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What makes some entrepreneurs tick while others fail? Why do people in some cultures and regions display a better entrepreneurial spirit compared to people in other cultures or areas? Read on for an overview of the major factors that influence entrepreneurship.
Cultures where people are risk averse and do not attach much importance to hard work and persistence are not conducive to entrepreneurship.
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Unstable political conditions where government policies change frequently discourage business, as investors fear for the safety of their investments.
Government support to economic development through infrastructure development, facilitation, industrial parks, and the like all encourage entrepreneurship. High taxes that cut into the returns usually discourage entrepreneurs. On the other hand, tax holidays to encourage business attract start-ups. The availability of infrastructure and utilities such as good roads, power, communication facilities, and lack of corruption and bureaucratic delays in obtaining such utilities encourage entrepreneurship.
Economic freedom in the form of favourable legislation and few hurdles to start and operate businesses encourage entrepreneurship.
While most businesses accept laws related to the safeguard of labor rights and the environment, some countries have retrograde laws that make compliance very difficult and time consuming. Such legal hurdles create a barrier to entrepreneurship.
In a subsistence economy, most of the people are engaged in agriculture, consuming most of their output and bartering the rest for simple goods and services. Entrepreneurial opportunities are few in such scenarios.
Capital remains indispensable to start an enterprise. The availability of capital allows the entrepreneur to bring together other factors and use them to produce goods or services.
The importance of human assets or employees can never be underestimated. No enterprise succeeds without a skilled and committed workforce. The very existence of the business depends on the availability of raw materials to process. Physical infrastructure and utilities such as good roads, parking, communication facilities, and power all play a crucial factor in the seamless functioning of a business.