Interview conducted at Rockford University by Stephen Hicks and sponsored by the Center for Ethics and Entrepreneurship.
Hicks: I’m Stephen Hicks. Our guest today is professor Arielle John, who is teaching fellow in the Department of Economics at Beloit College. Professor John was here to speak with us on culture and entrepreneurship with special reference to Trinidad, her native country.
In your talk you gave us some striking statistics about the relationship between culture and entrepreneurship. You started with a breakdown by ethnicity, or the various segments of Trinidadian society. And, to contrast to that, with the participation in self-employment and entrepreneurship. What were those numbers like?
John: Trinidad is an interesting country ethnically. The two majority segments of the population are Indians, who are descendants from Indian indentured servants; they comprise 40% of the population. African Trinidadians comprise about 37%, so they are about equal. Beyond that, about a fifth of the country, or 21% of Trinidadians, report themselves to be mixed; usually that implies they are a mix between Indian and African. And there is a small minority of individuals who are European descendants, also Chinese and Syrian-Lebanese and they comprise two percent of the population. They are the smallest group in the population.
Now, when we look at self-employment statistics we find that within that minority group [European, Chinese, and Syrian-Lebanese descendants], about 35%-36% of those individuals are self-employed — they are business owners. The next group with the biggest category of business owners are the Indians. About 25% of those individuals are considered self-employed. Mixed individuals, perhaps about 20% of that group are self-employed, and blacks in Trinidad have a below average self-employed rate at about 16%. So that’s the breakdown.
Hicks: So, your area of investigation is the effects of ethnic culture, and possibly racial culture, on the widely varying self-employed entrepreneurial ranges.
You also spoke about entrepreneurship and entrepreneurship is complicated in some respects, but you broke it down into two basic moments that you call the Kirznerian moment or the Schumpeterian moment. What are those?
John: Obviously, the decision to become an entrepreneur involves many factors over time and place. For Israel Kirzner, the defining moment of being an entrepreneur is the moment when you discover an opportunity, and usually that happens in a surprise fashion. You are going about your way, and suddenly you realize there are needs that people want met and you know exactly how to do that. So for Kirzner the defining moment is identifying the opportunity.
Hicks: He is emphasizing the cognitive elements in entrepreneurship.
John: Absolutely. For Joseph Schumpeter, what defines an entrepreneur is the doing. For Schumpeter, exploiting the opportunity and actually bringing a product to market or changing how a supply chain works or changing some aspect of production — that is what makes you an entrepreneur. So, in doing something creative, destroying the old way of doing things, the doing aspect of entrepreneurship is what Schumpeter focuses on. So there appears to be two moments of entrepreneurship, the moment when you identify the opportunity and the moment when you actually exploit the opportunity.
Hicks: Okay, so the next question is about culture and those two moments of entrepreneurship. So, in trying to figure out how well or not well a culture fosters the identification of opportunities and the exploiting, right, of those opportunities. You also had a definition of culture earlier, an explication of what culture is. What is culture?
John: Culture is one of those words that is ambiguous and hard to make concrete because it’s so abstract. But I think there is a very good definition of culture from the anthropologist Clifford Geertz. He refers to culture as an historically transmitted pattern of meanings, a system of inherited conceptions. So culture is essentially defined as the shared meanings individuals have about the objects and about the people and about the actions in their lives. They share meanings together, and those differ from culture to culture.
Hicks: So one then asks what meaning, so to speak, entrepreneurship has within a group of people, and to what extent there is a history; those will be connections that we want to make.
Coming to Trinidad in particular, you had three hypothesis about the intersection. One was about Kirznerian entrepreneurship — the identification of opportunities and how that is in Trinidadian culture. What is your hypothesis there?
John: Well, my hypothesis there is that Trinidadians across all of the ethnic cultures are fairly prolific in identifying opportunities. I confirm this by doing interviews with Trinidadians, and I sat them down and asked them: Tell me about your job, or your dream job, and instead of people identifying opportunities to be technicians, to be doctors, to be educators, people identified specific entrepreneurial activities. So they saw themselves as being self-employed one day, and not only did they know that they wanted to own trucks and rent trucks, or start restaurants, or start hairstyling businesses, they had actual plans for how they were going to achieve these businesses. They had a diverse number of reasons, but what really struck me was that they were good at discovering gaps where consumers had demands that were not being met. They were very good at identifying opportunities.
Hicks: And that was across all of the different ethnic cultures that you identified earlier?
Hicks: With respect to Schumpeterian moment in entrepreneurship, what is your hypothesis there for Trinidad?
John: Well, clearly according to the statistics I mentioned earlier, the ethnic cultures are not equal exploiters? According to the data, the white, Chinese, and Syrian-Lebanese Trinidadians are the best exploiters, and the blacks are not necessarily good exploiters. Indians are seen as the emergent business class.
Now there can be several cultural reasons for that. When I looked at the history of the different groups, I realized that there could be some historical, cultural reasons for these disparities. White, Chinese, and Syrian-Lebanese, to some extent, brought their cultures with them, from where they came from, e.g., from China, from Syria. They brought with them their entrepreneurial attitudes.
Not only that, once they arrived in Trinidad they kept close kinship ties and they formed business associations. So, an individual who belongs to that ethnic group has a support system, has a group of people who are aware of what it takes to be a good exploiter. They have technical advice, they keep their kinship network close, and that’s fairly true for Indian Trinidadians as well. But when it comes to black Trinidadians, they don’t have those close kinship ties. They never developed them across their history.
Hicks: Is that because they were largely brought in as slaves?
John: They were.
Hicks: And that destroys kinship connections?
John: That destroys kinship connections. Over the years blacks, as opposed to Indians and Chinese, have given different meanings to certain jobs. Public service, education jobs, and professional jobs are highly valued in the African culture in Trinidad. So an individual who is trying to climb the social ladder or make something out of himself, you know, chases prestige, is not likely to use business to exploit those dreams. They are likely to become more educated and avoid business altogether.
Hicks: Professional jobs in established institutions. You also mentioned some dimensions of dependence versus independence in post-colonial history of Trinidad. Trinidad became a country, you mentioned, in 1962. So this is within a couple of generations that we have a new culture, but nonetheless, dependence and independence are not equally distributed. What are the issues there?
John: I believe that coming out of colonialism, more people started to see business opportunities as something that they could do, they could take charge, they could aspire to be anything they wanted to be, which is why, I think, across cultures, Trinidadians are opportunity identifiers. But they are not necessarily, in terms of the ethnic groups, all equal opportunity exploiters, for these dependence reasons. So blacks and Indians coming out of independence were more dependent on the state, even after Trinidad was not a colony anymore.
There were social programs to try to get them to become businessmen, to take care of them, and I think that decreased their incentive to try to make it on their own. Within those families, living with your family well into adulthood and relying on your parents for money, that is still seem as normal in those ethnic groups. And so, again, that diminishes the incentive to become an entrepreneur and to make one’s own way through life. So, these cultures’ dependence transmits across generations and determine who actually, even though they may have ideas, feels a sort of real need to exploit the opportunities. And those who are more dependent don’t feel that need strongly.
Hicks: They are striking — the statistics on differences in entrepreneurship participation across ethnic groups and racial groups. Also, according to the degree of education.
You also had to break down by sex, and there is a marked difference in the participation between males and females in all ethnic groups and all levels of education. What are your thoughts on the gender or sex differentiation stats?
John: There are gender differences in employment across cultures, across nations, across time, and across jobs, right, so not just self-employed versus employed. Most fields, right, you see that choice gap. And I am not clear what the reason is, but I do think sometimes men have different goals. Sometimes women have more family goals, whereas men may aspire to be businessmen or to be very involved in their jobs. And I think there is a fundamental difference when it comes to the actual choices men and women decide to make on their own.
Hicks: The male/female rates in Trinidad aren’t different from male/female rates in other cultures and places?
John: I don’t think that they are, even here in the USA, I don’t think that they are. Well, there may be a higher percentage of women becoming entrepreneurs in the USA, but women here also generally are more self-sufficient and have a higher income.
Hicks: Okay. Toward the end of your talk, after emphasizing various elements of culture, you said your research shows an importance of institutions of certain sorts in fostering or squelching entrepreneurial participation rates. What do you mean by institutions in the Trinidad context? How does that fit in to your research?
John: When I talk about institutions, I am talking about the formal rules of the game within a society. The rules that tell you what you are allowed to do, where you are allowed to participate and not allowed to participate. I am not really talking about informal rules. I am talking about formal, official rules within Trinidadian society.
Hicks: Would informal rules be on the cultural side? And formal rules would be institutions?
John: Yes, informal rules refer to norms. The formal rules, the institutions operating in Trinidad, certainly apply to everyone. Of all ethnic groups in Trinidad, these are rules that are on the books. They don’t apply to blacks any more than they apply to whites or Indians. So there are institutions in Trinidad and Tobago that I believe, and that I think economic theory would predict, that are beneficial to entrepreneurial identification and exploitation in the first place. In Trinidad and Tobago, private property rights are respected and enforced, so if an individual decides they see an opportunity and they want to follow through with it, they can purchase the piece of land, they can purchase the building, and they don’t have to worry about it being confiscated. Private property rights are perhaps not as strong as in more developed nations, but, still, if individuals want to own properties, they could. Also, in Trinidad, I think the rule of law is respected, so individuals aren’t treated differentially. And so I think in Trinidad, as economic theory predicts, this incentivizes people to be comfortable with coming up with business ideas and going after these ideas because they know that, if they do the face the law in any point in their business dealings, they won’t be treated unfairly or differentially,
Hicks: So the law is noble and consistent, and so people can factor that in and that encourages entrepreneurship?
Hicks: All right, a fascinating set of issues. Thanks for being with us today.
John: Thank you, thank you very much. It was great to talk at Rockford University.
[The original video interview with Professor John follows.]