The Influence of Cultural Factors in Attitudes towards Start-ups

Bachelorarbeit , 2017 , 69 Seiten , Note: 1,7

BWL - Unternehmensgründung, Start-ups, Businesspläne

This thesis examines the effect of cultural factors on entrepreneurship in different eco-systems including attitudes and the role of journalism.

The object of this thesis is an exemplary examination of the question in a national context, whether and to what extent cultural dimensions influence individual’s propensity to found a start-up. The entrepreneurial activities in Germany and the United States differ from each other which is also reasoned by different value systems and attitudes. Indications of rather an individualist or collectivist and rather a risk-averse or risk-affine attitude towards start-ups and its foundation will be focused upon. Building on Hofstede’s research on cultural dimensions, newspaper and blog articles from the United States and Germany dealing with start-up foundations and the attitude of the respective society on start-ups including the founders’ views will be analyzed. Since all cultural dimensions are intercorrelated, quantifying the effects of how much single cultural dimensions influence start-up foundations while excluding the influence of other dimensions is difficult.

Therefore, the thesis does not examine the effects of the above mentioned two cultural dimensions isolated from other cultural factors, but it sets a focus on those two dimensions by analyzing statements and ideas published in newspaper and blog articles that deal with founders and start-ups.

Table of Contents

1. Introduction

2. Theoretical Background: Culture & Entrepreneurial Activity
2.1 Culture
2.2 National Culture
2.3 Assessing Cultural Difference
2.3.1 Cultural Dimensions
2.3.2 Individualism & Collectivism
2.3.3 Risk Aversion & Risk Affinity
2.4 Start-ups

3. Content Analysis: Cultural Factors influencing Start-up Foundation
3.1 Methodology
3.2 Influence of Individualistic & Collectivistic Attitudes of German Society
3.3 Influence of Individualistic & Collectivistic Attitudes of US-American Society .
3.4 Influence of Risk-averse & Risk-taking Attitudes of German Society
3.5 Influence of Risk-averse & Risk-taking Attitudes of US-American Society
3.6 Discussion

4. Conclusion

I. Works Cited

II. Appendix

1. Introduction

Entrepreneurship, especially a knowledge- and technology-intensive start-up culture, is progressively being recognized as a key factor for sustainable economic growth (Radziszewska 2014: 35, Carvalho et al. 2016: 41). Considering the economies of various countries around the world, it is observable that in some regions start-ups are being founded more often than in others and that the importance of entrepreneurship is seen differently (Lee and Peterson 2000: 403).

Silicon Valley, an area of approximately 2,900 square meters - almost as small as Monaco - in the state of California in the United States, is the largest conurbation of innovative, fast-growing, and highly successful young companies, so-called “start- ups” (Carvalho et al. 2016: 42). Silicon Valley's high density of technology companies, the resulting networking effects and the presence of renowned create the ideal conditions for an eco-system nurturing business start-ups. As a result, a lively start-up scene has developed there over the past decades. Silicon Valley is the hub of many major IT and high-tech companies, making it one of the most important centers for products/services in the technology industry worldwide. Former start-ups as such as Apple Inc., Facebook Inc., Google Inc., and Tesla Inc., which were founded there, have long since become global companies. Many people refer to them as being the product of a unique way of life called Silicon Valley, which has developed into the guiding culture of the digital age (Keese 2014: 11).

Germany, however, has lost its pioneering role regarding innovation and development. Besides, Germany is far behind in terms of digitalization, which is considered as the most imporant technology of today (Keese 2014: 11). However, innovation and business foundations are essential to economies in order to safeguard their economic development and employment (Schumpeter 1934: 75). Within the last 12 years, the number of business registrations in Germany has declined by 28 percent to 685,373 (Statistisches Bundesamt 2017: n. pag.). When reading about the German start-up scene, it is frequently referred to a comparatively small eco-system with its center in Berlin. The German scene cannot keep up with Silicon Valley: Last year, only $2.3 billion of venture capital was raised for 455 start-ups in 2016 through financing rounds (EY n.d.: n. pag.). Comparing this to Silicon Valley, however, there was a funding total of $58.6 billion for 4520 deals in 2016 (PwC 2017: n. pag.), thus on average, start-ups in Silicon Valley receive almost $8 million more than those in Germany. There is not only a difference in the quantity of start-ups founded but also in the financial support through provided venture capital.

One may ask for the causes of the discrepancy between both areas. As Silicon Valley is standing for the innovation leader with high entrepreneurial activity and Germany is falling behind in the international technology and start-up foundation. Although political, economic, legal, and social context factors play an important role with respect to an explanation of the degree of entrepreneurial activity, cultural context factors of a country or region can have an impact on the motivation, peculiarities, survival, quantity and quality of start-up foundations, too (Sternberg and von Bloh 2017: 20). Since the end of the 20th century, there has been a growing acceptance of the fact that (national) culture is a determinant of human behavior and that it can also be a factor influencing entrepreneurial activity, the range of ways in which cultural influences are dealt with remains impaired (Scherm and Süß 2001: 19). German-born Peter Thiel is co-founder of PayPal and was the first investor in Facebook. Due to his German and US-American background, he is often asked about the difference between both start-up cultures:

There is a great contrast between Germany and the United States, especially California. California is very optimistic and at the same time very uncertain. The Germans, on the other hand, are very pessimistic, but life is comfortable and safe. That's the difference. (“Thiel” in Schmaler 2016: n. pag.)¹

Marked differences among various nations have been recognized, which are mainly the result of the prevailing country-specific conditions (Scherm and Süß 2001: 19, Radziszewska 2014: 35). Cultural factors such as attitudes towards risky situations and the importance of individual self-realization have also been identified as key reasons for this (Feldmann 2007: 22). The characteristics of these cultural factors, also referred to as cultural dimensions, however, are not identical in every region: Every social group (subliminally) values them in different ways and thus behaves and thinks based on their culturally shaped attitude (Hofstede 1991: 4). Cultural values that can be recognized in a specific country are described as values of a national culture (Hofstede 1991: 11). As a consequence, when interpreting differences in entrepreneurship across different countries, the concept of national culture should be included since it affects entrepreneurial activity (Radziszewska 2014: 35). In Germany, these cultural values and norms, as a foundation-related framework, even have a significant negative impact, which is identified as a weakness of Germany as a founding location (Kelley et al. 2017: 20 seq.). By comparison, cultural values and norms in the United States are seen as positive influencing factors (Kelley et al. 2017: 22). This indicates that United States values and standards differ from those in Germany.

Just as the actions of individuals are influenced by their respective cultural values and traits, the economy of a country cannot be solely seen as an autonomous, untouched system, which follows purely rational calculations and operates independently without any influence of cultural developments (Hölscher 2006: 23). Rather, the economy must be seen as an integral part of a society from which it is difficult to separate (ibid.). Furthermore, human behavior has to be described in a similar dynamic context as the New Institutional Economics approach shows. This approach states that human behavior cannot be described by rigid individual maximization of self-interest in the sense of a complete rationality, which presupposes purely rational and predictable action (Hölscher 2006: 30). Thus, a description of human behavior can be made by means of bounded rationality, i.e., a limited rationality of the human being, in which cultural characteristics such as the embedding of the individual in social groups such as family, neighborhood, and nation must also be taken into account (ibid.). The image of the homo oeconomicus, a purely rational individual, is thus contrasted with the homo culturalis, a socially integrated and culturally shaped individual (Panther and Nutzinger 2004: 296).

With this legitimation, the cultural dimensions of Geert Hofstede, who made empirical cultural research known, can also be transferred to the economic context and the effects of the cultural background of economic actors on their commercial activities can be approached (Hölscher 2006: 35). Even though scientists of the comparative cultural research (e.g., Kluckhohn and Strodtbeck 1961, Hall 1976, Hofstede 1980, Trompenaars 1993; Schwartz 1994, or Javidan and House 2002) did not specify the influence of cultural dimensions on entrepreneurial activity per se, identifying tendencies of culture related to the potential for entrepreneurial behavior is helpful to compare different groups of individuals (Mueller and Thomas 2000: 52). Scientific research regarding the impact of culture within start-up environments has been carried out (e.g., Cramton 1993, Lee and Peterson 2000, Engle et al. 2011, Contiua et al. 2012, Radziszewska 2014). Other studies have focused on examining the effect of individualist und collectivist societies on their start-up activity (e.g., Peterson 1980, Tiessen 1997, Mueller and Thomas 2000). Furthermore, scientific research has examined the impact of societies’ attitude towards risk aversion and risk affinity (e.g., Shane 1995, Hancıog lu et al. 2014) on its entrepreneurial orientation. Anyhow, most are empirical studies and do not include journalistic publications as a medium of examination and are concentrated almost exclusively on circumstances in the USA (e.g., Cramton 1993). As there is hardly any empirical, qualitative work that examines the effect of cultural factors on entrepreneurship in different eco-systems including attitudes and the role of journalism, this thesis will do so.

Hence, the object of this thesis is an exemplary examination of the question in a national context, whether and to what extent cultural dimensions influence individual’s propensity to found a start-up. As shown above, entrepreneurial activities in Germany and the United States differ from each other which is also reasoned by different value systems and attitudes. Indications of rather an individualist or collectivist and rather a risk-averse or risk-affine attitude towards start-ups and its foundation will be focused upon. Building on Hofstede’s research on cultural dimensions, newspaper and blog articles from the United States and Germany dealing with start-up foundations and the attitude of the respective society on start-ups including the founders’ views will be analyzed. Since all cultural dimensions are intercorrelated (Yukl 2013: 355), quantifying the effects of how much single cultural dimensions influence start-up foundations while excluding the influence of other dimensions is difficult. Therefore, the thesis does not examine the effects of the above mentioned two cultural dimensions isolated from other cultural factors, but it sets a focus on those two dimensions by analyzing statements and ideas published in newspaper and blog articles that deal with founders and start-ups.

Against the background of this analysis, section two will give relevant information concerning the theoretical background by explaining term “culture” and the model of national culture in order to embed culture into a national context as the analysis will later deal with US-American and German cultural factors. Since the analysis will focus on two cultural dimensions, mainly based on Hofstede’s theory (1991), namely "Individualism & Collectivism" and "Risk Aversion & Risk Affinity", explaining them is necessary for the subsequent discussion. In respect to the analysis of their influence on attitudes towards start-ups, an introduction into the field of entrepreneurship and start-ups is then given.

After this thesis got embedded into a theoretical context, section three will present the practical analysis. Introducing with a presentation of the applied methodology of having analyzed German and US-American newspaper and blog articles in regard to content, hypotheses, and their argumentations. These will be examined and with respect to their described attitudes to start-ups, as the aim of the analysis is to investigate whether, how and with which influence two cultural dimensions can be found with regard to start-up foundation in Germany and the United States. The analysis focuses on the dimension “Individualism & Collectivism” and “Risk Aversion & Risk Affinity” in German and US-American Society and examines whether these attitude favor or hinder entrepreneurial action. Subsequently, a discussion of the findings derived from the previous section regarding the US- American and German attitudes towards start-ups follow. Finally, the work will conclude with a conclusion and an outlook in section four.

2. Theoretical Background: Culture & Entrepreneurial Activity

2.1 Culture

The term “culture” is extensively defined and discussed by many scholars and researchers including many different perspectives², whereby no universal definition of the term is recognizable (Martin 2002: 56). Raymond Williams refers to culture as being “one of the two or three most complicated words in the English language” (Williams 1967: 76) and emphasizes the difficulty of precisely defining the term. The debate about culture also points to the high degree of reflection and critical handling of scientific paradigms. As a reason for the difficulty of not being able to find a generally accepted definition of the concept of culture, authors mostly call attention to the high complexity, “abstraction of the grandest order“ (Osgood 1951: 204), its influence of many variables, and the concomitant difficulty of grasping the concept (Martin 2002: 4, Müller and Gelbrich 2004: 64).

On the basis of different definitions, the following summarized definition can be formulated as a working definition: Culture is the set of collectively irrational shared, unconscious, and deeply grounded basic assumptions, values, norms, attitudes and beliefs of a social group, expressed in a variety of behaviors and artefacts, which have evolved over time in response to the manifold demands placed on this social unit (Hofstede 1980, Herbig 1994). These behavioral norms, patterns and values which are passed on in the course of socialization, and which are relatively stable over time and serve the cohesion and functionality of the social group as well as the adaptation to the environmental conditions (Keller 1982: 113 seqq.). Moreover, they also affect the respective society’s³ political institutions and social systems, “all of which simultaneously reflect and reinforce values and beliefs” (Hayton et al. 2002: 33). Thus, the definition of the concept of culture can be understood as a hermeneutic circle, meaning a “cyclical process of ever-deeper understanding” (Babbie 2007: 141).

Culture is not fixed, but dynamic that develops its meaning further and further so that the original meaning may eventually be changed through this process by developing parts of the whole: “The closer determination of the meaning of the separate parts [of culture] may eventually change the originally anticipated meaning of the totality, which again influences the meaning of the separate parts” (Kvale 1996: 47).

Generally, the goals of the different interpreting researchers along with their distinct divisions of their subject areas are a reason for the multitude of cultural theories and definitions of the concept of culture. Each research area pursues different purposes and aims of its analysis and, thus, reaches different word meanings (Perlitz 1997: 304, Witchalls 2012: 12): whereas socialists, for example, mostly emphasize culture as a “social system” (Luhmann 1984: 104 seq.), psychologists might use the term culture as an “orientation system” for the individual (Thomas et al. 2003: 239) and semioticians are more likely to describe culture as a “system of signs” (Posner 1992: 37 seqq.). The concept of culture must therefore be described as a discreet construct (Pethes and Ruchatz 2001). Thus, the viewpoint and the research aim to specify the respective definition of culture, depending on whether it relates “to the functioning of society (macro-perspective), the success of an individual (micro- perspective), the communication process itself (processual perspective), or other viewpoints and objectives” (Witchalls 2012: 12).

Further, it is assumed that culture consists of both visible and invisible parts. These are referred to as concepta and percepta levels (Osgood 1951: 210 seqq.). First, the manufactures and “all ideas of the behavior of the aggregate of human beings which have been directly observed are the percepta of culture” after Osgood (1951: 210), thus the percepta level covers all visible elements of culture. These include, on the one hand, material things, such as jewelry and architecture, and on the other, intangible artifacts such as rituals and language (Scherm & Süß 2001: 20). Most members of one culture are conscious of those elements (Osgood 1951: 211). Second, “the ideas of the aggregate of human beings which have been communicated are the concepta of culture” (ibid.). The concepta level, thus, describes components of culture, which are not observable, referring to reasons for the particular behavior of the respective cultural members (Scherm & Süß 2001: 20 seq.). These include values, attitudes, standards and ideas that, like Osgood contrasts, cannot be perceived as sounds (Osgood 1951: 210). In intercultural research, the focus will be on the analysis of the concepta level. Yet there is another approach to understanding culture: Raymond Williams describes culture as a “whole way of life” (1967: xviii), as a space in which meaning, knowledge and power are created, and where confrontations about power take place. It does not only concern elaborated cultural spheres such as literature or art, but also social life. The cultural conception of Williams is an experience-orientated one, which does not predefine culture ideologically-elitist and attacks ideas about quasi-natural, elitist abilities (Pühretmayer and Puller 2011: n. pag.). Because William sees culture as an expression of a whole of a certain way of life (1967: 300), it becomes clear that culture is a historical phenomenon that only gains significance within certain contexts of experience. All social practices are always cultural practices that can only be understood in relation to people's relationship to their cultural objects and artifacts (Pühretmayer and Puller 2011: n. pag.). Therefore, cultural practices (which are lived in, i.e., texts, meanings, ways of organization) are to be contextualized, understood as an expression of a “whole way of life” (Williams 1967: 300). Because William sees culture as an expression of a whole of a certain way of life (1981: 10), it becomes clear that culture is a historical phenomenon that only gains significance within certain contexts of experience. In the context of this work, the inclusion of William's approach is important, since the attitudes of individuals, outlined in section 3.2-3.5, are historical and determined by the context. In this work, culture is not understood as an artifact, but as a way of life, which individuals practice differently in everyday life in a cross- national comparison. Culture is therefore a product of everyday performance.

2.2 National Culture

Some researchers argue that “cultural effects can be ignored as long as research takes place within the same cultural system” (Erez and Earley 1993: 4), but in order to identify cultural differences in the value systems across different cultural systems and countries, the assumption of the concept of national culture is necessary (Hofstede 1980: 10). Moreover, the understanding of national culture is essential for being able to interpret distinctions of entrepreneurial activities across countries (Radziszewska 2014: 35). It describes that shared values⁴, communicative norms, and beliefs determine a society’s value system, and moreover its behavior, since value systems determine behavior and add a certain predictability (Hofstede 1991: 13, Cullen and Parboteeah 2010: 180).

In the course of human development and human societies, people have been exposed to different challenges and situations, which have led to the development of different behaviors, beliefs and values (Hofstede 1991:11). Over the course of time, communities have been formed as such as villages and later towns, cities, kingdoms, states and sometimes eventually their colonies. Hence the system of "nations", and thus the territorial division of the earth into nation-states mostly by Western European colonial powers, was introduced worldwide in the mid-twentieth century (ibid.). Hofstede describes “national” as political units that divide the human population of this world into groups and according to which every human being can be allocated by his/her origin (ibid.).

However, there is scientific evidence that identity as such is not and cannot be only generated by geographical or national borders. For example, countries in Africa, whose borders still originate from this period, reflect less culturally connected areas, but instead, they met the needs of colonial territorial administration and resource exploitation or are the consequences of colonial wars (Hofstede 1991: 12). Therefore, Hofstede stresses that it would be incorrect to generally assume that nations are cultural entities nor should be synonymized with societies (ibid.): He describes societies as “organically developed forms of social organization” and clarifies that the “concept of common culture applies strictly speaking [...] more to societies than to nations” (ibid.). At this point it should be noted that other scholars draw a less strict distinction between nation and society (McDougall 2003: 3). Nevertheless, many nations often form a historically grown whole, since they have existed for a long time and consisted of several cultural groups in particular, show an integration tendency, which is mostly expressed by a dominant language, common mass media, a national education system and also by national teams in sporting competitions (Hofstede 1991: 12). Despite this, religious, linguistic or ethnic groups continue to seek recognition of their own identity. Thus, although it is possible to identify cultural characteristics according to national borders, linguistic, religious or ethnic groups should be differentiated as far as possible (ibid.).

Categories for national cultures of "classical" cultural comparative and subcultural studies (Hall 1976, Hofstede 1991, Trompenaars 1993) try to describe and contrast behavior with bi-polar continua. Here, relatively homogeneous and static cultural units, mostly national cultures, are assumed (Moosmüller 2007, Bolton 2012).

By endowing nations, societies, or cultures with the qualities of internally homogeneous and externally distinctive and bounded objects, we create a model of the world as a global pool hall in which the entities spin off each other like so many hard and round billiard balls. (Wolf 1982: 6)

According to Eric Wolf's "national cultural model", it is assumed that cultures clash as delimited units such as "billiard balls" (ibid.) - to stick with the metaphor - even bounce off each other - and remain separate. However, critics like McSweeney describe culture of not being static and homogeneous since “[a]n acknowledgement of internal divisions, gaps and ambiguities inserts an essential element of stance at the heart of tradition and thus the possibility of critical interpretation, action variation and unpredictability within a country” (2009: 936). In contrast to Wolf’s model, Hannerz points out that the cultural flow between countries and continents can very well lead to “another diversity of culture” (1992: 266), which is based on connections rather than autonomy, since the complexity of the concept of culture initiates different viewpoints and a continuing debate (ibid.).

Although this thesis assumes national cultures, some researchers rather consider cultural membership as a subjective phenomenon: “One cultural member may view boundaries (and other cultural products) differently than another“ (Martin 2002: 27). Categorization of cultural elements on a concepta level (due to abstract boundary settings) implies a generalization of individual attitudes and behavior. Researchers do not agree on the same generalizations, wherefore different cultural dimensions and various categorizations can be found.

Even though human beings belong to many different groups at the same time based on the national background, gender, generation, age, education, and religious, ethnic, regional, and linguistic affiliation (Hofstede 1991: 10), this thesis focuses on the mental and cultural programming that is based on the national level and tries to then assess its influence on entrepreneurial activity. However, it is by no means excluded that these different layers of culture do not influence each other. Therefore, the evaluation of human behavior must be viewed with caution, when explained solely on the basis of national origin.

It is proven that, historically, each society has faced different challenges and opportunities, wherefore created their own behavioral patterns (Lewis 1999: 65). Through the effect of collective identity (Assmann 1992: 132, 139) people “adhere collectively to the set of norms, reactions and activities which their experience and development have shown to be most beneficial for them” (Lewis 1999: 65). Since a respective behavior has been proven to be successful within a certain situation for a society, their attitudes and behaviors cannot be rated as good or bad when comparing national cultures. However, comparing different attitudes of cultural groups gives hints on how efficiently a culture with its collective attitude can deal with f. ex. founding start-ups and contributing to let its economy grow.

2.3 Assessing Cultural Difference

2.3.1 Cultural Dimensions

Although not directly focused on assessing people’s propensity to found a start-up, it is helpful for this context to recognize that differences in national cultural values have been identified across a number of dimensions as categories of comparative studies (Hofstede (1980), Elizur (1984), Ronen and Shenkar (1985), Schwartz (1994), Trompenaars (1993)). These dimensions have been developed based on a variety of assessments, methodologies and survey tools by different scholars and practitioners (Erez and Earley 1993: 12). Although the studies measure different cultural dimensions, they are used to explain specifics, contrast, and explain them in intercultural overlapping situations, as well as generally to assess cultural differences (Erez and Earley 1993: 12, Barmeyer 2010: 87). Even though critics classify dimensions as deterministic, restrictive and even stereotypical (Haas 2009, Hansen 2009), they have become an integral part of many publications in different fields of research, serve as a conceptual framework for many empirical studies and are used as the basis for intercultural continuing education (Hofstede 2001).

When describing cultural dimension, generalizations, unfortunately, cannot be avoided: It should be noted that stereotypes and generalizations are a way to strongly reduce and simplify complex real (external) situations considering perceived (cultural) differences (Scherm and Süß 2001: 19, Schroll-Machl 2013: 31). However, most scholars are also aware of the effect that “determining national characteristics is treading a minefield of inaccurate assessment and surprising exception” (Lewis 2001: 3). Stereotypes and generalizations can lead to situations and attitudes being made equal, although they are not the same (Usunier and Walliser 1993: 75 seq.). The national norm often indicates, for instance, that “the Germans” are punctual generously ignoring the existence of those that are unpunctual (Schroll-Machl 2013: 128, 130). Generalizations about a society are unreflected, self-evident facts and statements about predominant tendencies of a national group, but not statements about the attitudes and behavior of individual members of a national group (Schroll-Machl 2013: 31, 33). Additionally, Schroll-Machl emphasizes that there is no individual who in his/her thinking, feeling and acting always corresponds exactly to the cultural standards of his/her culture (Schroll-Machl 2013: 31). Hence, although cultural identity is an integral part of the self-concept and thus shapes the identity of an individual, it is substantially supplemented by personal identity (ibid.). Therefore, stereotypes and generalizations must be regarded as a questionable instrument of cultural handling (Usunier and Walliser 1993: 75 seq.).

A cultural dimension is a variable or category that describes and analyzes individual or social phenomena occurring in a particular combination (Hofstede 1991: 6 seq.): A set of values and norms form a cultural dimension of a particular group of individuals, whereas it is often a question of value orientation (Hofstede 1980). Hereby, special characteristics are worked out and contrasted with each other. Consequently, cultural dimensions are intended to classify cultural peculiarities and to help to understand other cultural systems that shape the perception, thinking, feeling and behavior of the individuals living in them. The national culture of a country as a whole is finally derived from all the different characteristics of the cultural dimensions (Hofstede 1991: 14).

Due to the modern approach of culture, the respective characteristics of a cultural dimension are expressed by means of a scale, which illustrates to what extent the various values apply. Not only extreme characteristics of one dimension, for example the understanding of a society being individualistic or collectivistic, are possible, but also continuous variations between these opposite poles. Thus, it has to be noted that this thesis does not understand cultural dimensions as dichotomies. Here, it should be mentioned that other researchers see cultural dimensions differently: In this context, Jackson et al. even does not describe cultural dimensions as opposite poles but rather as “orthogonal, independent constructions” (2006: 885), Wurst, however, determines them as “integrally connected, representing differing aspects of the same [...] entity” (2003: 229).

Most researchers define different theories about culture and different cultural dimensions; however, certain semantical similarities of some differently approached dimensions can be observed, whereas two of them serve as a basis of the analysis of this thesis: First, “Individualism & Collectivism”, originally determined by Hofstede (1980) in the course of this cross-cultural study, and later also examined by Kluckhohn and Strodtbeck (1961), Hall (1976), Trompenaars (1993), Schwartz (1994), and Javidan and House (2002) on the basis of their own research: they describe a dimension that relates to the cultural dimension of the relationship of an individual to its group. In the following, the thesis will focus on Hofstede’s concept. Second, Hofstede (1980), Trompensaars (1993), and Javidan and House (2002) define a dimension dealing with the value orientation of tolerating risk, which is referred to as “Risk Aversion & Risk Affinity”⁵. Since this thesis examines cultural differences in attitudes towards German and US-American start-ups, those two dimensions, on which the US-American and German cultures are likely to vary (as it will be discovered in section three), are investigated more closely. The purpose of the following section is to shed light on these two cultural dimensions.

2.3.2 Individualism & Collectivism

A fundamental question of human societies is the importance of the individual towards the group (Hofstede et. al 2002: 5). In some societies, the interest of the individual person is subordinated to the interest of the group (Yukl 2013: 352). Hofstede assigns this phenomenon to collectivist cultures (Hofstede and Hofstede 2006: 100), since they attach importance to being integrated into cohesive groups like extended families, the company where they work, or their nationality (Baughn and Neupert 2003: 316). From these groups, their members receive protection and social identity while being unconditionally loyal to them in return (ibid.).

In these collectivist societies a (large) family and the (close) social environment dominates over the individual collectivist cultures (Hofstede and Hofstede 2006: 102). Collectivists “understand themselves as interwoven with other people — as interdependent, not independent”, whereby their “goal is to fit in and adjust yourself to others, not to stand out” (Luhrmann 2014: n. pag.). Therefore, social contacts outside the cohesive group, and important decisions are not chosen or made by the individual, but by the family and the environment whereas it is very important to follow their decision (Hofstede and Hofstede 2006: 101, 108, Yukl 2013: 353). Moreover, it is, on the one hand, more improbable that people of collectivist cultures change jobs and, on the other hand, are more willing to spend time doing volunteering service for the benefit of his/her cohesive group or society (Jackson et. al 2006: 888, 890, 895, Yukl 2013: 353). China and Mexico are considered as being exemplary countries with strong collectivistic values (Yukl 2013: 353).

In individualist societies “social ties and commitments are loose[r] and social identity is based on individual initiative” (Baughn and Neupert 2003: 316)⁶. Here, the needs and autonomy of the individual take precedence over the collective interest of groups, or society (Yukl 2013: 353). Members of individualist societies like to share their successes due to individual achievement and to understand of themselves “as unique, […] self-motivated, [and] self-made” (Luhrmann 2014: n. pag.). In individualist societies, people do not feel the necessity to be psychologically or practically dependent on a group. In contrast to collectivist societies, relations with other people are not alien and self-evident, but are voluntarily addressed and then cultivated (Hofstede and Hofstede 2006: 102, 104, 107). It has been observed that self-interest and individual rights are more necessary than a social commitment, whereby a certain autonomy is expected from all its members (Gelfand 2012: 1132 seq.). Therefore, people are educated in such a way to be able to take care of and make choices for themselves independently (Hofstede and Hofstede 2006: 101).

In strongly individualist societies, there is no cohesive group that would force the individual to bind itself and would hinder to promote his/her own initiative (Baughn and Neupert 2003: 316). However, there are theories that divide individualism into different levels such as the theory after Friedrich August von Hayek: He defines one form of individualism as wahren Individualimus that includes the individual into small groups such as the family or the circle of friends (Hayek 1946: 29). Individualism is therefore not to be equated with 'cold egoism' (Ptak 2008: 56), since this orientation certainly involves a social competence in the course of the (voluntary) inclusion of the collective in the form of small groups (Hayek 1946: 29).

Because of the mentioned characteristics, people of individualist societies are more motivated to realize their true selves and personal goals (Yukl 2013: 353), e.g., by founding a business in order to become one’s own boss. Since they also prefer being rewarded based on individual achievements and performance, people of individualistic countries are also highly motivated to achieve a task alone by themselves (Kirkman et al. 2015: 137). A country that is considered to value individualism is, for example, the United States including its frontier mentality.

Scientific research has shown that the degree of how strongly a society acts and thinks in individualist or collectivistic manners affects its entrepreneurial activity differently and set the shared value of self-fulfillment of its members (Tiessen 1997: 368). Even if attitudes of individualist societies, such as the desire of self-realization, are seen as a positive determinant for start-up foundations and entrepreneurial activity (Jing et al. 2015: 378), Franke et al.

[...]

---

¹ All translations from German are made by the author. The original reads: “Es gibt einen riesigen Kontrast zwischen Deutschland und den Vereinigten Staaten, insbesondere Kalifornien. Kalifornien ist sehr optimistisch und sehr unsicher zugleich. Die Deutschen hingegen sind sehr pessimistisch, dafür ist das Leben bequem und sicher. Das ist der Unterschied.”

² The absolute number of works listed in the Sociological Abstracts which list the word “culture” in the title has increased from 256 (1960-64) to 4385 (1995-99). The relative proportion is, of course, more relevant, as the absolute number of publications has also increased by a factor of about 10 in the same period (Hölscher 2006: 55). The opinions of the need for such examinations, however, are decided, whereas researchers nowadays are rather skeptical about defining the concept of culture on a macro perspective (e.g., Bolton 2009: 239, Witchalls 2012: 13).

³ On the contrary there are prominent critics that deny the existence of the construct of society as Margaret Thatcher claims “There’s no such thing as society. There are individual men and women.“ (Thatcher 1987: n.pag.)

⁴ By mentioning “values” this thesis refers to all components of national culture that form human mental programming described through Hofstede’s onion diagram which manifests culture at various levels of depth (Hofstede 1991: 6, 9): First, shared symbols, which are “words, gestures, pictures or objects that carry a particular meaning” (Hofstede 1991: 7) that is exclusively perceived by the individuals who share a certain culture, second, real or imaginary, alive or dead humans whose character or characteristics are highly regarded in a culture and referred to as heroes (Hofstede 1991: 8), third, rituals, which represent “collective activities, technically superfluous in reaching desired ends, but which, within a culture, are considered as socially essential” (ibid.), and forth, values, the core of a culture, which indicates society’s perception of what behavior is appropriate and true (ibid.). Thus, values can be described as polar opposites and judge over good and bad behavior. Other scholars like Cullen and Parboteeah determine other cultural components that manifest culture, in their core meaning, however, refer to similar concepts (2010: 180).

⁵ It has to be noted that Hofstede, Trompensaars, and House only describe this dimension as “Uncertainty Avoidance” excluding any counterpart. The author of this thesis chooses to name the opposite poles of this dimension “Risk Aversion & Risk Affinity”.

⁶ This description is referred to as a working definition in the following sections of this thesis. It should be noted that there are other definitions which are in ambiguity to the definition used here. For example, Hayek defines individualism primarily as subjugation and adaptation of the individual to other people's opinions, which is why individualism entails an attitude of humility and tolerance (2004: 209).

• Hochschule: Justus-Liebig-Universität Gießen (Anglistik)
• Note: 1,7
• Autor: Magdalena Pusch (Autor:in)
• Erscheinungsjahr: 2017
• Seiten: 69
• Katalognummer: V412444
• ISBN (eBook): 9783668638136
• ISBN (Buch): 9783668638143
• Sprache: Englisch
• Schlagworte: Culture, Entrepreneurship, Cultural Dimensions, Hofstede, Individualism, Risk Aversion, Collectivism, Risk Affinity, Content Analysis, Germany, Silicon Valley, Attitude