The social status of entrepreneurs: An analysis of informal and formal institutional determinants

The social status of entrepreneurs, which measures the degree to which a country admires entrepreneurs and values their social contribution to society, varies significantly across countries. In some economies, such as the United States, entrepreneurs are seen as cultural heroes, whereas in others, particularly in many European countries, their status is less favorable. In this paper, we provide theoretical elaboration and empirical evidence to support the idea that informal institutions, such as uncertainty avoidance and collectivism, play a crucial role in determining social status. Additionally, formal institutions, like market freedom and government size, establish certain boundaries for these relationships. We analyze a sample of 105 countries that participated in the GEM project between 2003 and 2020. Our results indicate that entrepreneurs enjoy a higher social status in societies characterized by low uncertainty avoidance and a more collectivist orientation. Furthermore, these relationships are contingent upon the formal rules and regulations of the country.