The Relationship Between Culture and Entrepreneurship

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The Relationship between Culture and Entrepreneurship: An Inquiry to a Culturally Diverse

Developing Country

ABSTRACT

The relationship between culture and entrepreneurship has produced causalities that areindeed more complex, as both culture and entrepreneurship hold a unique position in affecting

each other. Even though it is highly affected by culture, entrepreneurship through its

entrepreneurs also drives cultural changes. Unfortunately, most literatures on

entrepreneurship and culture do not address these complexities into their relationship. This

research will fill those gaps by studying the relational nature between cultures attributes and

entrepreneurship that exists locally within a nation, as well as how they mutually affect one

another in their local settings. It seeks to understand the relationship between culture and

entrepreneurship by describing and analysing entrepreneurs social actions through the form of

multiple mental constructions, socially and experientially, from the entrepreneurs point ofview. Therefore, unlike traditional models and theories that focus solely on economic reality or

personality traits of individual entrepreneurs, this research will acquire holism that has the

potentiality to lead to a satisfactory alternative paradigm for entrepreneurship. It will adopt an

exploratory research design that emphasized on naturalistic research inquiries. Rather than

aiming to verify pre-defined theoretical constructs concerned with specific issues, this research

aims to generate new theories and concepts from the data collected in the field. Moreover,

considering that it is also concerned with the underlying pursuit of contextual depth, this

research will use Indonesia as a research context and the multiple-case study as an approach.

This approach consists of communities as cases (macro-cases) and several individualentrepreneurs within those communities as sub-cases (micro-cases). Both contribute to the

unique relation between the particular situations and phenomenon of interest mentioned

before. Beside the fact that many of its population depend on various informal entrepreneurial

activities for subsistence and that entrepreneurship through various Small and Medium

Enterprises (SMEs) played a crucial role in sustaining its economy during the 1997 Asian

Financial Crisis, Indonesia is chosen as a research context because it is also the most culturally

diverse developing country in the world. As a result, from the Indonesians viewpoint, the

research outcome is expected to represent the Indonesias culture-fit model of

entrepreneurship informing effective policies to foster entrepreneurial competitiveness, while

at the same time enhancing and highlighting local culture as the countrys regional asset.

Meanwhile, from the social sciences standpoint, the research outcome is expected to provide

understandings on how cultural variability explains the effect of entrepreneurial activity, the

insights into the significance of entrepreneurship in many communities, and the possible

responses, both individual as well as community, which balances the needs of individuals,

communities, and economic institutions as a whole.


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1. BACKGROUND

Entrepreneurial activity has been around for as long as man existed. However, serious

researches regarding the nature of the relationship between culture and entrepreneurship haveonly begun since the early twentieth century1, 2,3. Although the concept of culture is very

complex and is used with various meanings, it has become a generally accepted view that

cultural factors affect entrepreneurial activity4. Weber, through his thesis, outlined the

relationship between the attributes of culture (mainly religion)


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and entrepreneurship, which he represented as the spirit of capitalism, and was discovered to

be an interesting topic to be studied5,6. Nevertheless, it is only in the last three decade, when

Hofstede introduced his famous model on cultural dimension based on national culture for the

first time in 1980, that this relationship was empirically studied. Consequently, since then many

studies on the relationship between entrepreneurship and culture or cultural values have beenusing his model as the basis of their research7. Hoftstede8 defines culture as a collective

programming of the mind which distinguishes the members of one group or category of people

from another. He considers culture as a collective phenomenon, formed by the social

environment of individuals in a particular place. According to Hofstede, variations related with

nationality, ethnicity, social classes, religion, gender, and language cause cultural differences. In

the core of his model of culture are values, which he holds as a critical feature of culture and

cultural distinctiveness9. Hofstedes research has successfully shown how national culture

affects the environment essential for entrepreneurship across a range of countries. However,

by assuming that national culture is a common component of a wider culture which contains

both its global and subnational constituents10, his study ignores the differences among local

cultural groups within a country11,12,13,14,15. In fact, in a highly centralized country, cultural

systems that exist locally still dominantly influence grassroots communitys way of life16. In

reality, local cultural attributes also serve as a non-formal standard entry requirement needed

to be acquired by a person in order to be accepted as a community member17. In other words,

compared to Hofstedes common component of national culture, the dynamics of culture that

exist locally have a greater impact towards a community member of a country. Moreover, the

evolution of local cultures and their interactions with supporting national policies have also

been a key determinant of success that encourages entrepreneurship activities locally18.

Hence, aspects contained in a locally cultural system along with all of its supporting attributes

are more dominant in building a local environment that fosters entrepreneurship19,20.

Moreover, the relationship between culture and entrepreneurship does not only produce a

one-way interaction21. Although regarded as the elements orientating further actions, in reality

culture itself is also the product of actions22,23,24,25. Therefore, this condition places culture

as a subject of both repulsive and attractive forces of change, which are typically wrapped in

innovations and cultural inventions. Innovations as well as cultural inventions change

communitys social structures and affect culture internally26. They produce changes within a

community by altering social dynamics, which facilitate creative actions in promoting new

cultural models. Subsequently, these social shifts will stimulate ideological modifications and

other types of cultural changes27. Besides, in order to survive, a culture always needs to be re-

acceded and re-integrated under the consensus of the community where it belongs to28. This is

where entrepreneurship, through its entrepreneurs who were previously shaped by culture,

takes its critical role in driving cultural changes. Entrepreneurs act as a catalyst of change that

imagines new solutions. As the true agents of creative destruction, they endogenously destroy


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old ways and replace it with new ones29. Entrepreneurs possess the power in advancing those

cultural changes, no matter how big the impact is30,31. They are fully equipped with various

new ideas, as well as the ability to convert those ideas into successful innovations and social

inventions in order to alter inferior creation as a whole or a part (for examples see: Putnam32,

Baumol33, Boettke & Coyne34, Kirzner35, and Leff36). Eventually, through their creativity,entrepreneurs will not just create new products or even new business models, but also develop

a new cultural system37.


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All of those situations previously mentioned produce causalities that are indeed more complex,

due to the unique position both culture and entrepreneurship hold in affecting each other.

While it is highly affected by cultural factors existing locally within a nation, entrepreneurship

through its entrepreneurs also act as the catalyst of cultural changes38. Unfortunately, most

studies on entrepreneurship and culture have not integrated these complex causalities (seeLow & MacMillan39 and Voros40). They relegate the complexities by considering the

relationship as simply a one-way interaction, treating questions, such as how cultural attributes

affect entrepreneurship and how entrepreneurship through its entrepreneurs acts as the driver

of cultural changes, as a separate study or research topic. This condition will obviously enlarge

the literature gap regarding the relational nature between cultures attributes and

entrepreneurship that exist locally within a nation, as well as how they mutually affect one

another in their local settings41.

1.1 Rationalizing the Research Context

During the course of the twentieth century, globalization has marginalized indigenous people

around the world. The rapid shifts in economic forces, advances in technology, social

acculturation forced by the dominant ruling culture under the premise of common culture, as

well as other negative effects have made them suffer greatly. Therefore, studies on the degree

of cohesion that remains and the desire among many indigenous people to rebuild their

communities on a traditionally and culturally grounded foundation are important42. However,

those studies should not only be used as a supporting tool or a simple exercise in analysing the

existence of outliers in the global world-system. Studies of indigenous populations comprise of

efforts in providing theoretical and empirical sources of analysis, and are considerably relevant

to the development of a generalizable theory of entrepreneurship and its associations with

culture. These theories can be put forward in many settings including, but not exclusive to,

indigenous communities43. They can be used to provide insights into the significance of

entrepreneurship in many communities and the possible responses, both individual as well as

community, which balances the needs of individuals, communities, and economic institutions as

a whole. Indonesia, as the most culturally diverse country in the world, has numerous

indigenous populations that are separated into various distinct ethnic groups. While in some

colonialized countries indigenous people are considered minorities in their own motherland, in

Indonesia they represent the majority of the population. Nevertheless, we have to trace back

through history in order to describe clearly the concept of indigenous people in Indonesia44.

From the year 1844 until 1942, through the Regeringsreglement 1854 article 109, the Dutch

divided citizenship of the Dutch East Indies (currently Indonesia) into three social classes45,46.

The Europeanen (Europeans) was designated the highest of the three groups, followed by the


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Vreemde Oosterlingen (Foreign Orientals which consisted of mostly Chinese, Indian, and some

Arabians). The Inlanders stood at the very bottom of these groups (nativeindigenous). After

declaring its independence, Indonesia recognizes only two types of citizenships, the

warganegara Indonesia (Indonesians) and the warganegara asing (foreigners)47. Until now,

warganegara Indonesia consists of the indigenous people as well as the former Europeanen andVreemde Oosterlingen, as well as their descendants who have chosen the Indonesian

citizenship. Since the colonial period, culturally the indigenous people (Inlanders) are called the

pribumi, while those whose ancestors originated from other races or countries (Europeanen

and Vreemde Oosterlingen) are called non-pribumi48. The pribumi, consisting of 1,128 distinct

ethnic groups49, are spread all over


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Indonesia. Each differentiates itself mainly based upon ancestry and resides in particular places,

which they culturally proclaim as their land of origin. This differentiation has produced 746

different local languages (Bahasa Daerah)50 and informally legislate each pribumi ethnic group

its local status as the local community attached to a certain areas in Indonesia. In these local

communities, the pribumi retain their ancestral graves and main cultural practices. Thus, theconcept of indigenous community and local community are interrelated to each other, as for

Indonesians they have the same meaning. This condition defines the concept of local culture in

Indonesia and raises the term of Orang, which is used to refer an indigenous community and

their inherited culture, tied as the local community and local culture of a particular area. For

instance, Orang Bali (Balinese) and their inherited culture represent the local community and

local culture of Bali, or Orang Sunda (Sudanese) and their inherited culture represent the local

community and local culture of West Java. Referring to the above situation, multicultural

interaction and acculturation among those ethnic groups are a compulsory requirement for the

countrys sustainability. Hence, from the declaration of independence, Indonesia has been

trying to strengthen its culture, unfortunately, by imposing a national culture in the name of

national unity and integrity through centralized political structure, leadership, legislation, and

education51. Yet up until today, the expansion of Indonesias national culture was never able to

replace local cultures. Even under Soehartos centralized regime, local cultures still dominated

the lives of those pribumi ethnic groups52. In fact, their significance was reaffirmed through the

regional autonomy law first introduced in 1999. Consequently, the pribumi are increasingly

wishing for and talking about local wisdom possessed by their local cultures and traditions.

They believe that each local culture has its own geniuses that are instrumental in the

maintenance of socio-cultural stability and harmony53. This is not surprising, because younger

generations are initially brought up according to the values and modesty of their own ethnicity,

culture, and tradition54. This creates the idea of personhood in relation to their parents,

families, and society based on the traditional norms that are considered most appropriate for

each group. In terms of economic activity, many Indonesians depend on various informal

entrepreneurial activities for subsistence. As a result, entrepreneurship in this country is highly

manifested in the form of various SMEs. Historically they have played the main role in the

household economy of the countrys population, a generator of primary or secondary sources

of income for many families55, 56, 57. SMEs in Indonesia are regionally dispersed and are

mostly located in the rural areas. According to BPS58, in 2008 the majority of Indonesian SMEs

operate in agriculture (including forestry and animal husbandry, 52.48%), trading and

hospitality (28.1%), production (6.32%), service (4.25%), and transportation (6.25%) sectors of

the economy. They have employed approximately 94 million people (97.15% of the total

number of national employment) and contributed to 55.67% of Indonesias real Gross Domestic

Product (GDP). Until 2009, the number of SMEs in Indonesia grew to roughly 52.76 million units

or approximately 99.99% of all business units59. This shows how Indonesia deeply relies on its


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SMEs entrepreneurship in maintaining its economic growth, enhancing income distribution at

the rural and regional level, as well as their potentiality in reducing unemployment. It must be

admitted that the countrys awareness on the importance of entrepreneurship studies is

however due to SMEs pivotal role in sustaining the countrys economy during the 1997 Asian

Financial Crisis60. This is why studies or researches on entrepreneurship in Indonesia werenotoriously limited before the end of the twentieth century61,62,63. Literature such as The

Achieving Society of David McClelland64 and The practice of Entrepreneurship of Geoffrey G.

Meredith, Robert E. Nelson, and Philip A. Neck65 were translated into Bahasa Indonesia more

than a decade since they were first published in English, in 1987 and 1996 respectively. Even

both literatures are still used as primary


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textbooks for entrepreneurship courses in the country until today. The oldest comprehensive

account on entrepreneurship and its relationship with cultural attributes in Indonesia was

written by Clifford Geertz66 in his Peddlers and Princess, which consists of a closely observed

case study examining cultural factors of economic development through an examination of

entrepreneurs in Kediri (East Java) and Tabanan (Bali). Geertz published his work in 1963, whichwas then translated to Bahasa Indonesia in 1973. Nevertheless, since Geertzs publication, no

more in-depth research on the relationship between culture and entrepreneurship found in

Indonesia. This condition allows no other alternatives for academics in Indonesia but only to

uncritically validate various indices or models on national culture, such as models built by

Hostede, as something that is irrefutable (for example Nursjanti & Sulganef67, Purnomo68,

Suryana69, Winarningsih70, Handayani71, Atmanti72, and Ciputra73). Indeed, they encourage

the Indonesian government to foster the development of entrepreneurship by sponsoring an

entrepreneurial culture (see Presidential Instruction No. 474, Winarningsih75, Atmanti76, and

Ciputra77), which is built based upon various characteristics of entrepreneurship introduced by

prominent scholars around the world. For Indonesian academics, local culture is regarded as a

hindrance for entrepreneurial activity78,79. From their point of view, local culture is incapable

of assisting entrepreneurs to gain Lambing and Kuehls80 initiatives, selfconfidence, self-

determination, as well as high tolerance for ambiguity and failure; Hyrskys81 innovativeness

and creativity; Littunens82 ability to learn; Deakins83 needs for achievement; Mazzarol,

Volery, Doss, and Theins84 locus control; Bridge, ONeill and Cromes85 autonomous and

independence; Brockhaus86 risk-taking propensities to gain profits. This situation in fact

contradicts the affirmation of local culture in Indonesia discussed earlier. It is actually a general

datum that while the phenomenon and the role of entrepreneurship in the economy have been

widely studied in developed countries, studies of entrepreneurship in developing countries,

such as Indonesia, are still under-represented87. Even Lingelbach, De La Vina and Asel88 claim

that, Entrepreneurship in developing countries is the most understudied important global

economic phenomenon today. This situation is also exacerbated by the presence of

mainstream development theories and classical theories of entrepreneurship in those

countries, where they maintain their own conceited view in promoting the universality and

superiority of their western model89. Both failed to render real contribution to the

developmental aspirations of the people in developing countries, because most of their

assumptions often ignore cultural, environmental, technological, and structural differences

found between the developed and developing countries. Even when regarded as a common

phenomenon, entrepreneurship should still remain a country-specific experience that must be

promoted accordingly. Thus, it is argued here that by not considering the complexity of local

contexts will consequently hinder attempts to understand entrepreneurship.


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1.2 Guiding Question and Research Objectives

Since culture is intangible and lies within the subjective realm of entrepreneurship, this

research is in accordance with the interpretivists position via the framework of naturalistic

inquiry and can be regarded as an exploratory study that does not conform to any existing

hypothesis90,91. Thus, the central research question is general and focuses mainly on a what

question92,93. This type of question is used to guide the study towards exploring the individual

and social phenomenon through an integrative rocess94, 95 . The question is designed to better

understand the interface between exogenous factors and the unique elements of the existing

local culture, as well as entrepreneurial activity, where the emphasis can be changed or

modified throughout the field study. The goal is to substantively comprehend and


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systematically generate theory that emerges from the data96,97 in order to bring new insights

to the study of entrepreneurship. By considering the research background and the above

explanations, this research will be directed by the following central research question: What is

the relationship between culture and entrepreneurship in a culturally diverse developing

country? The central research question will guide this research to achieve the three mainobjectives below. First objective - develop a theoretical framework that directly germane to

understand the socio-cultural structures and contexts related to entrepreneurship within a

particular community. The research seeks to develop, as its principal finding and output, an

analytical framework that can describe and explain how different local cultures construct the

concept of entrepreneurship and how entrepreneurship manifests itself in those cultures.

Second objective - develop a theoretical framework that directly germane to understand how

sociocultural structures and contexts construct the subjective and objective elements of

entrepreneurs actions. The study seeks to develop, as its principal finding and output, an

analytical framework that can: 1) describe and explain how local entrepreneurs understand the

concept of entrepreneurship that exists in their local culture and how that concept develops

local entrepreneurs values on business practices; and 2) describe and explain how local

entrepreneurs values on business practices change overtime, what drives those changes, and

how those changes influence their first understanding on the concept of entrepreneurship that

exists in their local culture. Third objective - develop a theoretical framework that directly

germane to understand how entrepreneurs drive cultural changes in their community. The

study seeks to develop, as its principal finding and output, an analytical framework that can: 1)

describe and explain how local entrepreneurs understand their local culture; and 2) describe

and explain how local entrepreneurs accommodate their business with their domestic activities

along with all social activities related to their local culture overtime.

2. LITERATURE REVIEW

Studies regarding the relational nature of culture and entrepreneurship consist of multifaceted

backgrounds, informed by several disciplines98. Each discipline can be considered as a domain

for examining the relevant scholarly works including, but are not limited to, social psychology,

cultural anthropology, sociology, economics, political economy, or international business99.

Furthermore, apart from the range of theory that informs both subjects, concomitant

exploration of culture and entrepreneurship is further complicated by the very different

spectrums through which scholars approach economics and cultural studies. Indeed merely

defining them has spawned a mass of literature (see Schumpeter100, Leff101, Morrison102,

and Kuratko & Hodgetts103). The positive outcome is that the subject has produced a diversity

of approaches and perspectives. However, at the same time it may also be viewed as a negative


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outcome because every single academic discipline speaks with its own distinct language or

methodology, much too solid for outsiders to comprehend. As noted by Mankiw104, social


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scientists attempt to study the authenticity of cultures and their conformity to specific norms,

whereas economists study universal laws of economic decision-making by individuals and firms.

With the above annotations in mind, this discussion will first begin with a section overviewing

the evolution of entrepreneurship studies to date and different perspectives within the

research field. Afterwards, the second section is dedicated to explore the connection betweenculture and entrepreneurship in order to relate the research background with the guiding

research question and objectives. It consists of a discussion on defining and measuring culture,

followed by an outline regarding various discourses on the relationship. Finally, the third

section of the literature review will discuss the importance of SME as a representation of

entrepreneurship in developing countries and will serve as the basis for examining

entrepreneurship in Indonesia.

2.1 Overviewing Entrepreneurship Studies

Historically, Richard Cantillons105 Essay on the Nature of Commerce in General and Jean

Baptiste Says106 A treatise on political economy, are often given credit of being the first in

introducing the concept of entrepreneurship into scientific literature, primarily economics.

Cantillon recognized that discrepancies between demand and supply in a market create

opportunities for buying cheaply and selling at a higher price, and that this arbitrage would

bring the competitive market into equilibrium. His presumption was that the entrepreneur

would buy products at a fixed price, have them packaged and transported to market, and sell

them at an unpredictable price107. Cantillon loosely defined entrepreneurship as self-

employment of any sort and entrepreneurs as risk-takers108. On the other hand, Say

considered that effective entrepreneurs must possess the moral qualities of judgment and

perseverance, as well as enrich themselves with the knowledge of the world. He realized that

wealth is essentially and originally metaphysical. Say reasoned that wealth is the result of

creativity, ideas, imagination, as well as innovation, thereby placed the role of the entrepreneur

at the hub of economic theory109,110,111. He also stated economic advancement requires

both entrepreneurs and the accumulation of capital. Nevertheless, until now it must be

acknowledged that a generally accepted definition for entrepreneurship does not

exist112,113,114,115. Subsequently after Cantillon and Say, entrepreneurship research has

become highly diverse and complex116, 117. It cannot be confined to one discipline only,

because entrepreneurship research currently involves a variety of disciplines outside economics

to its field, such as psychology, anthropology, sociology, and management (see Figure 1).

Figure 1 (will be inserted here) Bases of Entrepreneurship Theory Building


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Entrepreneurship research has also included individual, group, organization, industry, and

society within its level of analysis119. The research topic seems to have an expanding trend,

discussing issues such as gender, ethnicity, migration, social capital, culture, or religion. The

diversity is further complicated by the proliferation of subcategories of entrepreneurship

research, which introduce additional terminology such as venture capitalist, corporateentrepreneurship, corporate venturing, intrepreneuring, internal entrepreneurship, and

venturing120. This is why any effort to condense them (see Table 1) into a single summary of

definition is dubious121.

Table 1 (will be inserted here) Definition List of Entrepreneurship


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Hans Landstrom146 argues that this diversity is due to the time discrepancy of interest among

researchers on entrepreneurship studies, which are linked to societal economic development

on a particular time. He labels this time discrepancy of interest as swarms of entrepreneurship

research and classifies it as follow:

Table 2 (will be inserted here) The Linkage between Societal Development and

Entrepreneurship Research

Landstrom furthermore explains that those swarms have been evolving entrepreneurship as a

multidimensional concept148, where each definition depends largely on the disciplinary

approach, the focus of the research undertaken, and the level of analysis149. According to

Verheul et al.150, all of the existing definitions can be categorized into two broad perspectives,

the supply side and the demand side. Commonly it is also referred as the pull and push factors

of entrepreneurship151. The demand sides perspective emphasizes its studies on

entrepreneurship opportunities created by the diversity of consumers demand or the industrial

structures. Its Supporters highly consider the influence of technological developments and

government regulations as being central for their research. Meanwhile, the supply sides

perspective highlights the characteristics of the population or demographic compositions within

a particular country as important subjects to be studied. Examples of those characteristics are

the influences of cultural and institutional environment on individuals, as well as their attitudes

towards entrepreneurship. In reality, the real debate between those perspectives lies in

theories of entrepreneurship emphasizing variation in individual traits versus theories that

privilege variation in the structural environment152, in explaining factors determining the level

of entrepreneurship in a certain place or time153. This condition has divided literatures on

entrepreneurship into two main traditions, concentrating largely on individuals and structure

respectively154,155,156. The first seeks to explain the prevalence of entrepreneurs in terms of

innate psychological traits or special characteristics formed in certain social groups. They argue

that special types of people are pulled to create entrepreneurship. Alternatively, the second

highlights how social and cultural structures call forth entrepreneurs by providing opportunities

for entrepreneurship. They argue that people are pushed into entrepreneurship by a supportive

culture that stems from any number of infra structural factors. The first important contribution

that highlights individuals as the primary focus of entrepreneurship studies was done in 1961 by

David McClelland through157 The Achieving Society. According to McClelland158, societies

are bounded by cultural attributes, which can be translated into primary socialization practices

that foster entrepreneurship. Since McClellands publication, various researchers have studied

the individual characteristics associated with entrepreneurship in order to find the differences

between entrepreneurs and non-entrepreneurs (see Gartner159). They have sought the


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entrepreneurial personality as having qualities, such as innovativeness and creativity (see

Hyrsky160); the ability to learn as well as the need for achievement, autonomy, and

independence (see Littunen161 and Bridge et al.162; locus of control (see Mazzarol et al.163);

initiative, self-confidence, self-determination, as well as tolerance for ambiguity and failure (see

Lambing & Kuehl164); and risk-taking propensity to gain profits (see Brockhaus165).Barreira166 compiled a list characteristics most often attributed to entrepreneurs by the

individual tradition, as follow:


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Table 3 (will be inserted here) Entrepreneurship Characteristics

On the contrary, scholars in the structural tradition seek to understand how social, cultural, and

institutional factors induce entrepreneurship167. Although some insist on the significance ofsocial distortion and marginalization, most of them agree that cultural and institutional

supports encourage entrepreneurship168. Under the structural tradition, supporting factors of

entrepreneurship can be categorized into three core dimensions169,170. They are the

regulatory dimension consisting of institutions and policies, the cognitive dimension consisting

of a widely shared social knowledge, and the normative dimension consisting of value systems.

Moreover, in the field of management, structural tradition researchers often emphasize on

distinctive organizational influence before an individual decides to work in a particular

established firm171. These researchers claim that organizations provide opportunities in

building confidence, knowledge about the opportunities, social networks, and access to criticalresources172. The importance of the totality of interpretation to reunite the two traditions has

been repeatedly reminded by various scholars such as Patricia Thornton173. She suggests the

use of sociological frameworks, an embeddedness perspective, ecological and institutional

theories, as well as multilevel models to integrate both traditions analyses of individuals,

groups, organizations, industries, and the characteristics of a society in explaining how, where,

and why entrepreneurship exist. However, these attempts appear to have failed174. There is

still no common link across the broad array of academic disciplines to reflect the rich diversity

of settings in which entrepreneurship may possibly takes place175. Thus, up until now,

questions on how cultural attributes affect entrepreneurship and how entrepreneurshipthrough its entrepreneurs act as the driver of cultural changes are treated as separate studies

by those traditions. This counter-intuitive situation prohibits the uncritical adoption of western

concepts in entrepreneurship studies and is considered not relevant in a culturally different

context176, 177 .

2.2 Culture and Entrepreneurship

The relational nature between culture and entrepreneurship is a circumstance hard to be

disputed. Although the hypothesized link between them is still not well established178, it has

become a generally accepted view that cultural factors affect entrepreneurial activity179. This

situation has motivated several disciplines, such as economics180, sociology181,

psychology182, and anthropology183 to raise several synthetic issues attributed to several

social characteristics, which consequently consist what we understand about their relationship.

Both traditions mentioned in the previous section put different emphasis on culture in their


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research. The individual tradition considers culture as an essential factor for the development

of psychological traits to pull entrepreneurship. In contrast, the structural tradition considers

culture as an important part of Kostovas184 normative and cognitive dimensions in order to

push entrepreneurship. These differences divided literatures discussing the relationship

between culture and entrepreneurship into two broad streams of research questions185:questions addressing the impact of cultural structure on entrepreneurial activity, inquired by

the structural tradition; and questions addressing the association between personal

entrepreneurial characteristics with entrepreneurship, inquired by the individual tradition.

Nevertheless, before discussing the differences between those traditions any further, it will be

best to discuss the definition and measurement of culture first.


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2.2.1 About culture

Kroeber and Kluckhohn186 made a critical review of culture based upon a compiled list of over

100 different definitions and concepts. They systematically sketched together different

meanings, then grouped them into six groups: descriptive, historical, normative, psychological,

structural, and genetic. They summarized that culture explains the way of life, thinking, feeling,

and believing, which not only comprises of social legacies and learned behaviour of an

individual, but also refers to the stored learning of society and groups187. Both men suggested

that culture is more than just social habits or patterns of behaviour learned and passed on from

generation to generation. In the 1950s, culture is defined as the ideational side of social action

or social practice, and anthropologists are called upon to view cultural analysis as the

interpretative study of behaviour. Geertz188, on the other hand gave a definition emphasizing

on symbol. He defined culture as a historically transmitted pattern of meanings embodied in

symbols, a system of inherited conceptions expressed in symbolic form by means of which men

communicate, perpetuate, and develop their knowledge about and attitudes towards life189.

He also placed attention to the regulatory function of culture on individual and gave an

emphasis on religion as cultural system. Until recently, parallel with entrepreneurship, there is

no single comprehensive definition of culture because it is also a multidimensional concept.

Williams190 admits that culture is one of the two or three most complicated words in the

English language. Further complications with the concept of culture arise from the slippage of

meaning between the academic usages and the popular usages of the term, and largely depend

on experiences and trends that shape it. Culture both as an individual and a social

phenomenon, connects individual behavior to community attitudes and values vice versa. It

characterizes the way of shaping society, consisting of rules for structuring and guiding societys

behavior. Hodgetts et al.191, outlines the definition of culture into six main characteristics.

First, culture is learned, not genetically or biologically inherited. Second, culture is

transgenerational or passed on through learning processes from generation to generation.

Third, culture is shared because it is shaped by groups, organizations, or entire societies.

Fourth, culture is symbolic because it defines how the world is perceived and how life is

organized. Fifth, culture is patterned, or in other words, it is integrated within a structure.

Finally, as it is based on human who are able to change and adapt, culture is dynamic and

adaptive. According to Hofstede, culture, or in his own word mental program, is intangible

and largely unobservable192. It is acquired only through the expression of variousmanifestations, which comprise of features that may well be learned. Hall193 dichotomized

culture into context, the lower and higher context respectively. In the lower context of culture,

most of the meanings of communication are embedded in explicit verbal expressions, whereas

in the higher context of culture, the meanings of communication depend heavily on the context

or non-verbal aspects of communications. Peterson clarifies this by noting that observable

cultural manifestations or the lower context194 of culture can be recognized very quickly,


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because they contain anything that can be perceived by human senses. He portrays culture as

an iceberg, puts the observable manifestations of culture above and the unobservable below

the water line of the iceberg (see Figure 2).

Figure 2 (will be inserted here) Culture as an Iceberg

Peterson argues that to understand all manifestations of culture, a researcher has to look

beyond the unperceived, studying the unobservable. He claims that the unobservable

manifestations are in fact the foundation of the observable, because they contain the hidden

origins of culture and act as the core of


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it. Brett195 supports Petersons argument by declaring that there is more to culture below

the surface. She furthermore claims that just like an iceberg, culture is not static, it drifts

and shifts 196. Wederspahn197 explains that the deep manifestations of culture however will

not drift rapidly overnight, even when the surface factors of culture shift over time due to

either modernization or trend. Hofstede et al.198 describes that the shifting of modern worldwill only affect the level of practices, not values. They are visible to outside observers and are

subsumed under the manifestations of symbols (words, gestures, pictures, or objects that carry

a particular meaning), heroes (persons, dead or alive, actual or imaginary, who serve as models

for behaviour in a particular community), and rituals (collective activities that are considered

socially essential by a community) (see Figure 3). Hofstede199 places value in the core of his

onion model of culture, which he holds as a critical feature that distinguishes one culture from

another. He believes that changes in values will still make it invisible and not converging,

because values lies only in the interpretation of the insider. Hofstede200 augmented that

changes in values are only due to four different kinds of effects: the maturation effects

(changes in personal values as a person grows older); the seniority effects (changes in personal

values because of greater responsibility); the generation effects (fixed personal values that

were built when adolescence); and the zeitgeist effects (changes in values that occur widely in a

society, regardless of age, due to drastic global changes or external shocks, such as political

revolution, war or recession).

Figure 3 (will be inserted here) Hofstedes Onion Diagram of Cultural Manifestations at

Different Level of depth

There are many different ways in analysing then subsequently measuring cultural

manifestations and differences. Especially for researches on entrepreneurship, Lalonde202

suggests the use of naturalistic method as a powerful tool to infer the complexity of culture.

Rituals, symbols, and heroes can be studied through content analysis of any recorded materials.

Values can be studied through direct observations, informal interviews, participation in the life

of the cultural group, collective discussions, analysing personal documents, self-analysis, and

life histories. Additionally, since cultural values affect the perception of an individual through

cognitive scheme, interpretation, and sense making, it is important to distinguish between how

people think the world should be or the desirable-values and what people want for

themselves or the desired-values when analysing statements on values obtained from

interviews203. The desirable-values maintain what is right or best. They relate more to

absolute, deontological, and ideological matters. Alternatively, the desired-values indicate the

choices actually made by the majority. They relate more to statistical, phenomenological, as

well as practical matters. Furthermore, cultural differences can be analysed using


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Rijamampianina and Maxwells204 framework of culture that takes into account the visibility

and centrality of values (see Figure 4).

Figure 4 (will be inserted here) Values Visibility and Centrality Framework

The most famous systematic attempt to study culture and cultural differences is made by

Hofstede. He aims to measure cultural difference between nations by utilizing national culture.

His work is based on the largest survey of work value at IBM subsidiaries that was held twice, in

1963 and in 1967 respectively, comprising of 116,000 questionnaires, from which over 60,000

people responded from over 40 countries206. Through these cross-cultural studies, overall he

identifies six main dimensions of cultural values, which he claims to affect human thinking,

organizations, and institutions in predictable ways. Those dimensions are power distance,

uncertainty avoidance, individualism, masculinity, longterm orientation, and indulgence versus

restraint. Although dimensions are hypothetical construct


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*and+ not directly accessible to observation207, Hofstede208 argues that they are the

aspect of a culture that can be measured relative to other culture. His pioneering study of

character based on a huge amount of data was taken up enthusiastically by many researchers.

It has been accepted and adopted quickly within academic and organizational environment

ever since. In addition to Hofstede, there is also a wide range of cross-national empirical studiesconducted by various other researchers (for a complete catalogue of these studies and their

measurement tools, see Taras209), such as Lynn210 who studied different national attitudes to

competitiveness and money; Mcgrath, Macmillan, and Scheinberg211 who examined cultural

values shared by entrepreneurs across the globe; or Tan212 who studied the impact of culture

and national context on entrepreneurs and nonentrepreneurs. Compared to those

researchers, Hofstedes research has a more remarkable effect on academics and

practitioners213. He is the most cited Dutch author and the ninth most cited European author

according to the Social Science Citation Index made in 2001214. His model is taught in

classrooms and has been instrumental in the implementation of various social contexts,

including cross-cultural issues of entrepreneurship215,216,217. Since his first publication in

1980, Hofstedes influence has become so pervasive and successively developed so many

offshoots. Even those who reject his theory or conclusions must at least acknowledge his work.

However, by assuming that there is a large degree of homogeneity within nation states as

opposed to large differences between nation states, and by considering that national culture is

a common component of a wider culture that contains both its global and sub-national

constituents218, Hofstede and his supporters overlooked cultural differences between regions

within countries219,220,221,222. Hofstede also tends to ignore the importance and variations

of the community influence223,224,225. Magala226 heavily criticizes Hofstedes theoretical

framework by denoting it as an in-built western bias. He concludes that all of Hofstedes

cultural dimensions are highly influenced by western perspectives because the entire research

process (particularly the empirical data gathering and processing) was conducted by western

scientists chosen exclusively. Hence, if there was at all any local culture containing dimension,

which were salient for individuals to identify but invisible to those unacquainted with the

local communitys tacit knowledge, or nonlinear with the six dimensions, they were deemed

as unnoticed or were labelled as aspects within the six dimensions, not as independent factors.

Child and Kieser227 admit that the boundaries in which culture is being shared are problematic,

thus according to them it may make as much sense to refer to a class or regional culture as

to a national culture. Since cultures are not necessarily bounded by borders and indeed

fragmented across groups and national lines, nations are not the proper units of

analysis228,229. McSweeney230 argues that the limited characterization of culture in

Hofstedes work, its confinement within the territory of states, and its methodological flaws

mean that it is a restrictor, not an enhancer, in understanding particularities. He claims that the

identification of allegations is fundamentally flawed and the attribution of national level to


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national cultures is an easy but impoverishing move. He regards Singular theories, such as

Hofstedes national culture, as profoundly problematic. The combination and single-level

analysis of these theories precludes considerations on the interaction between macroscopic

and microscopic cultural levels, or between the cultural and the non-cultural factors.

McSweeney suggests that to understand national culture, a researcher needs to know moreabout the richness and diversity of national practices and institutions, not by assuming their

homogeneity. This is why, searches for culture-fit models, which provide understanding of

how cultural variable explains the effect of different practices in different cultures, are

desirable231.


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2.2.2 Debates on their relationship

Various cross-national empirical studies underline the point that entrepreneurship in fact exists

in every country. However, while the economic and institutional characteristics discrepancies

among those countries are relatively low, the levels of entrepreneurship vary significantly232.

Since extensive research on culture has showed a link between values and practices, it is

plausible that differences in culture in which these values are imbedded, may influence a wide

range of practices including entrepreneurial decision233. Using this logic, several studies

explore the relationship between various aspects of culture and entrepreneurship across

cultures234,235,236. Weber237,238 started this exploration through his famous theory on how

religious doctrine provided the cultural legitimation needed to shape the economic behaviour

of individuals that led to the rise of capitalism. His theory eventually endorses the individual

and the structural traditions to develop research programs on the relationship between culture

and entrepreneurship. The individual tradition has demonstrated how culture and personality

guide entrepreneurship239, while the structural tradition has shown how entrepreneurial

opportunities are determined by the structure of various institutional networks240. As

mentioned in section 2.1, the central argument of the individual tradition and its trait oriented

approach is that special types of individuals pull entrepreneurship. To advance economically,

societies need an adequate supply of these special individuals. According to this tradition,

differences in the rate, form, and location of entrepreneurs and entrepreneurship are

attributed to differences in culture that creates effective characteristics of individuals engaged

in entrepreneurial activity. The individual tradition affirms that differences in entrepreneurship

can be predicted by differences found in individuals241. Yet, the influence of culture explained

by the individual tradition is difficult to establish and remains rather speculative242. The

tradition underplays the influences of external structure, illustrating economic activity merely

as a function of individuals243. In contrast, the structural tradition enhances the study of

entrepreneurship by concentrating on the prevalence of entrepreneurial values within the

realm of government and politics. These values may influence the scope of the private versus

the social sector to push entrepreneurship, particularly the utilities and personal services, the

degree of entry regulation of new business start-ups, and the extent to which innovative

regional clusters are fostered through private-public partnerships. Davidsson244 identifies two

different perspectives within the individual tradition, which contribute to a pull

entrepreneurial behaviour explanation on the relationship between culture andentrepreneurship. They are the aggregate psychological trait perspective and the social

legitimation perspective. The psychological trait perspective built its theory based on the idea

that if a society contains more people with entrepreneurial values, more people will be

entrepreneurs. It argues that the prevailing values and beliefs among others may make a

person more or less inclined towards new venture formation. Davidsson notes that this is

essentially the perspective taken by McClelland and other proponents of the individualistic view


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of culture, in which higher entrepreneurial activity is explained by aggregate effects of

individual characteristics. Alternatively, the social legitimation perspective views the impact of

social norms and institutions as the conduct of the society as a whole. It argues that the

relationship between culture and entrepreneurship may occur only if a region has a larger pool

of potential entrepreneurs245. In this perspective, higher entrepreneurial activity within somecountries can be explained by the general occurrence of culture and institutions favourable to

entrepreneurship. Thurik and Dejardin246 recognize a push explanation within the structural

tradition that contrasts with Davidsons perspectives in viewing the relational nature between

culture and entrepreneurship. The dissatisfaction perspective, as they call it, contends that

cross regional and national differences on


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entrepreneurial activity is due to differences in values and beliefs between individuals and the

populations as a whole. It assumed that clashes of values or dissatisfactions between groups

within a predominantly non-entrepreneurial culture may drive entrepreneurship to flourish247.

Huisman and de Ridder248 notice this clash of values can lead to frustration or personal crises.

According to Wennekers et al.249, this situation will drive potential entrepreneurs away fromthe average organization into selfemployment. Furthermore, the expected relationship

between cultural indicators and entrepreneurship described by this perspective may highly

conflict the expected relationship referred by the aggregate psychological trait perspective and

the social legitimation perspective250. For instance, Wennekers et al. 251 found higher self-

employment in countries with less prosperity (low GDP per capita), greater disappointment

with society, and lower life contentment. Another perspective within the structural tradition

that also attempts to explain the relationship between culture and entrepreneurship, is the

post-materialism concept introduced by Inglehart252. This perspective tries to describe

entrepreneurship within the transformation of a culturally materialisticoriented society into a

non-materialistic society who prefers life-goals beyond material purposes253. Post-materialism

based its value orientation on two hypotheses, the scarcity hypothesis and the socialization

hypothesis respectively. The first assumes that priorities of an individual reflect their

socioeconomic circumstances, where goods with a shortage of supply will have a subjectively

higher value. While, the second assumes that peoples basic values reflect the circumstances of

their childhood. The combination of these two hypotheses imply that younger birth cohorts by

means of intergenerational replacement will place lower degree of importance to materialistic

values (economic and physical security), and give higher priorities to post-materialistic values

(self-esteem and life satisfaction), compared to older birth cohorts who may have experienced

poverty in their early years. Although it supports the idea that culture affects entrepreneurial

activities and the state of post-materialism in the society negatively influences the rate of

entrepreneurship254, post-materialism sets a rather appalling conclusion that economic

conditions drive change in cultural values, rather than the reverse255. Bygrave and Minniti256,

who focus on the embeddedness of entrepreneurship in social and structural relationships,

suggest a combination of all of the perspectives above to link the individual and structural

traditions. They argue that entrepreneurship is a self-reinforcing process. They also give an

emphasis that entrepreneurs act as the catalysts of economic activity. Hence, they believe that

entrepreneurship leads to more entrepreneurship, and the degree of entrepreneurial activities

is the outcome of that dynamic process in which cultural habits are as important as legal and

economic incentives257. Bygrave and Minniti view entrepreneurial activity within a

community as an unintended consequence of many individual choices, and they claim that

entrepreneurship is an interdependent act. They foothold their argument on the concept of

collective behaviour, where the decision made by individuals does not depend on their

preferences alone, but is highly influenced by what others choose. Bygrave and Minnitis


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suggestion reaffirms Cooper and Denners258 portrayal on culture as capital, a theory of social

capital that refers to the relationships and networks from which individuals are able to derive

institutional support. Social capital is cumulative, leads to benefits in the social world, and can

be converted into other forms of capital. Nevertheless, regardless of various perspectives

offered by both traditions, this research will view culture as a crucial determinant of any socialsystem and human behaviours as functions of a specific socio-cultural system in which cultural

institutions may affect individual behaviours259,260. Entrepreneurs social actions, which are

fundamentally shaped by value system, are meaningful human behaviours that cannot be

separated from their social and cultural context261,262. Although human attitudes, beliefs, and

values are neither measurable nor precise, it will be more useful for this research to think of

them as


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meaningful in the world. Their meanings are multiple, changing, and contextual. They can only

be explored through the form of multiple mental constructions, socially and experientially, from

the actors point of view. This is why an interpretative procedure will be very essential in

reaching an understanding of how people describe things and experience them from their

socio-cultural standpoint263. A sociocultural analysis of entrepreneurial activity is ethical.Therefore, unlike traditional models and theories that focus solely on economic reality or

personality traits of individual entrepreneurs (see Covin and Slevin264), this research will

acquire holism that has the potential to lead to a satisfactory alternative paradigm for

entrepreneurship.

2.3 Portraying Entrepreneurship in Developing Countries

Most academics nowadays tend to agree that economies which discourage SMEs in any

common sense are therefore likely to discourage newer dynamic industries from putting down

the roots they may otherwise do265. Zimmerer and Scarborough266 even predicted in their

book that the 21st century would dawn with the greatest number of small businesses ever.

Their prediction turned out to be true and over the past two decades, new SMEs have been

identified by many governments as significant components of economic strategies for job

creation and wealth accumulation267,268,269,270. Still, these achievements would be

impossible without the presence of David Birch271. In the mid-1970s, he received a grant from

the Economic Development Administration of the United States to study how the movement of

enterprises across state boundaries state employment growth. He found and reported that

inter-state movement of enterprises was a minor part of the overall job changes, and that 82%

of the new jobs created came from SMEs272. Birchs systematic studies and empirical results

gave SMEs a place on the research map. His report not only opened up the research field, but

also received considerable attention from politicians and media, which placed a spotlight on the

situation and the importance of SME273. Beside all of the recognitions given to them, SMEs are

one of those things that is recognized when seen but difficult to define 274. Up until today,

there is no single, uniformly acceptable definition of SME275, because it varies significantly in

line with the scale of the economy concerned, the degree of development and the economic

structures that are present276. Early definitions of SME were often quite vague. Normally, the

dominant principle behind those definitions, such as adopted by the US (Small Business

Mobilization Act of 1942 and Small Business Act of 1953) or the UK (1971 Bolton Committees

definition), was on defining a disadvantaged enterprise that need to be supported in terms of

market share or bargaining power277. However, because small business policy has always

attracted direct and indirect subsidies to businesses identified as sufficiently small278,

definitions have gradually shifted towards a more objective sized thresholds that can be


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unambiguously enforced. Currently, almost all definitions on SME adopted by governments

worldwide employ a small number of thresholds against variables accepted as proxies for size,

which is ultimately a political decision, even though technical arguments for different

treatments abound (see Table 4).

Table 4 (will be inserted here) Quantitative Definitions Adopted by Several Southeast Asian

Nations and the European Union

Loecher280 categorized two groups of criteria in defining SME, the quantitative and qualitative

criteria respectively. For the first group, similarly to the above list, the term SME refers to

enterprises in different sectors with a given size of threshold that should not be exceeded. Due

to simplicity, compatibility, and practicality of the application, economists within the

quantitative group usually propose the number of employees and turnovers as the proxies to

define SME. Alternatively, the


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second group provides information on the nature of SMEs. It commonly suggests that the

relationship between the owner and institution within the framework of personal principle

and leadershipcapital unity as the most appropriate qualitative tool to define SME, and

differentiate it from Large Enterprise (LE). The personal principle framework analyses SMEs

manager in performing the central role in business decision making. Typically, she or he has afundamental overview of all technical, administrative, and organizational procedures in the

company. On the other hand, the leadership-capital unity framework examines SMEs manager

as the proprietor, who is frequently much more selfsufficient and independent than the

contracted management of LEs. While a variety of qualitative literatures inextricably associate

entrepreneurship with SME281, scholars in developed countries insist on a clear definition to

distinguish both of them. Nevertheless, as the major share of enterprises in developing

countries are small in terms of assets and many of them operate informally using family labour,

a clear distinction, as formerly insisted, will be very difficult to be achieved. In these countries,

entrepreneurship and SMEs are used synonymously and interchangeably to describe

entrepreneurial activities that include the formal and informal sectors282,283. For example,

Fafchamps284 found that market intermediation in Africa is characterized by the excess of

small traders that employ less than ten employees or family helpers. Moreover, due to their

abundance, the World Bank has instead focused on SMEs in its effort to target

entrepreneurship in developing countries285. Even if SMEs are not truly entrepreneurial in

nature, it must be acknowledged that entrepreneurial start-ups are often a subset of SMEs. As

Schumpeter286 once pointed out that to see the phenomenon even in the humblest levels

of the business world is quite essential though it may be difficult to find the humble

entrepreneurs historically. SMEs indeed hold the added allure of being a key component of a

wider economic development and poverty alleviation in developing countries287. They provide

an avenue for entrepreneurship288, where their growth in these countries is often used as an

indicator of entrepreneurial development. As previously noted, SMEs tend to dominate their

corporate communities, at least in terms of enterprise registrations, if not always in terms of

aggregate size. Furthermore, since they are labour intensive, SMEs are also recognized as a

major and sustainable generator of employment, as well as income for their citizens working

outside the public sector289. For example, in Cambodia, Laos, and Nepal, SMEs represent the

vast bulk of the corporate sector, accounting for approximately 99% of all firms, over 70% of

total employment, and more than 50% of GDP output290. Additionally, SMEs in developing

countries also serve as a useful bridge between the informal economy of family enterprise and

the formalized corporate sector, balancing development among regions291. They act as inter-

industrial linkages, or as supporting industries producing components and parts for LEs, either

via market mechanisms, subcontracting systems, or other forms of production linkages292.

SMEs are in general much more selfsufficient and independent, because they finance their

operations overwhelmingly by personal savings of the proprietors, supplemented by gifts or


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loans from relatives, from local informal moneylenders, traders, input suppliers, or payments in

advance from consumers. Similar to other developing countries, Indonesian SMEs have

historically been the main agent in domestic economic activities, especially as a large provider

of employment opportunities, thus a generator of primary or secondary source of income for

many households293. Moreover, because they are regionally dispersed, these enterprises alsoplay an important role as the engine for an equitable economic development by stimulating

economic growth, and enhancing income distribution at the rural and regional level294,295.

During the 1997 Asian Financial Crisis, SMEs in Indonesia also proved to be more resilient than

LEs. In 1998, when the crisis reached its climax and the national economic growth was at minus

13%, SMEs output contribution to the formation of real GDP rose to almost 41%. In 1999, that


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share increased to about 41.3%, but declined slightly in the next year to 40.4%296,297. Up Until

2008, the majority of Indonesian SMEs operate in the agriculture (including forestry and animal

husbandry, 52.48%), trading and hospitality (28.1%), production (6.32%), service (4.25%), and

transportation (6.25%) sectors of the economy. They employed approximately 94 million

people (97.15% of the total number of national employ) and in 2009, the number of IndonesianSMEs grew to roughly 52.76 million units, or approximately 99.99% of all business units298,299.

3. RESEARCH METHODOLOGY

A study on the relationship between culture and entrepreneurship includes social actors

embedded within the cultural system. Social actors, both the entrepreneur or other groups of

people involved with her or him, are characterized by diverse minds, psyches, emotions,

thoughts, feelings, senses, attitudes, beliefs, views, self, individuals, ideas, motivations,

consciousness, experience, education, skills, training, and behavioural patterns300. These

characterizations are multiple realities because they contain frequent discontinuities and

change in the real life context, hence positivistic science can be rejected as being an

inappropriate framework for investigation301. Matza302 argues, In the empirical world, man

is subjective, not objective, except when he is likened to one by himself or by another subject.

According to him, naturalism must choose the subjective view, and must consequently combine

the methods with the distinctive tools of humanism, such as experience, intuition, and

empathy. Thus, the paradigmatic disposition chosen to consider entrepreneurial activity in this

research will encompass the subjective as well as the objective elements of entrepreneurs

actions (see Figure 5).

Figure 5 (will be inserted here) Paradigmatic Projection of the Research

Henceforth, all of the sections will discuss the research methodology that will be utilized by this

research (see Figure 6). Methodology refers to the overall approach to the research process,

from the theoretical underpinning to the collection and analysis of the data303. Since there

are several methods that can be used in social science, explicitly defining a methodological

choice of study is important. In order to justify the methodology that will be employed in thisresearch, the research philosophy that will be adopted first needs to be addressed.

Understanding philosophical issues helps to identify the research design and provide good

answers to the central research question being investigated304.

Figure 6 (will be inserted here) Methodological Structure of the Research


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3.1 Choosing the Right Ism

A research philosophy is a set of basic beliefs and represents a worldview that defines, for its

holder, the nature of the world or the individuals place in it (ontology), also the range ofpossible relationships to that world or its part (epistemology)305. Ontology concerns with the

nature of the world or social reality, and what can be known about it306,307. Blanche,

Durrheim, and Painter308 define ontology as the nature of reality that is to be studied, and

what is to be known. Cohesively, epistemology refers to a general set of assumptions about

the best ways of inquiring into the nature of the world309, 310,311. Hussey and Hussey312

define epistemology as the study of knowledge and what we accept as valid knowledge.

The philosophy of social science as a whole can be classified into two main paradigms based on

its ontology, epistemology, and research design, namely positivism and interpretivism313.


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Positivism rely on the basic belief that reality is objective and is driven by immutable natural

laws, whereas interpretivism stems from the view that reality is not objective and exterior, but

is socially constructed and given meaning by people (see Table 5).

Table 5 (will be inserted here) Positivism versus Interpretivism

Since this research seeks to understand the relationship between culture and entrepreneurship

by describing and analysing entrepreneurs social actions through the form of multiple mental

constructions, socially and experientially, from the entrepreneurs point of view, the research

will settle for the interpretivism paradigm, which will be based on the constructionist ontology

and the interpretivist epistemology (see Figure 6). Schwandt315 explains both ontological and

epistemological terms as sensitizing concepts that direct researchers toward a particular view:

Proponents of these persuasions share the goal of understanding the complex world of lived

experience from the point of view of those who live it. This goal is variously spoken of as an

abiding concern for the life world, for the emic point of view, for understanding meaning, for

grasping the actors definition of a situation, for Verstehen. The world of lived reality and

situation-specific meanings that constitute the general object of investigation is thought to be

constructed by social actors. Bryman316 defines the constructionist ontology as an ontological

position which implies that social phenomenon and categories are not only produced via

social interaction but that they are in a constant state of revision. It regards all knowledge,

and therefore all meaningful reality as such, is contingent upon human practices, being

constructed in and out of interaction between human beings and their world, and developed

and transmitted within an essentially social context317. The constructionist ontology is

coherent with the interpretivist epistemology that comprehends the social world through an

examination of the interpretation of that world by its participants318. It accentuates on the

interpretive nature of inquiry, which is used to understand a particular phenomenon, not to

generalize a population. However, according to Seale319, this ontological and epistemological

mixture has its own limitation. He argues that it can promote a relativist perspective, which is a

view that everyone makes their own meaning and all views are equal. Hence, as a result, this

perspective fails to provide a basis for decisionmaking. Such failures usually occur when a

researcher is oblivious to the value-laden position of her or his interpretations that shape the

understanding of meaning. Wimmer and Dominick320 propose that this limitation should be

first recognized in order for the ontological and epistemological mixture to be useful. Thus,

during the course of the research, data and methodological triangulations will be used to

minimize the researchers subjectivity. Furthermore, because studying people in their own

community yields better results and in order to create a natural flow of the study, this research

will also combine interpretivism with the method of inquiry used by naturalism. Weber321


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suggested that this combination is important because they can mutually balance each other for

a more valid causal interpretation. According to him, verification of subjective interpretation

by comparison with the concrete course of events is indispensable322. In support of Weber,

Geertz323 supplemented that man is an animal suspended in webs of significance he himself

has spun, I take culture to be those webs, and the analysis of it to be therefore not anexperimental science in search of law but an interpretive one in search of meaning.

Bryman324 defines naturalism as a fusion of elements of interpretivist epistemology and

constructionist ontology. It is actually employed in social science to recognize that people are

not passive objects because they also


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attribute meaning to their behaviour and act as authors of their social world. Naturalistic

inquiry can be characterized by its natural research setting (to keep realities in their contexts),

qualitative methods, purposive sampling, inductive analysis, grounded theory, case study

reporting mode, tentative application of findings, and special criteria of trustworthiness325.

3.2 Designing an Exploratory Multiple-case Study

Leedy326 postulates that research design is the strategy, the plan, and the structure of

conducting a research study. Research design deals with a logical problem and not a

logistical problem327. It provides the overall framework for data collection. Since the

relationship between culture and entrepreneurship has not been clearly defined, this research

will adopt the exploratory research design that emphasizes on naturalistic research inquiries.

This design was chosen in order to respond to the central research question and observing the

requirements of the research paradigm. Rather than aiming to verify pre-defined theoretical

constructs concerned with specific issues, this research aims to generate new theories and

concepts from the data collected in the field. Moreover, considering the fact that it is also

concerned with the underlying pursuit of contextual depth328,329, this research will use a

multiple-case study approach, consisting of communities as cases (macro-cases) and several

individual entrepreneurs within those communities as sub-cases (micro-cases), to contribute

the unique relation between particular situations and the phenomenon of interest. According

to Yin330, A case study is an empirical enquiry that investigates a contemporary phenomenon

within its real-life context, especially when the boundaries between phenomenon and context

are not clearly evident and it relies on multiple sources of evidence. He also argues that

case study is the logical sequence that connects the empirical data to initial questions and

ultimately to its conclusions331. Sturman332 notes that while the techniques used in the

investigation may be varied, the distinguishing feature of case study is the belief that human

systems develop a characteristic wholeness or integrity and are not simply a loose collection of

traits. Glaser and Strauss333 even suggested that it could ideally buttress grounding theory,

which is the theory grounded from the data collected, in contrast to the theory generated from

logical deduction from a priori assumptions. Case study is indeed special because it focuses on

a bounded system, whether a single actor, a single classroom, a single institution, or a single

enterprise - usually under natural conditions 334. It involves the examination of a

phenomenon in natural settings. Even though researchers have no control over the

phenomenon, the scope and time of the examination can still be controlled. Case study

research does not require the researcher to pre-define all variables prior to the study, allowing

flexibility of variables emerging through the phases of data collection and analysis335. Such

strength will bring advantage to this research, which will be exploratory in nature. It is essential


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to permit the emergence of new variables during the research process in order to grasp the

reality and the complexity of interactions between culture and the entrepreneurs social actions

in the particular context of a culturally diverse developing country, such as Indonesia. Despite

the fact that case study has certain fundamental defining characteristics, distinction referring to

the number of cases under investigation is often made. A single-case study is characterized byYin336 as a study that: 1) represents the critical case in testing a well-formulated theory; 2)

represents an extreme case or a unique case; 3) represents a revelatory case; or 4) is the

representative or typical case. Whereas, the study of particular issues in a number of settings is

referred to as multiple-site study by Sturman337, collective case study by Stake338, or

multiple-case studies by Yin339. Single-case study allows researchers to investigate

phenomenon in depth in order to provide rich description and


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understanding340. Benbasat, Goldstein, and Mead341 nevertheless propose that a single case

used for exploration may be followed by a multiple-case study. Multiple cases are desirable if

the intention of the research is descriptive, theory building, or theory testing. Herriott and

Firestone342 saw multiple-case study as the emergence of a new form of qualitative

research, one intended to strengthen its ability to generalize while preserving in-depthdescription. It is noted by Sturman343 as a response to the perceived limitations of many

policies and an evaluative research for policy makers. According to Yin344, The evidence from

multiple cases is often considered more compelling, and the overall study is therefore regarded

as being more robust. Multiple-case study refers to multiple experiments - that is, to follow

a replication logic345, allowing cross-case analysis and comparison, and the investigation of a

particular phenomenon in diverse settings, which lead to more general results346. In this

research, the number of cases (communities) and sub-cases (individual entrepreneurs) to be

studied, however, will not be predetermined. The proper number will depend, first, on how

much is known about the phenomenon after studying a community, and second, how much

new information is likely to emerge from studying further Communities347. Multiple-case study

will help this research by producing literal and theoretical replication, which consequently will

increase the generalization of research findings348. Communities and individual entrepreneurs

will be carefully selected to produce similar or contrasting results for predictable reasons,

which will provide substantial support for the propositions349. Due to the fact that this

research also attempts to develop a theoretical framework in understanding the interface

between exogenous factors, the unique elements of the existing local culture, as well as

entrepreneurial activity within a country, multiple-case study will definitely improve the

likelihood of an accurate and reliable theory, in which the researcher may capture new findings

emerging from the data350. Multiple case studies enable the research to verify that findings

are not merely the result of peculiarities of the research setting351.

3.2.1 The need for a pilot study

In addition to a variety of information that has been mentioned previously in section 1.1,

Indonesia was selected as the research context because it will perfectly coagulate the research

objective in identifying the relationship between culture and entrepreneurship in a culturally

diverse developing country. Based on the concept of Orang, the contiguity of cultural

homogeneity and heterogeneity in Indonesia can be studied concurrently within a single

research site. Such situation will eventually deliver the most benefit in downplaying academic

interest in stable personality traits and broad contextual pressures, in favour of a more detailed

investigations and explanations of entrepreneurial action352. Nevertheless, as suggested by

Benbasat et al.353 and with the intention to familiarize the researcher with the phenomenon in


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its context, this research will first use a pilot study before determining the actual communities

or the actual individual entrepreneurs that will be regarded as cases and sub-cases. The pilot

study will be considered as a drift stage of the multiple-case study to be proposed in this

proposal, in which the researcher will learn first-hand the relevant jargon and context where

the phenomenon takes place354. This will be the stage where the research context will beobserved in order to obtain a better perspective on modifications necessary for the central

research question, as well as to ensure fruitful investigation355. Yin356 emphasizes this by

claiming that the final preparation for data collection is the conduct of a pilot case study. In

this research, the format of the pilot study, whether it will include a complete case or not, will

depend on the time and financial constrains that may appear during the research process.


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The pilot study will consist of two phases, the pre-test and the pilot test respectively. Yin356

describes pre-test as a dress-rehearsal in which the intended data collection plans will be used

as faithfully as possible. Hence, the first phase of the pilot study in this research will be more

influential, assisting the researcher to provide some conceptual clarification for the research

design and to develop lines of subquestion that will back up the central question. It will beaimed to test and refine the research conceptual framework through various consultations with

various reputable academics, religious or cultural leaders, and related government or non-

government officials in Indonesia. The initial conceptual framework (the first version)

developed before the pilot study, will be refined by integr

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The Relationship Between Culture and Entrepreneurship