National Culture and Entrepreneurship: A Quantitative Analysis Using Hofstede's Cultural Dimensions

Data and Variables

Entrepreneurship is widely considered to be a key determinant of economic performance and development Within the entrepreneurship literature, a key question has been to what extent and how national culture influences entrepreneurship.In Part 1 of this computer assignment, we will conduct some simple quantitative analyses explaining variables related to entrepreneurship using cultural dimensions from Hofstede. The entrepreneurship data is taken from the Global Entrepreneurship Monitor (GEM) project, which has done survey-based research on entrepreneurship for more than 20 years and is a key source of data for entrepreneurship research.

The data has been downloaded from the GEM webpage. We are using data from the Adult Population Survey (APS) that “looks at the characteristics, motivations and ambitions of individuals starting businesses, as well as social attitudes towards entrepreneurship”. These data have been aggregated from the individual level to the national level.

The dataset in Excel has been uploaded with the computer assignment material.  The three entrepreneurship variables that will be used, measuring different dimensions of entrepreneurship, are defined as follows (variable name in the dataset is shown in parenthesis):
•    Total early-stage Entrepreneurial Activity (TEA) Rate (TotalearlystageEntrepreneuria): Percentage of 18-64 population who are either a nascent entrepreneur or owner-manager of a new business.
•    Perceived Opportunities Rate (Perceivedopportunities): Percentage of 18-64 population (individuals involved in any stage of entrepreneurial activity excluded) who see good opportunities to start a firm in the area where they live.
•    Entrepreneurial Intentions Rate (Entrepreneurialintentions): Percentage of 18-64 population (individuals involved in any stage of entrepreneurial activity excluded) who are latent entrepreneurs and who intend to start a business within three years.
The following cultural, institutional and economic variables will be used as explanatory variables for this study (variable name in the dataset is shown in parenthesis):

•    Uncertainty avoidance (uai). According to Geert Hofstede’s homepage, this variable captures “a society’s tolerance for uncertainty and ambiguity.”  
•    Individualism (idv). This variable measures “the extent to which people feel independent, as opposed to being interdependent as members of larger wholes.”
•    Economic Freedom Index (hf_efiscore). This index is produced by the Heritage Foundation, and measures 10 specific freedoms in the areas of Business freedom, Trade freedom, Fiscal freedom, Freedom from government, Monetary freedom, Investment freedom, Financial freedom, Property rights, Freedom from corruption, and Labour freedom. Each of these is weighted equally and combined into an index ranging from 0 to 100, where 100 represents the maximum economic freedom (Dahlberg et al., 2021).
•    ICRG Indicator of Quality of Government (icrg_qog). This is the mean value of the International Country Risk Guide (ICRG) variables Corruption, Law and Order and Bureaucracy Quality. It ranges between 0 and 1, where higher values indicate higher overall quality of government (Dahlberg et al., 2021).

•    GDP per capita (constant 2010 US dollar) (wdi_gdpcapcon2010). This variable contains gross domestic product divided by midyear population, taken from the World Bank’s World Development Indicators (Dahlberg et al., 2021).Please use the Data Analysis package in Excel to produce descriptive statistics for the numerical variables in the dataset. Comment briefly on the results for the three entrepreneurship variables in terms of their mean, standard deviation and minimum and maximum values. Which countries are the most entrepreneurial as measured by these three variables?