Perceived opportunities, a proper risk assessment and the right social environment also help motivate the creation of new businesses (Photo: Towfiqu barbhuiya/Unsplash)
A UOC research project has analysed factors that drive people to become entrepreneurs
The results demonstrate the need to promote financial and numeracy skills in universities and other places of learning
Perceived opportunities, a proper risk assessment and the right social environment also help motivate the creation of new businesses
To create jobs and enhance a country's wealth, there is a vital need for entrepreneurs who create new ventures. Research by the Universitat Oberta de Catalunya (UOC) has examined the factors that motivate people to become entrepreneurs, and shows how elements such as financial and numeracy skills, as well as each individual's belief in their own capabilities are key in leading them to found their own business.
These findings, published in The Journal of Entrepreneurship, underline the need to enhance this knowledge to foster entrepreneurship. "There's a need to foster financial knowledge and numeracy skills in universities and other education settings, but also to work on self-confidence, as these are the things that help people to want to create businesses more," said Elisabet Ruiz, the principal investigator and a member of the UOC's Faculty of Economics and Business.
Not enough financial literacy
The study, based on a survey of 322 people at an online university, shows that the majority of respondents lacked solid financial literacy and numeracy and the ability to properly assess risks, which are all key factors for an entrepreneur. These findings coincide with those of worldwide studies carried out by the Organisation for Economic Co-operation and Development (OECD), which stress the need to improve people's understanding of financial matters.
As this research shows, this is a vital skill that needs to be learned. Although self-confidence (or, more specifically in this case, "entrepreneurial self-efficacy") remains a key factor in people deciding to start a business venture, the research revealed that financial and numeracy skills can compensate for a lack of self-confidence in their entrepreneurial abilities.
Other factors identified by this study as important in starting a venture are the perception of opportunities, a social context viewing entrepreneurship in a positive light, nearby examples serving as an example, and accurate risk assessment. Gender and employment status did not, however, appear as significant factors in entrepreneurship.
"In another, later study on financial literacy, we did find differences between men and women," said Ruiz. "We saw that men were more willing to invest in financial education than women. Generally speaking, men also have greater levels of self-efficacy in these skills, which could explain why women tend to be less entrepreneurial or encounter greater difficulties in accessing financial markets."
Different kinds of motivation
One way in which this research is innovative is that, to study the factors that foster entrepreneurship, it took account of those that are both subjective (personal perceptions of one's entrepreneurial abilities) and objective (financial literacy, numeracy skills and risk assessment abilities). The result was that they identified three distinct groups of entrepreneurs, each with its own characteristics and differentiated by their abilities and motivations.
Those with greater financial skills and good self-efficacy tended to have more social motivations than those with poorer objective knowledge. Those with a good perception of their abilities but who did not score highly in terms of financial literacy and numeracy found more motivation in identifying market opportunities. Lastly, those with low levels of subjective skills and knowledge created businesses, above all, because they were in situations where there were points of reference, such as families or friends.
Contrary to the arguments of traditional theories, entrepreneurs are not driven solely by economic factors, rather, their motivations vary considerably and include aspects such as the lack of employment opportunities, dissatisfaction with their current jobs, a search for independence or a wish to cover a social need.
Ruiz-Dotras, E, Lladós-Masllorens, J. Entrepreneurial Self-efficacy and Financial and Calculation Skills Can Shape Different Profiles of Venture Intentions. The Journal of Entrepreneurship. 2022;31(1):153-183. DOI: 10.1177/09713557211069319.
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The UOC's research and innovation (R&I) is helping overcome pressing challenges faced by global societies in the 21st century, by studying interactions between technology and human & social sciences with a specific focus on the network society, e-learning and e-health.
The United Nations' 2030 Agenda for Sustainable Development and open knowledge serve as strategic pillars for the UOC's teaching, research and innovation. More information: research.uoc.edu #UOC25years