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

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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. without an explanation as to why this was done. As such we cannot consider all of these to be failures, some may be conscious choices by the owner manager to scale down output or the owner manager may wish to retire or close down the business for other personal reasons. Official statistics are also hindered by the fact that not all firms are registered for V.A.T. to begin with so they can effectively close down production without being included in the statistics. The concept of risk refers to the uncertainty of potential loss (or gains) the owner manager may face. It is often the case that although society may view a certain investment as a risk the businessperson involved will only invest if they feel they have enough information to nullify the risk or at least make it a calculated risk.

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One of the most widely accepted views is that the United States is a country that embraces the entrepreneur and considers their failures as learning experiences. In contrast it is thought that the Europeans and in particular British have less drive to become self employed preferring job security, and that when a European businesses fails it is a reflection on the owner’s incompetence. According to Herbig et al (Herbig et al., 1994, pg 2) “Europeans are less likely to start new businesses at a rate of between one-third and one-sixth of their American counterparts.” But is this due to the ...

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