VALUES, BELIEFS AND REGIONAL VARIATIONS IN NEW FIRM FORMATION RATES

There are recurrent claims that culture, understood as prevailing valu es and beliefs, is an important determinant of the level of entreprene urship in a society. In spite of this, relatively few empirical studie s with this focus seem to have been carried out. While some studies of national culture and the rate of economic development have been publi shed and received wide readership, empirical studies of values and bel iefs in relation to variations in new firm formation rates are lacking . In a previous study in that vein by one of the authors, it was found that possible cultural and economic-structural determinants of the ne w firm formation rate were positively correlated, so that the unique c ontribution of each type of explanation could not be determined. In th e present follow-up study, three matched pairs of regions are investig ated. While the regions in each pair are similar on economic-structura l dimensions, one region in each pair has shown a higher and the other region a lower rate of new firm formation than predicted by carefully developed regression models that use economic-structural factors as e xplanatory variables. To determine whether cultural differences can ex plain the deviations from the predictions based on economic-structural variables, large samples of 35-40 years old inhabitants in each regio n were surveyed for cultural values and beliefs data. The results of t his study suggest that both values and beliefs of the kind investigate d do have an effect on regional new firm formation rates. The cultural variation is small, however, and for contemporary Sweden it appears t o be a relatively less important determinant of new firm formation rat es than are variations in economic-structural conditions.