In Which Cultural Contexts Do Individual Values Explain Entrepreneurship? An Integrative Values Framework Using Schwartz's Theories

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In which cultural contexts do individual values explain entrepreneurship? An

integrative values framework using Schwartz’s theories
Article in International Small Business Journal · December 2018

DOI: 10.1177/0266242618811890
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values framework using
Schwartz’s theories
Carlos Morales and Claudia Holtschlag

CENTRUM Católica Graduate Business School (CCGBS), Pontificia Universidad Católica del Perú (PUCP), Perú
Aline D Masuda
EADA Business School, Spain
Percy Marquina
CENTRUM Católica Graduate Business School (CCGBS), Pontificia Universidad Católica del Perú (PUCP), Perú
Abstract
Answering research calls for better contextualisation of entrepreneurial behaviour, we examine the
cultural contexts in which individuals with entrepreneurial values (Schwartz’s self-enhancement-
and openness-to-change values) are most likely to be entrepreneurs. Culture is assessed through
Schwartz’s cultural dimensions of mastery and egalitarianism. The results of multilevel logistic
regressions with more than 35,000 respondents nested in 28 European countries support the
hypotheses that individual values are more important for explaining entrepreneurship in non-
entrepreneurial cultures (low in mastery and egalitarianism). Our results indicate that mastery
compensates for openness-to-change, whereas egalitarianism reduces the impact of both self-
enhancement and openness-to-change values.
Keywords
culture, entrepreneurship, individual values, multilevel, situational strength
Introduction
Although the effects of entrepreneurship on economic development are widely acknowledged
(Wong et al., 2005) and have spurred increasing interest in its determinants, there is a lack of well-
developed theory integrating the individual and social determinants of entrepreneurship (Shane
Corresponding author:
Carlos Morales, CENTRUM Católica Graduate Business School (CCGBS), Pontificia Universidad Católica del Perú
(PUCP), Los Álamos de Monterrico, Jirón Daniel Alomía Robles 125-129, Santiago de Surco, Lima 33, Perú.
Email: morales.ce@pucp.edu.pe
2 International Small Business Journal: Researching Entrepreneurship 00(0)
and Venkataraman, 2000). This article contributes to the understanding of the multilevel nature of
entrepreneurship (Fuentelsaz et al., 2018) by examining how the role of individual motivational
values in shaping entrepreneurship is contingent upon a country’s cultural values. Even though
research in the field has traditionally used values only as a social/national/cultural indicator at the
country/regional level, individual and cultural values are two different constructs that operate at
two different levels of analysis, that is, individual and societal (Schwartz, 2011). Only recently
have entrepreneurship researchers identified the need to develop coherent frameworks that, first,
distinguish between culturally and individually held values and second, explain how individual
and cultural values interact (Fayolle et al., 2014; Hayton and Cacciotti, 2013). As such, we have
little knowledge of how entrepreneurial behaviour is explained by the interplay between these two
different types of values (Fayolle et al., 2014).
We use Schwartz’s (1992, 2008) values theories to theoretically frame the relationship
between entrepreneurship and individual and cultural values. Schwartz (2011) argues the need
for two distinct theories for different levels of analysis, claiming that individual values are
derived from psychological and biological needs related to survival and social adaptation.
Whereas cultural values, at the societal level, derive from the “functional imperatives” that soci-
eties have to deal with in order to survive. Entrepreneurship research using Schwartz’s frame-
works is scant. At the individual level, a few studies have examined how entrepreneurs and
non-entrepreneurs differ on Schwartz’s individual values (see, for example, Holt, 1997; Noseleit,
2010). At the country level, examples linking Schwartz’s cultural values to country entrepre-
neurship ratios include Liñán et al. (2013) and Fernández-Serrano and Romero (2014). Hayton
and Cacciotti’s (2013) review on culture and entrepreneurship, covering research published up
to 2012, and Terjesen et al.’s (2016) review of comparative international entrepreneurship, cov-
ering research published up to 2010, do not include any articles using Schwartz’s cultural model.
Cacciotti and Hayton’s (2017) updated review covering the period 2013–2016 includes one arti-
cle using Schwartz’s cultural theory. This illustrates the novelty of this framework to address
questions related to entrepreneurship and culture. Moreover, there is a call for more research in
this field (Stephan and Uhlaner, 2010), particularly using new approaches drawing upon
Schwartz’s cultural theory (Cullen et al., 2013).
We frame the interplay of micro and macro values within a compensatory logic based on situ-
ational strength theory. According to this theory, contexts restrict the effects of individual differ-
ences if they provide implicit or explicit cues for the desirability of a behaviour or outcome (Meyer
et al., 2010). Hence, we discuss how individual values provide a particularly crucial role in explain-
ing entrepreneurship when countries do not present a strong entrepreneurial culture. Entrepreneurship
is measured as a composite including self-employment and employment creation, sampling self-
employed individuals who have employees. We test our hypotheses using the European Social
Survey (ESS) (2008) data, a novel data set in entrepreneurship research, which include responses
from 35,165 individuals nested within 28 countries. We have not identified any other studies that
simultaneously theoretically distinguish between individual and cultural values and tests how they
interact to explain entrepreneurial behaviour.
This article makes three contributions: First, building upon exploratory studies using Schwartz’s
individual values, we theoretically frame and empirically test individual values as a micro-variable
capable of explaining individual entrepreneurial behaviour across countries. Second, although
calls have been made to use recent cultural models to understand country entrepreneurial activity
(Cullen et al., 2013), very few studies examine how cross-country variation in entrepreneurship is
explained by Schwartz’s (2008) cultural values. Third, following calls for multilevel entrepreneur-
ship research (Shepherd, 2011), we use the situational strength framework to examine under which
cultural conditions individual values explain entrepreneurship.
Morales et al. 3
Schwartz’s values theories

According to Schwartz’s (1992, 2011) individual values theory, 10 motivational values can be clas-
sified in a circular structure with two poles: self-enhancement (power and achievement) versus
self-transcendence values (universalism and benevolence) and openness-to-change (self-direction
and stimulation) versus conservation values (conformity, security and tradition). Hedonism values
cannot be clearly mapped to either of the two poles, but share aspects of both openness and self-
enhancement. An emphasis on one pole implies that the values of the opposite pole are less impor-
tant for an individual. Individual values are a psychological characteristic describing desirable
goals that transcend specific situations, guide selection of behaviour and events and are ordered by
relative importance (Schwartz, 1992). Previous research suggests that the origin of individual val-
ues includes biological (Hechter et al., 1993) and various socio-structural components such as
ethnicity (Rokeach, 1973), gender (Xiao, 2000) and family structure (Gecas and Seff, 1990).
Schwartz’s (2008) culture theory identifies three bipolar cultural orientations: autonomy versus
embeddedness, egalitarianism versus hierarchy and harmony versus mastery. As culture expresses
what is considered to be good and desired in a society (Schwartz, 2011), these dimensions provide
normative responses that prescribe how individuals should behave.
Schwartz’s theories are particularly useful in the field of entrepreneurship for several reasons.
First, a combined perspective of individual- and societal-level theories allows for drawing a more
complete picture of the entrepreneurial phenomenon, which is primarily individual but highly con-
textually embedded (Welter, 2011). Second, although some researchers consider Schwartz’s theo-
ries as the best-validated and most established measures of values (Fischer, 2006: 1420), they are
rarely used within entrepreneurship research. Third, Schwartz’s conceptualisation of culture is
theory-driven, in contrast to the most frequently used definition of culture in the field (i.e. Hofstede,
1980). In Schwartz’s (2011) conception, culture is ‘the press to which individuals are exposed by
virtue of living in particular social systems’ (p. 470). Culture, therefore, is outside of the individual
rather than in their minds (Hofstede, 1980).
Individual values and entrepreneurship

Why should we expect a link between individual values and entrepreneurship? Individual values are
a motivational construct (Feather, 1995; Karp, 2000), which work as broad goals of attainment and
which apply across contexts and time (Schwartz et al., 2001). As trans-situational goals, values
serve as guiding principles and help individuals to select actions (Schwartz, 2011). For these rea-
sons, values are highly relevant for understanding the foundations of professional decisions (cf.
Halaby, 2003). Extensive research in sociology and social psychology has shown links between
individual values and behaviour (Hitlin and Piliavin, 2004; Marini, 2000). Even though entrepre-
neurship research has paid little attention to individual values (Fayolle et al., 2014; Jaén et al., 2013),
their motivational condition makes them appropriate for explaining volitional choice (Barrick et al.,
2013), such as the decision to become an entrepreneur (Halaby, 2003; Lechner et al., 2018).
Research using individual values as antecedents of entrepreneurship is scant (Fagenson, 1993;
Morales and Holtschlag, 2013), particularly in comparison to the attention afforded to other indi-
vidual characteristics such as personality traits. Specifically, research on entrepreneurship using
Schwartz’s individual values theory has analysed the role of values on different aspects of the entre-
preneurial process. Examples of such include Gorgievski et al. (2018) who found that self-efficacy
and attitudes towards entrepreneurship partly mediated the link between openness-to-change and
self-enhancement and entrepreneurial intentions. Noseleit (2010) explored value differences in nine
countries concluding that the self-employed individuals rate higher in openness to change and
self-enhancement than non-self-employed. Holland and Shepherd (2013) found that the decisions of
persistence depend on the level of adversity experienced and entrepreneur values.
Building upon the evidence in social sciences on the relationship between individual values and
behavioural outcomes in addition to the initial exploratory insights noted above, we theoretically
frame the relationship between Schwartz’s individual values and entrepreneurship across cultures.
Culture and entrepreneurship

The cultural context is one of the most prevalent societal characteristics analysed by entrepreneur-
ship researchers (Hayton et al., 2002); yet, more research is required to address pending questions
and inconsistencies (Hayton and Cacciotti, 2013). The majority of research in this area has largely
relied upon Hofstede’s (2001, 1980) theory (Wennekers et al., 2007) or more recently upon
Inglehart’s (1977) postmaterialist values theory (Stephan et al., 2015; Uhlaner and Thurik, 2007)
and the GLOBE (House et al., 2004) project (Autio et al., 2013; Pathak and Muralidharan, 2016).
Research at the country level of analysis has begun to study the link between Schwartz’s cultural
values and national entrepreneurship ratios (Liñán and Fernández-Serrano, 2014). Contributing to
this research stream, we argue that Schwartz’s dimensions of mastery and egalitarianism are the
most relevant cultural dimensions affecting country ratios of entrepreneurship.
Hypothesis development
Which values are entrepreneurial?
In order to select the individual values most related to entrepreneurship, we follow Licht’s (2010)
suggestion and theoretically link Schwartz’s values to Schumpeter’s entrepreneurial characteris-
tics. Schumpeter’s theory frames the selection of individual pro-entrepreneurial values by meeting
three key criteria: First, it is a theory at the individual level of analysis; second, it explains entre-
preneurial behaviour in terms of motivations and goals that a person wants to attain and, finally, it
addresses entrepreneurship as an action-based process capturing the motivational action–related
nature of individual values. Schumpeter (1934) argues that anyone can identify opportunities, but
only a minority are motivated to act and create new combinations: ‘It is this “doing the thing”,
without which possibilities are dead, of which [the entrepreneur’s] function consists’ (p. 88).
Schumpeter’s theory calls for a particular type of individual, that is, an active actor with very spe-
cific motivations such as the desire for autonomy and personal achievement. It is in these motiva-
tions that entrepreneurs differ from non-entrepreneurs. This action-based condition of the
Schumpeterian entrepreneur allows for a theoretical link with the model of motivational values.
Schumpeter’s theory is consistent with the argument that values – because of their motivational
condition – may explicate agency in entrepreneurship.
We argue that Schumpeter’s (1934) assertion that entrepreneurial behaviour originates from
the desire for autonomy, the wish to get things done, the willingness to exercise one’s energy, the
joy of creating and the desire to change is theoretically linked with Schwartz’s (1992) value
dimension of openness-to-change. This consists of self-direction values (independent thought
and action, the need for control, autonomy, freedom, creativity, willingness to choose one’s own
goals and curiosity) and stimulation values (the need to achieve variety and activity, novelty and
challenge in life). Based on the notion that individuals select professional and job opportunities
in line with their values (Schwartz, 1992), we argue that those with higher openness-to-change
values are more likely to be entrepreneurs as they give priority to independence and curiosity,
are more daring and are tolerant of change. Although not always framed within motivational
Morales et al. 5
theory (Licht, 2010), contemporary research provides evidence for the relevance of self-direc-
tion and stimulation (Noseleit, 2010; Shepherd and Patzelt, 2018), the search for autonomy
(Douglas, 2013) and variety (Astebro and Thompson, 2007) as key entrepreneurial determinants.
Conversely, those less comfortable with changing circumstances observing the principle of
‘tried, tested, and true’ associated with conservation values are less likely to pursue entrepre-
neurial careers (Licht, 2010). Research on value trade-offs by Schwartz et al. (2017) suggests
that the opposing values of openness-to-change, namely conservation values, are negatively
correlated with entrepreneurship but do not predict entrepreneurship when controlling for the
corresponding value that prompts such behaviour:
H1. Individuals with higher levels of openness-to-change values are more likely to be
entrepreneurs.
A second group of entrepreneurial motivations addressed by Schumpeter (1934), namely, the

desire for social power, will to conquer, social recognition and personal achievement, is theoreti-
cally linked with Schwartz’s dimension of self-enhancement, which includes achievement val-
ues (obtaining resources by showing competence and being ambitious, influential, capable and
successful) and power values (attainment of social status and prestige, control over resources,
authority, social power, preserving public image and social recognition). Thus, based on
Schwartz’s (1992) individual values theory, we argue that self-enhancement values are anteced-
ents of entrepreneurship. As such, those with such values are more likely to seek work environ-
ments enabling them to be ambitious and successful, obtain social recognition and exercise their
need for achievement. In a similar vein, previous research has shown that self-enhancement
explains entrepreneurial intentions (Gorgievski et al., 2018). Previous studies also found that
people are more likely to become entrepreneurs when motivated by achievement (McClelland,
1961). Accordingly, and in line with the Schwartz bipolar structure, self-enhancement values are
likely more decisive for understanding entrepreneurship than self-transcendence values. We
expect that those who focus on achieving personal goals and success, implied by self-enhance-
ment, are more likely to become entrepreneurs than those who ascribe higher importance to
benevolence and universalism. These value priorities are particularly relevant for commercial
entrepreneurs and might be less applicable to social entrepreneurs (Stephan and Drencheva,
2017). Following Schwartz et al.’s (2017) suggestion, we include in the regressions not only the
values expected to propel the behaviour under investigation but also the values expected to
oppose it – self-transcendence values in this case:
H2. Individuals with higher levels of self-enhancement values are more likely to be
entrepreneurs.
Interaction of individual and cultural values

Although we expect the relationship between these individual values and entrepreneurship to be on
average positive, the strength of these associations is likely to vary by cultural context. Individuals
with entrepreneurial values (i.e. openness-to-change and self-enhancement) are found in every
society. However, social groups differ with regard to their culture, which not only affects the pro-
portion of entrepreneurs but also encourages or discourages the decision to be an entrepreneur
(Licht and Siegel, 2006). Cultural values express what is considered good and desired in a society
(Schwartz, 2011); they, therefore, either socially legitimise or delegitimise the entrepreneurial role
and so, influence the individual decision to be an entrepreneur (Etzioni, 1987). Specifically,
cultural values provide external rewards and cues to which individuals in a country are exposed
(Schwartz and Ros, 1995). Although knowledge about the interaction between individual and cul-
tural values is limited (Fayolle et al., 2014; Hayton and Cacciotti, 2013), previous research sug-
gests that the individual values of entrepreneurs do not necessarily reflect the dominant cultural
values held by their broader society (Baum et al., 1993; Noorderhaven et al., 2004). Recent research
shows that the cultural-personal values divergence may explain entrepreneurial intentions (Liñán
et al., 2016).
Situational strength theory (Hattrup and Jackson, 1996; Meyer et al., 2014) provides an insight-
ful framework for understanding how individual and cultural values interact in explaining entre-
preneurship. This theory states that person–culture divergence is not decisive per se, but rather
that certain situations allow individual differences to exert an influence on the outcome.
Specifically, situational strength theory says that individual characteristics such as values deter-
mine behaviour particularly in ‘weak’ situations, meaning those situations in which few external
cues reinforce behavioural outcomes. In ‘strong’ situations, characterised by ample external
rewards in favour of the outcome, individual differences become less important as they are over-
ruled by situational cues. Situational strength is defined as the ‘implicit or explicit cues provided
by external entities regarding the desirability of potential behaviours’ (Meyer et al., 2010: 122).
Situational strength theory is consistent with Schwartz’s (2011) conceptualisation of culture as it
is also understood as external pressure upon the individual to choose from particular courses of
action (Meyer et al., 2010).
Based on situational strength theory, we contextualise the relationship between individual val-
ues and entrepreneurship, arguing that openness-to-change and self-enhancement values are more
important for explaining entrepreneurial behaviour in cultural contexts less favourable to entrepre-
neurship. It is when culture does not provide entrepreneurship incentives, so does not provide a
high degree of implicit or explicit cues regarding the desirability of entrepreneurship, that the
person has to rely more upon his or her values. Where non-entrepreneurial cultural values domi-
nate, individuals need to compensate for the lack of societal resources and incentives. This com-
pensatory rationale is underlined by the motivational nature of individual values. Given their
motivational condition, entrepreneurial values help individuals, particularly in adverse environ-
ments. Values act to guide individuals in their goal pursuit by overcoming situational barriers,
finding gateways and maintaining focus upon goal achievement. Accordingly, Bardi and Schwartz
(2003) found that individual values–behaviour associations are weaker for behaviours that group
members frequently perform and for values that the group strongly endorses. Also, research has
noted that self-efficacy beliefs and culture are mutually compensatory in predicting entry (Wennberg
et al., 2013).
In contrast, according to the situational strength framework, context can restrict the effects of
individual differences if providing cues for the desirability of a behaviour or outcome (Gelfand
et al., 2011; Holtschlag et al., 2013). Cultures that are more entrepreneurial already provide
rewards and a conducive structure of opportunities incentivising entrepreneurial careers (Etzioni,
1987). In effect, potential entrepreneurs can presume upon external support for business creation
thus reducing the necessity to depend mainly on their individual characteristics. For the compen-
satory mechanism to exist, it is not sufficient that culture promotes entrepreneurship; it is also
important that cultural values match individual entrepreneurial values. This means that only
entrepreneurship-favourable cultural dimensions can compensate for individual values, if they
promote the same behaviour linked to entrepreneurship (cf. Fischer, 2006). For example, only
those cultural dimensions that correspond to openness-to-change can compensate for the effect of
openness-to-change values in explaining entrepreneurship as both encourage the same value-
related behaviour linked to entrepreneurship.
Morales et al. 7
To operationalise this interaction rationale, we first discuss which of Schwartz’s cultural dimen-
sions are supportive of entrepreneurship. Second, we discuss which individual and cultural values
correspond to each other. This permits us to test the tenet of situational strength theory that the
relationship between entrepreneurial values and entrepreneurship is more pronounced in ‘weak
situations’ (i.e. in cultures that do not provide high external rewards for entrepreneurship and
value-related behaviour).
Mastery. We anticipate a positive direct effect of mastery on entrepreneurship due to the number of
entrepreneurial features that mastery values promote. In high-mastery societies, fitting-in is not
emphasised. Instead, individuals are rewarded for being self-assertive and for changing, managing
and exploiting the social environment to attain individual or group goals. Active problem solving
and achieving progress are highly valued in mastery cultures (Schwartz, 2011). Cultural mastery
also puts emphasis on venturing, daring and ambition (Schwartz and Ros, 1995). As such, it legiti-
mises and grants social status to entrepreneurial behaviour, making it a more attractive career
option (cf. Etzioni, 1987). Schwartz et al. (2000) also suggest that mastery values are the basis for
a free enterprise system. There is some empirical evidence in favour of a positive association of
mastery with entrepreneurship. Using the Global Entrepreneurship Monitor (GEM), Liñán et al.
(2013) show that high mastery is positively associated with Total Early-Stage Entrepreneurial
Activity (TEA). In the same vein, Siegel et al. (2013) reported that countries low in harmony (i.e.
high in mastery) are more entrepreneurial. Conversely, harmony – the opposite pole to mastery –
represents an emphasis on fitting comfortably into the environment. An inverse link has been noted
between harmony and entrepreneurship (Schwartz et al., 2000; Sørensen, 2007). Given the
explained theoretical argumentation, we expect that an emphasis on mastery will encourage entre-
preneurial characteristics at the societal level:
H3a. Mastery cultural values are positively associated with entrepreneurship.
Cultural mastery matches the individual values of openness-to-change and self-enhancement.

Openness-to-change values express an intrinsic concern with mastery (Schwartz, 1996, 2011).
Like openness-to-change values, the mastery cultural dimension encourages individuals to explore
and pursue their work goals and be independent and daring. According to situational strength the-
ory, a high focus on mastery could promote entrepreneurial behaviour, even for individuals who
themselves do not have independent goal exploration and pursuit among their life priorities. A
mastery culture could be reflected in institutions that promote venturing by creating, for example,
pro-entrepreneurship regulations or favourable entrepreneurial ecosystems. In the absence of these
situational cues, openness-to-change values might be a particularly important individual character-
istic differentiating between entrepreneurs and non-entrepreneurs. This is because in low mastery
cultures, individuals who are inherently driven by independent goal pursuit are more likely to be
entrepreneurs, as they are more prone to independently explore market opportunities and search for
network support than peers who place a lower priority on openness-to-change values:
H3b. Mastery cultural values moderate the relationship between openness-to-change values and
entrepreneurship, such that the positive effect of openness-to-change on entrepreneurship is
maximised in countries with lower levels of mastery.
Mastery also corresponds to self-enhancement because both share a focus on ambition and suc-
cess (Schwartz, 2011). In high-mastery cultures, self-enhancement values might present little com-
parative advantage as the environment already incentivises behaviour related to ambition and
success. In these countries, individual self-enhancement values explain little of the variance in
entrepreneurial behaviour. In low-mastery cultures, on the contrary, the highly ambitious are more
likely to stand out as they present value-driven behavior which is not typically present in the popu-
lation – a mechanism also described in the cultural frog-pond model (Kozlowski and Klein, 2000).
In countries with a low focus on mastery, having high self-enhancement values may offer a relative
advantage and be particularly well-suited to explain selection into entrepreneurship. Thus, based
on situational strength theory, we argue that self-enhancement and openness-to-change are more
important for predicting entrepreneurship in cultures which do not promote behaviour related to
openness-to-change and self-enhancement values:
H3c. Mastery cultural values moderate the relationship between self-enhancement values and
entrepreneurship, such that the positive effect of self-enhancement on entrepreneurship is max-
imised in countries with lower levels of mastery.
Egalitarianism. In more egalitarian societies, individuals tend to see fellow members of their society
as equals, promoting the idea that there are no fixed social roles and hierarchies. In contrast, in
low-egalitarianism cultures, which tend to be more hierarchical, individuals are socialised into
thinking that each person has certain roles in society. It is likely that low egalitarianism reinforces
the importance of maintaining the status quo and discourages change and venturing. In contrast, in
a society with less rigid hierarchies and status – a more egalitarian society – it is easier to pursue
personal goals and comply with need for achievement. This reasoning is supported by previous
findings showing a link between egalitarianism and TEA (Liñán et al., 2013). Previous research
also shows that Hofstede’s (1980) power distance dimension (conceptually related to hierarchy, the
opposite of egalitarianism) is negatively associated with entrepreneurship (Hayton et al., 2002):
H4a. Egalitarianism cultural values are positively associated with entrepreneurship.
In line with the situational strength tenet and research on culture–entrepreneurship fit (Etzioni,
1987), a high cultural focus on egalitarianism promotes entrepreneurial behaviour even for those
who do not prioritise self-enhancement or openness-to-change values. A cultural focus on egali-
tarianism is reflected in a number of institutional conditions, for example, rule of law, fair com-
petition in the marketplace and property rights (Siegel et al., 2013), that, in turn, promote and
protect entrepreneurial activity (Li and Zahra, 2012). Hence, self-enhancement values, linked to
entrepreneurship due to their emphasis on achieving, controlling resources and overcoming
obstacles, are likely to be less important in egalitarian cultures. As such, these societies already
provide practical benefits for which individuals with high self-enhancement values do not need
to compete. According to situational strength theory, a high focus on egalitarianism could incen-
tivise entrepreneurial behaviour, even for individuals who themselves do not have ambitious and
power-driven career goals. In contrast, in cultures low in egalitarianism, self-enhancement val-
ues provide a comparative advantage by helping individuals to overcome fixed roles and social
hierarchies and to strive within less fair market conditions. Taken together, this means that egali-
tarianism is less likely to increase the effect of self-enhancement on entrepreneurship, as would
be the case in a synergistic interaction, but rather compensates for low self-enhancement in
explaining entrepreneurship:
H4b. Egalitarianism moderates the relationship between openness-to-change values and entre-
preneurship, such that the positive effect of openness-to-change on entrepreneurship is maxim-
ised in countries with lower levels of egalitarianism.
Morales et al. 9
Egalitarianism might also compensate for the effect of openness-to-change because, like open-
ness-to-change, it encourages change and venture, key factors promoting entrepreneurial behav-
iour. These situational incentives present in high-egalitarianism societies render individual
openness-to-change values less important for explaining entrepreneurial behaviour. Low egalitari-
anism, in contrast, does not encourage change and does not tolerate the necessary deviance for
entrepreneurship development (Hjorth, 2004). According to situational strength theory, the absence
of contextual cues promoting entrepreneurship – as present in low-egalitarianism cultures –
explains why openness-to-change is more important for understanding entrepreneurship in such
cultural contexts. It is in these situations that individuals who are change and opportunity seekers
are differentiated from their peers and pursue venturing:
H4c. Egalitarianism moderates the relationship between self-enhancement values and entrepre-
neurship, such that the positive effect of self-enhancement on entrepreneurship is maximised in
countries with lower levels of egalitarianism.
Autonomy versus embeddedness. Previous theoretical and empirical research on the autonomy–embed-
dedness dimension points to the complexity of the culture–entrepreneurship relationship (Hayton and
Cacciotti, 2013). There is opposing evidence both in favour of autonomy and embeddedness as predic-
tors of entrepreneurship. On the one hand, high autonomy might favour entrepreneurship as those in
autonomous cultures find meaning in their own singularity and are encouraged to express their prefer-
ences, feelings and ideas (Schwartz, 2006). Such a scenario might promote personal achievement and
facilitate individual venturing. Societies low in autonomy, on the other hand, emphasise respect for
tradition, obedience and identification with the group to which one belongs, searching for common
objectives, and a shared way of life. In such societies, the expectation that resources and goals should be
shared with the in-group may restrict the access to resources such as out-group networking, different
channels of information and alternative sources of funding (De Clercq et al., 2013).
Conversely, it is suggested that entrepreneurship is not just supported in cultures that emphasise
self-interest and profit maximisation but also in cultures that focus upon networks, social capital
and cooperativeness (Bruton et al., 2008). In this regard, cultures low on autonomy and high on
embeddedness can also contribute to entrepreneurship as they provide social and emotional capital
in form of strong networks and in-group resources that support (potential) entrepreneurs in their
ventures (Stephan and Uhlaner, 2010). Hence, the relationship between autonomy/embeddedness
and entrepreneurship is unlikely to be simply linear and direct, but might be curvilinear or contin-
gent upon other factors, such as economic context (Pinillos and Reyes, 2011).
Echoing these opposed lines of argumentation, also noted by Hayton and Cacciotti (2013), pre-
vious research reports mixed results on this link. Taylor and Wilson (2012), for example, reported
a positive effect of autonomy on innovation, whereas De Clercq et al. (2013) show that high
embeddedness, and so low autonomy, explains new business creation. Given these complex and
ambivalent arguments, it is not possible to confidently assert that either autonomy or embedded-
ness provides sufficiently clear and explicit cues and rewards that characterise a ‘strong situation’.
Thus, we do not expect openness-to-change and self-enhancement to be contingent upon a coun-
try’s autonomy and embeddedness values.
Methodology
Sample
At the individual level, data for 35,165 respondents were taken from the 2008 Ed. 4 database of the
ESS. Sampled individuals represent the following 28 countries: Belgium, Bulgaria, Croatia,
Table 1. Sample information per country.
Country Sample size % of Mastery Egalitarianism LSPRa GDP p.c. ($)b % change
entrepreneurs GDP p.c.
Belgium 1215 5.8 3.84 5.20 6.92 43,671.48 0.95
Bulgaria 1504 4.0 4.02 4.13 5.21 6423.35 5.75
Croatia 936 4.1 4.05 4.60 6.35 14,222.37 2.05
Cyprus 761 10.5 3.95 4.85 7.79 31,409.84 3.62
Czech Republic 1439 2.9 3.75 4.45 6.43 18,138.63 2.71
Denmark 1233 4.9 3.91 5.03 8.74 55,992.24 −0.72
Estonia 1178 4.8 3.79 4.58 6.55 14,238.10 −5.33
Finland 1407 5.8 3.66 4.90 8.66 44,580.70 0.72
France 1480 3.2 3.72 5.05 7.31 41,050.89 0.20
Germany 1974 6.2 3.93 5.01 8.17 40,669.67 1.05
Greece 1172 11.8 4.25 4.84 6.14 29,240.05 −0.44
Hungary 1005 2.5 3.73 4.51 6.28 12,867.72 0.88
Ireland 1231 5.6 4.04 4.90 7.92 51,049.39 −2.61
Israel 1530 5.9 4.06 4.69 5.90 26,256.33 3.50
Latvia 1412 3.4 3.75 4.32 6.40 11,615.93 −3.18
The Netherlands 1269 6.2 3.97 5.03 8.22 47,916.90 2.08
Norway 1092 4.1 3.85 5.12 8.80 79,089.13 0.38
Poland 1048 4.7 3.84 4.48 5.94 11,273.33 3.87
Portugal 1280 3.7 4.11 5.21 6.81 21,902.95 0.20
Romania 1270 3.1 4.06 4.48 6.07 7499.64 7.86
Slovakia 1252 3.4 3.83 4.58 6.24 16,175.52 5.45
Slovenia 847 3.5 3.71 4.56 5.37 23,725.65 3.30
Spain 1623 7.7 3.80 5.23 6.56 31,773.81 1.12
Sweden 1135 3.5 3.81 4.90 8.47 43,653.69 −5.60
Switzerland 1241 5.4 3.86 4.99 8.44 63,628.67 2.28
Turkey 805 6.6 3.98 4.77 5.60 8214.89 0.66
Ukraine 1205 3.5 3.99 4.31 5.00 2467.92 2.30
United Kingdom 1621 4.1 4.01 4.92 8.11 35,164.86 −0.33
Total 35,165 5.0
aLSP: Legal system and property rights, measured on a scale from 0 to 10. A higher score indicates a better legal struc-
ture and security of property rights. Data source: Fraser Institute.
bGDP p.c.: Gross Domestic Product per capita. Data source: World Development Indicators and World Bank.
Cyprus, Czech Republic, Denmark, Estonia, Germany, Finland, France, the United Kingdom,
Greece, Hungary, Ireland, Israel, Latvia, the Netherlands, Norway, Poland, Portugal, Romania,
Spain, Slovakia, Slovenia, Sweden, Switzerland, Turkey and Ukraine. Working participants aged
18 to 68 are included. Table 1 shows information about the sample.
The ESS
The ESS is a bi-annual cross-national survey that measures beliefs, attitudes and behaviour pat-
terns across Europe. The sample frame of the ESS consists of those aged 15 and above, resident
within private households in the participating countries. The sampling strategy requires that
national samples include at least 800 individuals. The ESS involves strict random probability sam-
pling with a minimum target response rate of 70% (ESS, 2016).1 The adequacy of the ESS for
Morales et al. 11
measuring individual values across countries has been proven using multi-group confirmatory fac-
tor analysis (Davidov et al., 2008). This measurement equivalence allows the study of links
between values and a number of social phenomena (Beilmann and Lilleoja, 2015; Davidov and
Meuleman, 2012). Entrepreneurship research using the ESS is scarce (Lange, 2012; Sappleton,
2009; Schneck, 2014). Due to Europe’s heterogeneity, the ESS is a useful database for studying
entrepreneurship. Although a wider context covering other countries would allow for more varia-
bility, the European context is highly diverse (Esping-Andersen, 1990). Europe comprises different
traditions, languages and cultures. The variance is also evident in relation to entrepreneurship. For
example, the GEM consistently reports differences with respect to entrepreneurial activity using
different indicators (e.g. TEA-2008: Belgium 2.9%; Spain 7.0%; Bosma et al., 2009).
Dependent variable
The variable ‘entrepreneur’ is a composite measure of self-employed business operators who are
simultaneously responsible for supervising employees. Thus, entrepreneurship is measured by
counting those who work for themselves and, at the same time, supervise employee(s), which
means that they have started a venture in which they employ others. Hence, the dependent variable
is dichotomous: A person is either an entrepreneur (1) or not (0). See Appendix 1 for a detailed
explanation about this study’s variables.
A universal definition and measurement of entrepreneurship still constitutes a critical issue in
the field (Baum et al., 2007). Self-employed individuals are commonly considered entrepreneurs
(Stephan and Uhlaner, 2010; Van Praag and Versloot, 2007), such that self-employment is used as
a measurement of entrepreneurship (Patzelt and Shepherd, 2011). No matter if they are called
entrepreneurs, business owners or self-employed, individuals who work for themselves need to
search for opportunities in a way that employed people do not have to. Likewise, irrespective of the
label, they have financial/personal autonomy and a desire for independence (Rauch and Frese,
2007; Van Stel and de Vries, 2015) as key motivators that waged workers do not. Self-employment
is an all-encompassing concept that describes people who work for themselves, covering the con-
cepts of entrepreneurship and business ownership (Bögenhold et al., 2014).
In spite of the fact that self-employment is extensively used in research as a measurement of
entrepreneurship, it does not necessarily recognise the contribution of entrepreneurship on job
creation (Fölster, 2000; Mueller et al., 2007) above the job created for and by the person himself or
herself. Importantly, Schumpeter (1934: 248) emphasises the contribution of entrepreneurship for
employment creation including jobs for people other than the entrepreneur. Hence, because of
theoretical consistency, we sample only self-employed who employ other people in their business.
In this sense, business ownership as measured by GEM may be the entrepreneurship stage that is
closest to our measurement of entrepreneurship. As a validity measurement, we correlate GEM’s
(2008) Business Ownership and our country-level ratios of entrepreneurship. Based on 17 out of
the 28 countries (because of data availability in both data sets), we obtained a correlation of r = .69
which is highly significant (p < .01).
Predictors
Openness-to-change and self-enhancement were measured with a version of the Portrait Values
Questionnaire (PVQ; Schwartz et al., 2001) adapted for the ESS (Schwartz and Rubel, 2005). This
questionnaire includes portraits of the values of people that are gender-matched with each respond-
ent. Using a response scale from 1 (very much like me) to 6 (not like me at all), participants indicate
how much they resemble the person in each of the portraits. Items are reverse-coded so that a
higher score represents greater resemblance. We measure the two constructs using the sum scores
of self-direction and stimulation for openness-to-change (four items, Cronbach’s α = .67) and
power and achievement for self-enhancement (four items, Cronbach’s α = .75). The alpha of open-
ness-to-change values is low because the construct is conceptually broad, but only four items
measure it in the version adapted for the ESS (Schwartz, 2003). Despite its reliability, previous
studies proved that openness-to-change values present validity (Schwartz, 2007). Given that indi-
viduals across cultural groups often differ in their use of response scales, we followed the ESS
recommendation and centred participant responses on their means eliminating individual differ-
ences in response scales (Schwartz and Rubel-Lifschitz, 2009). Hence, the value scores indicate
the relative importance a person places on a specific value (Schwartz, 1992).
Moderators
The measurements of mastery and egalitarianism were taken from Schwartz’s cultural-orientations
data set released in 2007, which contains data from 72 countries.2 More than 55,000 respondents
completed the 57-item Schwartz Value Survey (SVS; Schwartz, 1992; Schwartz and Boehnke,
2004) in their native languages. This survey consists of a number of abstract value items (social
justice, creativity, ambition) followed by their meanings. Each item is rated as ‘a guiding principle
in MY life’. The SVS only includes values whose meanings are similar across cultures because
‘otherwise, group differences might reflect the fact that different concepts are measured in each
group’ (Schwartz, 2006: 144). The mean rating of the cultural values was calculated for each of the
28 countries included in this research. The cultural dimension scores for each country represent the
mean importance rating for the pertaining value items. The cultural values were measured on a
scale ranging from 7 (the guiding principle of supreme importance) to −1 (the guiding principle
opposed to my values) (Schwartz, 1999). For a detailed description of the theory validation and
data collection, see Schwartz (2004, 2006, 2009).
Control variables
At the individual level, we controlled for Schwartz’s individual values of conservation and self-
transcendence. In addition, a set of variables that may be alternative explanations was included –
education level: measured on a five-point scale, following the International Standard Classification
of Education (ISCED) scale used by the ESS from less than lower secondary education to tertiary
education completed; gender: with female = 0 and male = 1 and age: measured on a scale of 5-year
ranges from 18 to 68 years. At the country level, we controlled by standardised Gross Domestic
Product per capita (GDP p.c.) (World Bank, 2015). For robustness checks, we additionally included
change in GDP p.c. 2008 as a second economic covariate (World Bank, 2015), legal system and
property rights (Fraser Institute, 2015) as an institutional control, as well as the remaining Schwartz
cultural values (autonomy, hierarchy, harmony and embeddedness).
Analysis
Given that we sample individuals living in 28 countries and that our study variables are measured
at two levels (Level 1: individuals; Level 2: countries), hypothesis testing requires cross-level
techniques. To account for the clustered structure of the data, we analysed the interactive effects of
values on entrepreneurship using a multilevel logistic model in Mplus (Muthén & Muthén, [1988]
2010). The logit-function accounted for the dichotomous nature of the dependent variable.
Multilevel modelling has several advantages over conventional single-level regression analyses.
Morales et al. 13
First, it reduces the risk of Type I (false positive) errors that occur when clustering at higher levels
(e.g. countries) is not considered. Second, it allows us to take into account the non-independence
in the sample, thus reflecting that individuals living in the same country share similar experiences.
Third, multilevel modelling avoids the ecological fallacy, which occurs when society-level data are
imputed to individuals (Thornton, 1999).
The intra-class correlation (ICC) of entrepreneurship has a value of .044. Given that ICC values of
approximately .05 are considered to be small, the larger proportion of variance in entrepreneurship
(95.66%) resides at the individual level. Despite the small ICC, the use of multilevel models is impor-
tant for theoretical and methodological reasons. Conceptually, our hypotheses reflect a multilevel
problem concerning a population with a hierarchical structure (i.e. individuals within countries) and
relationships between variables at distinct levels. In addition, even small dependencies within clusters
combined with large group sizes result in large biases in the standard errors. Standard single-level
statistical tests rely on the assumption of independence of observations. If this assumption is violated,
as in the case of a population with a hierarchical structure (i.e. individuals within countries), the
standard errors are too small leading to spuriously significant results and design effects (Hox, 2010).
To improve the interpretability of the intercepts, the continuous variables at the individual and
country level were also grand-mean centred. This means that, for Level 1 (individual level), we
correct for the average score of a given variable across all countries, and for Level 2 (country
level), we correct for the average country value of a given variable (Aguinis et al., 2013). We addi-
tionally ran robustness checks group-mean centring the individual variables at the individual level.
The checks yielded the same results and are available from the authors. The grand-mean centring
also sidestepped the multicollinearity associated with estimating main and interaction effects. To
further test for multicollinearity, we calculated variance inflation factor (VIF) scores for our mod-
els. All VIF scores remain below the recommended cut-off value of 10, which provides serious
evidence of multicollinearity (Hair et al., 1998). The highest VIF scores belong to conservation and
openness-to-change values (VIF of 4.43 and 3.88).
We tested the postulated main effects at the individual (H1 and H2) and country level (H3a and
H4a) with the control variables in the model. To test for the interaction effects (H3b and H4b), we
first computed each interaction separately. We then conducted several robustness tests: For the
interaction hypotheses, we include all interaction terms concerning either openness-to-change or
self-enhancement together. In addition to the regression coefficients, we report for each model the
log-likelihood ratio, the degrees of freedom and the McKelvey and Zavoina pseudo R2. For the
nested models, we also provide the change in log-likelihood to assess whether the modifications
lead to an improvement over the main effect model.
Results
Tables 2 and 3 present the correlations of the study variables. Table 4 shows the results of the mul-
tilevel logistic regression analyses.
Main effects of individual and cultural values. H1 posits that openness-to-change is positively associ-
ated with entrepreneurship. In support of H1, openness-to-change values are positively related to
the likelihood of being entrepreneur, holding the control variables constant (B = .36, p < .001, odds
ratio = 1.43). H2 states that self-enhancement is positively associated with entrepreneurship.
Supporting H2, the results indicate that self-enhancement predicts the likelihood of being an entre-
preneur (B = .21, p < .05, odds ratio = 1.23, see Model 2). Although both conservation and self-
transcendence values are significantly and negatively associated with entrepreneurship in the
control variables model, conservation values become a positive predictor of entrepreneurship, once
Table 2. Individual-level correlations (N = 35,165).
1 2 3 4 5 6 7
1. Gendera
2. Age −.02***
3. Education −.04*** −.13***
4. Self-transcendence −.16*** .17*** .03***
5. Conservation −.09*** .31*** −.20*** .06***
6. Self-enhancement .12*** −.19*** .07*** −.59*** −.34***
7. Openness-to-change .09*** −.22*** .15*** −.23*** −.68*** −.02***
8. Entrepreneurship .11*** .04*** .04*** −.05*** −.05*** .04*** .07***
aFemale = 0; male = 1.
***p < .001; **p < .05 (two-tailed).
Table 3. Country-level correlations (N = 28).
1 2 3 4 5 6 7 8 9 10
1. GDP p.c.
2. GDP p.c. growth −.30***
3. LSPR .87*** −.38***
4. Hierarchy −.49*** .31*** −.49***
5. Harmony .11*** −.20*** .17*** −.64***
6. Autonomy .71*** −.26*** .68*** −.31*** .18***
7. Embeddedness −.75*** .34*** −.74*** .49*** −.35*** −.89***
8. Egalitarianism .76*** −.33*** .68*** −.49*** .19*** .65*** −.78***
9. Mastery −.13*** .18*** −.19*** .32*** −.45*** −.18*** .14*** .00
10. Entrepreneurship .02*** −.01* .01* −.01* .00 .00 −.02** .04*** .04*** .00
Notes: GDP p.c.: Gross Domestic Product per capita; LSPR: Legal system and property rights.
***p < .001; **p < .01; *p < .05.
openness-to-change values are held constant (B = .07, p = .02, odds ratio = 1.07, see Model 2). This
may arise from methodological reasons, considering the slightly elevated VIF scores for conserva-
tion and openness-to-change values. In such cases, Schwartz recommends subtracting values,
meaning subtracting conservation from openness-to-change and self-transcendence from self-
enhancement to measure the relative importance individuals place on self-enhancement (vs self-
transcendence) and openness-to-change (vs conservation values). Results of this robustness model
confirm that individuals are more likely to be entrepreneurs when they place higher values on
openness-to-change and self-enhancement, instead of the opposing values.3 Overall, Model 2
explains 15% of the individual-level and 40% of country-level variation in entrepreneurship (cor-
responding to 15.89% of the total variation). Supporting H3a and H4a, the results show that mas-
tery (B = .99, p = .04) and egalitarianism (B = .88, p < .01, see Model 2) are significantly and
positively related to entrepreneurship at the country level.
Cross-level interactions
Mastery. We predicted that the effects of the openness-to-change (H3b) and self-enhancement
(H3c) on entrepreneurship are maximised in countries with lower levels of mastery. The results
Table 4. Results of multilevel regressions (N = 35,165).
Morales et al.
Model 1 Model 2 Model 3 Model 4 Model 5 (OC × Model 6 (SE and Model 7 (OC, Model 8 (SE,
(Controls) (Main effects) (OC × Mastery) (SE × Mastery) Egalitarianism) Egalitarianism) final model) final model)
Coefficient (SE) Coefficient (SE) Coefficient (SE) Coefficient (SE) Coefficient (SE) Coefficient (SE) Coefficient (SE) Coefficient (SE)
Individual level
Threshold 3.69 (.09)*** 3.69 (.08)*** 3.73 (.09)*** 3.73 (.09)*** 3.73 (.09)*** 3.76 (.09)*** 3.74 (.09)*** 3.75 (.09)***
Gendera 0.97 (.06)*** 0.97 (.06)*** 0.97 (.06)*** 0.97 (.06)*** 0.97 (.06)*** 0.97 (.06)*** 0.96 (.06)*** 0.97 (.06)***
Age 0.17 (.01)*** 0.17 (.01)*** 0.17 (.01)*** 0.17 (.01)*** 0.17 (.01)*** 0.17 (.01)*** 0.17 (.01)*** 0.17 (.01)***
Education 0.14 (.02)*** 0.13 (.02)*** 0.13 (.02)*** 0.13 (.02)*** 0.13 (.02)*** 0.13 (.02)*** 0.13 (.02)*** 0.13 (.02)***
Conservation −0.16 (.02)*** 0.07 (.03)* 0.07 (.03)* 0.07 (.03)* 0.07 (.03) 0.08 (.03)* 0.07 (.03)* 0.07 (.03)*
Self-transcendence −0.24 (.03)*** 0.01 (.04) 0.00 (.04) 0.01 (.04) 0.01 (.04) 0.01 (.04) 0.01 (.04) 0.01 (.04)
OC 0.36 (.04)*** 0.37 (.11)*** 0.36 (.10)*** 0.37 (.09)*** 0.36 (.04)* 0.37 (.04)** 0.36 (.04)***
SE 0.21 (.03)*** 0.21 (.10)*** 0.22 (.04)*** 0.21 (.03)*** 0.23 (.04)* 0.21 (.03)*** 0.23 (.04)**
Country level
GDP p.c. 0.08 (.07) −0.08 (.10) −0.07 (.10) −0.08 (.10) −0.06 (.10) −0.07 (.10) −0.07 (.10) −0.07 (.10)
Mastery 0.99 (.47)* 1.09 (.48)* 1.05 (.48)* 1.05 (.48)* 1.07 (.47)** 1.13 (.48)* 1.10 (.48)*
Egalitarianism 0.88 (.34)* 0.88 (.34)* 0.90 (.35)** 0.88 (.35)* 0.95 (.34)** 0.89 (.34)** 0.97 (.35)**
Cross-level interactions
OC × Mastery −0.38 (.19)* −0.39 (.18)*
SE × Mastery −0.11 (.15) −0.11 (.13)
OC × Egalitarianism −0.16 (.09)† −0.16 (.09)†
SE × Egalitarianism −0.26 (.07)*** −0.26 (.07)***
Model fit statistics
R2 13.80% 15.89% 16.19% 16.04% 16.35% 16.51% 16.51% 16.58%
−2LL −6501.41 −6453.87 −6446.94 −6452.99 −6447.46 −6446.02 −6445.33 −6445.58
df 8 12 14 14 14 14 15 15
∆−2LL 47.54** 6.93* 0.88 6.41* 7.85* 8.54* 8.29*
AIC 13,018.83 12,931.74 12,921.89 12,933.99 12,922.92 12,920.05 12,920.67 12,921.15
Notes: All regression coefficients are unstandardized. Gradually smaller values over models denote improved model fit. LL: log likelihood; AIC: Akaike’s Information Criterion; SE: self-enhancement
values; OC: openness-to-change values.
afemale = 0; male = 1.
***p < .001; **p < .01; *p < .05; †p < .10.
15
Figure 1. Regression lines for entrepreneur by openness-to-change values for two levels of mastery.
show that mastery interacts with openness-to-change in a compensatory fashion such that open-
ness-to-change values are more strongly related to entrepreneurship when mastery is low (B = –.38,
p = .05). The inclusion of the cross-level interaction also leads to an improved model fit
(∆χ2(2) = 6.93, p < .05; see Model 3) and increases the overall R2 by 1.89%. As the marginal effects
illustrated in Figure 1 show, the effect size of the cross-level interaction is meaningful. In high-
mastery cultures, the difference between high and low openness-to-change amounts to an increase
of 22 percentage points (pp) in the predicted probability of being an entrepreneur, whereas it
amounts to an increase of 40 pp in low-mastery cultures. Although the interactive effect between
self-enhancement and mastery is negative, it lacks significance (B = –.11, p = .48, ∆χ2(2) = .88,
p = NS; see Model 4). Accordingly, the results provide support for H3b, but not for H3c.
Egalitarianism. The results of the cross-level interactions show that the cross-level interaction
between egalitarianism and openness-to-change is negative, as expected (B = –.16, p = .09, see
Model 5), although it is only marginally significant. The inclusion of the interactive term leads to
an improved model fit (∆χ2(2) = 6.41, p < .05; see Model 5) and increases the overall R2 by 2.89%.
Comparing the end points of the plotted cross-level interactions (see Figure 2), we see that the posi-
tive effect of openness-to-change on entrepreneurship is marginally more pronounced in cultures
with low egalitarianism; however, the influence is not large in effect size. Specifically, the differ-
ence between high and low openness-to-change amounts to a 21 pp increase in countries where
egalitarianism is high and to a 25 pp increase in countries low on egalitarianism. The results thus
provide partial support to H4b. Furthermore, as proposed, self-enhancement is more strongly
related to entrepreneurship in societies low in egalitarianism (B = –.26, p < .01; see Figure 3). The
inclusion of the self-enhancement and egalitarianism interaction leads to an improved model fit
(∆χ2(2) = 7.85, p < .05; see Model 6) and increases the overall R2 by 3.90%. In low-egalitarianism
countries, the difference between low and high self-enhancement constitutes an increase of 25 pp
in the predicted probability of being an entrepreneur, whereas it constitutes only 9 pp in high-
egalitarianism countries. Hence, the H4c is supported.
Morales et al. 17
Figure 2. Regression lines for entrepreneur by openness-to-change values for two levels of egalitarianism.
Figure 3. Regression lines for entrepreneur by self-enhancement for two levels of egalitarianism.
Finally, we display final models for openness-to-change and self-enhancement, which include
all interaction terms. The results of these models confirm the direction and significance of the pre-
vious model results. Further robustness checks including legal property rights, GDP p.c. growth
and the remaining cultural values not already included in the analyses (i.e. autonomy, embedded-
ness, harmony, hierarchy) as additional covariates showed that neither the direction nor the signifi-
cance of the postulated interaction effects changed.
Additional analyses
We additionally tested whether our model results hold for distinct operationalisations of entrepre-
neurs/self-employed. To this end, we compared model results when predicting solo self-employ-
ment (i.e. self-employed who do not employ others), all self-employed (irrespective of whether
they employ other people or not) and self-employed who employ others (the operationalisation
chosen in this article). Irrespective of the dependent variable chosen, the results show a similar
pattern. The cross-level interaction between self-enhancement and egalitarianism is significantly
negative for all three operationalisations of the dependent variable. The cross-level interaction
between openness-to-change and mastery is significant for the self-employed with employees;
marginally significant for all self-employed individuals (p value of .06) and non-significant for
self-employed without employees.4 These additional analyses show that the results are fairly robust
across distinct operationalisations of entrepreneurship.
Discussion
The manner in which entrepreneurship antecedents interact at different levels is still an open
question in the field (Terjesen et al., 2016). Responding to calls to address the main and interac-
tive effects of individual and cultural values on entrepreneurial behaviour (Fayolle et al., 2014),
we developed a multilevel moderation model that examines how the interplay between individual
and cultural values predicts entrepreneurship across 28 countries. This study offers three contri-
butions. First, we confirm exploratory findings identifying openness-to-change and self-enhance-
ment values as individual-level determinants of entrepreneurship across 28 countries. Second, we
investigate the implications of Schwartz’s cultural values on country-level entrepreneurship, sin-
gling out egalitarianism and mastery as antecedents of country-level entrepreneurship. Third, we
show that individual and cultural values compensate for each other in predicting entrepreneur-
ship, specifically that egalitarianism can compensate for self-enhancement and mastery for open-
ness-to-change values.
Interpretation of results
This article contributes to the literature on individual differences and entrepreneurship by examin-
ing motivational values as an antecedent of entrepreneurial behaviour. Reflecting Schumpeter’s
(1934) entrepreneurial characteristics, individuals who seek achievement and power (self-enhance-
ment) and place high priority on seeking stimulation and self-direction (openness-to-change) are,
on average, more likely to be self-employed than their counterparts with low emphasis on such
values. These relations are robust, even when controlling for the opposed values of self-transcend-
ence and conservation. Motivational values are linked to behaviour (Rohan, 2000); thus, we con-
tribute to research that emphasises the importance of framing individual entrepreneurship
determinants within theoretically driven micro-foundations (Zahra and Wright, 2011), particularly
those related to entrepreneurial actions (Frese, 2007; McMullen and Shepherd, 2006). Furthermore,
individual values are stable over long periods (Inglehart and Baker, 2000) and shaped early in life
(Goodnow, 1997). These chronological characteristics point towards explanatory mechanisms for
later outcomes. Although individual values explain entrepreneurship, we show that their influence
upon entrepreneurial behaviour differs across cultures. To frame the interplay of individual and
cultural values, we used situational strength theory (Cooper and Withey, 2009), postulating com-
pensatory interaction effects between individual and cultural entrepreneurial values. Specifically,
we argue that individual values are more relevant for explaining entrepreneurship when societies
Morales et al. 19
do not display high entrepreneurial cultural values. Considering that entrepreneurship research
using Schwartz’s (2006) cultural model is still in its infancy, we addressed which cultures are
entrepreneurial.
Mastery
As postulated, the multilevel results showed that cultures high on mastery were more entrepre-
neurial. Previous findings using GEM (Liñán et al., 2013) and the WorldBase data set (Siegel et al.,
2013) show a positive effect of mastery on entrepreneurial activity. Reflecting this research and
associated theoretical arguments (Schwartz et al., 2000), our results show that mastery is positively
associated with country-level entrepreneurship in the ESS sample. This positive association can be
explained by the fact that mastery promotes assertiveness, change management and active problem
solving – all entrepreneurial features that also lead to employment generation within a country. Our
findings indicate that mastery interacts with openness-to-change, but not with self-enhancement in
explaining entrepreneurship. This is probably because mastery is more closely connected with
openness-to-change values (Schwartz, 1996) and can more easily substitute behaviour associated
with openness-to-change values, for example, the independent pursuit of work goals. The non-
significant interaction of individual self-enhancement and cultural mastery suggests that they do
not promote the same entrepreneurial behaviours in order to compensate for each other. Hence,
self-enhancement values increase the likelihood of being entrepreneur irrespective of a culture’s
mastery level.
Egalitarianism
Our analyses show that egalitarianism is also positively associated with entrepreneurship. This
reflects the work of Liñán et al. (2013) who argue that cultures high on egalitarianism show higher
TEA. Likewise, our results correspond with those of Stephan and Uhlaner (2010) who indicate that
social capital is positively related to entrepreneurship. Societies high in social capital tend to be
egalitarian because they are more inclusive. As postulated, high egalitarianism reduced the impor-
tance of self-enhancement and openness-to-change (marginally significant) values for explaining
entrepreneurship. Egalitarianism compensates for the effect of openness-to-change because, like
openness-to-change, it encourages change and venture, which are supportive of entrepreneurship.
Self-enhancement values, which are linked to entrepreneurship due to their emphasis on achieving,
controlling resources and overcoming obstacles, are also likely to be less important in egalitarian
cultures. This is because these societies already provide practical benefits such as a lack of fixed
roles and hierarchies as well as the presence of favourable institutional and market conditions for
which individuals with high self-enhancement values no longer need to ‘fight’. Capturing
Schumpeter’s link between entrepreneurship and employment creation, our results suggest that in
cultures high on egalitarianism, individuals with entrepreneurial values might exert a lower impact
on employment generation.
In general, we show that the role of culture in promoting entrepreneurship is more complex than
a mere direct effect. We provide initial evidence that culture may also play an instrumental role in
compensating for the lack of individual entrepreneurial values, increasing the probability of being
an entrepreneur. The compensatory manner in which individual values and culture interact sug-
gests that more is not necessarily better. Indeed, it might be the case that high levels of some deter-
minants at either the individual or the societal level are sufficient to explain entrepreneurship. For
example, in countries low on mastery, the probability of being an entrepreneur might be influenced
considerably by individual openness-to-change values. However, a cultural focus on mastery might
not necessarily increase the probability of a person who is already driven by openness-to-change.
Instead, a cultural focus on mastery can partly substitute for openness-to-change values. This
insight connects to the limited cross-cultural research in entrepreneurship which suggests that the
values of entrepreneurs are not necessarily the same as the dominant cultural values held by the
societies in which they live (Noorderhaven et al., 2004).
Overall, we advance the multilevel theory of entrepreneurship by testing situational strength as
a framework for studying the interplay of individual and cultural characteristics. We also contrib-
ute to situational strength theory by outlining culture as a strong situation in the relationship
between individual values and entrepreneurship. As such, our results add to previous studies that
discuss national culture as a ‘strong situation’ that can restrict the effects of individual differences
on work-related outcomes (Holtschlag et al., 2013).
Practical implications
Practical implications can be developed by understanding values as factors involved in action.
This might be particularly relevant for countries aiming to boost entrepreneurship and/or employ-
ment creation. First, because values have deep roots in individual lives, they can be included as
part of school programmes in a country’s long-term policy to encourage achievement, autono-
mous thinking, problem solving and, therefore, entrepreneurial activity. As shown by the interac-
tion models, the impact on entrepreneurship and, hence, employment generation may be especially
useful in countries in which entrepreneurial features are not a predominant part of the culture.
Second, our findings shed light on the beneficiaries of a favourable entrepreneurship culture. The
people that benefit most from high egalitarianism and mastery are those that lack entrepreneurial
values. This means that culture matters, but it matters differently depending on the level of indi-
vidual values. Egalitarianism and mastery can substitute for low-entrepreneurial values, but they
do not strengthen the positive role of high individual values in explaining entrepreneurship. This
insight can help policy makers in targeting would-be entrepreneurs who are most likely to benefit
from societal support.
Limitations and future research

We acknowledge that this study is not without limitations. First, although the ESS is recognised for
its rigour, and even though our model addresses the ecological fallacy (Thornton, 1999), the data
set is cross-sectional, and therefore, causal inferences cannot be drawn. We assess the relationship
between values and entrepreneurship at a specific point in time. In this sense, our estimations are
conservative as we sample current self-employed people and therefore, may have a survivor-biased
selection in our sample.
Second, although significant, our models account for a low variance. In line with our R2
results, Liñán et al.’s (2016) paper shows that the interactions between individual-level values
and their regional aggregation explain an additional 0.1% to 2.1% of accounted variance. This
has both methodological and conceptual reasons. Statistically, the variance of entrepreneurship
explained at the country level is low (4.40%), which partly is due to the fact that our sample
consists of 28 European countries. Theoretically, a reason for the low explained variance is that
individual values and culture are by nature distal variables (Stephan and Pathak, 2016).
Individual values do not necessarily have a direct effect on behaviour (Bardi and Schwartz,
2003); instead, they exert an indirect effect through various cognitive processes. Hence, a third
limitation arises from the lack of individual-level mediators. This study cannot explain the
process through which a would-be entrepreneur with a particular set of values becomes an
Morales et al. 21
actual entrepreneur. Further research may propose an action theory and test links between val-
ues and entrepreneurial action through a sequence of cognitive variables. Assuming that media-
tors increase the explanatory power of values, our model represents a conservative estimation
of the role values play in explaining entrepreneurial behaviour. Future research could also
expand our study by testing the interactive effects of individual and cultural values on social
entrepreneurship. Previous studies show that the value profile of social entrepreneur is partially
distinct from commercial entrepreneurs, in that they tend to display a high importance on open-
ness-to-change and self-transcendence values (the opposite pole of self-enhancement) (for a
review, see Stephan and Drencheva, 2017).
In sum, this article shows that entrepreneurial values matter for understanding individual entre-
preneurship, but they matter particularly in cultures that do not promote entrepreneurship. Through
this article, we hope to encourage researchers to examine the explanatory role of individual values
on alternative entrepreneurial outcomes such as entrepreneurial performance or up on other entre-
preneurial scenarios such as intrapreneurship.
Acknowledgements
The authors wish to thank Professors Bernhard Wessels, Bernd Wegener and Shalom Schwartz and four
anonymous reviewers for their significant contribution in earlier versions of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.
Note
1. For further information about the European Social Survey (ESS), see http://www.europeansocialsurvey.org/.
2. Eighty-eight samples of schoolteachers, 132 samples of college students and 16 representative national
samples (Schwartz, 2011: 476).
3. Results of robustness checks are available upon request.
4. See Note 3.
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Author biographies
Carlos Morales holds a PhD from Humboldt Universität zu Berlin. His main research interests include the
integration of individual and societal-level entrepreneurship determinants, as well as biases in entrepreneurial
decision making.
Claudia Holtschlag holds a PhD in Quantitative Psychology from Universidad de Barcelona. Her
research interests include the individual and cross-cultural differences in career success, engagement and
entrepreneurship.
Aline D Masuda holds a PhD in Industrial-Organisational Psychology from the State University of New
York–Albany. Her research interests include motivation, employee attitudes, the work-family interface and
cross-cultural studies.
Percy Marquina holds a PhD in Business Administration degree from Maastricht School of Management, the
Netherlands; a Doctorate in Strategic Business Administration from Pontificia Universidad Católica del Perú;
a Master’s degree in International Leadership from EADA Business School and a Master’s degree in Business
Administration from Universidad del Pacífico, Peru. He is a specialist in marketing, social marketing, ethical
consumption, corporate social responsibility and entrepreneurship.
Morales et al. 27
Appendix 1
European Social Survey variables used
Control variables
Education level is measured on a five-point scale from 1 (less than lower secondary education)
to 5 (tertiary education completed). The variable is called Highest level of education
(edulvla-392).
Gender – Variable: Gender (gndr-343). The variable was originally coded ‘1’ for ‘male’ and ‘2’
for female and was recoded to ‘0’ for ‘female’ and ‘1’ for ‘male’. This has been done in order to
make the interpretation of the intercept easier.
Age – Variable: Age of respondent, calculated (agea-360). 10 five-year ranges have been created
from the original raw variable. Only working respondents from 18- to 68-years-old were
sampled.
Dependent variable ‘entrepreneur’

Two European Social Survey (ESS) variables are used to create this composite measure: First:
Employment relation (440-emplrel) (alternative 2 = self-employment). This variable has been recoded.
The original value ‘2 – self-employed’ was changed to ‘1’ and the original value ‘1 – employed’ was
changed to ‘0’. This variable then was transformed into a dichotomous variable comparing people
who have a working relation of dependency (employee) against people who do not have a working
relation of dependency (self-employed). The third alternative response (working for a family business,
n = 617; which represents 1.6% of the sample) was dismissed because it is uncertain whether these
respondents work as employee or self-employed. Second: Responsible for supervising other employ-
ees (444-jbspv). This was originally a dichotomous variable with the value ‘1’ for ‘yes’ and the value
‘2’ for ‘no’. To simplify the interpretation of the intercept, the original value ‘2’ was allocated value
‘0’, and the original value ‘1’ remained unchanged.
All the ESS 2008 variables used in this research were collected the year 2008.
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In Which Cultural Contexts Do Individual Values Explain Entrepreneurship? An Integrative Values Framework Using Schwartz's Theories

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In which cultural contexts do individual values explain entrepreneurship? An

Article in International Small Business Journal · December 2018

Carlos Morales Claudia Holtschlag

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Aline Masuda Percy Marquina

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Values and Well-being View project

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Carlos Morales and Claudia Holtschlag

Schwartz’s values theories

Individual values and entrepreneurship

Culture and entrepreneurship

A second group of entrepreneurial motivations addressed by Schumpeter (1934), namely, the

Interaction of individual and cultural values

H3a. Mastery cultural values are positively associated with entrepreneurship.

Cultural mastery matches the individual values of openness-to-change and self-enhancement.

H4a. Egalitarianism cultural values are positively associated with entrepreneurship.

Table 1. Sample information per country.

Table 2. Individual-level correlations (N = 35,165).

***p < .001; **p < .05 (two-tailed).

Table 3. Country-level correlations (N = 28).

Limitations and future research

Dependent variable ‘entrepreneur’

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*p < .001; p < .05 (two-tailed).