Are We Ready? Entrepreneurial Mindset in Nepal

Ruchin Singh, June 29, 2017

Most B-schools and business communities in Nepal are supporting and motivating aspiring and active entrepreneurs to develop innovative ideas and start companies. The entrepreneurial and startup ecosystem has been rallying people to take up entrepreneurship as a career option. This is good because startups contribute to economic dynamism by spurring innovation and injecting competition. Each year, hundreds of students enroll in entrepreneurship courses. Students are interested in learning entrepreneurial skills to start a business, but a significant portion fail to launch new businesses in the near term. There seems to be a huge hindrance for aspiring entrepreneurs to actually be able start a successful business: it is not lack of skills, but a flawed mindset.

The art of the start is closely tied not just with business skills but also with business culture. To understand why someone fails to start a venture, even when one has right tools and resources, one needs to take a peek at the their culture. The Geert Hofstede Cultural Dimension is one of the most well-known models to analyze and compare cultures of different countries.

The Geert Hofstede cultural model describes the effects of a society's culture on the values of its members, and how these values relate to work-related behavior. The four fundamental cultural dimensions are 

 (1) Power Distance: theextent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally;

 (2) Individualism: the degree to which people in a society value independence and self-reliance;

 (3) Masculinity: The preference in society for achievement, heroism, assertiveness and material rewards for success; and 

(4) Uncertainty Avoidance: the extent to which people feel threatened by uncertainty and ambiguity and try to avoid them.

Culture directly influences entrepreneurial spirit and behaviors. Generally, a low power distance in any community implies that that the lower members of the organization don’t accept the rigid hierarchical system prevalent in organizations and hence, these people end up leaving the organization and start opening business of their own. If we compare these cultural dimensions with the United States (see figure above), we see that we lack the ingredients that promote an entrepreneurial ecosystem. The power distance in Nepal is much higher compared to the United States, which indicates that hierarchy is clearly established and easily accepted in Nepali society; a lower score signifies that people question authority and attempt to distribute power. Consequently, restricted access to resources and entrepreneurial opportunities make it hard for entrepreneurs to emerge.

Similarly, the level of risk-taking, assertive and decision-making values, which are essential for any entrepreneur, is denoted by individualism and masculinityIndividualism is positively related to entrepreneurial spirit because entrepreneurship is an activity of individual enterprising people taking personal risks in hopes of succeeding and getting rewards individually. Since individualistic cultures reward individual initiative, the low individualism in Nepal affects its entrepreneurial spirit negatively. Furthermore, (ignoring the sexism in the terminology, of course) masculinity in any culture means that the dominant values are profits and success, as opposed to caring about others and overall quality of life in feminine cultures. The United States promotes an individualistic and masculine culture because of which more entrepreneurs can thrive.

On the other hand, a relatively and comparable degree of uncertainty avoidance shows more acceptance of differing ideas in both Nepali and American cultures. High uncertainty avoidance culture promotes a need for structured and calculated decisions. Hence, a fairly low uncertainty avoidance in Nepal and the United States implies that people are willing to take risks. However, Nepal lags behind in number and quality of entrepreneurial ventures because of a culture with high power distance, low individualism and low masculinity.

Based on Hofstede's model, our culture needs to become healthier to promote our entrepreneurial ecosystem. Like most models, Hofstede's model is not absolute, there are many exceptions to the model. For example, Vietnam and Nepal share similar cultures yet Vietnam has been doing significantly well in promoting entrepreneurship. Hofstede is one of the many models that one can use to explain the cause of low entrepreneurship in Nepal. But I would not blame culture to be the only reason for Nepal's lack of entrepreneurial spirit. Culture is something that makes us unique and provides us a separate identity. We can promote entrepreneurial ecosystem by becoming less complacent about the system and more proactive in taking initiatives, either themselves or collectively. Indeed, entrepreneurial courses and activities are a step in the right direction. The focus of these courses and activities is to engage students in customer discovery early on, and test major hypotheses of business models. While this is a valuable approach in entrepreneurship education, it is useful only once a new business idea is formulated, which requires a risk-taking entrepreneurial mindset. If we want to foster an entrepreneurial ecosystem, we need to raise entrepreneurs from early on to develop an entrepreneurship-friendly culture in Nepal. Only then can we be fully ready.

Ruchin Singh is the Co-founder of Edushala and a participant in the first batch of our Enterprise business accelerator program.

This blog is based on the book The Opportunity Analysis Canvas by Dr. James V. Green.
Learn more about Geert Hofstede Cultural Model here and here

Reference: Radziszewska, Aleksandra. “Intercultural Dimensions of Entrepreneurship. Journal of Intercultural Management 6.2 (2014): n. pag. Web.

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