A recent investigation by Valentina A. Assenova and Raphael Amit from The Wharton School, University of Pennsylvania, uncovers the significant role of cultural tightness and looseness in driving entrepreneurial activities across the globe. The findings are detailed in an article published in the Strategic Entrepreneurship Journal, which explores why certain countries and regions are more prolific in generating startups, providing a novel insight into the relationship between culture and entrepreneurship.

The research utilised data spanning 156 countries and 50 U.S. states, introducing the concept of cultural tightness-looseness (CTL) as a key determinant in the dynamics of entrepreneurial ecosystems. CTL is defined by how strictly social norms are enforced; cultures with high tightness implement strict adherence to rules, while those with higher looseness allow more flexibility and tolerance for deviation. The study reveals that cultural looseness accounts for 56% of the differences in rates of new firm creation across countries and 71% of the variation in rates of new entrepreneurs within U.S. states.

These insights carry profound implications for stakeholders like governments, investors, and educational institutions keen on fostering entrepreneurship. For instance, policymakers can enhance startup ecosystems by advocating for more significant cultural looseness, including minimising bureaucratic obstacles and promoting open communication. Similarly, investors and startup accelerators could leverage CTL metrics to pinpoint regions with promising entrepreneurial success potential. Moreover, educational strategies can be adjusted to encourage resilience and creativity among entrepreneurs operating within tighter cultural frameworks.

Valentina A. Assenova, the lead researcher, emphasises the utility of understanding cultural tightness-looseness in crafting effective entrepreneurial policies and practices. “Grasping the nuances of CTL not only helps in formulating supportive environments but also in unlocking the full capabilities of individuals and communities by celebrating diversity and innovation,” she notes. This approach suggests a strategic pathway for leveraging cultural dynamics to bolster entrepreneurial activities worldwide.

More information: Valentina A. Assenova et al, Why are some nations more entrepreneurial than others? Investigating the link between cultural tightness–looseness and rates of new firm formation, Strategic Entrepreneurship Journal. DOI: 10.1002/sej.1520

Journal information: Strategic Entrepreneurship Journal Provided by Strategic Management Society