ENTREPRENEURSHIP AND POSTMATERIALISTIC VALUES. An individual-based analysis

Author: Carlos Emilio Morales

ENTREPRENEURSHIP AND POSTMATERIALISTIC VALUES. AN INDIVIDUAL-BASED ANALYSIS

ABSTRACT

Research theme and hypothesis. From Schumpeter right up to today research on

entrepreneurship has mainly demonstrated that entrepreneurs constitute a key factor in a

country's economic development, in creating employment and in innovation. However, there is

still no definitive answer to the question: What makes a person an entrepreneur? The

hypothesis of this study is based on the tenet that materialistic people seek material security

and that postmaterialistic people seek to satisfy needs such as independence and fulfilling

personal objectives in life and that for this reason the latter tend to set up less companies than

the materialists. Hypothesis: People who are more postmaterialistic tend to start up less

companies than people who are more materialistic.

Data. A model was drawn up to explore the predictive capacity of postmaterialism in

entrepreneurship at the individual level. The measure of postmaterialism was taken from

Inglehart's 4-item postmaterialism index. The model uses the socio demographic variables of

age, gender, education and income level as control variables. Data from about twenty thousand

subjects from 25 OECD countries is used in the 1999-2004 database of the World Value Survey

to measure all these variables.

Results. Results were obtained using logistic regression. There is significant statistical

evidence that postmaterialism decreases a person´s likelihood of becoming an entrepreneur,

although its impact varies depending on the country and on the variables incorporated into the

models.

Key words: Postmaterialism, Values, Entrepreneurship, World Value Survey

INTRODUCTION

The study of human values — and their change patterns — has been a

recurrent subject in the sociological literature of the last fifty years. Values have

gained central importance in academic discussions regarding societal

behaviour, as they have been considered by theorists as deeply rooted,

abstract motivations that guide, justify and explain attitudes, norms, opinions

and actions (Rokeach 1973, Feather 1975, Schwartz 1992, Halman and de

Moor 1994). A solid understanding of the place values occupy in today’s

sociological discussions is a necessary condition for any theory dealing with

human development in the 21st century.

One of the predominant theories regarding changing trends in values in

advanced industrial societies is the theory developed by Ronald Inglehart. The

theory is known as postmaterialism or postmaterialistic values theory. Already

in 1971, Inglehart suggested that a transformation in the political culture of

advanced industrial societies may be taking place, a transformation that “seems

to be altering the basic value priorities of given generations as a result of

changing conditions influencing their basic socialization” (Inglehart 1971, p.

991). The effects of postmaterialism, as it will be explained later, have been

studied in relation with different fields. However its relation to entrepreneurship

is not properly known.

Many of the studies on entrepreneurship coincide on a number of points about

the state of the art of entrepreneurship research: First of all, there is no agreed

definition of entrepreneurship. Wennekers et al. (2005) counted 12 different

definitions of entrepreneurship just from the economics literature. This disarray

is closely related to the multi-faceted nature of entrepreneurship as a

phenomenon. This means that entrepreneurship is a social phenomenon

observed at various levels and that it displays different properties in each of

these levels. Starting from the individual level, entrepreneurship is observed at

the firm, regional, industrial and national level (Davidsson 2004). The second

point about entrepreneurship literature in general is the use of various

disciplines in the research. This is a natural corollary of the multi-faceted nature

of entrepreneurship. An array of academic disciplines ranging from economics,

management science and organization studies, to sociology and social

psychology, to name the major ones, have all been employed in

entrepreneurship research (Beugelsdijk 2007). The third property of

entrepreneurship research is related to this second point. There are a multitude

of perspectives on entrepreneurship. Some studies deal with the origins or

sources of entrepreneurship whereas others deal with the effects of

entrepreneurship on economic development and still others look at the

managerial implications of entrepreneurship. After multiplying this number of

perspectives with the large number of different disciplines, researchers are led

to the conclusion that there is still no well developed theory of entrepreneurship

(Ritchie and Brindley 2005). It means that consensus has not been achieved in

specifying the entrepreneurship determinants, neither at the individual nor at the

socio-cultural level. In this paper we contribute to this debate by analyzing the

potential relationship between the entrepreneurial phenomenon and cultural

values. Following the still unanswered question: “What makes an

entrepreneur?”, the main objective of this paper is to analyze the potential

predictive role that postmaterialism has on entrepreneurship.

The paper is structured as follows: First, a review of the literature on

entrepreneurship, values and postmaterialism will be presented. Then, the

methodology section goes on to outline the data used, the measurements,

sample information and the analytical techniques employed in the study. This is

followed by a presentation of the main results, which aims to offer its own

particular contribution to the relationship between postmaterialism and

entrepreneurship. The paper then ends with a discussion of the findings and

conclusions.

LITERATURE REVIEW

1. The Relationship between Values and EntrepreneurshipIn recent decades entrepreneurship has been increasingly recognized as a

crucial factor in processes of economic development in nations. At the moment

there seems to be a broad consensus that entrepreneurs play an important role

in the generation of employment and the creation of wealth (Muhanna 2007,

Brunet & Alarcón 2004). This has led to a growing interest among researchers

on examining the main determinants of nascent entrepreneurship and the

entrepreneurial behaviour of individuals, cultures and nations.

It was economic theory that accorded entrepreneurship its deserved importance

in the first place. Schumpeter had already described the entrepreneur as an

active, dynamic element, capable of breaking the routine in market economies

(Schumpeter 1934). Followers of the Schumpeterian approach to growth have

suggested the key role entrepreneurial dynamism could have in innovation and

growth (Aghion and Hewitt, 1997). Other widely cited authors have agreed on

the importance of the entrepreneur as a determining figure in a market

economy, be it as an agent for providing inputs to the system (Leibenstein

1968), distinguishing opportunities (Kirzner 1973) or diminishing uncertainty

(Knight 1921).

Previous studies mostly concentrated on the enterprise as the unit of analysis,

and only a few paid particular attention to the characteristics of entrepreneurs

as individuals or to entrepreneurship as a concept. This has changed lately,

however: the role of entrepreneurs has today acquired its due importance in

academic research, and this has led to the emergence of a whole body of

research dealing with “entrepreneurship” as a field of study (Brunet & Alarcón

2004).

1.1 Determinants of entrepreneurship When looking at the main determinants of entrepreneurship, three distinct

perspectives have been emphasized: the role of institutions, the role of social

networks and the role of personal characteristics (Muhanna 2007). While all

three perspectives seem relevant, there is no clear consensus in social

sciences on the determinants of entrepreneurship. Some authors have found

particularly strong effects of social networks (Muhanna 2007), some sociologists

have long emphasized the role of individual values in promoting or discouraging

entrepreneurial activities (Cochran 1971), while others have argued that

differences in value systems and cultural orientations play a key role in

entrepreneurship rates (Illeris 1986, Thomas and Mueller 2000), others again

have concentrated on the roles of personality, origins, and labour experiences

(Carland et. al. 1984), and yet others have emphasized resources such as

human, social, financial and organizational capital (Cooper et al. 1994).

A similar strategy which has been widely used to approach the study of the

determinants of entrepreneurial activity has been to distinguish between an

“individual” dimension (entrepreneur’s actions, psychological traits) and a

“structural” dimension (institutionally, socially, culturally, ideologically and

politically based factors). Most researchers have focused on the external (or

“structural”) conditions of entrepreneurship and their influence on the formation

of new enterprises (Keeble & Walker 1994), their survival (Romanelli 1986), the

competition strategies they develop (Zahra 1996), or improvements in their

functioning (Covin & Slevin 1989), among other topics. But, according to other

scholars, these views may offer incomplete pictures for understanding

entrepreneurial behaviour. The argument behind this is that both dimensions

are necessary for a complete understanding of the determinants behind the

entrepreneurial function, and if only one dimension is taken into account, the

understanding will be deficient (Brunet & Alarcón 2004, Van de Ven 1993).

Studies have described how rates of entrepreneurship show strong and

persistent differences across nations (Van Stel 2005). These cross-national

differences in rates of entrepreneurial nascence have been explained by a wide

range of economic, technological, demographic, cultural and institutional factors

(Verheul et al. 2002, Wennekers, 2006). Some authors have argued that these

differences are related to levels of economic development, in addition to

demographic, cultural and institutional characteristics (Blanchflower 2000). But

the relative stability of differences in entrepreneurial activity across countries

and over time suggests that factors other than economic ones are at play (Grilo

and Thurik 2005).

The findings in the field are diverse. Some authors have found there is a

positive relationship between education and entrepreneurship, that is,

individuals with a higher educational level will show a higher level of

entrepreneurial behaviour (Wang and Wong, 2004). There are studies,

however, that associate informal entrepreneurship and self-employment with

low educational levels (Gong & Soest 2002). For others, entrepreneurship is

strongly associated with having a family background of entrepreneurs and being

in a social circle with many entrepreneurs, highlighting the importance of the

social environment and social effects in the entrepreneurship direction

(Muhanna 2007). Entrepreneurial attitudes have also been measured in terms

of preferences for self-employment as well as in actual self-employment. In this

sense, it has been shown that country-specific (cultural) variables seem to

explain the preference for entrepreneurship, but cannot explain actual

entrepreneurship (Freytag & Thurik 2007). It has also been argued that

individual characteristics play an important role in the choice of whether or not

to become an entrepreneur, and that confidence in starting one’s own business

is boosted by having entrepreneurs in one’s family and among one’s friends

(Muhanna 2007). In many other dimensions entrepreneurs and non-

entrepreneurs share similar values, for instance in terms of believing that family,

friends, leisure time, religion, service to others, financial security, health and

freedom are important (Muhanna 2007). Moreover, no real exogenous

differences in trust among entrepreneurs and non-entrepreneurs have been

found (Muhanna 2007).

1.2 Values as determinants of entrepreneurship Extensive research in social sciences has shown links between sets of values,

beliefs, attitudes and behaviour. It could be argued, then, that differences in

culture, in which individual values and beliefs are embedded, may have an

influence in a wide range of behaviours, including the decision to become an

entrepreneur (Mueller and Thomas 2001). In this line, several studies have

explored the relationship between various aspects of culture and

entrepreneurial behaviour across nations and over time (Noorderhaven et al.

2004, Mueller & Thomas 2001, Busenitz et al. 2000, Lee & Peterson 2000,

Tiessen 1997, Davidsson 1995, McGrath & MacMillan 1992, Huisman 1985).

Three types of explanations have been used along this line (Wennekers 2006).

The first argues the existence of certain values closely related with

entrepreneurship, and thus suggests that if the presence of these values is high

in a particular society, the probability of higher levels of entrepreneurship will

increase (Uhlaner and Thurik 2007). In this line, important contributions have

been made by Davidsson (1995) and Davidsson and Wiklund (1997), who have

studied the relationship between the individual’s values and beliefs and

entrepreneurial behaviour and intention in six structurally different clusters of

regions. The second view puts forward the argument that the higher the degree

of ‘moral approval’ of entrepreneurship, the more entrepreneurs will exist in a

given society (Etzioni 1987). The third explanation argues that in a non-

entrepreneurial culture, a clash of values between potential entrepreneurs and

the population as a whole may drive the former to higher level of self-

employment (Noorderhaven et al. 2004, Baum et al. 1993).

When it comes to the findings, these are again diverse. Some authors have

found a positive relationship between certain cultural values, informal social

networks and federal aid and entrepreneurship (Valencia de Lara et al 2007).

Suddle et al. (2007) developed a composite measure of entrepreneurial culture

using McClelland’s (1961) Need for Achievement, Lynn’s (1991)

competitiveness index, Granato et al.’s (1996) achievement motivation index,

and GLOBE’s performance orientation index 1 (Javidan 2004). They found their

measure to be significantly and positively related to nascent entrepreneurship,

when controlling for economic, demographic and institutional factors. Other

findings have argued that individualistic values exert a positive and direct

influence on entrepreneurial behaviour, while the presence of significant intra-

cultural distances implies the need to assume a multiple cultural perspective

when studying differences in entrepreneurial behaviour (Garcia-Cabrera &

Garcia Soto 2008).

An interesting alternative slant on the matter has been introduced by means of

applying the values model developed by Shalom Schwartz to the study of

entrepreneurial conduct. Initially, Schwartz derives from theory ten motivational

1 See also http://www.thunderbird.edu/wwwfiles/ms/globe/

types of values from three universal requirements: needs of individuals as

biological organisms, requisites of coordinated social interaction, and

requirements for the smooth functioning and survival of groups. Schwartz

claims exhaustiveness of this set of ten basic value types; “It is possible to

classify virtually all the items found in lists of specific values from different

cultures (…) into one of these ten motivational types of values” (Schwartz 1994,

pp. 22-23). These single values can be classified in a circular structure (see Fig.

1), where the closer the values are in either direction around the circle, the more

positive the relationship between them, and thus, the more distant they are, the

more negative their interrelationship. This circular structure is then situated in a

two-dimensional scale (individualism vs. collectivism), where the axes are

labelled “Self-enhancement – Self-transcendence” and “Conservation –

Openness to Change” (Schwartz, 1994; 2007).

Figure 1. Schwartz’s theoretical model of relations among motivational types of

values

Departing from Schwartz’s theoretical framework, Moriano et al. (2001) reflect

on the possibilities this standpoint brings to the study of entrepreneurial

behaviour. The research is conducted by comparing the differences in means

for types of values and the specific values between a group of entrepreneur

subjects and another non-entrepreneur group. Their results show that

significant differences exist, both in the types of values and in the specific

values of the two groups, suggesting that entrepreneurs are inspired by more

individualistic values (Moriano et. al 2001). More specifically, these authors

found that their sample’s answers to a “being an entrepreneur” item they

introduced into their study, correlated significantly and positively with four of the

five individualistic types of values suggested by Schwartz: power, achievement,

self-direction and stimulation. This led them to conclude that “being an

entrepreneur” would be situated within the individualistic dimension in

Schwartz’s scheme. Other findings reinforce that entrepreneurship correlates

positively with power and achievement and, in general, with individualistic

values (McGrath 1992).

Valencia de Lara et al. (2007) contribute to the perspective with an interesting

approach, in which they link Schumpeterian economic theory and Schwartz’s

approach to the study of values in their relationship to entrepreneurship.

According to these authors, Schumpeter had already stated that the

entrepreneurial behaviour of the individual does not lie in hedonism but in a

desire for social power, independence, personal achievement, and in an

adventurous nature and creativity (Schumpeter 1934); all are factors compatible

with Schwartz’s individualistic value categories: power, achievement,

stimulation and self-direction.

In their study, Valencia de Lara et al. depart from the idea that individualistic

and ‘mixed’ values will have a positive relationship with the rate of

entrepreneurial nascence, while collectivistic values will have a negative effect

on it. They present the hypothesis that entrepreneurs have a specific set of

values that is positively related to the probability of creating an enterprise; this is

they show a significant presence of individualistic and ‘mixed’ values rather than

collectivistic ones. But what the authors find in their analysis is that individualist

values do not show any positive or statistically significant relationship to the

probability of creating an enterprise. The ‘mixed’ values, however, do show a

positive relationship to entrepreneurship, while collectivist values show a

negative relationship, meaning the increase in presence of collectivist values

clearly diminishes the probability of entrepreneurial nascence (Valencia de Lara

et al. 2007).

Although the literature has investigated various types of factors and their

relationship with entrepreneurship, among them personality factors and values,

there has been little research into the impact of postmaterialistic values on

entrepreneurship. Only one study thus far has looked at the specific relationship

between the presence of postmaterialistic values and rates of entrepreneurship.

Uhlaner and Thurik (2007) approached the matter by seeking to explain how

postmaterialism influences differences in entrepreneurial behaviour across

countries. The study uses aggregate data from different sources. For this

objective the authors developed a measure of postmaterialism based on

Inglehart’s four-item postmaterialism index (Inglehart 1990), and including

several controls for economic, social and demographic effects. Their findings

across 27 countries confirm the significance of postmaterialism in predicting

total entrepreneurial activity and more particularly, new business formation

rates.

Uhlaner and Thurik argue that in societies with a strong presence of

postmaterialistic values, the rate of total entrepreneurial activity is likely to be

lower than in societies where material values have more importance to the

individual. To test this hypothesis, they run regressions using Inglehart’s four-

item index as a measure for postmaterialism against the dependent variable of

total entrepreneurial activity. Their findings lend support to the hypothesis that

there exists a negative relationship between postmaterialism and total

entrepreneurial activity; that is, countries with a higher presence of

postmaterialism tend to have lower total entrepreneurial activity, seen as in the

combination of nascent entrepreneurship and new business formation.

Furthermore, they find that when introducing controls for education and life

satisfaction, there remains an independent negative influence of

postmaterialism on the rate of entrepreneurial activity (if the control variables

are viewed together in the model), making it possible to refute the possibility of

the influence of postmaterialism being spurious. However, the lack of stability of

the results when the control variables are introduced independently, and in

general, the lack of studies linking postmaterialism and entrepreneurship, call

for more thorough research in this line.

Some years earlier, the same authors, Uhlaner and Thurik (2002) tested the

same hypothesis with data from 24 OECD countries at the country level. In this

case postmaterialism against selfemployment rates, controlling for various

economic and social factors such life satisfaction, church attendance and

extremism. Similar to their previous mentioned research at the macro level, they

found a negative relationship between post materialism and self-employment.

Despite the academic interest in the determinants of entrepreneurship, there is

a lack of cultural elements in entrepreneurship research. Several authors claim

that more studies comparing entrepreneurs across cultures are needed. These

studies would enable us to come to a more complete understanding of the

national culture´s influence on entrepreneurial characteristics (Hayton, George

and Zahra, 2002; Freytag and Thurik, 2007). Moreover, some scholars argued

that the studies in the area of entrepreneurship and culture should measure

cultural orientations at the individual level instead of culture at the aggregate

level (Koenig, Steinmetz, Frese, Rauch and Wang, 2007). Following these lines

of reasoning this paper focuses on the individual as a unit of analysis,

something that has not been done so far in the research of the relationship of

entrepreneurship and postmaterialism.

2. Postmaterialism. An overviewOne of the predominant theories regarding values is the Postmaterialistic values

one. It has been developed by Ronald Inglehart (University of Michigan, director

of the World Values Survey). Inglehart suggested that a transformation in the

political culture of advanced industrial societies may be taking place, a

transformation that “seems to be altering the basic value priorities of given

generations as a result of changing conditions influencing their basic

socialization” (Inglehart 1971, p. 991). This idea was to guide his production

over the following years and became the theoretical framework of the WVS

project, one of the most ambitious — and respected — public opinion research

projects that currently exist.2

2 The World Values Survey (WVS) is described on its website as a “worldwide network of social scientists studying changing values and their impact on social and political life”. The project has been carrying out representative national surveys in 97 societies containing almost 90 percent of the world’s

Inglehart’s theory on human development began to take shape in the early

1970s, but it was in his 1977 work The silent revolution: changing values and

political styles among Western publics that he introduced the notion of

postmaterialism that would be key to his subsequent work. In The silent

revolution Inglehart described how a major intergenerational shift in the values

of the populations of advanced industrial societies was taking place, and

proposed two hypotheses that explained these patterns of change. The first he

called a “scarcity” hypothesis, which established a distinction between material

needs for basic survival (physiological needs, safety), and non-material needs,

such as aesthetic satisfaction and self-expression values. Departing from

Maslow’s theory of the hierarchy of human needs (Maslow 1943); Inglehart

argued that while virtually everyone aspires to freedom and autonomy, human

beings place the highest value on their most pressing needs. This is why in

socioeconomic environments where material sustenance and physical security

are not yet resolved; people will tend to prioritize these “materialistic” goals,

while in conditions of prolonged prosperity, “postmaterialistic” values such as

autonomy, belonging, esteem, self-expression and intellectual satisfaction will

be emphasized (Inglehart 1977, 1990). However, Inglehart warns that the

relationship between socioeconomic conditions and priorities in values is not

one of immediate adjustment, and this is where he introduces his second

hypothesis, that of “socialization”, as a complement to the “scarcity” one. The

“socialization” hypothesis starts out from the idea that basic human personality

tends to crystallize by the time an individual reaches adulthood, undergoing

relatively little change thereafter (Rokeach 1973). This implies that value

changes in societies are gradual processes that occur through intergenerational

replacement, as they will only happen when younger generations with new

values replace older ones in the adult population. Only “after an extended

period of rising economic and physical security, one would expect to find

substantial differences between the value priorities of older and younger

groups, since they would have been shaped by different experiences in their

population, through five waves of surveys that date from 1981 through 2007. “The WVS provides an unprecedently rich cross-cultural data base exploring orientations toward religion, politics, work, economic growth, family values, sexual norms, and gender roles” (Inglehart and Carballo, 1997). See www.worldvaluessurvey.org

formative years. But a sizeable time-lag would occur between economic

changes and their political effects” (Inglehart 2008, p. 132). In short, Inglehart

argues that socialization in the absence of scarcity produces individuals with

post-materialist values, and that the shift in values taking place in advanced

industrial societies is a reflection of these conditions.

In Culture Shift in Advanced Industrialized Societies (1990) Inglehart again

argues that the “unprecedented levels of economic and physical security that

prevailed during the post-war era has led to an intergenerational shift from

Materialist to Postmaterialist values” (Inglehart 1990, p. 103). The analysis in

this work is expanded to include a large body of time-series survey data (the

Eurobarometers) from twenty-six nations gathered from 1970 through 1988.

Through them he analyzed the cultural changes happening in Europe — which

he then described as a shift “from an overwhelming emphasis on material well-

being and physical security toward greater emphasis on the quality of life”3

(Inglehart 1990). Inglehart concluded that a large number of basic values and

the changes they are undergoing in contemporary societies (both advanced

industrial societies and those in process of modernization) can be depicted in

two major dimensions of cross-cultural variation: “traditional authority/secular-

rational authority” and “survival/self-expression values”4. These two dimensions

explain more than 70 percent of the cross-national variance in a factor analysis

of ten indicators, and each of these dimensions is strongly correlated with

scores of other important orientations.5 These two axes, and the location of

each society on them, lead to the creation of the famous “Inglehart-Welzel

Cultural Map of the World”.6

His interpretation of these findings crystallized in a revised version of

modernization theories, which once again took up the idea that economic

development leads to specific, functionally related changes in mass values and

belief systems (Inglehart 1997, Inglehart and Carballo 1997). This implied

3 This notion had already been theoretically shaped in his work on the concept of postmaterialism in the 1970s. See The Silent Revolution (1977).4 Originally the second dimension oscillated between “survival‟ and “well-being”, but after the nineties Inglehart replaced the second notion with the more precise label of “self-expression”.5 http://www.worldvaluessurvey.org/ (date of survey: May 3, 2009).6 See Figs. 2 and 3 in Appendix.

readdressing the controversial point that economic development, cultural

change, and political change go together in coherent and even, to some extent,

predictable patterns; though introducing the notion that once societies have

completed their industrialization processes, they initiate a new series of cultural

changes that pass from survival to postmaterialist well-being and self-

expression values.7 According to this idea, societies that have achieved a

certain level of economical development and prosperity provide the necessary

conditions for the emergence of new political issues and foster the appearance

of new political movements interested in topics such as environmentalism,

quality of life, autonomy, individual self-expression and tolerance, rather than

“traditional” modern concerns such as reindustrialization and rearmament. This

is in fact what Inglehart calls the “silent revolution” which is brought about

through intergenerational value change in industrialized societies: old material

values (economic productivity, growth, order, safety) are displaced by new

postmaterial ones (self-expression, ecological balance, quality of life,

democracy, human rights).

An extensive body of literature shows the profound impact that Inglehart’s ideas

on the nature of value change have had in the social sciences. His theoretical

assumptions, methodological tools and practical implications have been cited

and used widely by social researchers around the world in a variety of fields that

include studies regarding value change (Flanagan 1982, Abramson and

Inglehart 1987, 1992, 1995, de Graaf et al. 1989, Halman and de Moor 1994, de

Graaf and Evans 1996), democracy and electoral studies (Gibson and Duch

1994, Brown and Carmines 1995, Dalton 1996, Fuchs and Rohrschneider

1998), economic and entrepreneurial studies (Granato et. al 1996, de Graaf

1988, Uhlaner et al. 2002, Uhlaner and Thurik 2007), and a variety of political

science studies that deal with participation and citizenship (Anderson 1990, Opp

1990, Layman and Carmines 1997), among other fields. The postmaterialism

index has been included (either in its short four-item version, or its longer

twelve-item version) in surveys such as the European Community Surveys, the

General Social Surveys and National Election Surveys from the US, the

7 The main conceptual features of Inglehart’s stance on modernization can be found in Modernization and Postmodernization (1997). See Fig. 1 in Appendix for a simplified exposition.

International Social Survey Programme, the World Values Surveys, and many

others.

But controversy regarding Inglehart’s ideas and index has also been present in

vast amounts. Amongst others, the validity, the stability and the causation of

postmaterialism have been called into question. Authors have argued that the

classification of human beings into materialist or postmaterialist categories

(from which Inglehart develops his ratio of materialist to postmaterialist) is

founded on no real evidence, but that people mostly have mixed values, some

more materialist, some more post-materialist (Brooks and Manza 1994). Others

have noted that the postmaterialist issues Inglehart describes are in fact non-

materialist liberal values, and furthermore, that some materialist values can be

well described as authoritarian values (Flanagan 1987, de Graaf and Evans

1996). Changes in values have also been explained by rising levels of

education (de Graaf and Evans 1996, Davis 1996).

The relationship between postmaterialism and entrepreneurship therefore does

not seem clear a priori. On one hand, the value that postmaterialist people

attach to autonomy leads one to believe that they might also seek such

autonomy in their working life and that setting up one's own company would be

one way of achieving this, but on the other hand, at the same time, the fact that

postmaterialist people value money and the search for material security less,

may also influence the final decision of creating a company that is economically

motivated. This position assumes that wealth creation is the most important

objective of entrepreneurial efforts. In this respect, a causal relationship can be

envisaged between postmaterialism and entrepreneurship. Following the

previous findings in the field at the aggregate level (Uhlaner and Thurik 2004,

2007), this study also assumes that the more postmaterialist a country is, the

less entrepreneurship ratios it has. At the individual level, this is the hypothesis

that the study is testing.

METHODOLOGY

Model

This study analyses whether postmaterialism has a predictive value on

entrepreneurship. A set of economic and demographic variables was chosen to

analyse the independent role that postmaterialism plays in predicting

entrepreneurial activity. These control variables are: Age, gender and education

level. Income level was also used to control for economic effects.

This study’s hypothesis may be summed up by the syllogism that materialistic

people seek material security whereas postmaterialistic people seek to satisfy

needs such as self-expression, independence and fulfilling personal objectives

in life and that for this reason the latter may tend to set up less companies than

the materialists.

Research question and hypothesisIn a more general framework of the determinants of entrepreneurship, this study

´s research question is: Which individual values explain the decision to become

entrepreneur? And the study´s hypothesis is: People who are more

postmaterialistic tend to start up less companies than people who are more

materialistic.

Data Data from 25 OECD countries was taken from the World Value Survey, for the

wave 1999-2004. The five OECD countries not included in the study are:

Australia, New Zealand, Norway, Switzerland and Great Britain. The first four

did not take part in the World Value Survey in the wave that was analysed. In

the case of Great Britain, the questions on Postmaterialism were omitted in the

1999-2004 wave. The OECD countries were chosen due to their income level,

rates of unemployment and because inequality rates were more similar among

them than among other countries included in the World Value Survey.

Variables

In order to test the model, seven variables were chosen from the above

mentioned data base. Below are the variables that were used together with

their values:

Independent variable

- Postmaterialism (index 4) – variable y002 (1=materialist; 2=mixed values;

3=postmaterialist)

Control variables

- Gender – variable x001 (0=male; 1=female)

- Age – variable x0031r1 (six categories from 1=15-24 years old to 6>=65

years old).

- Education level – variable x025r (1=lower; 2=middle; 3=upper)

- Income level – variable x047 recoded (1=low; 2=medium; 3=high)

Dependent variable. Entrepreneurship was measured with the variable self-

employment

- Employment Status – variable (alternative 3=Self employment). This

variable was recoded. The original value “3” was allocated value “1” and

the original variables “employed-part time” and “employed-full time”

become value 0. By using this process the variable was transformed into

a dichotomic variable.

SampleThe database contains data on 38075 subjects. For the chosen variables, the

valid data contains 20112 cases. The unit unit of analysis is the individual.

AnalysisIn order to test the hypothesis, logistic regression was used in a series of

models carried out to determine the effects of different variables. Analyses were

performed for the entire sample of subjects from the 25 countries in addition to

country-by-country analyses. Furthermore, 24 dichotomous dummy variables

were included in all of the models for the entire sample (one for each country,

with the exception of one which was used for the purpose of contrast). This was

done by attempting to correct the standard errors, given that contextual factors

could cause the individual values of one same country to be correlated.

RESULTS

Table 1 shows the regressions made between postmaterialism and

entrepreneurship. Six models are presented, which gradually add variables

beginning from postmaterialism alone to postmaterialism together with age,

gender, education level and income level. Postmaterialism by itself explains

0,1% of entrepreneurship variance. When controlled separately by using the

five different variables, a difference in each case is observed. The five variables

together account for 3,0% of entrepreneurship variance. Regarding the

influence that independent and control variables have on the probabilities of

becoming an entrepreneur, postmaterialism decreases the probability and it is

significant in any model except in the last one. The variables, age (p<0,001),

along with the fact of being a woman (p<0,001), increase the likelihood of

becoming an entrepreneur. On the other hand income level (p<0,001) and

educational level (p<0,001) decreases the probability to be an entrepreneur.

In summing up, postmaterialism predicts decreasing likelihoods of

entrepreneurship in the 25 OECD countries taken as a whole. The effects of the

chosen control variables differ and all of them have a statistically significant

impact. Following these analyses and because it is clear that postmaterialism

has a significant effect on entrepreneurship, a variable was sought in the

database of the World Value Survey that would measure attitudes towards

capitalism or towards the accumulation of money for the purpose of being used

as a new control variable and in order to see its effect on entrepreneurship.

Even though the variable exists in the WVS and is termed Wealth Accumulation

(variable e041), the question was not formulated for any of the countries in the

1999-2004 wave.

Table 1 Regressions on self employment (S.E). 25 OECD countries

Model 0 Model 1 Model 2 Model 3 Model 4 Model 5 Variables Postmaterialism on S.E. Postmaterialism and Postmaterialism, Postmaterialism, income level, All variables on

income level on S.E income level and age and gender on S.E. S.E.age on S.E.

Exp (B) Exp (B) Exp (B) Exp (B) Exp (B)(Standard error) (Standard error) (Standard error) (Standard error) (Standard error)

Postmaterialism ,902** ,913* ,929* ,924* ,952(0,03) (0,03) (0,03) (0,03) (0,03)

Income level ,845*** ,84*** ,837*** ,872***(0,02) (0,02) (0,3) (0,03)

Age 1,28*** 1,27*** 1,263***(0,01) (0,01) (0,01)

Gender 2,12*** 2,087***(0,05) (0,05)

Education level ,85***(0,03)

Constant ,163*** ,26*** ,28*** ,128*** ,082*** 0,1***(,022) (0,74) (0,93) (0,11) (0,11) (0,12)

R2 Cox-Snell 0,001 0,003 0,013 0,028 0,030R2 Nagelkerke 0,001 0,005 0,024 0,050 0,053

Notes:Valid N for all the independent variables = 20112*p<0,05; **p<0,01; ***p<0,001 In order to correct the standard errors, it has been included 24 dichotomy variables (one for each country) in the calculation of all the models.

Table 2. Regressions on entrepreneurship. Country by country.

Notes:+p<0,10; *p<0,05; **p<0,01; ***p<0,001 (1) Presented Exp(B) of postmaterialism, corresponds to the model which includes all the

variables: income level, age, gender and education level. The same with the R2 Cox-Snell and R2 Nagelkerke.

Table 2 presents coefficients country by country. It presents the odds ratio of

the effect of postmaterialism of the fifth model, in other words of all the control

variables. It also shows Cox-Snell’s and Nagelkerke R2 values of the model with

all of the variables. The country-by-country analysis reveals that the effect of

postmaterialism operating together with income level, age, gender and

educational level is statistically significant in only five countries: Austria

(p<0,05), the Czech Republic (p<0,05), France (p<0,05), Japan (p<0,001) and

Turkey (p<0,001). Moreover, the highest R2 are those of Ireland (R2 = 0,239)

and Japan (R2 = 0,17), both of which are particularly influenced by gender.

CountryN

EXP(B) (1)R2 Cox – Snell

(R2 Nagelkerke) (1) Postmaterialism

Austria 776 1,7* ,038 (,085)Belgium 888 ,966 ,034 (,079)Canada 1077 1,294 ,019 (,043)Czech Republic 1027 1,549* ,014 (,029)Denmark 633 ,392+ ,041 (,143)Finland 521 1,058 ,010 (,019)France 794 ,398* ,010 (,052)Germany 895 1,557+ ,028 (,071)Greece 706 1,281 ,020 (,038)Hungary 462 1,463 ,017 (,042)Iceland 753 ,888 ,060 (,096)Ireland 573 1,187 ,150 (,239)Italy 1080 1,093 ,017 (,027)Japan 825 1,993** ,105 (,170)Korea 726 ,876 ,068 (,097)Luxemburg 670 ,817 ,017 (,055)Mexico 874 1,007 ,064 (,097)Netherlands 636 1,238 ,048 (,095)Poland 522 1,097 ,026 (,048)Portugal 454 1,500 ,078 (,137)Slovakia 772 1,139 ,025 (,076)Spain 1066 ,787 ,018 (,034)Sweden 661 ,954 ,026 (,100)Turkey 1890 ,797** ,106 (,148)USA 831 1,210 ,018 (,045)

DISCUSSION

The results of the study confirm that there is reasonable evidence to support the

stated hypothesis, which envisaged a potential negative relationship between

postmaterialism and entrepreneurship. In line with the idea that the more a

society values money, the less postmaterialistic it is, we can conclude that the

rate of entrepreneurial activity is also likely to be lower in postmaterialistic

societies.

The syllogism proposed in this paper that materialistic people seek material

security and that postmaterialistic people seek to satisfy other needs in life (i.e.

autonomy and fulfilling personal objectives) and that for this reason the latter

may tend to set up less companies than the materialists, has been confirmed. It

is, in fact, materialistic people, concerned with material needs, who tend to

create more companies. This suggests that the postmaterialistic values of sel-

expression, freedom, independence and fulfilment of personal objectives do not

necessarily apply to the sphere of work and that people do not associate these

values primarily with creating a company of their own. Furthermore, the findings

provide support for the hypothesis that an entrepreneur is essentially an

economically oriented person regardless of the sort of entrepreneur he/she is,

either through necessity or through opportunity.

The different lines of research approached in entrepreneurship have assumed

from the outset that the principle for creating a company is to make money.

Following to Aldrich (2005), Rindova, Barry and Ketchen (2009) affirm that the

four main approaches in entrepreneurship research share this idea. “While

these approaches vary in their tenets and nuances, they explicitly or implicitly

share an underlying assumption that wealth creation is a (if not the)

fundamental goal of entrepreneurial efforts” (Rindova, V., Barry, D. and

Ketchen, D., 2009). On the other hand, there are also authors (although fewer)

who are of the opinion that the quest for autonomy is one of the main motivators

for self-employment (Kolvereid, 1996). The results of this study are clearly in

line with the tradition of understanding the entrepreneur first and foremost as a

person who basically seeks to make money. Nonetheless, the relationship

between postmaterialistic values and entrepreneurship is still not completely

clear, given the lack of stability of the results in the different countries and the

scant explained-data in the models put forward.

In the case of the results obtained separately for individuals from the 25

countries, these are only statistically significant in five. In Turkey and France

postmaterialism, when operating with the chosen control variables, reduces

one's probabilities of becoming an entrepreneur; whereas in Austria, the Czech

Republic and Japan, it increases them. These three latter cases are particularly

interesting because this study´s hypothesis is not confirmed in them. In these

countries postmaterialism increases significantly the likelihood to become

entrepreneur, the opposite of what happens in the analyzed 25 OECD countries

as a whole. In the case of Austria, Japan and the Czech Republic, the

differences are apparently greater than the similarities in the variables analysed

in this study. In addition to the fact that all of them belong to the OECD, the

most outstanding similarity is they have relatively similar population pyramids

with a tendency in Japan to have more people with ages over 658 and in Czech

Republic to have more people with ages between 26 and 40. On the other

hand, apart from the most obvious difference in their political and economic

systems and traditions, certain indicators stand out. In spite of the fact that

Japanese and Austrian per capita income are higher than the one in the Czech

Republic, the relative poverty rates, as well as income inequality coefficients are

higher in Japan and Austria than in the Czech Republic (OECD, 2008).

Particularly significant are the number of entrepreneurs in the three countries. In

2004 Japan had a TEA9 of 1,5% (information for Austria and Czech Republic in

2004 are not available). In 2006 the Czech Republic had a TEA of 7.9%, Austria

of 2,4% and Japan of 4,3% (GEM, 2006). The search for explanations for the

significant effect that postmaterialism has in the entrepreneurship in Austria,

Japan and the Czech Republic, clearly points to the need for further research

into the particular features of both countries. Particularly when postmaterialism

8 The most recent data available to the OECD for this indicator are from 2004. (OECD, 2008)

9 TEA (Early-stage Entrepreneurial Activity) includes individuals who have taken some actions towards starting a new company and individuals who have been running their own business for less than 42 months). The most recent data for the Czech Republic in this indicator are those from 2006; for Austria 2007 and for Japan from 2008. (GEM Consortium, 2009).

punctuations are similar in both Japan and Czech Republic, but much higher in

Austria.

The main result of this research work suggests that for postmaterialistic people

the effect of autonomy is compensated or even surpassed by the lesser interest

generated by money. Therefore, this finding provides support for policies which

incorporate cultural values into entrepreneurship promotion programmes in

more postmaterialistic societies, for example, by promoting the value of

independence as opposed to economic profits only.

The study has some limitations. All variables reflect a measurement in a specific

point in time (1999 - 2004), which was chosen for practical reasons (a more

complete sample of countries than in other periods). This could suggest that the

relationship between the proposed variables may be different if data were

analysed from different periods. At the same time, the definition of an

entrepreneur as simply a person who is self-employed, has a series of

limitations, two in particular: first of all, this definition does not take into account

innovation and employment creation factors, both strongly related to the fact of

being an entrepreneur and secondly, it does not distinguish between different

types of entrepreneurs.

Other research scenarios taking into consideration these findings, are to

analyse the potential mediating effect that postmaterialism has on the

relationship between economic variables and entrepreneurial activity; following

Inglehart’s suggestion that the economic environment moves social change

rather than the other way round. Likewise, this research study proposes

questions about the potential interplay between the entrepreneurs’ desire for

autonomy and their desire to earn more money. Schumpeter himself, the

founder of one of the traditions that regard entrepreneurship to be related to the

desire to create new products and markets had stated that entrepreneurial

behaviour is more related to independence and personal achievement than to

hedonism (Schumpeter, 1934). Finally, further research could also be done with

longitudinal data, trying to confirm (or not) the stability of the relationship

between entrepreneurship and postmaterialism.

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APPENDIX

Figure 1

Figure 2

Figure 3