Aspirations of Small-scale Entrepreneurs: Evidence from Urban Retailers in Indonesia

Patricio Dalton, Julius Rüschenpöhler, Bilal Zia

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Abstract

Small-scale entrepreneurs are ubiquitous in developing countries, yet very few graduate to become larger businesses. We ask whether such entrepreneurs even aspire to grow, and if so on which dimensions of the business? Among a representative sample of retail shop owners in Jakarta, we find 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, there is pronounced
heterogeneity with more than half the businesses reporting no aspirations for growth in the next 12 months, and 16 percent failing to imagine an ideal business over the long-term. We find that entrepreneurs with low profits, business skills, and agency beliefs, as well as those who are older, female, and less educated have significantly lower aspirations. We also show that aspirations
predict future-oriented behaviors such as savings, credit use, business expansion, and innovation, even after controlling for business practices. These results have important implications for the design and targeting of business growth programs and policies.
Original languageEnglish
Place of PublicationTilburg
PublisherTilburg University
Number of pages32
Publication statusPublished - Feb 2018

Publication series

NameDFID Working Paper

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Keywords

  • aspirations
  • micro-enterprises
  • innovation
  • small business growth
  • firm performance
  • technology adoption
  • self-efficacy
  • locus of control

Cite this

Dalton, P., Rüschenpöhler, J., & Zia, B. (2018). Aspirations of Small-scale Entrepreneurs: Evidence from Urban Retailers in Indonesia. (DFID Working Paper). Tilburg: Tilburg University.