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How do different cultural attitudes towards risk and failure affect the process of business start up?

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Introduction

How do different cultural attitudes towards risk and failure affect the process of business start up? Business start up occurs in almost every country in the world, even in cultures that have negative attitudes towards entrepreneurial activity. However what differs is that the level of start up tends to be higher in countries that prize individualism and furthering personal goals such as United States than countries that stress a persons place within a team and are expected to work in order to promote the team such as Japan. Cultural attitudes are often reflected in the response from the establishment; as such we can examine the establishments in different countries in order to gain an impression of the cultural attitude. The definition of what it is for a firm to fail is highly subjective; some people might consider it to be when a firm is unable to pay its debtors, or when a firm has to cease trading or perhaps when it begins to liquidate some of its assets. British official figures tend to record businesses that exit the industry or deregister for V.A.T. ...read more.

Middle

Arguably, the highest moral value in Japanese business is ningen kankei (human relationships)1. Hence the entrepreneur/small business owner manager is not highly regarded as they have left the group in order to pursue their own goals, which is unusual in Japanese society. Although the Japanese does have examples of successful entrepreneurs, they are created 'not because of the system but in spite of it'.2 Examples such as Honda who faced opposition from the government when trying to expand into the automotive industry (Ramo, 1988) show how difficult it can be for firms not only to start up a new business from scratch but also to venture in their present business. Another Japanese business practice that discourages individuals from starting a new business is the seniority based wage system that big companies in Japan use. Due to this, the gap between entrepreneur's earnings and that of salaried workers steadily increases the older they get. Whilst at the same time, it gives experienced, skilled workers little incentive to make the transition to be entrepreneurs. Cultural attitudes towards business are often mirrored by the government's policies towards them. ...read more.

Conclusion

(Herbig et al., 1994). Although on a personal level failure in business can be distressing, it can on the aggregate have a positive effect on the economy. Storey, (REF) identifies three ways in which businesses failure helps the economy. Firstly, business failure levels help indicate which sectors of the economy are riskiest and which are safer, so if banks and venture capitalists can invest in the safer options steady economic growth is more likely to occur than the riskier option which could facilitate the boom bust cycle. Secondly in the process of 'failing' small business owners are likely to have learned a lot about how to conduct business and what they could/should have done to help their business. If they are able to use this information either to inform others and help them make the correct decisions, then something positive will result. Finally the small business owner may be able to use that knowledge in order to form a more successful business. http://www.atimes.com/japan-econ/DF21Dh01.html The United States can be said to have a less pe It is difficult to get empirical evidence on attitudes towards risk and fao 1 http://www.belmont.edu/philosophy/courses/businessjap.html 2 The relationship of structure to entrepreneurial and innovat Marketing Intelligence & Planning; Bradford; 1994; Herbig, Paul; Golden, James E; Dunphy, Steven; ...read more.

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