It is well known that entrepreneurship plays a key role in economic development; however, its cultural underpinnings remain a marginal field of study. This paper is an attempt to fill this gap. The development trend of the oil-rich United Arab Emirates (“UAE”) is at the heart of debates surrounding the effects of culture on economic choices and outcomes. In order to move away from an oil-based economy and provide private sector jobs for its growing number of nationals, the UAE has promoted and implemented diversification strategies over the last 20 years. Yet, less than 2% of the private sector workforce is composed of UAE nationals. The latter prefer working in the public sector because of better salary and working conditions. This paper seeks to explain the cultural foundations of the lack of entrepreneurship among UAE nationals. It conducts a survey among students from United Arab Emirates University and tests the determinants of their entrepreneurial intentions. It shows that the students’ culture is holistic and rather hostile to entrepreneurship. Such disinterest is stronger because of fear of stigmatization associated with business failure and because of social prestige associated with public sector jobs. Our results not only confirm the cultural specificity of Rentier States but also invite the launching of educational programs aimed at modifying students’ beliefs over entrepreneurship. Such cultural change seems inevitable in the context of a transition from an oil-based to a knowledge-based economy.
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The six GCC countries are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE.
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Total early-stage entrepreneurial activity, or TEA, measures the percentage of the adult population age 18–64 years who are in the process of starting a business (a nascent entrepreneur) or have started a business less than 42 months before the survey took place (owner-manager of a new business).
UAE Bankruptcy Law, (Federal Decree Law No. 9/2016) was published on 29 September 2016 and came into force on 29 December 2016. The UAE government stated that the new bankruptcy law in the UAE was needed to “help owners of small and medium-sized enterprises weather rising levels of bad debt”.
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Power distance is defined as the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.
Rate of fear of failure measures the percentage of the population age 18–64 years perceiving good opportunities, but who indicate that fear of failure would prevent them from starting a business.
High status of successful entrepreneurs is measured by the percentage of the adult population age 18–64 years who believe that high status is afforded to successful entrepreneurs.
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Facchini, F., Jaeck, L. & Bouhaddioui, C. Culture and Entrepreneurship in the United Arab Emirates. J Knowl Econ (2020). https://doi.org/10.1007/s13132-020-00663-z
- Middle East and Rentier State