Economy Entrepreneurship Employment Essay

For more than twenty old ages the chief drive force of a modern economic system has been entrepreneurship. Entrepreneurs have invariably been run intoing the demands of turning and stable economic systems through the creative activity of 1000s of concerns each twelvemonth. Due to the big Numberss little concerns and their considerable micro-macro degree effects on the state they form the anchor of any modern economic system ( Bruyat and Julien, 2000 ) .

Entrepreneurship forms the footing of invention, creativeness, making employment and new endeavors and finally fostering the economic system as a whole. ( Henry et al. , 2003 ) . The importance of entrepreneurial activity can non be overlooked as highlighted by Michaelis et Al ( 2001 ) in Robertson et al 2003 that SME ‘s were responsible for more than 55 per cent of the entire employment within the UK, and the SME ‘s contributed 51 per cent of the state ‘s one-year turnover. Furthermore 12 per cent of the work force was self employed. The above statistics clearly indicate how dependent the UK economic system is on entrepreneurial activities.

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Research has shown that there is a mixture of societal and cultural factors that fostered an anti-entrepreneurial civilization within the state. It is interesting to observe that both Britain and the United States have the right economic and political substructure to further entrepreneurial activities within their well-thought-of states. But the startling fact is that over the past six old ages, the Untied States has the highest degree of entrepreneurial acitivty in 2007 which was recorded at 9.6 % whereas the United Kingdom was about at half by entering a mere 5.6 % . The bulk of the four BRIC* states had besides recorded higher entrepreneurial activity than the United Kingdom: Brazil ( 12.7 % ) , India ( 8.5 % ) and China ( 16.4 % ) . The diagram below high spots the entire early phase entrepreneurial development in the BRIC and G7 states. [ GEM, 2007 ]

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Even though Britain is seen as one of the more aspirations states within the European Union United Kingdom still lags behind the United States in high-growth start-ups, which implies that new endeavors within the USA expand at a much more rapid gait than those states within Europe ( HM Treasury, 2003 ) in Robertson et al 2003. As figures reveal UK has low degrees of HEE* than other high-income states, with 7 in every 1,000 grownups being under this class which is much lower when compared to US ( 15 in 1,000 ) , New Zealand ( 14, 1000 ) , Iceland ( 13, 1000 ) and Canada ( 12, 1000 ) .

One of the siginificant grounds behind these statistics are due to the competitory wages offered by big organisations which provide a greater security, than concern ownership and hazards associated with them. Alistair Fraser, Global Head of Owned-Managed Business Services stated that With a floaty economic system supplying attractive calling options, big companies frequently fast track the gifted persons who might otherwise do ideal high aspiration enterprisers. Combined with the high chance cost of get downing a house in the UK, the hazard wages balance merely does n’t add up for many aspirations persons. Referee: REVEALED: THE WORLD OF ENTREPRENEURSHIP.

Findingss indicate that Britain is non every bit entrepreneurial as it was 10 old ages ago despite the fact that the authorities has taken several enterprises to advance concern invention. Fostering endeavor development within the state is one of the authorities ‘s chief political docket. The research undertaken by Robert Huggins and Nicholas Williams from Shienfield ‘s direction school has shown that concern start ups have been in diminution from 1997while the state ‘s self employment rates have n’t seen important alterations in the past decennary. Dr Huggins besides suggested that with the governing labour party there has been a important addition in employment within the populace sector where persons shun the hazards of get downing their ain concerns by procuring fixed rewards from the populace and private sector.

The current province of entrepreneurial activity is upseting when compared to the fact that a spokeperson for Department for Business, Enterprise and Regulatory Reform said that the United Nations ( U.N. ) had ranked UK foremost and set the state among the top 10 globally to make concern with easiness. The OCED conformed this by adding that UK has the least figure of barriers to put up a new endeavor. [ Lippset, 2007 ]

Through the apprehension of the current context of entrepreneurial activities within the United Kingdom, it comes to light that Britain has one of the lowest barriers to entrepreneurship and the authorities has set up several novices that have helped further an enterprise civilization within the United Kingdom, but the amazing fact is that Britain has the right environment for an enterprise civilization but there is still a considerable lessening in the nascent entrepreneurial activity within the state as per the GEM study ( 2007 ) .

Over the old ages at that place has been a great trade of research which has focused on the features of enterprisers and the motivation factors for them to get down their ain endeavor. Most research in this field is based on those enterprisers that have already established and running their new ventures. There has been really small research on people who are still in the procedure of get downing a new concern ( Mazzarol et al, 1999 ) . In order to a addition an complete apprehension of entrepreneurship, and the barriers and triggers impacting start ups both Fieldss must be studied. It has been really good set frontward by ( Mazzarol et al, 1999 ) that is non sufficient plenty to near merely those ( enterprisers ) who have fulfilled their aims.

The intent of this research is to convey to light those concealed factors which are restricting the development and growing of entrepreneurship within the state. The survey will besides take to understand the attitudes of possible enterprisers and critically analyse the factors that form barriers to possible enterprisers who would wish to get down an endeavor within Britain. This research will besides seek to pull recommendations for how these barriers can be surpassed or minimise the impact of such barriers which will take to encouragement generation of Greenfield endeavor in the UK. By holding a appreciation over what drives immature people to get down a concern in this research, the survey will supply some clear attacks for determining policy to promote growing of British companies.

Research Aims

To look into the factors that form barriers to concern startups and its consequence on modern-day immature enterprisers

To analyze the general attitudes towards entrepreneurship and to understand how the public perceive chances to set up a concern

To supply equal schemes and recommendations which will assist both the authorities and the possible entrepreneurial population in get the better ofing these barriers


Despite its evident importance discussed in the old chapter, there is no in agreement definition of either what constitutes an enterpriser or entrepreneurship. The term entrepreneurship is normally associated with a new venture creative activity and little concern development as stated by ( Gibbs, 1996 ) in ( Kirby, 2003 ) . Carland et Al ( 1984: 358 ) in ( Kirby, 2003 ) suggested that An enterpriser is an person who establishes and manages a concern for the rule intents of net income and growing. Whereas Harwoord ( 1982: 98 ) has suggested that an enterpriser is person who takes enterprise, assumes considerable liberty in the organisation and direction of resources, portions in the plus hazard, portions in an unsure pecuniary net income, and innovates in more than a fringy manner In contrast to this definition Meredith et Al. ( 1982: 3 ) sees entrepreneurs as people who have the ability to see evaluate concern chances ; to garner the necessary resources to take advantage of them ; and to originate appropriate action to guarantee success.

From the above definitions it is clear that entrepreneurship is non an event but an procedure which may take old ages to germinate and develop. It is besides apparent that enterprisers are those people who identify an invention to prehend an chance, mobilise money and direction accomplishments, and take deliberate hazards to open markets for new merchandises, procedures and services.

It is interesting to observe that the survey of entrepreneurship has been drawn from two lines. First, the personal features or traits of the entrepreneurship ( internal venue of control ) and the external factors such as societal, cultural, political and economic factors ( external venue of control ) ( Mazzarol et al, 1999 ) . The survey of these two lines of will organize the footing though which we can derive a better apprehension of both the external and internal factors that signifier barriers towards concern start-ups within the UK. First we shall look at the theoretical accounts and theories that were based entirely on the enterpriser and so we shall reexamine literature which is based on the environmental context.


The Personality Approach towards Entrepreneurship

Early research on the field of entrepreneurship associated the term with the ‘great individual ‘ theory which focused on the person ‘s personality traits. The advocators of this attack have stated that there are certain single features that are related to enterprisers which initiates the purpose to prosecute an entrepreneurial calling. This school of thought around four such as the demand for accomplishment, which were so thought to be the motivational factors in an person ‘s determination to go an enterpriser. This attack is grounded in the survey of successful people who tend to exhibit similar features that if copied would increase the success chances for the copycats

This construct gave birth to thoughts such as an enterpriser is born non made. The trait attack had made it apparent that the demand for accomplishment ( McClelland, 1961 ) in ( Mazzarol, 1999 ) , hazard taking leaning ( Brockhaus, 1980 ) , locus of control ( Brockhaus, 1982 ) , tolerance of ambiguity ( schere, 1982 ) , and desire for personal control ( Greenberger and Sexton, 1988 ) were identified as possible features of entrepreneurial behaviour. These features which were identified are still really much relevant in understanding entrepreneurial behaviour.

The personality attack plays a important function in understanding the internal factors that promote entrepreneurship. The charecteristics such as the internal venue of control, tolerance of ambiguity and personal liberty have

Social Development Approach towards Entrepreneurship

The societal technology school of idea gave entrepreneurial survey a new dimension by saying that individuality itself is a societal phenomenon ( Bendix, 1956 ) . This attack viewed entrepreneurship as an end product which consequences from the interaction of internal and external societal factors. The societal school stated thatenterprisers are non born but made. It is said that there are a figure of factors that are seen as important to the societal development of enterprisers. In general they fall into one of the three wide classs that have been outlined below

Innate: Factors such as intelligence, creativeness, personality, motive, personal aspiration

Acquired: Learning, preparation, experience in brooder organisations, mentoring, being of actuating function theoretical accounts, etc

Sociable: Birth order, experiences in household life, socio-economic groups and parental business, society and civilization, economic conditions, etc.

The attack besides advocated that while the person ‘s sensitivity plays an of import portion in originating action, it does non hold any significance in isolation from their experiences. Therefore implementing that other external variable such as household influences, civilization, function theoretical accounts, work experiences, cultural influences ( Bridge et al, 2003 ; Boyd and Vozikis, 1994 ; Henderson and Robertson, 1999 ; Gibb and Ritchie, 1985 ) play an of import function in the survey of influences on entrepreneurial purposes. Present research besides indicates a direct relationship between societal factors and entrepreneurial activities within states. For illustration the GEM ( 2000-2002 ) study in the UK suggested that the strongest barriers that aspirant enterprisers face are societal and cultural attitudes where people showed negative attitude towards wealth creative activity, self employment and concern failure ( Robertson et al, 2003 ) .

The societal development theoretical account provides a more plausible image of entrepreneurial behaviour. The attack has clearly helped in placing the big figure of factors, some internal to the enterpriser, and others which are the characteristics of the environment within which entrepreneurs express themselves. [ Wickham, 2006 ]


The theories and research on the trait theories has partly helped in understanding entrepreneurial surveies, but the writers who have proposed the theoretical accounts and theories on the environment advocator that the trait attack has come to a dead terminal. The major restriction of the trait and the sociological attack towards entrepreneurship is that they have ignored other major factors that influence the entrepreneurial procedure. The entrepreneurial procedure by definition involves all the activities, maps and actions perceived in placing chances and making organisations to persue them.

Not merely the internal factors but the external environmental factors play a dominant function in the procedure of originating entrepreneurship.The procedure goaded school believes that the external environment plays an every bit critical function in developing entrepreneurial activity. Dyer ( 1994 ) in Robertson ( 2003 ) had noted that in more recent research carried out by ( Secrest, 1975 ; Aldrich et al. , 1986 ; Kirchoff, 1991 ) had identified the societal and economic factors that affect entrepreneurship. There are assorted factors within the environment such as the handiness of economic resources, quality of life in footings of instruction and wellness issues which play a critical function on entrepreneurial purposes ( Writings, 1982 ) .

Researchs under this school of idea besides claim that the persons ability or self-efficancy is a key variable which determine both the strength of the entrepreneurial purpose and the opportunities that those purposes will be converted into actions. The self-efficeny itself depends on a figure of factors including background factors, educational attainment and vicarious experience. There are besides other factors such as larning through observation, function theoretical accounts, perceptual experience of personal qualities which combine to organize the knowhow of the person in order to achieve his/her entrepreneurial aims.

The push and pull factors have besides been really good cited in old research. The push factors are likely to be redundancy, blocked publicity, recession, and unemployment, defeat with old employment, the demand for originative look and the demand to gain a sensible life. The pull factors may include independency, originative look, high motivational degrees, and cautionary benefits. A recent study of a loosely representative sample of little concern proprietors in Britain found that more than 50 % said independency was their chief motivation for running their ain concerns. Merely 18 % said their chief ground was to do money, and 10 % mentioned other grounds that included enjoyment, challenge, more room for creativeness and personal satisfaction. Another survey affecting Russian enterprisers revealed that 80 % of the surveyed said they started a concern so as to be their ain foreman, and that holding their ain concern reinforced feelings of liberty and freedom ( Bygrave, 1994 ) .

Small Business Policy Support and Governance

There is empherical grounds that there is a direct relationship between creative activity, enlargement and development of the little concern sector and the revival of involvement in the little concern as an object of research and policy among faculty members and policy shapers ( Cater & A ; Evans, 2000 ) . Within the United Kingdom there were 3.6 million concerns in 2000 when compared to 1 million in 1979. Over the past decennary the UK authorities has placed a strong accent on little concern development and entrepreneurship by emphasizing on productiveness, invention and regeneration. In the 2003 policy model the authorities had set out a bundle of reforms for little concern with particular accent on the little concern sector. This has seen an addition in invention, investing and preparation for little concerns.

Since 2004 the authorities has set a specific policy towards entrepreneurship which has focused around seven subjects which have been outlined below

Making an Enterprise Culture

Engendering and prolonging dynamic start up markets

Increasing the Capability of concern growings

Bettering entree to finance

Bettering the Business experience of authorities services

Enterprise for all, with an accent on increasing entrepreneurial activity among those difficult to make and excluded groups.

Better ordinance

In the twelvemonth 2006 there has been a figure of alterations in the endeavor policy and the bringing of concern support. The authorities will go on to transport frontward the seven strategic subjects that have been outlined above. The authorities has besides included specific enterprises to back up and advance entrepreneurship which include the followers: –

The launch of two new Enterprise capital financess strategy which will seek to supply fiscal growing and bridge the equity spread from 0.5 million to 2 million. Both these strategies have been allocated 50 million lbs in support.

The authorities is besides changed its procurance processs and has made it compulsory for all authorities sections to seek atleast 2.5 % of its procurance from little advanced concerns. In 2006 the authorities set aside 429 million lbs for this enterprise.

In the 2006 budget there was a 30 % revenue enhancement alleviation threshold that had been set aside for investings in Venture Capital Trusts.

The authorities has besides launced the undertaking force for female enterpriser which will move as a individual voice to raise concerns and advancing the involvements among female enterprisers and to assist increase female engagement in entrepreneurial activities.

The authorities has shown continued support of the ‘Make Your Mark ‘ run and ‘Enterprise Week ‘ which has continued to turn with a sum of 3, 184 events which are run by more than 1,400 organisations and making 4,50,000 participants.

Tax Policies

In order to ease a more dynamic start up within the state the authorities has introduced a lower limit of 19 per centum corporation revenue enhancement on distributed net incomes to see that the corporation revenue enhancement rate that are below the 19 per centum grade will be available for SME ‘s to reinvest in their concerns. The authorities has besides increase the first twelvemonth capital allowances for little concerns who spend atleast 50 per centum of their outgo on buying machinery and equipment for their concern.

Regulation by the UK Government

The authorities has introduced the Regulatory Reform Action which is aimed at simplifying statute law affecting the ordinance of concerns. The reform is to take over 650 deregulating steps to overhaul and streamline the planning procedure in order to better the bringing of public services to private sectors which will do it easier to obtain patient rights, and besides reform the company jurisprudence which more or less reflects the demand of little concerns.

In the 2004 budget the authorities had besides reduced the regulative loads that little concerns face. The authorities has reduced the VAT conformity costs for concerns the authorities has raised the VAT enrollment threshold from 52,000 lbs to 58,000 lbs by which more than 5000 houses would non hold to register for VAT. It has besides raised the turnover ceiling from 600,000 to 6,60,000 lbs.

[ National Dialog on Entrepreneurship, 2005 ]


Even though there are no unequivocal barriers or incentives that which will assist organize new endeavors. There are certain common factors which are seen as critical for most possible concern enterprisers. Bygrave ( 1994 ) states that there is ever a triping event that will foster new organisations. The diagram below is an entrepreneurial procedure theoretical account which is based on Carol Moore ‘s theoretical account which was presented in Understanding Entrepreneurial Behavior.

The theoretical account highlights the possible triggering events and other factors which will assist determine the possible enterprisers execution and growing of his/her concern thought or invention. The theoretical account below can besides be viewed as a multidimentional facet towards entrepreneurship, which indicates that the entrepreneurship is a complex, multidimentional model that emphasizes the person, the environment, the organisation, and the venture procedure. [ Hodgetts & A ; Kuratko, 2004 ]

Main Barriers Identified Within the United Kingdom: Reappraisal of Past Findingss


In many societies the formal instruction system is recognized as a strong influence in the development of conformist, anti-entrepreneurial behaviour. As a effect, many in society are at best ambivalent towards entrepreneurship as a consequence of their instruction conditioning.

The traditional instruction system in the UK, focuses and procedure of much instruction as it presently stands is working against the nurturing of entrepreneurship. Harmonizing to the GEM ( 2000 ) out of the 39 cardinal sources in the UK 11 identified instruction and preparation as the most individual cardinal issue facing entrepreneurship within the state. In the Entrepreneurship Education Index, The UK consequence was the worst along with France and Japan. activity. In the UK the proportion of persons enrolled at third degree has historically been comparatively low. For illustration, in 1980 registration was merely 19 % of the relevant age group, the lowest of all GEM states.

Another startling fact is that The Education Minister, David Blunkett, has stated that some 7 million grownups in this state have existent jobs with literacy and n um vitamin E r a hundred Y. This means that every bit many as one in four can non cipher the alteration they should acquire out of 2 when purchasing goods deserving 1.35.

Cultural and Social Norms

Culture drama ‘s an of import function in act uponing people ‘s lives, it is proposed that the civilization of societies and the features of people populating in these societies, impacted by certain personality traits will act upon the grade to which entrepreneurship is initiated. Clearly, civilization is of import in any treatment of entrepreneurship because it determines the attitudes of persons towards the induction of entrepreneurship ( Vernon-Wortzel and Wortzel 1997 ) .

From the GEM ( 2000 ) study findings, 17 of the 39 UK experts of them identified a civilization related issue as the most important issue confronting the entrepreneurship. Peoples in Britain tend to be risk averse, because they tend to see the societal costs of failure as outweighing the fiscal benefits of success. There is a corporate desire to keep the position quo in the UK, reflected in the importance attached to continuing societal position, a penchant for working in established and recognized administrations and a opposition to alter in one ‘s immediate environment. The rhenium is a widespread perceptual experience that entrepreneurial success brings benefits to a few but provides small general benefit to society as a whole.


A concern will neither get down up nor win without motive. Motivation is the key to entrepreneurial activity. Boyd and Vozikis ( 1994 ) surveies on pupil motive showed that a sum of 11 per cent of pupils perceived the ownership of one ‘s ain concern to affect excessively much fuss, emphasis, and difficult work. These pupils seemed to believe they would be happier without the duty. A sum of 6 per cent of pupils stated that they did non hold the clip to give to entrepreneurship, half due to student committednesss and half due to the fact that their relationships/family life would endure.

Lack of an idea/awareness of the market
To give an overview of the consciousness within United Kingdom from the GEM ( 2001 ) findings, a sum of 22 per cent of pupils did non get down up because they do non hold a concern thought or chance, which they perceive to be critical. Merely 10 per cent of regional aspirers see the concern thought as debatable. Shurry et Al. ( 2001 ) argue that a little bulk of enterprisers in the UK acquire their concern thoughts from old or current employment. Most pupils are missing in work experience and accordingly happen it more hard to develop a good concern thought.

Lack of accomplishments

There is a strong nexus between the thought and accomplishments in footings of being good prepared to get down up. One of the strong factors that pose as a barrier to possible enterprisers within the UK is that they is a lack of entrepreneurial accomplishments. UK Qualitative responses associating to this variable show that 7 per cent of pupils feel they do non hold the work experience necessary, in their sentiment, to get down up. A sum of 2 per cent said that they needed more market cognition.

Students ‘ perceptual experience of self-efficacy is therefore affected by their work experience or cognition, which corroborates the surveies conducted by Wang et Al. ( 2001 ) , Davidsson ( 1996 ) and Gibb and Ritchie ( 1985 ) . A sum of 4 per cent said they know nil about get downing a concern and how to travel about it, reasoning that it is non for them. The start-up know-how once more contributes to the pupils ‘ perceptual experience of entrepreneurial feasibleness and self-efficacy ( Boyd and Vozikis, 1994 ; Wang et al. , 2001 ) . A sum of 2 per cent of the pupils mentioned that their educational field was non something that lent itself to the possibility of start-up.



The intent of this research survey is to analyse the barriers that possible enterprisers face while set uping their concern. This paper has been divided into three stages. Phase one is a critical reappraisal on the relevant literature on entrepreneurship and its barriers confronting possible enterprisers Phase two of this survey is an probe of the designation of the possible psychological and environmental barriers that persons face in the taking the determination of going an enterpriser. This preliminary probe will be carried out utilizing studies where two questionnaires which will be given out to 30 persons.

The questionnaires have been designed to look into the proposed barriers and the general attitudes of those who are, or non presently seeking to set up their concern and the questionnaires have besides been designed to suit those persons ( enterprisers ) who have established or presently running a concern on their ain or with others. Using this type of questionnaires will give this research study a broader base through which probe of the possible barriers can be identified. This will convey to illume the differences in the proposed barriers by persons who want to get down their concern and besides the existent barriers that established enterprisers have identified while puting up their new venture.

The 3rd stage of the research will mensurate and analyse the determination that will be brought frontward by the questionnaires which have been distributed to the sample population. The findings will so be compared to the exisiting barriers that have been put frontward by research workers within this field of survey. And eventually utilizing the findings I shall develop appropriate schemes and recommendations which will assist the authorities and persons overcome the greatest barriers which have been identified within the research.

The questionnaires distributed to the sample population consisted of a mixture of open-end and close terminal inquiries. The unfastened terminal inquiries have been provided in the questionnaire to allow the respondent to reply more wholly and to uncover the logical thinking behind the replies. The unfastened terminal inquiries have besides been designed to cover those points which have n’t been considered within the closed ended inquiries. The questionnaires have a greater weight age of stopping point ended inquiries, the ground behind this scheme, is that the inquiries are aimed to analyse the relevancy of the literature which focused on the possible barriers towards entrepreneurship. This will assist to analyse whether the barriers that are have been put frontward by research workers in this field are still relevant in present conditions.


The convenience sampling technique has been used to garner informations on the sample population. The technique has been used to be able to obtain a well big figure of completed questionnaires rapidly and economically. The sample population for this research is those persons who fall in the age class from 23-65 and who are British citizens presently shacking in London. The field survey has been restricted within London due to the deficiency of fiscal financess and clip. The age class of the sample ( 23-65 ) by and large represents the working population within Britain.


Variables in footings of research survey are those entities that can take a certain value. A variable does non merely organize quantitative values but they can be qualitative entities as good. Below are the undermentioned variables that are taken into consideration to measure the failure or barriers to entrepreneurship within the United Kingdom.

Potential enterprisers: In the current survey potency enterprisers have been defined as those persons who are lasting occupants of the United Kingdom. The definition is general because the survey aims to analyse the grounds behind why persons do non carry to take up entrepreneurship as a calling option.

Entrepreneurs: Within this research enterprisers have been defined as those persons who have either established a concern in the yesteryear or is presently having or pull offing a concern by themselves or with others.

Age: The focal point of this paper will be to analyse the factors act uponing the age group from 23 to 65. The people that I will analyze will fall under this age class.

Geographic Location: The observation is based on persons within London

Gender: Another variable is the gender factors. This paper will besides analyse the current tendencies of the figure of adult females and work forces that are potentially seeking to start-up concerns and the current figure of enterprisers within the state.

Motivation: This is a critical factor which will be explored as to what are the motivational degrees of possible enterprisers.

General Attitudes: Which takes into considerations the feelings and behaviours of the sample population towards entrepreneurship

Current accomplishments and cognition of possible enterprisers.

Barriers: Any psychological or environmental obstruction which will impede the determination doing procedure of the person to go an enterpriser.


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