Saturday, January 21, 2012

Traits of Turkish Entrepreneurs

Although the culture and external environment in Turkey are conducive to and advocate entrepreneurship as an acceptable path, it is argued that entrepreneurship in Turkey might be considered as a necessity-based entrepreneurship (GEM 2001).

In recent articles on the cultural and behavioural aspects of Turkish entrepreneurs Eroğlu and Pıçak (2011)  and Turan and Kara (2007)  revealed their findings as that Turkish entrepreneurs have such traits; (a) a family history of self-employment, (b) being the first child of the family, (c) almost half of the Turkish entrepreneurs had less than college education, (d) for female entrepreneurs “having more a network of family and friends that are self-employed” and “relying more on their previous experience or training in the area that they establish their new venture” are very important, (e) previous self-employment experience is among personal reasons for new venture creation, (f) people are more likely to exploit opportunities when they have relevant knowledge and experience from previous employment, (g) short-term oriented entrepreneurs, and (h) lack the strategic orientation and long-term vision due to less entrepreneurship education and Turkey’s long history of economic instability.

According to mentioned articles Turkish entrepreneurs are achievement oriented, highly responsible, impatient, and self confident, have high self-esteem, possess an internal locus of control (they do not give up easily), and like to work on their own. They are highly involved with the control of the operations of their businesses. They experience relatively high levels of stress and cope with this stress by working hard. The major challenges that Turkish entrepreneurs faced are greater responsibility, inability to obtain financial loans for start-up, inability to acquire location for the enterprise, inability to spend enough time with family, and stress due to hard work. These challenges are all consistent with the results of other studies that examined the profile of entrepreneurs (Young and Welsch 1993).

According to the Geert Hofstede Cultural Dimensions  analysis, the Power Distance Index (PDI), Individualism (INV), Masculinity (MAS), and Uncertainty Avoidance Index (UAI), Long Term Orientation (LTO) indicators of Turkish entrepreneurs are as follows:


Figure 1: Geert Hofstede Cultural Dimensions, Turkey

PDI is defined as “the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally”. Turkey scores high on this dimension (score of 66) meaning that the characteristics of the Turkish style is “Dependent, hierarchical, superiors often inaccessible and the ideal boss is a father figure”. Power is centralized and employees expect to be told what to do. Communication is indirect and the information flow is selective, which is very necessary for the dissemination of information among the networks inside and outside of the company that that positive effects on the competition strength of a company.

For IDV indicator, Turkey, with a score of 37 is a collectivistic society meaning that “the “We” is important, people belong to in-groups (families, clans or organisations) who look after each other in exchange for loyalty. Communication is indirect and the harmony of the group has to be maintained, open conflicts are avoided. The relationship has a moral base and this always has priority over task fulfilment. Time must be invested initially to establish a relationship of trust. Nepotism may be found more often. Feedback is always indirect, also in the business environment”.

The fundamental issue in MAS is what motivates people, wanting to be the best (masculine) or liking what you do (feminine). Turkey scores 45, which puts it on feminine side, meaning that “the dominant values in society are caring for others and quality of life; and quality of life is the sign of success and standing out from the crowd is not admirable. In masculine societies people are “driven by competition, achievement and success, with success being defined by the winner / best in field – a value system that starts in school and continues throughout organisational behaviour”.

UAI score reflects “the extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these”. As seen from the figure Turkey scores very high on this dimension. This creates a problem for making business high-risk technology sectors which in fact provides high-profit returns who can cope with the high-risk.

LTO score is not available for Turkey. “The long term orientation dimension is closely related to the teachings of Confucius and can be interpreted as dealing with society’s search for virtue, the extent to which a society shows a pragmatic future-oriented perspective rather than a conventional historical short-term point of view”. By using the studies of Eroğlu and Pıçak (2011) and Turan and Kara (2007) we can infer that the LTO score for Turkey will be low since Turkish entrepreneurs lack of long-term vision.
Another report which focuses on the measures of entrepreneurship is Global Entrepreneurship Monitor (GEM) report.

The GEM report (2010) repeatedly mentions the importance of opportunity-based entrepreneurship rather than the necessity-based entrepreneurship. Improvements in wealth and basic requirements (infrastructure, economic stability, education) stimulate opportunity-based businesses, shifting the nature of entrepreneurship activity. These ventures are more likely associated with greater aspirations for growth, innovation and internationalization. The following chart shows the increase in opportunity-based entrepreneurship as the GDP rises:


Figure 2: Necessity-Based Early-Stage Entrepreneurial Activity and Per Capita GDP 2010

The GEM report shows that in the innovation-based economies the opportunity-based entrepreneurship is higher and as seen from the chart, Turkey is on the necessity-based entrepreneurship side.

But shifting from the necessity-based entrepreneurship to opportunity-based entrepreneurship is strongly related with the wealth (capital accumulation) of entrepreneurship. While the capital accumulation is possible with managing the business successfully, the financial options within an economy play a crucial role in supporting businesses in a globally competitive environment.

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