The Risk Preferences of Entrepreneurs in Indonesia
17 Pages Posted: 4 Jul 2017
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: Suggested Citation
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The Risk Preferences of Entrepreneurs in Indonesia
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