Entrepreneurial Motivations in Start-Up and Survival of Micro- and Small Enterprises in the Rural Non-Farm Economy

This study investigates the idea that it is possible to construct a richer array of motivations to understand the start up and survival of micro- and small enterprises in the rural non-farm sector. Data were collected from a village-level survey of micro- and small enterprises in an agriculturally depressed area using a cross-sectional survey of new, failed, and potential enterprises. Factor analysis was used to reduce the large number of variables. Five categories of entrepreneurs are identified, with each relating to various aspects of an enterprise (startup, expansion, constraints, and source of funds) in a different manner, thus supporting the underlying hypothesis posed by the study. Conclusions indicate that, for micro-enterprises, credit restrictions are the main constraint in the timely availability of raw materials and money lenders as the primary source of funds for business expansion. Other findings include wanting to better oneself financially in 52 of the 60 responses, that market research indicated good potential for growth in 40 of 60 responses, and a need to be independent in 34 of 60 responses. The overlap in responses indicates not just one but several entrepreneurial motivational factors. (JSD)