Theory, Networks, History
Chapter 8: The Cultural Embeddedness of Entrepreneurship
Culture, defined as shared values and beliefs, can influence the performance of an economy in many ways. The culture of a group, whether national, regional or ethnic, may be regarded as a particular type of intangible public good. This chapter summarizes and critiques a positive theory of intercultural competition. According to this theory, culture is created by leaders who specialize in the production of culture, and is shared by their followers. Successful leaders require entrepreneurial judgement, but they employ this judgement in different fields to entrepreneurs. They innovate values and beliefs rather than ordinary types of product, and to exploit their innovations they establish social groups and non-profit organizations rather than conventional firms. Leaders compete for followers in order to increase the rents that they can extract from their groups. Whilst some of these rents may be pecuniary, most are non-pecuniary, such as the enjoyment of pursuing a public project that glorifies the leader and the group. There are four main dimensions of culture that influence performance, and there are trade-offs between them which are governed by the environment of the social group. The positive theory is useful in interpreting historical evidence and the rise and decline of societies, institutions and organizations of various kinds. 8.1 INTRODUCTION It is popularly believed that culture has a significant effect on economic performance (Buruna, 1999). Whilst some economic historians are sympathetic to this hypothesis (Landes, 1998), most economists are sceptical. They question the intellectual rigour of the underlying theory, and the objectivity of...
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