Entrepreneurial characteristics and behaviour demonstration--a comparative study between small scale manufacturing entrepreneurs and service entrepreneurs.

Srinath, T.T. ; Supriya, M.V.

Introduction

While policy makers and small-scale entrepreneurs in manufacturing attribute obsolete technologies and management practice as a major barrier for growth and progress, the service sector without doubt has proved that attitude, adaptability, understanding market realities and upgradation of skills is the basis for survival and growth. New and unknown entrants into the service business have exploded the myth that entrepreneurship is a matter of inheritance and monopoly of a few sections of the population. Rao and Pareek, (1978), have said that through proper training, qualities can be acquired and developed in individuals. Smith (1967), has suggested that certain constellations of personal characteristics, background, motivation and goals differentiate types of entrepreneurs. Sinha, (1969), stresses that human factors make the difference between success and failure. Policy makers whose interest in the small-scale entrepreneurs is fomented by potential for large scale employment by them, are keen to harness human potential in all sectors (Nagayya, 2005). Against this backdrop, with the increase of investment in service businesses, policy makers are keen to know if there are differences in background that result in differing entrepreneurial disposition (Murugesan and Sankaran, 2005).

The present study attempts to understand the presence and intensity of entrepreneurial characteristics among small-scale entrepreneurs. It is noticed that entrepreneurs tend to fall into two distinct categories namely manufacturing and service. Thus the study has focused its attention on understanding differences between entrepreneurial characteristics and behaviour demonstration by the two sectors.

Research Methodology

Operational definition

For purpose of the study the small-scale business is defined as an organisation:

* With investment up to Indian Rupees 10 million in plant and machinery and in select cases upto Indian Rupees 50 million.

* With business turnover of Indian Rupees 5 million to Indian Rupees 300 million.

* In the manufacturing and service sectors currently in operation.

Scope of study

Data for ascertaining intensity of entrepreneurial characteristics have been obtained from Coimbatore district, Tamil Nadu, India. Coimbatore plays a significant role in the growth and evolution of entrepreneurship in South India, particularly Tamil Nadu.

Sampling

The sample consists of an adult population of small-scale entrepreneurs. 300 entrepreneurs from Coimbatore district were interviewed to obtain data on characteristics. The sample consisted of 150 entrepreneurs from the manufacturing sector and 150 entrepreneurs from the service sector. The samples were drawn from two categories, namely, manufacturing and service. The types of industries covered under manufacturing were dealing in, pumps, motors, wet grinders, textiles and hosiery. In service the sample was drawn from hospitality, BPO, software, retail and job workers. A non-probability convenience sampling technique was adopted to draw the sample from the population.

Hypothesis

The major hypothesis of this study is: There is no significant association in the presence of entrepreneurial characteristics between small-scale entrepreneurs in the manufacturing and service sectors.

Development of interview schedules

An interview schedule was developed. It captured the background demographic information. This interview schedule was used to study entrepreneurial characteristics and behaviour demonstration.

Results and Analysis

In profiling entrepreneurs in the small-scale manufacturing and service sector, the study generated data on education background of the entrepreneur, the skill training that they may have acquired, education of father and contribution to community. The study tried to establish a possible connection between the presence of entrepreneurial characteristics (EC) demonstrated by the entrepreneur as a dependent variable, vis-a-vis the demographic factors. Table 1 represents that there is a significant association between presence of EC and education level in the service sector, of the total sample, 103 of the respondents from the service sector displayed high levels of EC, compared to 52 respondents in the manufacturing sector. The fact that the impact of education in the manufacturing sector is not significant indicates that the qualification level does not impact the presence of entrepreneurial characteristic. In the service sector however, the case is reversed, as many entrepreneurs, on enquiry revealed being first generation. This is not so in the case of manufacturing where many respondents had stepped into manufacturing businesses either as a 'hand me down' or as part of family legacy.

It was found during interviews that a large part of respondents from the manufacturing sector had retained family members in their businesses, thus building an internal support mechanism. The leadership style that entrepreneurs in the manufacturing sector tended to adopt was 'benevolent autocracy.' The low level of education seems to encourage small-scale entrepreneurs in the manufacturing sectors to run their businesses as personal empires. The presence of EC vis-a-vis skill training required to perform job is tabulated in Table 2. The data shows a significant association in manufacturing and an absence in service. It suggests that entrepreneurs in manufacturing believe that skill training i.e. being trained for the job has high value for them. This is also supported by the fact that many entrepreneurs in manufacturing have had prior exposure to the field of choice. In the case of service most entrepreneurs being first generation they have not had any previous skill training in the chosen field. What is also of value in this understanding is that service entrepreneurs have attempted several businesses before settling in to the current businesses. This sharply contrasts with entrepreneurs in the manufacturing sector who have opted for the current business without trying more vocations.

The relationship of the education of parents with the entrepreneurial characteristics has been shown in Table 3. It can be observed from Table 3, presence of EC vs. education of father bore a strong significance in manufacturing but not in service. Both in manufacturing and in service a large part of the respondent's fathers had only studied up to Plus2 yet this had a significant impact on the presence of EC only in the manufacturing sector. To reiterate, as service sector entrepreneurs had set out on their own they were unaffected by their parent's education level, while in manufacturing the qualification of the father bore some influence. It is deduced that many parents of entrepreneurs in the manufacturing sector were 'craftsmen,' having learnt their trade in their previous employment.

The contribution to the community has been shown in Table 4. It can be seen from the Table 4, presence of EC vs. contribution to community has a significant association in the case of manufacturing. The same is not the case with service. Manufacturers are involved in local community work such as temples; churches and the immediate environment. The presence of labour unions within the organisations attracted them towards community work. Service enterprises were not confined to any particular geographical area while manufacturing enterprises tended to cluster around similar terrain. Manufacturers were essentially located in industrial belts. On the other hand, with service outfits were widely spread. Therefore any happening in the region or environment resulted in involvement of entrepreneurs in the manufacturing sector.

Conclusion

The study has revealed that entrepreneurs in the manufacturing and service sector differ in their demonstration of entrepreneurial characteristics owing to background factors. Succinctly education has played an important part in the lives of small-scale entrepreneurs in the service sector. Whereas, previous skill training, education of father or lack of it, involvement in community are prominent in the lives of small-scale entrepreneurs, in the manufacturing sector. Most small-scale entrepreneurs in the service sector tend to be first generation entrepreneurs and were therefore unaffected by past experiences. Excessive attention to skill training, the limitation of parental education and community dominance cause small-scale entrepreneurs in manufacturing to remain myopic. Sentiment and benevolence preoccupy small-scale entrepreneurs in the manufacturing sector. This keeps them tied to their traditional businesses. As small-scale entrepreneurs in the service sector had no previous association with their businesses are nimble and able to shift focus rapidly.

References

Murugesan V. and Sankaran A. (2005), "Entrepreneurial Perception of Problems", SEDME Journal, Vol. 32 (2), June 2005.

Nagayya D. (2005), "Enhancing Competitiveness among Small and Medium Enterprises," SEDME Journal, Vol. 32 (1), pp. 53-74, March, 2005.

Rao T. V. and Pareek U. (1978), "Developing Entrepreneurship: A Handbook", New Delhi, Learning Systems.

Smith N. R. (1967), "The Entrepreneur and his Firm: The Relationship between Type of Man and Type of Company", Bureau of Business and Economic Research, Michigan State University Press, East Lansing. Michigan.

Sinha T. N. (1996), "Human Factors in Entrepreneurship Effectiveness", The Journal of Entrepreneurship, Vol.5 (1), pp. 23-29.

T.T. Srinath (1) M.V. Supriya (2)

(1) Organisational and Behavioural Consultant, 38, First Main Road, Raja Annamalaipuram, Chennai--600 028, Tamilnadu, India.

(2) Department of Management Studies, College of Engineering, Guindy, Anna University, Chennai--600 025, Tamilnadu,India.

(1) E-mail: ttsrinath@vsnl.net, (2) E-mail: mvsupriya@hotmail.com

Table 1: Presence of EC vs. Educational Level

Education Level Type of Industry Intensity of Characteristics
 Present

 High Medium

Below 10+2 Manufacturing 18 23
 Service 41 13

10+2 Manufacturing 12 8
 Service 15 6

Graduation Manufacturing 14 11
 Service 38 16

Post Graducation Manufacturing 5 5
 Service 3 5

Professional Manufacturing 3 5
 Service 6 3

Total Manufacturing 52 52
 Service 103 43

 Manufacturing
Chi-Square Value 7.47432

Education Level Intensity of Characteristics
 Present

 Low Total

Below 10+2 17 58
 -- 54

10+2 4 24
 -- 21

Graduation 12 37
 1 55

Post Graducation 5 15
 2 10

Professional 8 16
 1 10

Total 46 150
 4 150

 Service
Chi-Square Value 20.1523 *

* Significant at 0.01 level of significance

Table 2: Presence of EC vs. Skill Training

Intensity of Skill Training
Characteristic
Present Manufacturing Service Manufacturing Service

 Yes No Yes No Total Total

High 12 40 86 17 52 103

Medium 7 45 36 7 52 43

Low 10 36 2 2 46 4

Total 29 121 124 26 150 150

 Manufacturing Service
Chi-Square Value 16.680 * 3.0616

* Significant at 0.01 level of significance

Table 3: Presence of EC vs. Education of Father

Education of Father Type of Industry Intensity of Characteristics
 Present

 High Medium Low

Professional Manufacturing -- 6 2
 Service 1 2 --

Post Graduation Manufacturing 4 3 7
 Service 1 - -

Graduation Manufacturing 2 5 5
 Service 9 3 1

10+2 Manufacturing 21 9 11
 Service 25 7 2

Below 10+2 Manufacturing 25 29 21
 Service 67 31 1

Total Manufacturing 52 52 46
 Service 103 43 4

 Manufacturing Service
Chi-Square Value 16.841 * 7.45

Education of Father Intensity of Characteristics Present

 Total
Professional 8
 3

Post Graduation 14
 1

Graduation 12
 13

10+2 41
 34

Below 10+2 75
 99

Total 150
 150

* Significant at 0.01 level of significance

Table 4: Presence of EC vs. Contribution to Community

Intensity of Skill Training
Characteristic Present
 Manufacturing Service

 Yes No Yes No

High 15 37 42 61

Medium 28 24 24 19

Low 18 28 2 2

Total 61 89 68 82

 Manufacturing
Chi-Square Value 6.7995 *

Intensity of
Characteristic Present Manufacturing Service

 Total Total

High 52 103

Medium 52 43

Low 46 4

Total 150 150

 Service
Chi-Square Value 2.80400

* Significant at 0.01 level of significance