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Personal determinants of an Entrepreneur

Personal Characteristics of an
Entrepreneur

Submitted to:
Mr. Manan Khan

Submitted by:
Adnan Faisal 203

Wasif Rasheed 211

Junaid Khalid 219

Shoiab Channar 229

M. Zubair 238

MBA 3rd Evening G-2

Session 2008-10

Department of Management Sciences

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Personal determinants of an Entrepreneur

The Islamia University of


Bahawalpur
PREFACE
Department of Management Sciences, The Islamia University of Bahawalpur has always been

admirable in its efforts to equip the future executives with arms of creativity, flexibility and

adaptability to meet the challenges offered by fast changing business environment.

To achieve the above goals the department is providing both text and practical knowledge to its

students with its available resources. Text knowledge is very well transferred to the students

within the premises of the department; Practical knowledge requires the kind co-operation of

various business organization of the country. Faculty members are always trying their best to

ask the students to explore the market by assigning these different field activities and to conduct

the “Business Research”.

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Personal determinants of an Entrepreneur

Acknowledgement

We first thanks to ALLAH, The Almighty who bestowed knowledge, health, vigor, to complete
this report.

“Life is a learning experience”. We have learned the validity of this statement time and time
again. Every time we think we know something, we look back a year later and realize how little
we know and how much we have learned. This Research Report has convinced us again, not in
the learning but also in terms of the vast team of talented people that take part in creating this
report. We believe each person plays a piece of a puzzle to make the complete picture, some
pieces are bigger then others, but without anyone piece the picture would not be completed.

We feel great pleasure and honor to express our gratitude from the citadel of our hearts to the
people whom we met, for their cooperation. Their sympathetic behavior has an ever-lasting
impression on the pages of our memory.

We also give honor to Mr. Manan Khan who provide us an opportunity to get practical
experience in fieldwork and whose guidance remained with us during completing this report.

We also wordless to pay our humble gratitude to our parents, who have supported us to reach
the point where we stand now and have been a great and enormous source of inspiration for us
throughout the life

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Personal determinants of an Entrepreneur

ABSTRACT

Purpose of the study: The purpose of the study is to uncover the personnel determinants that
contribute to the success of entrepreneur.

Methodology: Questionnaire and Interview technique was used to determine the personnel
determinants of success. A structured questionnaire was employed to gather data and test the
model through stratified sampling method.

Findings: The results of correlation analysis had shown direct positive relation of (Age,
Education, Experience, Locus of control, Risk, Knowledge, Decision Making, Innovativeness
and tolerance for ambiguity) with entrepreneur’s success.

• Limitations and Implications: The research was conducted in particular geographical


area. The findings will help managers to put more focus on the mentioned two
dimensions and their related variables (demographic, Psychographic variables) which
affect these dimensions. Findings also tell the managers about the factors which are the
true determinants of entrepreneurial success at personal level. As the Research was
conducted in Bahawalpur, so the responses generated by the Entrepreneurs seems not
realistic because of they do not have enough information about some variable of
interest.

Key words: Personal determinants, success, Bahawalpur

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TABLE OF CONTENTS
TABLE OF CONTENTS ...................................................................................................5

Introduction

The state bank of Pakistan defines SME as (small and medium enterprises). These are entities
that are not categorized as public limited companies. Development of small and medium
businesses has been debated in detail at public and private forums in Pakistan, but until
recently the stimulus behind these efforts was more socio-political than economic. The main
focus of economic policies, budgetary measures and regulatory administration was large scale
industry. As a result, structural imbalances were created in Pakistan's business environment,
which got skewed unhealthily towards promoting small and medium scale industry.
Development Authority (SMEDA) as the flagship organization meant to provide support to SMEs
in Pakistan through:

1. The creation of a conducive and enabling regulatory environment.


2. Development of industrial clusters.
3. The provision of Business Development Services to SMEs in all areas of business
management.

There is no uniform definition of SME across the broad in Pakistan. Different organizations and
departments define SMEs in their on way. They small and medium enterprises do not have
employees more than 250 in manufacturing sector and not more than 50 if it is related to
services sector.

Further more according to criteria set up by state bank of Pakistan SME must abide the
following captions.

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a) SME if related to trading should have total assets at cost excluding land and building up
to Rs 50 million.

b) SME if related to manufacturing should have total assets excluding land and building up
to Rs 100 million.

c) Any concern (trading, manufacturing or services with net sales not exceeding Rs 300
million as per latest financial statements.

Global Importance:

Recently three of the world’s leading accounting bodies including CPA Australia, certified
general accountant association of Canada, and ACCA (association of charted certified
accountant) along with world renowned economist conducted a survey. Following the surveys
they concluded that all the government around the globe must concentrate on developing the
medium sized business or the economy will be at stake and the world will have to face
recession.

They gave certain recommendations to governments, bank and business. The accounting
bodies have called for continued support for SMEs. Noting that unless this sector has the
confidence to resume hiring and investing, the global recovery could prove delicate. The
significance of SMEs can be determined of the fact that in the recommendation lighter
regulatory laws, supportive policies, selected fiscal incentives, reasonable labor flexibility and
loan support was recommended for them.

SMEs contribute to the system in following dimensions

a) Unemployment and poverty reduction

b) GDP and per capita income growth

c) Value addition

d) Export earning

Importance of SMEs in Pakistan:

SMEs in Pakistan hold immense importance as Pakistan is the gigantic producer of agriculture
related raw material. Although Pakistan government do not concentrate on this sector of
business as it does on the big industries. Still this sector has developed very fastly by the self
initiatives of people. This sector has contributed a lot in the removal of unemployment and
poverty. It has added remarkable value to the products exported to the international market.

As an example the Faisal Abad power loomers are the significant part of the main textile sector.
People need employment on the local level and this opportunity is provided by the SMEs of
Pakistan. In order to fulfill the domestic demands of the region SME do prove themselves most
significant.

SMEs are considered as a backbone of economic growth in both developed and developing
countries. As they provide low cost employment since the unit cost of persons employed is
lower for SMEs as compared to large units. They also

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 Help in local development as SMEs fastens rural industrialization by linking it with the
more organized urban sector

 Play a pivotal role in export revenues because of the low-cost labor.

 Have a positive effect on the trade balance as SMEs generally use home grown raw
materials.

 Maintain a reasonable growth rate since being indigenous is the key to sustainability and
self -sufficiency.

Significance of study:
One of the defining characteristics of a prosperous and growing economy is a flourishing small
and medium enterprise (SME) sector. SMEs contribute to economic development in multiple
ways, creating employment for expanding rural and urban workforce and providing much
needed flexibility and innovation in the economy as a whole, No doubt there is a lot of work has
been done on this sector but still the SME sector in Pakistan is facing a very significant failure
rate, round about 90-95 percent business fails in initial stages. The previous work of researcher
is insufficient to uncover the reasons and suggests ways to improve.

The most common reason of failure is lack of managerial/entrepreneurial


characteristics. In Pakistan there in no concept of training and education before starting
business and it becomes a real cause of failure.
This study is helpful to demolish this traditional concept and to present a synthesis
model of entrepreneur characteristics which are helpful to reduce failure rate.
Objectives:
The purpose of the study was to identify the personal determinants of entrepreneur which area
helpful for the success of the business, further the objective of the study was not only to
highlight the determinant of entrepreneurial success but also to check the impact of each
determinant on the success of business. The study was helpful for Government to develop
educational & training programs. By developing such programs the probability of failure in
SME’s sector should be reduced.

Problem Statement:

Due to the growing importance of SME’s and their significant contribution to economic
development so there is a need to strengthen this area so in order to provide to this section
Government must have to take actions. The main issues in SME are their lack of
entrepreneurial expertise so there must be educational or training program to develop these
expertises. Failure rate of SME in Pakistan is very high around about 90 – 95 percent business
fails in their first year and the rest of the business are hardly survive for 3 to 4 years So this
research is conducted to explore the synthesize model of characteristics of entrepreneur that is
needed for success. Because if we want to survive in this global village than we must have to
upgrade our SME sector. Findings of this research encourage and increase the probability of
success of the person who want to start their business as well as the person who is still in the
business.

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Literature Review
This study gives an overview of different researches conducted by different authors on personal
determinants of entrepreneur. This study begins with the current problem faced by the SMEs
and their consequences. In this study the personal determinants of an entrepreneur which are
important for the success of a business are discussed. There is need to explore the personal
characteristics of an entrepreneur and importance of SMEs in Pakistan. The study includes
personal determinants of an entrepreneur which influence the success of a business and are
classified in Demographic, Psychographic and other variables. These categories have
comprises different variables which play a momentous role for the success of a business.

Demographic
Age:

Age is very controversial factor at which almost all researchers have different opinions like
(Rose, 2006) relates age with business success positievely while (Niels, Mirjam, & Gerrit, june
2000) relates age positievely with knowledge rather than the business success.Amazingly (Roy
& Isabel) Support both (Niels, Mirjam, & Gerrit, june 2000) and (Rose, 2006) that age has
positive relation with knowledge and further he add that knowlegde leads the business toward
success which he says in support of (Roy & Isabel). Mario, Arminda, & Joao, (2008) are with
the opinion which they divide in two parts.

1) The peoples upto age 24 usually did not feel positive indicator to start as an
entrepreneur.

2) They argue that willingness decreases as the entrepreneur grow old but opportunities
increase with the increasing age.

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Bostjan, (2009) totally disagree with all of the above, according to him age is directly related
with business success not to the age of person it is the age of firm which matters. Prof Tapan
placed in a group who relates persons age with business success.

Education:

Education is an important personal factor that entrepreneur is required for making a business
successful. Education is the factor at which almost all researchers nearly have same view with
minor addition like (Niels, Mirjam, & Gerrit, june 2000) believes that to make business
successful, entrepreneurs required education as a personal factor. Ajay, Archana, Arup, &
Lucky, (2008) relates education with entrepreneurs success significantly. Rose,( 2006) has
compared educated entrepreneurs with non educated entrepreneurs and gives opinion that
educated entrepreneurs have great chance of success. Prof Tapan argues in detail that why
education is helpful for successful business? According to him education helps in making
decisions, adoption of new technology, and providing market knowledge. Guzman, (1994)
found the positive relationship of education with intrinsic motivation factors. Ajay, Archana,
Arup, & Lucky, (2008) gave with unique and auckward theory. He says that education has
positive impact on profit and as usual (Michael & Pamela, 1995) argue in their unique style
describe two types of education. He says that creative education leads entrepreneur to high
level of success while the entrepreneurs with standarized educationa experiences have low
level of entrepreneurship.

Gender:

Arnold & Kendall, (1995) are the only who believes that gender has no influence on
expactations but on the other hand they believe also that female entrepreneurs have higher
level of satisfaction. All the other researchers seems to be more realistic like (Roy & Isabel)
believes that males can engage themselves in entrepreneurship in a better way. Mario,
Arminda, & Joao, (2008) agrue in detail the psycology of women aged between 21-25.
According to (Mario, Arminda, & Joao, 2008) they want personal and economic independence.
Further they say that although women want independence but they are less confidence and are
incapable to lead. Again (Reynold, Bygrave, Autio, Cox, & M, 2002) support the idea of (Roy &
Isabel) that women are 50 % less likely to involve in entrepreneurship as compared to male.
Ingrid, Andre, & Roy, (may, 2004) had focussed females in third world countries. According to
them the situation in third world countries is totally opposite, there women are very keen to
seem self employed because mostly in developing countries women labor force is at very low
level. Women are also very keenS for best living standard of their families and they are
struggling to become an entrepreneur.

Experience:

According to (Brockhaus, 1980) like education, experience also contribute much in business
success. Cooper, (1985) regard experience as a motivational factor which leads towards
entrepreneurial success. Rose, (2006) had explained experience in a very typical way by giving
comparison of high experience persons with a low experience one, obviously person with high

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experience is much successful entrepreneur than the person with a low experience. Niels,
Mirjam, & Gerrit, (june, 2000) simply give a list of field in which one has to gain experience to
become a successful entrepreneur.

The entrepreneur must have experienced in the following fields

• Experience in the sector

• Experience in the trade

• Experience as an employee

• Experience in self employment

• Financial experience

• Family experience

If a person has these experiences it will help him to become a successful entrepreneur (Niels,
Mirjam, & Gerrit, june 2000).

Last comes (Michael & Pamela, 1995) argue in their special way. According to them persons
with good experience as an employee have low level of entrepreneurship while persons with
bad experience as an employee are very keen to become self employed. This theory is much
close to human nature and it seems that (Michael & Pamela, 1995) had deeply study the
psychology of human behaviour, especially employees. Further they had also compared people
having bold experience with the people having complacent experience. Their words are in
favour of persons with bold experience. Overall we can conclude that experience contributes
much in business success, but experience must be in relevant field.

Family Background:

Niels, Mirjam, & Gerrit, (june, 2000) collectievely states that many persons have become
entrepreneurs because of their parents who were also self employed, so family background has
a positive impact on entrepreneur’s success. Prof Tapan agrees with (Niels, Mirjam, & Gerrit,
june 2000) believing that not only children are influenced to become entrepreneur but they gain
lot of experiences in childhood which leads to business success. Like others (Raman, 2004)
also relates family background with business success positively but in a condition that
encouragment by the family shall be there to ignitiate the child.

Michael & Pamela ( 1995) found the relation ship of family background with entrepreneurship in
such a way

• The person who has been brought up in a luxurious life style has low level of
entrepreneurship.

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• On the other hand the person who had faced number of hardships in his early life could
have high level of entrepreneurship.

Psychographic
Locus of control:

AU,( 2007) talked about the Psychology of successful entrepreneur that they alone can control
environment of the firm because they are selfconfident about their skills and knowledge. Koh,
(1996) is in ful support of the study given by (AU, 2007) with minor addition which includes
handling of ambiguous situations. Chen, Greene, & Crick,( 1998) concluded the studies of other
researchers and give their words in favor of entrepreneur with greater internal locus of control
and regarded him as more successful. Abdolhamid, Kiumars, Malekeh, & Mahya, (2008) are
also in favor of (Chen, Greene, & Crick, 1998) they said that internal locus of control has strong
positive relation wit the success of a business.

Risk Taking:

Michael & Pamela, (1995) gave a very general definition of the word risk. According to him risk
taking is completely one’s own personal decision in which he is ready to bear loss in form of
resources as well in form of capital. Following the footstep (Michael & Pamela, 1995, Bashir &
Mahmood, 2008) also appeared with a very general but incomplete definition of risk because he
only argue about entrepreneurs own capital invested in the firm neglecting the chance of loss in
any form. (Entirialgo, Fernandez, & Vazquez, 2000, Thomas & Muller, 2000) collectievely gave
the idea of differential entrepreneurs with empolyers and manager which is risk taking. (Cromie,
2000, Teoh & and Foo, 1997) also support this idea in their studies individually. (Mill, 1984) is
also in support of this idea recomendig this differential point as a key factor.

All of above talked about risk and risk takers but (Robert, october 2007) moved one step
forward argue about the relation of success with risk. According to him one who know well about
risk and can measure reward associated with risk can be a successful entrepreneur. Prof
Tapan could be seem as the supporter of (Robert, october 2007) theory to some extent
because he only states the risk taking as a key factor of success neglecting the knowledge of
risk and reward associated with it. (Bashir & Mahmood, 2008) again gave incomplete definition
of success ( same as Bashir individually argued in case of risk). They states that success is
measured by entrepreneur capital invested in the firm. They did not associate risk taking with
success. Last comes (Davidsson, 1989) who argue uniquely and seems to be close with
general human nature. As he says that small entrepreneur do not indulge themselves in risk
taking decisions.He also implies same thing with family responsibilities. According to
(Davidsson, 1989) if a person is in desperate condition and has no other choice but to take risk,
will take risk till the time of his goals which are at very small scale are achieved and further more
he will stop taking risk. It seems (Davidsson, 1989) has immense understanding and a fine grip
on entrepreneur’s thinking with respect to human nature. (Mill, 1984) Support (Davidsson,
1989) last idea that entrepreneur only indulge in risk in only those areas where he has great
control to maximize profit.

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Decision maker:

Entrepreneur should be a strong decision maker because right decision at the right time lead
business toward success while on the other hand wrong decisions at wrong time even right
decision at wrong time or wrong decisions at right time may leads total destruction of a business
success so decision making should be strong, timely and applicable

Knowledge:

Entrepreneurs should have many competencies of which one of the important competencies is
knowledge of the market or market awareness. As one should have proper knowledge of ups
and downs of market which can be directly or indirectly harm or boost the business (Martyn &
Peter).

Flexibility:

Entrepreneurs should be flexible by nature because sometimes we have to move forward


aggressively in business and sometimes we have to move slowly, so one should be enough
flexible so that person could convert him/ her self in every situation (Martyn & Peter)

Need For Achievement:

Sajie & Elizur, (1999) had given a traditional definition of need for achievement as they believe
that behind the person’s struggle for success and perfection, there are some forces giving
ignition, while (Abdolhamid, Kiumars, Malekeh, & Mahya, 2008) believes that it has large
influence on business success and they relates need for achievement with entrepreneurship
success positively. McClelland theory suports the idea given by (Hansemark, 1998) and
(Littiunen, 2000) about need for achievement in which it is suggested most significant
relationship with entrepreneurship. One can see that both (Hansemark, 1998) and (Littiunen,
2000) along with (McClelland) had related need for achievement with entrepreneurship not with
entrepreneur success which differ minor in general ,but in deep had a major difference what
(Abdolhamid, Kiumars, Malekeh, & Mahya, 2008) talked about, which is entrepreneur’s success
not entrepreneurship.

Innovativeness:

Michael & Pamela, (1995) states that introducing new technology in products as well as in
services is innovation. Further they relates innovation with entrepreneur’s attitude and behavior,
and also insist that success can also be measured by innovative abilities of entrepreneur.As
both (Entirialgo, Fernandez, & Vazquez, 2000) and (Mill, 1984) suggests that risk taking as a
differential point between entrepreneur and employee or manager, same here write (Stewart,
Carland, Carland, Watson, & Sweo, 2003) insists that innovative personality is also a trait which
differentiate entrepreneur from employee and manager. Mario, Arminda, & Joao, (2008) argue
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in detail that in starting a business mostly entrepreneurs rely on their own abilities so they must
be of innovative mind. Bostjan,( 2009) also states that small firms faces more innovativeness
than that of large firms. Zacharakis,( 1997) neither argued about success nor innovativeness
rather he talked about the nature of innovative entrepreneurs, suggesting that they are always
looking for new ideas and opportunities. Overall we can conclude that people are naturally
innovators and innovation is a key factor which leads entrepreneur toward success specially in
small firms where opportunities often blinks and had to be captured.

Self Confidence:

Cromie, (2000) believes that self confidence is not a determinant of entrepreneurship but when
one has become a successful entrepreneur than he feel self confident about himself but on the
other hand (Koh, 1996) and (Robinson, Stimpson, Hunefner, & Hunt, 1991) argue about self
esteem which they believe is very high in entrepreneurs than others. Here all support the theory
of (Cromie, 2000) to some extent that persons become selfconfident after becoming
entrepreneurs.

Tolerance of Ambiguity:

If the situation is ambiguous or uncertain it requires entrepreneur to respond positively .If limited
data is available for any situation and entrepreneur has to take decision on the basis of these
scare information and have trust on his decision under uncertainty then it is said that his
tolerance for ambiguity is high.

Sensing opportunities and mobilizing Resources:

According to (Bashir & Mahmood, 2008) entrepreneur’s success can be measured by


calculating the borrowed capital with in the business.

Achievement Orientation:

Achievement orientation is the process of reinvesting the profit into the business. According to
(Bashir & Mahmood, 2008) if the person reinvest the largest part of profit in the business for
future growth than he is considered to be a successful entrepreneur.

Efficiency in managing enterprises and mobilizing resources:

Calculating the return on investment if the return on investment (ROI) is good. Its mean he/she
is managing his/her resources efficiently and generating good profit. If the return on investment
is increasing, it’s mean that entrepreneur is successful (Niels, Mirjam, & Gerrit, june 2000).

Ability to balance work and ability:

If the entrepreneur has the ability to balance his/ her work and his/ her life equally then it is said
that he/ she is a successful entrepreneur (Niels, Mirjam, & Gerrit, june 2000).

Others
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Generate Employment:

According to (Niels, Mirjam, & Gerrit, june 2000) only high profit generator entrepreneur could
not larger be called a successful entrepreneur until he give consideration to society and his
employees. Variable “Employee generation” measure the social success of an entrepreneur.
Satisfaction of employee with their work and turnover all are included in this variable, even firm’s
survival time is also considered as a part of success.

Openness:

Bostjan, (2009) states that openness is a personality trait which is a key factor leads firm toward
success. Bostjan, (2009) also insists that openness is the factor which ignitiate entrepreneurs to
drop convential ideas, switching forward to new ones in term of technology and innovative
ideas. He also states that openness has a strong positive relation with the entrepreneur’s
success.

Willingness to start the same business:

If the entrepreneur is willing to start the same business then it is said that he/she is a successful
entrepreneur so there is direct relationship between willingness to start a new business and
entrepreneurial success (Niels, Mirjam, & Gerrit, june 2000).

Job satisfaction:

Job dissatisfaction pushes entrepreneur towards the success. Also found that the great the job
dissatisfaction more likely to be successful entrepreneur (Brockhaus, 1980).

Customer satisfaction:

Success is also measured through checking the satisfaction level of customers. If the customers
are satisfied then the entrepreneur is successful so, there is strong positive relationship
between customers satisfaction and entrepreneurs success (Niels, Mirjam, & Gerrit, june 2000)..

Profit motivation:

Mario, Arminda, & Joao, (2008) Collectievely believes that in start of business entrepreneurs are
much profit oriented. Their main focus is on profit, neglecting other targets and sacrifising
abilities of the business while in later stage there is deep change in entrepreneur’s nature and
now they focus on other targets such as firm’s growth e.t.c.

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Model:

Psychographic Variables
Risk Taking
Innovativeness
Locus of control
Need for achievement
self confidence
Decision making
Tolerance for ambiguity
Sensing opportunities and mobilizing resources

Efficiency in managing resources

Ability to balance work and Family


Achievement oriented
Flexibility
Knowledge

Demographic Variables
Age Entrepreneurship
Gender Success
Family Background
Education
Experience

Other Variables
Profit Motivation
Job satisfaction
Customer satisfaction
Willingness to start the business
Generate Employment
Openness

This model was tested on 50 usable responses from the sample of 50 entrepreneur (98% of
them were male and 2% of them were females). Data were collected via face to face interviews
and by structured questionnaire from entrepreneurs in Bahawalpur. The typical entrepreneur in
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the sample was 30-40 years old and having 5-10 years of experience. The following hypothesis
was developed from the Model.

Hypothesis

Hypothesis 1:

Risk Taking has strong positive relation with entrepreneurship success.

Hypothesis 2:

There is positive relationship between innovativeness and business success.

Hypothesis 3:

There is positive association between internal locus of control and business


success.

Hypothesis 4:

Need for achievement has positive association with success.

Hypothesis 5:

Self confidence has strong positive relationship with success.

Hypothesis 6:

Tolerance for ambiguity has direct relationship with business success.

Hypothesis 7:

Achievement orientation has strong positive relation with entrepreneurship success.

Hypothesis 8:

Age has strong positive relationship with success of the business.

Hypothesis 9:

The persons with high education have greater chances of success.

Hypothesis 10:

Experience has positive relationship with entrepreneurship success.

Hypothesis 11:

There is positive relationship with between family background and profit of the firm.

Hypothesis 12:

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Males have direct relation with the business success as compare to females.

Hypothesis 13:

There is strong positive relationship between decision making and success of the
business.

Hypothesis 14:

There is strong positive relationship between knowledge and business success.

Hypothesis 15:

Flexibility has also directly association with growth of a business.

METHODOLOGY:

The study is a descriptive correlation survey. The purpose of the study was to investigate the
impact of characteristics of an entrepreneur on the success of a business, as we know SMEs
contribute in the economic development of Pakistan data was not easily available to check the
trend in SMEs financing due to un-documented economy and lack of information. Measurement
items for assessing independent and dependent variables were previously tested and used in
past studies. Data have been collected from primary as well as secondary sources. Survey
approaches were used for research and questionnaire has been used as a research instrument
Independent variables including the general personality elements – the big five personality
factors – were measured by Saucier’s [50] Mini-Markers Inventory (also used and tested in
entrepreneurship by Singh and De Noble [31]), so in the light of previous studies conducted by
different researchers (Ajay, Archana, Arup, & Lucky, 2008), (Bostjan, 2009), (Brockhaus, 1980).
(Cooper, 1985) etc, and interviews with the entrepreneurs three different types of personal
characteristics of an entrepreneur were identified.

 Demographic
 Psychographic
 Others

Population

The aim of the study was to identify the characteristics of entrepreneur which leads
small and medium enterprises toward success so, All small and medium enterprises of
Pakistan are our target population but we have focused on Bahawalpur division. There
are 427 small and medium enterprises in Bahawalpur which is our target population.

Sample size:

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As our target population is Bahawalpur so we have selected a sample of 50 small and


medium enterprises from a population of 427 Small and medium enterprises on the
basis of which the result will be generalized.
Sampling Technique:
Proportionate stratified technique was used to select a sample size. Firstly the
population was divided into small strata’s and then the sample was selected from each
stratum on the basis of their proportion. This sampling plan has been the primary source
of gathering information
Data collection:
Data was collected by the structured questionnaire and interviews. The data was
collected by the trained interviewers who interview the 50 entrepreneurs. Collected data
has been presented in the form of tables and graphs, making it easier to
understandable the pattern and the personal determinants that play a key role for the
success of SMEs. Data was collected from primary as well as from secondary source.
In primary source questionnaire was used as research instrument while secondary
source includes Journals, Internet search, periodical and other supporting material from
books related to SMEs. Sample consists of only manufacturing sector of SMEs in
Bahawalpur which includes (cotton factories, Oil mills, Rice mills, Flour Mills, Food
manufacturing industries and marble makers).All the data collected was then analyzed
using statistical package for social sciences (SPSS)

Results:

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In this section, the results of the research will be presented. The statistical treatment
included the following processes. Correlation analysis was used to check the impact of
independent variable upon dependent variable. Analysis was done by using SPSS. We
define three dimenensions of dependent variable (Entrepreneur success)
• Survival time
• Sales
• Profit
And then check the relationship of each independent variable with all of the above
dimensions.
Following are the correlation results of the independent variables with dependent
variables are as follows.

profit survival sales


Age 0.203 .576** 0.24
Gender -0.077 0.089 -0.058
Decision maker 0.074 0.244 0.032
Self Confidence -0.023 0.145 -0.248
Ris_1 0.017 0.158 -0.146
edu_1 .308* 0.093 .298*
fami_1 -0.035 -.317* -0.138
innov_1 0.178 -0.012 0.172
EXP_6 .339* .454** 0.248
TOL_SUC -0.022 0.093 -0.036
ACH_SUC -0.022 -0.01 -0.072
LOC_SUCC -0.02 0.168 -0.071
KNO_SUC 0.138 0.006 -0.163
FLEX_SUC -0.231 -0.218 -0.239

Age:

Hypothesis:

Age has positive relationship with success of the business.

Age is very controversial factor at which almost all researchers have different opinions like
(Rose, 2006) relates age with business success positievely while (Niels, Mirjam, & Gerrit, june
2000) relates age positievely with knowledge rather than the business success.Amazingly (Roy
& Isabel) Support both (Niels, Mirjam, & Gerrit, june 2000) and (Rose, 2006) that age has
positive relation with knowledge and further he add that knowlegde leads the business toward
success. We are also cheking the rekationship of age with the success. Age has direct
relatioship with survival time (.576) sales increase(.240) and profit increase(.203). so we our
hypothesis is accepted that age has positive relationship with success.

Education:

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Personal determinants of an Entrepreneur

Hypothesis:

The persons with high education have greater chances of success.

Education is the factor at which almost all researchers nearly have same view with minor
addition like (Niels, Mirjam, & Gerrit, june 2000) believes that to make business successful,
entrepreneurs required education as a personal factor. Ajay, Archana, Arup, & Lucky, (2008)
relates education with entrepreneurs success significantly. Rose,( 2006) has compared
educated entrepreneurs with non educated entrepreneurs and gives opinion that educated
entrepreneurs have great chance of success. We have find that education has direct correlation
with survival (.093), sales (.298) and profit (.308). So our hypothesis is accepted as our findings
show that education has positive relationship with success and greater the entrepreneur has the
education greater the chances of their success.

Gender:

Hypothesis:

Males have direct relation with the business success as compare to females.

Arnold & Kendall, (1995) are the only who believes that gender has no influence on
expactations but on the other hand they believe also that female entrepreneurs have higher
level of satisfaction. Gender's influence on expectations and satisfaction have been checked but
not with the success so we have taken the relationship of gender with success. No one has
checked the relationship of gender directly with the success almost all of the previous
researchers has taken as an indirect variable that contribute to success but we have taken
gender as the direct variable that contribute to success. Our results shows that male
entrepreneur has positive relationship with survival time (.089), but negative relationship with
both sales (-.058) and profit (-.077). so our results does not provide educate results to say that
our this hypothesis is true but it has acceptability to some extent because male entrepreneur
has positive correlation with survival time period and it is a very significant dimension of our
dependent variable(success).

Experience:

Hypothesis:

Experience has positive relationship with entrepreneurship success.

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Personal determinants of an Entrepreneur

According to (Brockhaus, 1980) like education, experience also contribute much in business
success. Cooper, (1985) regard experience as a motivational factor which leads towards
entrepreneurial success. We have cheked the direct impact of experience on success. Our
results showes that experince has strong direct relationship with success. Experince correlation
with survival time is (.454), sales (.248) and with profit it has the correlation of (.339) that
provide enough avidances to support our hypothesis.

Family Background:

Hypothesis:

There is positive relationship with between family background and success of the firm

Niels, Mirjam, & Gerrit, (june, 2000) collectievely states that many persons have become
entrepreneurs because of their parents who were also self employed, so family background has
a positive impact on entrepreneur’s success. Prof Tapan agrees with (Niels, Mirjam, & Gerrit,
june 2000) believing that not only children are influenced to become entrepreneur but they gain
lot of experiences in childhood which leads to business success. Like others (Raman, 2004)
also relates family background with business success positively we are also checking this
relation of family background with success in our envoirnment. Our results provide no support to
the findigs of other researchers in our envoirnment this hypothesis is not accepted.

Locus of control:

Hypothesis:

There is positive association between internal locus of control and business success.

Chen, Greene, & Crick,( 1998) concluded the studies of other researchers and give their words
in favor of entrepreneur with greater internal locus of control and regarded him as more
successful. Abdolhamid, Kiumars, Malekeh, & Mahya, (2008) are also in favor of (Chen,
Greene, & Crick, 1998) they said that internal locus of control has strong positive relation wit the
success of a business. In the context of the bahawalpur it is also proved that entreprenure with
high internal locus of control has greater chances of success as our results showes that LOC
has a positive correlation with survival time (.168), negetive with profit and sales but if the
average of the dimension of dependent variablea has been taken then it showes that overall it
has positive correlation with success.

Risk:

Hypothesis:

Risk Taking has strong positive relation with entrepreneurship success.

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Personal determinants of an Entrepreneur

Tapan could be seem as the supporter of (Robert, october 2007) theory to some extent
because he only states the risk taking as a key factor of success. (Bashir & Mahmood, 2008)
also support that risk has direct relationship with success. In the context of our study it has also
proved that risk has direct relationship with success as it has positive correlation with survival
time (.158) and profit (.017).so our null hypothesis is accepted.

Knowledge:

Hypothesis:

There is strong positive relationship between knowledge and business success.

Entrepreneurs should have many competencies of which one of the important competencies is
knowledge of the market or market awareness. As one should have proper knowledge of ups
and downs of market which can be directly or indirectly harm or boost the business (Marty&
Peter). There is no doubt in this fact that education has strong positive relationship with success
as our results shows that it has positive correlation with survival time (.006) and with profit (.138)
and negative relation with sales (-.163) so we conclude that our hypothesis is accepted.

Decision maker:

Hypothesis:

There is strong positive relationship between decision making and success of the business.

Entrepreneur should be a strong decision maker because right decision at the right time lead
business toward success (Marty& Peter). Our findings support the previous findings of Marty
and Peter as evident by our results (profit .074, sales .032, survival .244) so we accept the null
hypothesis.

Flexibility:

Hypothesis:

Flexibility has also directly association with growth of a business.

Martyn & Peter find that flexible entrepreneur has greater chances of success. But our findings
contradict the results of Martyn & Peter because in the context of our study the relationship of
flexibility with success is negative. So our hypothesis is rejected. Flexibility has negative
correlation with survival time (-.218), sales (-.239) and with profit (-.231).

Need For Achievement:

Hypothesis:

Need for achievement has positive association with success.

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Personal determinants of an Entrepreneur

(Abdolhamid, Kiumars, Malekeh, & Mahya, 2008) believes that it has large influence on
business success and they relates need for achievement with entrepreneurship success
positively. McClelland theory suports the idea given by (Hansemark, 1998).and (Littiunen,
2000) about need for achievement in which it is suggested most significant relationship with
entrepreneurship.

Innovativeness:

Hypothesis:

There is positive relationship between innovativeness and business

Michael & Pamela, (1995) relates innovation with entrepreneur’s attitude and behavior, and also
insist that success can also be measured by innovative abilities of entrepreneur.As both
(Entirialgo, Fernandez, & Vazquez, 2000) and (Mill, 1984) suggests that risk taking as a
differential point between entrepreneur and employee or manager, same here write (Stewart,
Carland, Carland, Watson, & Sweo, 2003) insists that innovative personality is also a trait which
differentiate entrepreneur from employee and manager. We have taken innovation as the
directly affecting personal determinant of success and our findings also suppport the findigs of
other researchers. We accept this hypothesis becaouse innvation has direct relationship with
success as avident by the survival time (-.012), sales (.172) and profit (.178).

Self Confidence:

Hypothesis:

Self confidence has strong positive relationship with success.

Cromie, (2000) believes that self confidence is not a determinant of entrepreneurship but when
one has become a successful entrepreneur than he feel self confident about himself but on the
other hand (Koh, 1996) and (Robinson, Stimpson, Hunefner, & Hunt, 1991) argue about self
esteem which they believe is very high in entrepreneurs than others. Here all support the theory
of (Cromie, 2000) to some extent that persons become selfconfident after becoming
entrepreneurs.we are testing that either the self confident is the determinant of success? And
our findings show that self confidence has indirect relationship with success as evident by the
results (survival time .145, sales -.248 and profit -.023).so the null hypothesis is rejected.

Tolerance of Ambiguity:-

Hypothesis:

Tolerance for ambiguity has direct relationship with business success.

Littiunen,(2000) finds that the entreprenure with high tolerance of ambiguity has greater
chances of success and that is also supported by (Stewart, Carland, Carland, Watson, & Sweo,

Department of Management Sciences Page 23


Personal determinants of an Entrepreneur

2003). Our study also support these researches that high tolerance for ambuguity has a direct
relationship with success.

Achievement Orientation:

Hypothesis:

Achievement orientation has strong positive relation with entrepreneurship success

According to (Bashir & Mahmood, 2008) if the person reinvest the largest part of profit in the
business for future growth than he is considered to be a successful entrepreneur. Our finding
does not provide support to the findings of Bashir & Mehmood 2008 because in the context of
Bahawalpur achievement orientation has a negative relationship with success so we reject this
hypothesis.

Limitations:
Different type of problems was faced by the researcher during collection of a data and
choosing a sample size. The Research was conducted in Bahawalpur the city of
Pakistan and following were the problems faced by the Researchers.
• The first and major limitation of the study was time constraint. As the Research was
conducted by the researchers who were the students of management sciences of
Islamia University Bahawalpur and student have limited time to conduct a thorough and
suspicious research. So its a chance that some of the factors may be ignored or not
discussed in detail.
• The data was collected through stratified and convenient sampling, because of easily
availability of data and less expensive research it’s a chance that results may cause
sampling errors which affect the generalizability of research.
• As the Research was conducted in Bahawalpur, so the responses generated by the
Entrepreneurs seems not realistic because of they do not have any information about
some variable of interest.
• The sample size selected was small so it may also affect the generalizability of a
research

Conclusions:

This study was done for exploring the personal determinants of an individual for becoming
self-employed. To find the personal determinants was a difficult task to some extent, as
almost every person has had different background and possesses different nature as well as
norms and rituals. But we did not mean that there were never common factors leading
towards entrepreneurial success.
In our study we have got some factors which can be related positively with entrepreneurial
success. Different studies and questionnaire we developed could be seen in favor of
variables which we have found.
Department of Management Sciences Page 24
Personal determinants of an Entrepreneur

The variables include (Age, education, Locus of control, Risk, Knowledge, Decision making,
Innovativeness, and tolerance for ambiguity). All the variables had shown direct relationship
with entrepreneur success, as these variables increase in numeric terms the more chance of
success is there.

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Entrepreneurship: Theory and practice , 23-40.

Questionnaire for Entrepreneurs

Introduction:

We are the students of department of management sciences of Islamia University Bahawalpur.


We are going to conduct a research to identify what are the personal characteristics of
entrepreneurs which leads business toward success. The questionnaire is also the part of
research. We need your cooperation in answering the following questions. All collected
information will be treated with strict confidentially and will be used for study purpose only.

 Age

a) Below 25 b) 25-35 c) 35-45 d) 45 and above

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Personal determinants of an Entrepreneur

 Gender

o Male

o Female

 Marital Status

o Single

o Married

 Education

a. Illiterate

b. Under metric

c. Metric

d. Intermediates

e. Masters

f. Others

 How you came to own the business?

a. Started the business

b. Purchased the business

c. Inherited the business

d. Other (please specify)

 Which of the following intentions are held for this business over the next three years.

a. Significantly increase in production level

b. Maintain existing production level.

c. Introduce goods and services

d. Others

 How many total year of personal business experience do you have?

a. Below 5 years

b. 6-10 years

Department of Management Sciences Page 29


Personal determinants of an Entrepreneur

c. 11-15 years

d. Above 15 years

 How long you have worked as an employee?

a. None

b. Below 5 years

c. 6-10 years

d. 11-15

e. Above 15

 How many total year you have spent in this industry?

a. Below 5 years

b. b. 6-10 years

c. 11-15 years

d. Above 15 years

 What type of business do you have?

a. Sole proprietorship

b. Partnership

c. Corporate business

Please express your degree of agreement with following statement

(1= strongly disagree, 2= Disagree, 3= indifferent, 4= agree, 5= strongly agree)

Strongly Disagree Indifferent Agree Strongly


disagree agree

1 It is more fun to tackle a


complicated problem than to 1 2 3 4 5
solve a simple one.
2 I like tasks where the end
results are unpredictable. 1 2 3 4 5

3 I use aggressive approach to


undertake a task. 1 2 3 4 5

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Personal determinants of an Entrepreneur

4 I like to give myself challenge


when I take new projects. 1 2 3 4 5

5 I am less concerned with


achievement than with my 1 2 3 4 5
personal fulfillments
6 I try to be the first or best in my
area of competency 1 2 3 4 5

7 A complex situation/task can


only be solved if I consult 1 2 3 4 5
someone for the solution.
8 By taking an active part in
political and social affairs the
1 2 3 4 5
people can control world’s
events.
9 Many times I feel that I have
little influence over the things 1 2 3 4 5
that happen to me.
10 My future success depends
mainly on circumstances I 1 2 3 4 5
can’t control.

11 The result I get are the result


of my own efforts, luck has 1 2 3 4 5
little or nothing to do with it.

12 It takes much time to adopt the


1 2 3 4 5
changes in environment.

By circling the number that correspond to the level of importance you give to each item
on the scale below, show the extent to which you consider each item listed to the
important to your enterprise.

Not Slightly Moderate Very Extremely


Important important important important important

Achievement 1 2 3 4 5

Development of new
1 2 3 4 5
products and services

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Personal determinants of an Entrepreneur

Risk 1 2 3 4 5

Achievement of
1 2 3 4 5
realistic goals

Self confidence 1 2 3 4 5

Knowledge about
1 2 3 4 5
market

Experience 1 2 3 4 5

Profit motivation 1 2 3 4 5

High level of education 1 2 3 4 5

 Please mention the % change in your sales during the last three years.
2007______, 2008______, 2009______

 Please mention the % change in your profits during the last three years.
2007______, 2008______, 2009______

 How long have you been in this business?


a. 2 years
b. 3 years
c. 5 years
d. more than 5 years

Department of Management Sciences Page 32

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