Cultural Influences on Entrepreneurial Orientation: The Impact of National Culture on Risk Taking and Proactiveness in SMEs

TLDR

The study investigates how national culture and institutional variables affect risk taking and proactiveness in SMEs, testing eight hypotheses linking four cultural dimensions to these entrepreneurial orientation dimensions. Using data from 1,048 firms in six countries, the authors analyze the relationships between cultural dimensions, institutional factors, and entrepreneurial orientation. Results show that uncertainty avoidance and power distance negatively influence risk taking, while uncertainty avoidance, individualism, and power distance reduce proactiveness, and several institutional factors explain cross‑country differences, extending national‑culture theory.

Abstract

This study utilizes data from 1,048 firms in six countries to assess the impact of national culture and certain institutions that are representative of national culture on two key dimensions of entrepreneurial orientation: risk taking and proactiveness. Eight hypotheses are developed specifying the expected relationships between four cultural dimensions and levels of risk taking and proactiveness within SMEs. Additionally, two hypotheses are developed to explore between–country differences in the relationship between risk taking and proactiveness and a range of institutional variables. Uncertainty avoidance and power distance are both found to have a significant negative influence on risk taking; uncertainty avoidance, individualism, and power distance are found to negatively influence proactive firm behaviors. A number of institutional factors are also found to be significantly linked to between–country differences in both risk taking and proactive behaviors. This research contributes to existing theories of national culture by suggesting that the various dimensions of cultural values and several of the institutions that are representative of national culture impact the willingness of entrepreneurial firms to display risk taking and proactive behaviors.