Cultural Influence on Entrepreneurship - Literature review Example

Literature Review of Cultural Influence on Entrepreneurship: Evidence from Arab Entrepreneurs Introduction This is a literature review on a research project that is to be conducted. The research is based on the influence that culture has on entrepreneurship. Specifically, the study will be based on evidence from Arab entrepreneurs. Therefore, this review of literature is on the influence that culture has on entrepreneurship in Arab countries. The review of literature is divided into four sections. First, a brief examination of the concept of culture and basic cultural models is presented. The purpose of this is to provide a brief review of what literature says about the concept of culture, its constituent components and different models that have been developed to evaluate it. In the second section, a critical examination of what literature says about the Arab culture in general is presented. The purpose is to critically analyse various findings of different studies about specific aspects that are identified as key characteristics of the Arab culture. While reference is made to the different models of cultural dimensions that are identified, the bulk of the analysis is based on Hofstede’s model of national culture. The Arab culture is analysed based on the dimensions that are presented in this model. The third section of this literature review contains information about entrepreneurship in Arab countries. Here, a critical examination of findings of different studies on the subject of entrepreneurship in Arab countries in general is presented. The purpose is to identify factors that influence entrepreneurial activities in Arab countries as well as identifying specific cultural traits in Arab countries that affect entrepreneurs. In the last section, a critical review of findings of studies on the different ways in which culture affects entrepreneurial activities is presented. Throughout the review, specific gaps that exist with regard to research about the influence of Arab culture on entrepreneurs are identified. Cultural Dimensions In order to understand the different dimensions that define Arab culture and how this affects entrepreneurship, it is important to revisit the concept of culture. This is important because this research is based on the proposition that different geographical regions are defined by specific cultural attributes and that such attributes influence the behaviour of individuals in those regions. According to Dadfar, Helander, Norberg, Schuster and Zufferey (2003, p. 7), culture can be defined as a highly complex system that entails the different learned behaviour that people in a society live and work by. There are important characteristics of culture that can be drawn from this definition. First, since it is a system that is learned and passed down among individuals, it permeates every aspect of the lives of individuals in the society. Further, it is clear from this definition that culture helps individuals to remain attached to their societies (Cullen & Parboteeah, 2013, p. 45). This is because the norms and values that are learned in the course of life are intended to guide the behaviour, attitudes and actions of individuals in their lives. The culture of any given society is made up of different components. It is based on how individuals react to these components that the process of transfer of culture from one generation to the next in the society occurs (Neelankavil & Rai, 2014, p. 41). One of the components of the culture is the language that is used in a given society. Basically, this aspect covers the dominant language in the given society and specific communication styles that are generally used by individuals in the society. The second component of culture is the manner in which individuals are ordered within the society. Known as the social structure, this component determines the relationships that exist among individuals in the society within the context of family units and social classes. Religion and values are other important components of culture. The two are important because in many cases, the values that are central in a particular society are usually derived from and shaped by the teachings of the religion that is dominant in the society (Neelankavil & Rai, 2014, p. 43). Lastly, the customs and attitudes that people in any given society have are important components of the culture of the society. Whereas customs refer to specific ways that people perform different tasks in their lives, attitudes refer to the emotional response that individuals have to specific issues in their lives. All these components act to shape the behaviour of individuals in the society. An important issue that arises from the concept of culture is what is referred to as national culture. According to Hofstede (2001, cited by Obeidat, Shannak, Masa’deh and Al-Jarrah, 2012, p. 513), people who are from a common nation share specific components of the culture and this makes them distinctive from those of other nationalities. Therefore, national culture is defined simply as a form of collective mental programming that individuals of a particular nationality have in common. This shapes their beliefs, attitudes and overall behaviour. It is based on this definition of national culture that the proposed research will be carried out. The basic argument is that the Arab culture is characterised by specific values, attitudes, customs and religious teachings that are shared by all individuals of Arab origin. These aspects affect the behaviour of individuals who belong to this culture. The manner in which these attitudes influence entrepreneurship is the core aspect of the study. Different models of analysing cultural dimensions have been developed. According to Dadfar et al. (2003, p. 9), the dimensions can be categorised into three main classes: those that are based on single dimensions, those that are based on multiple dimensions and lastly, those that are based on the layer model. Whereas single-dimension models of culture are based on a single component or aspect of culture that is analysed, multidimensional models are based on a number of cultural aspects that are specific to a particular culture. The different components of a particular culture are compared with those that are found in the other cultures. On the other hand, layer-based models of cultural dimensions are used to analyse culture in terms of specific layers of different components. The components are considered to be arranged in layers that symbolise their level of influence in the lives of individuals. Two common models of cultural dimensions are as follows: Trompenaar’s seven dimensions of culture model and Hofstede’s model of national culture. In Trompenaar’s model, culture is seen as a means by which individuals respond to the different challenges that they meet in their lives (Aswathappa, 2010, p. 212). Therefore, the concept of national culture arises from the differences in the methods of dealing with challenges that have been developed in different societies. Under this model, culture is understood in terms of different dimensions. The first one is the extent to which individuals are oriented towards abstract principles and institutions as opposed to the belief that different circumstances require different responses. The second dimension is individualism versus collectivism. In cultures that can be described as being highly individualistic, people assume a highly independent attitude. This is in contrast with what the situation is in cultures that can be described as collectivist. In such cultures, individuals are concerned with the needs of the entire group or community. The third cultural dimension in this model is the extent of affection as opposed to neutrality that is shown in the actions of individuals. This dimension is used to indicate the extent to which individuals are expected to show emotions in their day to day interactions with each other. The third dimension of culture in this model is the level to which individuals feel that they are in control of the events in their lives. The fourth dimension, referred to as achievement versus ascription, describes whether individuals gain status as a result of achievement or other attributes that are not related to individual effort. In the Hofstede’s model of national culture, national cultures are analysed in terms of five different dimensions: power distance, uncertainty avoidance, long-term orientation, masculinity and uncertainty avoidance (Cullen & Parboteeah, 2013, p. 51). Since different cultures measure differently on every one of these dimensions, every geographical region has a specific type of culture that can be described in terms of particular characteristics. The power distance dimension is used to describe the manner in which individuals in a given society treat inequality. Therefore, societies with a high score in this attribute are characterised by the belief that every individual has his or her place in the society. The dimension of masculinity is used to indicate the extent to which traditional masculine values are held by individuals in a particular society. In highly masculine societies, clear gender roles are emphasised and the values of assertiveness, competitiveness and decisiveness that are usually associated with men are highly emphasised. What is important to note with regard to the Hofstede model of national culture is that by using the different dimensions that are proposed in the model, the culture of every country can be described in terms of specific characteristics. It is from this work that the specific characteristics of the Arab culture can be ascertained. In this case, the Arab culture is characterised by the following scores as based on this model: 89 for power distance dimension; 51 for uncertainty avoidance; 52 for individualism and 58 for masculinity (Cullen & Parboteeah, 2013, p. 63). Aspects of the Arab Culture Studies on the subject of aspects of the Arab culture have varied in terms of what have been identified as specific characteristics that define what Arabic culture is. It should be noted that understanding specific characteristics, values and aspects of the Arab culture is important in this research. This is because the specific characteristics will be used as a basis for determining how effective the culture is in either promoting or stifling entrepreneurial activities among individuals in the countries. There are specific characteristics that define the Arab culture (Bukay, 2006; Dadfar et al., 2003; Nobles & Sciarra, 2000). These can be understood in terms of how they affect different aspects in the lives of individuals. For instance, Nobles and Sciarra (2000, p. 187) observe that the Arab culture is defined by its strict rules and regulations regarding sexuality, hospitality and how individuals express their feelings. It is also observed that Arab culture lays much emphasis on the need for hospitality and free expression of individual feelings (Nobles & Sciarra, 2000, p. 187). However, religious and societal restrictions are used to control sexual expressions particularly among the women. The strict restrictions on sexual relations have therefore made it necessary for efforts for the emancipation of women to take place in Arab countries across the world. The aspect of deep respect for hospitality among Arab individuals is not a new one in studies that are based on Arab culture. Feghali (1997, p. 353) observes that the need to welcome and give assistance to others is impressed upon Arabic children from a tender age. Since this is a practice that is taught to individuals at a tender age, its importance is experienced in the behaviour of adults and forms a basic component of the culture. Further, Dadfar et al. (2003, p. 11) observe that hospitality among individuals in the Arab culture is a consequence of the traditional values that have been carried forward from the tribal value system. These characteristics correspond to what are identified by Dadfar et al. (2003, p. 15) as important characteristics of the culture in Saudi Arabia. Since Saudi Arabia is one of the many Arab countries in the world, specific characteristics of its culture are a reflection of those that make up the culture in the entire Arab world. Therefore, the central role that religion plays in the lives of individuals, a high level of hospitality and deep respect for familial relations and the elderly in general are identified as the key characteristics of the Arab culture (Dadfar et al., 2003, p. 16). In addition to these, characteristics such as a highly male-dominant culture and lack of punctuality are identified as some of the most important characteristics of the Saudi Arabian culture. These aspects are similar to what has been identified as the key characteristics of the Arab culture in general. Studies on Arab culture have also been based on identifying the effect that specific issues have on the overall characteristics of the culture. One of the main issues identified is religion. Basically, Islam has a fundamental impact on the social, economic and cultural lives of individuals in the Arab world (Obeidat et al., 2012, p. 517). It is noted that although countries in the Arab world have been affected to a large extent by globalisation and secularisation, Islam still forms the basis for the language, social life and the traditions of individuals in Arab countries. What is important to note from this observation is that the effect of Islam as a religion is not restricted to Arab countries. Since there are many other countries that are not necessarily dominated by people of Arab descent yet Islam is the main religion that is practised by their citizens, it then follows that the specific cultural characteristics that arise from Islam are not restricted to the Arab culture. Therefore, as Dadfar et al. (2003, p. 10) observe, the impact of Islam on the Arab culture can best be understood by considering how it has shaped interpersonal relationships, family life and individual attitudes among individuals in Arab countries. Further, since traditional values preceded Islam, specific characteristics of Arab culture have developed as a result of the effect of religious rules and restrictions on traditional values inherited from the early system of values. The second issue whose effect on the Arabic culture has been examined is communication. Feghali (1997) did an extensive work on how communication is carried out among Arab individuals. In the study, specific attributes of interpersonal communication are identified as follows. To start with, it is observed that Arabs tend to communicate in highly elaborate language that is characterised by repetition, emphasis and an extensive use of words for descriptive purposes. As well, communication among Arabs tends to take place in a manner that incorporates a show of affection. This is because the use of emotional language that seeks to persuade others is an important characteristic of communication in the culture. Therefore, the Arab culture is defined by specific communication styles that are used by individuals. These involve a restricted level of contact between individuals of opposite sex, a strong emphasis on relationships as opposed to schedules, close interpersonal distance depending on the sex of the individuals involved, and the use of direct and extended eye contact (Feghali, 1997, p. 363). The bulk of academic work on the cultural aspects of the Arab culture has been based on analysing the specific attributes of the culture using well established models of cultural dimensions. However, in the majority of studies, the analysis of the cultural dimensions of the Arab culture have been based on the Hofstede’s model of cultural dimensions (Khanum, Fatima & Chaurasia, 2012; Obeidat et al., 2012; Robertson, Al-Khatib & Al-Habib, 2002). What is worth noting about the analysis of the Arab culture that is done in the studies using the model developed by Hofstede is that an assumption is made about the uniformity of the Arab culture. According to Feghali (1997, p. 359) there seems to be a consensus among researchers that regardless of the cultural differences that may exist among the numerous Arab countries, there is a high degree of cultural uniformity among them. This level of uniformity is therefore the justification for the treatment of the cultures of different countries across a wide geographical area as a single type. There seems to be a consensus among researchers about the specific attributes of Arab culture when analysed using the Hofstede’s model of cultural dimensions. For example, it is observed that the Arab culture has high levels of power distance, uncertainty avoidance and masculinity as compared to other cultures (Driouchi & Gamer, 2014, p. 16; Khanum et al., 2012, p. 1). Because of a high measure of power distance, there is a high level of dependency between managers and their subordinates within the context of a business environment in the Arab countries (Obeidat et al., 2012, p. 514). On the other hand, a high level of uncertainty avoidance defines the extent to which individuals in Arab countries tend to depend on the government and other established institutions as opposed to making efforts at individual empowerment. Also, a high score of masculinity indicates a high level commitment and dedication to work (Robertson et al., 2002, p. 586). Therefore, since the Arab culture scores highly on this value, it can be deduced that individuals in the Arab culture have a high degree of dedication to their work. From the foregoing, it can be seen that different researchers have identified various characteristics of the Arab culture. Furthermore, studies indicate that the culture is made up of different values. What remains to be done is a detailed analysis of how the specific attributes, values and characteristics of the Arab culture affect entrepreneurial behaviour among individuals. It is this gap in knowledge that the research intends to fill. Entrepreneurship in Arab Countries Studies on entrepreneurial activities in Arab countries have focused on identifying specific factors that contribute to entrepreneurship on one hand and those that hamper entrepreneurial activity on the other. Furthermore, the different ways in which such factors either facilitate or limit entrepreneurship among individuals in Arab countries are evaluated in such studies. Also, studies on entrepreneurship in Arab countries vary in terms of the specific population groups upon which they are based. For instance, Jamali (2009) evaluated the factors that influence the success of women entrepreneurs in Arab countries. From this study, it is observed that the chances of women in Arab countries to successfully manage business ventures depend on two sets of factors: those that operate at the macro-level and those that operate at the micro-level. Factors such as the availability of finances, the level of motivation to start and run business ventures and the ability to identify opportunities are identified as some of the factors that affect entrepreneurship behaviour among Arab women at the individual level. These are in contrast with factors such as the prevailing social and economic environment that operate at the macro-level. It can be noted that the micro-level factors interact with the prevailing legal, social and economic environment to determine the propensity of women entrepreneurs in Arab countries to succeed. It is from this complex relationship that issues such as institutional assistance and networking arrangements, which are key enablers of entrepreneurial activity among women in Arab countries, arise (Jamali, 2009, p. 241). However, although both Goby and Erogul (2011) and Jamali (2009) agree on the effect that environmental and individual factors have on determining the success of female Arab entrepreneurs, there are slight differences in the importance that is attached to individual factors. What is clear from the observations of Goby and Erogul (2011, p. 331) is that women entrepreneurs in Arab countries face challenges that arise from socio-cultural aspects of the culture which discriminate against them. Such factors make it difficult for Arab women to participate in social and economic activities in general and to successfully start and run new business ventures in particular. Such an approach that focuses on how specific factors make it difficult for women entrepreneurs in Arab countries to successfully start and manage new business ventures is the subject of a study conducted by Bizri, Kojok, Dani, Mokahal and Bakri (2012, p. 6). In this study, different ways in which specific factors stifle entrepreneurial activity among individuals are presented. For instance, it is observed that lack of access to economic resources, unpreparedness to handle the risks that are associated within entrepreneurship and lack of an inclination towards entrepreneurship are some of the factors that hamper entrepreneurial activity among individuals (Bizri et al., 2012, p. 8). Although these factors are universal, the extent to which they are common in Arab individuals remains an issue that should be examined. Therefore, in the proposed study, the extent to which factors such as aversion to risk, lack of an inclination towards entrepreneurial behaviour and political and economic uncertainty stifle entrepreneurship in Arab countries will be examined. Apart from the factors that affect entrepreneurship behaviour among specific groups of the Arab population, the most distinctive of them being women, studies on the subject of entrepreneurship in Arab countries have also focused on the overall effectiveness of the practice within the culture. The basic argument has been that there are different factors that either hamper or promote entrepreneurial effectiveness in the Arab countries. For instance, Greenwood (2007, p. 5) in a study, evaluates the role that the relationship between the state and the private sector in the Arab world plays in shaping entrepreneurial activity. Greenwood (2007, p. 5) also observes that because of the degree of disorganisation that exists within the private sector in many Arab countries as well as a strong sense of communal identity, the private sector in many Arab countries has remained marginalised by the state. This state of affairs bears a negative impact on the overall improvement of entrepreneurship in the respective countries. In another study, Oukil (2011, p. 116) observes that entrepreneurship in Arab countries is stifled by absence of the right policies that are required to spur self-employment among the population. It is observed that at the macro-economic level, the policies that are formulated by many countries in the region fail to take into account the need for efficiency and existence of local capabilities, which are necessary aspects of a successful entrepreneurial process. The role of entrepreneurship in the economic growth of Arab countries has also been a subject of several studies. Generally, entrepreneurship, and by extension small and micro enterprises, are seen as essential drivers of economic growth in countries (El-Gamal, El-Merghabel & Inanoglu, 2000, p. 5). Therefore, the success of small and medium-sized enterprises in an economy is directly attributed to a thriving entrepreneurship practice in the countries under consideration. However, in the case of Arab countries, it is observed that specific factors act as barriers to entrepreneurship and consequently threaten the potential for economic growth in the countries (El-Gamal et al., 2000, p. 7). Therefore, lack of access to credit facilities by individuals in Arab countries as a result of the existing legislative barriers that are common in such countries is identified as a major obstacle to entrepreneurial activities in such countries. This state of affairs translates into a slower rate of economic growth than what is the optimum rate of growth for such countries. Culture and Entrepreneurship National culture determines the willingness of individuals to work for others or get into self-employment (Bogan & Darity, 2008; Hussain, 2012). It also affects the extent to which the individuals will succeed in their chosen career paths. On the other hand, entrepreneurship is the process by which individuals set up and manage business ventures (Williamson, Mueller, Van Duesen & Perryman, 2008, p. 54). This process is either encouraged or discouraged in different cultures. The extent to which individuals engage in entrepreneurship depends on the specific cultural attributes of their society, among other factors. According to Thurik and Dejardin (2011, p. 57) the impact of culture on entrepreneurship is evident in the three common approaches that are used to study the emergence and development of entrepreneurship within a society. These are: the approach that focuses on the impact of the relationship between individual values and overall behaviour; the approach that is based on the effect that social norms have on individual behaviour; and lastly, the approach that attributes entrepreneurial activity to differences in character and values between entrepreneurs and others. Therefore, the importance of national culture in determining entrepreneurial activity within any given society cannot be overemphasised. There are several ways in which culture affects entrepreneurship. According to Urban (2007, p. 85), entrepreneurship is actually a result of the complex interaction between the personality of the individual involved and the aspects of the culture of the society in which the individuals resides. Entrepreneurial practice, which is the tendency of individuals to start and manage their own business ventures, largely depends on the influence that different cultural values have on the latent personality of individuals. Therefore, the self-concept that individuals have about themselves with regard to their ability to run their own business ventures is largely dependent on existing cultural values. The manner in which cultural values affect entrepreneurial activities varies in terms of what dimensions of culture are used to analyse the situation. However, from a number of studies that have been conducted on the subject, it is clear that different cultural dimensions either increase the chances of individuals getting into entrepreneurship or limit the chances of success of entrepreneurs. Zhao, Li and Rauch (2008, p. 6) discuss how different dimensions of national culture influence entrepreneurial activity among individuals. For instance, the extent to which individuals adhere to the in-groups in the collectivism dimension is identified as an important indicator of the potential of the individual to succeed in entrepreneurship. It is argued that in general, this dimension of culture, which measures the level to which an individual subscribes to the demands and needs for cohesiveness in social groups and families, works against the ability of an individual to venture into entrepreneurship. This is because entrepreneurship requires a degree of independence, individualism and creativity, all of which are factors that are the opposite of cohesiveness. It should be pointed out at this point that this dimension corresponds to that of individualism versus collectivism as discussed in Hofstede’s model of national culture. According to Lee (1999, p. 2), the manner in which an individual relates to the others in the society, as measured by the individualism dimension, is an important predictor of the ability of the individuals to succeed in entrepreneurship. This is because individuals who exhibit a high level of individualism tend to initiate things on their own and act independently of the rest of the members of the society (Yasin, 1996, p. 69). Therefore, when interpreted in terms of entrepreneurship, individuals who belong to cultures that have a high measure of individualism tend to exhibit the propensity to start and run their own business ventures as compared to those from cultures that have low scores on individualism. In evaluating the impact that culture has on entrepreneurship in general, Van der Linde (2012, p. 30) provides a framework in which every single dimension under the Hofstede’s model of national culture is related to specific aspects of the entrepreneurial process. The dimension of power distance is associated with the ability of individuals to be driven by specific goals in their actions. When interpreted in terms of its effect on entrepreneurship, it is argued that by having a high score in this dimension, entrepreneurs tend to set and follow predefined goals in their businesses (Van der Linde, 2012, p. 31). Furthermore, Lee (1999, p. 3) argues that successful entrepreneurs have a high ability to exist in societies that are structured in terms of classes and specific roles. Therefore, it can be concluded from these observations that cultures that have a high measure of power distance positively influence the ability of individuals to pursue careers in entrepreneurship. Another dimension of culture that has been identified as a key predictor of entrepreneurship activity in a society is uncertainty avoidance. Generally, this dimension is used to measure the extent to which uncertainty is accepted and tolerated within a society. Several researchers have linked this cultural attribute to the process of entrepreneurship. For instance, Van der Linde (2012, p. 32) observes that this attributes indicates the extent to which individuals in a society are expected to take advantage of contingencies in their entrepreneurial activities. Lee (1997, p. 3) links the measure of uncertainty avoidance in a society to the readiness of individuals in the society to take risks. Zhao et al. (2008, p. 9) argue that the measure of uncertainty avoidance of a particular culture is an important predictor of how well entrepreneurship activities in the society succeed. This is because individuals who live in societies with a high level of uncertainty avoidance tend to plan very carefully about the future while at the same time being prepared to handle unplanned for occurrences. Therefore, it is clear from the foregoing that the measure of uncertainty avoidance of a culture determines the quality of entrepreneurship that is likely to be undertaken by individuals in such societies. Furthermore, in societies where individuals are expected to handle uncertainties, the ability of entrepreneurs who operate in such societies to take advantage of unexpected and unpredictable events increases (Kreiser, Marino & Weaver, 2010, p. 6). Apart from analysing the impact of culture on entrepreneurship based on the dimensions of culture developed in different models, the collective nature of the socio-cultural environment and its effect on entrepreneurship has also been the subject of studies on this issue (Akhter, & Suni, 2014; Basu & Altinay, 2002; Radipere, 2014). According to Akhter and Sumi (2014, p. 5), the manner in which the overall social and cultural environment of a society affects entrepreneurial activity is embodied in two important theories: the family orientation theory and education incubation theory. Since the values that individuals are exposed to in the course of their lives within a family setup and during education are largely shaped by existing cultural values, it then follows that individuals who live in societies in which values such as hard work and independence are emphasised tend to succeed in entrepreneurial activities (Basu & Altinay, 2002, p. 6). Conclusion There are several conclusions that can be drawn from the review of literature. First, it is clear that different geographical regions have distinctive cultures. National cultures, as they are known, shape the behaviour and attitudes of individuals. Secondly, culture affects entrepreneurship activities in different ways. The extent to which individuals are willing to take advantage of opportunities, successfully start business ventures and manage to run the ventures through periods of uncertainty depends on the personality of the individuals and the prevailing social, cultural and economic conditions in their societies. Thirdly, Arab culture is defined by specific values and characteristics. When analysed using the different dimensions of Hofstede’s model of national culture, it can be seen that the Arab culture has relatively high scores in terms of the following dimensions: power distance, uncertainty avoidance, individualism and masculinity. Fourth, it has been pointed out that the manner in which culture affects entrepreneurship can be analysed in terms of the relationship between the different cultural dimensions and specific entrepreneurial activities. Consequently, the extent to which individuals can identify opportunities, take risks and act independently in starting and running business ventures depends on the measure of the cultures of their societies in terms of uncertainty avoidance, level of individualism and power distance. Therefore, it is this relationship between culture and entrepreneurship in Arab countries that is to be evaluated in the research. References Akhter, R., & Sumi, F. R. (2014). Socio-cultural factors influencing entrepreneurial activities: A study on Bangladesh. IOSR Journal of Business and Management, 16(9), 1-10. Aswathappa, K. (2010). International business. New Delhi: Tata McGraw-Hill. Basu, A., & Altinay, E. (2002). 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