Assessment of entrepreneurial potential

Entrepreneurial potential is understood as total of the acting entrepreneurs and their business activity, potential entrepreneurs and their entrepreneurial aspirations, and also business climate, promoting or restricting possibilities of both entrepreneur groups.

Under research sociological surveys in regions among entrepreneurs and population, interested in business activity, have been carried out. The population, interested in entrepreneurship, in this case, is presented by individual persons, which have contacted to the local Service Centers of Entrepreneurs (SCE) and the Business Support Centres (BSC) concerning opening of own business. Determination of motivation of today's business, entrepreneurial activity and perception of entrepreneurship in general, social and cultural characteristics of the region population in the attitude towards entrepreneurship, and also business environment assessment was the purpose of these surveys.

In total in regions of Kazakhstan were surveyed:

Entrepreneurs – 7975 persons;

Able-bodied population – 17031 persons.

The indexes, characterizing the level of entrepreneurial potential in this or that region, have been determined by the course of this work:

- Index of entrepreneurial potential;

- Index of entrepreneurial activity;

- Mortality index of the enterprises;

- Motivation index.


Index of entrepreneurial potential

For determination of business conditions in Kazakhstan regions the Rating "Business climate", which allows to determine the level of entrepreneurial potential, has been carried out.

The special feature of the Rating is that when analysing of a business environment the opinion not only of business owners, but also the potential entrepreneurs, planning to start own business in the near future, is considered. Involvement of potential entrepreneurs in an assessment of a business environment allows to get data in the "starting conditions", characterizing a business environment of Kazakhstan.

This Rating is based on results of entrepreneur and economically active population of the country survey. The population of the country has been surveyed for the purpose of region capacity identification on early entrepreneurial activity while active entrepreneurs have been surveyed first of all concerning satisfaction with state body and administrative control system activity in general. Besides, entrepreneurs have given an assessment of the acting business conditions.

The rating "Business climate" includes a business environment assessment in five main factors:

1. Administrative control

2. State support

3. Real estate

4. Human resources

5. Financial assets 

By results of the carried-out questioning the regions have been conveniently classified into three groups according to the level of entrepreneurial intentions:

- Regions-leaders

- Regions with the average level of business ventures

- Regions-outsiders


Index of entrepreneurial activity

The index of entrepreneurial activity characterizes the level of entrepreneurial activity at early stages, i.e. considers entrepreneurs both beginners, and owners of the newly created enterprises. This index is calculated as ratio of number of newly registered enterprises at the year-end to the number of operating enterprises in report year.



Mortality index of the enterprises

The mortality index of the enterprises is calculated as ratio of closed down enterprise number in the accounting period to total number of all operating enterprises in report year.



Motivation index

Global Entrepreneurship Monitor (GME) as an index of motivation applies the ratio of number of entrepreneurs with high aspirations to number of forced entrepreneurs. In this research for calculation of motivation index the data on self-imposed entrepreneurs instead of entrepreneurs with high aspirations are used. The concept is caused by a nonsignificant difference between number of self-imposed entrepreneurs and persons with high aspirations in regions of Kazakhstan.




Portrait of potential entrepreneurs in Kazakhstan

The portrait of potential entrepreneurs of Kazakhstan has been made up on the basis of survey carried out under a rating "Business climate". 2100 respondents from economically active population of the country aged from 18 to 64 years have been surveyed. The survey has covered all regions of RK – 14 regions and 2 cities of republican status.


Social and cultural portrait of the region population

Cumulative level of entrepreneurial activity cannot be determined by the separate country only based on economical indicators, as in many ways this indicator depends on social and cultural characteristics, when different levels of entrepreneurial activity match different cultural codes of the separate groups, forming by national, ethnical, religious and other characteristics. What is more, not always the level of economical and institutional development in the territory of these groups accommodation matters. In the center of social and cultural group development there is an individual behavior of the separate subjects, supporting the accepted intra-group values and norms or inobservant these principles.

Sum of widely applicable  in the international practice techniques has been applied for an assessment of social and cultural factors:

- Hofstede's techniques,

- Inglehart's techniques,

- Model of personality "The big five".

Gert Hofstede, the Danish sociologist, is a founder of the dependency theory of entrepreneurship gradations from cultural values. He has written the classical work "A culture consequences", the book, based on research of 1970, where national filiations of IBM corporation were studied. There is a popular version of this book, named "Cultures and Organizations: software of the mind" (Organizations: Software of the Mind). Its last edition in English, authors Hofstede (father), Hofstede (son) and Michael Minkov, is published by MacGraw-Hill (New York) in 2010.

Hofstede determines six measurements: a distance to the power (PDI), uncertainty avoidance (UAI), an individualism/collectivism (I-C), manlinnes (masculinity)/femininity (MAS), tolerance (T), long-term orientation (LTO). Distribution of indicators on these six measurements, constituting multidimensional system of coordinates, by separate group and their combination predetermines the level of entrepreneurial activity and, eventually, economical success of this group. Each nation, for which there are data, can be referred to each of these measurements, and its position can be compared with the position of other nations.

In the book of the Bulgarian researcher M. Minkov "Cultures and Organizations, Software of the Mind" (2010) is given the following definition of culture according to Hofstede as collective mental programming of human mind, which distinguishes one group of people from another, but these distinctions can be found only in comparison. Michael Minkov, being a coauthor of Mr. Hofstede and his follower in development of the social and cultural group difference theory, has been invited to the project as an expert.


Each of Hofstede’s six measurements is important from the point of view of region social and cultural portrait determination, however Individualism and Collectivism are more comprehensive for understanding of the unific values of one or several groups. The individualism describes loosely bounded social ranges, the person is focused on self-care and care of his family. The independence and initiativity are welcomed here. The collectivism, opposite, exists in a close social ranges, where people rely for group they are belong to. People act proceeding from common interests and consider themselves only within group.

Enormous popularity of Hofstede’s measurement model has pushed some scientists also to carry out researches at the regional level, using as units of measure separate regions or ethnic groups within the country.

Inglehart's techniques

Later, in other research by the American political scientist Ronald Inglehart the technique of value determination, which has accepted the name the World survey of values (World Values Survey), has been developed. The world survey of values - the biggest research of political views in the world and some cultural questions among 100 countries. Inglehart has offered two measurements of national culture: traditional against a rationally-laical values (secular values) and a survival against self-expression.

Traditional values focus attention on importance of religious principles, communication between parents and their children, total trust of the power and traditional family values. People the most professing such values are also unacceptably refer to divorces, aborts, euthanasia and suicides.

Rationally-laical values are opposite in relation to traditional values. Such societies are not guided by religion, traditional family values and the power. To divorces, aborts and euthanasia in such societies refer to as elements of everyday life.

Values of a survival put emphasis on economical and physical security. Societies are etnocentrical, and relations are characterized with a low level of confidence and patience.

Values of self-expression give preference to environmental matters, patience to foreigners, nontraditional sexual orientation. In such societies there is a strong demand for co-determination in economical and political life.

The countries, which have high rates in scale combination of traditional values and survivals: Zimbabwe, Morocco, Jordan and Bangladesh; scale of traditional values and self-expression: USA, the most of Latin America, Ireland; scale of rationally-laical values and survival: Russia, Bulgaria, Ukraine, Estonia; scale of rationally-laical values and self-expression: Sweden, Norway, Japan, France, Germany, Belgium and Czech Republic.

According to Inglehart forming of values falls at the emerging adulthood period, in the period of 18-24 years, for example, during training at university bachelor degree course. Then these values form a steady social and cultural code, which is subject to changes only through reproduction (training, culture) of human capital asset. In this case changes are considered through a prism of values shift and behavioural principles need towards upgrade. Movement of the countries toward modernization is followed by acceptance of a particular set of cultural principles (tolerance to other different people, less aggression, more liberty of individual choice), as residents of these countries must less care for the physical survival.

On the world map of values the characteristics of the Protestant world behavioural principles are considered as leading in economical development and activity of a business sector.

The main conclusion of all these researches is that distinctions of values and norms are caused by the public and biosocial reasons, at the same time, steady and hierarchical values and norms determine human behavior, including the solution to start own business or not.

At the project definition stage methods of cultural and economic researches and usabilities of Hofstede’s and Inglehart’s models, which have been described earlier, have been studied and discussed. Application of these two concepts has been taken by research group as a basis. At the same time, as these identification methods of social and cultural factors are used for detection of country distinctions, and in our project the main task was detection of distinctions between regions, there was a risk of receiving data, not allowing to reveal expected social and cultural differences.

As a result, the applied Hofstede's model has not brought satisfactory results. Questionnaire items, which should correspond in a certain way according to Hofstede's model, not exactly were combined by this way. Data all over regions have been received, however two of six Hofstede’s measurements have given contradicting results, including on scale masculinity/femininity. Confirmation of the fact that Hofstede's measurements cannot be reproduced and applied at the regional level has been received. In the scientific literature there is no universally accepted explanation of this fact. Generally refer to the fact that Hofstede's measurements are intended for work at the nation level, but not for regions of the countries, but until nobody has found out why. However, each region has been described on multidimensional system of Hofstede’s coordinates.

The similar situation has happened also to Inglehart's model. The first of Inglehart's measurements – traditional values or religious traditionalism, has repeated among all sixteen Kazakhstan regions. Nevertheless, it is impossible only based on region arrangement on this axis to assume whether it will be somehow connected with entrepreneurship. Some items, which were used by Inglehart for the second scale of the measurement - a survival against self-expression values, were inapplicable for our research: the percentage of respondents, who signed the political petition, the percentage of respondents, who do not approve homosexuality and so on, would be absolutely minimum.

As a result in addition to both concepts described earlier it was necessary to find acceptable, similar in components model. The model of personality "The big five" in this sense looks the most acceptable.

Model of personality "The big five"

For this project the international consultant has offered a questionnaire for which inspiration has come from the most popular for today model of personality "The big five". Initially, it was model for research of the individual personality, but not national culture. The idea is that everyone can be placed in pentahedral coordinates of human person, known as OCEAN. The data aggregation by selection of separate psychological types of the residence region to the national level gives the clear and described OCEAN model, allowing to provide a social and cultural portrait of separate regions and their ratio with each other.

1.           Openness to experience (Openness, grade of intellectual sophistication and view width)

2.           Consciousness (Conscientiousness, grade of subordination to laws, ductility to honors, reliability)

3.           Extraversion (Extraversion, grade of aggressiveness, sociability, aspiration to emotional stimulation)

4.           Agreeableness (Agreeableness, grade of kindness and readiness for cooperation)

5.           Neuroticism (Neuroticism, grade of alarm, anxiety, loss of self-control)    

Researches concerning OCEAN have been carried out among millions of respondents in all developed and many developing countries. The OCEAN model works fine enough in reference to the majority of world cultures.

Several research have shown that though "The big five" model is created for comparison of separate psychological types, its results can be aggregated to the national level. Thus, it is possible to compare the nations by the OCEAN model. In the turning research, Hofstede and MacGraw (top-ranked experts on OCEAN), have shown that OCEAN national measurements are compared to measurements of Hofstede’s culture, although this ratio nor as much as that. The subsequent research have shown that though OCEAN not all over factors copies Hofstede's measurements, but nevertheless creates the substantial maps of the countries, reminding cultural maps.

The OCEAN model has other advantage and strengths in comparison with the Hofstede's model. Many research have shown that entrepreneurs differ from ordinary people by some items. Thus, the OCEAN model has allowed us to distinguish a profile of the typical entrepreneur from a profile of the ordinary person through an assessment of 13 personal qualities.

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