The Risk Preferences of Entrepreneurs in Indonesia

17 Pages Posted: 4 Jul 2017

See all articles by Kitae Sohn

Kitae Sohn

Korea Institute for International Economic Policy

Date Written: July 2017

Abstract

Entrepreneurship is known to be important for innovation and economic growth, but relatively little attention has been paid to entrepreneurs in developing countries. We examined an important aspect of entrepreneurship: risk‐taking. We analysed the Indonesian Family Life Survey and compared risk preferences between entrepreneurs and non‐entrepreneurs. We found that risk tolerant workers were more likely to be entrepreneurs than risk averse workers by about 5 percentage points, or about 20 percent of the proportion of entrepreneurs in the labour force. The results imply that not all entrepreneurs in Indonesia are pushed into the sector; some actively take risks and seek innovations.

Keywords: risk aversion, entrepreneurship, self‐employment, developing country, Indonesian Family Life Survey

JEL Classification: D81, M13, O53

Suggested Citation

Sohn, Kitae, The Risk Preferences of Entrepreneurs in Indonesia (July 2017). Bulletin of Economic Research, Vol. 69, Issue 3, pp. 271-287, 2017, Available at SSRN: https://ssrn.com/abstract=2996820 or http://dx.doi.org/10.1111/boer.12088

Kitae Sohn (Contact Author)

Korea Institute for International Economic Policy ( email )

Seoul 137-602

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