Entrepreneurs are increasingly less positive about the business climate in the Netherlands. This is evident from the ’Monitor Ondernemingsklimaat 2024’, commissioned by the Ministry of Economic Affairs. However, research by economists Werner Liebregts, Coen Rigtering, and Niels Bosma shows that people in such an environment are not necessarily less entrepreneurial. Instead, they are more likely to channel their entrepreneurial spirit within an existing company rather than starting their own business.
Liebregts studied how the culture of various countries influences entrepreneurship within those countries. Cultures that value security and predictability are more inclined to introduce new laws and regulations that can also affect entrepreneurs, such as rules on dismissal protection or continued salary payment during illness. While it is often assumed that such a risk-averse culture negatively impacts the level of entrepreneurship in a country, Liebregts has discovered that this is not necessarily the case.
The culture of (un)certainty
Liebregts explains: ’Residents of countries like Denmark, Sweden, and Switzerland dislike uncertainty. This is also true, to a slightly lesser extent, for the Netherlands. These countries have relatively low percentages of new self-employed entrepreneurs, especially compared to South American countries. Yet, they consistently rank among the top nations in terms of competitiveness and innovation. Our research shows that a risk-averse culture has little to no effect on the number of people engaged in entrepreneurial activities.’
People who fear failure are more likely to choose a role as an intrapreneur rather than becoming self-employed
Werner Liebregts
Choosing intrapreneurship
A risk-averse culture does have significant effects, as the research highlights. One intriguing finding is that such a culture encourages people to pursue roles as intrapreneurs-entrepreneurial employees working within existing companies. Rather than launching a new idea independently, individuals are more inclined to develop innovations within the relatively secure environment of an established organization.
Intrapreneurs create new business activities on behalf of their employer, without taking on personal financial risk. Examples include developing a new product or service or establishing a new division within the company. Furthermore, people who fear failure as self-employed entrepreneurs are particularly drawn to intrapreneurial roles. This tendency is even more pronounced in countries with risk-averse cultures.
Aligning policies with cultural norms
The research by Liebregts and his co-authors reveals that while such cultures do not necessarily inhibit entrepreneurial activity, they do shape its form. Both self-employment and intrapreneurship contribute to innovation and economic growth. This suggests that countries with diverse cultures can succeed in fostering entrepreneurship, albeit in different ways.
Governments should therefore consider cultural norms when crafting policies, say the researchers. By aligning with the preferred forms of entrepreneurship within their populations, policymakers can create environments where individuals are most likely to thrive.
About this research
The study Uncertainty Avoidance and the Allocation of Entrepreneurial Activity across Entrepreneurship and Intrapreneurship by Werner Liebregts, Coen Rigtering, and Niels Bosma has been accepted for publication in the academic journal Entrepreneurship Theory and Practice.
