When Culture Restrains Resources: How Hierarchy and Conservatism Weaken Entrepreneurial Activity

What is it about?

This study examines how institutional resource availability and cultural values jointly shape early-stage entrepreneurial activity across countries. Focusing on the resource richness of proximate institutions—such as informal investment and entrepreneurship education—it explores how these factors support new venture creation at the national level. Building on institutional theory, the model distinguishes between proximate institutions, which directly supply resources, and background institutions, like cultural values, which influence their use. Using data from 42 countries, the study shows that nations with greater resource munificence—abundant financial (informal investment) and human (entrepreneurship education) resources—display higher levels of early-stage entrepreneurship. However, this effect weakens in societies with strong hierarchical or conservative values. In hierarchical cultures, elites restrict resource sharing, limiting new ventures, while in conservative ones, loyalty to close groups reduces the openness and resource circulation needed for entrepreneurship. These findings show that entrepreneurship depends not only on institutional resources but also on cultural conditions that determine whether those resources are freely accessible. Policymakers seeking to promote entrepreneurship should therefore focus not only on enhancing financial and educational infrastructure but also on fostering cultural openness and egalitarianism. Encouraging cross-group collaboration and reducing cultural rigidity can help ensure that institutional resources effectively support entrepreneurial growth.

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Photo by Saj Shafique on Unsplash

Photo by Saj Shafique on Unsplash

Why is it important?

This research is unique in integrating institutional theory with cultural value dimensions to explain how resource munificence translates into entrepreneurial activity across nations. By identifying hierarchy and conservatism as key cultural moderators, the study demonstrates that institutional resources alone are insufficient to drive entrepreneurship if social norms inhibit their free flow. This perspective advances cross-national entrepreneurship research by linking the accessibility of institutional resources to the deeper cultural context in which they operate. The study is particularly timely as many countries strive to stimulate entrepreneurship as a driver of innovation and economic renewal. Conducted across a diverse set of nations, it highlights that developing economies must consider both structural and cultural reforms to build thriving entrepreneurial ecosystems. By aligning institutional resource development with cultural change toward openness and equality, governments can foster environments where resources flow more freely and entrepreneurial activity can truly flourish.