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Entrepreneurial propensity in a transition

economy: exploring micro-level and meso-level


cultural antecedents
Cristian Chelariu
Sawyer School of Business, Suffolk University, Boston, Massachusetts, USA
Thomas G. Brashear
Isenberg School of Management, University of Massachusetts Amherst, Amherst, Massachusetts, USA
Talai Osmonbekov
W. Franke College of Business, Northern Arizona University, Flagstaff, Arizona, USA, and
Adriana Zait
Department of Management-Marketing, “Al.I.Cuza” University, Iasi, Romania

Abstract
Purpose – This paper aims to analyze antecedents of entrepreneurship propensity in two separate studies, at individual and organizational levels. The first
study proposes that the effect of individual cultural values on entrepreneurial propensity is mediated by the locus of control. The second study focuses on
the interaction effect between the individual’s need for autonomy and a bureaucratic culture characterized by high centralization and high formalization.
Design/methodology/approach – The approach takes the form of surveys of business students and retail salespeople in Romania and regression
analysis.
Findings – Internal locus of control predicts entrepreneurship propensity. Mediation effects were not supported. Centralization and formalization
stimulate entrepreneurial propensity, especially in salespeople with a high need for autonomy. In general, the individual cultural values approach
generated weak results, while the organizational culture approach showed strong support for the hypotheses.
Research limitations/implications – A combination of push and pull effects determines an individual’s entrepreneurial propensity. Personality traits,
such as internal locus of control and need for autonomy predict entrepreneurial propensity. But individuals are pushed into entrepreneurship by
negative factors, such as dissatisfaction with existing employment.
Practical implications – In transitional economies, entrepreneurial ventures are relied on to sustain a high growth rate, to serve the unmet needs of
the population, and to create jobs. Multinationals operating in transition countries could improve recruiting decisions by hiring managers with a high
internal locus of control and could then allow them decision-making power to satisfy their need for autonomy.
Originality/value – The paper analyzes antecedents of entrepreneurship propensity in two separate studies, at micro (individual) and meso
(organizational) levels, but set within the same transitional economy. This macro context is posited to shape both organizational culture and individual
cultural values and personality traits.

Keywords Entrepreneurialism, Control, Culture, Bureaucracy, Romania

Paper type Research paper

Entrepreneurship is the goal-oriented process whereby an to one-half (Zacharakis et al., 2000). Moreover, these results
individual identifies marketplace opportunities using creative are supported in both developed economies and emerging
thinking, secures resources, and adapts to the environment to economies (Berkowitz and DeJong, 2001). Given the
achieve desired results while assuming some portion of the beneficial impact on the economy, it is important to
risk for the venture (Smart and Conant, 1994). Individuals understand what factors at the national, organizational, and
animated by entrepreneurial spirit are the driving force individual levels predict entrepreneurial propensity.
creating new markets and promoting economic development At least two major approaches dominate entrepreneurship
(Schumpeter, 1968; Minniti, 1999). Estimates of the impact research. One approach has focused on national cultural
of entrepreneurial activity on the differences in growth rates antecedents to explain variation in entrepreneurship across
countries. This approach has generated inconsistent results
across countries range from one-third (Reynolds et al., 1999)
(Mueller and Thomas, 2001), and more recently, researchers
have begun to focus on other macro-level antecedents such as
The current issue and full text archive of this journal is available at environmental uncertainty (Baum and Locke, 2004) and the
www.emeraldinsight.com/0885-8624.htm institutional environment (Busenitz et al., 2000; Baughn et al.,
2006).
A second stream of research has focused on individual-level
Journal of Business & Industrial Marketing entrepreneurial traits, such as need for achievement, risk-
23/6 (2008) 405– 415
q Emerald Group Publishing Limited [ISSN 0885-8624] taking propensity, and innovativeness, as correlates of being or
[DOI 10.1108/08858620810894454] desiring to be an entrepreneur (Ahmed, 1985; Begley and

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Entrepreneurial propensity in a transition economy Journal of Business & Industrial Marketing
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

Boyd, 1987; Bonnett and Furnham, 1991). This line of “reclaim the individual” by studying the links between
inquiry also has generated inconsistent results, prompting personal attributes and socialization practices or institutional
scholars to call for research that includes not only individual processes (Bond, 2002). This approach also allows us to
characteristics, but also situational or contextual variables confirm the external validity of measurement instruments for
(Gartner, 1988; Aldrich and Martinez, 2001). cultural dimensions at the individual level (Donthu and Yoo,
The present study is situated in a transition economy, a 1998).
context characterized by radical change and crisis, factors The second study, at the meso-cultural level, focuses on the
traditionally associated with the emergence of interaction effect between the individual’s need for autonomy
entrepreneurship (Schumpeter, 1968; Ardichvili and and a bureaucratic culture characterized by high
Gasparishvili, 2003). Macro-level, institutional factors centralization and high formalization (Dwyer and Oh, 1987;
determine the structure, roles, and “rules of the game in a Aiken and Hage, 1966) and inimical to entrepreneurial
society” and influence individual behavior (North, 1990). In manifestation. Bureaucracies are the most pervasive type of
western economies, the entrepreneurial environment is organizational culture among command economy firms and
“nutrient rich” (Shapero, 1985), including access to
their transformation is one of the greatest difficulties facing
information and to tacit knowledge, besides tangible
transitional firms.
resources, such as access to capital. The legal framework is
Entrepreneurship has been studied by scholars in various
designed to stimulate entrepreneurship and, from a
disciplines including anthropology (e.g. Stewart, 1991),
sociocultural perspective, entrepreneurs possess an almost
psychology (e.g. Shaver and Scott, 1991), sociology (e.g.
mythical, hero-like status (Welter and Smallbone, 2003). In
contrast, in transitional economies, new small and medium- Reynolds, 1991), economics (e.g. Kirchhoff, 1994) and
sized enterprises have often emerged in spite of the “formal” management (e.g. Stevenson, 1985). However, consensus has
political and economic institutional limitations (e.g. yet to be reached on the conceptual definition of this
Berkowitz and DeJong, 2001; McMillan and Woodruff, construct (Shaver and Scott, 1991). Some researchers
2002; Peng and Heath, 1996; Peng, 2000; Yan and emphasize the behavior of creating a new enterprise
Manolova, 1998). (Gartner, 1985) and others argue that personal
While “formal” limitations are gradually eliminated as these characteristics of the founders are fundamental to the
countries advance on the path to a market economy, deeper definition of entrepreneurial orientation (Timmons, 1978;
cultural transformations at the meso and micro levels may be Dunkelberg and Cooper, 1982). For example, the term
more difficult to bring about (Luthans et al., 2000). At the “potential entrepreneur” was used to describe individuals
meso (or organizational) level, transition processes, such as possessing traits, skills, and desires that can motivate
privatization, were shown to impact entrepreneurial outcomes entrepreneurial behavior (Krueger and Brazeal, 1994) or
through organizational-level transformations in structures and increase its likelihood (Mueller and Thomas, 2001; Mueller,
culture (Zahra et al., 2000). At the individual level, 2004).
entrepreneurship in transitional economies may still be Our dependent variable is entrepreneurial propensity,
limited by informal, normative constraints, many of them defined as an individual’s favorable predisposition towards
“remnants of socialist attitudes” (Lukasiewicz and Sicinski, new venture creation. Focusing on actual enterprise creation
1992, p. 116), such as apathy, learned helplessness, would greatly understate the entrepreneurial potential in
lawlessness and corruption, and, more importantly, the transition economies, because economic and institutional
attitude that private entrepreneurship runs counter to social constraints, such as lack of available credit, bureaucratic red
norms (Smallbone and Welter, 2001). On the other hand, tape, and lack of information are powerful deterrents for those
some scholars argue that the large size of the unrecorded who want to open a new business (Kaufmann et al., 1995).
economy in some countries could be interpreted as a “strong Even in a western setting, scholars found that there are many
reflection of entrepreneurial behavior” (Reynolds, 1991, potential entrepreneurs in an organization even if intentions
p. 58). to start a new venture are not overtly displayed (Brazeal,
This paper contributes to the existing debates within the
1993).
entrepreneurship literature by analyzing antecedents of
From a practical perspective, entrepreneurship is
entrepreneurship propensity in two separate studies, at
particularly important in emerging and transitional
micro (individual) and meso (organizational) levels, but set
economies. In this context, entrepreneurial ventures are
within the same transitional economy. This macro context
relied on to sustain a high growth rate, to serve the unmet
shapes both organizational culture and individual cultural
values and personality traits. needs of the population, and to create jobs needed to absorb
The first study posits that the effect of individual cultural the excess numbers in the workforce resulting from the
values on entrepreneurial propensity is mediated by an restructuring of state-owned firms (Thomas and Mueller,
individual’s locus of control. We attempt a departure from the 2000).
existing theoretical tradition by analyzing Hofstede’s (1980) We begin with a study of the relationship between
classic dimensions of culture (power distance, masculinity, individual values, locus of control and entrepreneurial
uncertainty avoidance, and individualism) at the individual propensity. Then, a second study follows, exploring the
level. Hofstede’s typology was developed originally by interaction effect of a salesperson’s need for autonomy and
measuring employees’ personal values, aggregated using the level of bureaucracy in the firm on the entrepreneurial
Inkeles and Levinson’s (1969) modal personality concept to propensity of the salesperson. In the methodology section, we
obtain scores for cultural norms at the national level. Lately, discuss the data collection, the data analysis, and the results.
cultural psychologists have emphasized the need to move Finally, we conclude the paper with limitations and
away from “wrestling with the ghosts” of Hofstede’s legacy to implications for researchers and managers.

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Entrepreneurial propensity in a transition economy Journal of Business & Industrial Marketing
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

Study 1 H2. The “Powerful other” dimension of an individual’s


locus of control is negatively related to the individual’s
Individual values, locus of control, and entrepreneurial entrepreneurial propensity.
propensity H3. The “Chance” dimension of an individual’s locus of
Societal institutions or codes of conduct, values and norms control is negatively related to the individual’s
that “come from socially transmitted information and are part entrepreneurial propensity.
of the heritage that we call culture” (North, 1990) are
important to the entrepreneurial spirit. To the extent that
beliefs and attitudes serve primarily a social adjustment Cultural values and locus of control
Cultural dimensions give a foundation for the development of
function, they are likely to change if social norms change.
individual values that in turn influence people’s attitudes and
Accordingly, we propose that a larger transformation at the
behaviors. In many recent studies, entrepreneurship and
societal level modifies the individual’s value system, in terms
culture have been linked (e.g. Mueller, 2004; Mueller and
of individualism, power distance, masculinity and uncertainty
Thomas, 2001; Danis and Shipilov, 2002) at both macro and
avoidance. These changes in values affect the individual’s micro levels. For example, national culture influences the
system of beliefs (such as locus of control) and, in turn, affect formation of technology alliances by entrepreneurial firms
an individual’s attitude towards entrepreneurship. The (Steensma et al., 2000) or shapes the manifestation of
hypothesized relationships between individual values, locus entrepreneurial behaviors, such as championing, in
of control beliefs and entrepreneurial attitude are summarized organizations (Shane, 1994).
in Figure 1. In the following, we will examine these links in At the micro level, the impact of cultural values on
more detail. entrepreneurship has found mixed support. Some studies
have shown that entrepreneurs have higher power distance,
individualism and masculinity, and lower uncertainty
Locus of control and entrepreneurial propensity avoidance, when compared to managers (McGrath et al.,
Following its emergence in social psychology, locus-of-control 1992; Busenitz and Lau, 1996). On the other hand, studies
research (Rotter, 1966) has been applied in personality done in Portugal (Morris et al., 1994) or Israel (Baum et al.,
research (Cox and Ferguson, 1991; Levenson, 1974), sales 1993) found no support for the relationship between
(Srivastava and Sager, 1999), accounting (Frucot and Sharon, individualism and entrepreneurship. A study of Russian and
1991), and in the entrepreneurship literature (Kaufmann Georgian entrepreneurs found that they score lower on
et al., 1995; Shaver and Scott, 1991; Gartner, 1985). masculinity and individualism, but higher on power distance
Perceived internal locus of control is defined as “the than managers or employees from the same country
personal belief that one has influence over outcomes (Ardichvili and Gasparishvili, 2003).
through ability, effort, or skills; whereas external locus of These inconsistencies suggest the need to explore the
control is the belief that external forces control outcomes” possibility of mediation or moderation effects. Cultural values
(Kaufmann et al., 1995, p. 44). Levenson (1974) argues that are considered to have a significant effect on personality traits
while the internal locus of control is unidimensional, the (Hofstede and McCrae, 2004) and specifically on locus of
external locus of control can be explained by people’s beliefs control (Mueller, 2004; Mueller and Thomas, 2001;
about powerful others that influence their lives, as well as by Kaufmann et al., 1995), thus providing us with an
the influence of blind fate, luck or chance. Levenson (1974) important potential mediator. Specifically, we posit that
developed the IPC locus of control scale where “I” stands for individual cultural values affect an individual’s
internal locus of control, “P” for powerful others and “C” for entrepreneurial propensity, not directly but through the
chance. cognition of the individual and the formation of beliefs about
The link between locus of control and entrepreneurship has her locus of control. In the following, we explore separately the
been studied before, although very little in a transitional link between locus of control dimensions and each of the
setting. In general, studies found a positive correlation individual values.
between internal locus of control and various measures of
entrepreneurial tendencies (see for example, Brockhaus, Power distance
Power distance has been defined as “the extent to which the
1982; Bonnett and Furnham, 1991, on student samples;
less powerful members of institutions and organizations
and Pandey and Tewary, 1979, on entrepreneurs). Based on
within a country expect and accept that power is distributed
the existing theory, we advance the following propositions:
unequally” (Hofstede, 1991, p. 27). People characterized by
H1. The “Internal” dimension of an individual’s locus of large power distance demonstrate high tolerance for lack of
control is positively related to the individual’s autonomy and greater reliance on centralization and
entrepreneurial propensity. formalization of authority (Hofstede, 1980), and show more

Figure 1 The values-locus of control-entrepreneurship model

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Entrepreneurial propensity in a transition economy Journal of Business & Industrial Marketing
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

tolerance in accepting power hierarchy (Kale, 1993). Donthu (Hofstede, 1991, p. 51). In an individualistic society, people
and Yoo (1998) posit that in a society with large power have a great sense of autonomy and personal sustainability,
distance, authoritarian and coercive power strategies perform while in collectivist societies, people place importance on
well. Morris and Pavett (1992) found that non-coercive, group and social needs (Hofstede, 1980). Individualistic
participative management works well with Americans societies such as the US value job specialization, individual
(because of the small power distance norm) but not with rewards, flexibility, fairness, self-orientation, a competitive
Mexicans (characterized by a relatively large power distance climate, and self-confidence. On the other hand, collectivistic
norm). Jaeger (1986) explains this phenomenon by pointing societies such as China value cooperation, harmony,
out that team building and team decision-making activities in friendship, interdependence, conformity, forgiveness, and
general cannot be effective with employees characterized by social usefulness (Donthu and Yoo, 1998). Consequently,
large power distance because employees from different individual-based training is found to generate better
departments do not feel comfortable interacting face-to-face performance for American managers and group-based
with higher-ranking team members. training is found to lead to better performance for Chinese
People with high power distance tend to accept power managers (Earley, 1994).
hierarchy (Kale, 1993), tend to avoid arguments with senior People from a highly individualistic society tend to be
management, and rely on formalized and centralized
independent and self-reliant. They believe in their ability to
authority. This could indicate that the higher the power
control their achievements and success in life. In general,
distance in individuals, the more they will perceive that the
previous studies found lower internal control in countries that
outcomes of their activities depend on people in power and
are more collectivistic than the USA, such as Russia
not on themselves.
(Kaufmann et al., 1995), China and Yugoslavia (Mueller
H4. The greater an individual’s power distance, the greater and Thomas, 2001) or Hong Kong (Ralston et al., 1993).
the “Powerful other” locus of control.
H5. The greater an individual’s power distance, the lower H7. The greater an individual’s collectivism, the lower is
the “I” dimension of locus of control. the “Internal” locus of control.

Uncertainty avoidance Masculinity/femininity


Uncertainty avoidance is defined as “the extent to which The cultural dimension of masculinity/femininity represents
members of a culture feel threatened by uncertain or
“the dominant sex role pattern in the vast majority of both
unknown situations” (Hofstede, 1991, p. 113). People with
traditional and modern societies” (Hofstede, 1980, p. 277).
high uncertainty avoidance have low tolerance for uncertain
People in highly feminine cultures value affiliation and
situations because of a fear of indeterminate outcomes. They
nurturance. In contrast, people in highly masculine cultures
display a great level of anxiety about their actions and require
value achievement, assertiveness and acquisition as well as
highly structured and clearly defined instructions for actions.
In effect, a society with high uncertainty avoidance may be action-oriented behavior (Newman and Nollen, 1996).
referred to as rigid, whereas a society with low uncertainty People with a high internal locus of control exhibit strong
avoidance may be called flexible (Hofstede, 1991). The level internal motivation to reach their ambitious goals without
of uncertainty avoidance in a society determines the types of reliance on others. Accordingly, we posit that masculinity has
behaviors and actions of people in reacting to the ambiguities a positive impact on internal locus of control.
of the environment (Hofstede, 1980). In an organizational H8. The greater the masculinity, the greater the “Internal”
setting, uncertainty avoidance is manifested in the clarity and locus of control.
precision of rules, job descriptions and procedures. Clear and
precise rules trigger higher performance in high uncertainty- On the other hand, highly masculine cultures are
avoidance cultures (Newman and Nollen, 1996). characterized by a variety of seemingly disparate phenomena
People of low uncertainty avoidance tend to take risks manifested in family, work, and political settings that together
easily, accept ambiguities in the surrounding environment and point to a positive correlation with the “powerful other”
tolerate beliefs and actions dissimilar to their own. People of dimension of locus of control. For example, highly masculine
high uncertainty avoidance try to control the random element societies support strong candidates in politics and believe that
in the environment and strive to achieve more control over international conflicts should be solved by show of force or
events and situations (Donthu and Yoo, 1998). Thus we fighting (Hofstede, 2000, p. 323). In the workplace,
hypothesize: masculine cultures tend to see managers as cultural heroes,
resolve conflicts by fighting, and see promotion as depending
H6. The greater an individual’s uncertainty avoidance, the
on protection (Hofstede, 2000, p. 318). Accordingly, we
lower the “Chance” locus of control.
hypothesize:
H9. The greater the masculinity, the greater the “powerful
Individualism/collectivism others” locus of control.
A society is considered individualistic when the ties between
individuals are loose and people are expected to look after So far, we have looked at how individual cultural dimensions
themselves and their immediate family (Hofstede, 1980). On impact locus of control perceptions and, from there, the
the other hand collectivism “pertains to societies in which entrepreneurial propensity. In the second study we will
people from birth onwards are integrated into strong, cohesive analyze how the individual’s need for autonomy interacts with
groups, which throughout people’s lifetime continue to the bureaucratic culture of the organization to motivate
protect them in exchange for unquestioning loyalty” entrepreneurial propensity (see Figure 2).

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Entrepreneurial propensity in a transition economy Journal of Business & Industrial Marketing
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

Figure 2 The salesperson’s need for autonomy in a bureaucratic organization – moderating effects

Study 2 rules and procedures by setting up their own business


(Podsakoff et al., 1986; Organ and Green, 1981).
The need for autonomy in a bureaucratic organizational
culture – an interaction approach H12. Higher formalization will strengthen the relationship
Desire for autonomy, along with interest in personal between need for autonomy and entrepreneurial
achievement and unhappiness in the current job or career, propensity.
has long been identified as an important motivator for
entrepreneurial action (Gilad and Levine, 1986). Autonomy Methodology
refers to the ability and will of an individual to be self-directed
in the pursuit of opportunities (Lumpkin and Dess, 1996). Instruments and data collection
Entrepreneurial propensity requires a capacity for Data for both studies was collected in a city of 400,000 people
independent action on the part of the individual, in terms of in northeast Romania. Romania is an ideal setting for our
articulating a vision for the business, implementing it, and study, because it is less advanced in the transition process
carrying it forward to completion. Previous studies found that than some of the Central European nations (Czech Republic,
the most entrepreneurial firms have the most autonomous Hungary, Poland), but more advanced than some of the
leaders, both in a developed economy and in a developing former Soviet republics (Moldova, Ukraine, Belarus, Central
economy (Shrivastava and Grant, 1985). Consequently, we Asian republics).
hypothesize that: For both studies, we used an anonymous, self-report
questionnaire for data collection. Special attention was
H10. The greater the salesperson’s need for autonomy, the focused on the selection of the measures and the
greater the salesperson’s entrepreneurial propensity. development of the instruments due to the extension of
At least two well-established paradigms can be used to existing constructs to an international setting (Davis et al.,
theoretically frame dissatisfaction with the current job as a 1981; Singh, 1995). All constructs and their measurement
motivator for entrepreneurial action. The expectancy theory items were assessed to determine if the construct of interest
assumes that individuals make a conscious choice among had both functional and conceptual equivalence (i.e. has the
alternatives (current job situation versus owning one’s own same meaning in the target population and refers to the same
business), with the purpose of maximizing pleasure and behaviors and/or attitudes). To assure linguistic equivalence,
minimizing pain (Vroom, 1964). Similarly, when applying the the scales were translated into Romanian independently by a
social exchange theory, we assume that individuals compare native speaker, and translated back into English by a
professional translator from Romania. The two English
their current occupational outcomes with the alternatives and
versions of the questionnaire were compared and no
engage in entrepreneurial action if this is a viable alternative to
significant differences were observed. The survey was then
maximize their outcomes (Thibaut and Kelley, 1959).
pre-tested in Romania to assure equivalence.
Two dimensions characterize bureaucratic organizations:
centralization and formalization (Dwyer and Oh, 1987). Samples
Centralization refers to a limited delegation of decision- For the first study, given the focus on entrepreneurial
making authority throughout an organization (Aiken and propensity as determined by cultural dimensions, the
Hage, 1966). Higher centralization reduces the employees’ sampling frame was formed of senior business students in a
involvement in decision making, their job satisfaction, and major university in Romania. A student sample was
their organizational commitment (Morris and Steers, 1980). appropriate because it allowed us to isolate the impact of
Employees with a greater desire for autonomy are more likely organizational variables like the ones we used in the second
to resent this lack of involvement in decision making in the study. Moreover, student samples have been used in previous
organization and to want to set up their own business in studies to look at potential in transitional and emerging
response. markets (e.g. Danis and Shipilov, 2004; Hui et al., 2004;
H11. Higher centralization in the firm will strengthen the Mueller, 2004) and they allow us to capture the
relationship between need for autonomy and entrepreneurial propensity of future managers or
entrepreneurs. One of the authors collected the data among
entrepreneurial propensity.
business students at the local university, as part of a project
Formalization represents the degree to which administrative for a marketing research class. No incentives were used and
rules, policies, and procedures define roles, authority relations the data collection resulted in completed questionnaires from
and communications, norms and sanctions, and procedures 157 respondents.
(Hall, 1972). Employees with a higher need for autonomy are For the second study, focusing on the impact of
more likely to avoid the constraints imposed by organizational organizational variables on entrepreneurial propensity, we

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Entrepreneurial propensity in a transition economy Journal of Business & Industrial Marketing
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

used a sample of retail salespeople. The retail sector witnessed between the locus of control variables and entrepreneurial
the first manifestations of entrepreneurship in transition propensity. H1 received weak support, showing that Internal
economies. By the nature of their position, retail salespeople locus of control has a positive relationship with
are in direct contact with both the market and the Entrepreneurial Propensity. On the other hand, H2 and H3
entrepreneurial venture. Thus, they have better access to were not supported, indicating that Powerful other and
information, because they are better able to spot Chance are not predictors of entrepreneurial propensity.
opportunities and also are familiar with the constraints H4 and H5 looked at the effects of Power distance on the
faced by entrepreneurs. Powerful other and Internal dimensions of locus of control.
A total of 500 questionnaires were distributed in various The results show that both hypotheses were supported, at
commercial areas of the city, with an accompanying cover 0.01 and 0.1 significance levels respectively. Thus, Power
letter stating that the study was a joint project between distance is negatively related to Internal, and positively related
universities in the USA and the local university. The cover to Powerful others dimension of locus of control.
letter also informed the potential respondents that the survey H6 predicted a negative relationship between Uncertainty
aimed to obtain salespeople’s perspective on various avoidance and Chance, while H7 predicted a negative
organizational factors that affect retail salespeople in a relationship between Collectivism and Internal locus of
transition economy. Each salesperson received a monetary control. These two hypotheses were not supported.
incentive equivalent to the price of a cup of coffee. The data H8 and H9 propose positive relationships between
collection yielded 426 returned questionnaires. Of those, 29 Masculinity and two dimensions of locus of control: Internal
were found to have incomplete data or to have been and Powerful others. H8, linking masculinity and the Internal
completed by someone other than a salesperson. The usable dimension of locus of control, was not supported, while H9,
sample of 397 represents a 79 percent response rate. linking Masculinity and the Powerful others dimension shows
The majority of salespeople responding to the survey were weak support.
female (80 percent). The average age of respondents was 31 Overall, the impact of cultural values on locus of control can
with ages ranging from 19 to 42. More than half were married be characterized as weak. The only strong result links Power
and had children. Of the salespeople, 77 percent had high distance and the Powerful others dimension of locus of
school education or some college and 10 percent had college control, with weak support for the Power distance – Internal
degrees. and the Masculinity – Powerful others relationships.
These weak results suggest the need to consider moderating
Measures variables. Recent studies suggest gender can play such a
Measures for personal values were adapted from the Cultural moderating role, especially with respect to the masculinity
Values (CV) scales that capture Hofstede’s dimensions at the dimension (Mueller, 2004). Age is also a potential moderator,
individual level (Donthu and Yoo, 1998; Yoo and Donthu, because younger generations, socialized during transition, are
2002; Sayrac-Yaveroglu and Donthu, 2002; Kwok and likely to espouse different cultural values than older
Uncles, 2005). As shown in the Appendix, Power distance, generations.
Collectivism, Uncertainty Avoidance and Masculinity were One of the aims of Study 1 was to explore the potential
measured with four to six items each, and had Cronbach mediator effect of locus of control between cultural
alphas exceeding the recommended 0.7 threshold. To dimensions and entrepreneurial propensity. To this end, we
measure the locus of control dimensions, we used the scale ran a regression using cultural dimensions as independent
developed by Levenson (1974) and validated by Kaufmann variables and entrepreneurial propensity as the dependent
et al. (1995) in a study of entrepreneurship in Russia. The
variable. As shown in Table I, none of the regression
Internal, Powerful other, and Chance dimensions were
coefficients were significant. Furthermore, Sobel tests using
measured with four, eight and seven items respectively and
the results in Table I showed no significant mediation effects.
had Cronbach alphas of 0.66, 0.92 and 0.87. Finally,
entrepreneurial propensity was measured with a scale used
by Kaufmann et al. (1995). The alpha for this two-item scale Study 2
was 0.78. Study 2 proposed three hypotheses, one covering the direct
For the second study, centralization and formalization were effect of need for autonomy on entrepreneurial propensity,
measured with two scales of five and six items respectively, and the other two referring to the moderating effect of
adapted from Jaworski and Kohli (1993). Coefficient alphas centralization and formalization as dimensions of bureaucratic
for the measures were 0.76 for centralization and 0.87 for cultures.
formalization. The need for autonomy was measured with six As can be seen in Table II, the need for autonomy has a
items and had a Cronbach alpha of 0.83. Entrepreneurial significant positive correlation with the salesperson’s
propensity was measured with the same two items that were entrepreneurial propensity, thus confirming H10. In terms
used in Study 1, and had an alpha of 0.7. of the two moderating effects, only H11 is supported,
enabling us to conclude that centralization of the firm
increases the entrepreneurial propensity of salespeople with a
Analysis and results
high need for autonomy.
Study 1 The analysis of the results in Table II also reveals a
We ran four separate ordinary least squares regressions to test significant direct effect of centralization and formalization on
our hypotheses. The parameter estimates and the associated entrepreneurial propensity. These results imply that,
significance levels are shown in Table I. regardless of the individual salesperson’s need for autonomy,
In general, the results from Study 1 provided mixed support the level of bureaucracy in a firm’s culture tends to increase
for our hypotheses. H1, H2 and H3 assessed the relationships salespeople’s entrepreneurial propensity. In this case,

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Entrepreneurial propensity in a transition economy Journal of Business & Industrial Marketing
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

Table I Regression analysis results


Dependent variables
Independent variables I P C Entrep Entrep Entrep
Power distance 2 0.143 * 0.217 * * 0.106 2 0.07 20.056
Uncertainty avoidance 0.028 2 0.056 2 0.114 0.12 0.111
Collectivism 2 0.036 0.018 0.073 0.09 0.097
Masculinity 0.080 0.147 * 0.092 2 0.02 20.031
Internal 0.152 * 0.150 *
Power 0.028 0.406
Chance 2 0.029 20.273
Adj R2 0.006 0.065 0.012 0.004 0.004 0.007
F value 0.774 3.73 1.481 1.14 1.21 1.16
Notes: * p , 0.10; * * p , 0.01; Parameter estimates are standardized

Table II Need for autonomy – moderating effects factors, such as meeting the right people, which are beyond
the control of the individual and depend in great measure on
Main effects sheer luck. In contrast, in a Russian student sample, internal
Centralization 0.093 (1.8) * locus of control predicted entrepreneurial propensity
Formalization 0.123 (2.4) * * (Kaufmann et al., 1995). Our findings from a sample of
Need for autonomy 0.258 (5.1) * * * Romanian students found a similar (albeit weak) positive
effect of internal locus of control on entrepreneurial
Interaction terms propensity, as people with strong internal motivation to
Centralization 3 need for autonomy 0.17 (3.37) * * * succeed are more likely to create new ventures.
Formalization 3 need for autonomy 0.08 (1.62) Entrepreneurial propensity is an important factor for
Incremental R2 0.039 creating new ventures as well as developing an
F change 2.388 entrepreneurial culture within a large company. Our findings
Significance of F change 0.103 could be useful for multinationals operating in transition
countries, which could benefit from understanding local
Full model culture and its impact on creating joint ventures with local
F(5, 370) 12.9 entrepreneurs. This finding could lend itself to better
Significance 0.000 recruiting decisions when establishing a foreign subsidiary in
R2 0.150 a transition economy. If the strategic goal of a global company
Adj. R2 0.139 is to establish a local network, it should deploy an
Notes: * p , 0.1, * * p , 0.05, * * * p , 0.01; Parameter estimates are
entrepreneurial person with a high internal locus of control
standardized, with t-values in parentheses and allow this person considerable decision-making power to
satisfy her need for autonomy.

entrepreneurial propensity can be interpreted as a form of Limitations and future research


turnover intention. Several limitations in our two studies must be pointed out.
First, our samples were drawn from only one country,
Discussion of results and managerial implications Romania. This limits the external validity of our findings,
although one can argue that the historical events of the second
Based on the results from these two studies, an individual’s half of the twentieth century had a homogenizing impact on
entrepreneurial propensity is determined by a combination of all the countries of the former socialist bloc and replications of
push and pull effects (Mueller and Thomas, 2001). Personality the present study would be likely to produce similar results.
traits, such as an internal locus of control and a need for Second, we used business students and salespeople in our
autonomy, make individuals more likely to embrace samples. While the entrepreneurial propensity of these future
entrepreneurial propensity. On the other hand, some managers is important for advancement on the path of the
individuals are pushed into entrepreneurship by negative market economy, future research should look at examining
factors, such as dissatisfaction with existing employment or entrepreneurial propensity across other categories (Mueller,
job loss. Our results show that centralization and formalization 2004).
of the organization stimulate entrepreneurial propensity, Future studies could enlarge the nomological network of
especially in salespeople with a high need for autonomy. culture, individual traits and entrepreneurship. With respect
Kaufmann et al. (1995) find that Russian entrepreneurs, as to cultural dimensions, future studies could explore the
opposed to American entrepreneurs, attribute their success to Confucian dynamic dimension, or other cultural dimensions,
people in power and to chance. In high power distance such as materialism. We analyzed only two personality traits,
cultures, people are more likely to accept arbitrary decisions internal locus of control and need for autonomy. Other studies
or behavior on the part of the authority figures. In these could analyze the interaction between the specific institutional
cultures, solving one’s problems depends on a number of conditions in transition economies and other personality traits

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Entrepreneurial propensity in a transition economy Journal of Business & Industrial Marketing
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

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When I make plans, I am almost certain to make them
Personal Selling and Sales Management, Vol. 19 No. 2, work.
pp. 47-57. .
It is usually up to me to protect my personal interest.
Steensma, H.K., Marino, L., Weaver, M.K. and Dickinson, .
When I get what I want it is usually because I worked hard
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My life is mostly determined by my own actions.
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What happens in my life is mostly determined by powerful
Entrepreneurship: What It Is and How to Teach It, HBR people.
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.
Even though I might have good ability, I will never
Stewart, A. (1991), “A prospectus on the anthropology of become a leader without asking those in positions of
entrepreneurship”, Entrepreneurship, Theory and Practice, power.
Vol. 16 No. 2, pp. 71-92.
.
My life is mostly controlled by people more powerful than
Thibaut, J.W. and Kelley, H.H. (1959), The Social Psychology me.
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.
People like me have little chance of protecting our
Thomas, A.S. and Mueller, S.L. (2000), “A case for personal interests from strong pressure groups.
comparative entrepreneurship: assessing the relevance of
.
To get what I want I have to please the people above me.
culture”, Journal of International Business Studies, Vol. 31
.
If important people did not like me, I probably would not
No. 2, pp. 287-301. make many friends.
Timmons, J.A. (1978), “Characteristics and role demands of
.
Whether or not I get into an accident depends mostly on
entrepreneurship”, American Journal of Small Business, the people around me.
Vol. 3, pp. 5-17.
.
In order for my plans to work, I make sure that they fit in
Vroom, V. (1964), Work and Motivation, Wiley, New York, NY. with the plans of people above me.
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enterprise strategies in transition economies: an institutional Locus of control – Chance dimension (a ¼ 0.87)
perspective”, in Kirby, D. and Watson, A. (Eds), Small .
Many times there is no chance of protecting myself from
Firms and Economic Development in Developed and Transition bad luck.
Economies: A Reader, Ashgate Publishing, Burlington, VT, .
I have found that what is going to happen will happen.
pp. 95-114. .
Whether or not I get into an accident is mostly dependent
Yan, A. and Manolova, T.S. (1998), “New and small players on the people around me.
on shaky ground: a multicase study of emerging .
It is not a good idea to plan too far ahead because too
entrepreneurial firms in a transforming economy”, Journal many things depend on luck.
of Applied Management Studies, Vol. 7 No. 1, pp. 139-43. . Becoming a leader depends on whether I am lucky enough
Yoo, B. and Donthu, N. (2002), “The effects of marketing to be in the right place at the right time.
education and individual cultural values on marketing .
How many friends I have is mostly a matter of luck.

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Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

Power distance (a ¼ 0.92) Entrepreneurial propensity (a ¼ 0.78)


.
People in higher positions should make most decisions .
Someday I would like to own my own business.
without consulting people in lower positions. . I think that owning your own business has many
.
People in higher positions should not ask the opinions of advantages.
people in lower positions too frequently.
.
People in higher positions should avoid social interaction
with people in lower positions. Measures for Study 2
.
People in higher positions should not disagree with
Centralization (a ¼ 0.67)
decisions made by people in higher positions. .
There can be little action taken in this company until
. People in higher positions should not delegate important
upper management approves a decision.
tasks to people in lower positions. .
A manager who wants to make his own decisions would be
discouraged at this company.
Uncertainty avoidance (a ¼ 0.87) .
Even small matters have to be referred to someone higher
.
It is important to have instructions spelled out in detail so in the company for a final answer.
that I always know what I am expected to do. .
Any decision has to be approved by an individual at
.
It is important to closely follow instructions and another location.
procedures.
.
Rules and regulations are important because they inform Formalization (a ¼ 0.70)
me what is expected of me. .
I feel that I am my own boss in most matters (R).
.
Standardized work procedures are helpful. .
A person can make his/her own decisions without
.
Instructions for operations are important. checking with anybody else (R).
.
I feel uncomfortable when people ask me to do something .
People here are allowed to do almost as they please (R).
and then do not give me the information I need to do it. .
Most people here make their own rules on the job (R).
.
The employees are constantly being checked on for rule
Masculinity (a ¼ 0.73) violations.
. It is more important for men to have a professional career
.
People here feel as though they are constantly being
than it is for women. watched to see that they obey all the rules.
.
Men usually solve problems with logical analysis; women
usually solve problems with intuition. Need for autonomy (a ¼ 0.57)
.
Solving difficult problems usually requires an active .
I go on my own way in life, regardless of the opinions of
forcible approach which is typical of men. others.
.
It is preferable to have a woman in a high level position .
I disregard rules and regulations that hamper my personal
rather than a man. freedom
.
In running my life, I try to be my own boss.
Collectivism (a ¼ 0.83)
.
I prefer to work alone on a task.
.
Individuals should sacrifice self-interest for the group
(either at school or work place). Entrepreneurial propensity (a ¼ 0.66)
.
Individuals should stick with the group even through .
Someday I would like to own my own business.
difficulties. .
I think that owning your own business has many
.
Group welfare is more important than individual rewards. advantages.
.
Groups success is more important than individual success.
.
Individuals should only pursue their goals after
considering the welfare of the group. Corresponding author
. Group loyalty should be encourages even if individual
goals suffer. Cristian Chelariu can be contacted at: cchelariu@suffolk.edu

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