DEVELOPING A TAXONOMY FOR IDENTIFYING ENTREPRENEURIAL RISK: AN EMPIRICAL STUDY ON ENTREPRENEURIAL RISK PATTERNS OF BUSINESS ENTERPRISES

Most of the prior research on entrepreneurial risk concentrates on entrepreneur behavioral characteristics, personality traits and characteristics. Very little of the body of research examines the market behavior of the firm and its risk patterns that can cause business failure. The purpose of this research was to develop a taxonomy of entrepreneurial risk behaviors and examine their effect on small business enterprises (SME). The study was the development and administration of the Entrepreneurial Risk Survey (ERS) instrument. ERS was used to empirically examine a sample (N = 201) of SMEs across 11 industries for the proposed taxonomy of 22 risk variables. An exploratory factor analysis methodology was conducted for the study. The principle component analysis was conducted and resulted in an eight-factor solution. A multivariate regression analysis was also used to measure the industry type as a predictor variable. The results of the exploratory factor analysis (EFA) indicated there are eight factors of entrepreneurial risk that affect SMEs.