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Born to be an entrepreneur? How cultural origin affects entrepreneurship


Erhardt, Katharina; Haenni, Simon (2018). Born to be an entrepreneur? How cultural origin affects entrepreneurship. Working paper series / Department of Economics 309, University of Zurich.

Abstract

Persistent differences in entrepreneurial activity between regions and countries remain unexplained. This paper argues that cultural heritage is an important determinant. We exploit a quasi-experimental setting comparing entrepreneurial activities of individuals with different cultural ancestry from within Switzerland but who live in the same municipality today and are hence exposed to the same economic and institutional environment. We find that individuals with cultural origin on the German-speaking side of the Swiss language border found 20% more firms than their counterparts with cultural origin on the French-speaking side ─ no matter if they currently live in the German-speaking or French-speaking region. These newly founded firms are identical in terms of survival rate, industry composition, legal form, and firm size, independent of the cultural origin of firm founders. A model of entrepreneurial choice suggests that the empirical patterns of firm entry and performance are more likely driven by differences in risk aversion or preferences for entrepreneurship rather than by skill.

Abstract

Persistent differences in entrepreneurial activity between regions and countries remain unexplained. This paper argues that cultural heritage is an important determinant. We exploit a quasi-experimental setting comparing entrepreneurial activities of individuals with different cultural ancestry from within Switzerland but who live in the same municipality today and are hence exposed to the same economic and institutional environment. We find that individuals with cultural origin on the German-speaking side of the Swiss language border found 20% more firms than their counterparts with cultural origin on the French-speaking side ─ no matter if they currently live in the German-speaking or French-speaking region. These newly founded firms are identical in terms of survival rate, industry composition, legal form, and firm size, independent of the cultural origin of firm founders. A model of entrepreneurial choice suggests that the empirical patterns of firm entry and performance are more likely driven by differences in risk aversion or preferences for entrepreneurship rather than by skill.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:D22, L26, Z10
Uncontrolled Keywords:Culture, entrepreneurship, natural experiment
Language:English
Date:December 2018
Deposited On:11 Dec 2018 16:57
Last Modified:05 Jun 2019 12:17
Series Name:Working paper series / Department of Economics
Number of Pages:58
ISSN:1664-7041
OA Status:Green
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php?id=988 (Organisation)

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