Delay of gratificationand business performancein least developed countries
Authors: Xayavongsa Dalivone , Pholphirul Piriya 
Published: June 2019

Purpose

Does delay of gratification affect the probability of engaging in self-employment and does it contribute to business performance? This paper aims to quantify impacts of delay of gratification on engaging in self-employment and business performance.

Design/methodology/approach

Using Lao PDR as a representative of least developed countries, the authors analyze nationally representative survey data from the Lao PDR – STEP Skills Measurement Household Survey and estimate the binary logit/probit model to quantify impacts of delay of gratification on probability of self-employment. And, the impacts of delayed gratification on business performance of the self-employed individuals are also estimated.

Findings

Those with a lower degree of delayed gratification tend to elect to be self-employed instead of being full-time employees. However, a higher delay of gratification score is found to positively correlate with higher business performance among those who are self-employed. Other control variables such as business characteristics, education level and skills of the self-employed also play an important role in higher business performance.

Research limitations/implications

Analysis from this paper still shows some weak points and limitations. First, the data set on self-employment has little representation from industry and the service sector and lacks many important variables such as parents’ characteristics and working hours. Second, there is no clear measurement of delay of gratification, as the measurements use only hypothesis money. Finally, there is a lack of studies to back up the result of delay of gratification on business performance, especially in a least developed country such as Lao PDR. The authors suggest that future research be conducted with richer data regarding the self-employed in industries and services. It would be quite interesting to study further the effect of delay of gratification along with grit, another behavioral variable, on business performance.

Practical implications

Based on the findings, it is therefore crucial that the Lao Government support a policy that helps strengthen both cognitive and noncognitive skills and the delay of gratification along with education to make Lao self-employment more productive.

Social implications

Providing the self-employed with adequate skills to succeed in their enterprises can lead them and the nation to escape the poverty trap. Family, school and government should promote delay of gratification among young children. Encouraging special activities that foster emotional and behavioral skills learning and practice for children, such as religious learning and meditation, might boost their ability to delay gratification. Moreover, support for skills training, both basic and job-relevant skills, could promote business experience exchange by creating an organization that provides guidelines, information and advice for self-employment.

Originality/value

Even though there is extensive research indicating that delayed gratification exists in many contexts, there are very few studies investigating the impact of delayed gratification on the business, especially on the decision to be self-employed and the resulting business performance. The delay of gratification could be one factor that influences decisions on job selection or employment status and that influences business performance as well. This paper is also the first one conducted in a least developed country such as Lao PDR.