When Being Stuck in the Middle Hurts: The Effect of Culture and Institutions on Entrepreneurship

This study builds on Signal theory and Institutional theory to develop a framework that examines the role of cultural self and institutional variables on entrepreneurship. We propose that the relationship between cultural self (individualism-collectivism continuum) and entrepreneurship is positive curvilinear or U-shaped particularly in the presence of institutional determinants such as transparency or control on corruption. Our results also show that the relationship between cultural self and entrepreneurship is negative curvilinear in the presence of business freedom. We employ random-effects regression model to analyze ten years of panel data for this cross-country study. We find support for hypotheses and our findings present a more complete picture of the impact of cultural self and institutional variables on entrepreneurship. By proposing a theoretical model, developing measures and empirically testing propositions based on Signal and Institutional theories, this study contributes to international b...