Factors Influencing the Success of Small-Scale

Topics: Entrepreneurship, Entrepreneur, Business Pages: 14 (4129 words) Published: November 16, 2010
Ongoing Themes in Psychology and Culture
Bernadette N. Setiadi, A. Supratiknya, Walter J. Lonner, Ype H. Poortinga

Factors influencing the success of sma…


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Atmajaya Indonesia Catholic University Jakarta, Indonesia

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Approximately 99% of all enterprises in Indonesia operate in small-scale sectors, absorbing 88.66% of the workforce (Urata, 2000). Those small-scale and household industries use only 10% of the total circulating money, but they contribute 49% to the Gross Domestic Product. Small-scale businesses also contribute 15% of non-oil and gas exports (Urata, 2000). Because most entrepreneurs in Indonesia are in the small-scale category, it was considered important to conduct an exploratory study in order to identify factors affecting the success of the entrepreneurs in this category. The results of such a study could be used to help increase the role and success of small-scale entrepreneurs in boosting the Indonesian economy. Research conducted by Cunningham (in Meng & Liang, 1996) on 178 entrepreneurs and professional managers in Singapore showed that success is closely connected with individual traits (49%), education level (Bowen & Robert in Staw, 1991; Kim in Meng & Liang, 1997), as well as experience (Duchesneau et al. in Staw, 1991; Hasweel et al., Wood in Zimmerer & Scarborough, 1998). But Kim (in Meng & Liang, 1997) found that experience had no effect on business success. Also, according to Staw (1991) age is not closely related to success in business. However, if age implies entrepreneurial age (the length of time someone conducts business), there is a relationship between age and entrepreneurial success in Indonesia. The aforementioned individual traits are creativity and innovation. Holt (1992) underlines both traits as necessary conditions to become a successful entrepreneur. Because innovation is a special means for entrepreneurs to reach success, Drucker (1985) considers it necessary for an entrepreneur to innovate systematically or habitually. Creativity and innovation are not identical, however. Creativity is antecedent to innovation (Holt, 1992, p.32). According to Amabile (1989) creativity means the emergence of new ideas, while innovation means the application of these ideas. The novelty aspect of entrepreneurial innovation leads us to the Adaptation-Innovation theory of Kirton (1976, 1989). Kirton (1989) maintains that individuals are systematically different from each other in creative style, decision-making, and problem solving. Differences in creative style are influenced by originality, efficiency, and group-conformity. A low standing on originality but a high standing on efficiency and group conformity makes a person an adaptor; on the contrary, a high standing on originality but low on the other two aspects makes a person an innovator. Entrepreneurship experts insist that personality traits are important factors in determining entrepreneurial success. Theoretical analysis of the traits of entrepreneurs conducted by Sukardi (1991) identifies nine excellent traits in entrepreneurs: namely instrumental, prestative (a word based on the Indonesian concept of achievement), flexibility in friendship, working hard, self-confident, risk taking, self-controlled, innovative, and autonomous. In his dissertation, Sukardi showed that planned intervention can promote these major traits. In planned intervention, three of nine major traits were significantly enhanced in participants through a training program. These were achievement orientation, risktaking, and self-control. In the present study the nine traits of Sukardi will be re-examined with...
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