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Conclusions and Implications : Exploring entrepreneurship in a declining economy

Guest post by: Journal of Development Entrepreneurship

Article Overview: The results indicate the presence of a fundamental set of reasons for business start-up under conditions of economic adversity, with strong emphasis on extrinsically aligned motivators.

Conclusions and Implications : Exploring entrepreneurship in a declining economy

The results indicate the presence of a fundamental set of reasons for business start-up under conditions of economic adversity, with strong emphasis on extrinsically aligned motivators. Yet, start-up reasons such as "to control own life," "to be my own boss," "freedom to adapt personal approach to work" and "attain family security" also played prominent roles. It appears that, despite the economic difficulties, entrepreneurs also seek to satisfy non-extrinsic desires. With the ongoing retrenchment in the civil service (the largest employer in Nigeria), in the banking and manufacturing, and in other areas, it is not surprising that entrepreneurs in Nigeria start business ventures for reasons of independence and control over one's destiny. Additionally, entrepreneurs pursue intrinsic rewards such as achieving recognition and increasing their own status as well as the status of their families. However, there is no denying the importance of extrinsic factors. These finding are similar to those of Kolvereid and Obloj ( 1994) in Poland, a context that is very different from Nigeria in terms of regional and cultural characteristics, and ideological experiences.

This study also found that, overall the small enterprise initiatives and support initiated mainly by government, have had very limited or perhaps no effect in addressing small business needs and contributing to the development of the sector. Our finding that small firm performance was not influenced by the support services available reinforces this conclusion. However, the significant relationship between growth in employment and firms that received support is a highly desired short-term consequence of economic development. Of great concern, however, is the lack of any impact on the overall performance of the firms, which does not bode well for sustainable economic development, or for the ability of microenterprises to develop into medium-sized firms or entities demonstrating higher levels of "entrepreneurial intensity" . It was also found that, for small business support programs to be impactful, the support availed to the entrepreneur must be comprehensive. The finding that firms that received both financial and non-financial support performed better than firms that received only financial support supports this conclusion. Other researchers have generated evidence of the importance of a comprehensive approach (e.g., Sardar et. al, 1997). The notion therefore that providing small firms with financial resources will solve small business problems is shortsighted. Money must be packaged with other forms of assistance, such as information for decisionmaking, assistance in the development of business plans, feasibility studies, consulting, technical support, and management training and development.

It is advisable therefore, that banks, other lending institutions, and support organizations endeavor to enhance the quality of their advisory services to the small business sector especially with respect to financial and management aspects of day to day to business operations. These organizations may want to establish specialized units to provide the framework and strategy necessary in designing and delivering effective credit policies as well as programs for attracting and enlightening members of the small business sector.

This picture that emerges might lead one to conclude that, despite the attempts by government to support small firms in Nigeria, small firms have not been able to fully realize their potential because of the hostile environment borne by economic decline. Such a conclusion is premature, at least insofar as this study is concerned, as we have not investigated issues of causality. In particular, we have not examined the organizational architecture and operations of the agencies charged with executing the support programs and initiatives. Future studies may wish to do so, and to explore the link between these variables and firm performance. A more comprehensive study of the support system to include the informal support network is also desirable. The extent to which small business owners are unaware of the support network is another important consideration both for researchers and funders/ designers of public and private support programs.

It is further suggested that the multiple support programs and institutions (for small enterprises) in the country be streamlined to increase their visibility and relevance for the target markets. An umbrella organization might be helpful in coordinating the activities of these programs and institutions. The organization may also be charged with ensuring compliance with statutory provisions and requirements and providing general publicity for the support programs and agencies.

The findings of this study also reinforce the conclusion that entrepreneurship should not be measured solely in financial terms. Multiple measures and performance indexes are important for capturing the entrepreneurial potential of the small business sector. At the same time, the absence of data covering the period of economic boom in Nigeria for comparative purposes suggests that replication of this research in other contexts is important for establishing the most salient outcome or performance measures. Relevant contexts might include an emerging wealthy economy, such as in the Middle East, or one of the turnaround success stories in South America. Lastly, in light of the fact that the sampled firms are ones that survived the extremely difficult economic situation in Nigeria, only part of the picture is being revealed. Future research should investigate survival rates and reasons, as well as the structures, which have been successful in promoting small business development in the country being studied and in declining economies in general.

Exploring entrepreneurship in a declining economy
Journal of Developmental Entrepreneurship, Apr 2000 by Yusuf, Attahir, Schindehutte, Minet

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Article Tags: boss freedom, business ventures, civil service, economic adversity, economic difficulties, enterprise initiatives, entrepreneurial intensity, extrinsic factors, family security, firm performance, intrinsic rewards, microenterprises, motivators, personal approach, retrenchment, small enterprise, start business, study also found that, sustainable economic development, term consequence



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