The Impact of Social Preferences on Entrepreneurial Activities

Although, many studies have explained differences in entrepreneurial activity rates between regions based on economic factors, considerable unexplainable differences remain (Audretsch and Keilbach, 2004; Freytag and Thurik, 2007). Recent studies have found the underlying community culture is closely associated with economic development including the presence of entrepreneurial activity (Huggins and Thompson, 2014, 2016). The greater presence of particular personality traits in the population has also been found to be closely associated with the development of a more entrepreneurial culture (Stuetzer et al., 2016).

At an individual level when concentrating on social attitudes, Arribas et al. (2010) find evidence that entrepreneurs display less pro-social behaviour in experiments. In addition, Estrin et al. (2016) show that the type of entrepreneurial activity individuals engage with
varies depending on the type of human capital an individual possesses, but these relationships can also affected by the strength of formal institutions present suggesting culture may have a similar role. However, human capital is found to have both a direct role on the type of entrepreneurship developed, but also it determines the social preferences exhibited by individuals, which determines their likelihood of appropriating income from others (Jakiela et al., 2015).

Less work has looked to combine the work on culture’s impact on entrepreneurship with that looking at the type of entrepreneurship that develops. This study would look to combine these two fields of work by considering how aspects of culture and personality, particularly those linked to social preferences influence the types of enterprises formed, high growth, technology based, social enterprises etc.

The research will draw upon large data sets such as those from the World Values Survey (WVS), and European Social Survey (ESS) and combine these with data on enterprise formation and growth, such as that of the Global Entrepreneurship Monitor (GEM). These large data sets will be used to develop an understanding of the relationship between social preferences and entrepreneurship type with the aid of regression analysis. Primary data collection approaches based around the use of experiments such as the dictator and ultimatum games (Forsythe et al., 1994), would be used gather a deeper understanding of the motivations behind the choices of individual entrepreneurs of different types.