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Determinants and Dynamics of Business Aspirations : Evidence from Small-scale Entrepreneurs in an Emerging Market

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  • Dalton, Patricio

    (Tilburg University, School of Economics and Management)

  • Rüschenpöhler, Julius

    (Tilburg University, School of Economics and Management)

  • Zia, Bilal

Abstract

Small-scale entrepreneurs are ubiquitous in emerging market economies, yet very few graduate to become larger businesses. This paper asks whether such entrepreneurs aspire to grow and, if so, on which dimensions of the business? What factors influence these aspirations, how realistic are they, and do entrepreneurs dynamically update them based on realized outcomes? A unique panel data set of small-scale retailers in Indonesia is used to show that the average business has strong short- and long-term aspirations for growth in shop size, number of employees, number of customers, and sales. Yet, more than 50 percent of the businesses report no aspirations for growth in the next 12 months, and 16 percent fail to imagine an ideal business over the long term. Entrepreneurs with low profits, business skills, and agency beliefs, as well as those who are older, female, and less educated have significantly lower aspirations. Analysis from a year later shows that most entrepreneurs fail to set realistic aspirations at baseline, but significantly adjust their aspirations to realistic levels with realized outcomes. The analysis also shows that baseline aspirations are a strong predictor of measures of business expansion and innovation, as well as performance outcomes a year later.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Dalton, Patricio & Rüschenpöhler, Julius & Zia, Bilal, 2018. "Determinants and Dynamics of Business Aspirations : Evidence from Small-scale Entrepreneurs in an Emerging Market," Other publications TiSEM 5208b11c-cf81-45bc-9dd7-e, Tilburg University, School of Economics and Management.
  • Handle: RePEc:tiu:tiutis:5208b11c-cf81-45bc-9dd7-e7f81d2ea9b8
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    Cited by:

    1. Molina, Teresa & Usui, Emiko, 2022. "Female Labor Market Opportunities and Gender Gaps in Aspirations," IZA Discussion Papers 15453, Institute of Labor Economics (IZA).
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    3. Molina, Teresa & Usui, Emiko, 2023. "Female labor market conditions and gender gaps in aspirations," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 165-187.

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    More about this item

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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