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Methodology : Exploring entrepreneurship in a declining economy

Guest post by: Journal of Development Entrepreneurship

Article Overview: A sample of 160 entrepreneurs located in different parts of Borno State in the North Eastern part of Nigeria was randomly selected from a list of small businesses furnished by the Ministry of Trade and Industry. The ministry is the main agency responsible for registering small and medium enterprises and addressing issues related to their development in the state. Since the focus of this study was on business start-ups after the economic decline had began, only those entrepreneurs who had started their businesses after 1983 qualified for inclusion in this study.

Methodology : Exploring entrepreneurship in a declining economy

A sample of 160 entrepreneurs located in different parts of Borno State in the North Eastern part of Nigeria was randomly selected from a list of small businesses furnished by the Ministry of Trade and Industry. The ministry is the main agency responsible for registering small and medium enterprises and addressing issues related to their development in the state. Since the focus of this study was on business start-ups after the economic decline had began, only those entrepreneurs who had started their businesses after 1983 qualified for inclusion in this study.

Nigerian entrepreneurs tend to be fairly mobile, and so it was not surprising to find that the respondents represented all the major ethnic and regional groups in the country. Hence, the sample in this study fairly represents the population of Nigerian entrepreneurs.

Trained interviewers administered a structured questionnaire to the participants. One to one interviews were necessitated by the notoriously inadequate and inefficient postal and telephone systems found in the country. Initially 160 entrepreneurs were invited to provide data, 55 of whom declined to participate in the study, and 24 entrepreneurs who reported that they had started their businesses earlier than 1983. Thus, 81 useable interviews were obtained.

A structured questionnaire was used to limit the variations among interviewers and to increase the reliability and the validity of the responses obtained. Many studies of entrepreneurship have used this data collection procedure (see McEvoy, 1984; Lyles et. al., 1993; Kuratko et. al., 1997). The questions were grouped into three sections. Section 1 was dedicated to demographic questions. Section 2 had 23 items, selected on the basis of earlier studies (Shane, Kolvereid & Westhead, 1991; Kolvereid & Obloj, 1994), and was concerned with identifying the reasons leading to business start-ups along a five-point Likert-type scale. Section 3 addressed the issue of the effectiveness of the government enterprise support programs and initiatives, and the institutions providing them.

Effectiveness is assessed through a test of the performance of our responding firms using the MANOVA instrument. We sought to compare the performance of firms that received assistance from the support programs and those that did not. The questions asked in this section of the questionnaire were therefore, aimed at establishing whether or not the respondent received any form of support from a list of support programs compiled from the records of the Federal Ministry of Trade and Industry. Where no support was received, further questions were asked to find out the reasons for that.

A list of all possible support areas available to small businesses was compiled from the literature developed by the various enterprise support agencies to promote their activities. Twenty-three support areas were identified and incorporated into the questionnaire. Respondents were asked to identify the number of areas in which they received support. The support areas were treated as the independent variables. Receiving support in up to six areas was considered moderate support. Receiving support in more than six areas was considered substantial support. We also categorized the support as either financial or non-financial. Non-financial support included marketing assistance, development of business plans, management education and training, technical support, feasibility studies, and business and market information.

Firm performance was the dependent variable. The measurement of performance is somewhat problematic (Lentz, 1981; Tsai, MacMillan & Low 1991). Questions have been raised about the use of accounting performance indicators, such as net profits and return on investment (ROI) (Weiss, 1981; Tsai, MacMillan & Low 1991) as well as market share (Tsai, MacMillan & Low 1991). Consistent with the concerns raised by Shane and Kolveraid (1995) regarding the limitations of single measures, we decided to use the following composite of four performance indicators as the dependent variables. These included average percentage growth in sales revenue, profits and number of full-time employees, and sales per employee. Average percentage growth in sales was measured as follows: [(Sales in 1989 Sales in 1994)/Sales in 1989 /Number of years] x 100. Average percentage growth in profits and full-time employees were also measured in the same manner as average percentage growth in sales. Sales per full-time employee was measured as 1994 Sales/1992 total full-time employees.

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

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Article Tags: business start ups, demographic questions, economic decline, government enterprise, interviewers, list of small businesses, ministry of trade, ministry of trade and industry, questionnaire, questions section, regional groups, respondents, section 1, section 3, shane, small and medium enterprises, telephone systems, ups, validity, variations



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