Entrepreneurial factors that contribute to the success of Entrepreneurs

1. Introduction

The literature on entrepreneurship in Gilgit is limited. In order to fully understand the success factors of entrepreneurs in Gilgit, research on entrepreneurial factors and entrepreneurial success in other countries of the world is very important. This research relies on the research of other entrepreneurial factors and success in other countries. Entrepreneurship is very important, so this study explores the factors that contribute to the success of entrepreneurs in Gilgit. This research is about successful entrepreneurs and their success factors. This research helps to understand the entrepreneurial factors needed for entrepreneurial success (Cynthia, Chu, & Kara, 2009). Gilgit-Baltistan formerly known as the Northern Areas, is an important entity for entrepreneurs. It covers an area of 72,971 square kilometers and is highly mountainous. By taking advantage of these opportunities, small-scale and large-scale entrepreneurial activities are carried out in these valleys. The estimated population is close to 1,000,000. Its administrative center is the city of Gilgit (population 216,760). The main attraction of entrepreneurs is to control the trade routes that cross in Gilgit. Gilgit is the capital of Gilgit-Baltistan. It is the trade center of Gilgit. The weather conditions are suitable for entrepreneurs in the geographical location of Gilgit. According to demographics, 85% of the population lives in rural areas. The city of Gilgit is considered to be the main commercial center for entrepreneurs. There are large number of stores include textiles, shoes, bags, kitchen utensils, spices, pottery, jewelry, stones and gem stones. There is also a local handicraft market. The literacy rate is Gilgit is relatively high. The Karakorum International University was established for graduates and graduate students (Panoramio, 2011).

1.1 Objectives of study

    a. To identify the factors that contribute to the success of entrepreneurs.

    b. To study the relationship between entrepreneurial factors and success of entrepreneurs.

1.2 Research questions

    a. What are the entrepreneurial factors that contribute to the success of entrepreneurs?

    b. what is the relationship between entrepreneurial factors and entrepreneurial success?

1.3 Purpose of study

The purpose of this study is to identify the factors that influence the success of entrepreneurs in Gilgit. The purpose is to examine entrepreneurial success through entrepreneurial factors. The main purpose of this study is to design a comprehensive study on the factors that contribute to entrepreneurial success. On the basis of analyzing the relationship, the most significant entrepreneurial factors will be highlighted.

2. Literature Review

Entrepreneurship is a dynamic concept. Entrepreneurship is the act of being an entrepreneur. This is a French word meaning “one who undertakes endeavor” (Saleem & Abideen, 2011). According to Oganisjana et., al the concept of entrepreneurship in management research is often considered to be a dynamic system of individual interrelated components (e.g. personality traits, cognition, motivation, abilities, skills, attitudes, behaviors etc.) on the basis of which individuals can turn opportunities into new values. The term entrepreneur is often synonymous with the founder. Most commonly, the term entrepreneur applies to people who create value by providing services or products by finding niches in the market that may not currently exist. Entrepreneurs tend to identify market opportunity by effectively organizing resources and use it to achieve the outcome that change existing interactions within a particular sector. Entrepreneurs assemble resources including innovation, finance and business acumen to transform innovation into economic goods (Saleem & Abideen, 2011). There are several variables that have a significant impact on entrepreneurial success. Researches have recognized the importance of factors that contribute to entrepreneurial success. These studies have investigated the differences among entrepreneurial factors in entrepreneurs. The summary of these studies lead to the emergence of three factors. In this study three entrepreneurial factors are selected; personality traits (creativity, innovation, and risk taking), access to finance and government support, instead of selecting all factors (Chattopadhyay & Ghosh, 2008).

2.1 Personality traits

2.1.1 Creativity:

Here Holt (1992) has stated that creativity is a prerequisite for innovation. It is the ability to create something new. For their success entrepreneurs create ideas to promote them and develop successfully. They need creative ideas to pursue success.

2.1.2 Innovation

Innovation is the process of creating things new as stated by Holt (1992). Therefore, innovation is the transformation of innovative ideas into practical applications. Entrepreneurs use innovation to create wealth and increase potential resources. If entrepreneur manufacture a product or service, he must plan, organize and implement innovative ideas. Successful entrepreneurs recognize opportunities and transform ideas into useful values. Therefore, creativity is a prerequisite for innovation.

2.3 Risk taking

Risk taking means entrepreneurs want to start a new business without knowing the consequences of entrepreneurship whether the entrepreneur is successful or not. The risks that entrepreneurs bear include business, financial and personal risks. The goal of entrepreneur is to reduce the risks in entrepreneurship in order to succeed. Actually, successful entrepreneurs are not risk takers but they minimize the risk involved in starting a new business. Sometimes entrepreneurs take risk without certain knowledge of feasible and end result (Dess & Lumpkin, 2005).

2.2 Access to finance

Financing is one of the main factor of driving entrepreneurial success. Finance helps entrepreneurs in using the latest technology in their operations. The ability to obtain financing resources is sufficient to focus on the planning of their financial needs and to know the alternative sources of available funds (Munikrishnan & Veerakumaran, 2012).

2.3 Government support

Supportive government is significant for entrepreneurship to develop a dynamic environment. Many national governments have invested heavily in budgets and implemented a wide range of programs and procedures to promote and strengthen entrepreneurial activities. Government support is a key factor in accelerating entrepreneurial growth. Government should regularly assess the needs of entrepreneurs and provide them with the necessary support such as counseling or training programs (Sukasame & Lee, 2006).

2.4 Success of entrepreneurs

Entrepreneurial success is one in which entrepreneurs can pay their employees in time and grow over three years (long term survival and sustainability). Entrepreneurs who are risky in order to pursue profits are successful (Morales, 2011). The success of an entrepreneur depends on the ability to take advantage of opportunities and transform creative ideas into practical applications. Successful entrepreneurs create new ideas and develop innovative products according to the market demand.

2.5 Theoretical framework

 

Personality traits:

Creativity

Innovation

Risk taking

 

Access to finance

 

Government support

 

Entrepreneurial success

 

 

                                                             Fig = 2.1 

2.6 Hypothesis

H1: There is a significant relationship between personality traits and entrepreneurial success

H2: There is a significant relationship between access to finance and entrepreneurial success

H3: There is a significant relationship between government support and entrepreneurial success

3. Research Methodology

3.1 Sample selection

To achieve the objectives of this study a sample of one hundred and fifty-one (151) entrepreneurs were conveniently chosen from Gilgit. Data was collected from respondents by means of a convenience sample using a structured questionnaire consisting of 30 questions.

3.2 Instrument Development

The survey questionnaire included 30 questions related to dependent and independent variables. About 5 points Likert-scale item is developed to measure the factors that contribute to the success of entrepreneurs in Gilgit. The 5 points Likert-scale is labeled as such: 1 = strongly disagree and 5 = strongly agree.

3.3 Proposed Data Analysis Techniques:

Data is obtained from questionnaires returned by respondents. The SPSS 16.0 version statistical software has been used to analyze the data. And the mean, correlation and regression analysis were done mainly to test the hypothesis. Correlation and regression was mainly used to see the association between entrepreneurial factors and entrepreneurial success. Reliability analysis test is carried out to measure the strength of the data collected.

4. Data Analysis and Interpretations

4.1 Reliability Analysis

                               Table 1 Reliability Statistics

Variables

Cronbach's Alpha

N of Items

Personality traits

.829

15

Access to finance

.876

5

Government support

.843

5

Entrepreneurial success

.841

5

The table 1 shows the reliability statistics of the variables. To test the instrument, 29 successful entrepreneurs were retained for the pilot study. The changes to the instrument were done to ensure the instrument’s validity and reliability as well as to realize the objective of the study. All these changes have been used as the foundation to claim that the instrument has good content validity. An instrument is said to have good reliability if its Cronbach’s alpha achieves a level of at least 0.70. All the variables achieved reliability more than 0.70. Data collected will generally be considered reliable and acceptable for further analysis if the alpha coefficients were more than 0.70 as stated by Hair et al (2006).

4.2 Correlation Analysis

                                              Table 2 Correlation

Personality traits

Access to finance

Govt. support

Entrepreneurial success

Personality traits

1

Access to finance

.480**

1

Govt. support

.382**

.528**

1

Entrepreneurial success

.496**

.558**

.503**

1

 

**. Correlation is significant at the 0.01 level (2-tailed).

The table 2 shows that all entrepreneurial factors have a positive relationship with entrepreneurial success although the results show a positive relationship between the independent variables (IVs). The most significance one is access to finance (r= .558), followed by government support (r = .503) and personality traits (r= .496). Access to finance is the strongest indicator for entrepreneurial success. It means the higher the access to finance, government support and personality traits (creativity, innovation and risk-taking) the higher the entrepreneurial success in the venture.

4.3 Regression Analysis

                        Table 3 (A) Model Summary

R

R Square

Adjusted R Square

Std. Error of the Estimate

.648

.420

.409

.50817

a. Predictors: (Constant), Govt. support, Personality traits, Access to finance

The result of table 3 (A) indicates the adjusted R Square (R2) = 0.409, indicating that the model developed can be generalized to the population. It also shows that 40.9 % of change in entrepreneurial success is due to its relationship with the entrepreneurial factors. Accordingly, 42.0 % (R2= 0.420) of entrepreneurial success is determined by personality trait, access to finance and government support.

                        Table 3 (B) ANNOVA

 

Sum of Squares

df

Mean Square

F

Sig.

Regression

27.537

3

9.179

35.545

 .000

Residual

37.961

147

.258

 

 

Total

65.498

150

 

 

 

a. Predictors: (Constant), Govt. support, Personality traits, Access to finance

b. Dependent Variable: Entrepreneurial success

The table 3 (B) shows the ANOVA that the overall model explains the fit for the research. The ANOVA test shows that the significance level = 0.000 (p < 0.05). This significance shows that there is a relationship between entrepreneurial success and the independent variables.

                        Table 3 (C) Coefficients

 

Unstandardized Coefficients

Standard Coefficients

 

 

 

 

 

B

Std.Error

Beta

.178

.428

 

.379

.108

.256

.284

.073

.306

 

t

Sig.

Hypothesis

(Constant)

.417

.677

 

Personality traits

3.519

.001

H1 Accepted

Access to finance

3.876

.000

H2 Accepted

Govt. support

   .272            .084               .244

3.244

.001

H3 Accepted

a. Dependent Variable: Entrepreneurial success

The table 3 (C) shows the results of coefficient; indicate that the sig. values of personality traits, access to finance and government support factors are .001, .000 and .001. It means p< 0.05. So, the hypothesis H1, H2 and H3 are accepted. To test the hypotheses, p < .05 significance level was used to accept or reject the hypothesis.

The p value is for variable personality traits is 0.001. Likewise, the p value for access to finance and government support is .000 and .001. Therefore, we conclude that there is an association with entrepreneurial success. Thus, personality traits, access to finance and government support are predictors of entrepreneurial success.

Hence, this means there is a positive relationship between personality traits, access to finance and government support and entrepreneurial success. Also the result in correlation table (correlation coefficient = .496, 558 and .503) support this hypothesis. Thus, personality traits, access to finance and government support are predictor of entrepreneurial success of entrepreneurs in Gilgit.

5. Discussions & Conclusion

5.1 Discussions

This research studies the relationship between entrepreneurial factors and entrepreneurial success. This finding shows that the combination of entrepreneurial factors has a significant relationship with the success of entrepreneurs. Entrepreneurs need to combine their creative and innovative abilities in order to assess relevant and important information. This finding is consistent with the research of Makhbul and Hasun (2011) and Rose, Kumar and Yen (2006). Among them the special characteristics of entrepreneurial success including creativity, innovation and risk taking are the driving forces for entrepreneurs to start a new business. All of these characteristics are required, especially in the highly competitive global market, which contain many competitors. In this study, it has been found that the government support policy is a key component for accelerating the growth of entrepreneurs. Access to finance refers to availability and flexibility in obtaining the funds for business growth. This study proved that access to finance and government support have positive relationship with the success of entrepreneurs (Petheo & Szabo, 2011). Since the findings of this study reveal the characteristics of entrepreneurs, they help them succeed. Access to finance and government support programs are proposed especially to those entrepreneurs who newly joined entrepreneurship. This finding is also consistent with previous studies by Salwa, Azhari and Tamkin (2013).

Finally, these findings could help in mentally preparing entrepreneurs-to-be to develop the characteristics of successful entrepreneurs.

5.2 Conclusion

In conclusion, entrepreneurship is considered as an important factor of a market development. Therefore, it is important to grow and expand entrepreneurial activities in Gilgit. To grow and expand entrepreneurship, entrepreneurs need to combine their entrepreneurial characteristics. The present study highlights the entrepreneurial characteristics, access to finance and government support and its association with the success of entrepreneurs. Personality traits, access to finance and government support are the most important entrepreneurial factors for business growth and have a positive correlation with the success of entrepreneurs in Gilgit. When the entrepreneurs have higher access to finance, government support and combine personality traits, they can succeed their businesses and survive in the market. And the variance in entrepreneurial success was significantly explained by personality traits, access to finance and government support in this study.

5.3 Future Directions

1. In this research the focus is only on three entrepreneurial factors; personality traits (creativity, innovation and risk taking), access to finance and government support. Other factors associated with entrepreneurial success can be conducted in the selected population.

2. The findings also suggest that future research would be beneficial if the focus is paid to entrepreneurial factors (personality traits, access to finance and government support) in another geographical region.

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