Tightness and uncertainty avoidance: the impact on new venture creation - The impact of culture on entrepreneurial processes

The main focus of this study is to look into the relationship between entrepreneurial processes and culture. The entrepreneurial process is a part of entrepreneurship and entrepreneurship plays a very core and fundamental role in any economy. Different facets of entrepreneurship have been proven to be influenced by national culture, but research on the influence of culture on entrepreneurial processes are lacking. A relatively new process theory by Sarasvathy (2001) caused quite a stir. She discovered that there are different types of entrepreneurial processes used and developed a model where she put her findings against each other at the opposite level. She defined these two opposites as causation and effectuation. This model is well suited for both theoretical examination and for practical application which makes it a relevant model for this study. Hofstede (2001) is one of the pioneers in developing a theory about culture at the country level. Hofstede proposed that cultures can be measured on five dimensions. This study uses the dimension Uncertainty Avoidance to define culture. Uncertainty Avoidance refers to the extent to which people feel threatened by uncertainty and ambiguity and try to avoid these situations. Uncertainty Avoidance on country level is to what extent countries try to cope with uncertainty through the domains of technology, law and religion. This study is part of the EPICC project where multiple students have tried to find a relation between culture and entrepreneurial processes. The dimension Uncertainty Avoidance has been used before, with mixed conclusions. This motivated to make use of the theory of Tightness – Looseness, which has similarities with the concept of Uncertainty Avoidance, to see which concept is a better predictor for entrepreneurial processes. The differences between Tight and Loose cultures are that in tight cultures there are many rules, norms, and standards for correct behavior and in loose cultures it is the opposite: there are few rules, norms, or standards. Data has been gathered under 20 Belgium student entrepreneurs. The 20 student entrepreneurs have worked on a case in which they had to put themselves in the role of an entrepreneur who starts up a fictional venture. Therefore the think aloud method was used. This method allows the subjects to think aloud during the process of solving the case. The interviews have been recorded, transcribed and coded. To find out if there is a relation between culture and entrepreneurial processes, data of a different country is used to compare the data obtained from Belgium. Malaysia is used because it is very different to Belgium at the dimension Uncertainty Avoidance and Tightness – Looseness. Analysis of the results shows little support that culture influences entrepreneurial processes. Uncertainty Avoidance predicted only one out of 3 hypotheses, which confirms earlier conclusions that it might not be a good predictor for causation and effectuation. However, also Tightness turned out not to be a good predictor for entrepreneurial processes. A tentative conclusion can be given that culture influences the entrepreneurial process used by entrepreneurs on one element: Entrepreneurs from a high uncertainty avoiding country rely more on expected returns than entrepreneurs from a low uncertainty avoiding country.