Factors affecting the supply of entrepreneurship

What factors affect the supply of entrepreneurship? Basically, two factors affect the supply of entrepreneurship: opportunity and willingness to become an entrepreneur. Opportunity is the possibility to become self-employed if one wants to. The primary factors that affect opportunity are:



The individual’s intrinsic entrepreneurial ability and intuition.
The degree to which the spirit of enterprise exists or can be initiated in the individual is through the society, by the society and culture in which he is embedded.


The general macro-economic environment.
One of the primary determinants of the supply of entrepreneurship is the willingness of an individual to become an entrepreneur. Willingness is a personalized activity. It goes beyond intentions and/or new idea conceptualization. Willingness must lead to the creation of enterprise from nothing (Timmons, 1989).It also involves the relative evaluation of work in self employment compared with one’s other options for employment (Praag et al, 1995). The supply of entrepreneurship is seen thus, to be dependent on both individual level factors and general economic and non-economic factors.


To encourage entrepreneurship, policy makers can improve the economic factors that face entrepreneur by initiating reforms that increase both the market incentives and availability of credit and capital to entrepreneurs (Wilken, 1972). Therefore, instituting appropriate market and tax regulations a country can encourage and increase the supply of entrepreneurs in its population.

The second major determinant of the supply of the entrepreneurship is opportunity. In order for an individual to start his own enterprise, it is necessary for him to have the credit or capital to finance the initial start-up cost. Policy makers can encourage the supply of entrepreneurship by creating programmes and institutions such as SMEDAN to encourage and assist entrepreneurs to find capital, draw-up business plans, and comply with the various business and tax regulations.


On developing entrepreneurship, new education initiatives could be created to teach entrepreneurship. By equipping more people with the skills’ attitudes and characteristics to become entrepreneurs; by promoting and developing entrepreneurial spirit within the society, a country can effectively increase its supply entrepreneurs.