A greater level of entrepreneurial business opportunities will exist in a poor, developing economy, rather than in a rich, developed economy because the needs and opportunities are more widespread, they have a different and greater cultural awareness, and have the opportunity to assess industries that have a high level of market risk before entering them. Although there are many factors that can affect entrepreneurship in these countries and prevent entrepreneurship form existing like a lack of finance, difficulty recruiting, a lack of innovation, high barriers to entry and issues with their government.
There are 5 factors that are necessary for entrepreneurship to exist these are an ...view middle of the document...
” (Khoshla, 2011)
Other issues that need to be overcome by entrepreneurs is recruiting and assembling people to work in a job that is underpaid, due to the profits in a new organisation not being very high is often very difficult. The barriers to entry are very high in developing countries as well because the entrepreneurs often need to create their own infrastructure, business linkages and support systems that large firms in developed countries often take for granted, and finally entrepreneurship is not well understood by the governments and private sectors in developing countries and in turn become difficult to deal with. (Khoshla, 2011)
The main factor and the most obvious that affects entrepreneurship is the lack of capital and financial innovation to get the venture up and running. Many people in these countries that want to embark on an entrepreneurial venture lack the necessary capital to start their business due to having limited personal savings, because of this they need to source external financing which come with high interest rates due to the business being such a risk. (Pennisi, 2012).
Due to these high rates that need to be paid when acquiring external financing, many entrepreneurs in these countries frequently find informal sources of finance to enable them to open and start their business venture and generate income through having multiple jobs or businesses. Although this is an issue, it is also the advantage to entrepreneurship within developing countries. (Naude et al. 2011)
By running several start-up businesses and having multiple jobs at one time, entrepreneurs from developing countries are given a unique advantage. For example, an entrepreneur in a developing country may have a business in the food industry, but at the same time may have multiple jobs in other areas like construction, carpentry and farming. Through this the entrepreneur is able to assess which industries have a high level of market risk and can assess whether or not they want to enter that market in the future. (Winter, 2012)
Another reason why an entrepreneurial venture will have a greater chance of being more successful in a developing country than in a developed country is that the needs and opportunities are more...