Culture, institutions and risk-taking
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2025-07-11
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en
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This study examined how culture and institutional quality separately influence individual risk preferences, and whether institutional quality moderates the relationship between culture and risk-taking. Hofstede’s cultural dimensions of individualism and uncertainty avoidance were used as measurement for culture, since these exhibit the strongest theoretical link with risk-taking. The World Governance Indicators were used as operationalisation for institutional quality, with regulatory quality as the main proxy. It was expected that institutional quality positively moderates the positive effect of individualism on risk-taking. Moreover, there was hypothesised that institutional quality positively moderates the negative effect of uncertainty avoidance on risk-taking. These hypotheses were tested using a multilevel regression analysis on a large dataset of 49,582 respondents spanning 45 countries across multiple continents. There is controlled for both individual- and country-level variables. Random effects at the country and region levels were included to account for data clustering. The results reflected that uncertainty avoidance was significantly negatively associated with risk-taking, confirming the variable’s key role in shaping risk preferences. However, neither individualism nor institutional quality exhibited a significant effect. Moreover, the two interactions were non-significant. Additional findings highlighted the strong influence of income inequality, age, gender, and subjective math skills on risk-taking.
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Faculteit der Managementwetenschappen