Why do rates of entrepreneurship vary by country?

Why do societies vary in their rates of entrepreneurship and organizational founding? Drawing on the largest available longitudinal sample comprising 192 countries over 2001-2018, I examine the evidence in relation to several explanations, including variation in the density of established organizations, national investment in research and development (R&D), technology transfer to new companies, the quality of science, technology, engineering and math (STEM) education, venture capital (VC) availability, and governmental support and policies for entrepreneurship. Contrary to prevailing theories, there is limited empirical support for these explanations. 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. This study further examines the relationship between norms and societal culture and finds that more gender-egalitarian societies and societies that value and reward performance and endorse status privileges had on average higher rates of organizational founding, net of differences in national income and economic growth. The paper discusses the implications of these findings in relation to research on the social determinants of entrepreneurship and organizational founding.

That is from a new paper by Valentina Assenova.  Let me just repeat one sentence in there, as it is one of the most important sentences in all of economics:

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.

Recommended.  Here is Assenova’s other new paper, showing entrepreneurship is correlated with higher innovation.

Via the excellent Kevin Lewis.

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