This study aims to try and understand under what cultural conditions entrepreneurship will thrive and prosper, whether under shame or guilt cultures.
The authors use basic game theory to model the conditions under which entrepreneurship will thrive. The authors anticipate that guilt cultures allow for the development of a rules-based culture that allows for the development of impersonal exchange, whereas shame cultures, which are relationship-oriented, focus on strong ties and hence lack the means to expand firms from small and medium family/clan-based businesses.
Empirical results are completed to see whether guilt-dominating cultures are more conducive to having larger firms and whether guilt-dominating cultures have less informality. The authors find support for the latter but lack the right data to test the former.
The authors use a new measure of culture to see how it impacts entrepreneurship.
