Culture, attitudes affect business (How does Montana stack up?)

Perhaps the most critical factor driving business formation and entrepreneurial activity is the hardest to
measure: the culture and attitudes of the country or region.

By Hal Heaton
Brigham Young University

In many places, business is viewed as the enemy and people who own and run businesses as evil and
greedy. Negative attitudes are reflected in bureaucracies formed to control business, and heavy taxation
aimed at penalizing businesses for being profitable. Not surprisingly, these places don’t see much
entrepreneurial activity.

The difference in attitudes can be observed a number of ways. First is the attitude toward failure. In
some families, cities, regions or countries, business failure is seen as dishonor to the family. People who
have tried and failed are ostracized by family and friends and face a lifetime of social stigma. Such economies
find few people willing to take the risk of starting a business.
In other areas, failure is seen as acceptable. People who are willing to risk personal security and wealth
are actually admired — even if they fail. Their family accepts them, employers view their experiences as
valuable and are eager to hire them for the insight gained from the negative experience. In the hotbeds of
entrepreneurial activity in the United States, failure is viewed as the first level of their education. Employers
actually seek them out.

A second difference stems from a culture of freedom and property rights. In my travels abroad, I have
observed that the thing that makes the United States so desirable for entrepreneurs is the capital market.
People are free to invest in almost any venture. There are institutions that connect entrepreneurs with
people who have money to invest. Tax rates allow people to save enough money that they are willing to risk
a piece of it on a new, risky venture. People can do with their money what they wish and do not have
heavy-handed rules and restrictions.

In many countries, an entrepreneur without sufficient capital
cannot start a business unless she/he is connected with a
powerful family. Tax rates may be so high that unless the
business does spectacularly well, it is not worth the risk. Even
worse, if an entrepreneur does do well, she/he becomes a target
for corrupt bureaucrats, con artists and extortionists. Kidnapping
for ransom is a common occurrence in some countries.
Aggressive protection of property rights is essential to a culture
that wants entrepreneurial activity.

Finally, the educational system is also key to supporting
entrepreneurial activity. If the education system seeks
conformity as its objective, entrepreneurs do not flourish. If the
education system encourages innovative thinking and
disagreement, entrepreneurs are created.
Some of the best teachers I know have an interactive style.

They will occasionally argue with students even if they agree with
the student’s answer, because they know that the process of
arriving at the answer is more important than the answer itself.
They feel success when the student feels confident enough in his/her analysis and logic to aggressively argue
back. But in some cultures, students would never argue with a professor. They sit silently and absorb the
presented material and never learn to think and act for themselves.

Unfortunately in business, there are few absolute answers. Rather, the answers keep changing over
time. Absorbing current wisdom without challenge may make a person unwilling to do anything that flies in
the face of it.
To be successful, entrepreneurs must have the courage and confidence to defy conventional wisdom,
the freedom to do what they need to do and social support if they fail.

Hal Heaton is associated with the BYU Center for Entrepreneurship. He can be reached via e-mail at
[email protected].,1249,405024218,00.html

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