The Nordic concept of Janteloven mirrors some cultural attitudes in Latin America — yet the Nordic countries have still managed to build strong entrepreneurial ecosystems.
Entrepreneurs continue to face strong cultural challenges in Latin America. Risk aversion is particularly common in the region, and thus many youth lack the confidence to start their own businesses for fear of failure and the associated consequences. Would-be women entrepreneurs often must deal with machismo, or male dominance, in economic matters.
Additionally, Latin American cultures tend to be very community-oriented, and it is a common belief throughout much of the region that entrepreneurs are in business to make money only for themselves and are thus “abandoning” their communities, which has cast a negative light upon the concept of entrepreneurship. Moreover, strong pressures to conform to social class expectations often discourage young people from trying to improve their lives through entrepreneurship.
Latin America is not the only region in which cultural factors have hampered the development of entrepreneurship. Entrepreneurs still face sizable cultural obstacles even in regions where entrepreneurship has been able to flourish. This is especially true in the Nordic countries: Denmark, Finland, Iceland, Norway, and Sweden.
As someone who has straddled the Latin American-Nordic cultural divide his whole life, I have witnessed firsthand that while Latin American and Nordic cultures are very different in a variety of ways (just try making small talk while waiting for a bus in Copenhagen or foregoing cheek kisses upon meeting people in San Juan), in both cultures there are norms that encourage social conformity while stifling individualism. While these rules are unwritten and thus are not immediately apparent to outsiders, the social consequences of going against these norms can be severe.
Behavior in Nordic countries is guided by a concept called Janteloven, or Jante’s Law. Janteloven has some analogues in other parts of the world. The Australians call it “tall poppy syndrome.” Here in the United States we have the concept of “crabs in a bucket.” The central idea behind Janteloven is that showcasing one’s individual success or achievement is unworthy and inappropriate and should thus be criticized and avoided at all costs. Janteloven also stresses the importance of societal conformity and is extremely strong throughout the Nordic region, where personal achievements are downplayed and taciturn modesty, rather than self-promotion, is encouraged.
An oft-repeated saying in the Nordic countries goes like this: “You are not to think that you are better than us, or even special, for that matter.” Many have argued that Janteloven discourages creativity and innovation, which has a detrimental impact on the development of entrepreneurship.
Yet in spite of Janteloven, entrepreneurship has flourished in the Nordic countries. Indeed, the 2014 Legatum Prosperity Index, an annual ranking of the economy, entrepreneurship/opportunity, governance, education, health, safety/security, personal freedom, and social capital in 142 countries, ranked Sweden as the #1 country in the world under the “Entrepreneurship and Opportunity” category, while Denmark was a close second. The three remaining Nordic nations also ranked within the Top 10 for entrepreneurship (Finland #4, Norway #7, and Iceland #9). The Janteloven mentality seems jarringly at odds with the Nordic countries’ success in entrepreneurship. How could a region which frowns upon breaking the conventional mold become so conducive to entrepreneurship, where breaking the mold is expected and even necessary?
Latin America faces similar cultural challenges but has experienced vastly different outcomes in the development and success of entrepreneurship. For instance, in the Prosperity Index the top-ranked Latin American nation for entrepreneurship was Chile (#32), while the next-highest was Panama (#43). So what explains the difference between Latin America and the Nordic nations?
The answer lies within a combination of attempts to assuage the effect of these cultural obstacles in addition to the development of a strong institutional framework. In the Nordic countries, both the public and private sectors recognized that Janteloven was holding back the development of entrepreneurship, and took steps to incentivize entrepreneurs to start their own businesses.
The government of Denmark — where the idea of Janteloven originated — has tackled the problem head on. The Danish Agency for Trade and Industry offers the annual Janteknuser (“Jante’s Law Breaker) prize worth 100,000 Danish kroner (approximately $16,500) to young entrepreneurs whose businesses provide innovative contributions to the community. The private sector has also been involved in encouraging young Danes to look beyond Janteloven through similar prizes and competitions, such as Børsen’s Gazelle competition and Ernst & Young’s Entrepreneur of the Year Award.
Of course, no effort to promote entrepreneurship in the Nordic countries would have succeeded without those countries’ strong institutions and a climate that fosters personal freedom. In the 2014 Legatum Prosperity Index’s measurement of “Governance”, the five Nordic nations are in the top 10 (Denmark #3, Sweden #4, Finland #5, Norway #7, and Iceland #18). Under “Personal Freedom”, Norway was ranked #2, Iceland #4, Sweden #6, Denmark #9, and Finland #16. These countries also performed well on the Doing Business Index, all ranking inside the Top 12. Thus, the political and economic structure of the Nordic countries, combined with good governance in the region, is inviting and open to entrepreneurs.
Meanwhile, in Latin America, significant challenges remain in overturning cultural biases against entrepreneurship. While some countries, such as Chile and Puerto Rico, have taken steps to officially promote youth entrepreneurship, there is still a long road to go.
In several Latin American countries, the government has adopted a hostile tone toward entrepreneurs. In Venezuela, for instance, Hugo Chávez frequently denounced entrepreneurs as abandoning their communities and accused the private sector of colluding with outside elements to topple the government. Many Latin American countries still lack the strong institutional framework of the Nordic countries, which further impedes the development of a pervasive entrepreneurial culture. Corruption and large informal economies, in addition to onerous bureaucratic procedures, also are challenges to entrepreneurship.
In response to these challenges, CIPE is working with several partners throughout Latin America to stimulate entrepreneurship, particularly among youth. In Ecuador, CIPE is working with the Ecuadorian Institute of Political Economy (IEEP) on the “Ecuadorian Entrepreneurs” Program, which seeks to teach university students the benefits of entrepreneurship for both personal and social growth. CIPE is working on a similar project, EmprendeAhora, in Peru with Instituto Invertir.
In both Peru and Ecuador, CIPE and its partners emphasize the importance of entrepreneurs using their skills to give back to their communities, which is particularly relevant given the centrality of the community in these cultures’ value systems. In Venezuela, the Federation of Chambers of Commerce and Production (FEDECAMARAS)’s and CIPE’s project “Aprendiendo a Emprender” (“Learning to Be an Entrepreneur”) teaches entrepreneurs that they are key members of their communities and have a duty to help their families, friends, neighbors, and country through entrepreneurship. And in Nicaragua, the Network of Nicaraguan Businesswomen (REN) and CIPE have worked to increase women’s participation in entrepreneurship in a country in which men have traditionally taken the lead in political and economic roles.
The example of the Nordic countries offers hope to Latin America. These countries have been able to encourage entrepreneurship despite strong cultural biases against non-conformity. They have also undergone an institutional and economic transformation. For example, Sweden was primarily an agricultural, underdeveloped society at the end of World War II, but has since become a thriving, developed, high-income country.
If Latin American leaders in both the public and private sector demonstrate a clear commitment to strengthening institutions and working to offset negative perceptions of entrepreneurship, it is possible that Latin America will witness a growth in entrepreneurship in the same way that the Nordic countries have.
Kevin Gatter is a Program Assistant for Latin America & the Caribbean at CIPE.