Determinants and Dynamics of Business Aspirations : Evidence from Small-Scale Entrepreneurs in an Emerging Market
Small-scale entrepreneurs are ubiquitous in emerging market economies, yet very few graduate to become larger businesses. This paper asks whether such entrepreneurs aspire to grow and, if so, on which dimensions of the business? What factors influe...
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| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/641061523463737564/Determinants-and-dynamics-of-business-aspirations-evidence-from-small-scale-entrepreneurs-in-an-emerging-market http://hdl.handle.net/10986/29670 |
| Summary: | Small-scale entrepreneurs are ubiquitous
in emerging market economies, yet very few graduate to
become larger businesses. This paper asks whether such
entrepreneurs aspire to grow and, if so, on which dimensions
of the business? What factors influence these aspirations,
how realistic are they, and do entrepreneurs dynamically
update them based on realized outcomes? A unique panel data
set of small-scale retailers in Indonesia is used to show
that the average business has strong short- and long-term
aspirations for growth in shop size, number of employees,
number of customers, and sales. Yet, more than 50 percent of
the businesses report no aspirations for growth in the next
12 months, and 16 percent fail to imagine an ideal business
over the long term. Entrepreneurs with low profits, business
skills, and agency beliefs, as well as those who are older,
female, and less educated have significantly lower
aspirations. Analysis from a year later shows that most
entrepreneurs fail to set realistic aspirations at baseline,
but significantly adjust their aspirations to realistic
levels with realized outcomes. The analysis also shows that
baseline aspirations are a strong predictor of measures of
business expansion and innovation, as well as performance
outcomes a year later. |
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