Determinants of Entrepreneur's Success in a Developing Country (2010)

ABSTRACT With respect to determining the factors contributing to the success of entrepreneurs, many studies have concentrated on the psychological and behavioral traits of entrepreneurs, the managerial skills and training of entrepreneurs, and the external environment. However, no consensus has been reached as to the level of importance of those factors in entrepreneurs' success. In order to determine the role and importance of factors contributing to the success of entrepreneurs, an ordered logit model is applied to a sample of one hundred and thirty-eight Turkish entrepreneurs. The level of family support, good customer service, charisma and friendliness to customers, business stress, ability to manage personnel, previous business experience, hard work, appropriate training, satisfactory government support, political involvement, and being married, are found significant determining factors in entrepreneurs' success. (ProQuest: ... denotes formula omitted.) INTRODUCTION With respect to determining the factors contributing to the success of entrepreneurs, many studies have concentrated on the psychological and behavioral traits of entrepreneurs, the managerial skills and training of entrepreneurs, and the external environment (Jennings & McDougald, 2007; Arinaitwe, 2006; Frese, Brantjes & Hoorn, 2002; Lee & Tsang, 2001; Zinger, LeBrasseun, & Zannibi, 2001; Rauch & Frese, 2000; Rauch, Frese, & Sonnentag (2000); and Dess, Lumpkin & Covin, 1997) However, no consensus has been reached as to the level of importance of those factors in entrepreneurs' success [see, for example, Pratt (2001)]. In order to determine the role and importance of factors contributing to the success of entrepreneurs, an ordered logit model is applied to a sample of one hundred and thirty-eight Turkish entrepreneurs. Being strategically located between Europe and Asia, Turkey, which has recently entered the accession negotiations for full membership in European Union, is an important case. The contribution of entrepreneurship to economic development and employment creation is significant. In Europe, small businesses employ 60 percent of the workforce (Wintermantel, 1999). Japan, for example, has six million small- and medium-sized enterprises (SMEs) which account for 99 percent of all businesses in the country and 60 percent of the total labor force (Dana, 1998). In Taiwan 96 percent of all firms are SMEs that employ 78 percent of the nation's work force (Lin, 1998). Results of a study conducted by Lee (1998) indicate that South Korean SMEs provide more than 70 percent of all jobs in the country. SMEs play an important role in the Turkish economy as well. According to the OECD (2004), SMEs account for 99.8 percent of the total number of businesses and 76.7 percent of total employment. With respect to manufacturing firms, 99.3 percent are SMEs employing 56 percent of all manufacturing workers (Republic of Turkey Ministry of Industry and Trade, 2006). This study intends to examine the factors contributing to the success of entrepreneurs. To that end, the following section reviews the literature on the factors that affect entrepreneurs' success. The section after that explains survey and methodology. The next section analyzes the data and gives the results. The final section offers concluding remarks. FACTORS AFFECTING ENTREPRENEURS' SUCCESS The factors that entrepreneurs believe contribute to their success are not unanimously agreed upon by researchers. Most entrepreneurial studies have concentrated on a few sets of factors: 1) the managerial skills and training of entrepreneurs, 2) the external environment, and 3) the psychological and behavioral traits of entrepreneurs. This study concentrates on the managerial skills, training, and external environmental conditions that promote business success because these are the factors that are most easily altered by policymakers. …