Entrepreneurship: Pull and Push Factors - Term Paper Example

? Entrepreneurship: Pull and Push Factors College: Introduction The growth of entrepreneurs and entrepreneurship is on therise due to the pull and push factors that motivates or compelled individuals in seeking for new means of sustaining themselves. Different researches in entrepreneurship have been trying to identify the personality traits that is capable of explaining business start up. This paper will look at the relationship between entrepreneurial identities, intention of startup and the environmental factors that result to entrepreneurship. In developing countries particularly, the economic conditions drive many individuals to become entrepreneurs so as to redefine their economic conditions. The research field of entrepreneurship has been considered to be the major target of the most diverse area of study as presented by the enlarged range of theories and approaches and the trend is developing at a faster rate which is grounded on innovation, risk taking and proactiveness. The field of entrepreneurship has continually experienced attention from scholars leading to various theoretical frameworks being developed; however, new theories that are in line with the contemporary issues in the globe need to be developed (Islam, 2012, p.67). The growth of the business is influenced by the pull and push factors of starting a business. Entrepreneurs who start up a business out of the pull factors, such as desire to expand, will see their businesses growing successfully. On the other hand, entrepreneurs who are compelled into business by, say, unemployment, the situation will not experience much growth. It is important to determine the major factors that influence entrepreneurs and make them start businesses since every business calls for different strategies and drive (Deakins and Freel, 2012, p.32). The growth and success of a business establishment will depend on the commitment made by the entrepreneur which usually differs in accordance to the motivating factors. Individuals with expertise, creative ideas, innovation, and demographic characteristics, including age and education of an entrepreneur, will influence establishment and growth of an enterprise. Young, energetic and highly educated entrepreneurs are served with advanced high-tech and knowledge required in running a business. The study endeavored to identify the concepts of enterprise ‘push’ and ‘pull’ that play a significant role in explaining the factors that influence the decisions of individuals to become self-employed and/or start up a business. This will help in understanding the reasons that motivate to become entrepreneurs and establish business enterprises. The findings from case studies indicates that the need for higher social status, profitability nature of the business, self-employment, need to make money, business tradition of the family and knowledge as well as personal experience are considered to be the pull factors (European Commission, 2012, p.1). Whereas, lack of formal education, dissatisfaction in previous occupation, family pressure and unemployment issues are considered to be the major push factors. Research Questions This paper intends to answer a number of questions including: 1. What motivates individuals to be entrepreneurs or enter into self-employment amongst the gender? 2. Is there a positive correlation between pull and factors and entrepreneurship? 3. Is the decision of starting up a business affected by gender, age, education, risk, finance, information availability and complexities of the entrepreneurship process? 4. Are women and the minority group predisposed to a unique pursuit of self-employment? Main Body The forces that propel individuals to set-up businesses despite the personal, financial and social risks that are associated with new venture are diverse. Individuals will decide to engage in businesses out of several motivations, some of which are positive and others negative. The positive factor “pull” and the negative factors ‘push’ surround the entrepreneurial activity. The pull factors include the social development efforts, achievement desire and independent development needs as they emphasize desirable choices in motivating entrepreneurs to start businesses. The pull/ambitious factors differ from one individual to another in respect to their personal characteristics in nourishing the desire to achieve thus leading to economic growth (Islam, 2012, p.71). On the other hand, push factors include dissatisfaction in career, unemployment risk and family pressure compels individuals to undertake business initiatives. Drawing a line between ambitions and compulsions has always been a challenge for entrepreneurs, and this is what the paper will be focusing on. Given that as one entrepreneur considers some factors to be motivating, other sees them as hindrances. The usefulness of the concept of push and pull factors in business and entrepreneurship has propelled many scholars in conducting studies in this field. Studies have found out that individuals who start up businesses out of necessity are often the best. Earlier studies on the pull and push concept of entrepreneurship showed the need of distinguishing between opportunity and necessity theory and practice of entrepreneurship. For instance, unsatisfactory job conditions, underemployment, personal ambition, rising unemployment, self-realization, creativity, unstable job, desire to improve the quality of working conditions, need to raise economic returns, to develop flexibility in ones career and the desire for independence are the factors that pushed a number of entrepreneurs in setting up business enterprises (Deakins and Freel, 2012, p.63). This paper will therefore look on how different individuals are motivated by pull start-up factors and push start-up factors and how these factors are of significance in defining the entrepreneurial decision; thus leading to success or failure. Case studies conducted on the young entrepreneurs point out that the young generation is motivated by the desire to make money, to be their own boss, desire to achieve in life, the need of helping their families, contribute to the community development in social entrepreneurship as well as life situations such as death of spouse. The businesses were established mainly from individuals savings, support from spouses and close relatives. The drive of most women in starting businesses was to avoid overdependence on their spouses for financial support. The study conducted by Kabir (cited in Islam, 2012, p.73) points out that the desire for independence at work was the major internal motivating factor followed by occupational experience. Whereas external motivating factors include assistance from the government and financial institutions, availability of raw materials and technological factors plays insignificant roles in promoting entrepreneurial activities. Kabir did not find educational qualification to be of any significance in enhancing entrepreneurship while pointing out that establishment of any business is majorly attributed to internal motivating factors. The paper analyzes the economic, social and personal factors that made individuals to become entrepreneurs by focusing on secondary data from the conducted case studies on the pull and push entrepreneurship concept in reflecting the factors that influences entrepreneurs to set up businesses. A case study conducted in Bangladesh on the pull and push factors indicated that the moving factors are the ability of earning extra money for family, business tradition of family, need to gain higher social status, self-employment with economic freedom, to maximize on ones expertise and creativity, and profitability of the self-business. The study conducted by International Labor Organization found out that the need to use personal knowledge and experience is the highest pull factor leading to entrepreneurship. In respect to push/compelling factors, the study of Islam found out that dissatisfaction in earlier occupation compelled individuals to be entrepreneurs (Islam, 2012, p.68). In addition, the curse of unemployment, injuries or death of husbands contributed to establishment of businesses. In effect, the country of Bangladesh is experiencing a rise in the number of highly educated entrepreneurs and women entrepreneurs. The trait theory presents the five dimensions of personality including the need for achievement, locus of control, need for autonomy, propensity to risk taking and self efficacy. These five dimensions of personality are considered to be pulling individual in entrepreneurship. Critics of this theory argue that it fails to address the factors that push individuals to start up a business. The other motives for starting up a business are behavioral and sociological factors (Urwin, 2011, p.57). The pull and push factors makes an entrepreneur to be innovative, externally focused, determined and a team leader being able to identify opportunities, leverage resources available, network with key stakeholders as well as make imperative decision. As the factors of starting a business differs between men and women, young and old, educated and non-educated, drawing a substantial line between the reasons that force individuals to engage in risky ventures are profound. The push factors play a greater role in establishment of businesses in developing countries given that as the economic activity of the country decreases, more individuals will be forced out of the employment sector thus compelling to engage in entrepreneurship. In contrast, individuals in developed countries are pulled into the industry to maintain their status, make more money and be independent. In respect to these, the numbers of push-led entrepreneurship are higher as compared to pull-led entrepreneurship. The European Commission calls for more individuals to engage in entrepreneurship as it looks for more means of encouraging the growth of entrepreneurship (European Commission, 2012, p.1). Apart from influencing through culture in education, the administrative policies are being amended to encourage and attract entrepreneurship. By successful changing the attitude, image and facilitating information sharing while helping the minorities to overcome negative stereotypes, the EC has enhanced economic growth in the European market. Discussion The study conducted on the various stages of entrepreneurial process in European countries and the US in 2007 examining the factors that inspires or hinders individuals in starting up a business. In essence, the education of entrepreneurship, tolerance to risk, the perception of lack of financial support, geographical location, occupation of parents determines whether individual will venture into businesses or not. The pull and push factors play significant roles in the lives of entrepreneurs and the state at large. As starting up businesses enables entrepreneurs to fulfill their goal, they usually end up creating more employment opportunities in the society and this helps in combating social issues in the society (Burns, 2011, p.129). In addition, the decline in economic conditions that result to retrenchment, loss of income and reduced living standards makes the concept of pull and push to be vital to entrepreneurship as they will be forced to start their own businesses in order to sustain themselves and their families. Furthermore, the reasons behind the establishment of the firm will defines its survival or closure in the market and this calls for entrepreneurs to be alert on the traditional causes of business failures such as working capital shortage, lack of demand, bad business condition and personal reasons. The gender roles of women including domestic and productive roles restrict the expansion of women entrepreneurs thus limiting their growth and survival. The theory of career anchor plays a big role in starting up of a business. This theory points out that entrepreneurs will engage in business as they discover their talents and abilities, attain their motives and needs and realize the value that they were seeking while developing clearer self-concepts (Urwin, 2011, p.72). As the push factors are more preferable in starting own business, the pull concept requires a great deal of money and time and that good result is not guaranteed. For individuals who intend to be self employed and with a great deal of money, pull concept will be the most preferable. The opportunity and necessity theory of pull and push concept labels individuals as necessity entrepreneurs when they were say dismissed from their jobs or as opportunistic if they left their jobs voluntarily. Under necessity entrepreneurs, individuals do not have any other alternative of earning a living whereas opportunity entrepreneurs start new venture in order to realize their business idea. Criticism of this study argue that entrepreneurs are driven by more than one driver in start in starting a business pointing out that combining of opportunity and necessity drivers of entrepreneurs are important in entrepreneurship (Islam, 2012, p.70). The number of women engaging in entrepreneurship has been considered to be higher than that of women. In terms of age the duration that can necessitate an individual to engage in business is longer and capable of pushing to enter into self employment compared to the shorter span available for individuals who may voluntarily decide to start up a business. Men, on the other hand, are pushed into entrepreneurial businesses by pressure from family members, dissatisfaction from previous employment low education and lack of employment opportunities. Thus, opportunity entrepreneur need to take decision more quickly to start up a business. This implies that the policies to be developed in promoting entrepreneurship should ensure that pull-type entrepreneurs are given different stimulation to the push-type entrepreneurs. In the investigation where information is collected from owners or entrepreneurs, information gathered may be biased due to the social status where individuals fails to admit that they started a business out of opportunity rather necessity as they had no other option of earning a living (Burns, 2011, p.98). Traditionally, the theory of entrepreneurship was created by men for men and was to be applied by men. Women response to self employment is a group situation whereas men response is attributed to individual situation. Women are compelled to start business say following the death of husband, family hardship. Additionally, most women entrepreneurs are pulled in the business industry by the desire to be independent and contributor to the family. The traditional attitude of the place of women in the society, non-supportive institutions, lack of cooperation from family members and the risk adverse tendency of women harbors them from being entrepreneurs. In conclusion, the different studies have indicated that the concept of pull and push in enterprises plays significant role defining the factors that compels individuals to be entrepreneurs and start up a business. The pull and push factors rotates around personal traits of an entrepreneur and the socio-economic conditions. Furthermore, these factors are affected by gender, age, education and availability of finances. The need to make more money as well as take care of the family is pulling factors that influence entrepreneurship in men. Hence, this complies with the seven keys sources of idea developed by Drucker which are unexpected happenings, need of improving processes, demographics, incongruous happenings, perception, mood and meaning change, changes in market structure and new knowledge (Deakins and Freel, 2012, p.83). Finally, the individual’s intentions, self-conceptions and the need to find alternative career options pose on the start-up decision and process of businesses. The positive value in entrepreneurship contributes to the development of business. Efforts should be embraced in promoting self employment to encourage business start up. References Burns, P. (2011) Entrepreneurship and Small Business. London: Palgrave. Deakins, D. and Freel, M. (2012) Entrepreneurship and Small Firms. New York: McGraw-Hill Education. European Commission. (2012) Enterprise and Industry [online]. Available from: [accessed 21st December 2012]. Islam, S. (2012) “Pull and Push Factors Towards Small Entrepreneurship Development in Bangladesh.” Journal of Research in International Business Management, 2 (3), pp. 65-72. Urwin, P. (2011) Self-Employment, Small Firms and Enterprise. London: Institute of Economic Affairs. Read More