Impact of Education and Culture on Entrepreneurship

Abstract

This paper explored the impact of secondary education level and national culture on the entrepreneurial activities. Specifically, we examine how higher education and one dimension of national culture (individualist-collectivist orientation) are related to the ratio of opportunity-entrepreneurship in a country. The research model is developed as: high education and individualism are positive determinants of the entrepreneurial activity, but only when the motivation for starting new ventures is opportunity or improvement and not when people do it for necessity. Our variables were developed with GEM data, World Economic Forum's Global Competitiveness Report and Hofstede's cultural determinants for 57 countries for the years 2009, 2010 and 2011, and we test our hypothesis empirically. In addition to our testing independent variables, we added 3more control variables, economic freedom, and perception of corruption and property rights, in order to specify our findings. Our analysis proves that higher education and individualism are determinants for superior opportunity entrepreneurial activity. Education levels and individualism, however, do not show the interaction effect. Our results show that, after controlling for other entrepreneurship determinants variables borrowed from the institutional theory of entrepreneurship, education at the tertiary level i.e., university, college, etc., positively affects the choice of individuals to pursue opportunity driven entrepreneurship. Moreover, individualism is also found to positively affect entrepreneurs' choice. We hope this research contribute in expanding our understanding on global entrepreneurship activities.