UNIVERSITY OF NAIROBI by fanzhongqing

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									    Determinants of Entrepreneurial Behaviour for
Business Competitiveness: A Review of Theories and
                                    Models


Research Paper Submitted To The First African International Business and Management
                              (AIBUMA) Conference
                                        On
            ‘Knowledge and Innovation Leadership for Competitiveness’

                               August 25th – 27th, 2010




                                         BY




                                  Joseph F. Ntale
                 Lecturer: The Catholic University of Eastern Africa
                               Faculty of Commerce
                              P. O. Box 62157 – 00200
                                  Nairobi – Kenya
                               Tel: +254 733 597 573
                                Fax: +254 20 891084
                           E-mail: josefntale@yahoo.com
                                  ntale@cuea.edu



                                   Nairobi – 2010
                                                      Abstract
Entrepreneurs play an important role in any given economy and are the prime movers of economic development.
However, the concept of entrepreneurship is complex as Social scientists are yet to agree on the definition and the
determinants of entrepreneurial behaviour for innovation and business competitive. This study attempted to establish
the determinants of entrepreneurial behaviour suitable for innovation and business competitiveness that leads to
wealth creation in Kenya, by reviewing the various theories and models on entrepreneurship. Ten set factors were
identified as determinants of entrepreneurial behaviour innovation and business competitive namely psychological,
sociological, personality traits, cultural, luck, economic, political, legal, technological and geographical. Policy
makers, program planners and academician focused on building a successful entrepreneurship development strategy
for Kenya or any other least developed countries will find this study useful. The study underscores the importance of
addressing entrepreneurship from the multi-dimensional perspective as the most viable initiative to understand the
basis for innovation and business competitiveness. The study therefore recommends a multi-dimensional
entrepreneurship model that can be used as a guide in initiating innovations and competitiveness business ventures
in Kenya.


Introduction
Entrepreneurship is the process of wealth creation and individuals referred to as entrepreneurs create this wealth by
being innovative operating competitive businesses. They assume the major risks in terms of equity, time, and/or
career commitment of providing value for some product or service. The product may not be new or unique, but
entrepreneurs add value into it to make it more competitive. Millennium development goals, Kenya Vision 2030 and
competition necessitate entrepreneurs to apply new technologies and approaches in order to deal with the challenges
and exploit the opportunities of globalization. An entrepreneurial approach is seen by many scholars and policy
makers as an answer to innovation and business competitiveness in this era. The concept of entrepreneurship is
considered complex in nature, but an explicit relationship with various factors of production is yet to be fully
explored and remains often unclear (Barnett, 1993 and Jennings 1994). The origins and determinants of
entrepreneurship span a wide spectrum of theories and explanations (Carree, 1997; Carree et al, 2002; Gavron et al,
1998; OECD, 1998). The need to understand the determinants of entrepreneurship is as important as understanding
its concept. If the determinants are well understood, supporting institutions and innovative actions can be undertaken
to promote innovations and competitive enterprises in the country. Policies and programs designed specifically for
entrepreneurship promotion can greatly affect the innovation and the competitiveness of businesses and thus create
wealth in the country (Hisrich, 2008, Storey, 1994, Mache and Markley 2003).


Background
According to Macke and Markley (2003), economies with high rates of entrepreneurship are performing well, and
this is evidenced by high levels of prosperity. Many authors argue that entrepreneurship is largely a phenomenon of
developed and industrialized countries and that, if it was transferred together with western management practices,
then the problems of underdevelopment could be solved (Casson, 1982, Hisrich et al 2008 and Deakins and Freel


                                                          1
2003). Entrepreneurship has been seen as a key to economic development in many countries across the globe for
many years (OECD, 1998 and 2003). For instance, in the European Union’s Employment Strategies,
entrepreneurship has been given a major role to increase the dynamism of economies and help employment creation
and improvement (CEC, 1999 and 2003). The European Union’s ‘Gothenburg strategy’, adopted in 2001, is based
upon the three complementary factors namely: economic, social, and environmental foundations. The strategy
recognizes the inter-dependence of these factors (CEC, 2005).


Although entrepreneurs have been an important part of society for many years, there are still many different
perceptions and misconceptions about them. Entrepreneurship is commonly linked directly to Small and Medium
Enterprises (SMEs) and Micro and Small Enterprises (MSEs). However, this view presents several problems as most
small business owners do not innovate and most small businesses are founded on existing ideas and practices, and in
such situations, the so-called entrepreneur has to adapt and react rather than direct and create (Casson, 1982). This
is supported by (Macke and Markley, 2003) by stating that, all entrepreneurs must be successful business people, but
not all business people are entrepreneurs. According to (Schumpeter 1934), entrepreneurship is a process of
“creative destruction” where new firms, technologies, or modes of commerce displace the old established order. He
further asserts that entrepreneurship is a subversive activity and a powerful destabilizer of the status quo as it brings
about innovations and changes in technology that drive economic growth. The Schumpeterian entrepreneur is the
prime mover of innovation, technological growth, and economic development. This concept is rapidly becoming
apparent in many emerging economies.


Scott and Twomey, (1988), define entrepreneurship as a factor of: a) predisposing factors:- those elements that
prepare    individuals for entrepreneurship, such as, work experience, education, family background and
entrepreneurial traits; b) triggering factors:- those elements that pull individual into entrepreneurship, for example,
windfall, desire for independence, desire to exploit an opportunity, financial incentives, liberalization, privatization,
political, social or economic revolution. On the other hand, some individuals are pushed into entrepreneurship by
circumstances like economic hardship, unemployment, retrenchment, redundancy, divorce, disagreement and
separation; c) Business ideas:- these are the concepts that individuals have ,that when implemented nascent
businesses emerge.


McCormick (1996) concurs with Scott and Twomey (1988) on predisposing and triggering factors, and introduces
the concept of constraining factors, such as, retrogressive cultural practices, limited finance, little education, limited
information and weak markets. Macke and Markely (2003), underscore the importance of readiness factors in the
community entrepreneurial behaviour, namely, willingness to invest, leadership team, balancing business attraction,
entrepreneurial programmes, openness to entrepreneurship, and beyond the town borders.               According to Babu
(2003), there are different types of entrepreneurship models, namely, Brilliant idea, Consultant, Franchise and
Moonlighting models. McGrath et al. (1992) ascertain that culture influences entrepreneurial behaviour and can be
measured by, Confucian dynamism, high power distance, individualism, and uncertainty avoidance dimensions.


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Statement of the Problem
Entrepreneurship is relevant in promoting innovation leadership in businesses in different countries. Kenyan vision
2030 emphasizes the need for appropriate entrepreneurship strategy for wealth creation as one of the means to make
Kenya a globally competitive and prosperous nation. Nevertheless, factors influencing entrepreneurial activities are
not clear. Policy makers need to understand the factors in order to come up with viable policies and development
programs to promote entrepreneurship in the country. However, social scientist have not yet agreed on the
determinant of entrepreneurial behaviour yet policy makers need to know the determinants in order to come up with
viable policies that create an enabling environment fro innovation and business competitiveness. The establishment
of validated determinants of entrepreneurship could be of much help to the government to intervene in the economic
development. According to McGrath et al (1992), it is important to fully understand what constitutes and drives
entrepreneurial behaviour if such activities were to be motivated. Therefore, the study seeks to analyze the existing
theory and models of entrepreneurship to identify suitable determinants of entrepreneurial behaviour that can lead to
better livelihood in Kenya.



Objectives

         1.   Review theories and models that can inform policy makers on factors influencing entrepreneurial
              behaviour.
         2.   Assess the appropriateness of entrepreneurship determinants in the Kenyan context.


Justification
Establishment of the determinants of entrepreneurial behaviour for wealth creation enables the policy makers to
come up with a viable and focused entrepreneurship strategy that can make businesses innovative and competitive.
The government will be able to provide an enabling environment for entrepreneurship. The study will also bring a
paradigm shift in the concept of entrepreneurship by looking at it as a multi-dimensional phenomenon.


Literature Review
Theoretical Foundations of Entrepreneurship
Entrepreneurship is a complex phenomenon, as it can be viewed from economic, psychological, sociological cultural
and integrative perspectives. These different view points lead to varying definitions of entrepreneurship. Barnett
(1993) after studying more than 70 viewpoints of scholars on entrepreneurs and entrepreneurship concluded that, it
is not easy to come up with a consensus definition from the literature. Kilby (1971) refers to entrepreneurs as
complex individuals because no one has been able to precisely describe or define what they are. He further states
that the ideas in the entrepreneurship schools of thought are not original in the strict sense and therefore, the choice
of the working definition of entrepreneurs is scholarly work and hence subjective to the scholars. Jennings (1994)
does not find it necessary to define entrepreneurship as the concept has multiple perspectives. His argument is that
the field of entrepreneurship needs multiple paradigms that are different because research in entrepreneurship serves



                                                           3
a variety of purposes. Kapp (2003) suggests that a multidimensional perspective should be used when analyzing
entrepreneurship because it is not easy to comprehend the concept from one perspective as it is a multidimensional
phenomenon.


Economic perspective
Economic view indicates that entrepreneurs are motivated by profit in their commercial activities. They are out for
monetary gain in whatever strategy they undertake. According to Hisrich et al (2008) Richard Cantillon developed
one of the earliest theories of entrepreneurship from the economic point of view as an exchange for profit. He is
regarded by many scholars as the founder of the term entrepreneurship. He viewed an entrepreneur as a risk taker
who buys at a certain price to sell at an uncertain price and in the process he either makes a profit or a loss.
Marshall (1930), Say (1971) and Kilby (1971) widened the concept of entrepreneurship to include not only the
bearing of risks, but also the planning, supervising, organizing, and even owning the factors of production. Knight
(1971) says that the entrepreneur is the one who bears the responsibility and consequences of making decisions
under conditions of uncertainty. Schumpeter (1934) looked at an entrepreneur as a prime mover of economic
development and initiates the development by being innovative by carrying out new combinations in the factors of
production. Drucker (1994), defined an entrepreneur as an individual who searches for change, responds to it, and
exploits it when an opportunity is available. He viewed entrepreneurship as an action-oriented management style
process, which takes innovation and change as the focus of thinking and behaviour.


Kirzner (1985) sees entrepreneurs as individuals in the economy who are alert to discover and exploit profit
opportunities in any given environment. Birley (1997) says that one is a bona fide entrepreneur if one has the ability
to identify, pursue and capture business concept from a business opportunity.            According to Schultz (1980),
entrepreneurship is the ability to deal with disequilibria that is, being able to deal with the unknown to many by
exploiting the ignorance of the people in the markets. He further states that education plays a major role in this
behaviour. Macke and Markley, (2003) refer to entrepreneurs as Individuals who create and manage new
enterprises. They create new businesses for many reasons, such as, self-sufficiency, lifestyle necessity and desire for
wealth. Ultimately, they all have one thing in common to turn ideas into new business ventures.


Babu (2003) came up with entrepreneurship models describing four different types of economic motivations to
entrepreneurial as follows:- a) Consultant Model describes entrepreneurs who are academicians and specialists in
various professions. These are well known professionals with long working experience for large corporations who
find it convenient and lucrative to branch off from their employers. Many corporate executives after retiring from
their corporations take the consulting route, either directly or by taking on directors’ roles at different companies. b)
Moonlighting Model describes individuals who are part time entrepreneurs. They don’t take risks associated with
full-time entrepreneurial activities. For example, university lecturers, doctors and high school teachers take part-time
work outside their official working hours to supplement their incomes; c) .Brilliant Idea Model describes
professionals and employees working in the corporate world with brilliant entrepreneurial ideas as intrapreneurs.


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They come up with brilliant business ideas that can be exploited to make a lot of money, but when the brilliant idea
is rejected by the top management, they implement the idea for their own benefit; d) Franchise Model describes
individuals who serve in the corporate world but later on decide to start their own enterprises using their work
experiences. The enterprises are franchises. In the franchises model, the entrepreneurs approach a well established
corporation such as Safaricom, a mobile phone service provider, for the brand name and marketing support for their
businesses.


Psychological and Personality perspectives
Psychological view attempts to understand the mindset of the entrepreneurs, while the personality perspective
examines the characteristics of the entrepreneurs. Entrepreneurial behaviour can be looked at from either internal or
external viewpoints of an individual (Kapp 2003). Internal viewpoint looks at the personality traits of an individual
such as, locus of control, risk taking, need for achievement, problem solving, innovation, creativity perception and
work values. While external viewpoint examines things like, culture, role models, work experiences, education and
environment. McClelland (1961) says that entrepreneurs are persons who have a high need for achievement.              He
goes on to explain that, individuals with a high need to achieve will exhibit entrepreneurial behaviour. (Casson,
1982) quotes Kets De Vries (1985) as saying that family background and work experiences were significant in
forming an entrepreneurial personality, he says that individuals who have gone through hardship in childhood need
to escape from their harsh background. Their aggressive behaviour forces them to start their own enterprises, instead
of being employed by others. Rotter (1989) developed the concept of locus of control whereby the forces
responsible for an individual’s destiny are either internal or external .Individuals with a high internal locus of control
are more likely to become entrepreneurs, than those of high external locus of control. Timmons (1990) refers to
entrepreneurial behaviour as a way of thinking, reasoning, and acting that is opportunity directed, and leadership
balanced. He acknowledged that entrepreneurship personality can be acquired or in born.


Hisrich et al (2008) compiles seven factors responsible for entrepreneurial behaviour. First is education where he
states that, there is a general feeling that entrepreneurs are less educated than the general population, while research
findings show that this is not the case. He asserts that education is essential in the upbringing of an entrepreneur
because it facilitates the integration and accumulation of new knowledge, it provides individuals with opportunities
and assists entrepreneurs in adapting to new situations. The second factor is personal values, which refers to a set of
attitudes about the nature of the management process and business in general, for example opportunism,
individualism and competitiveness. Third is age, which is the chronological age of an entrepreneur, and the
entrepreneur’s previous business experience. Fourth         is work experience that includes previous technical and
industry experience. The fifth factor is role models; these are individuals influencing entrepreneurial career choice
and style. Moral-Support network is stated as the sixth factor and these are individuals who give psychological
support to an entrepreneur. The final factor is Professional-Support network, which refers to individuals who help
entrepreneurs in business activities.




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Sociological and Cultural perspectives
Sociologist and social scientist have underscored the influence of society and culture in the formation of
entrepreneurs. They emphasized the role of cultural values and social net works in promoting or discouraging
entrepreneurial activities (Cochran, 1971). Various dimensions of social networks may be salient, including
relatives, friends or community (Djankov et al., 2005). Research by Hofstede (1980) identified four dimensions of
culture that can be expected to impact on entrepreneurial behaviours within a country as illustrated in table 2.1.
McGrath, Macmillan, and Scheinberg (1992) undertook a multi-country comparison which indicated significant
differences between entrepreneurs and career professionals. In their analysis, the work of Hofstede was looked at in
the context of entrepreneurship.


Hofstede Cultural Dimensions
Hofstede’s            Cultural     Determinants of Entrepreneurship
Dimension
                                   High power distance people are likely to be entrepreneurs.
Power Distance                     Low power distance people are less likely to be entrepreneurs.
Individualism               Vs     Individualistic people are more likely to be entrepreneurs
Collectivism                       Collectivist people are less likely to be entrepreneurs
                                   People with low levels of uncertainty avoidance are more likely to be entrepreneurs
Uncertainty Avoidance              People with high levels of uncertainty avoidance are less likely to be entrepreneurs
                                   People with masculine culture are more likely to be entrepreneurs
Masculinity Vs Femininity          People with feminine culture are less likely to be entrepreneurs
Confucian Dynamism                 People with long-term Confucian dynamism are likely to be entrepreneurs.
                                   People with short-term Confucian dynamism are less likely to be entrepreneurs.


Source: Adapted from Hosfstede 1980
The power distance dimension is the sense of inequality between people within a society. Inequality can be
manifested in wealth, power, education, and basic physical and mental individual characteristics. The power
distance dimension is a characteristic of social systems and organizational styles. Entrepreneurs might be expected
to prefer larger power distance situations than non-entrepreneurs.           People who are individualistic are more
concerned about themselves and their nuclear families, while collectivistic people feel that they belong to groups
such as, families or clans or organizations. The groups look after them in exchange for loyalty and conformity.
Entrepreneurs are traditionally portrayed as being even more individualistic than the norm and are expected to value
competition over cooperation.




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Uncertainty avoidance refers to the extent to which people feel threatened by the unknown and ambiguous
situations. Uncertainty avoidance can be characterized with three indicators: rule orientation, employment stability
and stress, leading to the need for security and a dependence on experts. Uncertainty avoidance is negatively
correlated to the need for achievement, and this suggests that entrepreneurs would exhibit low levels of uncertainty
avoidance. Hofstede (1991) notes that rituals and rules are used by people to avoid uncertainty, which would also
suggest that entrepreneurs would exhibit low levels of uncertainty avoidance. Confucian Dynamism a dimension of
uncertainty avoidance is the long or short term orientation in planning (Hofstede, 1991). This is the extent to which
a society exhibits a pragmatic future oriented perspective, rather than a conventional short term view. In this case
low Confucian dynamism is characterized by risk avoidance, respect for traditions, personal steadiness and stability.
Non-entrepreneurs are perceived to have low Confucian dynamism as they tend to live for the moment, while
Entrepreneurs tend to be more pragmatic, innovative and long term planners and therefore, have high Confucian
dynamism (McClelland 1961, McGrath et al, 1992 and Schumpeter 1934).


Masculinity is understood in traditional terms of roles for the two sexes. Masculine cultures emphasize mainly on
material success, competition, challenge and performance. Feminine cultures put more emphasize on the well-being
of people, consensus, quality of life, nurturance and environmental protection. Individuals characterized with
masculinity culture tend to be entrepreneurial, while those with feminine culture tend to be less entrepreneurial.


The general finding that there are differences between entrepreneurs and non-entrepreneurs which can be classified
as cultural is particularly relevant for policy makers. Governments, regularly intervene in economic activities with
the expressed aim of stimulating business growth. An understanding of the attitudes and believes that differentiate
entrepreneurs from non-entrepreneurs is important to the extent that growth is influenced by entrepreneurial activity.
Interventions, which do not take account of these differentiating attitudes, including the differences between
countries, are likely to be less successful than those that do. Further, interventions that are targeted specifically to
entrepreneurial outcomes may run contrary to the attitudes and beliefs of non-entrepreneurs. Policy makers might
improve the efficacy of their intervention programs by balancing these differences in the design of economic
development initiatives.


Integrative Perspective
The integrative view attempts to bring a unity in diversity in the understanding of the different perspectives of
entrepreneurship. Some scholars have attempted to look at entrepreneurship from an integrative perspective; Scott
and Twomey (1988) analysed the entrepreneurial aspirations of students using a regression model. Their model
integrated predisposing factors such as personal characteristics, triggering factors such as economic hardship, and
business idea as functions of entrepreneurship. McCormick (1996) revised Scott and Twomey’s regression model by
stating that total supply of entrepreneurial events depends on predisposing, triggering and constraining factors such
as legal constraints. Macke and Markley (2003) identified six readiness entrepreneurship factors that can lead to
successful development programmes in a community. The readiness factors are willingness to invest, leadership


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team, viable business idea, entrepreneurial programmes, openness to entrepreneurship and going beyond the town
borders.


Based on the literature, integrative perspective can be described in the predictor model for entrepreneurial
behaviour, which can be expressed further as a function of entrepreneurship readiness factors, motivating factors and
barriers to entrepreneurship.


Y = f (X1,X2,X3)
Y = αo + α1X1 + α2X2 + α3X3 + Є
Where:             Y        = Entrepreneurial behaviour
                   X1       = Readiness Factors
                   X2       = Motivating Factors
                   X3       = Barriers to entrepreneurship
                   Є        = Error term


Readiness Factors (X1) are elements that predispose and prepare a person to think or to have business ideas.
McCormick (1996) and Scott and Twomey (1988) used the term predisposing factors in their entrepreneurship
models. They defined predisposing factors as personal background, personality traits, and business perceptions that
develop over several years. They include an individual’s role model, education, work experiences, one's self image,
entrepreneurial personalities and discernment of various types of organizations. Macke and Markley (2003), refer to
predisposing factors as readiness factors. These factors are prerequisites for entrepreneurship. Schultz (1980), says
that education plays a big role in entrepreneurship as it enables the entrepreneur to deal with the disequilibria.


According to GEM report of 2007 low level of education in South Africa contribute to lack of mind set and skills of
entrepreneurship. Work experience is a very important ingredient in entrepreneurship. (Scott and Twomey, 1988)
discovered that students with work experience were three times more likely to have a business viable idea than those
who have no business experience. Research studies revealed that most small-scale business owners had gained
business experience before they started their own businesses (McCormick, 1996). Family background is very
important in the formation of entrepreneurial personality, individuals tend to take on their parents’ traits - ‘like
father, like son’ (Kets De Vries 1985). Scott and Twomey (1988) found out that children of entrepreneurs were
more likely to have a business idea than those whose parents were not entrepreneurs. McClelland's (1961) identified
personal traits such as determination, perseverance, high need for achievement, peripheral awareness and need to
control as entrepreneurial characteristics. Empirical research shows that certain entrepreneurial traits in young
people are highly correlated with possession of a business idea (Scott and Twomey 1988). Traits like a high need
for independence, the capacity to take risks, ability to innovate and a tendency to look for opportunities were closely
associated with having a business idea.




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Motivating Factors (X2) are those elements that precipitate entrepreneurial activities. The motivation may come as a
result of frustration or opportunity identification. When entrepreneurs identify opportunities in the environment, they
come up with bright ideas to exploit the opportunity and make profit. When individuals are frustrated in one way or
the other, they tend to come up with business ideas to solve the problem, the motivating factors therefore, can either
push or pull individuals into entrepreneurship (Drucker, 1985 and McCormick 1996). Individuals who are pushed
into entrepreneurship are reluctant entrepreneurs while those pulled into entrepreneurship are willing entrepreneurs.
For example, Bill Gates willingly dropped out of University to start a business while Hong Kong Billionaire Li Ka-
Sing was forced into entrepreneurship when he lost his father at an early age. People in either situation can be
successful however; entrepreneur traits are presupposed (Giddens and Griffiths, 2006)


Barriers (X3) are those factors that discourage economic activities and hence reduce entrepreneurial activities in any
given economy. According to McCormick (1996), lack of financial resources, information, and appropriate
education, some cultural taboos, legal systems that fail to protect innovations, small weak markets, and excessive
regulations, are some of the factors that frustrate the implementation of business ideas into reality. Casson (1982)
points out that finance is a major constraint to entrepreneurial activity. The problem is especially acute during the
early days of an enterprise when the business idea is new and untested. According to Eggleston, Jensen and
Zeckheuser (2002) lack of information and communication technologies (ICTs) is a constraint to economic
development.    Information can empower rural communities to become entrepreneurial by enabling them to
participate in decision-making and to exchange ideas with others in developed and developing countries. They
enable the poor to use their own knowledge and strengths to improve their livelihoods. These technologies also have
an influence on entrepreneurial activities, employment and access to credit (McQuaid, 2002).        Low rural income
can be attributed to lack of information and knowledge that could improve earnings potential (Kenny 2000).


Lack of quality education is responsible to the low levels of creativity and innovation. Minniti (2007) says that
quality education empowers individuals with sound knowledge to perceive opportunities in the environment.
Schultz (1980) acknowledges that education enables an entrepreneur to deal with the disequilibrium. Lack or little
education constrains individuals from dealing with complex life optimally for wealth creation (McCormick, 1996).
Weber (1930) in his academic treatise on the relationship between the “protestant ethic” and capitalism investigated
the cultural issues for European countries and concluded that entrepreneurial behaviour can be constrained by
culture. Protestant ethic and capitalism encourage entrepreneurship while communism hinders entrepreneurship.
According to McCormick (1996) legal systems that do not provide enabling business environment discourage
entrepreneurship. She suggests the enactment of laws that protect intellectual property and innovation as incentive
for business venture. Moreover, too many bureaucracies and too many regulations are likely to be impediments
(Djankov et al., 2005). McCormick (1996) and Macke & Markley (2003) note that small weak markets are an
obstacle to entrepreneurial activities because of their limited opportunities. Rapando (2008), suggests that the
government and other regulating bodies should protect local entrepreneurial farmers when faced with serious




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challenges that could ruin their enterprises. He goes on to say that entrepreneurship ought to play an important role
to achieve MDGs and also realize Kenya Vision 2030.


Summary
Literature review is summarized in the following Multi-Dimensional entrepreneurship model:

                                    Multi-Dimensional Entrepreneurship Model
Categories of the                  Salient elements of the determinant factors Indicators of wealth creation
determinant factors
Psychological                      Attitude, perception, values and need for
                                   achievement, internal locus of control
Sociological                       Networks, clusters, linkages, social dynamics,
                                   friends and relatives
Personality traits                 Intelligence, creativity, innovative, hard work,   Economic growth
                                   persistence, perseverance, risk taking and
                                   internal locus of control                          Economic development
Cultural                           Education, religion, beliefs & customs,
                                   cultural dimensions, gender, age and               Standard of living
                                   socialization
Economical                         Infrastructure, economic performance, fiscal
                                   & monitory policies
Political                          Political stability, democracy, liberty and
                                   political system                                   Livelihood outcomes
Legal                              Legal framework, rules & regulations and
                                   business policies and procedures
Technological                      Use, access & possession of ICTs, level of
                                   science and technology
Geographical                       Physical environment, demography, ecology,
                                   topology, soil fertility, natural resources and
                                   weather
Chance                             Luck, invisible hand in success, being at the
                                   right place at the right time
Source: Author (2010)

The determinant factors in the Model can be explained as follows:-
Personal Traits: certain personality types innovativeness and risk taking predispose individuals to entrepreneurial
activities. They create an entrepreneurial urge in an individual.
Psychological factors: psychological factors like attitude, perception and value system that play a very important
role in mindset of an entrepreneur.
Sociological factors: social variables like social networks, clusters, relatives and friends, are important in promoting
entrepreneurial activities.




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Economical factors: vibrant economic activities like improvement of the infrastructure, national income, growth
national product provide an enabling environment for the success of entrepreneurs. In such an economy, there are
many opportunities to exploit.
Cultural factors: progressive cultural practices like the ‘protestant ethic’ and capitalism and individualism facilitate
entrepreneurial activities.
Technological factors: technological factors are those skills, knowledge and capabilities that enable individual to
earnest science to the benefit of man. For example, the use of ICTs promotes economic development and wealth
creation. Technologies have a direct impact on entrepreneurial activities.
Political factors: pragmatic political organizations and dispensations that play a very important role in providing a
conducive environment for entrepreneurial activities to take place.
Chance factor: although entrepreneurs down play the luck factor, there are certain elements in the success of
entrepreneurs that are beyond human explanation. These elements are referred to as simply the invisible hand in the
success of entrepreneurs.
Geographical factors: geographical factors are physical environment variables that are provided by Mother Nature
such as fertile agricultural land, lakes, rivers, and good weather. These factors play a very crucial role in the
entrepreneurial activities.


The determinant factors positively provided will create an enabling environment for innovation and business
competitiveness. This will consequently result in economic growth and development, improved standard of living,
and better livelihood outcomes.


Discussions
McGrath, Macmillan & Scheinberg, and Hofstede’s models are appropriate to the Kenyan society as it is
demonstrated by the gap between the rich and poor. The Kenyan entrepreneurs are expected to value things like and
competitive businesses, innovation and creativity, successful businesses and education as a means of propelling
them into higher social classes. The differences in the social status are exploited by entrepreneurs who tend to
exploit their employees by underpaying them, this exploitation pushes employees into entrepreneurship and this
leads to a cycle of struggle between entrepreneurs and their employees. Although Kenya is classified as a feminist
society because of the tendency to glorify the “motto Harambee”, elements of masculinity like aggression and desire
for independence are still eminent in the society. Successful entrepreneurs are revered and admired by many
Kenyans, and therefore, used as role models.

The Kenyan society tends to be more collectivistic in nature as evidenced by the social dynamics of extended
families, tribalism, nepotism and clanism. Individualism is looked down upon as a vice by many Kenyans as
opposed to the virtues of collectivism like generosity. This explains why wealth creation is limited in Kenya
because; Kenyan entrepreneurs tend to shoulder the burden of society in general. From observation there is a




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cultural trend for Kenyans to be short-term in their planning. However, empirical research needs to be done to
ascertain the Confucian Dynamism of Kenyans.

Babu’s entrepreneurship Consultant model is applicable to many retiring professionals in Kenya. Although this type
of entrepreneurship requires long-term planning, it is sometimes compromised by the Kenyan collectivistic culture.
The moonlight entrepreneurship model explains the trend where many employees are pushed to run small businesses
on the side to generate extra income. Although this is a common phenomenon, it is a dark side entrepreneurship as it
creates a crush of interest between employers and employees. With emerging technologies young employees tend to
be more innovative than the management team of some organizations. This creates a mismatch between the young
employees and the management. The mismatch can push young potential entrepreneurs employed in the
organizations into starting their own businesses. However, further research is needed to investigate this phenomenon
since business ventures require seed capital which young people might not have.

The mobile phone industry has made franchising a common phenomenon in Kenya because of the easy entry, for
example, Safaricom Company has many franchisees in their M-Pesa outlets, which are geographically diverse.
Otherwise franchising used to be a preserve of the rich. Entrepreneurial characteristics such as risk taking, internal
locus of control, creativity, goal directed, and innovation, as described by the classical theories are plausible.
However, it is difficult to validate these traits in the Kenyan context because they internal elements which are out of
touch. From literature review of different countries, it is clearly seen that the countries that have taken initiatives in
providing enabling environment have intensified entrepreneurial behaviour while those with for example political
instability, poor economic situations, and stringent legal framework have less entrepreneurial activities. For the East
African Region, Operationalization of the fibre optic cable system is expected to enhance entrepreneurial behaviour.
This will take care of the limited usage of ICT which is a barrier to entrepreneurship in Eastern Africa. The various
entrepreneurship theories and regression models of McCormick, Scott and Twomey, Macke and Markely can not
explain fully the determinants of entrepreneurial behaviour in Kenya therefore; this study suggests a hybrid model
referred to as a multi-dimensional entrepreneurship model as most appropriate to predict entrepreneurial behaviour
in Kenya that can lead to desirable indicators of wealth creations.



Conclusion and Recommendations
Assessing the theories, concepts, experiences from the various countries and models of the determinants of
entrepreneurial behaviour. It can be deduced that the determinants of entrepreneurial behaviour are complex and
varied and that they can be categorized into ten factors: Psychological factors, Sociological factors, Personality
Traits, Cultural factors, Economic factors, Political factors, Legal factors, Technological factors, Geographical
factors, Luck factors


These determinant factors influence the level of entrepreneurship in a person or a community or a country. The
integration and the inter-dependence of two or more determinant factors in a person give rise to a complex



                                                           12
phenomenon of entrepreneurship. Nevertheless, no efforts should be spared to initiate programmes and policies that
can promote entrepreneurial behaviour in a society.


The general finding that there are ten categories of the determinants of entrepreneurial behaviour, is very important
for policy makers, as an attempt to understand the ten determinant categories will enable the policy makers to come
up with viable interventions to stimulate entrepreneurial behaviour in our economies and thus bring economic
growth and development and consequently better livelihood outcomes of the people..


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