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New venture creation in transition economies: the case of Macedonia

Nieuwenhuis, G. (2012) New venture creation in transition economies: the case of Macedonia.

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Abstract:An ever-­‐increasing number of universities teach entrepreneurship and entrepreneurship is one of the most researched topics. Despite this, the understanding of entrepreneurship is still limited, knowledge is fragmented and unlinked by an embracing framework or explanation. As interest in entrepreneurship intensifies, new theoretical perspectives explaining the processes that underlie entrepreneurship emerge. An emerging theoretical perspective is Sarasvathy’s effectuation theory. This theory states that entrepreneurs do not always take a causal, based on a logic of prediction, approach as often being taught in textbooks. Instead of this they might also choose an effectuation, based on a logic of control, approach (Sarasvathy, 2001a). Whether an entrepreneur would choose a causation and when an effectuation approach is a question that remains. Literature shows that culture might influence entrepreneurship, though the subject lacks empirical research. Entrepreneurial process models, including Sarasvathy’s effectuation theory, neglect the influence of culture. Underlining the urge to understand the influence of culture on entrepreneurship is the increasing globalization and development of emerging economies. The lack of understanding of the influence of culture on entrepreneurial processes shows a gap in literature, making the research relevant. The research also tests the influence of corruption rate and type of economy in order to validate that it is indeed culture that influences entrepreneurial processes. Novice entrepreneurs from Macedonia and The Netherlands are compared on their cultural values and entrepreneurial behavior. The national culture of both countries is conceptualized using Hofstede’s cultural dimensions. Data on the entrepreneurial behavior of 20 novice entrepreneurs in Macedonia and 20 in The Netherlands is gathered using quantitative and qualitative research methods. Subjects were asked to participate in a think aloud session, solving a business case. Quantitative research is done by asking the same subjects to fill in a survey measuring the use of entrepreneurial processes. The results of the think aloud sessions and questionnaires are analyzed to determine the influence of national culture on entrepreneurial processes. Hofstede’s cultural dimensions showed that Macedonia is a collectivistic country with a high uncertainty avoidance and high power distance. Furthermore Macedonia has a transition economy and a high corruption rate. From theory it was expected that entrepreneurs in an uncertainty avoiding culture would prefer the use of existing market knowledge since uncertainty avoidance is often related to an urge of being informed. Furthermore, it was expected that entrepreneurs in collectivistic cultures would be focused on goals instead of means because of collectivistic group-­‐orientation and long-­‐term planning. Both expectations were significant validated. A literature search on the influence of the use of alliances expected that countries with a high power distance would make less use of alliances since entrepreneurs do not like to have a position in which others have authority. Countries with a high corruption rate were expected to make more use of alliances because entrepreneurs in such countries prefer to use their family, friends and public servants willing to accept a bribe to get things done. Results showed that there was a positive correlation between corruption rate and the use of alliances, while the relation between a high power distance and the use of alliances could not be proven. Entrepreneurs in transition economies were expected to make more use of non-­‐ predictive control since it is difficult to make predictions of the future in an unpredictable environment. Furthermore, entrepreneurs in transition economies were expected to make more use of the exploration of contingencies because they are often confronted by changing rules and regulations, resulting in unavoidable surprises. These might force them to try to make these surprises profitable. Both expectations could not be validated. Results show that national culture and corruption does influence entrepreneurs in their entrepreneurial decision-­‐making process, while type of economy does not seem to influence. At the other hand it could not be concluded that being an entrepreneur in a specific national culture or in a country with a high or low corruption rate predicts either a causal or effectual way of decision-­‐making.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/62787
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