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International Journal of Management

Volume 11, Issue 09, September 2020, pp. 803-820. Article ID: IJM_11_09_075

Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=9

Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com

ISSN Print: 0976-6502 and ISSN Online: 0976-6510

DOI: 10.34218/IJM.11.9.2020.075

© IAEME Publication Scopus Indexed

RELATIONSHIP BETWEEN CULTURAL

SOCIAL NORMS AND AVAILABILITY OF

ENTREPRENEURIAL FUNDING: MEDIATING

EFFECT OF GOVERNMENT POLICIES,

PRIORITIES, SUPPORT AND EASE OF DOING

BUSINESS

Sumit Bhatt, Dr. Ajay Sharma

School of management, Graphic Era Hill University Dehradun, India

Deepak Kaushal

Department of management studies, Graphic Era deemed to be University, Dehradun, India

ABSTRACT

Entrepreneurship is a process of generation of employment and income by

exploitation of opportunists and innovation. Entrepreneurship helped in growth of

global economy and also contributed to elevate standard of living and to fulfil needs of

people worldwide. Availability of venture capital acts as catalyst in the growth of

entrepreneurship; easy funding motivates entrepreneurs to transform their ideas into

commercial product and to innovate products and services. Entrepreneurship directly

and indirectly influenced by various factors, entrepreneurial activities in a society

shaped by social norms, values &culture with in an institutional setting. In this article

with the help of literature review and analysis of secondary data we have studied the

relationship between cultural, social norms, society support and availability of private

funding for entrepreneurship. We have verified with the help of CFA and SEM the effect

of government policies, priorities and support to entrepreneurship and ease of doing

business in terms of government bureaucracy, regulations, taxes and licensing

requirements on this relationship.

Keywords: Entrepreneurship, funding, Government policy, ease of doing business,

social and cultural support.

Relationship between Cultural Social Norms and Availability of Entrepreneurial Funding: Mediating

Effect of Government policies, priorities, Support and Ease of Doing Business


Cite this Article: Sumit Bhatt, Dr. Ajay Sharma and Deepak Kaushal, Relationship

between Cultural Social Norms and Availability of Entrepreneurial Funding: Mediating

Effect of Government policies, priorities, Support and Ease of Doing Business,

International Journal of Management, 11 (9), 2020, pp. 803-820.

http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=9

1. INTRODUCTION

Globally entrepreneurship has helped in economic growth, creating employment opportunities

and renewal of economies (Miller, 2014). For that reason, most of the world governments are

giving encouragement to entrepreneurship. Innovation and job creation by entrepreneurs have

created strong impact on a country’s economic strength and stability. As per Small Business

Administration report 2010, small firms play a major role in the United States by providing a

significant share in innovations. They have continuously outperformed their large business

counterparts in terms of patent activity (Barringer and Ireland, 2012). As per MSME Annual

Report 2018-19, in India small and medium firms play an important role by contributing

28.90% share in GDP and by creating approximately 110 million jobs per year. As

unemployment is the phenomena faced by most of the world governments, they are giving

encouragement to entrepreneurship. However, the efforts by the governments are hindered by

the obstacles that persist along with a large rate of failure (De Gobi,2014). According to GEM

& YBI youth entrepreneurship report 2013, these obstacles include access to funding, lack of

required skills, lack of infrastructure and lack of mentorship. This report mentions that 59% of

UK youths consider the lack of funds as the key barrier that prevents them from starting an

enterprise. Usually, when a new technology is created, an entrepreneur needs financial capital

to transform it into an innovation and finally to a commercial product. When the funding is not

available, the entrepreneurial effort dies, but when funding is available, the entrepreneur can

enter the market and has chances to get successful. In most of the countries, the banks are

insensitive to the financial needs of the start-ups ( Bonacim et al., 2009).The transitional

funding of converting a new idea into a commercial product or service generally comes from

private sources (Gicheva & Link, 2013). The private sources of funding contain business angels,

venture capital and crowd funding etc. On literature review it is found that although

entrepreneurs’ characteristics, motivations and perceptions have been studied at length with

regard to why business start-ups succeed or fail, there is not enough research done on the

relationship between cultural, social norms and society support and availability of private

funding. Bruton, Zahra, & Cai(2018) quote Hayton, George, & Zahra (2002) and Bruton,

Ahlstrom, & Li (2010)” entrepreneurial activities are culturally grounded in that they are

determined as well as constrained by national cultures. The variety of entrepreneurial activities

in a society is similarly shaped by values, norms, and practices, that is, their institutional

setting”. Cultural and creative entrepreneurship is the reality of innovators, human capital,

society, financial and cultural capital (Sinapi, 2020). In this article with the help of literature

review and analysis of secondary data we are studying the relationship between cultural, social

norms and society support and availability of private funding in entrepreneurship. We are also

studying the effect of government policies, priorities and support to entrepreneurship and ease

of doing business in terms of government bureaucracy, regulations, taxes and licensing

requirements on this relationship. This study on relationship among social norms, culture,

funding sources and entrepreneurship will be helpful for policy makers for assessments and

recommendations for plan and policies for new firms.

Sumit Bhatt, Dr. Ajay Sharma and Deepak Kaushal


2. LITERATURE REVIEW

2.1. Availability of Entrepreneurial Funding from Private Sources

Funds for new enterprise is a basic point of consideration for the entrepreneurs wanting to enter

in new business; arrangement of funding is a repelling factor in the process of entrepreneurship;

therefore availability of funding for new firms plays a major role to attract people for

entrepreneurial activities (Bonacim et al., 2009). According to Kumar & Rao (2016) , funding

always remain a constrain for small and medium enterprises; there is a requirement of more

flexible credit facilities ; new sources of finance other than banks are needed for the

development and growth of small business as small and medium firms face bureaucratic barriers

to accessing funds and Banks credit facilities. The cost of finance for entrepreneurs in country

like Brazil is very high. In India Government under the leadership of prime minister Mr. PM

Narendra Modi launched Start up and Stand up programme to motivate people for

entrepreneurship. In the initial phase Jan-sept 2015 $7.3billion came from angel funds and

VCFs for Indian Start-ups (Amberber, 2015). Development-oriented funds are also financed by

international donors and financial institutions to small business (UNCTAD, 2012).Business

angles are wealthy individuals who support entrepreneurs for innovation and marketing by

providing them financial support and know- how based on their experience; business angles

possess characteristics of entrepreneurs because they not only advice and motivate new firms

but they also bear risk in investing in new business or project whereas return of investment is

not confirm (Aernoudt, 1999). This implies that business angels have the similar characteristics

as that of entrepreneurs. Cardonet. al. (2017) mention that investment decision by angel

investors depends on motivational cues, commitment and preparedness; they evaluate potential

success in business and qualities on entrepreneurs.

Crowd funding is a new method of funding new businesses, entrepreneurs request funding

social and business projects from single or many individuals, often in return for future idea,

innovation, products or equity (Mollick, 2014).Angel investors are traditional sources of

funding to entrepreneurs but crowd funding emerge as a new innovative sources of seed funding

(Drover et. al , 2015). Crowd funding is a mode of funds generationin small amount from large

numbers of investors. Fourati (2016) indicates that crowd funding emerged as a tool of

enhancing information environment for entrepreneur; it is a platform where investors and

entrepreneurs share the information it is a complement of traditional banking funding. Now it

has become easy to arrange funding by this method because internet has reduced the transaction

cost significantly. There are several web-based crowd funding service providers like

Kickstarter, Lending Club, Prosper, ProFounder, Indie Go Go, etc. In the US before 2016,

crowd funding did not mesh well with federal securities regulation. In 2016 The Jumpstart Our

Business Startups (JOBS) Act formed an exemption under the federal securities laws. This act

designed a regulatory structure for raising funds through security offering by means of crowd

funding. It is beneficial for entrepreneurs in different ways like availability of low cost capital,

ease to access new products and participation of community in entrepreneurial

activities.(Agarwal et al., 2013).

2.2. Cultural Social norms and Society Support for entrepreneurship

Business is a part of society. It influences the society and culture both. Entrepreneurship is a

social activity which is induced by social networking (Burt, 1992). An entrepreneur needs

support of other people in entrepreneurial activities. Social environment of any country and

geographic region highly influence entrepreneurship. Sociological theories that start from

ethnic identification try to explain entrepreneurship as a process where the individual’s

sociological background is one of the decisive “push” factors to become an entrepreneur

https://www.sec.gov/spotlight/jobs-act.shtml




(Reynold, 1991). Culture is a set of belief, values, knowledge, education, religion and norms of

a group. According to Hoftstede (1991), culture distinguishes members of one social group to

another. There are cultural differences due to of regional, ethnic, religious, social norms,

gender, and language variations. Inglehart (1997) defines culture as the set of values which are

sheared by people in society and shapes the behaviour of people in that society. Hofstede (2005)

culture influence on opportunity recognition and entrepreneurial intention exists through

cognitive mechanisms also; culture also influence entrepreneurship by social legitimatingand

by promoting favourable attitudes towards formation of new business.

Weber (1904) explained effect of caste system, religion and family system on

entrepreneurship in India. The Weberian theory postulates entrepreneurial behaviour is

determined by culture.the Jains community in India became a trading sect for purely ritualistic

reasons, trading is considered as one of the means of practice ahimsa. Along the same theme,

Gadgil (1959) some cultures are more diverted towards trading. Muslims, Christians, and Jews

were the chief traders of Kerala, and in South India. Shapero (1984) There are variation in

entrepreneurial activities in different cultures depending on values and norms. He mentions,

"Some cultures that value entrepreneurship are: Ibos in Africa, Gujratis, Jains, and Parsis in

India, overseas Chinese in southeast Asia, Antioquarioes in Colombia, Jews, Lebanese,

Mennonites and Mormons in the United States”. Socio-cultural factors influence on individual

behaviours towards entrepreneurial activities Kottak (2000). According to Simonin (2006) there

are push and pull factors which induce individuals for self employment. Push factors are forcing

factors and pull factors are voluntary engagement due to opportunity in market.

Shapero and Sokol (1982), “it is no accident that entrepreneurship is highly identified with

certain ethnic groups: Jews, Lebanese, and Ibos in Nigeria, Jains and Parsis in India, Guajarati’s

in East Africa.” As per Morrison et al. (1998a), foundation of entrepreneurship is based on

interaction between individual society and culture. The spirit of process of entrepreneurship

initiation lies in social values and interaction among members of society. It gives shape to

internationalization of values associated with entrepreneurial behaviour (kirkley, 2016). People

belong to specific society exhibits collective entrepreneurial characteristics (Hofstede,

1994).This indicates that societal and cultural factors play a significant role in beginning of

entrepreneur activity . Economic activity in any country is supported by that country’s formal

and informal institutional settings (North, 1990). Formal institutions comprise of economic,

political and contractual rules and regulations that govern behaviour and interaction of

individuals. Informal institutions belong to a country’s cultural heritage and social norms

(North, 1990).

In any national entrepreneurial activities are different due to variations in culture, personal

attitude and awareness of social norms ; family background is a part of social capital individuals

from self-employed parents are positively influence for own business (Röhl , 2018).

Hechavarría (2016) established positive impact between traditional societal values and

commercial entrepreneurship prevalence rates. Venture capital development mainly depends

on cultural value uncertainty avoidance(Li & Zahra, 2012). Uncertainty avoidance can be

associated with low risk taking propensity. Cultures with high level uncertainty avoidance

tendency , would attract low VC investment and would raise the opportunity costs of risk taking

(Li & Zahra, 2012). In different cultures, crowdfunding is impacted by social capital in different

manner(Zheng, Li, Wu, & Xu, 2014). Zheng et al.(2014) mention that it is easier to get funding

from sponsors in collective cultures as compared to in individualistic cultures. They further

state that, for that reason it is easier to get entrepreneurial funding in china as compared to that

in the US. In a study done by Mason and Harrison (1999, 2000b, 2002a) related to investment

by business angles has shown that tax relaxation has high impact on willingness of business

angels to invest in new ventures. Therefore legal and political environment related to tax relief



has positive impact on availability of funds by business angels. From above literature we may

conclude that entrepreneurial behaviour is influenced by the culture and society and there are

variations related to entrepreneurship from one society to other. Fund providers to start-ups also

have the characteristics of entrepreneurs (Aernoudt, 1999).Thus, we may hypothesize that

H1: Availability of entrepreneurial funding from private sources is positively related to

cultural, social norms and society support for entrepreneurship.

2.3. Government policies, priorities and Support

Development of entrepreneurship is a matter of government policy. Government policies and

support has a positive relationship with growth and development of entrepreneurship (Almahdi,

2020). Policy makers recognize that entrepreneurial behaviour gets influenced by providing

infrastructure and conductive business environment in economy, but the challenge is to develop

entrepreneurial culture in society (Gibb, 2002). For small enterprises it is difficult to access

credit most of small entrepreneurs arrange their own capital to start new enterprise. European

and American government made polices to facilitate credit and initiatives which support small

firms; this type of policy has shown positive results in setting of new firms and development of

entrepreneurship (Ferreira et al., 2012). According to Dubai SME 2011 report that the

government support for entrepreneurship is needed to create seed pipeline for future enterprises

and developing a risk-taking culture. Main hindrances in the way of SME financing arena are

high cost of finance, high rate of market failure, banks need collateral security from

entrepreneurs, high cost of instalment of new technology, uncertainty in commercial viability

of new idea and problems in payment of loan because of low profit in small enterprises. To

address these issues government introduce flexible and liberal policies like on line approval of

applications, guarantee free loan, incentives in tax to investors and venture capitalists. This

narrows down the financial gap and provides credit accessibility to new entrepreneurs

(Lundstrom and Steveneon, 2005). Thus, we hypothesize that

H2: Availability of entrepreneurial funding from private sources is positively related to the

government policies, priorities and support for entrepreneurship.

Many researchers use the term ‘institutions’ to explain contextual factors that have impact

on entrepreneurship. Salimath and Cullen (2010) define institutions as “ humanly devised

constraints that shape human interaction”. Institutions are of two types- formal and informal

institutions. Formal institutions are economic, legal and political structure of a country; and

informal institutions are culture, traditions, customs and social norms (Tonoyan et al., 2010).

National contexts i.e. formal and informal institutions influence the policies on

entrepreneurship (Salimath& Cullen, 2010). It implies that along with economic, legal and

political structure, informal institutions such as culture, traditions, customs and social norms

also influence the government policies and priorities in relationship to entrepreneurship. Li et

al.(2019) studied the impact of government policies and priorities and national culture in the

development of technological entrepreneurship. They concluded that uncertainty avoidance that

is a cultural factor influences the public policies formed by the government which further

influence the shaping of entrepreneurship. Thus we may hypothesize that

H3: Government policies, priorities and support to entrepreneurship are positively related

to the Cultural, social norms and society support to entrepreneurship.

H4: Government policies, priorities and support to entrepreneurship will mediate the

relationship between Cultural, social norms and society support to entrepreneurship and

availability of entrepreneurial funding from private sources.




2.4. Ease of doing business in terms of government bureaucracy, regulations,

taxes and licensing requirements

Policies like easy entry and exit of firms, easy licensing procedures, availability of credit to the

entrepreneurs and government intervention in injecting the venture capital in market for new

firm support entrepreneurship in a country (Almahdi, 2020).Over the time governments felt that

development of entrepreneurship is essential for economic growth and generation of

employment. Therefore governments implemented policies for the promotion of the SME by

providing subsidized credit, marketing assistance, training in development, etc. But all these

efforts did not surge entrepreneurship in developing countries like India because of red-tapism,

procedural hassles, lack of infrastructure strict labour laws and economic regulations (Sanghi

S. And Srija,2016). Three major factors which influence investment in new firms are political

stability, macroeconomic stability and legal& regulatory environment. Majority of business

firms consider them to be critically important (Global investment competitiveness report -2019-

20). According to report of National Knowledge Commission (2008), half of the entrepreneurs

faced difficulties in the procedure of statutory clearances and licences. Two-thirds faced

difficulty filing taxes and sixty percent of entrepreneurs encountered problem of corruption. It

also mentions that under-developed infrastructure, especially irregular power supply, transport,

and telecommunications, is the critical barrier. As per UNCTAD report 2012, liberal and hassles

free environment is the pre-requirement for entrepreneurship development. It is necessary to

ease the process and procedure of registration, licensing and loaning.

Government policy should support the sustainable development of entrepreneurs.

Developed countries like Singapore, New Zealand and Canada have least administrative

requirements on new firms. Cost of entrepreneurial activities should be lower down in

underdeveloped and developing countries. Excessive administrative requirements and higher

registration costs reflect negative impact in the growth of start-ups. (UNCTAD, 2012)

The taxation system is used by many governments to encourage private funding. According

to Lundstrom and Stevenson(2005), United Kingdom introduced the policy to facilitate new

firms by offering concessional tax rates. Similarly Irish government provide rebate on tax

through a Seed Capital Scheme. They further mention that Spanish government have a policy

to provide relief in taxes to firms that have income of less than 5 million Euros. To encourage

investment in new businesses Spanish government permits the deferment of the payment of

company for the first two years after the starting of a business. Australian, Finnish, Canadian,

Danish and UK governments have exempted small firms from Value-Added (VAT) or Goods

and Service (GST) Tax below a threshold of minimum income. Venture capitalists and angel

investors are also a potential source of funding for new entrepreneurs. Australian government

has policy of tax concessions to angel investors through pooled investment funds programme.

Canadian government is running programs such as Qualified Limited Partnership and Labour

Sponsored Venture Capital Companies to encourage investors by providing tax concessions.

In Ireland government grants tax concessions to the angel investors who invest up to £250,000

in a year Irish in certain sectors. Similarly Dutch government also offer programme income tax

benefits to individuals those who invest in start-up. Government polices related to tax relief

encourage private funding in new ventures and reduces the risk related to capital (Aernoudt,

1999). Hence we may hypothesize that

H5: Availability of entrepreneurial funding from private sources is positively related to ease


requirements

H6: Ease of doing business in terms of government bureaucracy, regulations, taxes and

licensing requirements is positively related to the government policies, priorities and support

for entrepreneurship.



As aforementioned literature review shows the relationship of government policies,

priorities and support with Cultural, social norms and society support to entrepreneurship and

availability of entrepreneurial funding from private sources, we may hypothesize that


licensing requirements is positively related to cultural, social norms and society support for

entrepreneurship.


licensing requirements mediate the relationship between Cultural, social norms and society

support to entrepreneurship and availability of entrepreneurial funding from private sources.

Figure 1 Theoretical Framework

3. RESEARCH METHOD

The above model (Figure 1) is tested by using a secondary source of data, the National Expert

Survey (NES) 2016 by Global Entrepreneurship Monitor (GEM). GEM was founded by Babson

College and the London Business School in 1997. GEM conducted its first study in 1999 that

contained 10 participating countries (GEM Report, 2016). Ever since, more than 80 countries

have been the part of this global consortium. The GEM is a global study that has the objective

of carrying out cross-country comparison of entrepreneurial activities and the measurement

approach is exactly same for all the participating counties (Reynold’s et al., 2005). It is

considered the best comparative data on entrepreneurship (Shorrock 2008) and has been widely

utilized in the academic research (Aidis et al., 2008; Barazandeh et al., 2015;Bowen and

DeClercq , 2008;Koellinger and Thurik, 2012; Kwon and Arenius ,2010; Lepoutre et al., 2013

;McMullen et al. ,2008; Stephan and Uhlaner, 2010).

In 2016, GEM conducted its research in 65 countries. GEM classified these countries on

the basis of geographical region and economic development (Figure 2) World Economic

Forum’s classification was adapted for the classification of economic development level. The

countries are classified into three categories by World Economic Forum. These categories are

factor driven countries, efficiency driven countries and innovation driven countries. In an

efficiency driven country economy develops to a level where more efficient processes and

product quality are incorporated. Next level of the classification is innovation phase in which

economy is more knowledge intensive and service sector grows (GEM Report, 2016). Social,

economic and political factors play an influential role in entrepreneurship, so every year GEM

surveys 36 carefully selected key experts having specific national knowledge and expertise.




Each identified expert completes NES(National Expert Survey) questionnaire that measures

their perceptions of national environment for entrepreneurship. The macro environmental

conditions assessed by NES contain “ financing, government policies, taxes and bureaucracy,

government programs, school-level entrepreneurship education and training, post-school

entrepreneurship education and training, R&D transfer, access to commercial and professional

infrastructure, internal market dynamics, internal market burdens, access to physical and

services infrastructure, and social and cultural norms” ( GEM Report, 2016). In the NES 2016

a Likert scale of 1 to 9 was used. 1 indicates “highly insufficient” and 9 indicate “highly

sufficient”. The survey provided the data collected from 2911 respondents from 65 participating

countries. The data was checked for incomplete entries and the respondents whose entries were

incomplete were removed from the dataset(Kang, 2013). Finally the data from 2883

respondents was considered for the analysis.

Out of 60 items of the NES 2016 dataset, 12 items are chosen that represent the theoretical

constructs of our hypothesized model. Availability of entrepreneurial funding by private

sources is assessed using the sample items “In my country, there is sufficient funding available

from professional Business Angels for new and growing firms”,”In my country, there is

sufficient funding available from venture capitalists for new and growing firms” and “In my

country, there is sufficient funding available through private lenders' funding (crowdfunding)

available for new and growing firms”. To measure Cultural Social norms and Society Support

, the sample items “In my country, the national culture is highly supportive of individual success

achieved through own personal efforts”, “In my country, the national culture emphasizes self-

sufficiency, autonomy, and personal initiative”,”In my country, the national culture encourages

entrepreneurial risk-taking”,”In my country, the national culture encourages creativity and

innovativeness” and “In my country, the national culture emphasizes the responsibility that the

individual(rather than the collective)has in managing his or her own life” are used. Government

Policies , Priorities and Support was assessed using the sample items “In my country, the

support for new and growing firms is a high priority for policy at the national government level”

and “In my country, the support for new and growing firms is a high priority for policy at the

local government level”. “Ease of doing business in terms of government bureaucracy,

regulations, taxes and licensing requirements is assessed with the help of the sample items “In

my country, taxes and other government regulations are applied to new and growing firms in a

predictable and consistent way” and “In my country, coping with government bureaucracy,

regulations, and licensing requirements it is not unduly difficult for new and growing firms”.

Remaining items of the NES dataset pertaining to the four constructs of our theoretical model

were dropped on account of low values of factor loading. According to Hair et al.(2006) , a

good standardized factor loading value should be above 0.5 and ideally 0.7 or above. As

indicated in Table 1 , items (total =12) used to measure our theoretical model support both the

reliability and validity.



Figure 2 GEM Countries 2016 (Source: GEM Report 2016)

Table 1 Overall Reliability of the constructs and the factor loadings of the items.

Item Cronbach's Alpha Factor Loading t-statistic P

Funding_1 0.79 0.82

Funding_2 0.83 36.033 ***

Funding_3 0.62 30.8 ***

Govt Pol_2 0.85 0.85

Govt Pol_1 0.87 32.769 ***

Ease_2 0.67 0.71

Ease _3 0.71 21.455 ***

Culture_1 0.91 0.78

Culture_2 0.87 60.007 ***

Culture_3 0.84 43.498 ***

Culture_4 0.81 41.942 ***

Culture_5 0.74 40.018 ***

*** Significant at the 0.001 level.

3.1. Analytical Approach

Using AMOS 21 , confirmatory factor analysis was applied to the theoretical model to review

the loadings of the items of the constructs . The goodness of fit was measured by using chi-

square statistics, CFI (comparative fit index), SRMR (standardized root mean square residual)




,RMSEA ( root mean square error of approximation )and, PClose (Hu and Bentler, 1999).

Threshold values of model fit measures are CMIN/DF more than 1 and less than 5 ; CFI a

value of 0.95 and above; SRMR a value of 0.08 or less; RMSEA a value of 0.06 or less and

PClose a value greater than 0.05 Hu and Bentler (1999). Structural Equation Modelling was

used to test the hypotheses of the theoretical model. AMOS 21 was used for the SEM.

According to Singh and Sarkar(2012) Structural Equation Modelling is the best tool to assess

multi-item latent variables and is widely used to examine mediating effects (Cheung,2007).

Yadav and Singh(2016) mention that relevant paths are specified and several measurement

errors are controlled while testing hypotheses in SEM.

4. RESULTS

4.1. Confirmatory Factor Analysis

Table 2 and Table 3 show the descriptive statistics that include mean, standard deviation,

kurtosis, skewness and Pearson’s correlation. The results of confirmatory factor analysis show

that the model fit measures are within the threshold limits. The values are CMIN= 175.33 , DF=

46, CMIN/DF= 3.812, CFI= 0.992, SRMR=0.02, RMSEA= 0.031, PCLOSE= 1.000 (Table 4).

As the factor loadings of 11 items out of 12 items is greater than 0.7 and factor loading of

remaining one item is 0.62 , the reliability of all the items is confirmed (Hair et al., 2006). The

convergent validity of the model is confirmed by the significant loadings and the high

reliabilities of the constructs. The values of AVE for all the items are above 0.5 and for all

items composite reliability is greater than its AVE , which confirms the convergent validity.

(Hair et al., 2010). Discriminant validity exists as all values of AVE are greater than MSV

(Hair et al., 2010) and the values of inter construct correlations are less than the values of square

root of AVE(Table 3 and the elements in bold in Table -5) (Fornell and Larcker, 1981).

Figure 3 CFA Diagram



Table 2 Descriptive Statistics

Mean Std. Deviation Skewness Kurtosis

Statistic Statistic Statistic Std.

Error Statistic Std. Error

Culture 4.0101 1.63019 .104 .046 -.768 .091

Ease 3.5528 1.45835 .231 .046 -.702 .091

GovtPolicy 4.2647 1.85635 .080 .046 -.955 .091

Funding 3.0534 1.27238 .220 .046 -.774 .091

Table 3 Correlations

Culture Ease GovtPolicy Funding

Culture

Pearson

Correlation 1 .533** .413** .369**

Sig. (2-tailed) .000 .000 .000

N 2883 2883 2883 2883

Ease

Pearson

Correlation .533** 1 .649** .348**

Sig. (2-tailed) .000 0.000 .000

N 2883 2883 2883 2883

Govt Policy

Pearson

Correlation .413** .649** 1 .387**

Sig. (2-tailed) .000 0.000 .000

N 2883 2883 2883 2883

Funding

Pearson

Correlation .369** .348** .387** 1

Sig. (2-tailed) .000 .000 .000

N 2883 2883 2883 2883

**. Correlation is significant at the 0.01 level (2-tailed).

Table 4 Model Fit Measures

Measure Estimate Threshold

CMIN 175.33 --

DF 46 --

CMIN/DF 3.812 Between 1 and 5

CFI 0.992 >0.95

SRMR 0.02 <0.08

RMSEA 0.031 <0.06

PClose 1 >0.05

Table 5 Validity Measures

CR AVE MSV MaxR(H) GovtPolicy Funding Ease Culture

GovtPolicy 0.849 0.737 0.285 0.85 0.859

Funding 0.799 0.574 0.112 0.825 0.334 0.758

Ease 0.667 0.501 0.285 0.667 0.534 0.272 0.708

Culture 0.905 0.655 0.193 0.911 0.366 0.324 0.439 0.81




4.2. Structural Equation Modeling

In the hypothesized model entrepreneurial funding from private sources is dependent variable,

Cultural Social norms and Society Support is independent variable, Government Policies,

Priorities and Support and Ease of doing business in terms of government bureaucracy,

regulations, taxes and licensing requirements are mediating variables. Table 6 indicates that all

SEM Model fit indices are within the acceptable range (Hooper D. et al., 2008), thereby support

the model fit.

Figure 4 SEM Diagram

Table 6 SEM Model Fit Indices

Fitness Indices CFI GFI AGFI NFI TLI CMIN/df RMSEA LO 90 HI 90

Ideal Value >0.9 >0.95 >0.90 >0.95 >0.9 <5 <0.1 <0.08 <1.5

Observed Value 0.992 0.99 0.983 0.99 0.989 3.812 0.031 0.026 0.036

Table 7 Standardized Regression Weights: (Group number 1 - Default model)

Estimate

GovtPolicy <--- Culture 0.366

Ease <--- Culture 0.281

Ease <--- GovtPolicy 0.431

Funding <--- GovtPolicy 0.223

Funding <--- Ease 0.058

Funding <--- Culture 0.217

Source: Amos Output

Table 8 Regression Weights: (Group number 1 - Default model)

Estimate S.E. C.R. P Label

GovtPolicy <--- Culture 0.387 0.023 16.709 ***

Ease <--- Culture 0.267 0.024 11.332 ***

Ease <--- GovtPolicy 0.386 0.024 15.958 ***

Funding <--- GovtPolicy 0.2 0.025 8.009 ***

Funding <--- Ease 0.058 0.033 1.782 0.075

Funding <--- Culture 0.205 0.023 8.824 ***

Source: Amos Output



Table 7 and Table 8 indicate that the standardized impact of Cultural Social norms and

Society Support on Availability of entrepreneurial funding by private sources (β = 0.217 at p ≤

0.001) is positive and significant. Hypothesis 1 is supported by this result, which states that

availability of entrepreneurial funding from private sourcesis positively related to cultural,

social norms and society support. Furthermore, the standardized effect of Government policies,

priorities and support to entrepreneurship on Availability of entrepreneurial funding by private

sources (β = 0.223 at p ≤ 0.001) is positive and significant. Hence supports the hypothesis 2

that there is a positive relationship between Government policies, priorities and support to

entrepreneurship and Availability of entrepreneurial funding by private sources. The

standardized effect of Cultural, social norms and society on the Government policies, priorities

and support to entrepreneurship(β = 0.366 at p ≤ .001)is positive and significant , that supports

the hypothesis that Cultural, social norms and society support is positively related to

Government policies, priorities and support to entrepreneurship. The standardized effect of ease


requirements on Availability of entrepreneurial funding by private sources (β = 0.058) is not

significant, hence doesn’t support the hypothesis 5.Table 7 and Table 8 further report that there

is a positive and significant (β = 0.431 at p ≤ 0.001)standardized impact of Government policies,

priorities and support to entrepreneurship on Ease of doing business in terms of government

bureaucracy, regulations, taxes and licensing requirements, which supports the hypothesis 6

that there is a positive relationship between Government policies, priorities and support to

entrepreneurship and ease of doing business in terms of government bureaucracy, regulations,

taxes and licensing requirements. It is recorded that Cultural, social norms and society support

has positive and significant (β = 0.281 at p ≤ 0.001) standardized impact on the ease of doing

business in terms of government bureaucracy, regulations, taxes and licensing requirements,

hence support the hypothesis 7 that Cultural, social norms and society support is positively

related to the ease of doing business in terms of government bureaucracy, regulations, taxes and

licensing requirements.

Bootstrapping Method was used to test the mediation effect (Bollen& Stine, 1990;

Shrout& Bolger, 2002). The standardised direct effect of Cultural, social norms and society

support to Availability of entrepreneurial funding by private sources in the absence of any

mediator is positive and significant (β = 0.324 at p ≤ 0.001), which is the necessary condition

to check the mediation effect. Table 9 shows that for the path from Cultural, social norms and

society support to Availability of entrepreneurial funding by private sources via Government

policies, priorities and support to entrepreneurship the standardized indirect effect is significant

(β = 0.107 at p ≤ 0.001). This indicates the presence of a significant mediation effect of

Government policies, priorities and support to entrepreneurship in the structural model. As the

standardized direct effect from Cultural, social norms and society support to Availability of

entrepreneurial funding by private sources in the presence of Government policies, priorities

and support to entrepreneurship is significant (β = 0.217 at p ≤ 0.001), it may be concluded that

the nature of mediation effect is partial. Hence the hypotheses 4 that Government policies,

priorities and support to entrepreneurship will mediate the relationship between the Cultural,

social norms and society support and the availability of entrepreneurial funding from private

sources is supported. There is no mediation effect of Ease of doing business in terms of

government bureaucracy, regulations, taxes and licensing requirements on the relationship of

the Cultural, social norms and society support and the availability of entrepreneurial funding

from private sources as the standardized impact of ease of doing business in terms of

government bureaucracy, regulations, taxes and licensing requirements on availability of

entrepreneurial funding from private sources is not significant. Hence hypothesis8 is not

supported.




Table 9 Standardized Direct, Indirect and Total Effects

5. CONCLUSION

In any nation entrepreneurial activities are influenced by social capital, social norms and

culture. Culture influences human capital and has positive impact on entrepreneurship and

innovation.Entrepreneurial skills are developed by social connections. Even if persons from

specific religious background migrate from one geographic region to other, they show positive

attitude towards entrepreneurship like Jews and Jains. Differences in entrepreneurial culture are

due to different ethnicity and social norms. The cultural social norms and society support has a

positive relationship with availability of entrepreneurial funding from the private sources.

Funding from angel investors is a big opportunity to entrepreneurs. Angel investors are

traditional sources of funding to entrepreneurs but crowd funding has emerged as a new

innovative sources of seed funding. Crowd funding provides platform where investors and

entrepreneurs share the information and ideas. The Investment in new business by venture

capitalists, angel investors and other individuals depends on government policies, priorities and

support that further create ease of doing business in terms of government bureaucracy,

regulations, taxes and licensing requirements. Our study didn’t show a direct relationship

between availability of entrepreneurial funding from private sources and ease of doing business

in terms of government bureaucracy, regulations, taxes and licensing requirements. Funding

always remainsa constrain for small and medium enterprises, hence there is requirement of

more flexible credit facilities. New sources of finance other than banks are needed for the

development and growth of small business. The governments of the countries where cultural

social norms and society support entrepreneurship, make policies that are conducive for

entrepreneurship and encourage entrepreneurial funding from the private sources. The countries

that are lagging in availability of entrepreneurial funding need to create a culture to support

entrepreneurship and governments of these countries should make policies to encourage

entrepreneurial funding from the private sources. Future research is possible to analyse the

Standardized Direct Effects (Group number 1 - Default model) Standardized Direct Effects - Two Tailed Significance (BC) (Group number 1 - Default model)

CultureGovtPol

icyEase

Fundi

ng

Cultur

e

GovtPol

icyEase

Fundi

ng

GovtPoli

cy0.366 0 0 0

GovtPo

licy0.001 ... ... ...

Ease 0.281 0.431 0 0 Ease 0.001 0.001 ... ...

Funding 0.217 0.223 0.058 0Fundin

g0.001 0.001 0.082 ...

Standardized Indirect Effects (Group number 1 - Default model) Standardized Indirect Effects - Two Tailed Significance (BC) (Group number 1 - Default model)

CultureGovtPol

icyEase

Fundi

ng

Cultur

e

GovtPol

icyEase

Fundi

ng

GovtPoli

cy0 0 0 0

GovtPo

licy... ... ... ...

Ease 0.158 0 0 0 Ease 0.001 ... ... ...

Funding 0.107 0.025 0 0 Fundin 0.001 0.086 ... ...

Standardized Total Effects (Group number 1 - Default model) Standardized Total Effects - Two Tailed Significance (BC) (Group number 1 - Default model)

CultureGovtPol

icyEase

Fundi

ng

Cultur

e

GovtPol

icyEase

Fundi

ng

GovtPoli

cy0.366 0 0 0

GovtPo

licy0.001 ... ... ...

Ease 0.439 0.431 0 0 Ease 0.001 0.001 ... ...

Funding 0.324 0.248 0.058 0Fundin

g0.001 0.001 0.082 ...



interconnection between national and regional variables of culture and society which influence

entrepreneurship and funding to new ventures. The influence of cultural social norms and

society support, government policies, priorities &support and ease of doing business in terms

of government bureaucracy, regulations, taxes and licensing requirements on venture capital,

angel investors and crowdfunding may be studied separately for each of these sources of

funding.

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