title: Entrepreneurial Regions: Do Macro-Psychological Cultural Characteristics of Regions Help Solve the "Knowledge Paradox" of Economics?
abstract: In recent years, modern economies have shifted away from being based on physical capital and towards being based on new knowledge (e.g., new ideas and inventions). Consequently, contemporary economic theorizing and key public policies have been based on the assumption that resources for generating knowledge (e.g., education, diversity of industries) are essential for regional economic vitality. However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates). To date, this "knowledge paradox" has resisted resolution. We take an interdisciplinary perspective to offer a new explanation, hypothesizing that "hidden" regional culture differences serve as a crucial factor that is missing from conventional economic analyses and public policy strategies. Focusing on entrepreneurial activity, we hypothesize that the statistical relation between knowledge resources and entrepreneurial vitality (i.e., high entrepreneurship rates) in a region will depend on "hidden" regional differences in entrepreneurial culture. To capture such "hidden" regional differences, we derive measures of entrepreneurship-prone culture from two large personality datasets from the United States (N = 935,858) and Great Britain (N = 417,217). In both countries, the findings were consistent with the knowledge-culture-interaction hypothesis. A series of nine additional robustness checks underscored the robustness of these results. Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries. In doing so, the findings raise the idea of regional culture serving as a new causal candidate, potentially driving the knowledge paradox; such an explanation would be consistent with research on the psychological characteristics of entrepreneurs.
authors.affiliation: Department of Psychology, Saarland University, Saarbrücken, Germany.
authors.forename: Martin
authors.initials: M
authors.lastname: Obschonka
authors.affiliation: Faculty of Economic Sciences and Media, Ilmenau University of Technology, Ilmenau, Germany; Baden-Württemberg Cooperative State University, Mannheim, Germany.
authors.forename: Michael
authors.initials: M
authors.lastname: Stuetzer
authors.affiliation: Department of Psychology, University of Texas at Austin, Austin, Texas, United States of America; School of Psychological Sciences, University of Melbourne, Parkville, VIC, Australia.
authors.forename: Samuel D
authors.initials: SD
authors.lastname: Gosling
authors.affiliation: Department of Psychology, University of Cambridge, Cambridge, United Kingdom.
authors.forename: Peter J
authors.initials: PJ
authors.lastname: Rentfrow
authors.affiliation: Department of Psychology, University of Cambridge, Cambridge, United Kingdom.
authors.forename: Michael E
authors.initials: ME
authors.lastname: Lamb
authors.affiliation: Atof Inc., Cambridge, Massachusetts, United States of America.
authors.forename: Jeff
authors.initials: J
authors.lastname: Potter
authors.affiliation: Institute of Developmental Strategies, Indiana University, Bloomington, Indiana, United States of America.
authors.forename: David B
authors.initials: DB
authors.lastname: Audretsch
mesh_terms: D003431:Cross-Cultural Comparison; D003466:Cultural Characteristics; D060909:Economics, Behavioral; D016520:Entrepreneurship; D006113:United Kingdom; D014481:United States