A new study by researchers Valentina A. Assenova and Raphael Amit from The Wharton School, University of Pennsylvania, reveals how cultural tightness and looseness significantly influence entrepreneurial activity worldwide. Published in the Strategic Entrepreneurship Journal, the research investigates why some nations and regions produce more startups than others, offering a fresh perspective on the intersection of culture and entrepreneurship.
Drawing on data from 156 nations and 50 U.S. states, the study introduces cultural tightness-looseness (CTL) as a pivotal factor shaping entrepreneurial ecosystems. CTL measures the strength and enforcement of social norms—with tighter cultures exhibiting strict adherence to rules and looser cultures favoring flexibility and tolerance for deviation. The research found that cultural looseness explains 56% of the variation in new firm formation rates across nations and 71% of the variation in new entrepreneur rates within U.S. states.
The findings have far-reaching implications for governments, investors, and educators aiming to nurture entrepreneurship. Policymakers can foster startup ecosystems by promoting cultural looseness, such as reducing bureaucratic hurdles and encouraging open dialogue. Investors and accelerators can use CTL insights to identify high-potential regions for entrepreneurial growth, while educators can tailor programs to build resilience and innovation among entrepreneurs in tighter cultural contexts.
"Understanding cultural tightness-looseness provides a powerful lens for shaping entrepreneurial policy and practice," said Valentina A. Assenova, lead author of the study. "By creating environments that celebrate diversity and innovation, we can unlock the full potential of individuals and communities."
About the Study
This research draws on extensive data from the World Bank's Entrepreneurship Database, the Global Entrepreneurship Monitor, and the Kauffman Foundation. The authors used advanced causal mediation analysis to dissect the individual and institutional mechanisms linking CTL to entrepreneurship.
To read the full context of the study and its methods, access the full paper available in the Strategic Entrepreneurship Journal .
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