Abstract
The twentieth century United States provides a natural experiment to measure the strength and persistence of entrepreneurial cultures. Assuming immigrants bear the cultures of their birth place, comparison of revealed entrepreneurial propensities of US immigrant groups in 1910 and 2000 reflected these backgrounds. Two measures of entrepreneurial culture are employed; the first is simply the chance that a member of the migrant group will be an employer and the second is the origin country effect on this probability, conditional upon personal characteristics. The preferred second measure shows persistence of some cultures and change of others over the twentieth century. Among the more stable cultures North-western Europe, where modern economic growth is widely held to have originated, did not host unusually strong entrepreneurial propensities. Instead such cultures were carried by persons originating from Greece, Turkey and Italy, together with Jews.
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Notes
Greek entrepreneurs were the most highly authoritarian—scored most highly on power distance—of all nations considered in one study for instance (Drakopoulou Dodd and Patra 2002).
Institutional collectivism and in-group collectivism, uncertainty avoidance, power distance, assertiveness, future orientation, humane orientation, and performance orientation.
These (unconditional) chances, calculated as relative frequencies, are referred to interchangeably as ‘entrepreneurship ratios’, the ratio of those who become employers to the total in the migrant group.
Although US culture as well as institutions may be a reason for the higher level of US entrepreneurship relative to all European countries, as noted by Grilo and Irigoyen (2006).
5% samples from IPUMS (http://usa.ipums.org/usa/). 1910 is the first year that the employer/employee question is asked.
The base case in the analysis is ‘other North America’.
A test of city- or region- based culture, as well as that of a nation, would be a considerably larger project at this level, although Davidsson and Wiklund (1997) used individual level data to identify weak regional effects in Sweden, and Beugelsdijk (2007) found mainly indirect aggregate regional effects across Europe.
At the Homestead Works in 1892 the Welsh managed the rolling mills and the Irish the Bessemer blast furnaces. In the International Association of Machinist there were individual branches speaking German, French or Bohemian at the beginning of the twentieth century.
Suggested to us by Tim Hatton.
Syria and Lebanon were also the most highly entrepreneurial in 1910 but the sample available was judged too small to report.
According to t-tests
Compare the relatively high preference for self-employment of Greek, Irish, Italian and Portuguese nationals found in 2000 by Grilo and Irigoyen (2006).
Grebler et al. (1970, p216) comment ‘One can only speculate about the reasons why so relatively few Mexican-Americans have moved into business occupations.’
Where Y is the probability of entrepreneurship, X i are country or origin dummies and Z is the level of development of the origin countries:
$$ {\rm Y}={\rm a}_{0} +\mathrm{a}_{1} {\rm X}_{1} +{\rm a}_{2} {\rm X}_{2} +{\rm a}_{3} {\rm X}_{3} + {\rm a}_{4} {\rm X}_{4} +\ldots+ {\rm bZ}+ \mathrm{e} $$(i)Z is defined as
$$ {\rm Z}={\rm c}_{1} {\rm X}_{1} + {\rm c}_{2} {\rm X}_{2} + {\rm c}_{3} {\rm X}_{3} + {\rm c}_{4} {\rm X}_{4} + \ldots $$(ii)where c i are the relative level of development of each country. Therefore Z is a linear combination of the country dummies explaining Y and will be perfectly collinear with them.
China is excluded from the 1910 sample in the estimates of Table 7 because of the filter of legislation on Chinese migration.
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Acknowledgements
Thanks to Andrew Burke, Kai Chan, Guillaume Daudin, Andrew Godley, Tim Hatton, Les Hannah, Frank Lewis, Tim Leunig, Ioanna Pepelasis and to a very helpful anonymous referee for comments and other assistance. The usual absolution applies.
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Foreman-Peck, J., Zhou, P. The strength and persistence of entrepreneurial cultures. J Evol Econ 23, 163–187 (2013). https://doi.org/10.1007/s00191-011-0239-z
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DOI: https://doi.org/10.1007/s00191-011-0239-z