Triggering Factors that influence the Entrepreneurs

Research in entrepreneurship has introduced many aspects of how and why people make decisions in new venture creation (Shane, 2002). Entrepreneurial individuals are often motivated by economic and/or psychological factors. Scholars have agreed that the entrepreneurial process and theories involve a complex set of variables that are beyond any single aspect. To identify motives and incentives of entrepreneurial activities involves disseminating several layers of relationships between personal factors, external forces and other random events (Liang and Dunn, 2007).

From the existing literature we can rationally hypothesize that, the decision to launch a new venture probably includes individual endogenous factors and exogenous factors of the environment. Limited studies have discussed the possibility that pre business entrepreneurs (who are planning to become entrepreneur) might have different triggers to launch new ventures compared to in-business (who are expanding the business) professionals.

Triggers as defined by Liang and Dunn (2007) “forces in the individuals or in the individuals’ perception of their situation that move them toward the entrepreneurial process”. It is important to distinguish “triggering factors” and “triggering events” from “triggers”. Triggering events are more like “something happened as an occasion or an episode that influence individual’s assessment on the situation.” Triggering factors could be interpreted as “issues or features that influence individual’s perspectives about certain situations” (Liang and Dunn, 2007).

This study measures the triggers, which influences the professionals (who are planning to become and those who wants to expand their business) to become entrepreneurs. In addition to this we will also measure the relationship between the triggers and demographics of individuals.

This study is of major interest to various government organizations like small and medium enterprises (SMEDA), non government organizations (NGO), policy makers of government and business to business organization (B2B). Implications of this research study will help them to identify the pattern of individuals, who wants to become entrepreneurs and which triggers them to think about starting new venture.

Literature Review

The purpose of the literature review is to outline the triggers identified by various researchers/authors and to analyze the dimensions in which different author’s works on the entrepreneur’s triggers.

At a basic level, entrepreneurship is recognized as a highly personalized activity. The entrepreneur is motivated to create a venture, which reflects their vision and ambitions, and is prepared to review and reorganize their social environment to make it materialize (Morrison, 2000)

Characteristics of entrepreneurs identified by various authors (Longenecker, Moore, & Petty,2000; Scarborough & Zimmerer, 2000; Bhide, 2000) are high achievement drive, action oriented, optimism, opportunistic, internal locus of control, tolerance for ambiguity, moderate risk taking, commitment/tenacity, commitment, initiative, independence or some form of one or more of these. These authors also determines motivation related to new venture formation, to enjoy what individuals are doing, revolves around the opportunity to gain control over personal lives/independence, to achieve personal goals and recognition, to get profits/financial rewards, and to make a difference/contribute to society.

The key of the entrepreneurship process initiations depends within the individual of the society and the extent to which individuals wants to enter in new ventures and holds the spirit of enterprise (Morrison, 2000)

McLelland, (1961) identified common characteristics and behaviors, Those which emerged relative to all the entrepreneurs are: they bring intelligence and sound analytical skills to bear on risk management; they are all in some respect deviants from the social norms within their countries; to differing degrees they exhibit strong moral, work and business ethics; irrespective of industry sector a strong “trader’s” instinct is apparent; they are committed to life-long learning through both formal and informal mechanisms; and extensive use is made of both informal and formal networks.

Morrison et al., (1998) proposed that the entrepreneurship is initiated by the personal, society and culture intuition. Entrepreneurship is not only initiated by the economic aspects but it involves material, immaterial and idealism functions. The fundamental nature of the entrepreneurship is the use of innovatory process and the risk bearing by the individual, through which individual wants to bring change in both a social and economic nature of his own and the society.

Kirzner (1979) believes that the source of entrepreneurship within the human spirit flourish when there is uncertainty and competition. This enterprising spirit in terms of inspirational means is described by Gilder(1971, p 258)

The spirit of enterprise wells up from the wisdom of ages and the history (of the west) and infuses the most modern of technological adventures. It joins the old and new frontiers. It assers a firm hierarchy of values and demands ad hard discipline. It requires a life of labor and listening, aspiration and courage. But it is the source of all we are and can become, the saving grace of democratic politics and free men, the hope of the poor and the obligation of the fortunate, the redemption of an oppressed and desperate world.

Longenecker, Moore, Pettit, & Palich (2006) suggested that entrepreneurs wanted to make money, become their own boss, escape a bad situation, enjoy and satisfying life, and contribute to the community.

Bygrave (1989) discussed entrepreneurship as a process that involved triggering event, innovation, implementation, and growth. In the triggering event stage he suggested that there were sociological, personal, and environmental factors that led to entrepreneurship. Again, both internal and external forces seemed to be at play.

Culture is an important variable in entrepreneurship because it establishes the attitudes of individuals towards the commencement of entrepreneurship (Vernon-Wortzel and Wortzel, 1997). Every era produces its own models of entrepreneurship according to its specific needs of the host society; however, it has been described consistently using terms such as innovative, holistic, risk-taking and co-coordinating ways of behavior. Certain cultural institutions may facilitate, or hinder, entry into entrepreneurship. Thus, it is proposed that the culture of societies and the characteristics of people living in these societies, impacted by certain innate personality traits, will influence the degree to which entrepreneurship is initiated (Morrison, 2000).

The above provided argument by the Morrison, (2000) is supported by the Bateman (1997), those economies and regions which have flourished in the late 20th century, have in common a business culture, which can be broadly described as “entrepreneurial”. It is attuned to the needs of a changing market economy and receptive to changing demands, innovations, products, opportunities and technologies. Entrepreneurship has been found to be important and meaningful in society at points of transition, for example, traditional to modern, modern to post-modern and state-controlled economies to free-market. At each of these points, entrepreneurship is harnessed by societies as a common approach to solving dilemmas, to break old, stable and hierarchical traditions and institutions and to introduce new, innovative ways of behavior. Thus, it is suggested that entrepreneurship can be regarded as an instrument for changing the culture of an era (Morrison, 2000)

According to Timmons (1994, p. 9) about entrepreneurial behavior is, what is needed is a favorable environment which combines social, political and educational attributes. In particular it requires: A culture that prizes entrepreneurship, an imperative to educate our population so that our entrepreneurial potential is second to none; and a government that generously supports pure and applied science, fosters entrepreneurship with enlightened policies, and enables schools to produce the best educated students in the world.

Dollinger (1995) discussed what he characterized as the “impetus for entrepreneurship.” He discussed the “Sociological Approach” which focused on four factors that led entrepreneurs toward new venture creation. “Negative displacement” was where individuals were marginalized from society, because of who they were or their situation including being fired or not satisfied with their current employment or divorced. “Between things” included individuals between stages of their life. “Positive pull” included other people (potential collaborators, parents, customers) who provided an impetus to entrepreneurship. “Positive push” included entrepreneurs who, because of their education or situation, were pushed toward entrepreneurship. Individual factors or a combination of any of these factors could move the entrepreneur toward new venture creation.

The manner, in which the young are conditioned from an early age through the formal education system, and the fact that dominant approaches are frequently reinforced within family life, plays a significant role in the initiation of characteristics generally associated with entrepreneurial behavior (Gibb, 1996).

It has been identified that a characteristic of entrepreneurship is that it tends to pervade family life, with the entrepreneur being unable to divorce business from social living (Deakin, 1996). In this respect, family background plays a role in two ways. First, if an entrepreneur has previous experience of the effect of entrepreneurship from a family member they are more prepared for the consequences of their own activities. Second, family support of entrepreneurship can make a positive contribution to its sustenance. For all the entrepreneurs represented in the study, positive immediate family support for their entrepreneurial behaviour had played an important part in its sustenance. What was also identified as of significance was the role of the extended family in enabling access to funds and markets to support individual entrepreneurs in the creation and development of their businesses

Within some societies there is a practice of saving for the future, while within others the focus is on living and spending to enjoy the moment. This has an implication for the amount of personal funds that may be available for investment in business. The dominant cultural attitudes, values and beliefs of a population at one particular point of time will result in a particular common mind-set relative to the degree to which entrepreneurship is supported by society (Gilder, 1971).

The entrepreneur in terms of who he/she is and what he/she does, which has often resulted in characterizing persons who might be more likely to become entrepreneurs than others (Rerup, 2005). To date, scholars suggest three broad types of entrepreneurs, namely (a) Nascent, (b) Novice, and (c) Habitual entrepreneurs (see e.g. Birley and Westhead, 1993; Kolvereid and Bullvåg 1993; Wright 1997; Westhead and Wright, 1998). The (a) nascent entrepreneur has not yet engaged in an entrepreneurial venture but has a general aspiration of establishing a business. The (b) novice entrepreneur has established one venture but does not have any prior entrepreneurial experience (Westhead et al. 1998). Lastly, the (c) habitual entrepreneur has established at least one other business prior to the current venture, hence possesses prior entrepreneurial experience. At some point, all entrepreneurs are nascent and then novice.

Hall (1995) who divides habitual entrepreneurs into four sub-types; namely serial entrepreneurs, portfolio entrepreneurs, serial inheritors or serial management buy-outs (MBO’s) /management buy-in’s (MBI’s), and multiple corporate entrepreneurs. Serial and portfolio entrepreneurs have repeatedly engaged in the creation of new ventures Serial entrepreneurs exit (close or sell) their current business before establishing a subsequent venture, whereas portfolio entrepreneurs keep ownership in more than one business at a time; hence have ownership stakes in a portfolio of businesses. In contrast, serial corporate entrepreneurs (or intrapreneurs) are persons who create new combinations of resources or realize new business opportunities in existing companies. Both, inheritors or serial MBO/MBI entrepreneurs are not traditionally regarded as true’ entrepreneurs because MBO’s and MBI’s do not create new businesses per se (Deakins and Freel, 2003).

Purpose of this Study

The main purpose of this study is to investigate theoretically and test empirically

The difference between pre business versus In business entrepreneurs triggers

Which pre-business entrepreneurial triggers have relationships with demographics

Which In-business triggers entrepreneurial have relationships with demographics

Conceptual Frame Work

The conceptual frame work of this study is taken from the study of Liang and Dunn (2007).

Data Analysis Technique

Cronbach’s alpha for internal consistency, factor analysis to reduce the variables in each trigger, and regression analysis will be used to check the relationship

Data Collection

Data will be collected from the professionals who are planning to become an entrepreneur and entrepreneur who are planning to expand their existing business.

Sample Size

The total sample size will be 200 professionals from Lahore and Islamabad, with equal consideration of respondents from each city and equal representation of pre-business and in-business professionals.

Research Instrument

Triggers of entrepreneur which will be 42 and demographics variables considered will be gender, education level, age, marital status, type of business and years of experience of respondents will be taken from the study of Liang and Dunn (2007).