Entrepreneurship success factors: an empirical investigation in Sri Lanka
| Date | 09 May 2016 |
| Published date | 09 May 2016 |
| DOI | https://doi.org/10.1108/WJEMSD-10-2015-0047 |
| Author | Robert N Lussier,Chamara Bandara,Shaike Marom |
| Subject Matter | Strategy,Business ethics,Sustainability |
Entrepreneurship success factors:
an empirical investigation in Sri Lanka
Introduction
Governments worldwide have recognized Small and Medium-size Enterprises (SMEs) for
their contribution to the economy stability and growth, employment and new job creation,
and social cohesion and development (Morrison et al. 2003; Santarelli and Vivarelli, 2007).
Moreover, during the economic recession of the last several years and the debt crisis in the
euro zone, SMEs have retained their position as the backbone of the European economy
accounting for m ore than 98 percent of all enterprises, for 67 per cent of total employment
and 58 percent of gross value added (EU, 2012). In the United States, small businesses make
up 99.7 percent of U.S. employer firms, 48.5 percent of private-sector employment, 63
percent of net new private-sector jobs, and 33 percent of exporting value. About half of all
new establishments survive five years or more and about one-third survive 10 years or more
(SBA, 2014). In Sri Lanka, SMEs make up more than 80 percent employer firms,
contribution to the GDP and generation of e mployment is more than 70 percent. The business
failure rate in Sri Lanka is 45 percent. Thus, creation and existence of SMEs is crucial for the
stability of t he economy, size and quality of employment, and socio-political structure of a
nation (Nooteboom, 1988).
Because SMEs are so important to the economy and society (Nooteboom, 1988),
public policy makers and other stakeholders have put efforts in helping to boosts creation of
new small businesses and reduce the incidents of failure and bankruptcy (Carter and Van
Auken, 2006). Therefore, predicting SMEs fate in terms of success and failure has become an
important area of research (Davidsson and Klofsten, 2003; Marom and Lussier, 2014; Pompe
and Bilderbeek, 2005). Such research on the prediction of success versus failure would
benefit current and would be entrepreneurs, as well as variety of other stakeholders including
parties who ass ist and advise them, investors and institutions who provide them with capital,
communities and society by and large (Dennis and Fernald, 2001). However, finding out
which factors lead to small business success and failure is still an ongoing and unfulfilled
effort that research continue to pursue (Rogoff et al., 2004). Important research questions
include:
• Which resources are most important to entrepreneurial development (West et al., 2008)?
• Why do some businesses succeed and others end up bankrupt (Carter and Van Auken,
2006)?
• Which variables explain and predict success versus failure (Halabi and Lussier, 2014)?
• Is there a robust global success versus failure prediction model (Marom and Lussier,
2014)?
With so many unanswered research questions, public policy cannot easily determine which
firms to provide support to, what type of support is most needed, and how to provide support
(Halabi and Lussier, 2014).
Literature Review and the Selected Model
There is great discrepancy in the literature as to which variables do in fact lead to
success, thus, there currently is no theory ( Lussier and Halabi, 2010). Also, as stated by Bono
and McNamar (2011), there is a need to test models in multiple countries to assess the
robustness of the findings. To move the field in that direction, the goal of this research was to
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