Journal of Business Venturing
This article examines how populist rhetoric and cultural tightness shape informal venture entry. We argue that populist rhetoric by national leaders, invoking the “will of the people” and directed against the “corrupt elite,” undermines trust in formal institutions and generates institutional uncertainty that pushes entrepreneurs toward informality. We further argue that cultural tightness moderates this relationship in a counterintuitive way. Cultural tightness typically enforces low tolerance for deviance and strong expectations of compliance; however, when populist rhetoric erodes confidence in democratic institutions, these same normative pressures likely heighten entrepreneurs’ sensitivity to institutional uncertainty, amplifying the perceived risks of formal engagement.
Paul Sanchez-Ruiz is an assistant professor of management and entrepreneurship at the Ivy College of Business. His paper is published in the Journal of Business Venturing.