Importance of Entrepreneurship

The main goal of fostering entrepreneurship is to create growth and wealth by giving high value added activities to the economy. This can be reached when new businesses are created and the existing ones keep their growing path (Fabre & Smith, 2003).

The Importance of Entrepreneurship 1

The entrepreneurial culture has a direct influence for job creation and on the promotion of creativity and innovation, which are key factors for the economic growth of a country. It is demonstrated that growing nations have a better entrepreneurial culture than those who are developing countries. (Observatorio Nacional del Emprendedor, 2015)

Culture Influences Entrepreneurship

There are two streams that show how culture has an impact on entrepreneurial activities. The “national culture – personal values – entrepreneurial behavior” model has the idea that a culture that fosters entrepreneurship tend to generate more individuals that have the potential to be entrepreneurs and have entrepreneurial activities. In this one is assumed that culture has a direct manifestation in the behavior of people belonging to a specific culture. The culture is what influences the values of the people and its behavior. Therefore, a national culture can foster or stop entrepreneurship at a personal level. The culture shows how a society will see entrepreneurial behavior in terms of risk-taking, growth-orientation, innovation, finding opportunities and taking action. The second model is the “culture-institution-entrepreneurship”, which is assumes that culture is an informal institution, but it is also the base of the formal institutions. It gives the orientation to the formal institutions. On countries with free and competitive markets, private property protection and an open and innovative education system, there will be a presence of more entrepreneurial activities (Li, et al., 2012).

The Importance of Entrepreneurship 2
Entrepreneurial Process Stages

...But culture doesn't mean everything for entrepreneurship.

To strengthen an underdeveloped entrepreneurial culture, it is needed to have initiatives that show the business opportunities to different and large sections of the population, so that they can be inspired to desire entrepreneurship (Piegeler & Röhl 2015 as cited in Röhl, 2016). Even with a strong entrepreneurial culture, this doesn’t mean that the new ventures will be successful of have a fast growth. The people who are inside a high entrepreneurial culture are more likely to take action and use their skills to take decisions (Foreman & Zhou, 2011). Countries with a low and medium GDP tend to show more entrepreneurship in early stage and established that countries with higher GDP. But in contrast, high GDP countries have a stronger high-growth entrepreneurship and high innovation than those with low and medium GDP. Culture has a different role in fostering entrepreneurial activity. What might be successful in one culture, might not be in other. To do so, the cultural context and economic development should be taken into consideration (Li, et al., 2012).

Entrepreneurship is important because it generates:

References

Fabre, F. & Smith, R., 2003. Building an Entrepreneurial Culture in Mexico. s.l.:Nacional Financiera.

Foreman, J. & Zhou, P., 2011. The Strength and Persistence of Entrepreneurial Culture. Journal of Evolutionary Economy.

Li, H., Rauch, A. & Zhao, X., 2012. Cross-country Differences in Entrepreneurial Activity: The Role of Cultural Practice and National Wealth. Frontiers of Business Research in China.

Observatorio Nacional del Emprendedor, 2015. Análisis Transversal del Gasto en Políticas de Apoyo a Emprendedores, MiPYMES.. Ciudad de México: INADEM.

Röhl, K., 2016. Entrepreneurial culture and start-ups. Could a cultural shift in favour of entrepreneurship lead to move innovative start-ups?, Cologne: Cologne Institute for Economic Research.

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