The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa

The Cultural and

Ethical Differences
that Effects
Entrepreneurship
Between the U.S. and
Africa

Edward Oboli

The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa
Abstract

Purpose- This study explores the overall difference of business ethics and cultures
attributed between the United States and Africa, more notably in Nigeria, and the various factors
that contribute to the drawing of these distinctions. In addition, this paper will expand more
information on the national awareness and progression of entrepreneurship, social stratification,
power distance and its effects on economic growth, individualism and how it coincides with the
increase or decrease of entrepreneurship, and the presence of long-term orientation and how it
impacts different business operations in both nations.
Design/Methodology/Approach- A survey conducted across the nation of South Africa
and research tools including surveys given to prestige North American academic journals for the
sake of business ethics research, as well a limited number of surveys conducted in Nigeria and
America that shows the statistics of the youth who aspire, or are interested, to become
entrepreneurs. A great amount of online research was also conducted to further differentiate and
compare the various cultural and ethical factors between two nations.
Findings- The findings showed that there are many factors that result in the turnout of
engagement of entrepreneurship, some being of political, societal, and economical natures.
Findings also showed the specific need to address possible actions that could be taken against the
potential of increased corruption in oversea economic affairs, thus preventing further policy
reversals and inconsistencies. Other known factors were identified as well including the
embracing of multicultural business to further experience steady growth in ROI in Nigeria, South

The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa
Africa, and the United States, and how this creates a perception of openness from other countries
and an incentive to expand more in globalization.
Research Limitations/Implications- Research and surveys for very specific statistics of
entrepreneurship are limited due to the lack of these surveys conducted in Nigeria and South
Africa. Utilizing data from over thirty years ago causes some hindrance for the reinforcement of
current factors that create the landscape for business ethics and cultures.
Practical Implications- By grasping an understanding of the factors that makes up
various business ethics and culture overseas, many global businesses and entrepreneurs can
position the operations accordingly to where they will gain competitive advantage and a point of
differentiation in the international market.
Originality/Value/Contribution- This current study is original in the various surveys
that were conducted, the explanations as to why it is important for businesses to take the notion
of constantly being open to different forms of innovation to the public, the peer review articles
that helps to reinforce a bulk of the important information provided, and its role in the
contribution to current and aspiring entrepreneurs and start-up companies who wish to achieve a
well-versed global outreach that will result in making profit.

Introduction
When we think of cultural aspects, we think about the different forms of traditions,
ethics, and overall social behaviors that make up an entire nation. In global business, it is
important for companies to understand these cultural aspects and to familiarize themselves with

The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa
the different nations they choose to partake in international economic activities with. We will
begin to observe two nations, the United States and Africa, with a large focus on the oilprosperous and independent sovereign nation of Nigeria (Planning in Nigerian Business, 1986),
will be the subjects of an in-depth analysis of business cultural and ethical differences that have
shaped their respective national structures. We will also be identifying the impacts of social
stratification, the effects of power distance on economic growth, the utilization of long-term
orientation and planning for corporate business, and the presence of individualism and its impact
on the continuation of business for entrepreneurs in both nations.
Throughout this research paper, we will also gradually establish the reoccurring theme of
entrepreneurship awareness and how it resonates with African and American ethics and culture.
In 2001, most respondents from a South Africa nationwide survey acknowledge the importance
of entrepreneurship as a subject field in their respective universities. For undergraduate level
students, 35% indicated that it is very important, while 19% perceived it as essential. For
diploma level, 32% viewed entrepreneurship as important for their institution. For PhD level,
36% of the respondents deemed entrepreneurship as important, while 32% in the diploma level
perceive it that way (Entrepreneurship education in SA, 2006). The results of this survey speak
volumes about the importance of entrepreneurship from the African youth perspective, and its
potential leveraging power in the molding of a sustainable economy.
From an American survey conducted from 1999 to 2005, there was also data that
indicated which courses were offered and were most popular by two-and four-year universities.
They included: Entrepreneurship, Small Business Management, New Venture Creation,

The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa
Technology/Innovation, Venture Capital, Small Business Consulting, Small Business Strategy
Seminar, Franchising, New Product Development, Entrepreneurship Marketing, Small Business
Finance, and Creativity. The results of this survey indicated that the most popular course offered
by two-and-four-year colleges and universities in the last year of the survey (2004-2005) was
Entrepreneurship with 53%, followed by Small Business Management with 36%, and New
Venture Creation with 30%, respectively (Entrepreneurship Education, 2007).

The fact that there is 17% difference between Entrepreneurship and the runner-up just goes to
show the importance for managers to invest into a segment of the youth who wish to become job
creators and not just job seekers.

The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa
Literature Review
Unlike a number of countries in Africa, Nigeria has already made itself a home to an
array of different cultures from overseas, including over 250 different languages (Nigerian
Business Practices, 2000), and a site for multinational businesses. They are like the United States
in this regard, because they have opened their doors to many different operations of foreign
business in some key parts of the country. As a result of allowing multinational corporations to
inhabit the country, Nigeria has reaped the benefits of large transfers of technologies, capital, and
overall boost to the culture of entrepreneurship. Not only do the parts of Nigeria that incorporate
this culture of hospitality experience a breakthrough in increased investment levels and income,
but they also get to experience the promotion of cultural progression in their own immediate
environments. In addition, these multinational corporations create access to high quality
managerial skills, improve the balance of payment of host countries by significantly increasing
exports and sharply decreasing imports, and aid in equalizing the costs of factors of production
(Multinational Corporations and the Nigerian Economy, 2013).
Cultural and ethical business standards in the United States have been both successful
and unsuccessful in finding ways to integrate itself in the global market. The standard has always
been known to focus extensively on the hierarchy and overall process of managerial decisionmaking while remaining oblivious to the collective impact of some of these decisions, and
avoiding left-field approaches that might earn the disapproval of corporate executives. This
illiberal approach proved a degree of success when it was able to shape the field and reassert
itself in 1980s, a time when America remained nonchalant and unscathed to any possible

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Entrepreneurship Between the U.S. and Africa
limitations in sovereignty through the exuberating pressures of finance and heightened
competition from foreign countries (Speaking Platitudes, 2010). The use of this top-down
approach, however, would later make the field heavily reliant on the mercy of these same
corporate executives for furthering any significance. Shown in different trends regarding finance,
employee compensation, regulation, taxpayer subsidies, and a number of other factors suggest
that American Business Ethics has failed to display any kind of impact in corporate behavior
(Speaking Platitudes, 2010). This research indicates that national ethics and culture can have a
lingering effect on national and international business decisions.
The social stratification in Africa has had a long history with whether the over,
colonization of Europeans into Africa, most Africans who followed the standard traditions and
customs of their homeland were not even regarded as profit oriented; the European colonists who
labeled them believed there wasnt considerable population who strived to make establish
themselves with significant monetary gains. This form of traditionalism would become a
problem for colonizers, or in other words foreign business relationships. The Europeans had
hoped that Africans would have a desire and a need for European goods, but it turned out to be
the opposite; the Europeans wish to have the African economies exploited and resources had
been denied. It wouldnt be until a later time that Europeans would be able to penetrate the
African traditions and ultimately instill colonial administrations that would target at inculcating
the Africans in their desire to generate money (Social Stratification in Africa, 2012).
Social stratification in America has had a significant impact on the monetary efforts of
many businesses. These efforts would lead some of the local government boundaries to secure

The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa
and insulate different resources from the larger region of cities, and then later the distribution of
needs (Social Stratification in America, 1979). Another aspect of the American social
stratification is the government inequality in regards to social classes and the access to resources
available to support services is systematically allocated across municipalities along status lines.
As we look at the table below we can how it reports the correlation between the different status
and resources measures used. It should also be noted that the data does not support the idea that social
stratification leads the way to a mass distribution of resources, but instead shows that some of the lower
class municipalities are generally favored by social stratification and a watered-down administration of
property tax supported public policies. Two key pieces of information can be assessed: there is no sign of
a significant connection between the higher or lower status measures and per capita analyzed value of
municipal property, and there is a direct correlation between the increase and decrease of municipality
status and how it tends to contain the industrial and manufacturing property devoted land (Social

Stratification in America, 1979).

The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa

When power distance is discussed in regards to African business, it is important that we

know that we remember to understand that majority of the countries take on a more traditional
approach, rather than engage in a pro-westernized stature. In this next research we look at the
power distance relationship in Nigeria with an experiment called the ultimatum and dictator
game. In the ultimatum game, a proposer is offered a sum of money and is told to share it
respondent. This respondent can decide whether accept or reject the offer. Neither of the
participants will receive the money if he rejects. The motives captured by this game are both
selflessness and retaliation. In the dictator game, it appears the respondent cannot reject any of
the offers and the proposer can share as much or as little as he/she wants to without fear of any
retaliation (Fairness and Retaliation, 2003).
Both of these games were played at the same time for a repeating amount of days in a

The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa
Nigeria village. In the results for the ultimatum game, the mean offer in the ultimatum game
turned out to be 43% and the mode was 50%. As it also turns out the mean and median were
offered on both days, and the median offer was 50% for day 1 and 40% for day 2. There was
only 1 offer out of 73 offers that was rejected, and, according to the article, most of the
comments and remarks collected from village were in the ballpark of the following: I believe
the other person is in the condition as me and I want to be fair. I wanted the other person to be
happy. Since the money is a free gift I have to give to another person. Since the money was
brought by a foreigner then why cant I give to my brothers? Since the money is a gift from
God I have to give to the other person (Fairness and Retaliation, 2003). As we can see from
these remarks the majority support the idea of being ethical thought the course of business-tobusiness transactions.

Table 2 displays the regression results from the dictator game. As it turns out, the factors
of gender, income, education, and age are not important statistically, but the overall ethic of

The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa
sharing in the southeast area of Nigerian society (Igbo) cuts across gender, levels of education,
and income (Fairness and Retaliation, 2003).

Power distance in the U.S. has had its run and continues to impact the modern economy.
Not only does it impact the innovative performance of some companies, it effects the
empowerment and team participation of employees (Power Distance, October 2011).
Entrepreneurs can benefit from this information and apply it to how they decide to compensate
employees, both in how they choose to leverage the multiple personalities and individual
qualities of each employee.
Another factor to compliment power distance and its role in the overall innovative
performance of companies would be power distance and its role in the aggregate expansion of
liquidity and credit in America during economic shocks (Debt, 2012). It has been researched by
many economic policymakers that credit and the financial market in the U.S. are treated as
aggregate and macroeconomic level, and ultimately have small involvement with the distributive
outcomes (Debt, 2012). As we reference back to social stratification, it is apparent that the

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Entrepreneurship Between the U.S. and Africa
markets that have associate themselves to large-scale institutions and infrastructures that
represent various distributive dynamics are some of the main contributors in creating the power
distance felt in America, as well some of the power inequalities fund in race, gender, and class
(Debt, 2012).
In the Africa, the idea of individualism and collectivism has a direct correlation on the
overall turnout of aspiring entrepreneurs. It has been well-documented over the course of the 20th
and 21st century that the ones the majority of the people who make it out of poverty are the ones
who find work in an existing company or decide to start their own. In Africa, specifically
Nigeria, some of the indicating factors that create youth unemployment include the lack of
opportunities for job employment after graduation, the general lack of employment opportunities
on account of the underdevelopment of the economy, the poor quality education sector that
continues to equip young adults with limited industrial skills, and the small formal private sector
(Inclusion of Entrepreneurship Education, 2012). Even if one were to decide to not be an
entrepreneur and become a subordinate for one, it is still for that individual to stay involved with
the functional education to make that desired career work. Despite Nigerias success in gaining
the biggest form of individualism by gaining independence 1960, they still remained worried
about the unemployment rate as it sat at 14%. Between 1964 and 1999 the unemployment rate
began to go at a roller coaster pace, going from 4.3% to 7% to 5.1%. The decreases in the rate
were mainly due to different government relief efforts on behalf of Nigeria. One of biggest
increases and decreases of the unemployment rate would occur in 1999 when it had risen to 20%,
and then it gradually fell in between to the year 2003 to 10.8%. Overall, the biggest proportion of

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The Cultural and Ethical Differences that Effects 2014

Entrepreneurship Between the U.S. and Africa
the unemployed that was represented by between 35 and 50% were secondary school dropouts
(Inclusion of Entrepreneurship Education, 2012). It is clear that there is dire need for
entrepreneurship to be exposed and taught at the primary level of education, so that it can lay
down the foundation for individuals to embrace individualism and to use its concepts to generate
a profit.
America believes in this same idea that it is necessary for people to embrace being
individualistic in the course of business. There is a strong source of the American belief of
business ethics that comes from the positive notion of human nature and an overall powerful
optimism characteristic in the American culture (American and German Business Ethics, 2002).
Furthermore, there seems to be tendency where American business ethics can be rather legalistic,
understanding ethics in terms to accordance to a specific set of universal values (American and
German Business Ethics, 2002). Every business community in the U.S. must utilize a way to
balance the rights of the individual with the necessities and fulfilling duties of the community,
and as a result, create that specific balancing act that represents a communication process
between the two cornerstones of belief that are individualism and collectivism. It is clear at this
of the paper that American business ethics is more concerned with individualism (American and
German Business Ethics, 2002).
As we make our way to the final parts of this literature review, we will now begin to
discuss how long-term orientation impacts the ethic and culture between the two nations of
Africa and U.S. There is an ever-growing new competitive environment that is developing solely
on the current technological revolution and increasing globalization amongst small and medium

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Entrepreneurship Between the U.S. and Africa
scale businesses (Customer Orientation, Nov 2010). The customer orientation in Nigeria is one
of the key factors that reflect the long-term orientation that is adopted by Africa. The goal for
Nigerian managers is to know customer decision processes, identify the value-added
oppurtunities, and create a medium for competitive intelligence, in the hopes of empowering
themselves in the culture of an enterprise (Customer Orientation, Nov 2010). In the table
bellows that shows one part of the research done to explore the implementation of customer
orientation, we can see the positive correlation between small and medium scale businesses
(Customer Orientation, Nov 2010).
Independent

Standardized

T-Test

Significance

Variable

coefficients

Customer orientation

0.314

3.526

0.003

Marketing

0.476

4.814

0.0001

0.465

4.672

0.0029

0.564

5.620

0.028

competence
Marketing
Information system
Managerial attitude

Despite the positive results from research showing the implementation of one of the
factors of long term orientation, Africa and U.S. are considered by Geert Hofstede to be on the
short term spectrum (Long-versus Short-term Orientation, 2010). The correlation of the new
CVS dimension with economic growth made Geert Hofstede make the decision to add an

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Entrepreneurship Between the U.S. and Africa
assessment of long-term and short-term orientation countries. The two nations of the U.S. and
the African country of Nigeria were analyzed to be on the short term-side, largely due to a
supposedly slow economic growth compared to the dragons and tigers of China and East
Asian countries (Long-versus Short-term Orientation, 2010).

Conclusion/Future Research
In conclusion, there are just about the same number of distinctions and similarities
between the Africa and the United States when it comes to cultural and ethical differences as it
relates to entrepreneurship. We have compared the rapid growth and the considerable lack of
awareness of entrepreneurship and the overall benefits of acquiring the education. We then
discussed the long history of Nigerian traditional values and how it impacted the interest in
multinational business, leading into the discussion between social stratification of both Africa
and the U.S. We then directed our assessments of the peer-reviewed articles into the topic of
power distance and its effect on economic growth. After discussing that, we dove into research
relating to the topic of individualism and how it correlates with the increase or decrease of
entrepreneurship. This was where we were able assess that individualism, in regards to business,
was still a work in progress for the African countries of Nigeria and South Africa, while
America was already a nation that had an impressive foundation for prioritizing individualism.
Lastly, we were able the presence of long-term orientation and how it impacts different business
operations in both nations. A very interesting result of this assessment was the strong similarity
of scored by Geert Hofstede as being a short-term oriented nation and this was shared between

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Entrepreneurship Between the U.S. and Africa
three nations: Nigeria, America, and even Zimbabwe.
Future research should include more emphasis on power distance between the Nigerian
small and medium-scale businesses and larger corporations that receive favor through the
political means. The rapid exposure of multinational businesses in Nigeria and how it contributes
to Nigerias overall GDP could have really contributed a significant amount to the section where
entrepreneurship awareness was discussed. Another suggestion for future research would be to
include more current surveys about the American higher education systems high interest in
developing a foundation for entrepreneurship as a staple program to degree plans.

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Entrepreneurship Between the U.S. and Africa
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Journal of Business Ethics, 2010, Vol.94(2), pp.239-253
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Asia Pacific Business Review, 2010, Vol.16(4), p.493-504

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