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Approaches On Factors Affecting Self Employment Commerce Essay

Paper Type: Free Essay Subject: Commerce
Wordcount: 2468 words Published: 1st Jan 2015

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There are diverse approaches and theories to the factors affecting self-employment efforts of individuals. Lambing and Kuehl have pointed out personality traits, cultural influence, economic conditions and the combination of these factors as the major factors influencing self employment. Other authors like Saini and Rathore (2001:5-6) argue that social, religious and cultural, psychological, political, and economic policies are the main factors affecting self employment. Another approach to the factors affecting self employment is described in a more summarized way by Khanka (2004:33-37). These factors are economic aspect, noneconomic aspects and government measures.

• The economic aspects comprise of capital, inputs and the market;

• The non-economic factors are the social and political circumstances such as social mobility, security and psychological factors

• The Government measures and actions comprise issues such as economic and industrial policies and strategies which influence both the above factors.

There are countless approaches to analyzing the factors affecting self employments, nevertheless the in one way or another, it seems they are all saying the same thing in different words. Regardless of their dissimilarity of treating the individual factors, they are harmonizing to each other. So much so that the major factors affecting self-employment scheme’s can be classified into various aspects such as support system factors, personal traits, government policies, and socio-cultural factors.

Personality Trait Factors

These are a set of aspects related to an individual’s personality either inborn or learned which determine an individual’s profession. The argument over learned or unlearned (inborn) character traits is endless in that a consensus has not been reached yet among scholars. When it comes to entrepreneurs, Lambing and Kuehl (2000:16) argue that entrepreneurs have an innate unique personality which cannot be taught. Schumpeter (in Deakins, 1999:11) holds the same idea Lambing and Kuehl (2000). This implies that the personality of entrepreneurs is inborn and learning has minor influence in becoming an entrepreneur.

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On the contrary, many authors, like Peter Drucker (in Lambing and Kuehl, 2000:15), believe that socio-cultural influences (learned traits) are sources of entrepreneurial personality. Kirzner also promotes that any one has the potential to be entrepreneur and he/she appears and operates within set production constraints (Deakins, 1999:11). Both ideas imply that, everyone having the inherited traits, environmental exposures are determinant factors of entrepreneurial qualities. However, still many others accept that both sources (nature and nurture) equally contribute to the individual’s entrepreneurial personality. Thus, in this study, the researcher prefers to have the stand with the third group believing both factors have their own share of contribution to the entrepreneurial personality. According to Lambing and Kuehl (2000:16), whether entrepreneurial tendencies exist at birth or developed as the person matures, certain traits are usually evident in those who achieve success.

Socio-Cultural Factors

These set of factors focus on such aspects as values, norms, beliefs, family and community entrepreneurial traditions, societal attitude, etc. It is considered in terms of social behavioral approaches, which stresses the influence of the social environment. It has been identified that different cultures have varying values and believes (Lambing and Kuehl, 2000:18-19). That is, some culture encourages entrepreneurship whereas others discourage, some promotes achievement whereas others give low value to entrepreneurship. For example, the Japanese have been known to have an achievementoriented culture which helps entrepreneurs persist until they succeed. That is, they give high value to entrepreneurship and encourage entrepreneurs to succeed. With respect to this, McClelland (Deakins, 1999: 18) has identified that the historical role models’ influence of heroes on subsequent generation induced a high motive of achievement on the population. On the contrary, in some cultures, entrepreneurship may be conceived as an occupation for low self-esteemed persons. For example, it is well described in Lelissa (2006:17) and UNESCO (2002:132) the negative social image held on the TVET program which discourages entrepreneurial ideas of TVET graduates (this will be discussed further in this section later).

The entrepreneurial tradition of the family has the most significant impact on the early development of entrepreneurial personality. Young (in Batra, 2003:26) maintains that entrepreneurial activity is generated by a particular family background and experience as a member of certain kinds of group and as a reflection of general cultural values. In respect to this, Saini and Rathore (2001:5-6) described that entrepreneurial traditions of the family as well as the community are important factors within which the entrepreneur grows and internalizes the values and norms. In addition, Batra and Dangwal (2003:13) have stated that caste and community are the most important socio-cultural determinants of entrepreneurial supply and performance.

With regard to societal attitudes, the TVET program itself is victim of negative image held by the society in Ethiopia. According to a research finding (Lelissa, 2006:17), it has been discovered that trainees of TVET institutions are considered as low achievers or failures of grade ten (national examination) students who are forced to attend TVET which discourages the potentially motivated students. This image of the society at large and the view of the graduates in particular is a barrier to have confidence and envision in their vocational career in general and starting new venture in particular. That is, the graduates feel inferior of their friends who joined the degree program and strive for higher education after a period of wage employment service which is a government

requirement as a path way to higher education. This path way may force the TVET graduates to work on a paid employment for the sake of getting a two-year work experience which is levied by the government policy as a requirement.

The negative images has been found to be global that a UNESCO monograph on perceived status of TVET stated as “TVET is often seen as a poor alternative to university or college courses, and the career paths resulting from TVET programs are often seen as less desirable as far as the career success of young people is concerned” (Hiebert and Borgen in UNESCO, 2002:132). Thus, the graduates are highly occupied by the drive to achieve higher education opportunity rather than thinking of job creation (self-employment).

Demographic factors such as gender may also contribute to graduates’ entrepreneurial success as a result of the influence of backward social and cultural environment. Though in the relatively long past times women are confined in the four walls of houses performing household activities, currently they are emerging as successful entrepreneurs (Khanka, 2004:18). This is due to educational equity and technological advancement that helped women to come out of the four-wall confinement and enabled them currently to run their own enterprises successfully.

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Likewise, religion as one component of social factors, the performance of individual entrepreneurs is directly or indirectly inspired by religious ideas (Khanka, 2004: 14). That is, in some religions high profit and interests are considered as a sin deeds. Thus, the social and cultural environment at which the entrepreneur emerged is important source of entrepreneurship as well as entrepreneurial personality.

Government Policies and Ations

Under this category, factors that influence entrepreneurial success include government’s economic and industrial policies, trade laws and legitimacy, promotion of free market, individual freedom, economic stability, introduction of new technology, etc. The economic and political environment includes various factors that either facilitate or inhibit the would-be entrepreneur the undertaking of a business venture which are necessary conditions for the success of the business. Among the economic factors lack of capital, working place, facilities and market are at the forefront. The week availability of credit services and the very limited accessibility of financial institutions is a barrier to

start a new venture. A World Bank report (2005) has identified that some of the graduates are not interested to be self-employed due to lack of capital, lack of training and lack of national policy which favored self-employment. The problem of capital and inadequate provision of micro-credit services are therefore central to the TVET graduates to start new micro and/or small enterprises. Hence, government economic policies which encourage new entrepreneurs in the provision of credits, availability of facilities, presence of technical assistance (consulting personnel), establishment of entrepreneurial incubation centers, facilitation of infrastructures, arrangement of working places and market are some of them just to mention few. With respect to the policy that favors new entrepreneurs, the training areas (sectors) affect the extent to which graduates are self-employed. That is, in relation to the government’s 70/30 (hard/soft skills) proportion training direction, soft skill trainings such as business fields may not be benefitted from incentives and encouragements. There is a tendency to discourage soft skills (occupations) training areas and, as a result, low access to the opportunities to soft skills graduates, as experiences of entrepreneurial efforts of the soft skills graduates showed. In this regard, for example, an attempt of establishing a small firm on auditing service by accounting graduates was inhibited by a concerned government’s Audit Office until related guideline is prepared but not realized and the graduates effort has been discouraged so that the group was banned.

In addition, with respect to government actions and policies favoring new entrepreneurs, economic regulations and taxation benefits are also important factors. Political stability, freedom of entrepreneurs, promotion of free market, absence of corruption, guarantee of security, etc. are also influential factors connected to the political environment (Dollinger, 1999:57).

Support System Services

Factors related to available support services include a number of services such as the quality of training institutions, on the job training provision of companies, financial and commercial institutions, research findings, entrepreneurial personnel support, consultancy services, etc. These support services have their share to the success of TVET graduates in venture creation efforts. Some scholars generally assume that entrepreneurs are born and support services are less important. However, it is proved that with the right type of training, follow up support and assistance, one can develop oneself as an entrepreneur (Batra, 2003:35). It is clear that the latent potentials can be cultivated and developed through wellconceived and integrated type of training including entrepreneurial skills. With this respect, Batra has stated that the right type of entrepreneurial training helps to identify and develop the natural, inherent and potential virtues of the human being which are lying dormant. From this we understand that the type and quality of training offered in a

TVET institution is vital for the TVET graduates’ entrepreneurial venture. Institutions (schools) with exciting courses in entrepreneurship and innovation tend to develop entrepreneurs and an entrepreneurial environment (Hisrich & Peters, 2002:13). This shows that the institution’s ability to equip the trainees with the necessary skills, knowledge and attitude paves the way to the idea of entrepreneurship and realization of a venture.

In relation to the role of training, the quality of trainers in their entrepreneurial skills and awareness about the expected output (entrepreneurial capability of graduates) is also one pivotal input. Encouragement to self-employment is further stimulated by trainers (teachers), who can significantly influence individuals to regard entrepreneurship as a desirable and viable career path (Hisrich & Peters, 2002:13). In addition to the trainers role for the entrepreneurial development of the trainees in training institutions, career guidance and counseling support is another contributing component of the quality of the TVET graduates. Hiebert and Borgen (in UNESCO, 2002:131) have well stated that guidance and counseling services are essential for the goals of TVET to be fully realized and that they should for that reason be fully integrated with all TVET programming. These services should be provided beginning at the time of enrollment in orienting their occupational choice, inculcating positive attitude through out their training and showing direction of their career path through the provision of career information including entrepreneurship. Another aspect of education and training background of the entrepreneur is experience of a previous business. This experience may be expressed in terms of any kind of exposure to a business environment be it free service ( practices in the form of apprenticeship or internship) or wage employment for a specific period of time. Some graduates choose wage employment because they acquire experiences without incurring cost such as know how to run a business, identify the way in which things operate in a business environment, learn skills of leadership and coordination, had a network of contacts, etc.

In this respect, a research finding (Lambing & Kuehl, 2000:90) in a survey on source of

business ideas of 500 successful entrepreneurs revealed that most of them (nearly half) (43%) of the respondents said they got the idea for their business from the experience they gained while working for wage in the same industry or profession. Therefore, it is clear that work integrated training methods such as apprenticeship, internship, cooperative training and free practice programs are of paramount importance.

In addition to the above factors, support services such as financial and commercial institutions, micro and small enterprise development personnel support, consultancy services, research findings, etc., have their own role for the entrepreneuri


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