Cultural differences in entrepreneurial ecosystems

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CULTURAL DIFFERENCES IN

ENTREPRENEURIAL ECOSYSTEMS

Mate Csernak

11084952

13933

MSc Business Administration

Entrepreneurship & Innovation

University of Amsterdam

Roel van der Voort

Author

Student number

Date of submission

Course

Track

Institution

Supervisor

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Statement of originality

This thesis work is written by student Mate Csernak, who declares to take full responsibility for the contents of this document. I would like to thank Roel van der Voort for being the supervisor for this master’s thesis, my girlfriend who emotionally supported me during the whole project and my parents whose financial backing made it possible for me to participate in this master’s program.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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4.2.Correlations……….42 4.3.Regression analysis……….………….46 5. Discussion……….…….…....46 5.1.Theory……….………….46 5.2.Practical implication………47 5.3.Limitations………..………….48 6. Conclusion………49 References………..……50 Appendices……….56

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LIST OF FIGURES AND TABLES

Figure 1: The entrepreneurial ecosystem configuration 2017………..11

Figure 2: Key elements, outputs and outcomes of an entrepreneurial ecosystem………12

Figure 3: TEA rate 2011-2013 in The Netherlands………..22

Figure 4: Conceptual model……….36

Table 1: Cultural dimension scores according to Hofstede (2005) ……….……31

Table 2: Cronbach’s Alpha………..……40

Table 3: Skewness, Kurtosis………41

Table 4: Distribution of variables……….41

Table 5: Correlation matrix………..42

Table 6: ANOVA……….43

Table 7: Model summary……….43

Table 8: Regression model………...44

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Abstract

This thesis work is focusing on cross-cultural differences of Hungary and The Netherlands. Entrepreneurship has always been a central concept to focus on as it strongly fosters economic growth of a nation. However, entrepreneurship only thrives if the necessary conditions are readily available in an ecosystem. Culture is one of an ecosystem pillar, which certainly has a huge impact on these types of ventures and the owners of businesses. I’m looking to establish a reasoned answer for the question: Is there a difference between the effect of cultural dimensions of Hungary and The Netherlands on the business performance of small and medium-sized enterprises in the respective regions?

I use Hofstede’s (1980) Cultural Dimensions as theoretical baseline for this study as a relevant and significant framework for cross-cultural investigations. The study finds that there is significant difference between the two countries in terms of cultural impact on business performance.

Keywords: entrepreneurship, SME, culture, performance, ecosystems, attitude, cultural dimension, business owner.

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1. Introduction

Humanities and anthropology has been around societies for thousands of years. It had always been and exciting field to examine, - no wonder - great number of scholars and experts studied it throughout history. The cultural development of humanity has been closely tied to geographical boundaries, today great number of diverse cultures can be found all around the planet, all exhibiting different preferences, traditions and characteristics. In the 21st century, in our fast digital world globalization brought cultures close to each other, nowadays we can access vast loads of information and learning about each other’s cultural characteristics is within our reach.

Being an entrepreneur has always been an attractive career choice, since it provides freedom and flexibility. Nowadays, with the emergence of the rapid development of IT, technology and the internet the path of entrepreneurship became an even bigger trend, meaning anyone with an internet connection can initiate the set up of various entrepreneurial ventures.

In this thesis, I conduct a research about cultural traits in entrepreneurial ecosystems. What are the building pillars of an ecosystem? How do these ecosystems differ geographically? What are the conditions for an ecosystem to thrive? A healthy ecosystem – that consists of a number of different pillars - can be a strong basis for prosperous businesses. Cultural support is one of the indicators of an ecosystem, that projects how the population thinks about entrepreneurship in that region. In this thesis, I conduct a research to see what are the effects of different cultural qualities on the business performance of the ecosystem’s businesses. I’m planning to investigate Hungary and The Netherlands as two very distinct countries to be able to compare the culture’s impact on entrepreneurial conditions using Hofstede’s famous Cultural Dimensions theory.

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Research goal and research question

The goal of this research is to contribute to existing entrepreneurial culture literature by examining the relationship between certain cultural dimensions established by Hofstede (1980) and the business performance of small and medium-sized enterprises (SME) in Hungary and The Netherlands.

RQ: Is there a difference between the effect of cultural dimensions of Hungary and The Netherlands on the business performance of small and medium-sized enterprises in the

respective regions?

The research applies quantitative data collection through a web-questionnaire, which targeted SMEs in the two regions. The motivation behind the research is that Hungary and The Netherlands are two very distinct countries in terms of cultural and entrepreneurial development, thus comparing them through local cultural traits might yield very interesting results projected on business performance.

This thesis is structured in the following way: the first section is a brief overview about entrepreneurship and its different definition today, then it was 50 years ago. This is followed by an extensive literature review about entrepreneurial ecosystems and the Small Business Act for Europe. Furthermore, detailed overview of the researched regions is given and entrepreneurial culture is being introduced, with focusing on Hofstede’s theory.

The third section presents the data collection and research method applied to investigate the research question. After this, the result of the analysis and hypotheses are being presented. This is followed by the discussion of the results, where the research question is answered. Finally, conclusion will be drawn from the main findings and further limitations of the research is being presented with a proposal for future research in the topic.

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2. Literature review

2.1. Entrepreneurship

Entrepreneurship has been studied for decades now – no wonder – the concept has interesting interpretations and its effect on economic growth, or on a region’s culture has always been a central question to focus on. In order to fully understand the economic importance of entrepreneurship as a process we need to clarify the concept itself. Schumpeter (1965)defined entrepreneurs as ‘individuals who exploit market opportunity through technical and/or organizational innovation’ and their role is to destroy old patterns in a society and replace them with new ones. However, as of today - after more than half a century – the definition of entrepreneurship has been excessively shaping, in a wider sense it can also be seen as the process, where ideas are turned into action by individuals whose personal qualities have great impacts on the outcome of the different challenges (European Commission, 2017). According to Professor Howard Stevenson - who is the leader of entrepreneurship studies at the Harvard Business School and considered to be the ‘lion’ of entrepreneurship today according to the Forbes (2011)1_{– ‘entrepreneurship is the pursuit of opportunity beyond resources controlled’}

(Eisenmann, 2013).

Furthermore, these opportunistic individuals can also be described as people, who prefer to start their own business from which they gain profit, instead of being employed and get a regular salary (Bönte, 2009).

Entrepreneurs are constantly chasing new ways of doing business to enhance societal adaptation to the constantly changing environment, therefore entrepreneurship must be described as a societal function rather than a set of individual characteristics. Societies usually reflect how legitimated entrepreneurship is in their region through the level of change they

1

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bring about (Etzioni, 1986). According to recent literature entrepreneurship could be a tool for nations to fortify their economies and fasten up their evolution of development in terms of economic progress. If we look at nowadays’ trends of the privatization of economies and global competition based on creativity and innovation, entrepreneurship is a solution for creating a sustainable global business climate (Birley, 1992).A number of smaller organizations already have been outperforming their bigger counterparts in several countries and sectors all around the world, thus economists should pay more attention to their role and contribution (Ács, 1992). Rauch et al. (2009) states firms with high entrepreneurial orientations (EO) more likely discover new opportunities that differentiate them from their competitive advantage resulting in higher performance. To sum up, lots of academic literature state that in many cases entrepreneurship can be seen as the driving force of a nation’s economic development and firms tend to be more successful if exercising to do business with an entrepreneurial mindset. It is a useful tool for both the society and economy since it increases the competitiveness and prosperity of a region and offer consumer products, services and job opportunities (Zahra, 1999).

The quality of entrepreneurship can be determined by the total amount of social capital aggregated in a region. That is the reason why entrepreneurship usually concentrates geographically in different quality clusters, allowing certain regions to exhibit really high rates of entrepreneurial activity, while impede these activities in others. Audretsch et al. (2004) describe entrepreneurship capital, as a concept of social and relational factors and is related to social capital, that boost entrepreneurship on different levels (i.e.: economic, organizational, personal) in the region. It positively effects economic output –in terms of GDP - and productivity through knowledge spillovers (Audretsch et al., 2004). The concentration of entrepreneurship can be ascribed to a number of things, such as economic variables, but more importantly the existence of certain social norms and specific cultural traits. These special

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cultural patterns are liable to self-reinforce the entrepreneurial occupational choice of the region’s population. Regional social norms can also foster the development of all actors of the ecosystem, such as schools, universities, or different business organizations, which actors are also essential to establish those social norms needed for entrepreneurial orientation (Bonaventura, 2012).

This social, or entrepreneurial capital is also the reason that long-lasting, geographically different, regional entrepreneurial cultures exist and usually it remains relatively on the same level of quality over longer periods of time in each region (Fritsch, 2012).

In this chapter we saw that today entrepreneurship has a wider definition as it used to be decades ago. A number of literature suggests that greater attention and support needs to be given to smaller organizations, which opreate in entrepreneurial spirit, due to their valuable business potential. Entrepreneurship has a societal function. Regions where certain social norms are present exhibits higher tendency for entrepreneurship and usually show higher economic growth, provide more jobs and increase the prosperity locally. In the next section the concept of entrepreneurial ecosystems will be presented, with focus on the cultural pillar.

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2.2. Entrepreneurial ecosystems

Acs et al. (2014) established the concept of the National System of Entrepreneurship (NSE), which are a set of interdependent actors and factors coordinated in such a way that they support and enable productive entrepreneurship in a region (Stam, 2016) and act as resource allocation systems. NSEs are driven by individual-level opportunity pursuit, through creating new ventures. The process and its outcomes of the NSE strongly depend on country specific institutional characteristics (Acs et al., 2014). The

notion of entrepreneurial ecosystems consists of different framework conditions and systemic conditions; and it places the entrepreneur him/herself in the center.

Entrepreneurial ecosystem as a concept is quite under researched yet and it is rather focused only on the ecosystems from a more general point of view through the examples of successful case studies

such as Silicon Valley, Boulder, or Colorado. It incorporates cultural, social and material attributes that benefit the entrepreneurs and the interrelatedness of these attributes facilitates the operation of a healthy ecosystem in which entrepreneurship can thrive (Spiegel, 2017). Nowadays, a transitions can be seen from quantity of entrepreneurship towards quality of entrepreneurship. The ecosystem has a framework role here too, to implement and facilitate this transition. The different framework conditions and systemic conditions lead to certain entrepreneurial activities which are the output and new value creation as outcome of the ecosystem (Stam, 2015).

Figure 1: The entrepreneurial ecosystem configuration 2017

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In addition, the NSE approach provides a way to improve the ecosystems least performing pillars through eliminating the biggest bottlenecks, that may constrain the performance of the whole system (Acs et al. 2014).

The Global Entrepreneurship and Development Index (GEDI) project establishes the comparability of regional ecosystems by measuring local framework and systemic conditions through entrepreneurial attitudes, abilities and aspirations (Figure 1.). Among the entrepreneurial attitudes sub-index, one of the framework conditions is the cultural support of the population towards entrepreneurs and small business owners, which can further be divided into 3 performance indicators: career, status and media attention. In the coming sections both regions in this research will be analyzed along these indexes.

To conclude, entrepreneurial ecosystems are collectives of interrelated pillars which together determine the conditions for entrepreneurship in a region. In this study the Cultural pillar of the ecosystem will be investigated, as an indicator of the level of support that entrepreneurship receives from the population in a region.

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2.3.The Small Business Act for Europe

As the research unit of this research, small and medium-sized enterprises (SMEs) are being used, which are accountable for driving innovation, creating jobs, supporting economic transformation and growth in many business sectors. According to the Small Business Act for Europe (SBA) regional framework, start-ups are considered to be included in the SME category from a statistical point of view. SMEs are non-subsidiary, independent organizations, which employ less than a given number of employees. We distinguish 3 different type of enterprises based on size:

• Micro-enterprises have up to 10 employees • Small enterprises have up to 50 employees

• Medium-sized enterprises have up to 250 employees

SMEs are also often described as having an annual turnover, that doesn’t exceed 50 million EUR and an annual balance sheet total, that doesn’t exceed 42 million EUR.

I would like to take the chance to clarify that entrepreneurship and SMEs are not necessarily the exact same concepts, although there is a close relation between the two notions. Entrepreneurship is rather the initial process that leads to the inception of different ventures, while SMEs are the outcome of entrepreneurial activities and serve as legal structures for businesses in micro, small and medium sizes. However, what is even more important that they both possess the same goal, which is usually economic growth, development, economic transformation, or job creation. Both are affected by the same set of variables such as the region’s culture, environment, the owner’s individual, or the firm’s characteristics. Most importantly SME owners and entrepreneurs must possess same personal characteristics such as initiative, creative problem solving, influencing strategy creation, commitment, hunger for success, integrity, strive for growth and reliability (Lucky, 2012; Rebecca, 2009). SMEs incorporate a unique nature of entrepreneurial processes, that are usually defined as ‘lifestyle

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businesses’. The SME owner needs to apply several entrepreneurial qualities to reach the business goals of the organization.

The Small Business Act (SBA) for Europe is a dynamic framework for SMEs in the European Union. Among other things - its goal is to improve the operating conditions of enterprises through improving the approach to entrepreneurship and removing the strict regulatory burdens and policy barriers in order to foster their growth. The SBA focuses on the constant improvement of the framework conditions with putting more emphasis on the recognition of entrepreneurs of a society. The SBA has 10 basic principles, which guide the creation and implementation of the policies. The first two SBA principles are closely related to entrepreneurship:

• I: ‘Create an environment in which entrepreneurs and family businesses can thrive and entrepreneurship is rewarded.’

• II: ‘Ensure that honest entrepreneurs who have faced bankruptcy quickly get a second chance.’

The fact that the SBA places the entrepreneur in the center of these policies emphasizes the need for improving the operating conditions of these organizations. SMEs are usually present in very different environments throughout Europe and their nature can be very diverse as well (e.g.: micro-enterprises, craft businesses, or family ventures). For this reason the different policies should recognize the diversity of these SMEs, to establish supporting conditions. In SME friendly regions entrepreneurship should be supported by political leaders and promoted by the media (European Commission, 2011).

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2.4. Local features in Hungary and The Netherlands

In this section, I am making an attempt to introduce the regions of Hungary and The Netherlands in terms of a brief historical background focusing on entrepreneurial ventures, current status of the economy and the local traits of the business ecosystems such as number of SMEs, education and cultural traits. The two regions differ significantly in terms of historical background and entrepreneurial evolution, resulting in a huge difference in cultural support towards entrepreneurship today. For this reason, I think it would be interesting to see, what the current state of entrepreneurial ecosystems are of the two countries and principally through the entrepreneurial attitudes (ATT) of the population. Entrepreneurial attitudes – by definition – are the societies’ attitudes toward entrepreneurship, which we describe as a ‘population’s general feelings about recognizing opportunities, knowing entrepreneurs personally, endowing entrepreneurs with high status, accepting the risks associated with business startups and having the skills to launch a business successfully’ (Global Entrepreneurship Index, 2017). This notion includes the cultural support of the population, which can be described as an indicator of ‘how a country’s inhabitants view entrepreneurs in terms of status and career choice, and how the level of corruption and media presence in that country affects this view’ (Global Entrepreneurship Index, 2017).

As I introduced in the previous paragraphs, entrepreneurial ecosystems consist of closely interrelated pillars that determine the quality of each ecosystem in each region. In the case of Hungary and The Netherlands, certain essential ecosystem pillars such as Human Capital, or Growth potential have almost the same values.

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However the two distinct, aggregate Global Entrepreneurship Index (GEI2) values of the two countries differ significantly according to the 2017 report:

• Hungary: 36,3 (47th)

• The Netherlands: 67,8 (10th)

Every year, the GEI index establishes a list of countries based on the rating of the quality of their individual entrepreneurial ecosystems. In this fashion, the difference between the two region’s tendency towards supporting entrepreneurship is presented above.

Moreover, if we keep on comparing and contrasting the two ecosystem’s pillars, we see that there are mostly disparities among most of the components especially on factors related to the entrepreneurial attitude (ATT) sub-index. On the ATT sub-index level there is one pillar, where an outstanding difference can be seen between the two regions: cultural support.

If we look at the GEI 2017 values for the Cultural support pillars, Hungary (0.34) underperforms The Netherlands (1.00) with an unusually big gap.

Today, one of the EU’s important aims is to decrease regional inequalities (Szerb, 2014). As I already stated in a previous section, the Small Business Act for Europe was established to facilitate this transition. Furthermore, the Organization for Economic Co-Operation and Development (OECD) and the European Union (EU) are constantly putting more and more emphasis on the environmental drivers of entrepreneurship – especially social and cultural factors that might influence individual career choice among potential entrepreneurs, who might start a new venture (European Commission, 2004, 2006; OECD, 1998, 2000).

In the next sections, the index of the total early-stage entrepreneurial activity (TEA) will be introduced for each region as well, which incorporates those individuals of the active, adult population, who were starting (nascent entrepreneurs), or managing businesses younger than

2_{The Global Entrepreneurship Index (GEI) is an economic activity index, which looks at}

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3,5 years in existence (new entrepreneurs). There is significant relation between the TEA index and the level of economic development in a region. Usually, the more developed the economy, the lower the value of the TEA (Global Entrepreneurship Monitor the Netherlands, 2015). For these reasons, I think it would be interesting to see what the possible impacts of different levels of cultural support on new ventures’ performance are in such different regions.

2.4.1. Hungary

Today, Hungary is a member of the European Union and possessing the world’s 59th largest efficiency-driven economy by nominal GDP (280,058 million USD in 2017). The population is around 9.8 million (2016 estimate). The form of government is an independent, unitary, parliamentary republic and the country is located in Central Europe, in the middle of the Carpathian Basin. Due to its geographical location, the country had always been situated between powerful empires that had been in conflicts with each other many times throughout history, making the country a typical ‘satellite state’. This fact means that the country always had a ‘supervisor’ state around, which has been playing a crucial part in terms of cultural and entrepreneurial development of the region.

In the last century, the country was a member of the Soviet-Union for more than 4 decades (1947–1989), which left the country with many scars in terms of economic state. According to Mueller (2002), in former communist countries entrepreneurship might be an essential force in the transformation of economies from closed to free markets and democracy. At that time, governments had a great role in creating the new market environment that either fostered, or made it hard for entrepreneurs to go into ventures. At the end of the 1980s, there was an economic shift taking place in Eastern Europe. Certain governments fostered entrepreneurship by building market-supporting infrastructure; others did not (Frye and Shleifer, 1997). Attention was given to the process called ‘bottom-up’ economic transformation, where economies were focusing on the small and medium-sized businesses’ development in order to

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strengthen their economic position. The development of small firms happened around this time in Hungary too, which was the outcome of two processes: the breakdown of large state firms into smaller private ones; and the removal of regulations which inhibited small firm birth and growth (Futo, 1997). According to McMillan et al. (2002) entrepreneurs are essential elements in these transition economies and through their performance they have powerful impact to determine the overall success, or failure of the new ecosystem. Compared to other transitional economies Hungary had a head start in terms of establishing small ventures right after the regime change in 1990. The predecessors of SMEs (‘enterprise work teams’ and ‘small co-operations’) were already introduced in 1982. This was followed by the first law on individual proprietorship in 1990. Today, the regulation and definition of SMEs was introduced by the European Union in 2004 through the ‘Act XXXIV. of 2004’ (Kkvtv.) (Roóz, 2011).

In the socialism, the media and propaganda put huge emphasis on capitalist and anti-entrepreneurial views. As a result, lack of initiative, risk taking and self-care was still being reflected among the Hungarian population in the nineties. People had not been socialized in a way to completely accept the capitalist system and the huge differences between wealth it could create (Szerb, 2008).

Today, these lack of entrepreneurial attitudes are still reflected on the mindset of most of the population of the country. Entrepreneurs are generally seen as individuals, who gain competitive advantage by suspicious affairs and who circumvent tax paying for the sake of their own business growth. Some say there were a number of individuals, who exploited the process of privatization and took advantage of their social position and relations. Some even made up their lack of managerial skills with committing economic crimes at various levels (Szerb, 2008). In the nineties, as a result of the high competition the rate of unemployment was continuously growing, so extreme number of people were employed illegally, or was in inactive status. This also contributed to the formation of a negative entrepreneurial image in

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the country (Lackó, 1995). All these above mentioned reasons make it clear, that positive values related to entrepreneurial culture had not got established yet in Hungary(Szerb, 2008).

Hungary performs outstandingly poorly on the entrepreneurial attitude sub-index even compared to other countries in the Eastern-Central European region. If we have a look at entrepreneurship as a desirable career choice, or the level of media attention it gets, the country is the very last one among the other states of the region (Croatia, Estonia, Latvia, Macedonia, Poland, Romania, Slovakia and Slovenia).

• Entrepreneurship as a desirable career choice: 48,35% • Entrepreneurship is given high status: 68,39%

• Media attention for entrepreneurship: 33,36%

The GEM report concludes that the biggest bottleneck of the entrepreneurial ecosystem is along entrepreneurial attitudes, especially mostly among personal traits, that are closely related to the attitude of the entrepreneur. The country’s ecosystem is very similar to other member states’ of the Eastern European cluster, which is described by high power distance and high family and group collectivism. Entrepreneurs are tipically attached to their cultural heritage of deep family and group cohesion, but at the same time they already prefer future and performance orientation much more than before (Bakacsi, 2002).

However, today there are already signs of improvement. A new entrepreneurial business culture is on the rise, although, crime and corruption make small business development quite risky. Capital is still not readily available, interest rates and inflation are high, taxation is restrictive and government control is pervasive. The business climate is overly bureaucratic and legal and business infrastructure is underdeveloped. In general, there is a lack of business

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expertise and entrepreneurship capital (Kornai, 1995). In the socialist system collective rewards and receipt of payment regardless effort was typical. The result of this was the development of a culture, in which independent thinking, innovation and individual initiatives were discouraged. Entrepreneurial characteristics like autonomy, achievement and risk-taking could not evolve sufficiently in the population. However, today we might witness the arrival of the culture transforming new generation, who had not been working under the influence of the communism and are open towards new ideas and values (Kornai, 1995).

In 2015, the number of small and medium-sized enterprises was 506.677 (micro-, small-, medium-sized ventures and startups!) and they added 26 billion EUR (53,6%) value of the whole business economy of the country. The spatial proximity of these companies are very small, 4 out of 10 companies operates in the region of Central Hungary (Budapest). 94,2% of all SME’s were micro-enterprises (under 10 employed person), 4,9% were small-enterprises (10-49) and the rate of medium-sized enterprises (50-249) was 0,8% (SBA Fact Sheet Hungary, 2015). The TEA index of Hungary in 2015 is 7,92%, which can be considered quite sufficient for an efficiency-driven economy (Global Entrepreneurship Monitor Hungary, 2015).

The education is mostly public and run by the Ministry of Education. Today, there are 67 higher education institutions, ranging from small colleges to top research universities, maintained by the state, private organizations, or the church. The country has a long tradition of higher education that shows the existence of knowledge economy. The University of Pécs is one of the oldest university institution in the world. It was founded in 1367 and is still functioning.

According to the current prime minister, Western democracy has been failing for a while now and the member states of the European Union should introduce strong ‘illiberal’ style governing in order to sufficiently recover from the crisis. The role of the state is getting stronger and more reguations take place, while different market system forces are weakening constantly.

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Administration is being centralized, state ownership is growing and new forms of selective taxes are being introduced to regulate utility prices. On the other hand, health care system, social security support and the quality of education have been dropping heavily, which leads to dissatisfaction among the population (Szerb, 2015).

In conclusion, today the Hungarian government introduced policies which are not necessarily in favor of the market economy principle and entrepreneurial activities, however GEI data didn’t show a major collapse in the ecosystem overall. It seems that if present trend continues it will also bring the slow agony of the country’s entrepreneurial ecosystem (Szerb, 2015).

2.4.2. The Netherlands

The Netherlands is a typical western society, with the world’s 28th_{market-based, mixed, but}

mostly innovation-driven economy by nominal GDP (898,732 million USD in 2017) and high support for entrepreneurial activities. The population is around 17,100,475 (2017 estimate) and the form of government takes place within the framework of a parliamentary representative democracy, a constitutional monarchy and a decentralised unitary state (Andeweg, 2014). The country had always been at the forefront of innovation and the development of a progressive market-economy. As a result, it always has been one of the richest regions in Europe. To begin with, we can look at the fact that around 55% of the country is below sea level. Over the centuries the Dutch nation adapted to this natural situation and constructed various networks of dams, dykes and dunes (e.g.: Delta Works - 1953) in order to keep the water out of the country and increase the availability of arable land. This example shows the ability of this inventive nation to come up with new initiatives and effective ideas to address threatening issues. This strong cultural characteristic of the Dutch nation - to be more compatible with the entrepreneurial thinking - can be derived already from the ‘Golden Age’ periods, when Dutch people were very successful around the globe in terms of doing business through newly

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discovered opportunities. We can mention the Vereenigde Oost-Indische Compagnie (VOC), the Amsterdam Stock Exchange, or the Bank of Amsterdam all founded in the beginning of the 17th century (Van Stel, 2015). To sum up, the Dutch nation had always been quite resourceful if it came to coming up with new initiatives and solving problems. Thus, we can safely assume that this place had really good conditions for entrepreneurial spirited individuals to start a venture in.

In the last two decades, The Netherlands has seen an outstanding growth in the rate of entrepreneurship. As we can see in the next figure, there is no other innovation-driven economy in Western Europe and Scandinavia that has seen such growth in over just one decade.

This process is called the Dutch Entrepreneurship Miracle. The number of independent entrepreneurs almost doubled by 2012 during only a decade. However, this high growth doesn’t come side by side with the increasing number of young, high-growth firms and innovativeness of the country per se. This phenomena, was called the Dutch Entrepreneurship Paradox, which made it obvious that the concept of self-employment cannot be described the same as entrepreneurship. However, as I already introduced the Small Business Act (SBA) for Europe framework previously in this research, a wider definition of entrepreneurship is being used.

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Thus, I’m focusing on the business activities of the self-employed individuals, not on high-growth ventures’, or start-ups. This more recent concept of an entrepreneur derives from the SBA for Europe construct and can be applied for anyone, who operates an enterprise (see in paragraph 2.3 about the SBA). Empirical data shows that between 1987-2013 self-employment lowered unemployment rates in The Netherlands, in spite of this there were no significant relationship between the rise of self-employment and innovation, thus productivity growth (Stam, 2014).

According to the 2015 GEM Report most of the pillars of the Dutch entrepreneurial ecosystem performs outstandingly well compared to other innovation-driven EU countries’. Entrepreneurial attitudes are especially important in an ecosystem, since it shows us how locals relate to entrepreneurs/entrepreneurship, which closely relates to a higher acceptance of entrepreneurs as innovative drivers of the economy. In the case of The Netherlands, the attitude factors have always been impressively high, just like in 2015, as 79% of the adult population thinks that entrepreneurship is a desirable career choice and two third of the population relates high status to entrepreneurs in the Dutch society. However, the media attention towards successful ventures dropped (58% of adult population) between the periods of 2011-2014, which might be in connection with the economic crisis, when media rather focused on those businesses that were fighting for survival. According to the GEI 2017, the highest valued pillars of the Dutch ecosystem are Cultural Support, Opportunity start-up and Start-up skills. This index also points out that the image of entrepreneurship is really favorable in the region and people find entrepreneurship a good career choice. This assumption is also reflected on the fact, that entrepreneurial exit is lower than the EU average, which means survival rates of Dutch ventures are relatively high (Global Entrepreneurship Monitor the Netherlands, 2015).

In 2015, the Total early-stage Entrepreneurial Activity (TEA) rate of the country was 7,2%, which shows a tiny decrease compared to preceding years. The reason for this might be that

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after the crisis (mostly 2010-2014) the relatively high number of businesses were not sustainable and many of them were forced to exit the market. However, by the year 2014, the SME sector experienced full recovery from the crisis (Global Entrepreneurship Monitor the Netherlands, 2015). In the same year, the number of small and medium-sized enterprises was 869.456 (micro-, small-, medium-sized ventures and startups!) and they added 199 billion EUR value (63%) of the whole business economy. The ratio of micro-enterprises is 94%, small-enterprises is 4.9% and medium-sized businesses are 1% of all SMEs (SBA Fact Sheet the Netherlands, 2015).

The biggest bottleneck of the ecosystem is Human Capital, however, the Dutch education is considered to be much higher quality than the OECD average. The national education budget exceeded 32 billion EUR in 2014. Today, the educational policies are coordinated by the Dutch Ministry of Education, Culture and Science and the first official nation-wide system in education was implemented already in around 1800. In general, education is oriented towards the needs and background of the students. Institutions are usually divided by age groups, or different streams of educational levels.

It is a popular view in the country, that entrepreneurship create jobs and boost economic growth. That’s why the government supports innovative ventures, by providing financing solutions and great ecosystem conditions, reducing regulatory burdens (see SBA for Europe) and developing various IT tools aiming at supporting the owners of the enterprises. In order to develop the main bottleneck of the ecosystem, big emphasis is put on the relationship between education and the labour market to increase the human capital factor of the country.

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There is another great initiative called The Royal Association MKB-Nederland, which is the largest organization in the country representing around 150.000 entrepreneurs nationwide. Its main goal is to represent the interests of all SMEs, by unifying them thus enhancing representative credibility (MKB-Nederland, 2015).

In conclusion, Hungary had always been a country, where conditions were not sufficient enough to establish a strong, supportive entrepreneurial culture. On the contrary, in The Netherlands the ecosystem’s infrastructure and the mindset of the population always fostered those individuals, who wanted to start a new venture. In the following sections, the cultural traits of each region will be discussed and Hofstede’s famous theory will be applied in order to compare the two countries.

2.5.Regional culture

Throughout history humanity divided all discovered land for political reasons, as a result nations were born. It’s important to mention that nations are not equal to societies, which are historically developed forms of social organization units. More than 200 nations inhabit our planet today, with different cultural qualities, so finding a common cultural language is essential in order to survive and successfully cooperate with each other (Hofstede, 2005). National culture plays an important role in entrepreneurship. According to Busenitz (1996), the fact that some regions with different cultural settings produce more entrepreneurs than others can be traced back to the way an individual think, which has a significant effect on starting a new venture. Eroglu (2011) states, that the concept of entrepreneurship is strongly related to cultural values of the population. Since every human being is unique in terms of personality, most entrepreneurs possess different set of personal values. The aggregate of all these individual values form the culture of each region and impacts local entrepreneurial activities. Today, several different definitions exist for culture. It can be associated with various behaviors

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that are dominant within an area and passed on from generation to generation (Davidsson, 1997), or ‘the collective mental programming of the mind which distinguishes the members of one group, or category of people from another and their respective responses to their environments’ (Hofstede, 2001). In order to succeed in business, members from different regions should adopt specific environmentally relevant patterns of behavior. The aggregation of these different patterns of behavior leads to the emergence of unique cultural values in societies (Shane, 1993). These certain attributes of individuals called values are which Hofstede describes as ‘a broad tendency to prefer certain states of affairs over others’. Values are considered to be the core of culture that people acquire and develop at an early age and can only be inferred by outside observers (Hofstede, 2004).

The relationship between culture and entrepreneurship has already been the focus of much research. Berger (1991) says, in order to turn young entrepreneurial ventures into flourishing businesses a supportive national culture is essential. Besides fostering political and business leadership - the presence of supportive culture is a must in order to provide inspiring and triggering environment for entrepreneurship (Mueller, 2000). Some cultures are more in favor for entrepreneurship than others. The conditions for entrepreneurial culture can vary from country to country, some can be more suitable with them, while others can be less suitable with them. As a result of cultural differences and diversion in political, legal and social situations, some nation can be considered to have a more entrepreneurial culture, exhibiting higher level of entrepreneurial orientation (EO). Thus, the cultural values of a region can either converge, or conflict with the development of the regional level of EO (Lee, 2000).

Today, such cultural difference can be seen between the parts of Europe, especially among Eastern and Western Europe. After the regime change in ex-Soviet states, marked cultural and economic differences are still present between the Western and Central European regions (Kolman et. al., 2003). Even today, cultural and economic-structural determinants and both

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values and beliefs have significant impact on new firm formation rate (Davidsson, 1997). Factors such as individuals’ personalities and behaviors, economic conditions, firms, political and legal systems and social mores are all related to the culture of the region, so the perception of it might be a common ground for further investigations. Furthermore, there are countries that have already developed their economies quite sufficiently towards the free market, but not their relationship towards entrepreneurial activities. Economic reform is only the first step in the development process, but nations must include a cultural transformation as well if they aim for establishing a well-oiled, supportive entrepreneurial ecosystem. In addition to this, businesses created in a specific cultural environment always reflect the characteristics of that cultural setting in the region, like strategic orientation and growth expectations (Hayton et al., 2002).

2.5.1. Hofstede’s theory

The influential cultural model proposed by Hofstede in 1980 has been largely debated throughout the decades, however according to recent literature there is no theoretical, or empirical basis for the criticism of the concept (Javidan et. al., 2006). His cultural dimension theory is still the most relevant scheme and it has been the most widely accepted means of investigating the culture of a society (Kirkman et. al., 2006).

In 1980, in his work Culture's Consequences: International Differences in Work-Related Values, Geert Hofstede proposed 4 basic cultural dimensions: Power Distance, Uncertainty Avoidance, Individualism/Collectivism and Masculinity/Femininity. He established these four basic anthropological problem areas that could describe the differences between national cultures and allow the cultural comparison of regions all around the world. In 1984, he released Culture's Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations, in which he combined statistical analysis from his survey with his personal

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experiences. In the coming decades his theory was refined and different cross-national studies were conducted to confirm his initial results. In 1991, - after an independent 23 country wide research – Hofstede added a fifth dimension to this theory called long term orientation (LTO), which I plan to use in this research instead of the dimension of Masculinity. The reason for this is that today gender roles are not divided that sharply as they had been in the previous century. Furthermore, the long-term orientation vs. short-term orientation dimension is a very good indicator for cultural quality of a nation. After the millennium, additional research refined the already existing dimensions of the theory and distinguished between country-level and individual-level data in analysis. Eventually, another, sixth dimension was added to the theory called indulgence vs. restraint, which I will not be using in this research (Hofstede, 2005). According to Hofstede (1980), differences on a national level would appear along the above mentioned cultural dimensions.

In the next sections of this thesis, the impact of different levels of cultural dimensions on the performance of small and medium-sized enterprises are presented in each region investigated. In order to be able to investigate this relation, the original definitions of the cultural concepts are provided by Hofstede3:

Power Distance (PDI): ‘Power Distance is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally.’ It is related to the different solutions to the basic problem of human inequality (Hofstede, 2011). In societies, where PDI is high superiors and subordinates consider each other as unequal, subordinates expect to be told what to do. In low PDI societies, superiors and subordinates consider each other as equal and they are interdependent (Yoon, 2009).

Individualism-Collectivism (IDV): ‘Individualism is the extent to which people feel independent, as opposed to being interdependent as members of larger wholes.’ This dimension

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relates to a societal, not individual characteristic of the population. It shows the degree to which people in a society are integrated into groups. The dimension is viewed on a high/low scale, where collectivistic regions are situated on the low end and individualistic nations on the high end of the spectrum. Collectivistic societies emphasize strong relationship and interdependence, while individualistic societies emphasize universalism (members identify themselves with broader groups of society) and self-reliance (Yoon, 2009).

Uncertainty Avoidance (UAI): ‘Uncertainty avoidance deals with a society’s tolerance for uncertainty and ambiguity.’ It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. It is related to the level of stress in a society in the face of an unknown future (Hofstede, 2011). UAI is associated with trust, it indicates the extent to which people feel threatened by uncertain situations and ambiguity. In cultures scoring high on UAI, the population generally feel threatened by uncertain situations and try to avoid them by having strict behavior codes, laws and rules. On the other hand, in low UAI nations people feel more comfortable with unknown situations (Hofstede, 2011). Long-term orientation vs. short-term orientation (LTO): ‘Long-term orientation deals with change.’ It is the dimension that indicates whether a society emphasizes its links either with the past/present; or oriented more towards the challenges of the future. Those societies who score low on this spectrum prefer to maintain traditions and norms, while those who score high usually prefer adaptation to certain circumstances and problem-solving is a necessity. High LTO cultures are also take risks easier during uncertainty, since the population has strong beliefs. On the other hand, low LTO cultures tend to focus on things happened in the past, or the present and live by universal guidelines (Yoon, 2009).

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2.5.2. Regional cultural traits

According to Hofstede (2004) if we look at certain nations, dissatisfaction with society and with life in general are one of the main determinants of going into entrepreneurship = more self-employed people. These societies are often described with higher power distance, stronger uncertainty avoidance, more bureaucracy and corruption and relatively poor. Unemployment is positively associated with the level of entrepreneurship, suggesting that it is a push factor (Hofstede, 2004). One good example is the Eastern European cluster which incorporates Albania, Georgia, Greece, Hungary, Kazakhstan, Poland, Russia, and Slovenia. The individual characteristics of this cluster is high power distance and high family and group collectivism. The cluster’s countries are mostly ex-Soviet Union members and now they have been in a transition era from the communist ideology to market-based economy. Managers has been valuing performance orientation more, but they still tend to stick to their cultural heritages of deep family and group cohesion. Also, they value highly charismatic and team-oriented leadership (Bakacsi, 2002).

On the other hand, those nations with such a cultural profile, that exhibits low power-distance, low uncertainty avoidance are more suitable for the evolution of entrepreneurship (Thurik, 2010). However, there is no homogeneous European business culture, European countries can not be treated as members of one, consistent cultural cluster, with typical cultural traits. Due to high diversity in the Hofstede dimensions of countries of Western Europe, no cultural mix can be considered as typical western European even though all these countries have their preferences (Durska, 2004).

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According to one of Hofstede’s most recent work Cultures and Organizations: Software of the mind (2005), Hungary and The Netherlands possess the following cultural dimension values.

Table 1: Cultural dimension scores according to Hofstede (2005)

Country PDI IDV UAI LTO Hungary 46 80 82 50

Netherlands 38 80 53 44

In Table 3. the two countries show similar scores alongside most of the cultural dimensions. Both regions score low on the power distance dimension, which means that hierarchy is present, but only for convenience, superiors are accessible for subordinates and management empowers employees. Managers rely on their teams, since power is decentralized and employees expect to be consulted as well. In both cases there is high preference for a loose social framework. Individuals are expected to take care of themselves and their families. The employer-employee relationship is a contract based on mutual agreement and promotion decisions are based on merit. The score of uncertainty avoidance shows that both societies tend to avoid uncertainty, although in case of The Netherlands this preference is more modest. There are inflexible codes of believes and behaviors and unorthodox attitude is not accepted. There is emotional need for rules, people tend to appear busy and diligent even if this is not necessarily the truth. The society prefers precision, security and innovation might be overshadowed4.

Both countries are pragmatic, the society believes that truth depends on the situation, the context and time. They are a bit two-faced, because they try to adapt traditions to different

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situations. On one hand, there is a tendency to save and invest money, but on the other they are economical and result focused5.

In this section, typical cultural value combinations were presented for each region, however one of Hofstede’s (2005) most recent works showed that all the invetigated dimensions have more or less the same values, thus the countries’ cultural mix is not that distinct as previously thought based on the Global Entrepreneurship Index (GEI).

2.6. The relation between culture and entrepreneurship

According to Davidsson & Wiklund (1997) national culture has a big influence on the characteristics of the individuals in a population, creating a bigger number of potential entrepreneurs. It can be concluded, that a supportive national culture will – ceteris paribus – increase the entrepreneurial potential of the country (Mueller, 2000). Culture - interpreted as the collection of general values – is an essential determinant of the level of entrepreneurial activities in a society. According to Baumol (1968), business growth differences can be related to differences in entrepreneurial culture (Baumol, 1968). Thomas and Mueller (2000) say, studying entrepreneurship should be expanded to international markets too to examine the different conditions and characteristics that supports entrepreneurial performance in a region. Empirical data says entrepreneurs reflect their national culture and culture has a big effect on entrepreneurial performance itself (Thomas and Mueller, 2000). What’s more, culture also has a strong effect on the willingness of entrepreneurial organizations to engage in risk-taking and proactive firm behaviors (Kreiser, 2001). Hofstede’s cultural dimensions proved to be quite useful in identifying key aspects of national cultures which is related to potential entrepreneurial behavior. Cultural attributes shape the development of certain personality traits and motives of individuals in a society to engage in behaviors, which might not be obvious in

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other societies (Mueller, 2000). According to Lumpkin and Dess’ concept only those countries with specific national culture will foster Entrepreneurial Orientation (EO) and a society’s propensity to establish autonomous, risk-taking, innovative, competitively aggressive and proactive entrepreneurs and firms depends on its culture, which are essential features for high entrepreneurial performance (Lee, 2000). Hofstede’s dimensions of national culture and its impact on inventiveness was also investigated by Shane (1993), who found that individualistic and non-hierarchical societies tend to be more inventive than others.

There has been numerous researches that investigate which factors are the most important for entrepreneurial performance. According to Wiklund (2009) access to capital and dynamic environment are the most essential factors regarding business performance of entrepreneurs. On the other hand, Haber (2007) finds that human capital of the entrepreneur – especially managerial skills – are the highest factors that contributes to performance. This was followed by venture type. Etzioni (1987) states that there is a connection between national cultures and firm-formation rates. Culture has an effect on the supportiveness of the environment so it makes the environment more legitimate to establish a new venture in (Etzioni, 1987).

Shane (1993) also points out the relation between Hofstede’s dimensions of individualism and power-distance and national rates of innovation. He concludes that individualism is positively associated and power distance is negatively associated with national innovation rates, even after adjusting for the influence of national wealth. The results also show, that the association between specific cultural dimensions are not temporally stable.

To conclude, existing literature appears to suggest that cultures scoring high on individualism, high masculinity, low uncertainty avoidance, and low power distance in Hofstede’s model are more advantageous to entrepreneurship. After all, entrepreneurship literature now confidently states that culture has a profound effect on all facets of entrepreneurship in societies (Zahra et. al., 2002)

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2.6.1. Hypotheses

First of all, on one hand Thompson (1976) and Bums and Stalker (1961) had found that innovation can be increased by reducing hierarchy. On the other hand, Shane (1992) concluded that power distance is negatively associated with a nation’s level of innovation, however the association is not temporally stable. Universally, scholars hypothesize that only those regions, exhibiting lower levels of power distance are suitable for entrepreneurship (Hayton et al., 2002). According to Hofstede (2005) the value for the power distance cultural dimension is higher in Hungary (46), than in The Netherlands (38), thus the first hypothesis is the following:

H1: Power distance has a negative impact on SME business performance in both countries, but the effect is bigger in the case of Hungary.

Based on a GEM study of 52 countries, higher levels of entrepreneurial activities are not necessarily related positively to individualism in a region. According to Global Entrepreneurship Monitor data, individualism is negatively related to entrepreneurship in case of medium, or low development countries. However, if we talk about high development countries entrepreneurship is linked positively to individualism (Maria-Jose Pinillos, 2011). Hofstede (1980) had already found a strong positive relationship between individualism and the level of GNP per capita. According to Hofstede, both countries have the same value (80) on the individualism dimension, thus:

H2: Individualism has a positive impact on SME business performance in both countries and the effect is the same.

Furthermore, interestingly positive correlation was found between uncertainty avoidance and business ownership rates, which indicates that high uncertainty avoidance pushes the employees of big organizations to start their own businesses (Yasemin, 2014; Wennekers,

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2007). On the other hand, in low uncertainty avoidance regions, the society accepts both familiar and unfamiliar risks, like changing jobs, or starting small businesses. The risk that comes with certain activities are not perceived as seriously as they might be in high uncertainty regions. That’s why people tend to enter into unknown ventures with a higher chance as well (Hofstede, 2001). On one hand, Shane (1993) found that uncertainty avoidance is negatively related to the rate of innovation, however Muller and Thomas (2000) concluded that cultures high in uncertainty avoidance tend to be more supportive for entrepreneurial activities. Hungary (82) outperforms The Netherlands (53) on the uncertainty avoidance dimension (Hofstede, 2005) as well, so the third hypothesis of this thesis is as follows:

H3: Uncertainty avoidance has a positive impact on SME business performance in both countries, but the effect is bigger in Hungary.

According to Lumpkin et al. (2010), family businesses with long term-orientation are more likely to exhibit some entrepreneurial behaviors, than others. Long-term orientation is positively associated with innovativeness, pro-activeness and autonomy, thus it is linked to higher business performance (Lumpkin, 2010). Since Hungary’s long-term orientation (50) is higher than The Netherlands’ (44), therefore, the final hypothesis is the following:

H4: Long-term orientation has a positive impact on SME business performance in both countries and the effect is bigger in the case of Hungary.

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Figure 4: Conceptual model

3. Methodology

In this section, I introduce the approach and the design of my research. First, the survey as a research tool I used for collecting data is discussed. Then the sample, which I targeted and the data collection procedure is explained. Afterwards, the measurements and variables are discussed, which is followed by the statistical method part.

3.1. Research design

The philosophy of this research is positivism, since all the variables of the study are observable and measurable. This suggests that a theory can be proposed, tested and refined until it accurately predicts reality (Saunders & Lewis, 2012). Hofstede’s Cultural Dimensions theory is considered to be a grounded theory in psychology and business literature, thus it provides a good theoretical framework for this thesis. Deductive approach is applied in the research, the

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hypotheses are being tested based on the above mentioned theory (Saunders et al., 2009). I used questionnaire as research technique of this thesis work and it has aimed at cross-analysis of the relation of cultural traits and business performance. Finally, I used the method of cross-sectional data gathering, since the limited time frame provided (Saunders & Lewis, 2012).

The survey was distributed online, using multi-channel approaches, like social media (Facebook and LinkedIn), e-mail and company websites. To distribute my survey, I used Qualtrics, an electronic survey distributing platform, which made it really easy to tailor my questionnaire to my special needs and to customize the format in order to maximize the number of respondents. Eventually, the received dataset was analyzed with the SPSS (v.21) software, to test the hypotheses of the thesis.

3.2. Sample and data collection

To create a representative sample of the population in the 2 researched region, I used non-probable self-selective sampling and targeted around 350 firms. Altogether, the number of received responses was 187, so the response rate is around 54%. Due to the nature of the research primarily founders and owners of SMEs of Hungary and The Netherlands were targeted. The survey itself is divided into 3 blocks. The first part is related to general information about the respondents and SMEs. The second part is about regional culture, how the owners of the businesses relate to certain cultural traits in their region of operation. The last part of the survey is about business performance of SMEs. Obviously, the second part was the most time-consuming, because I included 4-5 questions per each cultural trait, which resulted in 19 questions in that block. In average, it took ~ 5 minutes to complete the questionnaire, I put great emphasis on keeping the length of the survey reasonable to encourage respondents to start and finish it.

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3.2.1. Sample characteristics

Altogether 187 respondents started and completed the online survey. During the initial preparations of the dataset 7 responses were excluded due to being incomplete, so the dropout rate is 3.75%, which is considered to be very low, thus sufficient. After cleaning the data 180 responses were used for further analysis, from which 91 were Dutch and 89 were Hungarian respondents, so the dispersion of responses can be considered equal from the 2 different regions. The size of the sample meets the requirements, 63% of the respondents are male and the average respondent is 32,45 years old.

3.3. Variables and measures

The study is investigating the relationship between Hofstede’s cultural dimensions and performance of small and medium-sized enterprises in Hungary and in The Netherlands. In this section the independent and dependent variables of this thesis will be presented with the measurement scales used in the web-questionnaire.

3.3.1. Independent variables

I used 4 different independent variables, which are cultural dimensions from the famous theory of Hofstede6.

- power distance (PDI): ‘the extent to which the less powerful members of organizations accept and expect that power is distributed unequally’.

- individualism (IDV): ‘Individualism is the extent to which people feel independent, as opposed to being interdependent as members of larger wholes’.

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- uncertainty avoidance (UAI): ‘Uncertainty avoidance deals with a society’s tolerance for uncertainty and ambiguity’.

- long-term orientation (LTO): ‘Long-term orientation deals with change’.

All the independent variables were measured on an ordinal scale, with the help of a 5-point Likert scale, where -2=strongly disagree and +2=strongly agree, so 0 mark a nautral response, so all the variables were convenient to run further regressions with.

3.3.2. Dependent variable

The dependent variable is business Performance (BP), which was measured with change in number of employees, in profitability and in sales volume of the enterprises. BP was measured on an ordinal scale as well, with the help of a 7-point Likert scale to permit greater systemic variability was used, where -3=strongly disagree and +3=strongly agree, so 0 marks a neutral response. BP was measured on an ordinal scale as well, with the help of a 7-point Likert scale to permit greater systemic variability was used, where -3=strongly disagree and +3=strongly agree, so 0 marks a nautral response.

3.4. Statistical Procedure

In order to have the hypotheses of the research tested and be able to conclude the results from the gathered sample to the population, the following statistical procedures needed to be performed. To begin with, the raw dataset of the conducted research was prepared and cleaned, to keep the level of bias the lowest. Incomplete surveys were filtered out and excluded from the analysis. Each cultural dimension was measured with 5 items. To be able to run the testing of hypotheses new index variables were created for each cultural dimension category (e.g.: power distance -> PDI, individualism -> IDV, uncertainty avoidance -> UAI, long-term orientation -> LTO, business performance -> BP). These new continuous scale variables were

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calculated as the simple average of every answer from the relevant cultural dimension category. Furthermore, reliability analysis was conducted in order to examine the consistency of measurements in each category. Eventually, a correlation matrix, ANOVA table and regression analysis was conducted to test the hypotheses.

4. Results

In this section the analysis of the data is being presented in order to test the hypotheses. Firstly, the reliability of the variables is being tested. Then normality of the variables is investigated and its dispersion with checking skewness and kurtosis. After this, correlation and regression analysis is being conducted to test the hypotheses.

4.1. Preliminary steps, scale means, normality, reliability

After cleaning the dataset, 180 responses remained, which could be used for further investigations. In order to check internal consistency of the measures, reliability analysis was conducted. ‘Reliability is the extend to which data collection techniques or analysis procedures yield consistent findings’ (Saunders et al., 2009). As shown in Table 1. below every scales’ Cronbach’s Alpha values are higher than (>.70), which indicates high level of internal consistency.

Table 2: Cronbach’s Alpha

Variable Cronbach's Alpha

1. Power distance (PDI) 0,875 2. Individualism (IDV) 0,847 3. Uncertainty avoidance (UAI) 0,792 4. Long-term orientation (LTO) 0,781 5. Business performance (BP) 0,715

Cultural differences in entrepreneurial ecosystems