitioners where some suggestions, limitations and implications will be stated.

11.2 Entrepreneurship and the Contribution of Institutional

Theory to Its Understanding

An entrepreneur is a person who is alert to business opportunities that have not been
identified by others. Based on this concept of entrepreneur, research on entrepre-
neurship has been conducted. It has been approached from psychological (Carsrud
& Johnson, 1989; Collins, Moore, & Unwalla, 1964) and economic points of view
(Audretsch & Keilbach, 2004; Audretsch & Thurik, 2001; Parker, 2004; Wennekers,
Van Stel, Thurik, & Reynolds, 2005). Entrepreneurship has also been embedded in
11 Understanding Entrepreneurship Through the Enrichment… 181

a social context (Aldrich & Zimmer, 1986). Although there are studies related to
public policy, the influence of social and cultural factors on enterprise development
remains understudied (Thornton, Ribeiro-Soriano, & Urbano, 2011, p. 106).
Originally, entrepreneurship research was carried out based on a historical per-
spective—old entrepreneurship research. Later, public policy and support programs
prevail—new entrepreneurship research. The old approach mostly focuses on socio-
cultural effects, while the new approach essentially refers to the development, emer-
gence or transition of entrepreneurship on economies. The first mainly uses
qualitative methodology while the latter “is much more diversified regarding both
research topics and methodology and has two additional characteristics: (a) it refers
mainly to developing, emerging or transition economies and (b) research on public
policy and support programs prevails” (Veciana & Urbano, 2008, p. 373).
Regardless, focusing on the entrepreneurial process we can notice that every-
thing starts with the perception or discovery of an opportunity (Shane, 2003). Based
on opportunities, we can distinguish three key questions in entrepreneurship
research. Firstly, one is related to individual cognition to detect opportunities
(Gaglio & Katz, 2001). Secondly, another one deals with the specific anthropology
of the actor to focus on the decision to act upon an opportunity as opportunities lack
agency (Shane, 2003) and agency is the privilege of individuals (Veciana & Urbano,
2008). Thirdly, if we analyze the process of becoming an entrepreneur, we observe
that opportunities are subjective because their usefulness depends on the way entre-
preneurs interpret them (Korsgaard, 2007).
In this context, the institutional theory contributions to entrepreneurship are
related to their conception of institutions. This theory conceives institutions as com-
mon and predictable social behavior guidelines that generally share habits of
thoughts and action (Veblen, 1961/1898). Institutions have been human beings’ his-
torical devices to reduce uncertainty and create order in exchange (Veciana &
Urbano, 2008). This institutional understanding does not deny that sheer force
backs authority. Instead, it considers that authority is most importantly based on
custom or on a cluster of mores (Ayres, 1952). Following this approach, institution
can be considered as “a usage which has become axiomatic and indispensable by
habituation and general acceptance” (Veblen, 1967, p. 101). In other words, institu-
tions “are the rules of the game in a society that function as constraints and oppor-
tunities shaping human interaction” (North, 1990, p. 3). Institutions are structured
political, economic and social interaction based on human device constraints trans-
ported by various carriers—cultures, structures, and routines—and operating at
multiple levels of jurisdiction (Veciana & Urbano, 2008). They can be seen as “cog-
nitive, normative and regulative structures and activities that provide stability and
meaning in social behaviour” (Scott, 1995, p. 33).
The enrichment of the institutional approach can be noted for its entrepreneur-
ship human understanding of evolution, which was originally based on homo indi-
vidualis and homo oeconomicus conceptions. The homo individualis conception
conceived of entrepreneurs as individual agents not related to their context, that is,
to society. According to the homo oeconomicus conception, entrepreneurs are
mainly ruled by an economic logic focused on optimizing resources effectively and
182 A.J. Bañón-Gomis

efficiently. The inclusion of institutions as clusters of moral beliefs that configure

power (Veciana & Urbano, 2008, p. 366), as a kind of habitual behaviour broadly
spread and accepted incorporates the homo socialis understanding. The entrepre-
neur is no longer conceived of as a “Lone Wolf” (homo lupus) recognizing “a stable
structure for human interaction” (Thornton et al., 2011, p. 110). Institutions provide
a set of rules that articulate and organize the economic, social and political interac-
tions between individuals and social groups with consequences for entrepreneur-
ship, business activity and economic development (Veciana & Urbano, 2008).
In sum, entrepreneurship has evolved from the seventies’ and eighties’ perspec-
tive based on psychological traits—mainly understood as a homo individualis and a
homo oeconomicus conception—to the nineties and on an approach based on a
socio-cultural/institutional role offering a multidimensional understanding with,
respectively, a homo socialis and a homo politicus. This complementation has
enriched its human understanding, introducing new dimensions to the concept of
entrepreneurship. However, a problem yet remains: there is no unique understand-
ing because this enrichment has not been carried out in an integrative way. Our next
step is to understand why this happens, attempting to discover a way to integrate all
these perspectives.

11.3 Searching for the Missing Dimension to Achieve

an Integral homo Understanding

In the late nineteenth century and the early twentieth, entrepreneurship was associ-
ated with a conception where means were submitted to the achievement of the ideal
confluence between efficacy and efficiency. Entrepreneurs were valued according to
an economic rationality based on a homo oeconomicus conception. This economic
interpretation of entrepreneurship hides a mechanistic understanding of action pri-
marily conceived of as a rational syllogistic response. It was based on money as the
sole motivation of individuals. It was an entrepreneurship approach based on a
homo oeconomicus model that conceptualized entrepreneurs as resource optimizers
on the basis of an effectiveness and efficacy prism. It could be said that its locus had
a techno-economic base situated at the confluence of an action considering simul-
taneously efficiency and efficacy.
In that same period, institutional theory began in the U.S. It was a time influ-
enced by Marxism, German historicists, psychology and Darwinist evolutionism.
During that period, the economist Thorstein Veblen provided much of the intellec-
tual inspiration for institutionalism to mostly base its approach on cultural anthro-
pology. According to Veblen, the very field of economics is human action in all its
aspects, not only the structure and organization of economic life but, also, all social
behavior (Veciana & Urbano, 2008). Veblen (1961/1898) was highly critical of
underlying economic assumptions regarding individual behavior and the homo
oeconomicus because much behavior was governed by habit and convention. Later,
11 Understanding Entrepreneurship Through the Enrichment… 183

Wesley Mitchell and John R. Commons got involved in the early development of
institutionalism as a definite movement (Rutherford, 2000).
Institutional theory introduced a homo socialis approach emphasizing people and
their interaction as a necessary element to contemplate. It could be said that its locus
had a social anthropological base situated at the confluence of an action considering
simultaneously social anthropology and sociology. The introduction of the homo socia-
lis conception and a social anthropological sphere produced by institutional theory
together with the previous techno-economic sphere—with a concept of effectiveness
and efficiency—incorporates an entrepreneurship understanding that now contemplates
the importance of the human relationship. Therefore, its locus, its entrepreneurship
understanding, could be situated at the confluence of an action taking into consider-
ation, at the same time, an economic perspective—efficiency and effectiveness—along
with a relational perspective—anthropological and sociological constraints—.
Let us call this understanding a homo socio-oeconomicus approach to entrepre-
neurship, which is a logic based on the confluence of techno-economic and social
needs as bases to explain entrepreneurship. This conjugation constitutes an improve-
ment for entrepreneurship recognizing realities that a mere techno-economic sphere
contemplated in isolation. Despite its improvements, this approach is still incom-
plete and, therefore, insufficient. “In effect, we have professed that business is
reducible to a kind of physics in which even if individual managers do play a role,
it can safely be taken as determined by the economic, social, and psychological laws
that inevitably shapes peoples’ actions.” (Ghoshal, 2005, p. 77). Apparently, we
misunderstood the role of business and economy, making them ends for themselves
and not as means for human beings. The review of this distortion can be the clue for
a new entrepreneurship understanding, placing the human being in its rightful place,
that is, as the protagonist of these activities in their integral perspective.
If we quickly review the dimensions or components of the institutional entrepre-
neurship approach, we can notice three dimensions: regulatory, normative, and cog-
nitive. The regulatory component has an external nature of legitimacy based on
conformity to rules. The other two have an internal and external legitimacy, the
normative component is based on conformity to moral bases (social) and the cogni-
tive component is founded on conformity to common frames of reference, or to defi-
nitions of the situation (Scott, 1995, p. 47). The regulatory dimension aims to
promote certain types of behaviour and restrict others through rule-setting, monitor-
ing and sanctioning formalizing laws, regulations, rules and government policies.
The normative dimension is focused on agglutinating socially shared and carried
understandings about human nature and human behaviour through the definition of
goals or objectives and the designation of the appropriate ways to pursue them
based on social norms, social values, social beliefs and social assumptions. The
cognitive dimension is oriented to reflect the cognitive structures and social knowl-
edge shared by the people in a given country or region through the selection and
interpretation of information to create cognitive structures materialized in common
cognitive programs that result in rules that constitute the nature of reality and/or
frames through which meaning is made (Markus & Zajonc, 1985).
184 A.J. Bañón-Gomis

It seems that while the development of entrepreneurship theories had been taking
place, humans have not been its protagonist. In this development, humans were not
supporting actors of these changes. The institutional entrepreneurship approach is
based on persons, but not necessarily understood as ends, but as means, or second-
ary actors, conformers of sociological logic.
This understanding evidences a lack of an individual, ethical, anthropological
rationale in entrepreneurship. Human action cannot only be based on a sociological
perspective because a correct understanding of human beings also has to include its
individuality through anthropology—the science that tries to understand human
beings—and materialized in their actions through the explicit inclusion of ethics, as
the science studying human action as good or bad for persons.
Together with the two homos above mentioned—homo oeconomicus and homo
socialis—there are many others (See Note 1) included in one of the following human
potentialities or main dimensions: corporal, technical (or knowledge), affective and
moral (or coming from will) (Polo & Llano, 1997). If we focus on the last three dimen-
sions (the first is beyond the scope of this study) we can relate technical, affective and
moral dimensions to the different entrepreneurship understandings (economy—homo
economicus—and sociology and social anthropology—homo socialis—) to extract
interesting conclusions by endowing each of these homos with an extended content.
As a result, we can associate the homo oeconomicus conception with the techni-
cal anthropological dimension; and the homo socialis conception with the social
affective anthropological dimension. Afterwards, we can analyze the fusion of both
conceptions in one: homo socio-oeconomicus, as a conceptual effort towards an
integral entrepreneurship understanding. This approach helps us to go from indeter-
minacy to determinacy. This evolution also complements the exogenous determina-
tion of preferences with an endogenous one based on “mental models”. In light of
this, they could go from simplifying assumptions to behavioral realism and norm-
guided behaviours and from diachronic analysis to synchronic ones where ideologi-
cal convictions are also included. As a consequence, they overcame an exclusive
rational choice complementing it (Jacoby, 1990; North, 1990). However, why is the
study of entrepreneurship mainly focused on these perspectives? Is this approach
missing any important dimensions?
Although these improvements consider the idea of unity, they lack an important
anthropological dimension, free-will. Free will is a reality that has to be included in
this logic, which is a study by the logic of ethics. We are not insinuating that ethics
is not present in the institutional approach to entrepreneurship. In fact, John Hobson
in Europe as well as many American institutionalists showed a strong concern for
the social problems of their times (Seligman, 1967). Authors like Hobson had strong
ethical approaches, but they were mainly focused on a social, ethical perspective
and not to a great extent on an individual one. The question is: what are the conse-
quences of explicitly not considering the individual, ethical perspective?
Thus far, we have reviewed entrepreneurship understandings that either consider a
techno-economic sphere—focused on being effective and efficient—and/or a social-
anthropological one—focused on relational constraints—. Such understandings may
11 Understanding Entrepreneurship Through the Enrichment… 185

include a social, ethical approach, but lack of an individual, ethical dimension—the

one that considers free will. In this chapter, we argue the need to explicitly consider
entrepreneurship as “human acts,” not merely mechanical or simply social-affective
reactions, but, rather, complex dynamic interpersonal actions with technical, affective
and ethical dimensions. This humanistic proposal enriches previous entrepreneurship
conceptions, complementing the notion of human beings and analyzing entrepreneurs
not as means of the social system, or of the economy, but as ends in themselves.

11.4 Re-thinking the Dynamism of Entrepreneurship

Through a Humanistic Approach

Although institutional theory has included several perspectives to entrepreneurship

such as sociological, psychological, socio-anthropological and socio-ethical, it has
ascertained limitations dismissing the explicit presence of free will in the agent. To
overcome these limitations, there is a need for a reciprocal enrichment and coopera-
tion of sciences in order to better understand human realities. This challenge does not
consist of a simple addition of the contributions of each discipline. Instead, an orderly
interdisciplinary exchange is needed. The purpose is to offer an integral and open
understanding of entrepreneurship departing from and recognizing previous findings
of institutional theory and attempting to respond to their challenges. For example,
Veblen (1974) emphasized the need to distance institutional theory from utilitarian
theories, to search for other motivation sources different from motivations based on
necessity, and to introduce good reputation or social esteem, and not only consum-
erism or ostensible leisure as symbols of pecuniary success. Veblen (1961/1898)
clearly distinguishes between the physical and the financial perspective; between
producing goods and earning money; and between production—associated with
engineering and technical approaches—and speculation—associated with commer-
cial and financial approaches. These challenges proposed by Veblen are based on an
evolutionary economy overcoming the economy of the equilibrium of neoclassical
propositions. According to this approach, the economic agent understood as
homo oeconomicus is categorized as naïve; institutions are more than mere
restrictors of the agent’s behaviors; and economy has to be understood as a
social science and not just as the science that studies value and interchange
(Ramos-Gorostiza, 2013).
We propose an entrepreneurship conception essentially configured by three main
dimensions: technical-economic, relational and ethical-anthropological. Its locus,
its entrepreneurship understanding, is situated at the confluence of an action con-
sidering at the same time a technical-economic understanding of entrepreneurship—
efficiency and effectiveness—with its relational understanding—anthropological,
psychological and sociological constraints—but always submitted to an ethical-
anthropological understanding of entrepreneurship as an individual—anthropology
and ethics—, see Fig. 11.1.
186 A.J. Bañón-Gomis

Fig. 11.1 Humanistic entrepreneurship approach (See Note 2)

The confluence of the three different dimensions (circles) of Fig. 11.1 symbolizes
the core of this integral entrepreneurship understanding that we name humanistic
entrepreneurship. According to this conception, the actual general understanding
of entrepreneurship based on institutional theory is situated at the confluence of the
economic and relational spheres without an explicit inclusion of an ethical-anthro-
pological sphere that contemplates the person in his or her singularity. Such an
oversight prevents the other two dimensions (circles) being complemented with a
more complete understanding of the human being—based on anthropology—and
humans’ actions—based on ethics—not only as based on sociology, but also
contemplating their singularity. It is an integral rationale that demands the presence
of these three dimensions.
The role of anthropology is to provide “an orderly interdisciplinary exchange”
by always associating persons with their human dignity. The individual anthropo-
logical perspective complements social anthropology by integrating previous entre-
preneurship theories. The complement of the individual anthropological dimension
brings out a fundamental aspect of entrepreneurship: an understanding and an order
between having, making and being. It is from a complete understanding of
entrepreneurship conceived as a human action that one realizes that “between hav-
ing, doing and the being there is a fundamental relationship: the being is at the basis
11 Understanding Entrepreneurship Through the Enrichment… 187

of the doing and the doing of the possessing and not the other way round. I am not
what I possess.” (See Note 3) (Polo & Llano, 1997, p. 67). Anthropology allows a
correct association between having, making and being that derives a sound principle:
being is the foundation of making and having. On the other hand, the inclusion of
an anthropological understanding of the human being (from his/her singularity) also
has several implications for entrepreneurship understanding. This hierarchical-
anthropological principle of action can be formulated as follows: ‘making and hav-
ing are subordinates of being’. We can explain many entrepreneurship decisions,
behaviours and attitudes overcoming approaches exclusively based on economic
rationalities through this principle of action.
The subordination of actions stated in the principle becomes even clearer through
the explicit recognition of free will in all human actions. If being is the foundation
of all actions, there is a free choice prior to making and having because human
actions cannot be determined by them. This is the stage where ethics acquires prom-
inence as the discipline studying free human action as good or bad for human
growth. The object of ethics is to contribute towards acting responsibly, avoiding
any misuse of freedom. The acceptance of the concept of free will in entrepreneur-
ship logic has important consequences. It firstly implies a dynamic understanding of
decision-making that may change through the experience of the entrepreneur.
Secondly, the explicit presence of the freedom of the agent naturally demands the
inclusion of the ethical dimension (not only its social dimension, but also its indi-
vidual one) in the entrepreneurship understanding.
Of course, we are not suggesting the exclusion of approaches based on a
technical-economic understanding of entrepreneurship or their socio-
anthropological, psychological and sociological constraints. As we have already
stated, we also consider the anthropological and ethical sphere to explicitly consider
more dimensions of the entrepreneur as a human being and to also include the logic
of free will in his/her actions. We can now ask ourselves about predictable conse-
quences of adding the proposed integral and humanistic entrepreneurship under-
standing to institutional theory.

11.5 Conclusions, Limitations and Implications

The current understanding of entrepreneurship based on institutional theory has

enriched its concept and stands as a necessary, but insufficient, approach. We argue
the need for a holistic, integral and humanistic synthesis of entrepreneurship under-
standing since any theoretical approach neglecting anthropology and ethics from a
singular approach to the human being is essentially deficient. Our proposal inte-
grates most previous findings by essentially complementing them and opening the
door through anthropology to an explicit recognition of freedom in all human
actions and to the existence of a hierarchical order from which making (the techni-
cal-economic dimension) and having (the psycho-sociological dimension) are
188 A.J. Bañón-Gomis

subordinates of being (ethical-anthropological), deriving in a sound principle: being

is the foundation of making and having. This principle establishes a hierarchical
order from which making and having are subordinates of being.
Recognizing being as the foundation of all actions implies the previous existence
of a free choice to making and having as human actions cannot be determined by
them. Therefore, the importance of ethics is that it prescribes actions and enables
the correct use of freedom. Recognizing an ethical dimension in every entrepreneur-
ship action precisely demands the integration of ethics to deal with the presence of
freedom. Institutional theory does not fully contemplate all the casuistic dealings
with freedom due to its sociological perspective that does not include or does not
explicitly include the singular one. This is why ethics (not just its social-ethics
dimension) must be explicitly introduced as one of the entrepreneurship logics. Any
attempt to forget this need is similar to the approaches of those considering the fight
against drug addiction as an exclusively institutional matter. Institutions are undeni-
ably needed as exogenous suppliers of the required external means, but they are
insufficient. As in the drug addiction case, entrepreneurship is not only an institu-
tional affair—endogenous elements are also important. Entrepreneurship must
explicitly consider free will because accepting the fact that human beings can
potentially act rationally does not necessarily imply a rational result. In many cases,
having means and institutional support is not enough, there are other factors to take
into account.
Obviously, we have not attempted here to develop a complete entrepreneurship
theory. The purpose of this work has been precisely to offer a deeper critical evalu-
ation of entrepreneurship understanding based on institutional theory. Much work
remains to be done, but this previous recognition of the role of ethics and anthropol-
ogy remains as its first step. Significant research also remains to be conducted along
this same path, but the first step proposed here should be taken: in addition to the
technical-economic and the psycho-sociological dimensions, a new humanistic syn-
thesis of entrepreneurship demands the explicit recognition and pre-eminent role of
the anthropological and ethical dimensions of entrepreneurship conceived as a kind
of human action.
Much research can be carried out by associating studies from different fields
with entrepreneurship. We refer here to those that accept the existence of behaviours
that, according to their activities, require cooperation, altruism and/or spontaneous
support without pecuniary reward (to employees) (Smith, Organ, & Near, 1983) or
those that are not enforceable behaviours that can either be innovative (Katz, 1964)
or otherwise (Mowday, Porter, & Steers, 1982).
This chapter provides solid foundations for the development of a humanistic
entrepreneurship understanding. We are aware that we have mainly generated teleo-
logical arguments and not concrete tools for its development. We also admit that
this approach makes any empirical research more difficult. However, our aim has
been to open a critical revision of the institutional theory interpretation of entrepre-
neurship to aid reflection on entrepreneurship, the nature of entrepreneurs, their
motivations and the importance of their possible goals when acting related to their
free will, among others.
11 Understanding Entrepreneurship Through the Enrichment… 189

11.6 Notes

1. As an example, we could state: homo faber—seen as in relation to the extended

phenotype—; homo ludens—seen as in relation to play—; homo bestalis—seen
as in relation to our biological context—; homo mortalis—seen as in relation to
our unique existence in the world—; homo fallibilis—seen as being capable of
fallibility—; homo discens—seen as in constant learning and understanding—;
etc. All these dimensions can be distinguished from each other, but they cannot
be understood separately or by ignoring their interrelations.
2. Translations from Spanish to English have been done by the authors of this paper.
NOTE: The purpose of representing the different logics of entrepreneurship
through figures is done in order to complement the explanation. Figures are not
represented in scale, that is, the sizes of each circle do not necessarily correspond
to their importance. The area of coincidence among the different circles does not
necessarily have a correspondence to their importance.

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Chapter 12
The Importance of a Proactive Culture
of Exporting SMEs: Effect on Export
Performance and Regional Development

Antonio Navarro-García, Ramón Barrera-Barrera,

and Arturo Calvo-Mora Schmidt

Abstract The objective of this paper is to analyze the importance of a proactive

culture of exporting small and medium enterprise-SMEs. We propose relationships
between the characteristics, values, attitudes and perceptions of export managers
and their influence on the strategic behavior, export performance and regional
development. A multi-sector sample of 196 exporting SMEs from was analyzed
using PLS. The results show the influence of certain features of managers -international
experience, language proficiency and specific experience- about export activities on
the configuration of proactive value systems and attitudes toward export activity.
This proactive approach is essential for the company to show a strong export com-
mitment and to reduce the perceived psychic distance. This fact is vital in order to
adapt the marketing-mix strategy to the demand of foreign markets and to achieve
success in international markets.

12.1 Introduction

Adaptations to environment are increasingly more necessary to ensure the survival

of organizations. These adaptations may require complex and innovative decisions.
Some variables can play a key role in determining the strategic behavior and busi-
ness performance, such as the characteristics, values, attitudes and perceptions of
decision makers (Chatterjee & Hambrick, 2011). Given this, there are two
approaches from the managerial point of view. Thus, organizations may show a
conservative stance to maintain the status quo, showing reluctance to changes

A. Navarro-García (*) • R. Barrera-Barrera • A.C.-M. Schmidt

Departamento de Administración de Empresas y Márketing, Facultad de CC.Economicas y
Empresariales—Universidad de Sevilla, Avda.Ramón y Cajal, Sevilla 41018, Spain
e-mail: anavarro@us.es; rbarrera@us.es; schmidt@us.es

© Springer International Publishing Switzerland 2015 191

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3_12
192 A. Navarro-García et al.

and making the traditional dominant logic prevail inside the organization. Or,
conversely, firms may show a proactive position of openness and adaptation.
Overall, the literature shows that the second option is more favorable to adapt orga-
nizations to the environment and to develop a successful strategic behavior (Kor &
Mesko, 2012).
If the previous idea is relevant in the domestic market, it is even more important
in the international arena. This is because international environments are more
dynamic and complex than domestic ones. Consequently, they can create psycho-
logical barriers—psychic distance- impeding the progress of companies in their
internationalization processes. In addition, small and medium enterprises (SMEs)
should promote a proactive culture to overcome these psychological barriers, espe-
cially given their fewer resources and capabilities with respect to large organiza-
tions (Eliasson, Hansson, & Lindvert, 2012). Furthermore, SMEs should adapt
themselves to the environment and promote entrepreneurial strategic behavior in
order to obtain sustainable competitive advantages in international markets and,
therefore, good performance (Ibeh, 2003).
Although export-oriented new ventures and the field of international entrepre-
neurship have received considerable attention by scholars during the last decade
(Oviatt & McDougall, 2005), their potential economic impact has not been suffi-
ciently analysed yet. Recently, Hessels and van Stel (2011) analysed the role of
export-oriented entrepreneurship at aggregated level. Their findings reveal that this
kind of entrepreneurial activity is a relevant driver of economic growth in developed
countries. However, to the best of our knowledge, no studies on this issue have been
carried out at regional level. Despite the increasing impact of globalization, regions
have emerged as the essential and active unit of economic development process
(Scott & Storper, 2003). Regions are influential environments fostering entrepre-
neurship (Feldman, 2001). This is especially true for knowledge-based entrepre-
neurship, since proximity to knowledge sources matters (Audretsch, 1998) and may
influence the process through which opportunities are recognised and exploited
(Shane & Venkataraman, 2000). Moreover, regions as spatial units of observation
differ culturally and economically, and such differences encourage or discourage
people to venture in entrepreneurial activity and compete internationally. Therefore,
the aggregated impact of entrepreneurship in it different dimensions should be mea-
sured at regional level too.
In this context, this work is novel because it jointly addresses managers’ charac-
teristics, values, attitudes, perceptions, strategic behavior and results in the field of
SMEs’ export activities. These variables have been analyzed in previous literature,
but not integrating all of them in the same model (Nadkarni & Barr, 2008). To fill
this important gap is the challenge of this work. Concretely, this study analyzes the
effect a proactive culture -measured through certain features, values, attitudes
(export commitment) and managerial perceptions (psychological distance)- exerts
on SMEs’ entrepreneurial strategic behavior. These behaviors are focused on
the adaptation of the international marketing-mix to the wishes and needs of for-
eign markets and their impact on these firms’ export performance and regional
development.
12 The Importance of a Proactive Culture of Exporting SMEs... 193

In order to achieve these aims, the paper is organized in four parts. Firstly, the
variables studied are defined based on the literature review. The specification of the
theoretical framework of the research leads to the proposition of the conceptual
model and the hypotheses to be tested. Secondly, the research methodology, the
sample information and the statistical tools used to test the hypotheses are described.
Thirdly, the results obtained are presented, from which the main conclusions and
managerial implications are extracted. Finally, the main limitations of the study and
future research are outlined.

12.2 Theoretical Framework

12.2.1 Studied Variables

According to the organizational theory, culture can be defined as “a set of norms and
values widely shared throughout the organization that determines the appropriate
attitudes and behaviors of its members” (O’Reilly & Chatman, 1996). In this research,
the cultural component is studied from the standpoint of values and their impact on
attitudes, perceptions, behaviors and performance of exporting SMEs. The measures
of values are extracted from Schwartz (1992) scale. Those items which reflect a proactive
orientation of managers associated with openness to change and self-transcendence
have been selected according Sousa, Ruzo, and Losada (2010). Therefore, two
second-order dimensions and five factors (Table 12.1) have been collected.
In addition to values, the influence that certain personal characteristics exert on
the value system is studied, according to the Upper Echelons Theory (Hambrick,
2007; Hambrick, Finkelstein, & Mooney, 2005). This is also carried out from
the standpoint of individual managers and associated with a proactive culture in
exporting SMEs. The Upper Echelons Theory highlights the central role of

Table 12.1 Proactive values and their motivations

Dimension Value Motivation to which it responds
Openness to Stimulation Associated with variety, novelty and challenge in life.
change Derives from the need for variety and stimulation to
maintain an optimal level of activation
Self- Associated with autonomy of thought and choice of the
direction action itself. Involves creating, exploring and choice. Derives
from the need for control, autonomy, and independence
Hedonism Pleasure and sensory gratification. Associated with
physical needs and leisure
Self-transcendence Universalism Appreciation, tolerance and protection of the welfare of
all people and nature
Benevolence Generosity. Help and protection of others, with special
concern for the welfare of the closest
Source: Schwartz (1992)
194 A. Navarro-García et al.

managers in defining and changing business strategies. In this sense, this study
focuses on three managerial characteristics that the literature indicates as drivers of
a proactive orientation of exporting companies. These are: the overall degree of
international experience (Holzmüller & Stöttinger, 1996; Williams & Chaston,
2004), the specific experience in export activities (Leonidou, Katsikeas, & Piercy,
1998) and the language skills (Williams & Chaston, 2004).
Attitudes associated with export activity will be analyzed through the export
commitment. In this sense, the export commitment is a strategic factor that deter-
mines the resources allocated to the firm’s foreign trade operations and it is a funda-
mental requirement for progress and continuous improvement in international
markets (Navarro, Acedo, Losada, & Ruzo, 2011). From the attitudinal perspective
(used in this study), export commitment can be defined as the managers’ willing-
ness to dedicate financial, managerial and human resources to the export activity
(Navarro, Acedo, Robson, Ruzo, & Losada, 2010).
The managerial perceptions of exporting SMEs will be analyzed through the
psychic distance. This variable is defined as “the manager’s perception of the differ-
ences that exist between the home country and the foreign country in terms of eco-
nomic development, climatic conditions, lifestyles, consumer preferences, language,
education, culture and values” (Sousa & Bradley, 2006). These perceptions may
create significant barriers (psychological) for the international progress of the com-
pany. However, when these barriers are overcome through a good analysis and inter-
pretation of the environment, they provide a better response and adaptation of the
organization to foreign markets (Sousa & Lages, 2011).
The strategic behavior of exporting SMEs, reflecting the response and adaptation
to the environment of foreign markets, will be studied through the marketing-mix
decisions (adaptation vs. standardization). In this sense, accepting the premises of
the contingent approach -which indicates there are no universal and comprehensive
strategic responses to each situation, product or service, sector, market- the literature
suggests that the adaptation decision is a clear indication of the exporting proactivity
of companies in international markets (Morgan, Kaleka, & Katsikeas, 2004).
Finally, the performance of exporting SMEs is evaluated through export perfor-
mance. This variable is defined as the extent to which the firm achieves its objec-
tives when exporting a product to a foreign market (Cavusgil & Zou, 1994).
Economic (profits, sales, costs, etc.) or strategic (expansion of market, increase in
market share abroad, and so forth) considerations through the planning and execu-
tion of its international marketing strategy are the focal points.

12.2.2 Conceptual Model and Hypothesis

Managers have mental models that influence how they interpret changes in their
environment, affecting actions and decisions that they have to take (Acedo &
Galán, 2011). Personal characteristics exert a major influence in the formation of
these beliefs and mental models (Hambrick, 2007). In the case of export activities,
12 The Importance of a Proactive Culture of Exporting SMEs... 195

Leonidou et al. (1998) point out the influence of the managers’ personality features
on exporting. These managerial characteristics can be general (e.g., age, educa-
tion) or more specific (e.g., experience in export activities). The latter can apply
more influence to value systems, attitudes and behaviors associated with export
activities (Katsikea & Skarmeas, 2003). In this context, Axinn (1988) noted that
the international experience of managers encourages the formation of values to
promote changes, reinforcing the development of an entrepreneurial culture in
relation to the export activity. This fact strengthens the international orientation of
the management team. Consequently, it increases the company’s willingness to
allocate more human, financial and management resources to foreign trade opera-
tions, and, therefore, to increase the export commitment (Holzmüller & Stöttinger,
1996). International experience also decreases the risk aversion associated with
exporting (Gray, 1997), reducing the managers’ perceived psychic distance
between domestic and international markets (Sousa & Bradley, 2006). Similarly,
the language skills and, particularly, experience in foreign trade increase the
managers’ confidence in the development of international business. In addition,
these features encourage international mobility, improve relations with foreign
distributors and favor the detection of business opportunities in foreign markets
(Leonidou et al., 1998; Williams & Chaston, 2004). All these facts will foster the
adoption of more proactive value systems by the managers responsible for
the export activity. Moreover, they will encourage openness to changes and self-
transcendence, increasing export commitment and decreasing psychological barri-
ers (psychological distance) regarding exports. These arguments support the
following hypotheses:
H1a: Managers of exporting SMEs possessing managerial characteristics associ-
ated with greater international experience, language skills and specific experi-
ence in export activities positively influence the adoption of proactive value
systems (openness to change and self-transcendence) to export activity,
H1b: Managers of exporting SMEs possessing managerial characteristics associ-
ated with greater international experience, language skills and specific experi-
ence in export activities positively influencea greater export commitment.
H1c: Managers of exporting SMEs possessing managerial characteristics associ-
ated with greater international experience, language skills and specific experi-
ence in export activities negatively influence the perceived psychic distance
between domestic and foreign markets.
Values are relatively stable criteria that people use to evaluate their own and oth-
ers’ behavior across various situations (Schwartz, 1992) and are a crucial element
for the subjective appraisal of events (Finkelstein, Hambrick, & Cannella, 2008).
Therefore, understanding managers’ value systems is important in light of the grow-
ing evidence revealing that the way managers interpret a market situation directly
affects the solutions considered, resources committed, and changes made in terms
of strategic decisions (White, Varadarajan, & Dacin, 2003). This is consistent with
the view that managers’ values should be considered key determinants of strategic
choices and firm performance (Carpenter, Geletkanycz, & Sanders, 2004).
196 A. Navarro-García et al.

In this context, the individual values are usually a reflection of corporate culture
and an essential element. They explain people’s attitudes and behaviors (Hambrick,
2007). However, as Sousa et al. (2010) noted, it is surprising that despite the number
of studies that have examined the organizational and managerial factors affecting
export activities, scant research has investigated the possible impact of managers’
individual values on attitudes and strategic behavior, highlighting the need for more
research attention in this area.
From the point of the continuum that the inventory of human values is (Schwartz,
1992), two positions are emphasized from the managerial perspective (Sousa et al.,
2010): (a) conservative approach/self-enhancement characterized by a predomi-
nance of an individualistic vision, status quo maintenance and reluctance to make
changes. This point of view’s predominant values are: security, conformity, tradi-
tion, power, and achievement. This position involves applying a traditional logic
reflecting a reactive culture in problem solving, decision making, entrepreneurial
attitudes and behaviors (Schwartz & Bardi, 2001). Its impact is often negative in the
speed of response and adaptation to the consumers’ wishes (Kohli & Jaworski,
1990), motivation to innovate (Steenkamp, Hofstede, & Wedel, 1999), market
diversification (Krasnikov & Jayachandran, 2008) and export performance (Sousa
et al., 2010); (b) proactive approach/openness to change/self-transcendence charac-
terized by a predominance of the collective vision, openness to changes and willing-
ness to accommodate them. Values such as, excitement, novelty, challenge in life,
control, autonomy in action and independence of thought dominate in this approach.
In this case, the preponderance of a proactive value system in managers positively
affects attitudes and perceptions associated with export activity. In this way, the
proactive approach can boost the willingness of the company to increase export
commitment (Navarro, Rondán, & Acedo, 2013), to respond faster to the demands
of foreign consumers and to reduce the psychological barriers (psychic distance)
associated with export activities (Sousa et al., 2010). These arguments lead us to
propose the following research hypotheses:
H2a: The dominance of a proactive system of values (openness to change and self-
transcendence) in the managers of exporting SMEs positively influences the
export commitment.
H2b: The dominance of a proactive system of values (openness to change and self-
transcendence) in the managers of exporting SMEs negatively influences the per-
ceived psychic distance between domestic and foreign markets.
The inspection of the exporting literature reveals (e.g., Lages & Montgomery,
2004; Styles & Ambler, 2000) that export commitment is a direct antecedent of
performance. However, prior research has concentrated on the role of strategy, in
general, and marketing program adaptation/standardization, in particular, in leading
to export performance (Hultman, Robson, & Katsikeas, 2009). In line with the influ-
ential structure conduct–performance framing, several studies (e.g., Lages, Jap, &
Griffith, 2008; O’Cass & Julian, 2003) deal with export commitment as an anteced-
ent or contingency factor that affects international marketing strategy. This, in turn,
determines performance.
12 The Importance of a Proactive Culture of Exporting SMEs... 197

A firm’s export commitment can be shown in many different ways, but nothing
reflects a firm’s export commitment better than its desire to adapt and fulfill the
wishes, needs and expectations of its foreign customers. This will mean adapting
those elements of the marketing program that require modification (Navarro, Acedo
et al., 2010). Therefore, the following research hypothesis captures this idea:
H3: The firm’s export commitment has a positive effect on the adaptation of the
export marketing-mix elements to the needs of foreign markets.
In another way, the export commitment serves to increase and configure informa-
tion flows from the marketplace to reduce the uncertainty and risks related to export-
ing activities. It enables a firm to allocate resources correctly and proactively to
ongoing exporting activities (Styles & Ambler, 2000) and to achieve positional
advantages abroad. In summary, an export commitment facilitates a firm’s organiza-
tion of marketing strategy activities so that these can be implemented, with less
difficulty, to achieve advantage in competitive export markets. Moreover, this export
commitment will increase managers’ willingness to make efforts to achieve the
companies’ international objectives, offering strategic guidelines that will orientate
their decision making in foreign markets (Lages & Montgomery, 2004). All these
facts will improve the efficiency and effectiveness of the resource allocation, pro-
viding an essential stimulus to boost both international sales and the managers’
satisfaction with the firm’s export performance. Several studies find evidence of this
positive relationship between export commitment and export performance (e.g.,
Cavusgil & Zou, 1994; Navarro, Losada, Ruzo, & Diez, 2010). Consequently, the
following research hypothesis is:
H4: The firm’s export commitment has a positive effect on export performance.
The managerial perceptions exert a major influence on managers’ decision tak-
ing and behaviors (Griffith & Lusch, 2007). For example, White et al. (2003) show
that marketing executives’ cognitive style affects their interpretation of a market
situation and their response to it. In the case of exporting, the advantages or obsta-
cles perceived by export managers determine corporate behavior (Leonidou et al.,
1998). In this sense, one of the major potential obstacles to the advancement of the
company in the development of foreign trade is given by the barriers identified by
the management of the company to enter new country-markets (Suárez-Ortega,
2003). These perceptions are often associated with differences in economy, legisla-
tion, culture, etc., between the domestic market and the foreign market, called psy-
chic distance. This concept has been referenced in the literature as one of the major
features in the international expansion of organizations process (Ellis, 2007).
At present, the study of the effect exerted by the psychological distance from
the international perspective is emerging strongly, and it is being especially rele-
vant in the case of the standardization vs. adaptation debate of the marketing-mix
strategies (contingency perspective) (Sousa & Lages, 2011). Thus, where needs
and wants across countries are homogeneous, standardization is facilitated
(Özsomer & Simonin, 2004). In countries in which customers have widely different
tastes or needs, an adaptation strategy is necessary (Sousa & Bradley, 2006).
198 A. Navarro-García et al.

For instance, it has been acknowledged that export promotion strategies must be in
accordance with the tastes, wants, values, and attitudes in the foreign market
(Albaum, Tse, Hoozier, & Baker, 2003). The characteristics and availability of the
media are also dependent on the economic environment of the country. Thus, the
greater the differences between countries the more difficult it is for the firm to suc-
cessfully adopt a standardization strategy. The same rationale also applies to prod-
uct, pricing and distribution decisions. Product adaptation is often necessary to
match customer tastes or preferences (Leonidou, Katsikeas, & Samiee, 2002). The
degree of distribution adaptation is also dependent on the characteristics of the for-
eign market such as the level of economic development or the culture-specific buy-
ing habits (Theodosiou & Leonidou, 2003). Moreover, the economic development
in the foreign market can also have an impact on the degree of price adaptation
because of its impact on the prices that consumers are willing to pay for certain
products (Theodosiou & Katsikeas, 2001). Thus, by adopting the contingency per-
spective in the standardization/adaptation debate, we expect that the greater the
differences—as perceived by the export managers—between the home and foreign
country, the higher will be the degree of adaptation of the export marketing strategy
followed by the firm. On this basis, we propose the following research hypothesis:
H5: The psychic distance perceived by managers of exporting SMEs has a positive
effect on the adaptation of the export marketing-mix elements to the needs of
foreign markets.
The standardization of the marketing program involves the offering of identical
product lines at equivalent prices through identical distribution systems, supported
by similar promotional programs in several different countries (Theodosiou &
Leonidou, 2003). Various researchers recommend using a standardization strategy
when the firm’s target foreign markets behave similarly (Kustin, 2004; Özsomer &
Simonin, 2004). Opponents of standardized strategies have pointed out that though
socioeconomic trends in some market segments may be converging, national cul-
tures, local market conditions, public policies and regulations across markets and
consumer reactions to standardized strategies may be diverging (Navarro, Losada
et al., 2010). For this reason, Albaum and Tse (2001) point out that adaptation is
inevitable after a firm successfully enters its foreign markets. The adaptation of
export marketing-mix implies the change of any product attribute (label, brand name,
etc.), price, distribution and/or promotional program to fit the particularities of each
country-market (culture, individual income, consumer tastes and preferences, etc.).
In any case, two extreme positions, standardization versus adaptation, are impos-
sible to implement strictly, because, as the contingency approach indicates, the
degree of adaptation versus standardization is a function of products’ characteris-
tics, industry, market, organization, and environmental characteristics (Calantone,
Kim, Schmidt, & Cavusgil, 2006). In this context, researchers prefer to speak about
different degrees of standardization or adaptation in the export marketing strategy
(Lages & Montgomery, 2004). Consequently, we evaluate export marketing strategy
along the standardization-adaptation continuum, concentrated in the degree of
12 The Importance of a Proactive Culture of Exporting SMEs... 199

adaptation of four marketing elements (product, price, distribution and promotion).

In this sense, we view the adaptation of an export marketing strategy in terms of the
degree to which the marketing tactics are adapted for export markets to accommo-
date differences in environmental forces, consumer behavior, usage patterns, and
competitive situations (Cavusgil & Zou, 1994).
The literature suggests that a firm’s capability to achieve and sustain positional
advantages in foreign markets is closely linked to the efficient and effective execu-
tion of a planned export marketing strategy (Navarro et al., 2013). In this context,
some authors (e.g., Morgan et al., 2004; O’Cass & Julian, 2003) argue that develop-
ing a differentiated marketing strategy in foreign markets requires the firm to adapt
to the needs and desires of the target markets. More specifically, when the firm adapts
its marketing-mix elements to the idiosyncrasies of the different country-markets, its
products are more likely to be perceived as offering superior value compared to
those of its rivals, and positive outcomes can be expected for the firm (Theodosiou
& Leonidou, 2003). In this context, several benefits can be derived from the adapta-
tion of export marketing tactics: (1) they allow the firm to adjust its offer to the par-
ticular characteristics of each market, which reduces foreign consumers’ uncertainty,
or psychological distance (Madsen, 1998); (2) they improve relationships with local
intermediaries (Shoham, 1999), and (3) the firm can attain a larger profitability, as a
better product–market match can result in greater customer satisfaction, which can
give more pricing freedom than competitors (Leonidou et al., 2002). Therefore, the
adaptation of export marketing tactics enhances export performance (Navarro,
Losada et al., 2010; Zou & Cavusgil, 2002). For this reason, we have proposed that
adapting the price, communication, product and distribution to the needs and expec-
tations of foreign consumers is positively associated with performance in foreign
markets. Therefore, the following research hypothesis grasps this idea:
H6: Adapting the export marketing-mix elements has a positive effect on export
performance.
On the other hand, most of the knowledge acquired from foreign markets is
translated into experience and firm specific skills (Johanson & Vahlne, 1992), a kind
of knowledge which is usually complex and tacit. In contrast to codified knowledge,
which is easily replicated and transferred in the distance, tacit knowledge is linked
to people, and better transferred on face-to-face basis (von Hippel, 1994). Hence,
geographic proximity is important for knowledge spillovers to emerge and have an
effect on economic agents located in the same region (Audretsch, 1998). Interactions
between export-oriented and domestic new ventures are likely to be stronger—and
more effective in terms of transferring productivity-related knowledge—within a
region (or among neighbour regions) than across regions located in opposite ends of
a country. Thus, the impact of export-oriented entrepreneurship on economic growth
should be more relevant at regional level. In this context, although not directly ana-
lyzed in this investigation, there may be a positive relationship between export per-
formance and regional development.
The Fig. 12.1 shows the conceptual model proposed.
200 A. Navarro-García et al.

Proactive Export Culture Attitudes

H1b (+) Export Commitment H4 (+)

H3 (+)
H2a (+)

H1a (+) Strategic Behavior H6 (+) Export

Characteristics Proactive Values
Marketing-Mix Performance
(Export Managers) (Export Managers) Adaptation
H2b (-) H5 (+)

Regional
H1c (-) Perceptions
Development
Psychic distance
Upper Echelons Theory
Contingency Approach

Fig. 12.1 Graphical description of the model

12.3 Methodology

12.3.1 Sample and Data Collection

We performed an empirical study of Spanish SMEs export firms. With regard to the
activity of Spanish export firms in general, data from the Ministry of Industry,
Tourism and Commerce (2012) reveal a strong concentration of export activity in a
small number of firms (1 % of the exporters generate 64 % of total exports) and a
strong geographic concentration in the foreign markets (70 % of the exports go to
other European Union countries). The main sectors are capital goods (22 %), automo-
biles (18 %), and food (14 %). We used a multi-industry sample to increase observed
variance and reinforce the generalization of the findings (Morgan et al., 2004).
The sample of firms was obtained from the database of exporters of the Spanish
Institute for Foreign Trade (ICEX). Maintaining sectorial proportionality, question-
naires were sent, mainly via e-mail, to 1,200 managers responsible for exports. 196
valid questionnaires were obtained, representing a response rate of 16.3 %. This is
in the range between 15 and 20 % considered as an adequate response rate to a
questionnaire sent to senior executives (Menon, Bharadwaj, & Howell, 1996).
The majority of the sample firms were small (66 % with fewer than 50 employees)
and allocated a small number of employees to carrying out export-related tasks (86 %
with fewer than five export-related employees). The majority (81 %) had assigned
export managers, though a minority (33 %) had an export department. Most firms had
a great amount of experience in their business (86 % with more than 16 years in their
sector), and a great amount of experience in international business (61 % with more
than 15 years of exporting). Finally, the majority of sample firms had a strong concen-
tration of export sales in few markets (71 % exported to five or fewer countries).
We selected a single key informant in each firm to report on its export activity.
Use of a knowledgeable, single key informant can reduce the potential for system-
atic and random sources of error (Huber & Power, 1985). To ensure the reliability
of the data source, we required the respondents to be senior managers in charge of
12 The Importance of a Proactive Culture of Exporting SMEs... 201

exporting. A specific section of the questionnaire asked respondents for their job
title and assessed their competency in terms of knowledge of, involvement with,
and responsibilities in exporting. High scores on the competency questions indi-
cated that the potential sources of measurement error attributable to the key infor-
mant were minimized.

12.3.2 Measurement Scales

MacKenzie, Podsakoff, and Jarvis’s (2005) recommendations for distinguishing for-

mative and reflective variables have been taken into account in the multi-item mea-
sures of the study. First, we captured manager characteristics and export commitment
as first-order reflective constructs. Three personal characteristics of export managers
were borne in mind: (a) international experience (Axinn, 1988; Gray, 1997), (b)
specific experience in export activities (Leonidou et al., 1998) (c) language skills
(Williams & Chaston, 2004). We measured export commitment (four items) from
the attitudinal perspective. This can be defined as the managers’ willingness to dedi-
cate financial, managerial and human resources to the export activity (Navarro,
Acedo et al., 2010). Second, we captured the export managers’ values, psychic
distance and adaptation of marketing-mix as second-order reflective constructs.
Schwartz’s Value Inventory (1992) and the contributions of Sousa et al. (2010)
have been considered for the construction of the scale: proactive values of export
managers. This scale is composed of five reflective dimensions. The first three
dimensions, stimulation (5 items), self-direction (4 items) and hedonism (4 items)
are a reflection of the export managers’ openness to change. The two remaining
dimensions, benevolence (3 items) and universalism (4 items) reflect the self-
transcendence of export managers. In the case of psychic distance, Sousa and
Bradley’s (2006) measures have been taken into account. Consequently, this con-
struct is formed by two reflective dimensions. The first dimension assesses the eco-
nomic and legal differences between domestic and foreign markets (7 items); the
second dimension incorporates the socio-cultural differences (3 items).
Following the recommendations of various authors (Lages & Montgomery, 2004;
Leonidou et al., 2002; Theodosiou & Leonidou, 2003), the adaptation of marketing
strategy to the foreign markets was measured by the degree to which the firm adapts
its marketing-mix elements (product—5 items, price—4 items, distribution—4
items, and promotion—6 items) to the requirements of the foreign markets. Finally,
export performance has been considered as a second-order formative construct, with
two formative dimensions (qualitative and quantitative export performance).
Following Cadogan, Diamantopoulos, and Siguaw (2002), qualitative export perfor-
mance was measured through the export managers’ satisfaction with the effective-
ness of a marketing program in terms of five objectives: the growth of export sales,
the image of the firm in foreign markets, the profitability of export business,
the market share, and the international expansion. Quantitative export perfor-
mance was measured with the variables of the export sales’ growth in three years
202 A. Navarro-García et al.

(Cavusgil & Zou, 1994). The measurement scales used are five point Likert type,
allowing the characteristics, values, attitudes and managerial perceptions of the vari-
ables analyzed to be gathered. This helps to ensure reliability in the statistical analy-
sis and comparability in the results obtained when working with standardized data.

12.3.3 Data Analysis Techniques

To analyze data and evaluate the relationships between the different constructs we
chose structural equations modeling via PLS (partial least squares), in view of the
characteristics of the model and sample. As Reinartz, Haenlein, and Henseler (2009)
show, variance-based techniques (such as PLS) offer better estimations than other
techniques in samples of less than 250 subjects. In addition, the use of PLS rather
than other types of structural equations modeling tools is also appropriate here
because (Diamantopoulos & Winklhofer, 2001): (1) this work has a predictive char-
acter; (2) compared to other tools (AMOS, EQS, etc.), PLS does not require large
samples (the current work has 196 cases); (3) the model proposed considers forma-
tive and reflective scales together, and using PLS avoids the indeterminacy prob-
lems of other techniques such as EQS or LISREL (Jarvis, Mackenzie, & Podsakoff,
2003); and (4) PLS is a nonparametric technique, so researchers do not need to
guarantee the normality of the data. Besides, this technique is becoming more
important, as can be seen from the number of publications using it in the main jour-
nals (Henseler, Ringle, & Sinkovics, 2009). We used the statistics package SmartPLS
2.0 M3 to carry out the empirical analysis.

12.4 Results

To interpret and analyze the proposed model using PLS the analysis went through
two distinct stages (Barclay, Higgins, & Thompson, 1995): (1) the evaluation of the
measurement model; and (2) the analysis of the structural model. This sequence
ensures that the measurement scales proposed are valid and reliable before testing
the hypotheses. For the reflective scales, the factor loadings were all above the rec-
ommended 0.7 (Carmines & Zeller, 1979). The composite reliability and average
variance extracted (AVE) values also exceeded the recommended values of 0.7 and
0.5, respectively (Fornell & Larcker, 1981). Thus, the results support the convergent
validity of the reflective scales considered in this study (Table 12.2). Finally, to
ensure the discriminant validity, we confirmed that the squared correlations between
each pair of constructs did not exceed the AVE (Barclay et al., 1995). We also
checked that the inter-correlations between constructs were significantly different
from 1. This provided additional evidence of the discriminant validity. In addition,
none of the correlations between constructs reaches 0.5 (Table 12.3).
12 The Importance of a Proactive Culture of Exporting SMEs... 203

Table 12.2 Evaluation of measurement model

Variance Average
inflation Factor Composite variance
Construct/Dimension/Indicator factor Weight loading reliability (ρc) extracted
Export managers’ characteristics (reflective construct) 0.827 0.620
EMCH1 0.864
EMCH2 0.870
EMCH3 0.594
Proactive export managers’ values 0.818 0.523
(second-order reflective construct)
Stimulation 0.913 0.678
(first-order reflective construct)
STIM1 0.776
STIM2 0.834
STIM3 0.869
STIM4 0.741
STIM5 0.886
Self-direction 0.938 0.791
(first-order reflective construct)
SELFD1 0.913
SELFD2 0.859
SELFD3 0.898
SELFD4 0.885
Hedonism 0.899 0.695
(first-order reflective construct)
HD1 0.656
HD2 0.770
HD3 0.950
HD4 0.920
Benevolence 0.884 0.718
(first-order reflective construct)
BENV1 0.907
BENV2 0.839
BENV3 0.791
Universalism 0.898 0.690
(first-order reflective construct)
UNIV1 0.824
UNIV2 0.729
UNIV3 0.955
UNIV4 0.797
Export commitment (first order 0.895 0.683
reflective construct)
COMM1 0.804
COMM2 0.854
COMM3 0.863
COMM4 0.766
(continued)
204 A. Navarro-García et al.

Table 12.2 (continued)

Variance Average
inflation Factor Composite variance
Construct/Dimension/Indicator factor Weight loading reliability (ρc) extracted
Psychicdistance (second order reflective construct) 0.917 0.846
Economic-legal psychic distance 0.896 0.554
(first-order reflective construct)
ELPD1 0.719
ELPD2 0.840
ELPD3 0.786
ELPD4 0.676
ELPD5 0.706
ELPD6 0.694
ELPD7 0.777
Socio-cultural psychic distance 0.869 0.690
(first-order reflective construct)
SCPD1 0.873
SCPD2 0.750
SCPD3 0.863
Adaptation marketing-mix (second order reflective construct) 0.846 0.579
Product (first-order reflective 0.903 0.608
construct)
PRODUCT1 0.746
PRODUCT2 0.781
PRODUCT3 0.806
PRODUCT4 0.798
PRODUCT5 0.756
PRODUCT6 0.789
Price (first-order reflective 0.893 0.680
construct)
PRICE1 0.656
PRICE2 0.852
PRICE3 0.864
PRICE4 0.904
Distribution (first-order reflective 0.937 0.788
construct)
DISTRIB1 0.908
DISTRIB2 0.936
DISTRIB3 0.837
DISTRIB4 0.867
Promotion (first-order reflective 0.977 0.879
construct)
PROMO1 0.962
PROMO2 0.943
PROMO3 0.970
PROMO4 0.873
PROMO5 0.936
PROMO6 0.937
(continued)
12 The Importance of a Proactive Culture of Exporting SMEs... 205

Table 12.2 (continued)

Variance Average
inflation Factor Composite variance
Construct/Dimension/Indicator factor Weight loading reliability (ρc) extracted
Export performance n.a. n.a.
(Second-order formative construct)
Quantitative export performance 2.040 0.299 0.873 0.697
(reflective construct)
Crev_2009 0.777
Crev_2010 0.898
Crev_2011 0.824
Qualitative export performance 1.981 0.850 0.926 0.715
(reflective construct)
SAT1 0.882
SAT2 0.808
SAT3 0.900
SAT4 0.817
SAT5 0.817
n.a. no application

Table 12.3 Correlations between constructs

Construct 1 2 3 4 5 6
1. Export managers’ characteristics 0.787
2. Proactive export managers’ values 0.209 0.723
3. Export commitment 0.294 0.193 0.826
4. Psychic distance −0.044 −0.0003 0.120 0.919
5. Marketing mix adaptation 0.059 0.011 0.222 0.428 0.761
6. Export performance 0.239 0.236 0.438 0.168 0.227 n.a
In the main diagonal are shown the square root of AVE; n.a. no application

After having ensured the convergent and discriminant validity of the measure-
ment model, we tested the relationships between the different variables. We started
by calculating the different statistical parameters, using the bootstrap method (1,000
subsamples) (Table 12.4). Although many researchers opt for 500 subsamples in
their studies, and this is sufficient, in the current work we decided to use 1,000 to
reduce the randomness (Davidson & MacKinnon, 2000). The hypothesis tests con-
sidered the sign and significance of t-values in each relation (β coefficient). Of the
nine hypotheses proposed, seven were verified with the postulated sign (Fig. 12.2).
The hypotheses not accepted are: hypothesis H1c, which states that the personal
characteristics associated with export managers -international experience, good lan-
guage skills and specific experience in export activities- reduced the perceived psy-
chic distance between domestic and international markets; and hypothesis H2b,
which postulates that the proactive values of export managers (openness to change
and self-transcendence) have a positive effect on the perceived psychic distance.
The variance explained values of the different endogenous constructs are given in
the discussion section.
206 A. Navarro-García et al.

Table 12.4 Parameters from hypothesis tests

Hypothesis β t-Value Supported
H1a: Export Managers’ Characteristics—Proactive Export 0.209 2.348*** Yes
Manager Values
H1b: Export Managers’ Characteristics—Export Commitment 0.265 3.351*** Yes
H1c: Export Managers’ Characteristics—Perceived Psychic −0.046 0.445 ns No
Distance
H2a: Proactive Export Managers’ Values—Export 0.137 1.717* Yes
Commitment
H2b: Proactive Export Managers’ Values—Perceived Psychic −0.010 0.107 ns No
Distance
H3: Export Commitment—Marketing-Mix Adaptation 0.173 2.390*** Yes
H4: Export Commitment—Export Performance 0.406 6.088*** Yes
H5: Perceived Psychic Distance—Marketing-Mix Adaptation 0.408 6.402*** Yes
H6 Marketing-Mix Adaptation—Export Performance 0.137 1.703* Yes
Notes: ns no significant (one-tailed t(999) test) ***p < 0.001; **p < 0.01; *p < 0.05

2
β1b = 0.265 Attitudes R = 0.105
H1b (+) Export Commitment H4 (+)
β4 = 0.406
β2a = 0.137
H3 (+) 2
H2a (+) β3 = 0.173 2
R = 0.213 R = 0.300
β1a = 0.209
H1a (+) 2 Strategic Behavior H6 (+) Export
Characteristics Proactive Values R = 0.043 Marketing-Mix Performance
(Export Managers) (Export Managers)
Adaptation β6 = 0.137
β5 = 0.408
H2b (-) H5 (+)
β2b =-0.010
2 Regional
H1c (-)
Perceptions R = 0.002
Development
Psychic distance
β1c =-0.046

Fig. 12.2 Graphical structural model

12.5 Discussion and Contributions

The discussion is organized around the main objectives of this research. The first of
these is the validation of the theoretical model proposed. This model offers a suit-
able framework to explain how characteristics and managerial values play a key
role in the attitudes, perceptions and strategic behavior of exporting SMEs, condi-
tioning the export performance and regional development. Focusing on the relation-
ships between the variables and taking the global model as a reference, a number of
conclusions can be drawn.
Firstly, the dimensions and scales proposed to assess the export performance are
appropriate and they are conceived as multidimensional constructs (second-order
formative construct). Export performance has a variance explained of 30 %
(R2 = 0.300) and is influenced positively by export commitment (β = 0.406,
t-value = 6.088) and strategic behaviors that tend to adapt the marketing-mix
12 The Importance of a Proactive Culture of Exporting SMEs... 207

elements to the requirements of foreign markets (β = 0.137, t-value = 1.703), thus

confirming H4 and H6. In this context, managerial attitudes oriented to committing
human, financial and management resources abroad play an important role in deter-
mining export performance, as previous studies demonstrated (Lages & Montgomery,
2004; Navarro, Acedo et al., 2010). In addition, the adaptation to the environment
of each country-market in which the organization operates is essential. That is, to
make the necessary changes in the attributes of product, price, distribution and com-
munication, as this adaptation may give the exporting company a sustainable com-
petitive advantage and a good export performance (Morgan et al., 2004).
Secondly, the strategic behavior of exporting SMEs is conditioned by attitudes
(export commitment) and managerial perceptions (psychological distance). The
explained variance of the adaptation of the marketing-mix elements is 21.3 %
(R2 = 0.213). From this perspective, SMEs engaged in exporting activities will favor
strategic decisions designed to adapt to the demands and needs of foreign markets
from the point of view of the marketing-mix, confirming H3 (β = 0.173,
p-value = 2.390). This helps to reduce the psychological barriers associated with the
purchase of foreign goods, increases the satisfaction of the clients in each country-
market (Leonidou et al., 2002) and promotes lasting and stable relationships with
international distributors (Shoham, 1999). Furthermore, this fact helps to build sus-
tainable competitive advantages in foreign markets (Theodosiou & Leonidou,
2003). Moreover, when managers perceive differences between domestic and inter-
national markets, it is advisable to make adjustments in the marketing-mix elements
according to the economic-legal and socio-cultural characteristics of each country-
market (Sousa & Lages, 2011). This result confirms H5 (β = 0.408, p-value = 6.402).
Thirdly, the export commitment of exporting SMEs—which has a explained
variance of 10.5 % (R2 = 0.105)—significantly affects: (a) the proactivity shown by
managers in charge of the export activity, from the point of view of values (β = 0.137,
p-value = 1.717), confirming H2a; (b) certain managerial features, such as those
associated with the managers’ international experience, good language skills and
specific experience in foreign trade, confirming H1b (β = 0.265, p-value = 3.351). In
this context, exporting SMEs are recommended to encourage a proactive culture
with regard to export activities. This culture is based on a system of values for open-
ness of changes, joint instead of individual decision making, the reduction of psy-
chological barriers to exports, etc. (Navarro et al., 2013). Moreover, the experience
and training of managers play a key role in developing positive attitudes toward
committing resources to the export activity (Katsikea & Skarmeas, 2003).
Fourthly, the managerial perceptions associated with the psychic distance have a
specific weight in exporting SMEs, since they do not depend on the value system or
managerial characteristics, not accepting H2b (β = −0010, p-value = 0.107) nor H1c
(β = −0.046, p-value = 0.445). This is perhaps because these perceptions respond
exclusively to obtaining and interpreting information from foreign markets (Sousa
et al., 2010), exerting no influence on managerial characteristics and values. If this
information is not available, managers will create important psychological barriers
to the development of the export activity (Sousa & Bradley, 2006). Therefore, it is
necessary to articulate appropriate monitoring mechanisms of the international
208 A. Navarro-García et al.

environment and to encourage market orientation policies in the organization. The

acquisition and dissemination of relevant market information reduces the uncer-
tainty and risks associated with the export activity (Boso, Cadogan, & Story, 2012).
Fifthly, the international experience, language skills and specific experience in
export activities of managers significantly influence the setting up of a proactive
culture and value system in exporting SMEs, confirming H1a (β = 0.209,
t-value = 2.348). Managers have values and mental models that influence how they
interpret the changes in their environment, affecting the actions and decisions they
have to make (Acedo & Galán, 2011; Nadkarni & Barr, 2008). However, personal
characteristics exert a fundamental influence in the formation of these values
(Hambrick, 2007; Katsikea & Skarmeas, 2003). Thus, the international experience
of managers encouraged the formation of values open to changes, reinforcing the
development of an entrepreneurial culture in relation to the export activity (Axinn,
1988) and decreasing the risk aversion associated with exporting (Gray, 1997).
Similarly, language skills and, particularly, experience in foreign trade: (1) increases
managers’ trust in international business development, (2) encourages international
mobility, (3) reinforces the relationships with foreign distributors and (4) favors the
detection of business opportunities in the foreign markets (Leonidou et al., 1998;
Williams & Chaston, 2004).
In summary, this paper contributes significantly to filling an important gap in the
research field of exporting SMEs. Specifically, the study demonstrates the interrela-
tionships between managers’ characteristics, values, attitudes, perceptions, strategic
behaviors and export performance, taking the Upper Echelons Theory and the contin-
gency approach as a reference. Therefore, this paper shows the relationship between
a proactive culture of exporting SMEs and export performance, which may influence
on regional development. In this context, export-oriented entrepreneurial activity
could make an additional positive contribution to regional economic growth in Spain.

Acknowledgments The author acknowledge the financial support from the Excellence’s Proyect
of Andalusia’s Government P11-SEJ-7042 “Orientación y Gestión de los Mercados Exteriores Por
las Pymes Andaluzas. Análisis Estratégico y Propuestas de Mejora.”

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Index

A Coverage, 44, 46, 47, 117

Action, 11, 17, 24, 25, 54, 55, 57, 67, 68, 90, Crisis, 75–84, 158, 168, 174
94–95, 97, 100, 111, 115, 129, 130, Cultural cluster of countries, 167–168
136, 158, 174, 180–188, 193, 194, Cultural context, 56, 57, 157–175
196, 208 Cultural dimensions, 30, 57, 59, 62, 64–68, 167
Anthropology, 158, 180–188 Cultural factors, 4, 13, 24, 26, 31, 36, 38, 41,
Autonomy values, 57, 64, 68 46, 48, 75–85, 142, 162, 181
Cultural legitimacy, 109–122
Cultural perception, 111
B Cultural resources, 128–136
Behaviour, 25–27, 30, 76, 94, 142, 143, Cultural values, 54, 56, 57, 59, 61, 62, 64–69,
181–184, 187, 188 77, 93, 104, 128
Behavioural approach, 27 Culture, 2–4, 12, 13, 16, 17, 24–26, 31, 36, 38,
Brazil, 4, 26, 28–31, 69, 115, 131, 134 39, 49, 53–70, 77, 79, 82–84, 100, 104,
Business, 1, 3–9, 12–16, 26, 28, 30, 31, 37, 111–113, 128, 130, 132, 142, 143, 152,
38, 41, 47, 55, 62, 67, 76, 77, 81–84, 153, 167, 175, 181, 191–208
89–93, 99, 101, 110–117, 120, 121,
128, 130, 132, 142, 143, 147, 153,
158–167, 171, 174, 179, 180, 183, D
191, 194, 195, 200, 201, 208 Descriptive analysis, 63
entrepreneurs, 4, 6, 26, 84, 163, 170 Developing countries, 68, 69, 85, 109–122, 162
ethics, 180, 182–188 Domestic legitimacy of entrepreneurship, 111,
114, 115, 122
Drivers of social innovation, 76, 141
C
Case studies, 2, 10–12, 16, 17, 90, 96, 98,
104, 111, 133–136 E
Chile, 69, 111, 113–120, 122, 131, 134 Economic conditions, 29, 31, 37, 53–70,
Cognitive dimension, 183 110, 112
Comparative analysis, 36, 49 Economic development, 7, 16, 17, 23, 24, 36,
Consistency, 29, 44–48 53, 55–56, 60, 67, 69, 78, 79, 84, 113,
Contingency approach, 198, 208 128, 129, 133, 160, 182, 192, 194, 198
Country development, 132, 135 Economic downturn, 36, 75–85
Country-level influences, 37 Economic factors, 30, 37, 41, 47, 48

© Springer International Publishing Switzerland 2015 213

M. Peris-Ortiz, J.M. Merigó-Lindahl (eds.), Entrepreneurship,
Regional Development and Culture, DOI 10.1007/978-3-319-15111-3
214 Index

Economic growth, 1, 2, 24–26, 37, 41, 55, 56, F

60, 62, 65, 67, 84, 109, 110, 113, 130, Feasibility, 77, 142, 144, 145, 148, 150
133, 192, 199, 208 Financial support, 6, 7, 15, 166, 174
Economic system, 53, 75, 158 Foreign markets, 192, 194–201, 207, 208
Education, 2–4, 6, 12–15, 17, 26, 28, 37, 39, Formal institutional factors, 37–38, 41
57, 79, 91, 143, 144, 153, 158, 160, Formal institutions, 2–4, 6, 9, 14–16, 143
164, 165, 168, 171, 194, 195 Free will, 184, 185, 187, 188
Efficiency-driven countries, 127–136 Fuzzy-set, 36, 43, 49
Egalitarianism values, 63, 67, 68
Enterprise creation, 78, 159, 160, 181
Entrepreneur, 5, 6, 14, 16, 27, 36, 38, 39, G
41, 48, 62, 67, 77, 78, 82, 83, 90, GDP. See Gross domestic product (GDP)
92, 93, 97, 100, 101, 103, 104, 110, GDP per capita (GDPpc), 36, 37, 41, 42,
111, 116, 132, 143, 145–147, 149, 45–48, 53, 55, 56, 62–66, 68, 80
151, 152, 158, 161–166, 173, 174, German countries, 69, 167, 168
180–182, 187 Global entrepreneurship monitor (GEM),
Entrepreneurial activity, 2–10, 12–18, 35–39, 56, 62, 63, 68, 76, 79, 80, 84, 109,
45–50, 53–56, 60–62, 66–69, 76–83, 117, 118, 120, 132, 141, 143, 163
85, 99, 109–111, 115, 122, 127–136, GLOBE study, 159, 167, 168
143, 152, 159–163, 166, 171, 175, Government, 3, 7, 9, 15, 26, 31, 38,
192, 208 57, 75, 77, 104, 110, 111, 113,
Entrepreneurial attitudes, 112, 153, 162, 114, 116, 118–121, 129, 130,
165, 196 136, 168, 183
Entrepreneurial culture, 12, 16, 77–84, 208 Government’s entrepreneurial strategy, 7
Entrepreneurial ecosystem, 111, 113–115, 122 Gross domestic product (GDP), 56, 62, 67, 80,
Entrepreneurial framework conditions, 118 132–135
Entrepreneurial intentions, 4, 37, 38, 57, 77, Growth expectation, 89–104
83, 112, 141–153, 174
Entrepreneurial motivations, 145
Entrepreneurial orientation, 25, 112, H
142, 143 Habits, 24, 181, 183, 198
Entrepreneurial strategy, 153, 192 Hayter approach, 25–28
Entrepreneurship, 1–18, 23–31, 35–50, 53–70, HDI. See Human development index (HDI)
75–85, 90, 91, 109–122, 132, 141, High skills, 102
157–175, 179–189, 192 High-technology, 14, 19, 90–92, 96, 97, 99,
education, 14, 171 101, 104
policy, 109–122 Historical background, 36, 39, 48, 49
programs, 12, 116, 121 Historical weight, 38–41, 49, 50
promotion, 2–7, 9, 14, 15, 17, 19, Human actions, 24, 25, 90, 94–95, 180, 182,
69, 77, 78, 84, 99–102, 111, 115, 184, 186–188
116, 122, 129, 160, 162–164, Human development index (HDI),
170–171, 192 132–135, 170
social image, 3, 4, 13, 38, 76–84 Humanistic entrepreneurship,
Environment of foreign markets, 194 180, 186–188
Ethics, 179–189 Human needs, 90, 94, 95, 97
Excitement, 98, 99, 101, 102, 196
Existence, 6, 24, 36, 39, 41, 42, 45–49, 54, 55,
62, 68, 69, 90, 93, 97–102, 144, 145, I
162, 180, 187–189 Income level, 54, 55, 61, 62, 66, 67
Expectations, 75, 83, 89–104, 118, 135, Industrial clusters, 36, 39, 41
197, 199 Industrial fabric, 36, 45, 49
Export commitment, 192, 194, 196, 197, 201, Industrial sector, 11, 39–41, 45–49
203, 205–207 Informal factors, 4, 7, 14, 54, 77, 84
Export performance, 191–208 Informal institutional factors, 38
Index 215

Informal institutions, 2–4, 12, 13, 15, 17, 54, N

55, 69, 79, 80, 82–84, 143 Neoclassical approach, 25, 27
Innovation, 1, 2, 4, 8, 9, 11, 12, 14, 16–18, 24, Networks, 4, 5, 7, 11, 13, 16, 38–41, 48, 49,
29, 31, 49, 57, 67, 93, 110, 111, 113, 114, 115, 152
118–119, 141, 143, 153, 159–161, 174 New ventures, 2, 4–8, 12, 14–17, 37, 41, 42, 45,
Institutional approach, 2–4, 9, 10, 12, 13, 17, 47, 48, 89–104, 112, 130, 161, 191, 199
76, 181, 184 Non-profit organizations, 160
Institutional economics, 6, 17, 54, 77, 84 Nordic countries, 167, 168
Institutional factors, 5, 14, 16, 37–38, 41, 80, Normative dimension, 3, 132, 183
82–85, 135 Normative legitimacy, 127–136
Institutional spillovers, 31 North, Douglass C., 2, 3, 6, 17, 54, 55, 77,
Institutional theory, 3, 77, 111, 128, 135, 143, 84, 130, 143, 181, 184
179–189 Not-for-profit organizations, 160, 161
Institutions, 2, 3, 8, 9, 12–15, 17, 18, 25, 27,
36–38, 54–57, 69, 77, 85, 113, 143,
179, 181, 182, 185, 188 O
Interaction effect, 54, 55, 61, 64–66, 68, 120, 121 Opportunities to create start-ups, 76, 77, 79,
Internal control, 144 83, 84
Internal legitimacy, 117, 120 Orientation, 25, 57, 59, 60, 62, 63, 67, 90,
International entrepreneurship, 192 95, 97, 103, 104, 111, 112, 142, 143,
International experience, 194, 195, 201, 205, 193–195, 208
207, 208
Internationalization, 11, 192
International legitimacy for entrepreneurship, P
114–116, 119, 122 Panel data, 63, 76, 79, 82, 84
Partial least square, 202
Personal attitudes, 144, 145, 148,
K 150, 152
Knowledge, 3, 17, 27, 29, 31, 36, 39, 44, 49, Personal dimension, 97
90–92, 96, 98, 99, 101, 102, 104, 110, Personal motivations, 29, 30
114, 128, 135, 159, 175, 183, 184, 192, Personal values, 89, 90, 93, 95–100, 103, 143,
199–201 146, 147
Portugal, 11, 26, 28, 29, 31, 69, 79, 141–153,
158, 168, 169
L Proactiveness, 142, 144, 145, 150, 152
Latin America, 110, 111, 113, 167 Proactive value systems, 195, 196
Latin European countries, 167 Probit estimation, 120
Laws, 2, 6, 37, 41, 77, 128, 129, 183 Promotion, 3, 9, 98, 100–102, 111, 198, 199,
Legitimacy, 3, 7, 15, 38, 109–122, 127–136, 183 201, 204
ranking, 136 Psychic distance, 192, 194, 196–198, 201,
Level of development, 67, 68, 131, 133, 135, 204, 205, 207
136, 175 Psychology, 143, 180, 182
Location, 23–31, 40, 115, 164, 165, 171

Q
M Qualitative comparative analysis (QCA),
Managerial characteristics, 194, 195, 207 36, 43, 44, 49
Managerial perceptions of exporting, 194 Quantitative analysis, 44
Marketing-mix decisions, 194
Media, 77–84, 115–117, 119, 120, 132–135, 198
Motivation, 3, 4, 29, 30, 36, 57, 90, 93, 97, R
103, 104, 145–148, 162–165, 185, 188, Regional development, 1–18, 24, 25, 30, 31,
193, 196 191–208
Multivariate analysis, 116 Regional level, 31, 192, 199
216 Index

Regulatory conditions, 122 Startup Chile, 113, 114, 122

Regulatory dimension, 183 Strategic behavior of exporting, 194, 206–208
Role models, 2, 3, 5–7, 14, 17, 165 Suprapersonal, 98–102

S T
Schwartz Value Survey (SVS), 62, 69 TEA. See Total entrepreneurial activity (TEA)
Small and medium enterprise (SMEs), 11, 17, Technology based companies (TBC), 26, 28
111, 191–208 Textile sector, 39–42, 47–49
Social anthropology, 183, 184, 186 Third sector, 79, 159, 160
Social dimension, 187 Total entrepreneurial activity (TEA), 56,
Social enterprise, 157–161 62–64, 67, 132–135
Social entrepreneurs, 75, 82, 157–175 Transnational entrepreneurship, 113–116, 122
Social entrepreneurship, 75–85, 157–175 Travel and Tourism Competitiveness Index,
Social innovation, 159 132, 133, 136
Social networks, 2, 4, 5, 9, 12, 13, 17
Social value, 58, 76, 94, 132, 145, 148, 151,
152, 158, 160, 161, 174, 183 U
Sociology, 158, 180, 183, 184, 186 University students, 12, 14, 17, 141–153
Spain, 10, 11, 36, 39, 40, 43, 49, 50, 76, 79, Upper echelons theory, 193, 208
83, 84, 93, 98, 141–153, 158, 168,
169, 208
Spanish statistical office, 80 W
Start-up, 4, 8, 14, 16, 30, 38, 53, 54, 57, 76, World Economic Forum (WEF), 110, 113,
77, 79–84, 97, 111, 113, 118, 142 131–133