Language Rules: The Effect of Language on Entrepreneurship

This paper proposes a linguistic-entrepreneur hypothesis: the language we speak influences our likelihood of engaging in entrepreneurship. Some languages require speakers to follow complex honorific rules to express deference to the addressee (e.g., Japanese), and others have no such rule at all (e.g., English). I theorize that languages with more honorific rules help create a culture that values seniority and stability, discouraging their speakers from engaging in entrepreneurship. I empirically test this theory using several representative cross-national surveys, including over three million respondents in 110 countries and speaking 230 different languages. I find that speakers of more honorific-based languages are less likely to engage in entrepreneurship both cross-nationally and cross different language groups within the same country. Examining immigrants in the US, I find about 10 percent of this language effect is transmitted to second-generation who no longer speak the language. In terms of mechanisms, I show that speakers of more honorific-based languages are less likely to embrace new ideas and are more risk-averse. Additionally, in countries using more honorific-based languages, entrepreneurship is less valued culturally. This paper shows how language structures could determine our culture and career choices.