This article presents a theoretical framework and seven related propositions linking national culture-specifically individualist and collectivist orientations-to entrepreneurship. The framework identifies how both orientations affect the functions of entrepreneurship. This perspective casts new light on cross-cultural research that, while generally confirming individualism-entrepreneurship ties, has had less success accounting for the entrepreneurial vitality of largely ''collectivist'' nations-especially Japan. There are two main streams of research on the effects of individualism and collectivism on entrepreneurship. The micro-level stream finds that those who generate variety-founders and corporate entrepreneurs-tend to be individualistic. This work does not identify proclivities for the other entrepreneurial function, leveraging resources. The macro-stream associates both individualism and collectivism with national levels of economic growth and innovation. The framework comprises tow dimensions depicting (1) levels of individualism nad collectivism, and (2) the entrepreneurial functions. I conceive of individualism and collectivism as two characteristic orientations distributed in varying proportions within and between cultures and individuals. These characteristics are not polar ends of a continuum, as commonly described. The second dimension recognizes that entrepreneurship requires two activities: generating variety through innovation or new ventures, and leveraging resources internally or by establishing external ties. This paper's main contribution comes from the recognition that two entrepreneurial functions are very different processes. Variety generation requires mostly individual creativity and initiative; resource leverage depends on efficient relationships that thrive under collectivism, but can be induced contractually between individualists. These differences reveal that individualism and collectivism neither categorically encourage nor discourage entrepreneurship; rather they influence how its functions are accomplished. The propositions outlined in this paper can sharpen future research on individualism, collectivism, and entrepreneurship. In short, the paper claims individualists produce breakthroughs that collectivists implement and improve. Individualists show proclivities for new venture formation and making major innovations. They tend to leverage their resources through contract-based relations. For example, resources are stretched internally using contingent, performance-based incentives, and outside funds can be acquired through venture-capital agreements. In contrast, collectivists generate variety through group-based, incremental improvements and changes. Collectivists leverage their own resources by harnessing ''clanlike'' affiliations, and securing the use of the resources of other firms by building close relational ties, like keiretsu. Theory acknowledging that individualism and collectivism are not negatively related allows us to recognize that both orientations can contribute to entrepreneurship. The framework has key implications for entrepreneur/managers and policymakers. Recognizing that individualism and collectivism both contribute to entrepreneurship can guide decision-makers to examine the inventory of these orientations in their firms or regions, and implement policies to address shortfalls. For example, Americans can concentrate more on building close network ties while Japanese can focus on encouraging individual innovations. (C) 1997 Elsevier Science Inc.
