Title: Entrepreneurial motivation and entrepreneurial leadership of entrepreneurs: evidence from the formal and informal economies

Authors: Retno Ardianti; Inggrid

Addresses: Department of Management, Petra Christian University, Jl. Siwalankerto 121-131, Surabaya 60236, Indonesia ' Department of Management, Petra Christian University, Jl. Siwalankerto 121-131, Surabaya 60236, Indonesia

Abstract: Micro, small and medium enterprises (MSMEs) have played a pivotal role in the economy of developing countries. Intriguingly, only a small fraction of MSMEs are legally registered as formal enterprises, and they typically lack entrepreneurial management. Our paper is to test the influence of formality status on entrepreneurial motivation and leadership among active entrepreneurs. To gather data, we surveyed formal and informal entrepreneurs in East Java, Indonesia. Our results show that formal entrepreneurs score higher in all dimensions of the entrepreneurial motivation variable compared to informal entrepreneurs, except for desire for wealth. Yet, only entrepreneurial opportunity is statistically significant among all the entrepreneurial motivation dimensions. Furthermore, while informal entrepreneurs seem to accept more risk and have higher achievement than their counterpart in the formal sector, this does not apply to the other dimensions of entrepreneurial leadership. For this variable, only proactive behaviour is significantly different from zero.

Keywords: micro; small and medium enterprises; MSMEs; entrepreneurial motivation; entrepreneurial leadership; formal economies; informal economies.

DOI: 10.1504/IJESB.2018.090136

International Journal of Entrepreneurship and Small Business, 2018 Vol.33 No.2, pp.159 - 175

Received: 05 Jun 2015
Accepted: 10 Dec 2015
Published online: 01 Mar 2018 *

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