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Why Are Some Societies More Entrepreneurial than Others?

155 points by elsewhen 7y ago

jasonkester 7y ago
The submitted url just copy/pastes the abstract from the paper. Here’s where it lives: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3449762 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3449762
- mikekchar 7y ago
  The paper does not seem to have any of the data intact. It just says "Insert figure 1 here", etc. Perhaps I'm missing something, but it doesn't seem very useful as it is. The paper makes some claims, but I found it very difficult to follow the reasoning.
  - zhdc1 7y ago
    That's standard practice for working article drafts in management & the social sciences. I can't find a link to her data set & reproduction code - I would be surprised if she had it, tbh, because it's unfortunately not really a requirement in this field - but the data itself should be easy to assemble yourself. Entrepreneurial Activity: GEM (https://www.gemconsortium.org/ https://www.gemconsortium.org/) Country Level Vars: World Bank Dataset & Project Globe (https://globeproject.com/ https://globeproject.com/) The models are panel regressions w. fixed effects in Stata (you can recreate this with the PLM library in R).
  - freddie_mercury 7y ago
    > It just says "Insert figure 1 here" This is how virtually every pre-print is formatted. Scroll to the bottom and you will find all of the tables & figures. Laying out the paper is for the journal to do.
goodcanadian 7y ago
Without reading the article, some ideas that come to mind are: -differing culture making it more or less likely for someone to go down that road and making it more or less acceptable by others. -differing legal frameworks that make it easier or more difficult to pursue entrepreneurship and make a living from it.
prepend 7y ago
I think it has something with redemption and new identities. I think societies that allow reboots lead to greater risk taking. Also capital and risk distribution. I visited Amsterdam and was interested in their history and how it took off after the invention of the corporation. Corporations can end and the knowledge from them can go into a new venture (redemption). They can also raise capital through distributed ownership and distributed risk.
- paganel 7y ago
  > I visited Amsterdam and was interested in their history and how it took off after the invention of the corporation. I wonder if anyone has written a history of the Dutch economy that can be also accessible to non-Dutch readers (i.e. translated to either English or French or Spanish). From a very outside view (i.e. mine) the Dutch used to be a very entrepreneurial society/people in the 1600s going into the 1700s, but it seems that by the 1800s that spark had gone. They're of course still one of the most developed nations in Europe and in the world, but it looks like in terms of risk-taking they're the same as us, the rest of the Europeans, i.e. behind the Americans and I'd say even the Chinese. As a similar example the Italian economic historian Carlo Cipolla was blaming the wars and the associated pests/famines of the early 1600s for Italy's towns' fall into economic irrelevance. Not sure if they're easily accessible on the Internet, but in one of his books [1] he presents some charts where the population of entrepreneurial Italian cities of that time such as Firenze, Venice, Brescia, Lucca or Bergamo felt by more than 50% during 1600-1630 (give or take), which caused them not to be able to compete against Flemish and especially English clothes-related industry. I wonder if anything similar happened to the Dutch. [1] https://www.amazon.com/Before-Industrial-Revolution-European-1000-1700/dp/0393311988 https://www.amazon.com/Before-Industrial-Revolution-European...
  - simonh 7y ago
    >but it seems that by the 1800s that spark had gone I'd say the spark is doing just fine, but it ignited a blaze that swept much of the rest of Europe, and the New World. The innovations that Holland rode to success just aren't uniquely Dutch anymore, so now they're back to competing on an even playing field. The same happened to England after the industrial revolution. Once the new techniques spread to Germany, the US and elsewhere their special utility to the UK wasn't so special anymore.
zhdc1 7y ago
Hot take, but the data for this study comes from the Global Entrepreneurship Monitor (GEM https://www.gemconsortium.org/ https://www.gemconsortium.org/), which has been repeatedly beaten to death in the literature (that is, used as a primary data source). I'm not saying that she doesn't add anything that hasn't already been published, I don't know if I see it though.
- zhdc1 7y ago
  Just to add a little context, one issue she ignores entirely is the relationship between needs based entrepreneurship and the total entrepreneurial activity (TEA) rate. So, one of the effects you're going to run into are that the countries with the highest TEA rate are going to be 1.) developing economies (which have higher needs based entrepreneurship) that 2.) have reached a high enough development level to have functioning university systems and 3.) are in the process of adopting western-culture norms. As a result, all of the traditional determinants of entrepreneurial activity, such as capital availability, education infrastructure, &c... aren't going to matter that much because her DV only measures total entrepreneurial activity (e.g., person A opens a street stand because they don't have any other way of generating income) or variables that are heavily correlated with TEA, which isn't what most folks are really interested in when they talk about entrepreneurship. However, her sample is also going to be biased in favor of developing countries that have higher levels of normative western-culture beliefs (e.g., support for gender equality), because developing countries with university systems sophisticated enough to know about & participate in a project such as GEM (and generate good data) are also more likely to have already started the process of incorporating western norms into their culture. Gender equality is a massive value added, and I know a lot of people who have done actual research which proves it. But, you can't run a couple of regression models on GEM data and declare that capital access, geography, education, and all of the other traditional determinants of entrepreneurship aren't influential.
  - bakuninsbart 7y ago
    3.) are in the process of adopting western-culture norms. Could you expand on this point? What does it include outside of gender equality. The idea that this is a "western-culture norm" seems slightly misleading in the sense that gender equality in the workplace was much earlier and better developed in communist countries that would usually be contrasted with "western culture" albeit of course also originating in Europe.
matthewfelgate 7y ago
Could somebody explain the conclusions in laymans terms?
- QuesnayJr 7y ago
  The author contrasts two different types of explanation for entrepreneurship -- institutional or cultural. "Institutional" means that the country has institutions that make entrepreneurship easy. The author argues that these are not sufficient, and that the key difference is social norms.
  - pnako 7y ago
    Oliver Williamson and the "New Institutional Economics" school came up with a four-layer model explaining that real-time/day-to-day economic activity is influenced by contracts (time frame: months to years) which in turn are influenced by institutions, laws, etc. (time frame: years to decades) which in turn are influenced by things like culture and religion (time frame: centuries).
matthewfelgate 7y ago
Could somebody explain the conclusions in lay-mans terms please?
hertaveinS 7y ago
https://www.result.pk/med-result.html https://www.result.pk/med-result.html
kayaeb 7y ago
There's a good book on this called "Why Nations Fail," [1] they posit that extractive economic policies (corrupted governments) essentially de-incentivize entrepreneurial businesses, while inclusive policies cause them to thrive. They use this argument to counter "Guns, Germs, and Steel" [2] to explain dramatic economic differences across country borders in similar environments. [1] https://www.goodreads.com/book/show/12158480-why-nations-fail?from_search=true https://www.goodreads.com/book/show/12158480-why-nations-fai... [2] https://www.goodreads.com/book/show/1842.Guns_Germs_and_Steel?from_search=true https://www.goodreads.com/book/show/1842.Guns_Germs_and_Stee...
- ido 7y ago
  Interesting! Anecdotally I'm an Israeli who moved to Europe (first Austria then Germany) and at least from my layman's perspective both of these countries seem both a lot less entrepreneurial than Israel and a lot less corrupt... So I wonder if something unusual is going on or if one or more of my perceptions are wrong.
  - avip 7y ago
    If Israel is "more entrepreneurial" than Germany (and it's probably not), it would be due to IDF tech leakage and the very supportive international Jewish community (that one is difficult to measure, but as this whole thread is anecdotal... I think the influx of Israeli-sympathetic money had a huge impact).
  - eternalban 7y ago
    Typically, in a corrupt country, the 'take' of corrupt institutions and actors critically diminishes available (finite) Capital and distorts the distribution of what remains. What is unusual is that Israel is the recipient of largess of the American tax payers and enjoys continual replenishment of available Capital. Enjoy it while it lasts.
    - jasonvm 7y ago
      Nope. Almost all US aid is in the form of military equipment, and , incidentally, 75% must be spent on US-made armaments. So it's more like aid to the US military-industrial complex.
known 7y ago
Why startups condense in America? http://paulgraham.com/america.html http://paulgraham.com/america.html
jmkd 7y ago
Always worth zooming out and considering this study that relates average temperature to economic production, claiming 13C as a sweet spot https://www.nature.com/articles/nature15725 https://www.nature.com/articles/nature15725
- chewxy 7y ago
  Is this going to be a new Montesquieu's climatoethnic justification for racism?
  - enriquto 7y ago
    What does it have to do with race? Aren't there people of every race in every climate?
    - ceejayoz 7y ago
      The proportions of people with brown/black skin tend to increase as you approach the equator.
      - opportune 7y ago
        It’s a pretty obvious genetic adaptation to dealing with varying levels of sunlight. You even see it in the Americas which (presumably) is based off a relatively recent, smallish founder population
- jdm2212 7y ago
  I believe the conventionally accepted explanation for this is Acemoglu's, and it's that GDP is an Nth-order effect of climate. Warm weather -> highly productive agriculture -> landholders become extremely wealthy -> oligarchic government -> low GDP. Think of the American North and South before the Civil War, where slavery and inequality took hold in the highly agriculturally productive South but never in the North. The North wound up poor and more egalitarian, but eventually industrialized and overtook the South. Edit: warm weather also happens to correlate with another natural resource: oil. Oil tends to produce a similar dynamic -- whoever owns the oil owns the government and badly mismanages the government for their own benefit. The exceptions prove the rule: Alaska and Norway were both established, egalitarian societies before the oil was found, in contrast with Middle Eastern petrostates, Russia and Venezuela.
johnchristopher 7y ago
A day or two ago there was a comment on HN about the differences between eastern and western societies regarding entrepreneurship and/or motivations (the west is driven by events while the east is driven by its location). I am pretty sure there's a link between that comment and that submission but I can't find the original comment at the moment.
filleduchaos 7y ago
This is a topic that's particularly interesting to me because there's an ethnic group in my country - the Igbo - that are so pervasively, aggressively[0] entrepreneurial that it's become a meme. I can't really think of another culture that has business woven as tightly into its very bones - I haven't read the entire paper yet, but I'm curious to see if it mentions them at all. [0] In a good way. Several people have noted that the Igbo pretty much invented venture capital.
- barry-cotter 7y ago
  The Igbo are an example of a merchant minority, like both Ashkenazi and Sephardi Jews, Armenians, Parsis and the Chinese in Southeast Asia, Lebanese in West Africa, Latin America and elsewhere and Yankees in the US South. There’s always hostility to merchant minorities from the majority population but the degree of difference modulates the hostility. No Yankee enclave was ever burned in a pogrom in the South whereas Jews everywhere in the Old World, various Christians in the Ottoman Empire and the Chinese in SE Asia all dealt with those regularly enough. The Igbo tried to secede from Nigeria after independence and it was an utter bloodbath. We know this is at least partly cultural because genetically Turks in Turkey are over 90% Greek or Armenian with some additional Balkan and Caucasus contribution and after mutual ethnic cleansing rid Turkey of Christians and the rest of the Balkans of Muslims Turks eventually filled those socioeconomic niches. Until Erdogan it looked like Turney would be richer than Greece pretty soon. Any Chua wrote a great book on merchant minorites, World On Fire.
  - filleduchaos 7y ago
    Wikipedia articles *do very little to accurately convey cultures/situations one doesn't actually have experience with. The clear majority of Igbo people live in their homeland in Southeastern Nigeria. Even with the quarter to a third of Igbos that live in other parts of Nigeria I find the Western arrogance in calling people living in their own country a "merchant minority" rather dull. (For more context, there are three dominant ethnic groups in Nigeria, and none of them form a majority. The largest group - the Hausa - doesn't make up even 30% of the population, and the Igbo make up over 20% in current estimates) > The Igbo tried to secede from Nigeria after independence and it was an utter bloodbath. This was far, far more complicated than is being made out here.
breadandcrumbel 7y ago
In the last few years I had the chance to live in Amsterdam, Buenos Aires, Perth, Sofia and Tel Aviv From all of those cities Amsterdam and Tel Aviv a lot more innovative and the number of entrepreneurs was high (at least felt like it) I think that there are few criterions that a city need to have to become a tech hub - Relatively small city - Society who worship startups and entrepreneurs - Many Programmers and engineers (In Israel every 4 months few hundred talented programmers are releasing from the top units in the Israel Defence Forces, bringing high quality manpower to the ecosystem) There are probably more criterions, those are just few I thought about now
- lnsru 7y ago
  IDF is a great Israel’s advantage. This high quality manpower is not only highly qualified, but also understands hierarchy and is not afraid to take responsibility when needed. The same is valid for Switzerland and their mandatory military service. University cannot replace army.
  - cpursley 7y ago
    I don't understand the down votes (maybe they are anti-Israel?). Heck, I'm pretty libertarian but see the value in a mandatory military service. There's many lessons to be learned in an environment like that including how to effectively work together, take initiative as well as the lifelong relationships you create.
    - ch4s3 7y ago
      Doesn’t mandatory service violate the Non-Agression Principle[1]? It is after all coercive by definition. [1]https://en.m.wikipedia.org/wiki/Non-aggression_principle https://en.m.wikipedia.org/wiki/Non-aggression_principle
      - cpursley 7y ago
        Yes, which I one of the reasons I'm still against it. Just acknowledging the potential upsides.
dustinmoris 7y ago
I think it's mostly down to human nature. People are tribal. If there's more people around one who are risk taking and trying to innovate, then others feel also more inclined to go down this path, whereas if there's almost nobody around one to do their own startup, then other people will also be less likely to do it, because noone wants to be alone in their risk taking. It's seen everywhere in life and starts with kids. When you have one kid alone, he/she is less likely to jump of a 10m cliff, but if you have a group of kids who all jump into the water then others will follow. It's the same with adults, except you replace cliff jumping with risk taking/innovation/startups. I base that opinion, because I've seen a lot of friends/family who come from a very risk averse culture/country move to a different place and then instantly change their attitudes as they see that it's more normal elsewhere and therefore they acustom to the thinking that it's more normal and ok to do it.
Spooky23 7y ago
It's about a balance in stability. Look at state capitals in the US as compared to commercial cities as an example. In general, big populations of people with high security (ie. .gov workers) and contractors to the same equal stable, but boring places.
- hohoho12345 7y ago
  You a word.
ramtatatam 7y ago
Nations developed different set of laws. Nations with simpler laws make it simpler to take risk. To run business means take risk, but you will never win if you have state as your enemy. I say this from experience, was living in both over bureaucratised country with such complex regulations that even bureaucrats could not follow. In such country your business relies on mood/honesty of public servant who handles you. I was also living in the country where I have not heard from state for 7 years while I was running my business there. I was paying my fair share of taxes and state was not throwing roadblocks under my legs. After a bit of thinking I'd also stress out how important juridical system is. If you have to wait 10 years for ruling you will be definitely more risk averse.
- jdm2212 7y ago
  The paper argues the opposite explicitly. From the abstract: "Rather, the evidence shows that the strongest predictors of cross-national variation in entrepreneurial activity were normative, with social norms being the most strongly associated with entrepreneurialism and rates of organizational founding."
  - ramtatatam 7y ago
    Well, great :) my experience shows something else :)
bluedino 7y ago
It's just a culture thing. My neighbors are Lebanese, almost everyone in the family either owns a store, or works for one of the other people in their store. Only a few of them have 9 to 5 jobs not related to the family. They help each other out, you can use my van to pick things up, you can use the corner of my store to start your own store, etc.
- simonh 7y ago
  My wife is Chinese and Chinese people are the same way. Families treat resources in a much more communal way than my UK family, but also outside the family networking and personal social bonds are crucial to getting things done and finding new business opportunities. I suspect this is how it is across most of the world though. If you can't rely on 'society' and particularly the government or legal system, you find ways to rely on each other instead. In the 'developed world' those social bonding muscles have atrophied away.
  - nitwit005 7y ago
    There's a danger of only seeing the portion of the culture that left their country with the intent to start a business. I see a decent number of Japanese businessmen where I am. I know they're not at exactly representative of Japan. They're part of companies that thought investing in Silicon Valley would be a good idea and were willing to move here.
- lazyjones 7y ago
  You just "proved" that it's a family thing.
screye 7y ago
The answer is a resounding yes from me. The phenomenon cannot be more obvious when viewed at state levels in India. The Gujarati and Marwadi communities are far more enterprising than others in India. This is while the federal rules that all communities live under remain the same. Anecdotally, the cause for this seems to neatly fall out of my conversations with friends from these communities. There is cultural weight to being a person who doesn't work for someone else. There is cultural pride in ownership that does not exist in most others. On the other hand, Maharashtrians seem to value being able to separate work and life. Being able to sleep without worrying about your enterprise and knowing that the same reliable amount will be deposited in your account every month is considered important. These fundamental differences manifest even when people live under other geographical, political and economical variables.
tempsy 7y ago
Anyone find it strange how few tech startups come out of Seattle despite all the tech workers? It is the land of the big tech co and big tech co satellite offices, and can think of few actual startups and believe it comes in low as far as VC dollars go (will find source)
- filereaper 7y ago
  I'd say it has to do with these three points: - Ownership of IP: IP produced in your own time on your own equipment doesn't belong to your employer. - Non-competes: Not enforceable in CA - Access to capital: Plenty in CA. I'd say the first two points are what differentiate Silicon Valley from the rest of the tech capitals.
  - tempsy 7y ago
    Ok but fairly certain NYC and Boston attract multiples more VC dollars as well vs Seattle, and at least can think of far more startups out of those cities than Seattle. I don’t think it’s just a state specific thing.
- Analemma_ 7y ago
  I don't have any proof or even tangible evidence of this, but anecdotally I wonder if, even though Seattle has a lot of tech workers, they're a self-selecting population of tech workers who don't want to be entrepreneurs. I'm in Seattle, and I've worked at Microsoft, Amazon, and a couple of smaller companies, and I've run across quite a few people who could've gone to either Seattle or the Valley, and deliberately picked the former because they didn't want to participate in the startup rat race and just wanted a stable job. And of course, this trend would be a positive feedback loop over time: the more the Valley is associated with entrepreneur culture and Seattle is not, the more that potential entrepreneurs go to the Valley and the day-jobbers go to Seattle, which reinforces the original perception. Again, this is all guesswork, but it does line up with my anecdotal experience.
EGreg 7y ago
Because some societies have the concept of limited liability and bankruptcy protections.
hogFeast 7y ago
Hm, sounds interesting but looking at rates of entrepreneurship in Fig 1. amongst the top are (you can't really tell because they are so jammed together): Vanuatu, Yemen, Cameroon, Zambia, Uganda...I am not sure how smart it is reason about entrepreneurship in a developed economy against these nations (and the difference between rates within this chart suggest to me that most variance is going to be a function of income level).
throw0101a 7y ago
Someone once observed / joked that it may be a result of natural selection: A lot of the people that left the proverbial Old World for (e.g.) the US were often the most hopeful, so that's why the US is (stereotypically) optimistic. The people that stayed behind were the ones that were more dour and/or laid back.
- Bayart 7y ago
  Those who left were the most at risk of persecution, starvation or disenfranchisement (due to the shrinking amount of wealth to be inherited, similar to how half-nobodies congregated around Norman adventurers to invade England or Italy). The religious upheavals following the Reformation and the insane demographic growth following in the wake of industrialization drove the settlement of overseas colonies, not ethereal qualities like optimism and entrepreneurship.
wazoox 7y ago
In his very interesting book "Kicking away the ladder", the Korean economist Han Joon-Chang quotes US merchants discovering Japan for the first time in the 1860s. They all marvelled at how lazy the Japanese were. Surprising, isn't it? Fact is that 1860's Japan lacked all sort of resources, particularly natural ones. In the absence of resources, there isn't much that you can do to bootstrap yourself. With all the workers you need and the money to pay them, you can't build a house if there isn't any timber, mortar and bricks. Therefore, you're better off simply doing nothing, or things that don't require much, like playing music and writing poetry.
sharadov 7y ago
Most important reasons - 1. Do you tolerate failure? Is it treated as a learning step or are you marked for life ( huge stigma in some societies,IMO America does this better than anyone else.). 2. Individual vs Group Think ( lots of societies don't tolerate people who think differently, frequently ostracized or outcast). 3. Capital 4. IP protection 5. Immigration Policy - Do you allow immigrants in? Immigrants are hungry, they come with nothing, expect nothing and have huge appetite for risk.
crb002 7y ago
They have leisure capital.
mmsimanga 7y ago
I can tell you why my society isn't entrepreneurial. We basically believe everything should be hard and we frown upon people who appear to be taking short cuts. This attitude served us well before the advent of technology but now it just gets in the way. Let me give an example. As recently as 50-70 years ago we lived a subsistence way of farming. Working the land was done using a hoe with a handle that is about 40cm long. Working the fields meant a lot of time bent over. One of the neighboring tribes decided to lengthen the handle of their hoes meaning they worked more upright. Probably had more mechanical advantage. Our reaction as a tribe was to call the other tribe lazy. To this day this is how we react when something new is introduced, loads of skepticism and derision of the person who dares introduce something new. By the time we come around to embracing whatever it is all the opportunities associated with the new technology have been taken up by the very few entrepreneurs. Normal from outside the region. Off course they are exceptions but these are far and few between. We make for a great workforce and we made for a great army back in the day when tribal wars were a thing. In this modern world we are getting left behind. So I guess in a nutshell some societies probably embrace change better than others.
liminal 7y ago
I wonder if the overall level of life risk influences entrepreneurship? Two places mentioned often on this page are America and Tel Aviv, both risky places to live. America has no health care, many gun deaths, etc. Israel similarly has a history of suicide bombers, rocket attacks, etc. If you think you might die anyway, why not take a chance on starting a company?
simonebrunozzi 7y ago
This reminds me of an old adage that you could hear in Italy, which goes something like this: Italy: constant war, killing, etc, and we produced the Renaissance, Leonardo and Galileo, Music, art, etc; Switzerland: 500 years of constant peace, and all they invented is hemmental an nice watches.

155 points by elsewhen 7y ago

The submitted url just copy/pastes the abstract from the paper. Here’s where it lives: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3449762 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3449762

mikekchar 7y ago
The paper does not seem to have any of the data intact. It just says "Insert figure 1 here", etc. Perhaps I'm missing something, but it doesn't seem very useful as it is. The paper makes some claims, but I found it very difficult to follow the reasoning.
- zhdc1 7y ago
  That's standard practice for working article drafts in management & the social sciences. I can't find a link to her data set & reproduction code - I would be surprised if she had it, tbh, because it's unfortunately not really a requirement in this field - but the data itself should be easy to assemble yourself. Entrepreneurial Activity: GEM (https://www.gemconsortium.org/ https://www.gemconsortium.org/) Country Level Vars: World Bank Dataset & Project Globe (https://globeproject.com/ https://globeproject.com/) The models are panel regressions w. fixed effects in Stata (you can recreate this with the PLM library in R).
- freddie_mercury 7y ago
  > It just says "Insert figure 1 here" This is how virtually every pre-print is formatted. Scroll to the bottom and you will find all of the tables & figures. Laying out the paper is for the journal to do.

goodcanadian 7y ago

Without reading the article, some ideas that come to mind are: -differing culture making it more or less likely for someone to go down that road and making it more or less acceptable by others. -differing legal frameworks that make it easier or more difficult to pursue entrepreneurship and make a living from it.

prepend 7y ago

I think it has something with redemption and new identities. I think societies that allow reboots lead to greater risk taking. Also capital and risk distribution. I visited Amsterdam and was interested in their history and how it took off after the invention of the corporation. Corporations can end and the knowledge from them can go into a new venture (redemption). They can also raise capital through distributed ownership and distributed risk.

paganel 7y ago
> I visited Amsterdam and was interested in their history and how it took off after the invention of the corporation. I wonder if anyone has written a history of the Dutch economy that can be also accessible to non-Dutch readers (i.e. translated to either English or French or Spanish). From a very outside view (i.e. mine) the Dutch used to be a very entrepreneurial society/people in the 1600s going into the 1700s, but it seems that by the 1800s that spark had gone. They're of course still one of the most developed nations in Europe and in the world, but it looks like in terms of risk-taking they're the same as us, the rest of the Europeans, i.e. behind the Americans and I'd say even the Chinese. As a similar example the Italian economic historian Carlo Cipolla was blaming the wars and the associated pests/famines of the early 1600s for Italy's towns' fall into economic irrelevance. Not sure if they're easily accessible on the Internet, but in one of his books [1] he presents some charts where the population of entrepreneurial Italian cities of that time such as Firenze, Venice, Brescia, Lucca or Bergamo felt by more than 50% during 1600-1630 (give or take), which caused them not to be able to compete against Flemish and especially English clothes-related industry. I wonder if anything similar happened to the Dutch. [1] https://www.amazon.com/Before-Industrial-Revolution-European-1000-1700/dp/0393311988 https://www.amazon.com/Before-Industrial-Revolution-European...
- simonh 7y ago
  >but it seems that by the 1800s that spark had gone I'd say the spark is doing just fine, but it ignited a blaze that swept much of the rest of Europe, and the New World. The innovations that Holland rode to success just aren't uniquely Dutch anymore, so now they're back to competing on an even playing field. The same happened to England after the industrial revolution. Once the new techniques spread to Germany, the US and elsewhere their special utility to the UK wasn't so special anymore.

zhdc1 7y ago

Hot take, but the data for this study comes from the Global Entrepreneurship Monitor (GEM https://www.gemconsortium.org/ https://www.gemconsortium.org/), which has been repeatedly beaten to death in the literature (that is, used as a primary data source). I'm not saying that she doesn't add anything that hasn't already been published, I don't know if I see it though.

zhdc1 7y ago
Just to add a little context, one issue she ignores entirely is the relationship between needs based entrepreneurship and the total entrepreneurial activity (TEA) rate. So, one of the effects you're going to run into are that the countries with the highest TEA rate are going to be 1.) developing economies (which have higher needs based entrepreneurship) that 2.) have reached a high enough development level to have functioning university systems and 3.) are in the process of adopting western-culture norms. As a result, all of the traditional determinants of entrepreneurial activity, such as capital availability, education infrastructure, &c... aren't going to matter that much because her DV only measures total entrepreneurial activity (e.g., person A opens a street stand because they don't have any other way of generating income) or variables that are heavily correlated with TEA, which isn't what most folks are really interested in when they talk about entrepreneurship. However, her sample is also going to be biased in favor of developing countries that have higher levels of normative western-culture beliefs (e.g., support for gender equality), because developing countries with university systems sophisticated enough to know about & participate in a project such as GEM (and generate good data) are also more likely to have already started the process of incorporating western norms into their culture. Gender equality is a massive value added, and I know a lot of people who have done actual research which proves it. But, you can't run a couple of regression models on GEM data and declare that capital access, geography, education, and all of the other traditional determinants of entrepreneurship aren't influential.
- bakuninsbart 7y ago
  3.) are in the process of adopting western-culture norms. Could you expand on this point? What does it include outside of gender equality. The idea that this is a "western-culture norm" seems slightly misleading in the sense that gender equality in the workplace was much earlier and better developed in communist countries that would usually be contrasted with "western culture" albeit of course also originating in Europe.

matthewfelgate 7y ago

Could somebody explain the conclusions in laymans terms?

QuesnayJr 7y ago
The author contrasts two different types of explanation for entrepreneurship -- institutional or cultural. "Institutional" means that the country has institutions that make entrepreneurship easy. The author argues that these are not sufficient, and that the key difference is social norms.
- pnako 7y ago
  Oliver Williamson and the "New Institutional Economics" school came up with a four-layer model explaining that real-time/day-to-day economic activity is influenced by contracts (time frame: months to years) which in turn are influenced by institutions, laws, etc. (time frame: years to decades) which in turn are influenced by things like culture and religion (time frame: centuries).

matthewfelgate 7y ago

Could somebody explain the conclusions in lay-mans terms please?

hertaveinS 7y ago

https://www.result.pk/med-result.html https://www.result.pk/med-result.html

kayaeb 7y ago

There's a good book on this called "Why Nations Fail," [1] they posit that extractive economic policies (corrupted governments) essentially de-incentivize entrepreneurial businesses, while inclusive policies cause them to thrive. They use this argument to counter "Guns, Germs, and Steel" [2] to explain dramatic economic differences across country borders in similar environments. [1] https://www.goodreads.com/book/show/12158480-why-nations-fail?from_search=true https://www.goodreads.com/book/show/12158480-why-nations-fai... [2] https://www.goodreads.com/book/show/1842.Guns_Germs_and_Steel?from_search=true https://www.goodreads.com/book/show/1842.Guns_Germs_and_Stee...

ido 7y ago
Interesting! Anecdotally I'm an Israeli who moved to Europe (first Austria then Germany) and at least from my layman's perspective both of these countries seem both a lot less entrepreneurial than Israel and a lot less corrupt... So I wonder if something unusual is going on or if one or more of my perceptions are wrong.
- avip 7y ago
  If Israel is "more entrepreneurial" than Germany (and it's probably not), it would be due to IDF tech leakage and the very supportive international Jewish community (that one is difficult to measure, but as this whole thread is anecdotal... I think the influx of Israeli-sympathetic money had a huge impact).
- eternalban 7y ago
  Typically, in a corrupt country, the 'take' of corrupt institutions and actors critically diminishes available (finite) Capital and distorts the distribution of what remains. What is unusual is that Israel is the recipient of largess of the American tax payers and enjoys continual replenishment of available Capital. Enjoy it while it lasts.
  - jasonvm 7y ago
    Nope. Almost all US aid is in the form of military equipment, and , incidentally, 75% must be spent on US-made armaments. So it's more like aid to the US military-industrial complex.

known 7y ago

Why startups condense in America? http://paulgraham.com/america.html http://paulgraham.com/america.html

jmkd 7y ago

Always worth zooming out and considering this study that relates average temperature to economic production, claiming 13C as a sweet spot https://www.nature.com/articles/nature15725 https://www.nature.com/articles/nature15725

chewxy 7y ago
Is this going to be a new Montesquieu's climatoethnic justification for racism?
- enriquto 7y ago
  What does it have to do with race? Aren't there people of every race in every climate?
  - ceejayoz 7y ago
    The proportions of people with brown/black skin tend to increase as you approach the equator.
    - opportune 7y ago
      It’s a pretty obvious genetic adaptation to dealing with varying levels of sunlight. You even see it in the Americas which (presumably) is based off a relatively recent, smallish founder population
jdm2212 7y ago
I believe the conventionally accepted explanation for this is Acemoglu's, and it's that GDP is an Nth-order effect of climate. Warm weather -> highly productive agriculture -> landholders become extremely wealthy -> oligarchic government -> low GDP. Think of the American North and South before the Civil War, where slavery and inequality took hold in the highly agriculturally productive South but never in the North. The North wound up poor and more egalitarian, but eventually industrialized and overtook the South. Edit: warm weather also happens to correlate with another natural resource: oil. Oil tends to produce a similar dynamic -- whoever owns the oil owns the government and badly mismanages the government for their own benefit. The exceptions prove the rule: Alaska and Norway were both established, egalitarian societies before the oil was found, in contrast with Middle Eastern petrostates, Russia and Venezuela.

johnchristopher 7y ago

A day or two ago there was a comment on HN about the differences between eastern and western societies regarding entrepreneurship and/or motivations (the west is driven by events while the east is driven by its location). I am pretty sure there's a link between that comment and that submission but I can't find the original comment at the moment.

filleduchaos 7y ago

This is a topic that's particularly interesting to me because there's an ethnic group in my country - the Igbo - that are so pervasively, aggressively[0] entrepreneurial that it's become a meme. I can't really think of another culture that has business woven as tightly into its very bones - I haven't read the entire paper yet, but I'm curious to see if it mentions them at all. [0] In a good way. Several people have noted that the Igbo pretty much invented venture capital.

barry-cotter 7y ago
The Igbo are an example of a merchant minority, like both Ashkenazi and Sephardi Jews, Armenians, Parsis and the Chinese in Southeast Asia, Lebanese in West Africa, Latin America and elsewhere and Yankees in the US South. There’s always hostility to merchant minorities from the majority population but the degree of difference modulates the hostility. No Yankee enclave was ever burned in a pogrom in the South whereas Jews everywhere in the Old World, various Christians in the Ottoman Empire and the Chinese in SE Asia all dealt with those regularly enough. The Igbo tried to secede from Nigeria after independence and it was an utter bloodbath. We know this is at least partly cultural because genetically Turks in Turkey are over 90% Greek or Armenian with some additional Balkan and Caucasus contribution and after mutual ethnic cleansing rid Turkey of Christians and the rest of the Balkans of Muslims Turks eventually filled those socioeconomic niches. Until Erdogan it looked like Turney would be richer than Greece pretty soon. Any Chua wrote a great book on merchant minorites, World On Fire.
- filleduchaos 7y ago
  Wikipedia articles *do very little to accurately convey cultures/situations one doesn't actually have experience with. The clear majority of Igbo people live in their homeland in Southeastern Nigeria. Even with the quarter to a third of Igbos that live in other parts of Nigeria I find the Western arrogance in calling people living in their own country a "merchant minority" rather dull. (For more context, there are three dominant ethnic groups in Nigeria, and none of them form a majority. The largest group - the Hausa - doesn't make up even 30% of the population, and the Igbo make up over 20% in current estimates) > The Igbo tried to secede from Nigeria after independence and it was an utter bloodbath. This was far, far more complicated than is being made out here.

breadandcrumbel 7y ago

In the last few years I had the chance to live in Amsterdam, Buenos Aires, Perth, Sofia and Tel Aviv From all of those cities Amsterdam and Tel Aviv a lot more innovative and the number of entrepreneurs was high (at least felt like it) I think that there are few criterions that a city need to have to become a tech hub - Relatively small city - Society who worship startups and entrepreneurs - Many Programmers and engineers (In Israel every 4 months few hundred talented programmers are releasing from the top units in the Israel Defence Forces, bringing high quality manpower to the ecosystem) There are probably more criterions, those are just few I thought about now

lnsru 7y ago
IDF is a great Israel’s advantage. This high quality manpower is not only highly qualified, but also understands hierarchy and is not afraid to take responsibility when needed. The same is valid for Switzerland and their mandatory military service. University cannot replace army.
- cpursley 7y ago
  I don't understand the down votes (maybe they are anti-Israel?). Heck, I'm pretty libertarian but see the value in a mandatory military service. There's many lessons to be learned in an environment like that including how to effectively work together, take initiative as well as the lifelong relationships you create.
  - ch4s3 7y ago
    Doesn’t mandatory service violate the Non-Agression Principle[1]? It is after all coercive by definition. [1]https://en.m.wikipedia.org/wiki/Non-aggression_principle https://en.m.wikipedia.org/wiki/Non-aggression_principle
    - cpursley 7y ago
      Yes, which I one of the reasons I'm still against it. Just acknowledging the potential upsides.

dustinmoris 7y ago

I think it's mostly down to human nature. People are tribal. If there's more people around one who are risk taking and trying to innovate, then others feel also more inclined to go down this path, whereas if there's almost nobody around one to do their own startup, then other people will also be less likely to do it, because noone wants to be alone in their risk taking. It's seen everywhere in life and starts with kids. When you have one kid alone, he/she is less likely to jump of a 10m cliff, but if you have a group of kids who all jump into the water then others will follow. It's the same with adults, except you replace cliff jumping with risk taking/innovation/startups. I base that opinion, because I've seen a lot of friends/family who come from a very risk averse culture/country move to a different place and then instantly change their attitudes as they see that it's more normal elsewhere and therefore they acustom to the thinking that it's more normal and ok to do it.

Spooky23 7y ago

It's about a balance in stability. Look at state capitals in the US as compared to commercial cities as an example. In general, big populations of people with high security (ie. .gov workers) and contractors to the same equal stable, but boring places.

hohoho12345 7y ago
You a word.

ramtatatam 7y ago

Nations developed different set of laws. Nations with simpler laws make it simpler to take risk. To run business means take risk, but you will never win if you have state as your enemy. I say this from experience, was living in both over bureaucratised country with such complex regulations that even bureaucrats could not follow. In such country your business relies on mood/honesty of public servant who handles you. I was also living in the country where I have not heard from state for 7 years while I was running my business there. I was paying my fair share of taxes and state was not throwing roadblocks under my legs. After a bit of thinking I'd also stress out how important juridical system is. If you have to wait 10 years for ruling you will be definitely more risk averse.

jdm2212 7y ago
The paper argues the opposite explicitly. From the abstract: "Rather, the evidence shows that the strongest predictors of cross-national variation in entrepreneurial activity were normative, with social norms being the most strongly associated with entrepreneurialism and rates of organizational founding."
- ramtatatam 7y ago
  Well, great :) my experience shows something else :)

bluedino 7y ago

It's just a culture thing. My neighbors are Lebanese, almost everyone in the family either owns a store, or works for one of the other people in their store. Only a few of them have 9 to 5 jobs not related to the family. They help each other out, you can use my van to pick things up, you can use the corner of my store to start your own store, etc.

simonh 7y ago
My wife is Chinese and Chinese people are the same way. Families treat resources in a much more communal way than my UK family, but also outside the family networking and personal social bonds are crucial to getting things done and finding new business opportunities. I suspect this is how it is across most of the world though. If you can't rely on 'society' and particularly the government or legal system, you find ways to rely on each other instead. In the 'developed world' those social bonding muscles have atrophied away.
- nitwit005 7y ago
  There's a danger of only seeing the portion of the culture that left their country with the intent to start a business. I see a decent number of Japanese businessmen where I am. I know they're not at exactly representative of Japan. They're part of companies that thought investing in Silicon Valley would be a good idea and were willing to move here.
lazyjones 7y ago
You just "proved" that it's a family thing.

screye 7y ago

The answer is a resounding yes from me. The phenomenon cannot be more obvious when viewed at state levels in India. The Gujarati and Marwadi communities are far more enterprising than others in India. This is while the federal rules that all communities live under remain the same. Anecdotally, the cause for this seems to neatly fall out of my conversations with friends from these communities. There is cultural weight to being a person who doesn't work for someone else. There is cultural pride in ownership that does not exist in most others. On the other hand, Maharashtrians seem to value being able to separate work and life. Being able to sleep without worrying about your enterprise and knowing that the same reliable amount will be deposited in your account every month is considered important. These fundamental differences manifest even when people live under other geographical, political and economical variables.

tempsy 7y ago

Anyone find it strange how few tech startups come out of Seattle despite all the tech workers? It is the land of the big tech co and big tech co satellite offices, and can think of few actual startups and believe it comes in low as far as VC dollars go (will find source)

filereaper 7y ago
I'd say it has to do with these three points: - Ownership of IP: IP produced in your own time on your own equipment doesn't belong to your employer. - Non-competes: Not enforceable in CA - Access to capital: Plenty in CA. I'd say the first two points are what differentiate Silicon Valley from the rest of the tech capitals.
- tempsy 7y ago
  Ok but fairly certain NYC and Boston attract multiples more VC dollars as well vs Seattle, and at least can think of far more startups out of those cities than Seattle. I don’t think it’s just a state specific thing.
Analemma_ 7y ago
I don't have any proof or even tangible evidence of this, but anecdotally I wonder if, even though Seattle has a lot of tech workers, they're a self-selecting population of tech workers who don't want to be entrepreneurs. I'm in Seattle, and I've worked at Microsoft, Amazon, and a couple of smaller companies, and I've run across quite a few people who could've gone to either Seattle or the Valley, and deliberately picked the former because they didn't want to participate in the startup rat race and just wanted a stable job. And of course, this trend would be a positive feedback loop over time: the more the Valley is associated with entrepreneur culture and Seattle is not, the more that potential entrepreneurs go to the Valley and the day-jobbers go to Seattle, which reinforces the original perception. Again, this is all guesswork, but it does line up with my anecdotal experience.

EGreg 7y ago

Because some societies have the concept of limited liability and bankruptcy protections.

hogFeast 7y ago

Hm, sounds interesting but looking at rates of entrepreneurship in Fig 1. amongst the top are (you can't really tell because they are so jammed together): Vanuatu, Yemen, Cameroon, Zambia, Uganda...I am not sure how smart it is reason about entrepreneurship in a developed economy against these nations (and the difference between rates within this chart suggest to me that most variance is going to be a function of income level).

throw0101a 7y ago

Someone once observed / joked that it may be a result of natural selection: A lot of the people that left the proverbial Old World for (e.g.) the US were often the most hopeful, so that's why the US is (stereotypically) optimistic. The people that stayed behind were the ones that were more dour and/or laid back.

Bayart 7y ago
Those who left were the most at risk of persecution, starvation or disenfranchisement (due to the shrinking amount of wealth to be inherited, similar to how half-nobodies congregated around Norman adventurers to invade England or Italy). The religious upheavals following the Reformation and the insane demographic growth following in the wake of industrialization drove the settlement of overseas colonies, not ethereal qualities like optimism and entrepreneurship.

wazoox 7y ago

In his very interesting book "Kicking away the ladder", the Korean economist Han Joon-Chang quotes US merchants discovering Japan for the first time in the 1860s. They all marvelled at how lazy the Japanese were. Surprising, isn't it? Fact is that 1860's Japan lacked all sort of resources, particularly natural ones. In the absence of resources, there isn't much that you can do to bootstrap yourself. With all the workers you need and the money to pay them, you can't build a house if there isn't any timber, mortar and bricks. Therefore, you're better off simply doing nothing, or things that don't require much, like playing music and writing poetry.

sharadov 7y ago

Most important reasons - 1. Do you tolerate failure? Is it treated as a learning step or are you marked for life ( huge stigma in some societies,IMO America does this better than anyone else.). 2. Individual vs Group Think ( lots of societies don't tolerate people who think differently, frequently ostracized or outcast). 3. Capital 4. IP protection 5. Immigration Policy - Do you allow immigrants in? Immigrants are hungry, they come with nothing, expect nothing and have huge appetite for risk.

crb002 7y ago

They have leisure capital.

mmsimanga 7y ago

I can tell you why my society isn't entrepreneurial. We basically believe everything should be hard and we frown upon people who appear to be taking short cuts. This attitude served us well before the advent of technology but now it just gets in the way. Let me give an example. As recently as 50-70 years ago we lived a subsistence way of farming. Working the land was done using a hoe with a handle that is about 40cm long. Working the fields meant a lot of time bent over. One of the neighboring tribes decided to lengthen the handle of their hoes meaning they worked more upright. Probably had more mechanical advantage. Our reaction as a tribe was to call the other tribe lazy. To this day this is how we react when something new is introduced, loads of skepticism and derision of the person who dares introduce something new. By the time we come around to embracing whatever it is all the opportunities associated with the new technology have been taken up by the very few entrepreneurs. Normal from outside the region. Off course they are exceptions but these are far and few between. We make for a great workforce and we made for a great army back in the day when tribal wars were a thing. In this modern world we are getting left behind. So I guess in a nutshell some societies probably embrace change better than others.

liminal 7y ago

I wonder if the overall level of life risk influences entrepreneurship? Two places mentioned often on this page are America and Tel Aviv, both risky places to live. America has no health care, many gun deaths, etc. Israel similarly has a history of suicide bombers, rocket attacks, etc. If you think you might die anyway, why not take a chance on starting a company?

simonebrunozzi 7y ago

This reminds me of an old adage that you could hear in Italy, which goes something like this: Italy: constant war, killing, etc, and we produced the Renaissance, Leonardo and Galileo, Music, art, etc; Switzerland: 500 years of constant peace, and all they invented is hemmental an nice watches.