Individualism and Venture Capital: A Cross-Country Study

Pascal Gantenbein (), Axel Kind () and Christophe Volonté
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Pascal Gantenbein: University of Basel, Faculty of Business and Economics, Switzerland
Axel Kind: University of Konstanz, Department of Economics, Universitätsstrasse 10, D-78457 Konstanz, Germany

No 2019-01, Working Paper Series of the Department of Economics, University of Konstanz from Department of Economics, University of Konstanz

Abstract: We investigate the effect of individualism – a dimension of culture that is strongly associated with entrepreneurship – on venture-capital investments using a large cross-country sample. Our sample consists of 1,496 country-year observations and includes 88 countries from 1998 to 2014. Controlling for economic conditions, the legal environment, and different aspects of culture, we find that individualism is positively and significantly related to venture-capital investments and explains 30% of cross-country variation. This result is stable across different subsamples, several measures of venture-capital investments, and even holds when using the political system 200 years ago as an instrument for individualism. The quality of formal institutions (rule of law) and entrepreneurial attitudes (uncertainty avoidance) partially mediate the effect of individualism on venture-capital investments, while economic conditions (GDP per capita) moderate this effect.

Keywords: Comparative Entrepreneurship; Cultural values; Individualism; Institutions; Venture Capital (search for similar items in EconPapers)
Pages: 52 pages
Date: 2019-06-25
New Economics Papers: this item is included in nep-ent and nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Journal Article: Individualism and Venture Capital: A Cross-Country Study (2019)
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