Determinants and Dynamics of Business Aspirations: Evidence from Small-scale Entrepreneurs in an Emerging Market

Patricio Dalton, Julius Rüschenpöhler, Bilal Zia

Research output: Working paperDiscussion paperOther research output

74 Downloads (Pure)

Abstract

Small-scale entrepreneurs are ubiquitous in emerging market economies, 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? What factors influence these aspirations, how realistic are they, and do entrepreneurs dynamically update them based on realized outcomes? Using a
unique panel data set of small-scale retailers in Indonesia, we 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 half 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 baseline
aspirations are a strong predictor of measures of business expansion and innovation, as well as performance outcomes a year later.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages40
Volume2018-009
Publication statusPublished - 3 Apr 2018

Publication series

NameCentER Discussion Paper
Volume2018-009

Fingerprint

Aspiration
Entrepreneurs
Emerging markets
Influence factors
Emerging market economies
Employees
Innovation
Retailers
Profit
Predictors
Indonesia
Panel data

Keywords

  • aspirations
  • micro-enterprises
  • innovation
  • small business growth
  • firm performance
  • adaptive learning

Cite this

Dalton, P., Rüschenpöhler, J., & Zia, B. (2018). Determinants and Dynamics of Business Aspirations: Evidence from Small-scale Entrepreneurs in an Emerging Market. (CentER Discussion Paper; Vol. 2018-009). Tilburg: CentER, Center for Economic Research.
Dalton, Patricio ; Rüschenpöhler, Julius ; Zia, Bilal. / Determinants and Dynamics of Business Aspirations : Evidence from Small-scale Entrepreneurs in an Emerging Market. Tilburg : CentER, Center for Economic Research, 2018. (CentER Discussion Paper).
@techreport{5208b11ccf8145bc9dd7e7f81d2ea9b8,
title = "Determinants and Dynamics of Business Aspirations: Evidence from Small-scale Entrepreneurs in an Emerging Market",
abstract = "Small-scale entrepreneurs are ubiquitous in emerging market economies, 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? What factors influence these aspirations, how realistic are they, and do entrepreneurs dynamically update them based on realized outcomes? Using aunique panel data set of small-scale retailers in Indonesia, we 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 half 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 baselineaspirations are a strong predictor of measures of business expansion and innovation, as well as performance outcomes a year later.",
keywords = "aspirations, micro-enterprises, innovation, small business growth, firm performance, adaptive learning",
author = "Patricio Dalton and Julius R{\"u}schenp{\"o}hler and Bilal Zia",
year = "2018",
month = "4",
day = "3",
language = "English",
volume = "2018-009",
series = "CentER Discussion Paper",
publisher = "CentER, Center for Economic Research",
type = "WorkingPaper",
institution = "CentER, Center for Economic Research",

}

Dalton, P, Rüschenpöhler, J & Zia, B 2018 'Determinants and Dynamics of Business Aspirations: Evidence from Small-scale Entrepreneurs in an Emerging Market' CentER Discussion Paper, vol. 2018-009, CentER, Center for Economic Research, Tilburg.

Determinants and Dynamics of Business Aspirations : Evidence from Small-scale Entrepreneurs in an Emerging Market. / Dalton, Patricio; Rüschenpöhler, Julius; Zia, Bilal.

Tilburg : CentER, Center for Economic Research, 2018. (CentER Discussion Paper; Vol. 2018-009).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Determinants and Dynamics of Business Aspirations

T2 - Evidence from Small-scale Entrepreneurs in an Emerging Market

AU - Dalton, Patricio

AU - Rüschenpöhler, Julius

AU - Zia, Bilal

PY - 2018/4/3

Y1 - 2018/4/3

N2 - Small-scale entrepreneurs are ubiquitous in emerging market economies, 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? What factors influence these aspirations, how realistic are they, and do entrepreneurs dynamically update them based on realized outcomes? Using aunique panel data set of small-scale retailers in Indonesia, we 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 half 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 baselineaspirations are a strong predictor of measures of business expansion and innovation, as well as performance outcomes a year later.

AB - Small-scale entrepreneurs are ubiquitous in emerging market economies, 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? What factors influence these aspirations, how realistic are they, and do entrepreneurs dynamically update them based on realized outcomes? Using aunique panel data set of small-scale retailers in Indonesia, we 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 half 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 baselineaspirations are a strong predictor of measures of business expansion and innovation, as well as performance outcomes a year later.

KW - aspirations

KW - micro-enterprises

KW - innovation

KW - small business growth

KW - firm performance

KW - adaptive learning

M3 - Discussion paper

VL - 2018-009

T3 - CentER Discussion Paper

BT - Determinants and Dynamics of Business Aspirations

PB - CentER, Center for Economic Research

CY - Tilburg

ER -

Dalton P, Rüschenpöhler J, Zia B. Determinants and Dynamics of Business Aspirations: Evidence from Small-scale Entrepreneurs in an Emerging Market. Tilburg: CentER, Center for Economic Research. 2018 Apr 3. (CentER Discussion Paper).