SME Entrepreneurship: U.S. vs. Germany Cultural Comparison

Introduction and Research Overview

The overarching interest of this research — building on an initial research proposal and subsequent literature review — has been to identify core distinctions between the United States and Germany with regard to small and medium enterprise (SME) development. Using the distinctions established by the literature review, survey respondents from both countries answered a series of questions concerning the relationship between business enterprising and the various aspects of entrepreneurship either present or absent in each country's cultural fabric. The findings discussed here revolve around the key themes identified in the literature review and how those themes relate directly to data gathered from survey respondents.

Cultural Attitudes Toward Entrepreneurship

Evidence from the literature review produced a foundational understanding that the United States has, as a matter of principle and national identity, long maintained a strong interest in entrepreneurial development. Particularly for those with ambitions of creating a viable SME, the United States appears more culturally fixed on the idea of the self-made individual, the dynamic entrepreneur, and the competitive innovator. The literature therefore supports the contention that the United States has historically placed a greater value and emphasis on the right, opportunity, and ability of any individual to develop and steward a business effectively.

By contrast, the research suggests a proclivity on the part of European nations — most notably Germany — to rest on their laurels in recent decades. There is a distinct European cultural tendency toward a lesser interest in the type of innovation and orientation that drives a smaller firm to succeed and that propels a medium-sized firm toward becoming a corporate entity of broader social and economic importance. As explored on the Wikipedia overview of entrepreneurship, cultural context plays a substantial role in shaping who enters business formation and why. Phelps (2007) characterizes the gap between the United States and European counterparts such as Germany as resulting from a dearth of individuals and groups who feel a cultural impetus to succeed in development.

Phelps contends that "there is evidence of such a dearth. Germany, Italy and France appear to possess less dynamism than do the U.S. and the others. Far fewer firms break into the top ranks in the former, and fewer employees are reported to have jobs with extensive freedom in decision-making — which is essential at companies engaged in novel, and thus creative, activity" (Phelps, p. 1). The implication is that in such contexts, the will for individual or independent success becomes stifled, with innovation seeming inaccessible to those who are not already at the top of the organizational hierarchy.

Still, the ultimate resolution of this research is that the globalizing economy has had a meaningfully positive impact on the degree to which Germany's culture of entrepreneurship has evolved. Today, its relative disinclination compared to the United States is countered by its considerable acceleration in economic importance relative to itself a decade prior and to other nations in Western Europe. As Hellmann (n.d.) observes, "A period of just a few years, the German venture capital industry has transformed itself from a small, stagnant and obscure niche industry into one of the fastest growing and most visible segments of the economy" (p. 1). Germany's modern ascendance within Western Europe owes a meaningful portion to this important shift. The embrace of enterprising growth has highlighted the capitalist implications of global free trade, which inherently opens insulated or resistant cultures to open competition and introduces them to innovative technologies and ideas. Heightened accessibility to such trends invites broader participation and creates a sense of opportunity for those groups with the ingenuity to improve and advance existing forces of technological evolution — ultimately producing an economy with a wider and more varied pool of enterprising organizations.

Survey Findings: Motivations for Starting an SME

The formal research process — conducted through a survey equally distributed to small and medium enterprise administrators and leaders in both the American and German entrepreneurial contexts — produced results that reflected the balance suggested by the literature, while also confirming the bias toward greater entrepreneurial opportunity in the United States.

Of the 50 German respondents, 22 reported starting an enterprise by happenstance or opportunity. Some spoke of chance relationships with future partners and investors; others described capitalizing on a surprising aptitude for independent leadership in a business context. The statistically significant portion of German respondents indicated motivations rooted less in cultural indices than in personal experience.

This differed considerably from American respondents. Of the 50 Americans interviewed, 29 reported motivations such as wanting to control their own occupational fate or an unwillingness to work within a large corporate structure. The research questions underlying the survey design were therefore affirmed: cultural imperatives played a significant role for many American respondents who had found an entrepreneurial path to earning a living.

This provides a foundation for concluding that the anticipated outcome was achieved through the experimental process. Research confirmed what had been overwhelmingly suggested by the prior literature — a direct connection between cultural tendencies and entrepreneurial tendencies that has in many ways advanced American entrepreneurship with relative vigor, while certain cultural characteristics create some resistance to this spirit in Germany. The general tone of responses from the two groups demonstrated a greater tendency toward singular, individualized reasons for entering SME development among German entrepreneurs, and, by contrast, a greater tendency among American entrepreneurs to cite causes rooted in broader American corporate culture — whether positive or negative — as inclining their move toward independence.

Conclusion and Recommendations

Ultimately, the findings produced by the survey conducted here endorse the overall argument that cultural factors have long promoted a distinction in entrepreneurial tendencies between the United States and Germany, where the former places a considerably greater emphasis on independent business enterprising than does the latter. Survey respondents produced the qualitatively observed finding that, in terms of both motive and means, American entrepreneurs are illustrative of a culture in which small and medium enterprise orientation is encouraged and supported through various sociologically induced avenues. By comparison, German entrepreneurs who responded to the survey were less likely than their American counterparts to be either motivated or funded through avenues created by cultural or sociological factors. Instead, there appears a greater likelihood among German entrepreneurs to reflect a motive and a means for entrepreneurship with individual and personal implications.

This tends to suggest that, compared to their American counterparts, German respondents do not reflect specific cultural patterns relating to entrepreneurial activity. Where we may not necessarily conclude that there is a pattern which actively dissuades or restrains German entrepreneurs from engaging in the process, we can conclude that there is an apparent pattern whereby lesser opportunity or encouragement exists to help stimulate such engagement.

Based on what the present body of research understands about the entrepreneurial process, these findings contribute to the resolution that a relationship between culture and entrepreneurship does exist, and that this relationship is more strongly expressed in the United States than in Germany. Nonetheless, we may also resolve that Germany is currently in a state of opening: free trade and the realities of the European Union are causing it and many of its neighbors to engage markets with a greater interest in diversification. As large corporate entities move operations to markets offering greater cost flexibility, local activity has become an increasingly important part of retaining dynamism and competition in domestic contexts. In this regard, the German market will come increasingly to identify with the American market in its encouragement and support of SME development.

The study also elucidates several prospects for more precise or empirical examination. In particular, the basic nature of the survey — composed of open-ended questions — carries certain strengths but also some weaknesses in terms of formal rigor. The open-ended format does allow for considerable flexibility in response, which is appropriate for a study intended to breach the surface of the subject matter and efficiently steer future, deeper investigations. However, in the interests of producing more scientifically grounded observations, it is recommended that future survey formats be altered to accommodate quantitative findings. It is also possible to eschew the survey format entirely and engage an altogether different approach to resolving the basic research questions with quantifiable data. Another recommendation, executable only with sufficient resources, would be to expand the sample populations in order to find greater consistency and reliability in the findings.

Overall, the research conducted here met its intent effectively and did satisfy the proposed research questions. The recommendations are focused on ways that future studies — expounding upon more specific or more scientifically focused research questions — could orient their design and procedure accordingly.