The Cottrell Entrepreneurship Center

A comparison of the motivations of small business owners in Africa

Benzing, C. & Chu, H. 2009. "A comparison of the motivations of small business owners in Africa." Journal of Small Business and Enterprise Development, 16(1): 60-77

Abstract

Purpose: This paper sets out to examine the reasons why 599 entrepreneurs in Kenya, Ghana and Nigeria started their small businesses. It aims to compares ten motivations across three countries and by gender.

Design/methodology/approach: Ten Likert-style questions were used to determine start-up motivations. The mean scores were calculated and compared to test for significant differences. A factor analysis was conducted to see whether the ten items could be synthesized into distinct factors. Then, the factors were compared across countries and by gender.

Findings: The strongest motivator across countries was the opportunity to increase income. A factor analysis found three motivation factors: a family factor, an external validation factor, and a self-betterment factor. The three countries showed significant differences with Ghanaian entrepreneurs rating the family factor as more important. The item analysis showed that female entrepreneurs were less motivated to create a business as a legacy or for external validation.

Research limitations/implications: The list of motivations here is non-exhaustive. The addition of other motivation items could change the results. Results should not be generalized to other countries or other regions of the countries surveyed.

Practical implications: Since motivations differ across countries and gender, countries can benefit from developing country- and gender-specific programs to encourage business creation. For instance, Nigeria and Kenya should develop stronger succession laws so that businesses can be inherited by family members. Ghana and Nigeria might stimulate more enterprise development by providing public recognition for entrepreneurial behavior.

Originality/value: This is the first cross-country study of the motivations of entrepreneurs in sub-Saharan Africa.

Regional comparison of the motivation and problems of Vietnamese entrepreneurs

Benzing, C., Chu, H., & Callanan, G. 2005. "Regional comparison of the motivation and problems of Vietnamese entrepreneurs."Journal of Developmental Entrepreneurship, 10: 3-27.

Abstract

This study assesses the motivations, perceived success factors and business problems experienced by entrepreneurs in Vietnam. It also compares the results between the northern and southern regions of the country. Using data from a survey of 378 Vietnamese entrepreneurs in Hanoi and Ho Chi Minh City, results show that Vietnamese entrepreneurs are motivated by the ability to provide jobs for themselves and family members, to gain public recognition, and to prove they can successfully run a business of their own. Important perceived entrepreneurial success factors include friendliness toward customers and a good product at a good price while significant business problems include too much competition, unreliable employees and the inability to obtain both short-term and long-term capital. Results also show a number of city/regional differences in motivation, success factors and perceived success. Implications for policymakers in Vietnam and other emerging economies are also presented.

Entrepreneurs in Turkey: A factor analysis of motivations, success factors, and problems

Benzing, C., Chu, H., & Kara, O. 2009. "Entrepreneurs in Turkey: A factor analysis of motivations, success factors, and problems."Journal of Small Business Management, 47(1): 58-91.

Abstract

One hundred and thirty-nine entrepreneurs in Ankara, Turkey were surveyed to determine their motivations for business ownership, the factors contributing to their success, and their problems. Based on survey responses, the primary reasons for starting a business are to increase income, to obtain job security, and to secure independence. According to the factor analysis, small and medium-sized enterprises owners are driven more by income rewards than intrinsic rewards. The most important business success variables are the entrepreneurs' reputation for honesty and friendliness. Social skills and good customer service were also cited as critical success factors. The most serious problem faced by entrepreneurs in Turkey is the complex and confusing tax structure. Other important problems include unreliable employees, the inability to maintain good records, and a weak economy.

Hungarian and Romanian entrepreneurs in Romania -- Motivations, problems, and differences

Benzing, C., Chu, H., & Szabo, B. 2005. "Hungarian and Romanian entrepreneurs in Romania -- Motivations, problems, and differences." Journal of Global Business, 16: 77-87.

Abstract

Three hundred ninety-eight Romanian and Hungarian entrepreneurs in the county of Cluj, Romania were surveyed to determine their motivation for starting a business, as well as their business-related problems. Other factors examined were financing, marketing, stress, and education.

Romanian and Hungarian entrepreneurs were motivated by different factors and faced different problems. Romanian entrepreneurs were more concerned about financing, while Hungarian entrepreneurs were more concerned about maintaining accounting records, navigating the complex tax structure, and registering their businesses.

Ethnic-immigrants in founding teams: Effects on prospector strategy and performance in new Internet ventures

Chaganti, R., Watts, A., Chaganti, R., & Zimmerman Treichel, M. 2008. "Ethnic-immigrants in founding teams: Effects on prospector strategy and performance in new Internet ventures." Journal of Business Venturing, 23(1): 113-139.

Abstract

We investigated differences in strategy and performance between new Internet ventures with ethnic-immigrant members in the founding team and a matched set of Internet ventures with non-ethnic-non-immigrant team members. Results showed that new ventures with an ethnic-immigrant presence in the founding teams tended to pursue a more aggressive prospector strategy than those with non-ethnic-non-immigrant founding team members. Still, performance of the two groups of ventures was comparable. However, the positive effects of ethnic-immigrant presence on founding teams depended on team size and average age of the founding team members.

Vietnamese Small Business Owners: The Study of Entrepreneurship in an Emerging Country

Chu, H. "Vietnamese Small Business Owners: The Study of Entrepreneurship in an Emerging Country." Global Business Development Institute.

Abstract

Two hundred and twenty three Vietnamese small business owners in Hanoi and Ho Chi Minh cities, Vietnam were randomly selected for this study. Among those surveyed, 44.8% were male and 55.2% were female. Results showed that the average time devoted to their business was 52.86 hours per week. Of the total respondents, 66.8% specialized in retailing, 3.1% in wholesaling, 22.4% were service providers, 3.1% in manufacturing and 0.4% was in agriculture. Findings also showed that the main reasons for business ownership were to increase income, to be independent, creating jobs for family members, and to be able to utilize past experience and training. Regarding the crucial factors contributing to their success, Vietnamese entrepreneurs indicated that offering a quality product at a competitive price, having good location and providing good customer service were the conditions leading to the high level of business achievement. Among the most critical problems encountered, excessive competition, lack of management training, and unreliable/undependable employees were most often cited by Vietnamese small business owners.

Ghanaian and Kenyan Entrepreneurs: A comparative analysis of their motivations, success characteristics and problems

Chu, H., Benzing, C., & McGee, C. 2007. "Ghanaian and Kenyan Entrepreneurs: A comparative analysis of their motivations, success characteristics and problems." Journal of Developmental Entrepreneurship, 12(3): 295-322.

Abstract

Three hundred and fifty-six entrepreneurs from Kenya and Ghana were surveyed to determine their motivation for business ownership, variables contributing to their business success, and the problems they encountered. Kenyan and Ghanaian entrepreneurs indicated that increasing their income and creating jobs for themselves were leading factors motivating them to become business owners. Hard work and good customer service were cited by both Kenyan and Ghanaian business owners as critical for their success. But, compared to the Kenyan entrepreneurs, Ghanaians weighed support from family and friends and external relationship building as more important. A weak economy is the most important problem preventing entrepreneurs of both countries from achieving their goals. Ghanaian entrepreneurs were more concerned about the inability to obtain capital, while Kenyan entrepreneurs were more concerned about government regulations and problems related to business location.

An empirical study of Nigerian entrepreneurs: Success, motivations, problems, and stress

Chu, H., Kara, O., & Benzing, C. 2008. "An empirical study of Nigerian entrepreneurs: Success, motivations, problems, and stress."International Journal of Business Research, 8(2): 102-116.

Abstract

Two hundred and forty three entrepreneurs in Lagos, the former capital city of Nigeria were surveyed. Results show that 69% of respondents are male and 31% female. The average age of entrepreneurs is 36.7. The time devoted to their businesses is approximately 37.8 hours per week. When asked to indicate the reasons for becoming business owners, Nigerian entrepreneurs suggested independence, satisfaction and growth, increasing income and past training/experiences as important motivators. Factors contributing to business success were mainly attributed to hard work, excellent management skills, and good customer services. Charisma and reputation for honesty were also ranked high on the list. Among the problems encountered by entrepreneurs, unreliable employees was the most critical. Weak economy, electricity shortages and unsafe location were also mentioned as obstacles preventing entrepreneurs from achieving their goals. The relationship between stress and business ownership were also assessed. In spite of business success attained and family support received, entrepreneurs reported that they did experience business-related stress.

Cash Crisis in Newly Public Firms: An Empirical Analysis of Internet-based firms

Mudambi, R. & Zimmerman, M. 2005. "Cash Crisis in Newly Public Firms: An Empirical Analysis of Internet-based firms." Journal of Business Venturing, 20(4): 543-571.

Abstract

This study examines why, even when financial resource constraints are significantly relaxed, some new ventures struggle to survive while others prosper. Using the data of approximately 200 new Internet ventures that went public during the years 1997 through 1999, we propose that the performance of new ventures is a function of pre-initial public offering (IPO) characteristics. We determined that firm-level characteristics, including top management team (TMT), financial position, networks, and location, are related to the performance of struggling new ventures. We found strong evidence of agency relationships, so that a substantial reduction in equity holdings by the entrepreneurial team is a strong signal of impending crisis. Interestingly, similar reductions by venture capital (VC) backers did not serve as a signal of crisis.

An Empirical Study of the Relationship of CEO Characteristics and Time to IPO

Yang, Q., Zimmerman, M., & Jiang, C. "An Empirical Study of the Relationship of CEO Characteristics and Time to IPO." Accepted for publication, Journal of Small Business Management.

Abstract

Despite changes in international trade agreements and the introduction of new technologies that facilitate international business, many firms, especially SMEs, still do not diversify into international markets. In this paper, we suggest that an important factor that can influence the international diversification decision is social networks. We hypothesize that both the strength of the ties to international firms and the size of a SME's international network influence its decision to diversify internationally. Our analysis suggests that the strength of international network ties significantly influences SME international diversification, but that the size of the international network does not. These results have important implications for researchers, managers, and public policy makers.

The Influence of TMT Heterogeneity on the Capital Raised through an Initial Public Offering

Zimmerman, M. 2008. "The Influence of TMT Heterogeneity on the Capital Raised through an Initial Public Offering."Entrepreneurship Theory and Practice, 32(3): 391-414.

Abstract

A significant body of research exists on the top management teams (TMTs) of established firms and specifically on the heterogeneity of TMTs of established firms. Little research exists, however, on the heterogeneity of TMTs of firms in the early stages of their existence. In this study, I examine the relationship among TMT heterogeneity and the capital raised by the firm through its initial public offering (IPO). I argue that TMT heterogeneity provides a signal to potential investors about the quality of the IPO and hence is associated with greater capital accumulations. My findings suggest that heterogeneity in the TMT's functional background and educational background is associated with greater capital raised through an IPO.

The Influence of TMT Heterogeneity on the Capital Raised through an Initial Public Offering

Zimmerman Treichel, M., Barsky, D., & Brouthers, K. 2009. "Networks, SMEs and International Diversification." Multinational Business Review, 17(4): 143-162

Abstract

Despite changes in international trade agreements and the introduction of new technologies that facilitate international business, many firms, especially SMEs, still do not diversify into international markets. In this paper, we suggest that an important factor that can influence the international diversification decision is social networks. We hypothesize that both the strength of the ties to international firms and the size of a SME's international network influence its decision to diversify internationally. Our analysis suggests that the strength of international network ties significantly influences SME international diversification, but that the size of the international network does not. These results have important implications for researchers, managers, and public policy makers.

Women-owned Businesses and Access to Bank Credit: A Time Series Perspective (Evidence from three surveys since 1987)

Zimmerman Treichel, M., & Scott, J. 2006. "Women-owned Businesses and Access to Bank Credit: A Time Series Perspective (Evidence from three surveys since 1987)." Venture Capital, 8(1): 51-67.

Abstract

Women-owned businesses are often thought to face difficulties in applying for and securing bank loans (Schwartz, 1979; Riding and Swift, 1990; Buttner and Rosen, 1992; Fabowale et al., 1995; Haines et al., 1999; Coleman, 2000). While there may always be individual instances of difficulties with credit availability that might receive the attention of the media, the more important issue-especially given the increasing contribution of women-owned business to growth in the US economy, is whether women-owned businesses face any systemic, non-economic discrimination in applying for credit. We test three questions related to the success of women-owned businesses in accessing commercial bank financing. First, are women-owned businesses less likely to apply for bank loans than businesses owned by men? Second are women-owned businesses more likely to be turned down in their most recent loan application? And finally, if approved on their most recent loan application, are they more likely to receive a smaller loan? We found gender to be related to the application for bank loans as well as the size of the loans but not to the frequency of turndowns. These findings may be due to an omitted variable that could capture women's concerns about maintaining control over their business.

To Be or Not To Be an Entrepreneur: Applying A Normative Model to Career Decisions

Callanan, G.A., and Zimmerman, M. 2016. “To Be or Not To Be an Entrepreneur: Applying A Normative Model to Career Decisions.” Journal of Career Development, October, 43: 447-461.

Abstract

Reflecting the need for a better and broader understanding of the factors influencing the choices to enter into or exit an entrepreneurial career, this article applies a structured, normative model of career management to the career decision making of entrepreneurs. The application of a structured model can assist career counselors, college career centers, outplacement firms, and other vocational advisors in properly guiding students and working adults in deciding on an entrepreneurial career. The career decision making needs of entrepreneurs are examined at two different phases – the choice to become an entrepreneur and the potential to exit from the business. By summarizing existing research, the article examines key developmental and exploration tasks at each phase. The article concludes with an overview of areas for future research on the career decision making of entrepreneurs.

Early internationalization and the role of immigration in new venture survival

Jiang, G. Kotabe, M., Hamilton (III), R.D., Winston Smith, S. 2016. “Early internationalization and the role of immigration in new venture survival.” International Business Review, 25: 1285–1296.

Abstract

Immigrant-started new ventures face the liability of ethnicity because of their founders’ disadvantaged immigration status. It is extremely difficult for them to acquire human, social and financial capital and access market in founders’ country of residence to survive. This study empirically examines the survival of immigrant-started new ventures. We find that an early internationalization strategy could enhance those ventures’ survival and that immigration status moderates the effect of an early internationalization strategy on their survival. This study contributes to both immigrant and international entrepreneurship literature. Managerial and policy implications are also discussed

Barriers to entry index: a ranking of starting a business difficulties for the United States

Megan Teague , (2016),"Barriers to entry index: a ranking of starting a business difficulties for the
United States", Journal of Entrepreneurship and Public Policy, Vol. 5 Iss 3 pp. 285 - 307

Abstract

Inspired by the World Bank's Doing Business report concerning business development across countries, this investigation presents  new data on entry barriers that illustrates the costs of government intervention within the United States for 2011. Results from
cross section analysis using standard OLS regressions of business entry rates across nine different business size classifications on a composite barriers to entry variable yield two main findings: (1) increases in barriers to entry decrease business growth for most
establishment sizes and (2) increases in barriers to entry for larger rms result in positive entry rates. Additional regressions using establishment exit rates against barriers to entry indicate that increases in barriers to entry lead to decreased exit rates.