Culture Matters to Entrepreneurship

Culture Matters

All through childhood and adolescence you are a sponge absorbing cultural stimuli. From local billboard advertisements, to school curriculum stylized to your country; from conversations with your parents about the ways of the world to the thousands of local customs that dictate proper behavior in restaurants, queues, airports, homes, and driving on the road.

Culture matters. That’s the title of a compelling set of essays on whether some cultures are better at creating freedom, prosperity, and justice. It is politically incorrect to chalk up massive societal failures in places like Africa to culture — besides, the situation is always more complex than a single factor — but it seems safe to assert that the culture you come up in affects how you think.

In Robin Hanson’s post in praise of international travel, he writes:

our beliefs are severely distorted by our culture and training… We all know that we would have been inclined toward different beliefs had we been raised in different cultures or disciplines. We see consistent differences between folks trained in West vs. East, science vs. humanities, economics vs. sociology, and in different schools of thought of most any discipline.

By the time you’re 18 years-old, I believe a certain vision about how the world works glows in your head. You carry many assumptions. It’s possible to change these assumptions in adulthood — easier now thanks to the knows-no-physical-boundaries internet — but it is still hard, and most people would rather not expend the energy to develop a set of values about the world that are independent from their milieu defaults.

Governments Trying to Promote Entrepreneurship

Now pivot to this: virtually every county’s government is trying to promote entrepreneurship, create a mini-Silicon Valley, “become an IT island,” become a hub for innovation, etc. It makes sense: the data are clear that entrepreneurship is the engine of economic growth.

How should a government do it? As Amar Bhide says in From Poverty to Prosperity, the most important thing is for the basic government functions to work: property rights, provision of roads, water, electricity, etc.

The most common next step is for government to make starting a business as easy as possible, minimize tax and regulatory burdens on business, offer tax incentives, etc. These are all good things and are well within a government’s purview.

Chile has done both these things. By taking care of basic government functions, no small task, it has become a better place to be an entrepreneur than most other developing countries. You need only look at its dysfunctional, corrupt neighbor of Argentina to understand that when a government can’t take care of its own basic functions, nothing else matters. And by offering various tax breaks and incentives and helping VCs get new early-stage funds off the ground, Chile’s government carrots have made many entrepreneurs I know take a careful look.

Chile is 100x better place than Argentina to be an entrepreneur. But it’s still far away from rivaling the U.S. as an environment for entrepreneurs. Because here’s what it lacks more than anything: entrepreneurial culture. And no government program or law can change this overnight.

Lack of Entrepreneurial Culture

Here’s a seemingly trivial example but I think it’s telling: In Chile as in many parts of Europe and Latin America (and maybe elsewhere), kids usually live with their parents until into their late 20’s or until they are married. Think about the attitude that probably accompanies this custom: greater dependence and deference to the central authority figure you’ve had in your life. More significantly, in Chile as in almost everywhere except young America, they have a long history, and with history comes psychological burdens. Being conquered and then re-conquering. Living through a military dictator. This stuff seems to affect everything from a person’s propensity to trust strangers to their willingness to challenge the status quo. It’s harder to invent the future if you’re still debating and processing the past.

In Northern Cyprus government officials told me about the various incentives they were going to roll out to attract entrepreneurs and how they were going to have conferences to encourage young people to think about a career in IT. And I’m sitting there sipping my tea thinking, “How the fuck are you going to get people to want to be entrepreneurs when half your citizens work for the government and get off work at 3 o’clock in the afternoon and the other half feel like they deserve more handouts from Turkey?” It’s not an incentive problem; it’s a mindset problem.

I get emails from Koreans who have read the Korean translation of my book and they tell me that they want to start a company but if they do their family will think they are a failure.

This is the story in so many parts of the world. (China, as always, is complicated — they certainly today have a culture of hustling. Beyond that I can’t say.)

Why I’m Bullish on the U.S.

The single best reason to be long on the future of the U.S. is it has a culture of entrepreneurship. It was born this way. Contra Umair Haque — who thinks “it was the American way of life that ate America. And America’s real bankruptcy is a bankruptcy of the soul” — in fact it’s the American way of life and the American soul that are one of the redeeming and enduring attributes of the country’s DNA in this time of uncertainty. The free wheeling spirit, the self-reliance, the fearlessness, the celebration of youth, the permanent fresh start: these things remain, independent of the meltdown of our governance system.

Can You Change Culture?

Culture is really hard to change. It takes generations of time. There are a million levers you could possibly push and it takes way longer than a politician’s term to see any effects. People have pride in their habits.

So what do you do? I think you try everything, and you also try this: import people from countries who have the cultural attitudes you’re looking to cultivate in your country. Use them as implants. I know the Japanese do this with American consultants: they ship in “crazy Americans” to sit in on business meetings and blow up the enormously inefficient customs that still dominate Japanese business. For example, get right to the point instead of flattering the seniority of all the senior people in the room. Integrate the implants with the youth and hope that the power of example will cause more people to think different.

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