The entrepreneurial culture

In an article published by Dr. Abonamah on January 29th, 2005 and appearing in e-entrepreneur he states that between the years of 1980 and 1999 only 370 patents were registered in the 9 leading Arab economies. If you were to compare the ratio of total population of these nations to the number of patents developed, the ratio will more than shock you! But why is it so, with such high growth rate and steady development, based on oil wealth, one would expect to have more entrepreneurs in the region.

Many studies have been made regarding what influences the development of entrepreneurial activities. In these studies three major factors were recognized. These factors are Economic condition of the nation, Education, and Culture. If we were to consider these three factors we would find that Arabian nations are not short in either of the first two factors. These nations are among the richest in the world, with per Capita GDP's that places them near the top. Education is the other factor that these nations are catching up with. Many universities are being set-up in the region providing high quality education.

With this in mind, I was ready to analyze why GCC countries don't produce more per capita entrepreneurs. The answer to my question was found in a study conducted over 30 years ago by Geert Hofstede, a psychologist working for IBM. Hofstede, who surveyed more than 100,000 IBM employees scattered across the globe was able to identify 4 distinct factors that can help explain the behaviors existing in different cultures. He called them 'dimensions' and they became known to us as 'Hofstede dimensions'. These 4 distinct factors are

1. Individualism vs. Collectivism
2. Masculinity vs. Femininity
3. High vs. low power distance
4. High vs. low uncertainty avoidance.

Although Hofstede did not conduct the study on any Arab nation, we can still conjecture and relate to similar cultures to arrive at what it would be like in the Arab world. The cultures that exhibit similar characteristics to Arabian cultures are those of Mexico and India.

With that in mind, let us walk through these dimensions:

1. Individualism vs. Collectivism:

This dimension measures the amount of emphasis a society places on 'individual' achievement over 'group' achievement.

The natural finding that Individualistic cultures tend to have more entrepreneurial activities comes as 'no surprise'. In this category, the worlds greatest supplier of entrepreneurs, the United States, had the single highest score. On the other hand we had India and Mexico scoring 48 and 30 respectively. Relating it back to the Arab culture we can understand why such a factor would influence our drive towards success. Simply put we rather emphasize group values over individual success.

2. Masculinity vs. Femininity:

This dimension deals with gender/work relationships. In masculine cultures, sex roles were sharply differentiated whereas in feminine cultures little distinction is made between males and females doing the same job.

Although both India and Mexico had scores somewhere in the middle range, suggesting that such distinction does not exist, I believe the Arab culture would have scored much higher. This is due in part to the traditional view that a female role is to be housewives and full time mothers.

How does this affect entrepreneurial activities? Simple, almost half the population is excluded from attempting any entrepreneur activities, thus sharply decreasing the number of possible female entrepreneurs. (Most females that have succeeded represent the exception rather than the rule).

3. High vs. Low power distance:

This dimension deals with how a society deals with the people acceptance of others 'right' to exert power over them, even harsh power.

By definition, the Arab culture is one that has, over the years, emphasizes the existence of such inequalities and the importance of respect and looking up to our superiors. This is again evident in the high scores achieved by both Mexico and India, 81 and 77 respectively.

How does this dimension affect entrepreneurial activities? Given how importance inequalities are, many of the people at the lower end of the pyramid may find difficulties being accepted in the culture as ones that have high chances of success. This likely impacts their perception of their own worth or right to step out of role and be individualistic risking, in the process, being disapproved by other members of society.

4. Uncertainty avoidance:

Out of the four factors I believe this is the most important dimension. Uncertainty avoidance deals with how members of different cultures deal with ambiguous situations. Higher scoring nations feel uncomfortable with ambiguous situations and vise versa.

How does Mexico hold up in this dimension? They had a score of 82. My assumption is that the Arabic culture will score at least as high if not higher than that. Arabs have a rich history of exploration, trade and multi-cultural experiences.

How does this help explain the shortage of entrepreneurial activities? Risk is built into entrepreneurial activities. The fact that many people have to leave their secured jobs to start a new business makes it a risky venture living in modern society. As such, it is not surprising to find that many Arabs choose the security and safety of a permanent job over the risks of starting a new business.

Although one can speculate back and forth and many exceptions and limitations to this particular theory maybe found, it still helps define the problem and shed some light on why it exists.

Whether this trend would continue or not is still to be seen. Many of us have experienced a quantum leap in cultural values and practices over the last 20 year and what used to be a rule had in many cases become an exception. As such, I would not be surprised as more and more entrepreneurs start coming out of this region.