Entrepreneurial propensity in a transition

economy: exploring micro-level and meso-level

cultural antecedents
Cristian Chelariu
Sawyer School of Business, Suffolk University, Boston, Massachusetts, USA
Thomas G. Brashear
Isenberg School of Management, University of Massachusetts Amherst, Amherst, Massachusetts, USA
Talai Osmonbekov
W. Franke College of Business, Northern Arizona University, Flagstaff, Arizona, USA, and
Adriana Zait
Department of Management-Marketing, “Al.I.Cuza” University, Iasi, Romania

Abstract
Purpose – This paper aims to analyze antecedents of entrepreneurship propensity in two separate studies, at individual and organizational levels. The first
study proposes that the effect of individual cultural values on entrepreneurial propensity is mediated by the locus of control. The second study focuses on
the interaction effect between the individual’s need for autonomy and a bureaucratic culture characterized by high centralization and high formalization.
Design/methodology/approach – The approach takes the form of surveys of business students and retail salespeople in Romania and regression
analysis.
Findings – Internal locus of control predicts entrepreneurship propensity. Mediation effects were not supported. Centralization and formalization
stimulate entrepreneurial propensity, especially in salespeople with a high need for autonomy. In general, the individual cultural values approach
generated weak results, while the organizational culture approach showed strong support for the hypotheses.
Research limitations/implications – A combination of push and pull effects determines an individual’s entrepreneurial propensity. Personality traits,
such as internal locus of control and need for autonomy predict entrepreneurial propensity. But individuals are pushed into entrepreneurship by
negative factors, such as dissatisfaction with existing employment.
Practical implications – In transitional economies, entrepreneurial ventures are relied on to sustain a high growth rate, to serve the unmet needs of
the population, and to create jobs. Multinationals operating in transition countries could improve recruiting decisions by hiring managers with a high
internal locus of control and could then allow them decision-making power to satisfy their need for autonomy.
Originality/value – The paper analyzes antecedents of entrepreneurship propensity in two separate studies, at micro (individual) and meso
(organizational) levels, but set within the same transitional economy. This macro context is posited to shape both organizational culture and individual
cultural values and personality traits.

Keywords Entrepreneurialism, Control, Culture, Bureaucracy, Romania

Paper type Research paper

Entrepreneurship is the goal-oriented process whereby an
individual identifies marketplace opportunities using creative
thinking, secures resources, and adapts to the environment to
achieve desired results while assuming some portion of the
risk for the venture (Smart and Conant, 1994). Individuals
animated by entrepreneurial spirit are the driving force
creating new markets and promoting economic development
(Schumpeter, 1968; Minniti, 1999). Estimates of the impact
of entrepreneurial activity on the differences in growth rates
across countries range from one-third (Reynolds et al., 1999)
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Journal of Business & Industrial Marketing
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[DOI 10.1108/08858620810894454]
to one-half (Zacharakis et al., 2000). Moreover, these results
are supported in both developed economies and emerging
economies (Berkowitz and DeJong, 2001). Given the
beneficial impact on the economy, it is important to
understand what factors at the national, organizational, and
individual levels predict entrepreneurial propensity.
At least two major approaches dominate entrepreneurship
research. One approach has focused on national cultural
antecedents to explain variation in entrepreneurship across
countries. This approach has generated inconsistent results
(Mueller and Thomas, 2001), and more recently, researchers
have begun to focus on other macro-level antecedents such as
environmental uncertainty (Baum and Locke, 2004) and the
institutional environment (Busenitz et al., 2000; Baughn et al.,
2006).
A second stream of research has focused on individual-level
entrepreneurial traits, such as need for achievement, risk-
taking propensity, and innovativeness, as correlates of being or
desiring to be an entrepreneur (Ahmed, 1985; Begley and

405
 Entrepreneurial propensity in a transition economy
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait
Boyd, 1987; Bonnett and Furnham, 1991). This line of
inquiry also has generated inconsistent results, prompting
scholars to call for research that includes not only individual
characteristics, but also situational or contextual variables
(Gartner, 1988; Aldrich and Martinez, 2001).
The present study is situated in a transition economy, a
context characterized by radical change and crisis, factors
traditionally associated with the emergence of
entrepreneurship (Schumpeter, 1968; Ardichvili and
Gasparishvili, 2003). Macro-level, institutional factors
determine the structure, roles, and “rules of the game in a
society” and influence individual behavior (North, 1990). In
western economies, the entrepreneurial environment is
“nutrient rich” (Shapero, 1985), including access to
information and to tacit knowledge, besides tangible
resources, such as access to capital. The legal framework is
designed to stimulate entrepreneurship and, from a
sociocultural perspective, entrepreneurs possess an almost
mythical, hero-like status (Welter and Smallbone, 2003). In
contrast, in transitional economies, new small and medium-
sized enterprises have often emerged in spite of the “formal”
political and economic institutional limitations (e.g.
Berkowitz and DeJong, 2001; McMillan and Woodruff,
2002; Peng and Heath, 1996; Peng, 2000; Yan and
Manolova, 1998).
While “formal” limitations are gradually eliminated as these
countries advance on the path to a market economy, deeper
cultural transformations at the meso and micro levels may be
more difficult to bring about (Luthans et al., 2000). At the
meso (or organizational) level, transition processes, such as
privatization, were shown to impact entrepreneurial outcomes
through organizational-level transformations in structures and
culture (Zahra et al., 2000). At the individual level,
entrepreneurship in transitional economies may still be
limited by informal, normative constraints, many of them
“remnants of socialist attitudes” (Lukasiewicz and Sicinski,
1992, p. 116), such as apathy, learned helplessness,
lawlessness and corruption, and, more importantly, the
attitude that private entrepreneurship runs counter to social
norms (Smallbone and Welter, 2001). On the other hand,
some scholars argue that the large size of the unrecorded
economy in some countries could be interpreted as a “strong
reflection of entrepreneurial behavior” (Reynolds, 1991,
p. 58).
This paper contributes to the existing debates within the
entrepreneurship literature by analyzing antecedents of
entrepreneurship propensity in two separate studies, at
micro (individual) and meso (organizational) levels, but set
within the same transitional economy. This macro context
shapes both organizational culture and individual cultural
values and personality traits.
The first study posits that the effect of individual cultural
values on entrepreneurial propensity is mediated by an
individual’s locus of control. We attempt a departure from the
existing theoretical tradition by analyzing Hofstede’s (1980)
classic dimensions of culture (power distance, masculinity,
uncertainty avoidance, and individualism) at the individual
level. Hofstede’s typology was developed originally by
measuring employees’ personal values, aggregated using
Inkeles and Levinson’s (1969) modal personality concept to
obtain scores for cultural norms at the national level. Lately,
cultural psychologists have emphasized the need to move
away from “wrestling with the ghosts” of Hofstede’s legacy to
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Volume 23 · Number 6 · 2008 · 405 –415
“reclaim the individual” by studying the links between
personal attributes and socialization practices or institutional
processes (Bond, 2002). This approach also allows us to
confirm the external validity of measurement instruments for
cultural dimensions at the individual level (Donthu and Yoo,
1998).
The second study, at the meso-cultural level, focuses on the
interaction effect between the individual’s need for autonomy
and a bureaucratic culture characterized by high
centralization and high formalization (Dwyer and Oh, 1987;
Aiken and Hage, 1966) and inimical to entrepreneurial
manifestation. Bureaucracies are the most pervasive type of
organizational culture among command economy firms and
their transformation is one of the greatest difficulties facing
transitional firms.
Entrepreneurship has been studied by scholars in various
disciplines including anthropology (e.g. Stewart, 1991),
psychology (e.g. Shaver and Scott, 1991), sociology (e.g.
Reynolds, 1991), economics (e.g. Kirchhoff, 1994) and
management (e.g. Stevenson, 1985). However, consensus has
yet to be reached on the conceptual definition of this
construct (Shaver and Scott, 1991). Some researchers
emphasize the behavior of creating a new enterprise
(Gartner, 1985) and others argue that personal
characteristics of the founders are fundamental to the
definition of entrepreneurial orientation (Timmons, 1978;
Dunkelberg and Cooper, 1982). For example, the term
“potential entrepreneur” was used to describe individuals
possessing traits, skills, and desires that can motivate
entrepreneurial behavior (Krueger and Brazeal, 1994) or
increase its likelihood (Mueller and Thomas, 2001; Mueller,
2004).
Our dependent variable is entrepreneurial propensity,
defined as an individual’s favorable predisposition towards
new venture creation. Focusing on actual enterprise creation
would greatly understate the entrepreneurial potential in
transition economies, because economic and institutional
constraints, such as lack of available credit, bureaucratic red
tape, and lack of information are powerful deterrents for those
who want to open a new business (Kaufmann et al., 1995).
Even in a western setting, scholars found that there are many
potential entrepreneurs in an organization even if intentions
to start a new venture are not overtly displayed (Brazeal,
1993).
From a practical perspective, entrepreneurship is
particularly important in emerging and transitional
economies. In this context, entrepreneurial ventures are
relied on to sustain a high growth rate, to serve the unmet
needs of the population, and to create jobs needed to absorb
the excess numbers in the workforce resulting from the
restructuring of state-owned firms (Thomas and Mueller,
2000).
We begin with a study of the relationship between
individual values, locus of control and entrepreneurial
propensity. Then, a second study follows, exploring the
interaction effect of a salesperson’s need for autonomy and
the level of bureaucracy in the firm on the entrepreneurial
propensity of the salesperson. In the methodology section, we
discuss the data collection, the data analysis, and the results.
Finally, we conclude the paper with limitations and
implications for researchers and managers.
 Entrepreneurial propensity in a transition economy
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait
Study 1
Individual values, locus of control, and entrepreneurial
propensity
Societal institutions or codes of conduct, values and norms
that “come from socially transmitted information and are part
of the heritage that we call culture” (North, 1990) are
important to the entrepreneurial spirit. To the extent that
beliefs and attitudes serve primarily a social adjustment
function, they are likely to change if social norms change.
Accordingly, we propose that a larger transformation at the
societal level modifies the individual’s value system, in terms
of individualism, power distance, masculinity and uncertainty
avoidance. These changes in values affect the individual’s
system of beliefs (such as locus of control) and, in turn, affect
an individual’s attitude towards entrepreneurship. The
hypothesized relationships between individual values, locus
of control beliefs and entrepreneurial attitude are summarized
in Figure 1. In the following, we will examine these links in
more detail.
Locus of control and entrepreneurial propensity
Following its emergence in social psychology, locus-of-control
research (Rotter, 1966) has been applied in personality
research (Cox and Ferguson, 1991; Levenson, 1974), sales
(Srivastava and Sager, 1999), accounting (Frucot and Sharon,
1991), and in the entrepreneurship literature (Kaufmann
et al., 1995; Shaver and Scott, 1991; Gartner, 1985).
Perceived internal locus of control is defined as “the
personal belief that one has influence over outcomes
through ability, effort, or skills; whereas external locus of
control is the belief that external forces control outcomes”
(Kaufmann et al., 1995, p. 44). Levenson (1974) argues that
while the internal locus of control is unidimensional, the
external locus of control can be explained by people’s beliefs
about powerful others that influence their lives, as well as by
the influence of blind fate, luck or chance. Levenson (1974)
developed the IPC locus of control scale where “I” stands for
internal locus of control, “P” for powerful others and “C” for
chance.
The link between locus of control and entrepreneurship has
been studied before, although very little in a transitional
setting. In general, studies found a positive correlation
between internal locus of control and various measures of
entrepreneurial tendencies (see for example, Brockhaus,
1982; Bonnett and Furnham, 1991, on student samples;
and Pandey and Tewary, 1979, on entrepreneurs). Based on
the existing theory, we advance the following propositions:
H1. The “Internal” dimension of an individual’s locus of
control is positively related to the individual’s
entrepreneurial propensity.
Figure 1 The values-locus of control-entrepreneurship model
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H2. The “Powerful other” dimension of an individual’s
locus of control is negatively related to the individual’s
entrepreneurial propensity.
H3. The “Chance” dimension of an individual’s locus of
control is negatively related to the individual’s
entrepreneurial propensity.
Cultural values and locus of control
Cultural dimensions give a foundation for the development of
individual values that in turn influence people’s attitudes and
behaviors. In many recent studies, entrepreneurship and
culture have been linked (e.g. Mueller, 2004; Mueller and
Thomas, 2001; Danis and Shipilov, 2002) at both macro and
micro levels. For example, national culture influences the
formation of technology alliances by entrepreneurial firms
(Steensma et al., 2000) or shapes the manifestation of
entrepreneurial behaviors, such as championing, in
organizations (Shane, 1994).
At the micro level, the impact of cultural values on
entrepreneurship has found mixed support. Some studies
have shown that entrepreneurs have higher power distance,
individualism and masculinity, and lower uncertainty
avoidance, when compared to managers (McGrath et al.,
1992; Busenitz and Lau, 1996). On the other hand, studies
done in Portugal (Morris et al., 1994) or Israel (Baum et al.,
1993) found no support for the relationship between
individualism and entrepreneurship. A study of Russian and
Georgian entrepreneurs found that they score lower on
masculinity and individualism, but higher on power distance
than managers or employees from the same country
(Ardichvili and Gasparishvili, 2003).
These inconsistencies suggest the need to explore the
possibility of mediation or moderation effects. Cultural values
are considered to have a significant effect on personality traits
(Hofstede and McCrae, 2004) and specifically on locus of
control (Mueller, 2004; Mueller and Thomas, 2001;
Kaufmann et al., 1995), thus providing us with an
important potential mediator. Specifically, we posit that
individual cultural values affect an individual’s
entrepreneurial propensity, not directly but through the
cognition of the individual and the formation of beliefs about
her locus of control. In the following, we explore separately the
link between locus of control dimensions and each of the
individual values.
Power distance
Power distance has been defined as “the extent to which the
less powerful members of institutions and organizations
within a country expect and accept that power is distributed
unequally” (Hofstede, 1991, p. 27). People characterized by
large power distance demonstrate high tolerance for lack of
autonomy and greater reliance on centralization and
formalization of authority (Hofstede, 1980), and show more
 Entrepreneurial propensity in a transition economy
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait
tolerance in accepting power hierarchy (Kale, 1993). Donthu
and Yoo (1998) posit that in a society with large power
distance, authoritarian and coercive power strategies perform
well. Morris and Pavett (1992) found that non-coercive,
participative management works well with Americans
(because of the small power distance norm) but not with
Mexicans (characterized by a relatively large power distance
norm). Jaeger (1986) explains this phenomenon by pointing
out that team building and team decision-making activities in
general cannot be effective with employees characterized by
large power distance because employees from different
departments do not feel comfortable interacting face-to-face
with higher-ranking team members.
People with high power distance tend to accept power
hierarchy (Kale, 1993), tend to avoid arguments with senior
management, and rely on formalized and centralized
authority. This could indicate that the higher the power
distance in individuals, the more they will perceive that the
outcomes of their activities depend on people in power and
not on themselves.
H4. The greater an individual’s power distance, the greater
the “Powerful other” locus of control.
H5. The greater an individual’s power distance, the lower
the “I” dimension of locus of control.
Uncertainty avoidance
Uncertainty avoidance is defined as “the extent to which
members of a culture feel threatened by uncertain or
unknown situations” (Hofstede, 1991, p. 113). People with
high uncertainty avoidance have low tolerance for uncertain
situations because of a fear of indeterminate outcomes. They
display a great level of anxiety about their actions and require
highly structured and clearly defined instructions for actions.
In effect, a society with high uncertainty avoidance may be
referred to as rigid, whereas a society with low uncertainty
avoidance may be called flexible (Hofstede, 1991). The level
of uncertainty avoidance in a society determines the types of
behaviors and actions of people in reacting to the ambiguities
of the environment (Hofstede, 1980). In an organizational
setting, uncertainty avoidance is manifested in the clarity and
precision of rules, job descriptions and procedures. Clear and
precise rules trigger higher performance in high uncertainty-
avoidance cultures (Newman and Nollen, 1996).
People of low uncertainty avoidance tend to take risks
easily, accept ambiguities in the surrounding environment and
tolerate beliefs and actions dissimilar to their own. People of
high uncertainty avoidance try to control the random element
in the environment and strive to achieve more control over
events and situations (Donthu and Yoo, 1998). Thus we
hypothesize:
H6. The greater an individual’s uncertainty avoidance, the
lower the “Chance” locus of control.
Individualism/collectivism
A society is considered individualistic when the ties between
individuals are loose and people are expected to look after
themselves and their immediate family (Hofstede, 1980). On
the other hand collectivism “pertains to societies in which
people from birth onwards are integrated into strong, cohesive
groups, which throughout people’s lifetime continue to
protect them in exchange for unquestioning loyalty”
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Volume 23 · Number 6 · 2008 · 405 –415
(Hofstede, 1991, p. 51). In an individualistic society, people
have a great sense of autonomy and personal sustainability,
while in collectivist societies, people place importance on
group and social needs (Hofstede, 1980). Individualistic
societies such as the US value job specialization, individual
rewards, flexibility, fairness, self-orientation, a competitive
climate, and self-confidence. On the other hand, collectivistic
societies such as China value cooperation, harmony,
friendship, interdependence, conformity, forgiveness, and
social usefulness (Donthu and Yoo, 1998). Consequently,
individual-based training is found to generate better
performance for American managers and group-based
training is found to lead to better performance for Chinese
managers (Earley, 1994).
People from a highly individualistic society tend to be
independent and self-reliant. They believe in their ability to
control their achievements and success in life. In general,
previous studies found lower internal control in countries that
are more collectivistic than the USA, such as Russia
(Kaufmann et al., 1995), China and Yugoslavia (Mueller
and Thomas, 2001) or Hong Kong (Ralston et al., 1993).
H7. The greater an individual’s collectivism, the lower is
the “Internal” locus of control.
Masculinity/femininity
The cultural dimension of masculinity/femininity represents
“the dominant sex role pattern in the vast majority of both
traditional and modern societies” (Hofstede, 1980, p. 277).
People in highly feminine cultures value affiliation and
nurturance. In contrast, people in highly masculine cultures
value achievement, assertiveness and acquisition as well as
action-oriented behavior (Newman and Nollen, 1996).
People with a high internal locus of control exhibit strong
internal motivation to reach their ambitious goals without
reliance on others. Accordingly, we posit that masculinity has
a positive impact on internal locus of control.
H8. The greater the masculinity, the greater the “Internal”
locus of control.
On the other hand, highly masculine cultures are
characterized by a variety of seemingly disparate phenomena
manifested in family, work, and political settings that together
point to a positive correlation with the “powerful other”
dimension of locus of control. For example, highly masculine
societies support strong candidates in politics and believe that
international conflicts should be solved by show of force or
fighting (Hofstede, 2000, p. 323). In the workplace,
masculine cultures tend to see managers as cultural heroes,
resolve conflicts by fighting, and see promotion as depending
on protection (Hofstede, 2000, p. 318). Accordingly, we
hypothesize:
H9. The greater the masculinity, the greater the “powerful
others” locus of control.
So far, we have looked at how individual cultural dimensions
impact locus of control perceptions and, from there, the
entrepreneurial propensity. In the second study we will
analyze how the individual’s need for autonomy interacts with
the bureaucratic culture of the organization to motivate
entrepreneurial propensity (see Figure 2).
 Entrepreneurial propensity in a transition economy
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait
Figure 2 The salesperson’s need for autonomy in a bureaucratic organization – moderating effects
Study 2
The need for autonomy in a bureaucratic organizational
culture – an interaction approach
Desire for autonomy, along with interest in personal
achievement and unhappiness in the current job or career,
has long been identified as an important motivator for
entrepreneurial action (Gilad and Levine, 1986). Autonomy
refers to the ability and will of an individual to be self-directed
in the pursuit of opportunities (Lumpkin and Dess, 1996).
Entrepreneurial propensity requires a capacity for
independent action on the part of the individual, in terms of
articulating a vision for the business, implementing it, and
carrying it forward to completion. Previous studies found that
the most entrepreneurial firms have the most autonomous
leaders, both in a developed economy and in a developing
economy (Shrivastava and Grant, 1985). Consequently, we
hypothesize that:
H10. The greater the salesperson’s need for autonomy, the
greater the salesperson’s entrepreneurial propensity.
At least two well-established paradigms can be used to
theoretically frame dissatisfaction with the current job as a
motivator for entrepreneurial action. The expectancy theory
assumes that individuals make a conscious choice among
alternatives (current job situation versus owning one’s own
business), with the purpose of maximizing pleasure and
minimizing pain (Vroom, 1964). Similarly, when applying the
social exchange theory, we assume that individuals compare
their current occupational outcomes with the alternatives and
engage in entrepreneurial action if this is a viable alternative to
maximize their outcomes (Thibaut and Kelley, 1959).
Two dimensions characterize bureaucratic organizations:
centralization and formalization (Dwyer and Oh, 1987).
Centralization refers to a limited delegation of decision-
making authority throughout an organization (Aiken and
Hage, 1966). Higher centralization reduces the employees’
involvement in decision making, their job satisfaction, and
their organizational commitment (Morris and Steers, 1980).
Employees with a greater desire for autonomy are more likely
to resent this lack of involvement in decision making in the
organization and to want to set up their own business in
response.
H11. Higher centralization in the firm will strengthen the
relationship between need for autonomy and
entrepreneurial propensity.
Formalization represents the degree to which administrative
rules, policies, and procedures define roles, authority relations
and communications, norms and sanctions, and procedures
(Hall, 1972). Employees with a higher need for autonomy are
more likely to avoid the constraints imposed by organizational
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Volume 23 · Number 6 · 2008 · 405 –415
rules and procedures by setting up their own business
(Podsakoff et al., 1986; Organ and Green, 1981).
H12. Higher formalization will strengthen the relationship
between need for autonomy and entrepreneurial
propensity.
Methodology
Instruments and data collection
Data for both studies was collected in a city of 400,000 people
in northeast Romania. Romania is an ideal setting for our
study, because it is less advanced in the transition process
than some of the Central European nations (Czech Republic,
Hungary, Poland), but more advanced than some of the
former Soviet republics (Moldova, Ukraine, Belarus, Central
Asian republics).
For both studies, we used an anonymous, self-report
questionnaire for data collection. Special attention was
focused on the selection of the measures and the
development of the instruments due to the extension of
existing constructs to an international setting (Davis et al.,
1981; Singh, 1995). All constructs and their measurement
items were assessed to determine if the construct of interest
had both functional and conceptual equivalence (i.e. has the
same meaning in the target population and refers to the same
behaviors and/or attitudes). To assure linguistic equivalence,
the scales were translated into Romanian independently by a
native speaker, and translated back into English by a
professional translator from Romania. The two English
versions of the questionnaire were compared and no
significant differences were observed. The survey was then
pre-tested in Romania to assure equivalence.
Samples
For the first study, given the focus on entrepreneurial
propensity as determined by cultural dimensions, the
sampling frame was formed of senior business students in a
major university in Romania. A student sample was
appropriate because it allowed us to isolate the impact of
organizational variables like the ones we used in the second
study. Moreover, student samples have been used in previous
studies to look at potential in transitional and emerging
markets (e.g. Danis and Shipilov, 2004; Hui et al., 2004;
Mueller, 2004) and they allow us to capture the
entrepreneurial propensity of future managers or
entrepreneurs. One of the authors collected the data among
business students at the local university, as part of a project
for a marketing research class. No incentives were used and
the data collection resulted in completed questionnaires from
157 respondents.
For the second study, focusing on the impact of
organizational variables on entrepreneurial propensity, we
 Entrepreneurial propensity in a transition economy
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait
used a sample of retail salespeople. The retail sector witnessed
the first manifestations of entrepreneurship in transition
economies. By the nature of their position, retail salespeople
are in direct contact with both the market and the
entrepreneurial venture. Thus, they have better access to
information, because they are better able to spot
opportunities and also are familiar with the constraints
faced by entrepreneurs.
A total of 500 questionnaires were distributed in various
commercial areas of the city, with an accompanying cover
letter stating that the study was a joint project between
universities in the USA and the local university. The cover
letter also informed the potential respondents that the survey
aimed to obtain salespeople’s perspective on various
organizational factors that affect retail salespeople in a
transition economy. Each salesperson received a monetary
incentive equivalent to the price of a cup of coffee. The data
collection yielded 426 returned questionnaires. Of those, 29
were found to have incomplete data or to have been
completed by someone other than a salesperson. The usable
sample of 397 represents a 79 percent response rate.
The majority of salespeople responding to the survey were
female (80 percent). The average age of respondents was 31
with ages ranging from 19 to 42. More than half were married
and had children. Of the salespeople, 77 percent had high
school education or some college and 10 percent had college
degrees.
Measures
Measures for personal values were adapted from the Cultural
Values (CV) scales that capture Hofstede’s dimensions at the
individual level (Donthu and Yoo, 1998; Yoo and Donthu,
2002; Sayrac-Yaveroglu and Donthu, 2002; Kwok and
Uncles, 2005). As shown in the Appendix, Power distance,
Collectivism, Uncertainty Avoidance and Masculinity were
measured with four to six items each, and had Cronbach
alphas exceeding the recommended 0.7 threshold. To
measure the locus of control dimensions, we used the scale
developed by Levenson (1974) and validated by Kaufmann
et al. (1995) in a study of entrepreneurship in Russia. The
Internal, Powerful other, and Chance dimensions were
measured with four, eight and seven items respectively and
had Cronbach alphas of 0.66, 0.92 and 0.87. Finally,
entrepreneurial propensity was measured with a scale used
by Kaufmann et al. (1995). The alpha for this two-item scale
was 0.78.
For the second study, centralization and formalization were
measured with two scales of five and six items respectively,
adapted from Jaworski and Kohli (1993). Coefficient alphas
for the measures were 0.76 for centralization and 0.87 for
formalization. The need for autonomy was measured with six
items and had a Cronbach alpha of 0.83. Entrepreneurial
propensity was measured with the same two items that were
used in Study 1, and had an alpha of 0.7.
Analysis and results
Study 1
We ran four separate ordinary least squares regressions to test
our hypotheses. The parameter estimates and the associated
significance levels are shown in Table I.
In general, the results from Study 1 provided mixed support
for our hypotheses. H1, H2 and H3 assessed the relationships
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Volume 23 · Number 6 · 2008 · 405 –415
between the locus of control variables and entrepreneurial
propensity. H1 received weak support, showing that Internal
locus of control has a positive relationship with
Entrepreneurial Propensity. On the other hand, H2 and H3
were not supported, indicating that Powerful other and
Chance are not predictors of entrepreneurial propensity.
H4 and H5 looked at the effects of Power distance on the
Powerful other and Internal dimensions of locus of control.
The results show that both hypotheses were supported, at
0.01 and 0.1 significance levels respectively. Thus, Power
distance is negatively related to Internal, and positively related
to Powerful others dimension of locus of control.
H6 predicted a negative relationship between Uncertainty
avoidance and Chance, while H7 predicted a negative
relationship between Collectivism and Internal locus of
control. These two hypotheses were not supported.
H8 and H9 propose positive relationships between
Masculinity and two dimensions of locus of control: Internal
and Powerful others. H8, linking masculinity and the Internal
dimension of locus of control, was not supported, while H9,
linking Masculinity and the Powerful others dimension shows
weak support.
Overall, the impact of cultural values on locus of control can
be characterized as weak. The only strong result links Power
distance and the Powerful others dimension of locus of
control, with weak support for the Power distance – Internal
and the Masculinity – Powerful others relationships.
These weak results suggest the need to consider moderating
variables. Recent studies suggest gender can play such a
moderating role, especially with respect to the masculinity
dimension (Mueller, 2004). Age is also a potential moderator,
because younger generations, socialized during transition, are
likely to espouse different cultural values than older
generations.
One of the aims of Study 1 was to explore the potential
mediator effect of locus of control between cultural
dimensions and entrepreneurial propensity. To this end, we
ran a regression using cultural dimensions as independent
variables and entrepreneurial propensity as the dependent
variable. As shown in Table I, none of the regression
coefficients were significant. Furthermore, Sobel tests using
the results in Table I showed no significant mediation effects.
Study 2
Study 2 proposed three hypotheses, one covering the direct
effect of need for autonomy on entrepreneurial propensity,
and the other two referring to the moderating effect of
centralization and formalization as dimensions of bureaucratic
cultures.
As can be seen in Table II, the need for autonomy has a
significant positive correlation with the salesperson’s
entrepreneurial propensity, thus confirming H10. In terms
of the two moderating effects, only H11 is supported,
enabling us to conclude that centralization of the firm
increases the entrepreneurial propensity of salespeople with a
high need for autonomy.
The analysis of the results in Table II also reveals a
significant direct effect of centralization and formalization on
entrepreneurial propensity. These results imply that,
regardless of the individual salesperson’s need for autonomy,
the level of bureaucracy in a firm’s culture tends to increase
salespeople’s entrepreneurial propensity. In this case,
 Entrepreneurial propensity in a transition economy Journal of Business & Industrial Marketing
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

Table I Regression analysis results

Dependent variables
Independent variables I P C Entrep Entrep Entrep
Power distance 2 0.143 * 0.217 * * 0.106 2 0.07 20.056
Uncertainty avoidance 0.028 2 0.056 2 0.114 0.12 0.111
Collectivism 2 0.036 0.018 0.073 0.09 0.097
Masculinity 0.080 0.147 * 0.092 2 0.02 20.031
Internal 0.152 * 0.150 *
Power 0.028 0.406
Chance 2 0.029 20.273
Adj R2 0.006 0.065 0.012 0.004 0.004 0.007
F value 0.774 3.73 1.481 1.14 1.21 1.16
Notes: * p , 0.10; * * p , 0.01; Parameter estimates are standardized

Table II Need for autonomy – moderating effects factors, such as meeting the right people, which are beyond
the control of the individual and depend in great measure on
Main effects sheer luck. In contrast, in a Russian student sample, internal
Centralization 0.093 (1.8) * locus of control predicted entrepreneurial propensity
Formalization 0.123 (2.4) * * (Kaufmann et al., 1995). Our findings from a sample of
Need for autonomy 0.258 (5.1) * * * Romanian students found a similar (albeit weak) positive
effect of internal locus of control on entrepreneurial
Interaction terms propensity, as people with strong internal motivation to
Centralization 3 need for autonomy 0.17 (3.37) * * * succeed are more likely to create new ventures.
Formalization 3 need for autonomy 0.08 (1.62) Entrepreneurial propensity is an important factor for
Incremental R2 0.039 creating new ventures as well as developing an
F change 2.388 entrepreneurial culture within a large company. Our findings
Significance of F change 0.103 could be useful for multinationals operating in transition
countries, which could benefit from understanding local
Full model culture and its impact on creating joint ventures with local
F(5, 370) 12.9 entrepreneurs. This finding could lend itself to better
Significance 0.000 recruiting decisions when establishing a foreign subsidiary in
R2 0.150 a transition economy. If the strategic goal of a global company
Adj. R2 0.139 is to establish a local network, it should deploy an
Notes: * p , 0.1, * * p , 0.05, * * * p , 0.01; Parameter estimates are
entrepreneurial person with a high internal locus of control
standardized, with t-values in parentheses and allow this person considerable decision-making power to
satisfy her need for autonomy.

entrepreneurial propensity can be interpreted as a form of Limitations and future research

turnover intention.
Discussion of results and managerial implications
Based on the results from these two studies, an individual’s
entrepreneurial propensity is determined by a combination of
push and pull effects (Mueller and Thomas, 2001). Personality
traits, such as an internal locus of control and a need for
autonomy, make individuals more likely to embrace
entrepreneurial propensity. On the other hand, some
individuals are pushed into entrepreneurship by negative
factors, such as dissatisfaction with existing employment or
job loss. Our results show that centralization and formalization
of the organization stimulate entrepreneurial propensity,
especially in salespeople with a high need for autonomy.
Kaufmann et al. (1995) find that Russian entrepreneurs, as
opposed to American entrepreneurs, attribute their success to
people in power and to chance. In high power distance
cultures, people are more likely to accept arbitrary decisions
or behavior on the part of the authority figures. In these
cultures, solving one’s problems depends on a number of
Several limitations in our two studies must be pointed out.
First, our samples were drawn from only one country,
Romania. This limits the external validity of our findings,
although one can argue that the historical events of the second
half of the twentieth century had a homogenizing impact on
all the countries of the former socialist bloc and replications of
the present study would be likely to produce similar results.
Second, we used business students and salespeople in our
samples. While the entrepreneurial propensity of these future
managers is important for advancement on the path of the
market economy, future research should look at examining
entrepreneurial propensity across other categories (Mueller,
2004).
Future studies could enlarge the nomological network of
culture, individual traits and entrepreneurship. With respect
to cultural dimensions, future studies could explore the
Confucian dynamic dimension, or other cultural dimensions,
such as materialism. We analyzed only two personality traits,
internal locus of control and need for autonomy. Other studies
could analyze the interaction between the specific institutional
conditions in transition economies and other personality traits

411
 Entrepreneurial propensity in a transition economy
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait
suggested by the entrepreneurship literature, such as a high
need for achievement, preference for challenge, acceptance of
responsibility for outcomes, and innovativeness,
resourcefulness, risk-taking propensity, preference for
energetic action (McClelland, 1965; Begley and Boyd,
1987), the role of positive illusions about self and venture
(Branzei and Zietsma, 2004), or passion for work and tenacity
(Baum and Locke, 2004).
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Appendix. Scales
Scales for Study 1
Locus of control – the Internal dimension (a ¼ 0.66)
.
When I make plans, I am almost certain to make them
work.
.
It is usually up to me to protect my personal interest.
.
When I get what I want it is usually because I worked hard
for it.
.
My life is mostly determined by my own actions.
Locus of control – Powerful others dimension (a ¼ 0.92)
.
What happens in my life is mostly determined by powerful
people.
.
Even though I might have good ability, I will never
become a leader without asking those in positions of
power.
.
My life is mostly controlled by people more powerful than
me.
.
People like me have little chance of protecting our
personal interests from strong pressure groups.
.
To get what I want I have to please the people above me.
.
If important people did not like me, I probably would not
make many friends.
.
Whether or not I get into an accident depends mostly on
the people around me.
.
In order for my plans to work, I make sure that they fit in
with the plans of people above me.
Locus of control – Chance dimension (a ¼ 0.87)
.
Many times there is no chance of protecting myself from
bad luck.
.
I have found that what is going to happen will happen.
.
Whether or not I get into an accident is mostly dependent
on the people around me.
.
It is not a good idea to plan too far ahead because too
many things depend on luck.
. Becoming a leader depends on whether I am lucky enough
to be in the right place at the right time.
.
How many friends I have is mostly a matter of luck.
 Entrepreneurial propensity in a transition economy Journal of Business & Industrial Marketing
Cristian Chelariu, Thomas G. Brashear, Talai Osmonbekov and Adriana Zait Volume 23 · Number 6 · 2008 · 405 –415

Power distance (a ¼ 0.92) Entrepreneurial propensity (a ¼ 0.78)

.
People in higher positions should make most decisions .
Someday I would like to own my own business.
without consulting people in lower positions. . I think that owning your own business has many
.
People in higher positions should not ask the opinions of advantages.
people in lower positions too frequently.
.
People in higher positions should avoid social interaction
with people in lower positions. Measures for Study 2
.
People in higher positions should not disagree with
Centralization (a ¼ 0.67)
decisions made by people in higher positions. .
There can be little action taken in this company until
. People in higher positions should not delegate important
upper management approves a decision.
tasks to people in lower positions. .
A manager who wants to make his own decisions would be
discouraged at this company.
Uncertainty avoidance (a ¼ 0.87) .
Even small matters have to be referred to someone higher
.
It is important to have instructions spelled out in detail so in the company for a final answer.
that I always know what I am expected to do. .
Any decision has to be approved by an individual at
.
It is important to closely follow instructions and another location.
procedures.
.
Rules and regulations are important because they inform Formalization (a ¼ 0.70)
me what is expected of me. .
I feel that I am my own boss in most matters (R).
.
Standardized work procedures are helpful. .
A person can make his/her own decisions without
.
Instructions for operations are important. checking with anybody else (R).
.
I feel uncomfortable when people ask me to do something .
People here are allowed to do almost as they please (R).
and then do not give me the information I need to do it. .
Most people here make their own rules on the job (R).
.
The employees are constantly being checked on for rule
Masculinity (a ¼ 0.73) violations.
. It is more important for men to have a professional career
.
People here feel as though they are constantly being
than it is for women. watched to see that they obey all the rules.
.
Men usually solve problems with logical analysis; women
usually solve problems with intuition. Need for autonomy (a ¼ 0.57)
.
Solving difficult problems usually requires an active .
I go on my own way in life, regardless of the opinions of
forcible approach which is typical of men. others.
.
It is preferable to have a woman in a high level position .
I disregard rules and regulations that hamper my personal
rather than a man. freedom
.
In running my life, I try to be my own boss.
Collectivism (a ¼ 0.83)
.
I prefer to work alone on a task.
.
Individuals should sacrifice self-interest for the group
(either at school or work place). Entrepreneurial propensity (a ¼ 0.66)
.
Individuals should stick with the group even through .
Someday I would like to own my own business.
difficulties. .
I think that owning your own business has many
.
Group welfare is more important than individual rewards. advantages.
.
Groups success is more important than individual success.
.
Individuals should only pursue their goals after
considering the welfare of the group. Corresponding author
. Group loyalty should be encourages even if individual
goals suffer. Cristian Chelariu can be contacted at: cchelariu@suffolk.edu

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