What Determines Entrepreneurial Success — A Psychometric Study of Rural Entrepreneurs in India

This study investigates the determinants of entrepreneurial success by studying the characteristics of rural kiosk operators, to identify and provide a model for the selection strategy of rural entrepreneurs.

Background
Considerable effort has gone into understanding psychological and sociological determinants to entrepreneurial success, with some traits such as the need for achievement, locus of control, orientation toward intuitive rather than sensate thinking, and risk-taking propensity of entrepreneurs having been suggested. This raises the question of whether these traits can be generalized across countries and cultures. Different models of rural entrepreneurship are being attempted by various government and private agencies to tap the potential of human sources as an engine of growth. However, little is known about the characteristics of rural entrepreneurs. The objective of this study is to identify and present a model for selection of rural entrepreneurs for the different rural entrepreneurship-based businesses. In this study, researchers investigated the determinants of entrepreneurial success by studying the characteristics of rural kiosk operators in India, specifically kiosks run by an organization Drishtee.
Approach
Data was collected on various psychological factors from existing kiosk operators in two states: Assam and Uttar Pradesh. The research team selected 100 kiosk operators as sample, 45 from Assam and 55 from Uttar Pradesh. Due to the vast differences between the two states in regard to their education, socio-economic status and culture, the two samples were not merged. The measured factors were then matched with performance measured by log sales of the kiosk. The researchers identified certain psychological characteristics that are indicative of entrepreneurs, using these to construct the variables. The variables selected were – psychological traits, time preference, risk aversion, intelligence quotient and Background. Following this, a questionnaire was formulated and implemented to test these variables.
Key Findings
The study suggests that a significant degree of performance variation can be explained by psychological characteristics, in particular, self-efficacy, achievement motivation and average psychological aptitude for entrepreneurs in Assam. However, performance variation among entrepreneurs in Uttar Pradesh is explained by age and prior experience in borrowing in addition to the psychological characteristic of achievement motivation. Further, the study found that performance is significantly related to the questions relating to self-efficacy and locus of control for both states. Finally, findings were employed to build a model for the selection strategy of rural entrepreneurs.

Implications

Although the findings of the paper focus on the Drishtee case, the analysis and methodology developed could have a much broader interest for organizations involved in rural entrepreneurship. As for further research, there is considerable variation in entrepreneurial traits with respect to culture, geography and also macro economic status of the country. For organisations involved in selection activities, it would be important to know whether they prefer entrepreneurial qualities over managerial skills or a balance of both, and the role of training for grooming of skills required for sustaining over business cycles. 

Thematic area

MSME and Entrepreneurship

Project Leads

Viral Acharya, Abhilasha Rajan, Antoinette Schoar

Location

Assam, Uttar Pradesh

Partners

Drishtee

Status

Completed