Relationship between Uncertainty Avoidance Culture, Entrepreneurial Activity and Economic Development

 Yasemin Hancıo
ğ
lu et al. / Procedia - Social and Behavioral Sciences 150 ( 2014 ) 908 – 916 
entrepreneurship. Researchers assumed that entrepreneurial activities appear mostly in the cultures, which were high 
in masculinity, low in power distance, low in uncertainty avoidance, and high in individualism (Hayton et al., 2002; 
Nyguen et al., 2009). 
The entrepreneurial culture favors a positive social manner towards the entrepreneurial approach. A strong 
entrepreneurial culture has a bigger tolerance for failure and enables the acceptance of the fateful role of the 
entrepreneur in creating new jobs (Grigore and Mitroi, 2012). Sustaining an entrepreneurial culture by focusing on 
core competencies is a key to sustainable growth, because cultural activities employ entrepreneurship strategy in 
social, environmental, and economic dimensions (Chaifetz, 2010; Lugosi and Lugosi, 2010). 
2.2. Uncertainty Avoidance, Entrepreneurship and Economic Development 
Cultural traits which differ between societies are being developed in the family, shaped in schools and 
organizations. As a one of the cultural traits, uncertainty avoidance can be expla
ined by the level of society’s tolerance 
for ambiguity and uncertainty (Wennekers, S. et al., 2007). Unfamiliarity and ambiguity are known as frightening 
notions for some countries in the world. These countries refuse facing with unusual ideas, different types of people 
and different lifestyles. They do not want to be faced with unusual things and wish to stay away from possible 
conflicts. They also try to balance optimal stability with minimal risk. These countries are called as high uncertainty 
avoidance countries. On the other hand, new concepts and new situations are not frightening notions for some other 
countries which are called as low uncertainty countries. High uncertainty countries have countless legislations, 
regulations and laws in order to lower uncertainty and control everything. It is believed that all problems can be 
handled with the formal legislations. Turning to low uncertainty avoidance countries, individuals do not like intensive 
regulations. It is believed that rules are not necessary to solve problems. People benefit from rules only when they 
need. For example, in high uncertainty avoidance countries, an organization is very structured that shows the 
communication channels clearly, job descriptions in very detail. However, in low uncerta
inty avoidance countries’ 
organizations do not like a lot of rules and regulations. They feel bounded 
by the rules (Stupar and Brankovi
ć
, 2012; 
Frijns et al., 2013; Matusitz and Musambira, 2013). 
According to Osoba (2009), uncertainty avoidance associates with the control. If a person has a weaker locus of 
control, self-employment will be less comfortable, because of high level of ambiguity. However entrepreneurs tend to 
keep conditions under control with their strong locus of control and they show it by entering unknown ventures 
(Frijnset.al., 2013). Individuals in higher uncertainty avoiding countries tend to takeover an existing business with 
existing products, market share and an established organization. But an entrepreneur in a lower uncertainty avoiding 
country starts a new firm which must develop such assets over time. So it can be said that culture plays a big role on 
entrepreneurial behavior (Block and Walter, 2012; Ozgen, 2012). Briefly entrepreneurship is associated with 
uncertainty, involves innovation and flexibility. It is encouraged in low uncertainty avoidance cultures. (Shinnar, 
Giacomin and Janssen, 2012). As Wennekers et al. mentioned (2007) in 
their paper “Without uncertainty, 
entrepreneurship would be unnecessary”.
It was suggested that individuals that behave entrepreneurially search for the opportunities in markets that are 
dynamic, by their knowledge stocks and abilities to perceive and deal with uncertainty. Their ability while operating 
under uncertainty conditions might also be based on motivation and risk-taking tendency. On the other hand, the 
importance of entrepreneurship on the economy should not be ignored. Radical innovations of entrepreneurial firms 
serves as a catalyst for becoming a dynamic or potentially dynamic munificent environments (Hitt et.al. 2011). So that 
entrepreneurship assists economic growth by causing innovations, change and making it possible to enter new 
markets, creating new jobs and increasing competition (Wong, Ho and Autio, 2005; Pendiuc and Lis, 2013). Because 
economy now consists of creativity, innovation, entrepreneurship and imagination instead ofjust knowledge based 
activities (Fiilis and Rentschler, 2010).In the literature, there are plenty of studies which examine impact of 
entrepreneurship on growth (Stel, Carree and Thurik, 2005; Audretsch and Keilbach, 2004; Rocha, 2004; Wennekers 
et al., 2005; Wong, Ho and Autio, 2005; Pinillos and Reyes, 2011) and these studies show that there is a positive and 
significant relationship between entrepreneurship and growth. 

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 Yasemin Hancıo
ğ
lu et al. / Procedia - Social and Behavioral Sciences 150 ( 2014 ) 908 – 916 
Consequently, it can be said that entrepreneurship is affected by culture, which determines individual's behaviour 
and personality and it affects economic growth via variety of supply, innovation, exit and entry of firms etc. Carree 
and Thurik (2002), explain how entrepreneurship affects economic growth in Figure 1. 
Fig 1. Relation between Conditions, Entrepreneurship and Economic Growth