chapter  1
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How culture moulds the effects of self-efficacy and fear of failure on entrepreneurship

ByKarl Wennberg, Saurav Pathak, Erkko Autio

Michigan Tech University, Academic Office Building, G006, Houghton, MI, USA; dImperial College London Business School, South Kensington Campus, London SW7 2AZ, UK; eAalto University

School of Science, Department of Industrial Engineering and Engineering Management (Received 30 October 2012; accepted 8 October 2013)

We use data from the Global Entrepreneurship Monitor and the Global Leadership and Organizational Behavior Effectiveness study for 42 countries to investigate how the effects of individual’s self-efficacy and of fear of failure on entrepreneurial entry are contingent on national cultural practices. Using multilevel methodology, we observe that the positive effect of self-efficacy on entry is moderated by the cultural practices of institutional collectivism and performance orientation. Conversely, the negative effect of fear of failure on entry is moderated by the cultural practices of institutional collectivism and uncertainty avoidance. We discuss the implications for theory and methodological development in culture and entrepreneurship. Keywords: culture; entrepreneurship; institutions; multi-level

1. Introduction National culture is often seen as central to entrepreneurship (Hayton, George, and Zahra 2002). Some countries are considered models of an ‘entrepreneurial society,’ whereas others are perceived as ‘less entrepreneurial’ (Freytag and Thurik 2007). Yet, findings from studies on how national culture influences individuals’ entrepreneurial behaviours remain conflicting (Bowen and De Clercq 2008; Mueller and Thomas 2000; Steensma, Marino, and Weaver 2000; Stephan and Uhlaner 2010). One reason for this confusion is that few studies apply multi-level methods to test the relationship between national culture – a collective-level construct – and entrepreneurial behaviours – an individual-level construct. This paper provides a multi-level examination of the relationships between national culture and individual’s entrepreneurial entry.