Factors Affecting Entrepreneurial Decisions

Factors Affecting Entrepreneurial Decisions

The common disposition of entrepreneurs is towards undertaking opportunities for wealth-creating and value-adding activities. Entrepreneurial qualities are thought to be innate and inborn rather than acquired through formal training. Can this be so? McClellan (1987) comparison of characteristics of entrepreneurs in developing countries of average and larger sized firms found that proactive qualities such as initiative and assertiveness, achievement orientation, and commitment are equally important complementary characteristics of successful entrepreneurs.

Other expected qualities (self-confidence, persistence, persuasion, expertise) were not more characteristic of the successful. Hornaday (1982, cited in Ang and Hong 2000) documented that entrepreneurs have 42 characteristics that distinguish them from non-entrepreneurs. These include perseverance, resourcefulness, ability to take calculated risks, dynamism, and achievement orientation. To this end, substantial research has been devoted to entrepreneurial motivation, choice, and persistence particularly the psychological factors that predispose an individual toward entrepreneurial action instead of a managerial career. The results of these studies however, appear inconclusive (Stewart et al., 2003).

Research using trait approach has had limited success in explaining entrepreneurial behaviours and perceptions. For instance, some studies have shown that risk propensity, the personality trait that determines the tendency and willingness of the individual to take risk, does not explain why entrepreneurs are willing to undertake a business venture (Low & MacMillan cited in Keh et al., 2002).

As most research on entrepreneurship is based on frameworks developed using data from Western cultures little is know about the relevance of these frameworks in diverse culture settings (Ang and Hong, 2000). Even when cultures were similar differing aspects of culture could be expected and especially seen from individual from Hong Kong and Singapore. Although there are many similarities, differences exist from the socio-political situation in the two countries. For instance, an authoritarian government and the dominance of MNC and GLC contribution to the economy stifle entrepreneur zeal (Rodan 2002; Low, 1998, 2001).

Until as late a 1995, the MNC and GLC partnership was well-entrenched which saw SME and entrepreneurs left to their own devises, this was by no fault of the Singapore Government who up till then has ensured high employment and a rising standard of living. This has admittedly caused a certain paternalistic dependency on the Government who has based its economic and governing principles on Confucianism and Fabian societal distribution of wealth (Low, 2001).

Based on the above discussion, we concluded that entrepreneurs and SMEs are as much affected by their external factors such as socio-political situation as well as internal factors like traits.