Every year, several hundred new start-ups arise in today’s society. Starting your own business is becoming increasingly popular, and there is the predominant idea that it hasn’t ever been this easy to start up your own business (de Groene Amsterdammer 2016). We can’t predict the exact amount of start-ups, but figures from the Chamber of Commerce show that 150,000 starting companies registered themselves in 2014 (de Groene Amsterdammer 2016). Moreover, we are increasingly facing a global economy. This implies that businesses are crossing national borders more often to be competitive among other companies (Grosse 2004). The so called start-up system is interesting for entrepreneurial research. Who are these entrepreneurs and what do they do? In order to make more sense of who these entrepreneurs are and what they do, research topics like entrepreneurial skills and personality, opportunity recognition, decision making and the entrepreneurial identity are taking the lead. Within this field full of valuable investigations and interesting topics, I decided to take entrepreneurial identity as starting point for this paper. Although William B Gartner (1988) claims that we shouldn’t look that much to identity and personality, since entrepreneurship is considered as a process, and therefore it would be more useful to focus more on entrepreneurial actions and what they do instead of who they are (behavioural approach), I have learned that human action is based on identities, since we are embodied and embedded actors. The entrepreneurial identity is not a static trait, but can be seen as a process too: the process of identity construction (Peverelli and Verduyn 2012, 24). Entrepreneurial actions and decision making processes are a result of who entrepreneurs are and what they believe in (their own construction of reality). So, to make more sense of their actions and what they do, I think it is important to look into their identity first since that can declare their behaviour.
If we have a look into entrepreneurial identity research, various factors that influence identity construction have been researched. Recently, Wry and York (2015) studied how different types (identities) of entrepreneurs perceive the tension between commercial and social welfare logics within their business. Fauchart and Gruber (2011) explored how (founder) identities shape key decisions in the creation of new firms. Moreover, several researchers investigate different factors which influence entrepreneurial identities; for example, the influence of gender (Marlow 2014). Even the role of the body is researched in a way how it affects identity. For example Poldner, Shrivastava and Branzei (2015) explored how some entrepreneurs become their brands in the way they look and behave.
Although identity construction is a widely studied research topic, not much is known about the influence of cultural competencies on entrepreneurial identities. Nowadays, it is more common to set up (or expand) your business abroad and moreover, by globalization and migration streams, also entrepreneurs from ethnic minorities are more frequently in a situation to set up a business in a culturally unfamiliar setting. Within this context, these entrepreneurs need to acquire resources, find business partners, customers, employees, and other resources to start running their business. I can imagine that it is not easy to gain legitimate distinctiveness in a country where you don’t know the rules, norms and values.
In this paper I will identify the gap between cultural competencies and entrepreneurial identity in the entrepreneurial research field and explain why it would be relevant to investigate this gap.
Suppose that you as an entrepreneur visit one of your new business partners in India, a country where you want to set up a business as a Dutch entrepreneur. Your business partner is greeting you on a traditional way: ‘namasté’, brings his hands together with palms touching in front of his chest, and you offer a handshake. This can result in some awkward situations, which can be detrimental for your reputation as an entrepreneur. Would it be better to show that you have some knowledge about their culture, in order to be more trustworthy and respectful?
In order to make more sense of entrepreneurial decision making processes and how entrepreneurial beliefs affect their actions in running a business, it is important to take entrepreneurial identity into account. Sense making is grounded in identity construction (Peverelli and Verduyn 2012, 24). A lot of research is done to make the image of the entrepreneurial identity as complete as possible, but cultural competencies are under estimated so far. Researching cultural competencies can contribute to making the entrepreneurial identity more complete. Cultural competencies are defined as the skills and awareness related to issues such as culture, language, race and ethnicity (Trumbell en Pacheco 2005). Although some aspects of cultural competencies are studied, cultural competencies in this totality are empirically underexplored in organizational and entrepreneurship literature. For example, the role of language is becoming a more important research topic in the entrepreneurial field, like the use of metaphors in entrepreneurial processes (Gaddefors 2007; van Werven, Bouwmeester and Cornelissen 2014). Essers and Benschop (2009) tried to focus on ethnicity in the entrepreneurial context, so to understand how this is implicated in the construction of entrepreneurial identities. Both language and ethnicity belong to cultural competencies, and in a certain way researchers have already studied how these factors are part of your identity. In this article I see cultural competencies more as the awareness and adaptability of an unfamiliar culture in all its facets.
Many international business failures have been ascribed to a lack of cross-cultural competences on the part of business practitioners (Johnson, Lenartowicz, Apud 2006). Moreover, I observe a trend that people from ethnic minorities are able to set up their own businesses in countries which they are not familiar with; this is probably caused by globalization processes and migrations streams. In other words, more and more entrepreneurs have to deal with cultural diversity of a place where they want to set up their business. For this reason, they need the necessary skills and cultural competencies to handle a diverse and culturally complex situation (Pécoud 2004).
Both for entrepreneurs who wants to set up (or expand) their business in a foreign country and for migrants/ethnic entrepreneurs who start running a business, it might be beneficial to know how cultural skills and competencies influence their identity to give right impressions to their employees, customers and business partners. Moreover, if we know how cultural competencies influence identities, it is possible to develop theories and courses about the possibilities to improve and change these cultural skills. Therefore, in this article the various influences of cultural competencies on entrepreneurial identity will be explored in the context of setting up a business in a culturally unfamiliar setting. The following research question would be interesting to investigate: how do cultural competencies influence the construction of an entrepreneurial identity in setting up a business abroad?
By researching the role of cultural competencies in entrepreneurial identity it is better to explore how identities are constructed first (1). Subsequently, it is interesting to have a deeper look into the role and influences of cultural competencies on identity which I have divided in cultural skills (2) and cultural relations (3). I will discuss those three research questions in the following theoretical part of this essay.
1. Identity construction
In this paper, identity is approached in the light of social constructionism. This means that identity is perceived as a construct. Both, individual actors and groups of actors construct identities by a process of ongoing interaction (Peverelli and Verduyn 2012). During interaction, individuals (or organizations) co-create each other’s identity. McCall and Simmons define identity as the ensemble of perceived roles and linked activities (Peverelli and Verduyn 2012, 24). Identity is seen by McCall and Simmons as something static, and something that actors ‘have’ as an outcome of interaction. However, identity can also be perceived as an interactional process in which identity is a construction of identity within a social-cognitive environment instead of something which ‘exist out there’ (Peverelli and Verduyn 2012). Within this (cultural) environment, the entrepreneur needs to create an identity for his/her venture: who are you and what do you do? This identity needs to be legitimately distinctive which means that it is different from competitors while it is in line with interest and values of targeted resource-holders (Uberbacher 2015). So, your identity can influence legitimate distinctiveness, but what we don’t know yet is how cultural competencies are influencing this identity in order to gain legitimate distinctiveness.
What we actually do know more about is how identity is constructed. Within the literature, the identity theory and the social identity theory are separated approaches in identity construction. The self is reflexive, which means that it can take itself as an object and can categorize and name itself in particular ways in relation to other social categories (Stets and Burke 2000, 224). Within identity theory, the literature speaks about different roles in order to identify itself by incorporating the meaning and expectations associated with that role. In line with the social identity theory, the literature speaks about self-categorization. Social identity theory deals more with intergroup relations and how people come to see themselves as members of one group in comparison with another group. A complete theory of one’s identity would consider both the categorization of a role and his/her identity across groups according to Stets and Burke (2000). Moreover, Hatch and Schulz defined identity construction in 2002 as a bidirectional process. They argue that there is no fundamental difference in the ways individuals and organizations construct their identities (Peverelli and Verduyn 2012). This is interesting for the gap analysis in this paper between cultural competencies and identity, since cultural competencies can affect both the individual and the organization.
According to Uberbacher, Jacobs and Cornelissen (2015), skilled cultural action is crucial for entrepreneurs in order to attract resources to develop and grow their new organizations (Uberbacher 2015, 2). Two adaptive sense making processes are crucial in the development of cultural competencies: approval-driven sense making and autonomy-driven sense making (Uberbacher 2015). Approval-driven sense making facilitates cultural resources recognizing to couple a venture’s identity claims more narrowly with the cultural frames of targeted audiences and gain legitimate distinctiveness. Autonomy-driven sense making enables recognizing cultural constraints to protect the venture from constraining cultural frames and defend the venture’s autonomy and resources (Uberbacher 2015, 1). Gaining cultural awareness allow entrepreneurs to improve their cultural skills and so the adjustment to another culture.
2. Cultural skills on entrepreneurial identity
Leiba-O’Sullivan (1999) wrote an article about expats and their adjustment to another culture if they plan to work abroad. Expats who are unprepared for the challenges of an international mission are likely to have difficulty adjusting abroad and they will probably experience a culture shock. Moreover, poorly adjusted expats are likely to perform poorly too (Leiba-O’Sullivan 1999). It would be interesting to investigate if this observation also applies for entrepreneurs, setting up their business abroad.
Grosse (2004) studied people who worked abroad and asked them about their cultural and language skills and how this could lead to competitive advantages. According to her,
cultural skills are mandatory for local acceptance and setting one apart in a foreign setting. ‘Cultural understanding is vital to success in the international business community’ (Grosse 2004, 359). Those that do not make an attempt to learn the language for example, are looked down upon by locals but also by the ‘business community’ that has taken the time to learn the language (and the culture). It would be interesting to change the group of employees who worked abroad in a group of entrepreneurs, to see whether competitive advantages are also applicable towards this group. Moreover, if so, is this true for all different aspect of setting up a business; from finding premises, to recruiting staff, to targeting a clientele and finding resources? Shortly, there are some investigations about how expats carry out their cultural identity if they decide to work abroad, and how this lead to local benefits. However it is unclear how entrepreneurs are conscious and aware of their cultural knowledge and awareness. This observation leads me to the following proposition:
The development of cultural skills are influencing the entrepreneurial identity, and subsequently offer competitive advantages in setting up a business in a culturally unfamiliar setting.
3. Cultural relations on entrepreneurial identity
The cultural skills described above (cultural awareness/language/cultural adjustment) are not freestanding entities or concepts, but are constructed by the way we interact with others. Cultural relations are therefore important factors in constructing your entrepreneurial identity. Uberbacher and his colleagues (2015) propose that becoming a skilled cultural operator (someone who is aware of the culture) can deepen the understandings of context-specific cultural resources, opportunities and constraints. This gives the ability to be able to translate cultural understanding into better strategic actions. We can state that this is a big advantage. But to achieve this goal, it is only possible to interact with others. Pécoud (2004) studied entrepreneurial practices of German-Turkish entrepreneurs in Berlin. He explains that what first emerges in setting up a business in an unfamiliar setting is the use of co-ethic resources. This means that their relations to employees and business partners to gain resources like skills and money are acquired through relations with other German-Turkish entrepreneurs. They are embedded in an immigrant milieu, which creates their identity of belonging to an ‘immigrant community’. Where many native businesspeople acquire skills and resources through formal training and lent money by banks, immigrants lack these opportunities, which limits their possibilities to gain legitimate distinctiveness (Pécoud 2004). For this group of entrepreneurs, co-ethnic networks are supportive in becoming self-employed, but if businesses stay within their ethnic community, their business growth is limited (Altinay 2008). It would be interesting to investigate how the ability to establish good relations with a wide variety of people (and especially customers/resource holders) can change your identity, as for example an immigrant or an expat. Intercultural relationships between people of different backgrounds, can cause fruitful contacts. By the interaction with these contacts, the entrepreneurial identity is constantly reconstructed, which might lead to valuable resources. From this observation, the following proposition can be suggested:
Intercultural relationships with a wide variety of people can change your identity, which leads to more valuable resources.
Discussion & Conclusion
The current literature on entrepreneurial identity and cultural competencies are explored in this article. If we know how cultural competencies are influencing entrepreneurial identities in a way that is beneficial (or not beneficial) for entrepreneurs in gaining legitimate distinctiveness, this can have important implications for the way entrepreneurs think about and deal with setting up a business in a culturally unfamiliar setting. Moreover it can change their strategic decision making. This may also apply for entrepreneurs setting up a business in a totally unfamiliar sector or industry. Since the selection of literature about cultural competencies in relation to identity is scarce, I would like to provide suggestions for further research.
First of all, in influencing audiences and legitimizing ventures, start-up entrepreneurs and corporate entrepreneurs may possess differential sets of cultural skills and different cultural resources (Uberbacher 2015). This means that the methods of developing and adapting cultural competences may differ among corporate entrepreneurs and start-up entrepreneurs. So the question arises whether entrepreneurs who are equipped with different initial economic and social resources can adopt and expand cultural competences in similar ways (Uberbacher 2015)?
Secondly, it would be interesting to know how adaptation of cultural competences differ between ‘Western’ entrepreneurs who are setting up a business abroad by their own choice, and entrepreneurs from migrant groups who are entrepreneurial more or less out of necessity. The former group seems to have more access to economic and social endowments, and therefore they probably have more possibilities to learn cultural competencies. However, future research might explicate that larger endowments of financial and social capital constrain entrepreneurs’ expansion of their cultural competences. What is the effect and difference?
Additionally, a more practical implication for research would be to investigate what kind of practical actions an entrepreneur can undertake to gain cultural competencies. Are there several ways to enlarge your cultural awareness? And on what kind of aspect do you focus on if you want to discover the cultural environment wherein your business is operating? Grosse (2004) states that cultural knowledge benefits professional lives, but she is not clear in how professionals expand their cultural knowledge. A link towards entrepreneurial identity is clear here, since I’ve argued that identity is both: who you are and what you do. The ways in which you can probably enlarge your cultural competencies are under-developed in academic literature so far.
In the gap analyses that are made in this article, some limitations have to be mentioned. The first one is that cultural competencies in recent literature are used as an umbrella term for a lot cultural aspects. This makes it unclear what cultural competencies actually are and how this term differs from cultural skills or cultural awareness. Moreover, the vagueness of the term and the fact that recent literature is not clear in describing what kind of aspect are part of cultural competencies, makes it very hard to measure whether entrepreneurs consist of cultural competencies or not. This will make it hard to compare cultural competencies among different entrepreneurs in different settings. Whether you do a good job in the development your cultural skills depends mostly on your own perception and your own construct of reality. Still it would be valuable to approach research about cultural competencies in entrepreneurship by case studies or more qualitative research. I think these stories can make entrepreneurs more conscious about the importance of the cultural environment wherein they are operating, which can open their eyes and change their decision making processes in a beneficial way.
...(download the rest of the essay above)