Effects of Cultural Origin on Entrepreneurship

This paper investigates impact of cultural origin on entrepreneurship. Using Swedish registry data on second-generation immigrants and risk appetite measures from the Global Preference Survey (GPS), we investigate whether risk preferences in parents’ home countries affect entrepreneurship. We find that children of immigrants from more risk-loving cultures are more likely to enter entrepreneurship and establish larger firms that are less profitable. We also observe that culturally inherited risk appetite does not affect entrepreneurs’ personal income. However, entrepreneurs with parents from more risk-loving countries exhibit higher personal income volatility. Our analysis demonstrates that culturally transmitted risk appetite has significant effects beyond individual and parental socio-economic characteristics. Furthermore, this effect is independent of parents’ entrepreneurship