The Importance Of Successful Entrepreneurship

1155 Words 5 Pages
There are many definitions of small firms, but the most relevant ones include the `smallness` factors (no market power, high uncertainty, autonomy of running your own business, a small share of the marketplace). According to Hakim (1989), the smaller the business is, the less likely it is to have high growth ambitions [Small business and entrepreneurship, Storey and Greene]. So, we will focus on what matter most for the owner: the survival. Therefore, I will discuss about lifestyle firms with a productive entrepreneurship mind since its beneficial for the owner and the society [Baumol]. Welter (2011) has identified various types of context concerning small businesses: business (industry and markets), social (networks, household and family support), …show more content…
Most of studies prove that there is a link between entrepreneurship and institutions [Henrekson, 2007; Harbi and Anderson, 2010]. The institutional context (legal and political changes…) can be stimulating/restrictive for opportunities and deeply affect the business. The World Bank (2005) has highlighted that policy uncertainty, macro-economic instability, tax rate, cost and access to finance, but also corruption are the most usual constraints face by businesses thanks to a survey of 26,000 businesses in 53 countries. Therefore, the “rules of the game” (e.g. taxation, easiness to set up a business, legal formalities, entry barrier, easiness to have a loan, interest rates) have a significant impact on the way the business operates [Baumol]. For instance, the massive informal entrepreneurship in North Africa (upwards of 50%) is a way to cope with an unfavourable context. Moreover, Baumol argued the necessity of shaping the context to increase productive entrepreneurship. In addition, financing small firms is a major challenge in Africa, for instance, the government borrowing leads to increases in interest rates for the population (up to 20-45% in west and east Africa, The economist). The analysis of small firms in Africa shows that the institutional context is essential, indeed, the context is well known to be unfavourable and that explain the slower development of small firms (compared to

Related Documents