The entrepreneurial decision

Citation

Jones, O. (2008), "The entrepreneurial decision", International Journal of Entrepreneurial Behavior & Research, Vol. 14 No. 2. https://doi.org/10.1108/ijebr.2008.16014baa.001

The entrepreneurial decision

Article Type: Editorial From: International Journal of Entrepreneurial Behaviour & Research, Volume 14, Issue 2.

The entrepreneurial decision

The three papers in this issue deal with issues related to the entrepreneurial decision about starting a new business. Although this topic is central to the study of entrepreneurship, all three sets of authors indicate that there is still a considerable knowledge gap related to those factors which encourage or discourage individuals from starting their own businesses.

Madsen et al. examine the importance of financial, human and social capital in the genesis and early growth of entrepreneurial activities. The paper is based on a longitudinal study carried out in two Danish knowledge-intensive sectors; information and communication technologies (ICT) and biotechnology and life sciences (BIOMED). The importance of entrepreneurship and the creation of new ventures for economic growth and employment creation have long been recognised. Financial capital remains the key strategic asset needed for the realisation, survival and growth of any new venture. It is clear however that possessing the right mixture of human and social capital is also a prerequisite for accessing the appropriate sources of financial capital. Yet, the value of human and social capital depends largely on the industry environment. As Madsen et al. point out, the support needed in different sectors cannot be provided via a “one size fits all” strategy. Their results further reveal that although the entrepreneurs’ general educational backgrounds were high there was a lack of experience and knowledge related to sales and marketing. This suggests a need for the training of entrepreneurs in business administration as well as the introduction of business administration and entrepreneurship courses in technical and science-related programmes. The study further demonstrates that social networks, both personal and professional, play an important role in establishing and developing new ventures in knowledge-intensive sectors. This highlights the need to stimulate such skills through contact and dialogue at regular “match-making events” where entrepreneurs can meet those with the appropriate experience and financial capital.

In their case study of the Prince’s Initiative for Mature Enterprise (PRIME), Kautonen et al. utilise multiple sources to provide an extended literature review in entrepreneurship, entrepreneurial activities and concerns related to those in older age groups. Their data analysis is focused on the enterprising behaviour of socially disadvantaged older people (50+). The paper examines the barriers to older enterprise as well as the role and contribution of specific enterprise support policies. The survey results show that 43 per cent of the people who had contacted PRIME started a business and 30 per cent were still considering becoming entrepreneurs. This suggests that, once older potential entrepreneurs contact a support agency, a high proportion are willing to start some form of enterprise. The authors point out that this indicates that enterprise support schemes play a positive part in helping older people. However, their study revealed that such schemes seemed to negatively affect the willingness of older workless people to consider self-employment. This, it is suggested, indicates a need for greater sensitivity to the needs of older people and the role played by the benefits regime in imposing a barrier to enterprise. Furthermore, acknowledging previous research on the significant impact of individual’s career history on the likelihood of his/hers switching to self-employment at an older age, they highlight the importance of the “tradition proud male” work culture in forming a barrier to enterprising behaviour. The results of this research support similar experiences indicating that the gap between being outside the labour force and actually contacting an enterprise support agency (such as PRIME) is the major deterrent to older entrepreneurship. As career history might play a key role, Kautonen et al., raise the issue of cultural perception of age as a topic for further research and they emphasise the social objectives that need to be taken into consideration when discussing older enterprise support schemes.

Kropp et al. use multiple discriminant analysis to test the impact of entrepreneurial orientation (EO) and key demographic characteristics (age, education and gender) of nascent entrepreneurs on the start-up decision of IEBV. This study, based on a sample of 539 individuals, is the first to examine the role of entrepreneurial orientation and the IEBV entry choice in the Republic of South Africa (RSA). RSA is a dynamic developing country currently undergoing major social and economic transitions. The findings indicate that the start-up decision is positively related to the proactiveness and risk-taking components of entrepreneurial orientation and the age of the lead entrepreneur. However, it is negatively related to the education of the lead entrepreneur and more importantly the innovativeness component of entrepreneurial orientation is not a factor in the start-up decision. Adding to existing literature regarding the relationship between EO and the start-up decision, the authors support the idea that risk-taking and proactiveness are important dimensions of EO and may have a more significant impact than previously recognised in establishing a venture. Concluding their research, they consider two implications related to older and less educated individuals. First, they should be recognised as a promising target market for financiers and other EBV interested parties. Second, as they may have little or no previous experience at starting or running a business, there is an increased likelihood of failure at any stage of the new venture. Based on this, entrepreneurial and management training programmes should target older and less educated prospective entrepreneurs.

Oswald Jones