Important factors which predict entrepreneur’s perception in business risk
-
DOIhttp://dx.doi.org/10.21511/ppm.17(2).2019.32
-
Article InfoVolume 17 2019, Issue #2, pp. 415-429
- Cited by
- 1859 Views
-
193 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This paper seeks to examine the role of factors originated from outside (economic, political, competitive environment and relationships) and within (entrepreneur’s attitude) the organization on the business risk perceived by entrepreneurs. To test the hypothetical relationships, an ordinal regression with two link functions was applied on an original dataset of 641 small and medium-sized enterprises (SMEs) operating in Slovakia and Czech Republic. The analysis revealed that not only economic factors can predict business risk, but along with them are political and competitive environments, relationship with supply chain actors and entrepreneur’s attitude. Consistent with prior research, it is found that an unstable economic environment leads the business to expose themselves to business risk. Also, a friendly regulation framework and quality education contribute significantly to reducing the level of risk. The research triggers the interest of policymakers who design policies aimed at improving the business environment by reducing the level of risk that firms face in doing business. Also, this paper is useful for managerial perspective, since entrepreneur attitude was found to be a predictor of business risk.
- Keywords
-
JEL Classification (Paper profile tab)L26, O38, E02
-
References55
-
Tables7
-
Figures0
-
- Table 1. Descriptive statistics of the dependent variable and Mann-Whitney test
- Table 2. Mean, standard deviation, Pearson correlation and Cronbach’s alpha
- Table 3. Link functions
- Table 4. Mean and standard deviation by risk levels for each construct
- Table 5. Model fit, goodness-of-fit and test of parallel lines for two types of ordinal regressions
- Table 6. Results of ordinal regression – link function: cauchit
- Table 7. Results of ordinal regression – link function: complementary log-log
-
- Acar, E., & Göç, Y. (2011). Prediction of risk perception by owners’ psychological traits in small building contractors. Construction Management and Economics, 29(8), 841-852.
- Amankwah-Amoah, J., & Wang, X. (2019). Business Failures around the World: Emerging Trends and New Research Agenda. Journal of Business Research, 98, 367-369.
- Ardic, O. P., Mylenko, N., & Saltane, V. (2012). Access to Finance by Small and Medium Enterprises: a Cross-Country Analysis with A New Data Set. Pacific Economic Review, 17(4), 491-513.
- Aristovnik, A., & Obadic, A. (2015). The impact and efficiency of public administration excellence on fostering SMEs in EU countries. Amfiteatru Economic, 17(39), 761-774.
- Autio, E., & Fu, K. (2015). Economic and political institutions and entry into formal and informal entrepreneurship. Asia Pacific Journal of Management, 32(1), 67-94.
- Batsakis, G. K. (2014). Impediments on the way to entrepreneurship. Some new evidence from the EU’s post-socialist world. Journal of Small Business and Enterprise Development, 21(3), 385-402.
- Belas, J., Machacek, J., Bartos, P., Hlawiczka, R., & Hudakova, M. (2014). Business Risks and the Level of Entrepreneurial Optimism among SME in the Czech and Slovak Republic. Journal of Competitiveness, 6(2), 30-41.
- Boden, R. J., & Nucci, A. R. (2000). On the survival prospects of men’s and women’s new business ventures. Journal of Business Venturing, 15(4), 347-362.
- Boudreaux, C. J., Nikolaev, B. N., & Klein, P. (2019). Socio-cognitive traits and entrepreneurship: The moderating role of economic institutions. Journal of Business Venturing, 34(1), 178-196.
- Cacciotti, G., Hayton, J. C., Mitchell, J. R., & Giazitzoglu, A. (2016). A reconceptualization of fear of failure in entrepreneurship. Journal of Business Venturing, 31(3), 302-325.
- Cai, S., & Yang, Z. (2014). On the relationship between business environment and competitive priorities: The role of performance frontiers. International Journal of Production Economics, 151, 131-145.
- Cepel, M., Stasiukynas, A., Kotaskova, A., & Dvorsky, J. (2018). Business environment quality index in the SME segment. Journal of Competitiveness, 10(2), 21-40.
- Çera, G., Breckova, P., Çera, E., & Rozsa, Z. (2019). The effect of business enabling policies, tax treatment, corruption and political connections on business climate. Acta Polytechnica Hungarica (in press).
- Chowdhury, F., Audretsch, D. B., & Belitski, M. (2018). Institutions and Entrepreneurship Quality. Entrepreneurship Theory and Practice, 42(1), 51-81.
- Civelek, M., Ključnikov, A., Dobrovič, J., & Hudáková, M. (2016). A model of measurement of the quality of business environment in SME segment. Journal of International Studies, 9(2), 90-102.
- Dai, W., & Si, S. (2018). Government policies and firms’ entrepreneurial orientation: Strategic choice and institutional perspectives. Journal of Business Research, 93, 23-36.
- Delerue, H., & Perez, M. (2009). Unilateral commitment in alliances: an optional behavior. Journal of Management Development, 28(2), 134-149.
- DeVellis, R. F. (2017). Scale development: theory and applications (4th ed.). SAGE Publications.
- Dormann, C. F., Elith, J., Bacher, S., Buchmann, C., Carl, G., Carré, G., … Lautenbach, S. (2013). Collinearity: a review of methods to deal with it and a simulation study evaluating their performance. Ecography, 36(1), 27-46.
- Douhan, R., & Henrekson, M. (2010). Entrepreneurship and second-best institutions: going beyond Baumol’s typology. Journal of Evolutionary Economics, 20(4), 629-643.
- Eling, M., & Jia, R. (2018). Business failure, efficiency, and volatility: Evidence from the European insurance industry. International Review of Financial Analysis, 59, 58-76.
- European Commission. (2018). 2018 SBA Fact Sheet.
- Falkner, E. M., & Hiebl, M. R. W. (2015). Risk management in SMEs: a systematic review of available evidence. The Journal of Risk Finance, 16(2), 122-144.
- Fang He, V., Sirén, C., Singh, S., Solomon, G., & von Krogh, G. (2018). Keep Calm and Carry On: Emotion Regulation in Entrepreneurs’ Learning from Failure. Entrepreneurship Theory and Practice, 42(4), 605-630.
- Fereidouni, H. G., & Masron, T. A. (2012). Governance Matters and Entrepreneurial Activities. Thunderbird International Business Review, 54(5), 701-712.
- Gabbianelli, L. (2018). A territorial perspective of SME’s default prediction models. Studies in Economics and Finance, 35(4), 542-563.
- Gao, S. S., Sung, M. C., & Zhang, J. (2011). Risk management capability building in SMEs: A social capital perspective. International Small Business Journal, 31(6), 677-700.
- García-Ramos, C., Gonzalez-Alvarez, N., & Nieto, M. (2017). Institutional framework and entrepreneurial failure. Journal of Small Business and Enterprise Development, 24(4), 716-732.
- Gilmore, A., Carson, D., & O’Donnell, A. (2004). Small business owner‐managers and their attitude to risk. Marketing Intelligence & Planning, 22(3), 349-360.
- Grosanu, A., & Bota-Avram, C. (2015). The influence of country-level governance on business environment and entrepreneurship: A global perspective. Amfiteatru Economic, 17(38), 60-75.
- Harrell, F. E. (2015). Regression Modeling Strategies: With Applications to Linear Models, Logistic and Ordinal Regression, and Survival Analysis (2nd ed.). Springer.
- Herbane, B. (2010). Small business research: Time for a crisis-based view. International Small Business Journal: Researching Entrepreneurship, 28(1), 43-64.
- Hudakova, M., Masar, M., Luskova, M., & Patak, M. R. (2018). The Dependence of Perceived Business Risks on the Size of SMEs. Journal of Competitiveness, 10(4), 54-69.
- Iwanicz-Drozdowska, M., Jackowicz, K., & Kozłowski, Ł. (2018). SMEs’ near-death experiences. Do local banks extend a helping hand? Emerging Markets Review, 37, 47-65.
- Jenkins, A., & McKelvie, A. (2016). What is entrepreneurial failure? Implications for future research. International Small Business Journal: Researching Entrepreneurship, 34(2), 176-188.
- Jolley, G. J., Lancaster, M. F., & Gao, J. (2015). Tax Incentives and Business Climate: Executive Perceptions From Incented and Nonincented Firms. Economic Development Quarterly, 29(2), 180-186.
- Kadocsa, G., & Francsovics, A. (2011). Macro and micro economic factors of small enterprise competitiveness. Acta Polytechnica Hungarica, 8(1), 23-40.
- Karabag, S. F. (2019). Factors impacting firm failure and technological development: A study of three emerging-economy firms. Journal of Business Research, 98, 462-474.
- Kelly, P. (Phil), & Ashwin, A. (2013). The business environment. Cengage Learning.
- Kibler, E., Mandl, C., Kautonen, T., & Berger, E. S. C. (2017). Attributes of legitimate venture failure impressions. Journal of Business Venturing, 32(2), 145-161.
- Kim, Y. J., & Vonortas, N. S. (2014). Managing risk in the formative years: Evidence from young enterprises in Europe. Technovation, 34(8), 454-465.
- Kljucnikov, A., Belas, J., Kozubikova, L., & Pasekova, P. (2016). The Entreprenurial Perception of SME Business Environment Quality in the Czech Republic. Journal of Competitiveness, 8(1), 66-78.
- Mallett, O., Wapshott, R., & Vorley, T. (2018). How Do Regulations Affect SMEs? A Review of the Qualitative Evidence and a Research Agenda. International Journal of Management Reviews.
- Martinez, M. G., Zouaghi, F., Marco, T. G., & Robinson, C. (2019). What drives business failure? Exploring the role of internal and external knowledge capabilities during the global financial crisis. Journal of Business Research, 98, 441-449.
- North, D. C. (1990). Institutions, institutional change, and economic performance. Cambridge University Press.
- Norušis, M. J. (2012). IBM SPSS statistics 19 advanced statistical procedures companion. Prentice Hall.
- Peck, F., Jackson, K., & Mulvey, G. (2018). Regulation and growth-oriented small businesses in North-West England. Journal of Small Business and Enterprise Development, 25(2), 294-312.
- Rauch, A., & Rijsdijk, S. A. (2013). The Effects of General and Specific Human Capital on Long-Term Growth and Failure of Newly Founded Businesses. Entrepreneurship Theory and Practice, 37(4), 923-941.
- Sauka, A., & Welter, F. (2014). Determinants of Business Insolvencies During Economic Growth and Recession in Latvia. Journal of Baltic Studies, 45(3), 375-396.
- Schwarzkopf, D. L. (2006). Stakeholder Perspectives and Business Risk Perception. Journal of Business Ethics, 64(4), 327-342.
- Shepherd, D. A., Wennberg, K., Suddaby, R., & Wiklund, J. (2019). What Are We Explaining? A Review and Agenda on Initiating, Engaging, Performing, and Contextualizing Entrepreneurship. Journal of Management, 45(1), 159-196.
- Stenholm, P., Acs, Z. J., & Wuebker, R. (2013). Exploring country-level institutional arrangements on the rate and type of entrepreneurial activity. Journal of Business Venturing, 28(1), 176-193.
- Sukumar, A., Edgar, D., & Grant, K. (2011). An investigation of e-business risks in UK SMEs. World Review of Entrepreneurship, Management and Sustainable Development, 7(4), 380-401.
- Welter, F., & Smallbone, D. (2011). Institutional Perspectives on Entrepreneurial Behavior in Challenging Environments. Journal of Small Business Management, 49(1), 107-125.
- Xheneti, M., & Bartlett, W. (2012). Institutional constraints and SME growth in post‐communist Albania. Journal of Small Business and Enterprise Development, 19(4), 607-626.