Personal cultural orientations and self-employment
Cultural research in the field of entrepreneurship has chiefly concentrated on differentiating entrepreneurial from non-entrepreneurial cultures (e.g. Hayton & Cacciotti,
2013; Li & Zahra,
2012; Mueller & Thomas,
2001). The effect of the values on behavior extends to entrepreneurial situations and activities (McGrath et al.,
1992). Whereas culture is largely studied at national or society level following Hofstede’s model, it has been highlighted that personal level cultural values cannot be ignored. Within a given culture, individuals significantly vary in their predominant orientations (Au,
2000; Fischer,
2006). We presume that individual-level cultural values are more proximal than the national cultural values, to a person’s behavior. Hence our focus on the individual level cultural orientations rather than the national cultural dimensions. Moreover, personal cultural orientations have not been widely studied in entrepreneurship research. We therefore still develop our hypotheses based on literature related to the Hofstede model.
To enable measurement of Hofstede’s cultural dimensions at the personal, Sharma (
2010) reconstructed these dimensions into a taxonomy of 10 Personal Cultural Orientations (PCOs). As a good framework for understanding how different societies deal with social issues (Minkov and Hofstede,
2011), the Hofstede model has provided the basis for entrepreneurial culture research in recent decades. This research has shown that dominant cultural norms and practices have an influence on entrepreneurial activities in a given society (Autio, Pathak, and Wennberg
2013; Li and Zahra
2012; Wennberg, Pathak, and Autio
2013; Tlaiss
2014; Davidsson
1995; Huggins and Thompson
2014).
At the individual level, cultural values are essential for entrepreneurs in developing, accumulating and using cultural and human resource practices that enhance entrepreneurial performance (Chand & Ghorbani,
2011). Consequently, one’s cultural values can, directly and indirectly, affect success via interpersonal competencies. In the following subsections, we show how Sharma derives social inequality and interdependence personal cultural orientations from the Hofstede model, and hypothesize about the likely relationship of social inequality orientations and interdependence with subjective success in self-employment.
Social inequality cultural orientation
Sharma (
2010) derives the personal cultural orientation of social inequality from the “power dimension” of the Hofstede model. In small-power distance societies, there are minimal inequalities and interdependence; while large-power distance societies are characterized by high levels of inequality and are polarized between dependence and counter-dependence (Minkov & Hofstede,
2012; Mintu,
1992). However, based on the logic that presenting power distance dimension on a horizontal and vertical axis does not adequately show the difference in power and equality. Sharma (
2010) conceptualizes this dimension into two personal cultural orientations: power and social inequality. Sharma defines these orientations in line with (Schwartz,
1992,
1994) values of hierarchy and egalitarianism. Hence, power refers to the degree of acceptance of power differences among members of a community; while social inequality concerns the degree of acceptance of inequality among members.
Previous research regarding the impact of power and inequality issues on entrepreneurship have predominantly used Hofstede model, and shows that entrepreneurial behavior is favored in low-power distance cultures (Eroglu & Picak,
2011; Tlaiss,
2014; Vinogradov & Kolvereid,
2010; Wennekers, Thurik, Van Stel, & Noorderhaven,
2010). In high Power Distance societies, power is concentrated within a small group of individuals, while the majority has limited power. This has an effect on innovative and risk-taking behavior (Fernandez, Carlson, Stepina, & Nicholson,
1997; Sun,
2009), thus impacting negatively on entrepreneurial behavior. However, it could also be claimed that social inequality orientation is positively related to entrepreneurship and entrepreneurial success; whereby entrepreneurship is used as a platform for reducing social inequalities in society. For example, work-family conflicts tend to push women into business (Thébaud,
2010). In the context of social inequality, entrepreneurship is seen as a means of empowerment to the marginalized (Al-Dajani & Marlow,
2013). This is also in line with the thinking that entrepreneurship is a feasible solution to some of the challenges related to social inequality, for example, in alleviating poverty (Bruton et al.
2013) and reducing unemployment (Vogel,
2015a). Moreover, in line with social competence assumptions of Baron and Markman (
2003), entrepreneurs who recognize and value social differences among members of society are likely to have better approaches to relate with different customers and stakeholders, which improves customer impressions and network ties. Hence it is hypothesized that:
Interdependence cultural orientation
The interdependence orientation is derived from the individualistic-collectivistic dimension of the Hofstede model (Sharma,
2010); which concerns the relationship between the person and the society; or precisely the degree of cohesiveness or looseness of ties among individuals in a group (Franke, Hofstede, & Bond,
1991). Whereas these appear to be two ends of a continuum, there is literature suggesting that a person may have both individualistic and collectivistic tendencies (Oyserman,
2006). Based on these shortfalls and the alternatives provided in the self-construal model (Markus & Kitayama,
1991) and the personal cultural values (Schwartz
1992), Sharma re-conceptualizes this dimension into independence and interdependence orientations, which are purportedly negatively related. Independence involves preference to act independently, freedom, personal achievement, autonomy and strong self-concept (Sharma,
2010). Contrary, interdependence involves preference to act in groups, reliance on others, attention to the group over personal goals and collective achievement.
Research on entrepreneurship culture suggests that business is more suited to cultures where individual rather than collective action is emphasized (Dubina & Ramos,
2016; Huggins & Thompson,
2014). However, regarding success, Rauch et al. (
2013) noted that collectivistic tendencies are also important for the implementation of innovations. Particularly, it has been linked to women entrepreneurship (Bullough, Renko, & AbdelZaher,
2013); is essential for entrepreneurial development in so-called collectivistic countries (e.g. Zeffane
2014), and also relevant for social entrepreneurship (Pathak & Muralidharan,
2016). In relation to the social competence assumptions, interdependence is also related to the ability to establish external ties (Tiessen,
1997). These abilities are useful for obtaining external financing and marketing, which are linked to success indicators. It is therefore hypothesized that:
Cultural intelligence and self-employment
In today’s highly globalized economy, few businesses are operating in a confined uni-cultural context. Cultural diversity in all societies is increasingly inevitable, hence entrepreneurs are increasingly engaged in cross-cultural business. Their ability to adjust to doing business with individuals from a differing culture, or doing business in a cultural context different from their own is therefore important. Such capability fits with what has been labeled cultural intelligence (Earley and Peterson
2004; Crowne
2008; Earley and Mosakowski
2004; Earley
2002). This form of intelligence has been defined as the ability to interact effectively with people from different cultures (Soon & Linn,
2015; Tuleja,
2014); and this involves the ability to shape and exhibit appropriate behavior in a different or new cultural setting (Thomas
2006).
Such capability is needed for the self-employed to be able not only do business in cross-cultural settings, but also recognizing and respecting differences as well as reconciling and adjusting in such situations (Earley & Mosakowski,
2004; Magnusson, Westjohn, Semenov, Randrianasolo, & Zdravkovic,
2013; Rauch et al.,
2013; Soon & Linn,
2015). Moreover, such capability is still important in domestic businesses (Peus, Frey, Gerkhardt, Fischer, & Traut-Mattausch,
2009) given reduced cultural homogeneity of communities. In the same community, individuals differ on a variety of aspects that require cultural understanding and adjustment such as language, sexual orientation, ethnicity, religion, social class, and political affiliation (Triandis,
2006). Thus the justification for the studies of cultural intelligence and belief that cultural intelligence is an interactional asset for different professionals (Erez et al.,
2013; McNulty, Mackay, Lewis, Lane, & White,
2016; Thomas, Lazarova, & Inkson,
2005; Watkins & Noble,
2016). Several components of cultural intelligence have been proposed (cf: Van Dyne et al.
2012; Lange
2012). In the present study, we concern ourselves with the behavioral aspects of cultural intelligence, given that this is more proximal to the behavior of entrepreneurs in the business space.
Cultural intelligence may be vital for the self-employed at the different stages of the entrepreneurial activity; from the formation of self-employment intentions to opportunity recognition, entry, and success. Existing research shows that cultural intelligence is related to entrepreneurial intentions and performance (Jiang & Park,
2012; Magnusson et al.,
2013) including the abilities to recognize and willingness to exploit cross-national or cross-cultural business opportunities. This is reflected in the link between cultural intelligence and commitment to study international business (Ramsey, Barakat, & Aad,
2014) and the export performance of small business owners (Charoensukmongkol,
2016). Cultural intelligence is also an important competency for decision making, effective teamwork, leadership, management and negotiations (Brislin, Worthley, & Macnab,
2006; de la Garza Carranza & Egri,
2010; Earley & Mosakowski,
2004; Earley,
2002) as well as motivating creativity (Bogilović & Škerlavaj,
2016). All these are essential in the process of managing one’s own business. Competition in the contemporary business world is no longer localized. Therefore, a culturally diversified team is required, bringing together different cultural resources for a team. Evidence suggests that cultural diversity within the business and in the operating environment does help gain and maintain competitive advantage (Groves & Feyerherm,
2011). However, the business owner needs the capability to harness and manage such a resource.
The daily life of a self-employed or entrepreneur is by nature stressful (Baron et al.,
2016). Taking risks of investing, competition, dealing with conflicts and loss are some of the issues that confront the self-employed person. It gets worse when operating in cultures that are unfamiliar, or making business dealings with individuals whose beliefs and practices are different. The challenge arises especially if we cannot understand the intentions and behaviors of stakeholders, which are linked to culture. With regards to this, cultural intelligence has been found related to emotional intelligence (Crowne
2013; Earley and Mosakowski
2004; Lin, Chen, and Song
2012), which is further an important tool for resilience and adjustment (Houghton, Wu, Godwin, Neck, & Manz,
2012) and entrepreneurial success (Sarwar, Nadeem, & Aftab,
2017). This increases the likelihood of succeeding in self-employment role. It is therefore hypothesized that:
We further posit that interdependence and social inequality cultural orientations sensitize people to the peculiarities of each social contact. Hence they enhance one’s cultural intelligence, and consequently able to conduct business in a multi-ethnic context. Whereas some scholars question the existence of a cognitive capability called cultural intelligence, there is agreement that culture has influences on the development of such individual abilities. Sternberg (
2004) provides a framework in which intelligence is culturally determined; specifically, that culture does not only influence the development of intelligence but also the way intelligence is conceptualized and its significance. There are a few studies that have attempted to measure the effect of culture on different intelligence constructs. These few studies, however, demonstrate that culture indeed has an influence on different forms of intelligence such as emotional (Gunkel, Schlaegel, & Engle,
2014) and cultural intelligence (Chao et al.,
2017). We, therefore, would like to test an exploratory assumption that cultural orientations are related to cultural intelligence. Given that culture impacts both entrepreneurial success and cultural intelligence, we would like to hypothesize that the effect of cultural orientations on success in self-employment is partly mediated by cultural intelligence. Cultural intelligence is a competence that increases the capability of the entrepreneur to deal with clients of different cultural and ethnic backgrounds. In line with the assumption that social competencies are related to entrepreneurial success (Baron & Markman,
2003), we particularly propose that cultural intelligence is important for interactional tasks of the entrepreneur, which translates into performance and consequently improving subjective success. Based on the above arguments, we hypothesize that:
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H4a. Both interdependence and social inequality cultural orientations are positively related to cultural intelligence.
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H4b. Cultural intelligence mediates the effect of both interdependence and social inequality cultural orientations on subjective success in self-employment.
The context is essential to understanding entrepreneurship; including an understanding of antecedents and outcomes (Nabi, Liñán, Fayolle, Krueger, & Walmsley,
2017; Smallbone & Welter,
2006; Welter,
2011). We, therefore, posit that the effect of personal cultural orientation and cultural intelligence are dependent on the wider cultural environment and the country’s development. This is also supported by Frederking (
2004) observation that the role of culture in business varies among societies. That is, in some but not all societies, cultural values, and norms are extended to economic activities. Nonetheless, even in societies where cultural values are separated from the business process, the general cultural effect on character extends to entrepreneurial behavior. This includes the perception of barriers, support mechanisms, and personal competencies to engage in entrepreneurial activities (Migliore,
2011; Shinnar, Giacomin, & Janssen,
2012); development and usage of social capital (Chand & Ghorbani,
2011). In addition, values are closely linked to social and political circumstances (McGrath et al.,
1992); which have implications for self-employment (Gindling and Newhouse
2014). It is therefore expected that the direct effects of personal cultural values on subjective success in self-employment vary among countries given the differences in social, political and economic conditions; which factors may also affect the degree to which cultural values are applied to economic behavior. Keeping note that cultural intelligence is a competence that particularly enables individuals to interact with people from other cultural backgrounds (Earley & Mosakowski,
2004; Earley,
2002; Soon & Linn,
2015), it is also expected that the indirect effects of personal cultural orientation on subjective success via behavioral cultural intelligence also differ among countries, depending on the level of multiculturalism or multi-ethnicity of the business context. Most communities in East Africa are multiethnic and multi-linguistic. For example, Uganda has over 40 native ethnic groups (Naluwooza,
2017). Moreover, business hubs tend to have a greater collection of most ethnicities and languages. On the other hand, the comparison country, Germany is more homogeneous in terms of culture and language. In addition, East Africa is predominantly a collectivistic society, where interdependence is highly valued (Baluku, Bantu, & Otto,
2018). On the contrary, Germany has a high individualistic orientation (Guess,
2004). These are likely to affect the utility of interdependence and cultural intelligence in entrepreneurial activities. It is therefore hypothesized that:
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H5a. The direct effects of interdependence and social inequality cultural orientations on subjective success in self-employment are higher for East Africa than for Germany.
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H5b. The indirect effects of interdependence and social inequality cultural orientations on subjective success in self-employment via cultural intelligence are higher for East Africa than for Germany.