Israel, a country of only 7.7 million people, has the highest density of start-ups in the world (1 for every 1844 Israelis). Furthermore, more Israeli companies are listed on the NASDAQ exchange than all companies from the entire European continent. In addition, in 2008, per capita venture capital investments in Israel were 2.5 times greater than in the U.S. and more than 30 times greater than in Europe. This productivity takes place in one of the most unstable geopolitical regions in the world. This is a paradox given the fact that organizational theory and common sense suggest the importance of a stable geopolitical environment for successful market and business functionality, especially in the start-up industry that is by itself characterized by high levels of financial risk.
This research will rely on ethnographic fieldwork and participant observation in two Israeli high-technology start-ups and the Israeli start-up sector in order to account for the cultural logic that explains this paradox. The research hypothesis is that Israel’s unstable geopolitical reality has a number of productive features that are commensurate with some of the specific features of successful start-ups. I will study this productive relationship at three different levels: 1) the commensurability between the cognitive and procedural orientations former Israeli Defense Forces-trained high-tech people acquire during their military service and the cognitive and procedural orientations mobilized in much of the research and development in successful Israeli start-ups; 2) culturally-specific interactional norms among Israeli start-up employees that are the product of Israel’s conflictual history and that are conducive to flexible organizational decision-making; and 3) the commensurability between the risk-intensive Israeli culture and the cultural framework needed for the risk-intensive transformation of innovative ideas into marketable products through the recruitment of venture capital.
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