Introduction
This essay will try to elaborate on the relevant push and pull factors that have in the past and even at present been formulating the trend by which individuals move into or away from privately owned businesses. These factors apart from affecting the business environment in which the enterprises operate, also lead to a lot of the required inventions in the business arena. This is one important subject to all the players in and out of the field of business in the developing and the developed world alike. Individuals in every part of the world get drawn into being entrepreneurs because of a force that either tends to drive them out or into or a situation that calls for a commercial retaliation…these are the factors that are referred to as the “Push agents”-For those that drive people out, and the “pull Agents”-For those that attract individuals into starting their own businesses in any given field (Schjoedt Leon and Shaver Kelly, 2007, p 42).
These push-pull factors provide a good framework that can be used to examine the reasons that lead individuals to strive to be independent/self-employed. Against the backdrop of what has been made available in various study materials, that is the negative and positive factors in different countries, this essay paper will tackle the frequently asked questions of why a person may decide to settle into running a private business, that is opting for self-employment. One reason may be however certain, that is to counter the economic bad times…one may decide that the only way to make a extra shilling is to move out and establish his own business. Theories have been put forward to explain this fact by arguing from the basic knowledge that every business has the potential to thrive, grow and expand if well managed despite the significant obstacles it might encounter in its life: The two major hurdles among others include the following: – High cost of production and competition from other potential players in the same field. The factors, therefore, are those that are capable of either pushing in or out the individuals into deciding the future business path…the chosen theories tend to explain why the factors, if chosen and handled well will act as a good vehicle to propel the low-income people to achieve economic self-sufficiency (Kjeldsen C., 1991, p60-64). To effectively collect a fact-finding data to help compile this conclusive report, case studies were chosen to illustrate the practical scenarios.
The Push and Pull Factors
On the individual’s decision to start his/her own business/become self-employed. Some of the push factors involved in these contexts include:
- Limited barriers need to be overcome in order for one to enter into establishing a business in a particular region. For example easy government license acquisition will encourage many people to venture into business.
- Being in possession of the relevant skill required in starting and running a particular business will also definitely drive someone into initiating his own business.
By a prospective future entrepreneur getting good training in a field that will equip him/her with enough knowledge to develop a good business idea and successfully run it, he definitely will go out of his way and seek funding to jump-start and establish his private business as well as go to some further training. For such people who are interested in taking those relevant courses, the state, through the education department should encourage vocational training and review the school syllabuses to cover busy business-oriented courses.
This essay further gives some examples of the pull factors that influence peoples decision to seek independence as below:
- Flexible labor regulations within the area where one wants to start his business. It is an open secret that the rigidity of these regulations has been a great impediment to the new businesses or the ones that need to be expanded especially in the developing countries. The procedural complexities have in the past been use as a source of harassment by the law enforces to the businessmen. If only such procedures can be simplified then we would see more people being pulled to initiate expansions and establishments of new businesses.
- Another great pull agent is the idea by the commercial arm of the government to take up some measures that are relevant especially in the developing countries to boost entrepreneurial strategies. Such would include: – A Productive Assistance Package, Legal Institutional Package and finally the Welfare Package.
- Having a good business environment where all the players in the field are coordinated and operate as a unit is required for a new player to comfortably join the field of the minor and the mighty. The government should in this context articulate a comprehensive policy framework to cover all commercially related aspects, top in the list would be administrative, legal, economic and non-economic aspects. This will ensure that a consensus is reached among the chief business stakeholders like the Government, Private sectors, Business organizations, NGOs, Academic institutions and the Trade Unions. To help facilitate conflict resolution in case of a business dispute.
To sum up the pull factors, we do have the following other incidences as given in (Lafuente & Salas, 1989, 85-110).
The tax regime: The available tax regulations in a country should not be oppressive that is it should not force the small players to sink and move out of operation into extinction. That means that they need to be supportive, less costly and of pro-business nature rather than intimidating. The government should consider tax exemptions and incentives to such organizations/individuals.
Trade facilitation:Cross border policies should be such that persons planning to enter into business will be able to capture new markets both within and outside their respective countries. This can be achieved through elimination of interstate barriers and reduction of the costs for exportation and importation of goods.
Supportive infrastructure: Infrastructure, just as energy is a very important pull agent into starting a business. With the conditions of the infrastructure in a pathetic state, no single entrepreneur, even those with large sums of start-up capital will initiate his/her own business. Infrastructure is the greatest exogenous constrain in any business activity. Ways are therefore supposed to be formulated or devised in order to make players in the field easily access critical services like electricity and water. The best way forward would be to privatize such services to achieve quality and up-to-standard service.
If the above-mentioned stakeholders, for instance the donor communities, the government and the private sectors join hands to tackle the issues emerging in the most crucial areas affecting the business environment, it will enable people to positively take up business opportunities and transform them into practical acts.
Discussion
The entrepreneurial push-pull factors have been reported to be the main drivers that make individuals start their own businesses the world over. On top of other factors, like the awareness, starting a new enterprise and any other innovative development of an existing business is a major prerequisite for creating dynamics in the business structure. In order to maintain the international competitiveness of any nation in terms of economic development, employment rate and standard of living, new enterprises have to be developed and their management must be well (Gartner, 1985, 167). The above can not just be achieved by establishing many businesses, but the type does matter a lot. The international designated standards have to be kept. That is why these push-pull factors in the business have to be analyzed well to create a deep understanding of the way the people establish and develop new businesses. At this discussion part, this essay will further look at five different areas as derived in (Schultz Grafisk, 2000) that determine whether a factor is a pull or a push agent and its overall effect on a particular individuals’ need to start his/her own business.
The Behavioral Approach: The personal character of an entrepreneur like his attitude will determine if the individual has enough courage and is bold enough to move from being employee of someone to start his own business from scratch. Most people would prefer being heir of an already existing enterprise. The term entrepreneurship is referred to as “the creation of a new organization” (Gartner, 1985). Literally speaking, every person is assumed to have some degree of entrepreneurial ability, but it is the favorable push-pull factors that will encourage them to nature their skills into coming up with their own businesses. The creation of a new business therefore will take place as a consequence of what we call “the right match at the right time” between the individual and his/her environment.
Personal Characteristics: This area covers the sociological, psychological, employment and demographic related characteristics of the person and their relationship with their surroundings, that is; family and professional network. Under this, we look at the person’s motive and conceptions encouraging restrictive factors which will act together to influence the person’s desire and ability to make a decision to start a business.
The Environment: The way the business environment is at the time before one wants to start his own business, as he starts it and the anticipated environmental situation as the enterprise progresses has a lot to do with the decision to move into self-employment in one private business. The political, business policy and socio-economical framework conditions do shape the business environment. If the cultural interpretations and the commercial climate are favorable, then more and more people will be encouraged to settle for private practice by seeking self-employment in businesses.
Type of Business: Basically, various businesses require varying professional and personal demands due to the wide range of the degree of novelty of the business concept. Such are the differences that lead to the realization that not all new enterprises are homogeneous in mass, but different skills and resources are required to run them.
The Business Process: Any business action taken in most cases can prove to be very complicated owing to the number of uncertainties and radical changes in the person’s future life pattern. At some point one is pushed into a business and on the other hand the decisive factor may be one’s life dream to start his own business and being ones own master. The entrepreneurial push-pull factors are the ones that have been assumed to influence this complex decision making which of course goes on before, during and after the business has been created.
Conclusion
To make a conclusive analysis of the decision-making process, the following questions will have to be asked. How does one go through the process of making a conclusive entrepreneurial decision? How does an entrepreneur recognize a potential prospect? How does one organize the necessary resources, and does he overcome his barriers? What are the available support schemes for a new player in the business field? And finally, how are family and professional networks coordinated or balanced? (Kjeldsen C., 1991, 33).
As a recommendation to what needs to be done to encourage more and more individuals to be good managers of their own businesses, a kind of a study program should be undertaken in the tertiary institutions so the students can gain hands-on experience as they study more so in the areas of accounting, technology, management and computer studies. On top of this the relevant governments should make it possible for individuals who are seeking funds to start their business a little bit simpler…though most people prefer to use their own savings for this purpose.
This essay therefore has illustrated that the pull factors are those “positive” aspects that drive a person to start his own business as a wish or a dream that they have all along had. They are motivational factors behind each entrepreneurial event…these factors may also include loss of a job, tired of a job, fished training, found a business opportunity and or practically implementing a long time dream. In contrast to these factors are the push agents which according to research are the “negative” factors that lead to one starting his own business because he has been forced into it by certain situations, they therefore attempt to try their fortune in self-employment. They include undesirable changes in the work condition or family environment (Dafna Kariv et al, 2006, 1-38).
References
Kjeldsen C. (1999): “A survey of various theoretical and methodical approaches to investigations into entrepreneur and entrepreneurship”. 121-153.
Lafuente & Salas (1989): “Description of various types of entrepreneur”.85-143.
Kjeldsen C. (1991): “Detailed description of the framework with references to international entrepreneurial theory”.33-97.
Schultz Grafisk. (2000): “The Circumstances of Women Entrepreneurs”: Published by the Danish Agency for Trade and Industry. 50-77.
Gartner (1985): “A Conceptual Framework for Describing the Phenomenon of New Venture Creation”. 164-181.
Dafna Kariv, Teresa Menzies, Gabrielle Brenner and Louis Filion. (2006): “Transnational networking and Business Success: Ethnic Entrepreneurs in Canada”: HEC Montreal Institute. 1-38.
Schjoedt Leon and Shaver Kelly. (2007): “Deciding on Entrepreneurship Career: A test of Push and Pull Hypothesis”. Baylor University. 41-72.