Determinants and propensity of entrepeneurship in developing countries

In this study we conduct a survey among the poor in the rural state of Bihar in India, to answer the question: Can we find the entrepreneurial traits, more commonly found in entrepreneurs in developed countries, among prospected entrepreneurs in developing countries? The survey includes the entrepreneurial traits locus of control, perception of innovativeness, tolerance of risk, tolerance of ambiguity, need for success and a family history of entrepreneurship. In addition of the entrepreneurial traits, also the traits of the Big Five personality scale were included as control variables: extraversion, conscientiousness, imagination, agreeableness and emotional stability. The survey has sixty-one respondents, of which forty-five were selected to become an entrepreneur. The remaining sixteen were used as a control group. The results of the survey showed that only need for success and a family history of entrepreneurs have a significant result in the logit regression of all entrepreneurial traits. The effect of need for success is positive on the probability of becoming an entrepreneur and this is in line with earlier research, yet the effect of a family history is negative on the probability of becoming an entrepreneur and this contradicts earlier research. Also we see that both age and household size have a negative relation with the probability of becoming an entrepreneur. Of the Big Five personality traits in this research and only agreeableness has a significant effect in the logit regression. We conclude this research by recommending further research on the entrepreneurial traits model among rural entrepreneurs, on the entrepreneurial traits model among the poor and on the entrepreneurial traits model among the rural poor in a developing country. This will increase our understanding of entrepreneurship in these settings and the current relevance of the entrepreneurial traits model. Also policy implications for field workers and policy makers are discussed.