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Individualism and Venture Capital: A Cross-Country Study

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  • Pascal Gantenbein

    (University of Basel, Faculty of Business and Economics, Switzerland)

  • Axel Kind

    (University of Konstanz, Department of Economics, Universitätsstrasse 10, D-78457 Konstanz, Germany)

  • Christophe Volonte

    (University of Basel, Faculty of Business and Economics, Switzerland)

Abstract

We investigate the effect of individualism – a dimension of culture that is strongly associated with entrepreneurship – on venture-capital investments using a large cross-country sample. Our sample consists of 1,496 country-year observations and includes 88 countries from 1998 to 2014. Controlling for economic conditions, the legal environment, and different aspects of culture, we find that individualism is positively and significantly related to venture-capital investments and explains 30% of cross-country variation. This result is stable across different subsamples, several measures of venture-capital investments, and even holds when using the political system 200 years ago as an instrument for individualism. The quality of formal institutions (rule of law) and entrepreneurial attitudes (uncertainty avoidance) partially mediate the effect of individualism on venture-capital investments, while economic conditions (GDP per capita) moderate this effect.

Suggested Citation

  • Pascal Gantenbein & Axel Kind & Christophe Volonte, 2019. "Individualism and Venture Capital: A Cross-Country Study," Working Paper Series of the Department of Economics, University of Konstanz 2019-01, Department of Economics, University of Konstanz.
    • Handle: RePEc:knz:dpteco:1901
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    Comparative Entrepreneurship; Cultural values; Individualism; Institutions; Venture Capital;
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