Factors Affecting Entrepreneurial Growth

by Wendel Clark; Updated September 26, 2017
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The growth of entrepreneurship is not random, but influenced by four distinct factors: economic development, culture, technological development and education. In areas where these factors are present, you can expect to see strong and consistent entrepreneurial growth. In areas where they are lacking, entrepreneurship is likely to stagnate.

Economic Factors

The economy is a major factor affecting entrepreneurs. Research from the EIM Business and Policy Research at Erasmus University in Holland have found a U-shaped relationship between entrepreneurship levels and economic development. This means that entrepreneurial growth is more common in the most- and least-developed societies; it is least common in moderately developed nations. This is likely because people become entrepreneurs due to necessity -- when there are no other jobs -- or because of opportunity.

Cultural Factors

Culture also influences entrepreneurial levels. Individualist cultures like the United States are more open to entrepreneurship and experience greater entrepreneurial growth than collectivist societies. This is because people in an individualist society are more likely to see the merits of working for themselves. Religion may also be influential. People whose religious beliefs put more emphasis on spiritual than material wellbeing may be less likely to set up their own businesses.

Technological Factors

Countries with high levels of technological growth also tend to have high levels of entrepreneurial growth. This is because new technology offers people the opportunity to exploit these opportunities for commercial benefit. Periods of great technological development, such as that experienced during World War II, are typically followed by a period of entrepreneurial growth.

Educational Factors

There are high levels of entrepreneurship in highly educated societies, as well as under-educated countries. The distinct difference is the level of growth and success that entrepreneurs experience. Uneducated entrepreneurs tend to have less success than educated entrepreneurs. Advanced school systems that allow students access to university-level training are an important factor that can increase entrepreneurial success and growth.


About the Author

Wendel Clark began writing in 2006, with work published in academic journals such as "Babel" and "The Podium." He has worked in the field of management and is completing his master's degree in strategic management.

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