Abstract
Literature on informal economic activities has identified the significant role of informal micro-enterprises in national development and the role of entrepreneurial competencies in micro-enterprise performance. This study, therefore, examined the role of entrepreneurial competencies, i.e., risk-taking propensity, need for achievement, self-efficacy, and experience in informal micro-enterprise performance in Kelantan, Malaysia. This study used a cross-sectional design and collected quantitative data from 197 informal micro-entrepreneurs. Findings of the path analysis using variance-based structural equation modeling (SEM-PLS) revealed that informal micro-entrepreneurs’ risk-taking propensity and self-efficacy have a significant positive effect on micro-enterprise performance. Development programs and policies should, therefore, focus on increasing low-income informal micro-entrepreneurs’ self-efficacy and ability to take risks in order to take advantage of all the income-generating opportunities available to them, which would ultimately lead to the improvement of the socio-economic condition of low income households in Malaysia. DOI: 10.5901/mjss.2016.v7n3p273
Highlights
An informal economy consists of economic activities that occur outside of the formal institutional boundaries but which remain within the informal institutional boundaries for large societal groups, that are engaged in low-paid employment as waged employees (Webb et al, 2013)
It is crucial to examine and identify ways to improve informal micro-enterprise performance, in order to improve the socio-economic conditions of the low-income vulnerable households in Malaysia
This study was designed to examine the role of entrepreneurial competencies, i.e., risk-taking propensity, need for achievement, self-efficacy, and experience in informal micro-enterprise performance in Kelantan, Malaysia
Summary
An informal economy consists of economic activities that occur outside of the formal institutional boundaries but which remain within the informal institutional boundaries for large societal groups, that are engaged in low-paid employment as waged employees (Webb et al, 2013) These persons are labeled as informal entrepreneurs who display entrepreneurial attributes, qualities, and traits (Webb et al, 2013; Williams and Gurtoo, 2011). Earlier studies have noted a significant proportion of workers from low-income households being involved in informal economic activities (Naik, 2009; Sibal, 2007; Department of Statistics Malaysia, 2013). Most of the development programs and policies for the socio-economic development of low-income households in Malaysia are focused on formal micro-entrepreneurs It is difficult for informal micro-entrepreneurs to access working capital and other supportive services. This study is, designed to examine the role of entrepreneurial competencies, i.e., risk taking propensity, need for achievement, self-efficacy, and experience in informal micro-enterprise performance in Kelantan, Malaysia
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