This paper examines the determinants of business start-up , long and short-term success and failure of small businesses with emphasis on their education and training.
Drivers of Entrepreneurship and Post-Entry Performance of Newborn Firms in Developing Countries
Entrepreneurs and small firm success and failure have been the subject of extensive research. It is important to understand the external, internal and motivational factors responsible for business start-up, the barriers faced during the initial and continuous stages of trading and the advice and assistance available to entrepreneurs. This paper is aiming in exploring and explaining the main factors are related to successful and failure of entrepreneurs in small industrial business in ahvaz city 3. Based on a random sampling 51 enterprisers marked as successful and failures are selected.
Small Firm Formation and Regional Economic Development
The data collected based on a triangulation method interview, questionnaire and observation. The results show that:. A- from the failure entrepreneurs point of view the following issues were important effects on their weak performance and failure their business: weak managing technical skills, financial issues, planning and organizing of their business, economic issues, informal issues, weak managing conceptual skills, personnel skills, education and low training, and weak human relation.
B- from the successful entrepreneurs point of view the following issues were important effects on their high performance in their business: suitable managing technical skills, selecting appropriate personnel with relevant skills, education and paying more attention to personnel training, application of management conceptual skills, financial issues, better human relation, recognize the economic situation, planning and organizing of their business and informal issues.
Small businesses can be a vehicle for both Schumpeterian entrepreneurs introducing new products and processes that change the industry and for people who simply run and own a business for a living Wennekers and Thurik, During the first decades of the last century, small businesses were both a vehicle for entrepreneurship and a source of employment and income.
This is the era in which Schumpeter conceived his Theory of Economic Development.
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Here Schumpeter emphasizes the role of the entrepreneur as prime cause of economic development. Mehralizadeh , Acs and Audretsch and Carlsson provide evidence concerning manufacturing industries in countries in varying stages of economic development. Mehralizadeh and Lauder and Brown in their models advance three explanations and waves for the shift toward smallness and flexibility. The first wave is related to Fordist production Mass production deals with fundamental changes in the world economy from the s on-wards.
Second wave is started since called neo-Fordist management system, which due to the changes relate to the intensification of global competition, the increase in the degree of uncertainty and the growth in market fragmentation. The third wave is Post-Fordist system of management, which deals with changes in the character of technological progress, system of work and human resource development.
Small Firm Formation and Regional Economic Development (Routledge Small Business Series)
Study these waves shows that flexible automation has various effects resulting in a shift from large to smaller firms. Also Piore and Sable and Thurik, R, and Weneekers, S argues that the instability of markets in the s resulted in the demise of mass production and promoted flexible specialization.
This fundamental change in the path of technological development led to the occurrence of vast diseconomies of scale. Post-Fordist system of management is marked with entrperunres. Entrepreneurship and therefore "the entrepreneur", is at the core of what makes an enterprise succeeds, whether you call it an entrepreneurial firm, a small business, a family business, a home-based business, or a new business.
Over the past two decades there has been a mass of research which has attempt to discover the difficulties of start-up planning and existing small business. Some of the researches have addressed successful entrepreneurs but others looked at the failure small business managers. All these studies were addressing if there are any clear characteristics, which distinguish small business barriers to find out which one is more important for policy makers. After all these studies still the main question remain that why some of the small industrial business is successful but other is failed.
This situation has caused great concern, as a productive economy is reliant on the birth of substantial numbers of new enterprises and the growth of such firms. The importance of this question is more important due to the government determined that during the third five year social and economic development planning move toward more small business and privatization of economy in industrial part. Establishment of small business also provides more job opportunities for huge army of unemployed young people in Iran.
Therefore results of this research will help the policy make in Iran and other countries with the same economic situation to develop reasonable planning to get advantage of development of small business. Although there are a huge amount of research in relation to entrepreneurs but review the literature and most of the work done in this respect revealed that the authors focused on the different aspects of entrepreneurs success and failure.
Generally speaking, all entrepreneurs are when developing a business are faces with three vital stages: a getting idea of business, b start-up activity and c activate the business. In each stages they are struggle with different issues. To get a better idea of the relationship among these issues we classified them as 6 main issues and a numbers of variables. Previous research has identified a number of possible influences on the success of new small businesses, including the effects of opening size on growth, the entry process, customers and innovation.
For example, Johnson, Kattuman and Conway found that business size plays a key role in the growth rate of very small businesses, with micro businesses experiencing the highest rates of growth. It should be noted that whilst innovation can provide new market opportunities, innovative businesses often face rapid growth, which can be disastrous if not managed correctly. While a listing of reasons for small business failures would at first seem lengthy, according to Clark, S. But here we addressed issues, which are more frequently studied by previous researchers in different economic section and countries.
In the light of internal factors review of the related literature will show three main area of research, which are related to a- personal Characteristics of Small Business entrepreneurs, b- Planning and organizing business and c- financial management. In spite of a number of research which has attempt to discover if there are any clear characteristics which distinguish small business owners the general conclusion appears to be that there in no simple pattern, but a complex set of interrelated factors that increase or decrease the probability that an individual will become the owner of a small business, and whether or not that business will succeed or fail.
Some studies are focused on demographic and personality Characteristics of entrepreneurs. In terms of demographics they looked at class and educational background, age and gender Hornday, Historically, the majority of individuals who entered business did so through existing family interests Bolton, But in the light of personality, An emerging view held by economists is that particular traits characterize the successful entrepreneur e.
As the name suggests the main driving force for the personal achiever is the need to achieve, but they often have insufficient knowledge to run an organisation effectively and are likely expand their business too quickly in their pursuit of success. Attempts to characterize successful entrepreneurs have raised a number of issues. Brandstatter suggests that, although there are many reasons why so many new business ventures fail within the first five years, misfit of personality structure and task structure may be one of the most frequent causes of failure.
Moreover, it is emotional stability and independence that foster the skills necessary for business success, especially during the initialization phase when entrepreneurs need to a have the courage to take risks and b have the flexibility and persistence to purse their goals. Nine out of ten business failures in the United States are caused by a lack of general business management skills and planning Troy State University, The following list summarizes the 12 leading management mistakes that lead to business failures.
However, Cromie and John concluded: "The skills necessary to ensure the growth and development of an enterprise may well be different from those required to conceive and launch a business. There is also evidence that most successful small business owners previously worked in other small firms or smaller divisions of larger companies Lussier, Robert N. What seems to be a common citation are poor planning , poor management and marketing.
There are a lot of reasons given, but it is hard to actually know for sure why a business failed unless you analyzed each particular case.
Small business entrepreneurs must plan for success. Marketization involves far more than just knowing your market and what motivates it. Most businesses focus on the marketing "push," but few ever focus on the "pull," which is one of the secrets to success. Pre-start-up planning is "the process by which the entrepreneur, in exploiting an opportunity, creates a vision of the future and develops the necessary objectives, resources, and procedures to achieve that vision Sullivan et al ; Lussier, Robert N.
It is a process that includes collecting and analyzing data, then using that knowledge to develop a business plan. Plans can range from those with the most minimal structure through to very comprehensive and detailed, long-term plans. Bracker and Pearson propose a four-level classification: 1 unstructured plans, 2 intuitive plans, 3 structured operational plans and 4 structured strategic plans. Although several studies have shown strong positive links between planning and business success e.
However, although most would agree that planning can be beneficial, there is an emerging view that the value of planning is context-dependent and that its benefits may differ across contexts Castrogiovanni, ; Mintzberg, A chronic problem facing many small businesses is the lack of funds to establish them on a sound and stable financial footing. Initially, a business's capital may be limited to what its owners can raise from savings, mortgaging the family home or borrowing from relatives etc. Different studies observed the importance of financial issues for new and existing entrepreneurs Sullivan et al ; Lussier, Robert N.
Here some factors are more concentrated by previous researchers, namely: a-economic factors, b- government support, c- Social support d- Information factors and e- informal factors. The vast majority of new micro and small businesses are initialized in the localities in which their founders already live, and the chances of success are closely related to the geographical location Sullivan et al ; ; Lussier, Robert N.
In addition, in geographical areas of high large-plant-industries there tends to be a lack of suitable start-up premises for micro and small businesses. Thus, business start-up is likely to be greatest in areas which are low in large-plant-industries and which have a high small business populations already established. These included previous population growth, capital availability through housing wealth, local enterprise cultures, and professional expertise.
- Additional information.
- Am Horizont (Gedichte) (German Edition).
- Regional politics and economic patterns: ‘glocalisation’ and the network enterprise!
- The Tinnitus Remedy?
- Small Firm Formation and Regional Economic Development - CRC Press Book;
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Local market demand also has a degree of influence, although this is less important in determining survival and death rates in micro and small businesses. It is realized that small business has a greater role in economic growth.