Entrepreneurial Motivation in Developing Countries: What Does 'Necessity' and 'Opportunity' Entrepreneurship Really Mean?

14 Pages Posted: 17 Dec 2008 Last revised: 10 Mar 2009

See all articles by Peter Rosa

Peter Rosa

University of Edinburgh

Sarath S. Kodithuwakku

University of Peradeniya

Waswa Balunywa

Makerere University - Makerere University Business School

Date Written: December 3, 2008

Abstract

The paper examines the relationship between the state of necessity and entrepreneurial activity, through qualitative case studies from Uganda and Sri Lanka, and a survey of 1006 Ugandan adults. Questions are posed on the tenability of hypothesis that necessity is a primary motive for business start-up in poor countries. The relationship between necessity and business start-up, though significant, is in the opposite direction from that predicted by the "necessity hypothesis". Those with low incomes were much less likely to start a business, because they often became "trapped" by having to work long hours for just enough income to survive. Opportunistic diversification, however, flourished once resources improved. The results question recent attempts to classify countries on the basis of distinctive forms of entrepreneurship based on necessity and opportunity.

Keywords: Entrepreneurship

JEL Classification: M13

Suggested Citation

Rosa, Peter and Kodithuwakku, Sarath S. and Balunywa, Waswa, Entrepreneurial Motivation in Developing Countries: What Does 'Necessity' and 'Opportunity' Entrepreneurship Really Mean? (December 3, 2008). Frontiers of Entrepreneurship Research 2006; Frontiers of Entrepreneurship Research 2006. Available at SSRN: https://ssrn.com/abstract=1310913 or http://dx.doi.org/10.2139/ssrn.1310913

Peter Rosa (Contact Author)

University of Edinburgh ( email )

Old College
South Bridge
Edinburgh, Scotland EH8 9JY
United Kingdom

Sarath S. Kodithuwakku

University of Peradeniya ( email )

Peradeniya
Sri Lanka

Waswa Balunywa

Makerere University - Makerere University Business School ( email )

P. Box 1337
Kampala
Uganda

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