From entrepreneurial intention to enterprise creation: the case of Estonia

Abstract

PurposeThe present paper aims to identify a set of cognitive and contextual characteristics that explain entrepreneurial intentions, actions and venture creation, thereby covering three successive stages of becoming an entrepreneur.Design/methodology/approachThe analysis is based on entrepreneurship data from a self-reported online survey (n = 1,492) gathered among the Estonian population in 2017. The authors use an exploratory factor analysis to reduce initial survey responses about the external environment into latent factors. Linear regression models are applied to predict the determinants of entrepreneurial intention and actions, whereas the logit model is applied to find out the determinants of being or not being an entrepreneur.FindingsYounger people, respondents with vocational education and the unemployed have a higher intention to start up. Men are more active than women in the second stage of taking real action, whereas middle-aged respondents and managers are less active. In the final stage of enterprise creation, men become more likely entrepreneurs, whereas younger people and those who do not have higher education become less likely entrepreneurs. Entrepreneurial attitudes and competencies as preconditional factors of entrepreneurial readiness have a positive effect in all three stages. The role of motivation appeared to be controversial – it has a weak positive effect on the intention stage but a strong negative effect on the action stage, becoming insignificant in the final stage of becoming an entrepreneur. In the final stage, taking real action has the strongest positive effect. Regarding differences between entrepreneurs and non-entrepreneurs, entrepreneurs have a more positive perception of the business environment and the ease of doing business, including the simplicity of entrepreneurship-related legislation. On the other hand, entrepreneurs are more skeptical about the availability of financial resources, and they perceive public attitudes and the role of entrepreneurs in a society less positively.Research limitations/implicationsAs data of this study originates from a survey, the sample may not represent the whole population. This might limit the extent to which the conclusions of this study can be generalized. Also, the study’s data do not enable us to consider all potential factors that may affect entrepreneurial intention, action and venture creation. For example, the authors do not consider the effect of income or differences between opportunity and necessity entrepreneurship because of data limitations.Practical implicationsThis study focuses on environmental obstacles and individual restrictions that are important in different stages of becoming an entrepreneur. In terms of policy implications, providing better financing opportunities both from private and public institutions and keeping entrepreneurship legislation simple and transparent have the utmost importance in increasing the share of entrepreneurs and entrepreneurship-related benefits in society. The younger population’s high entrepreneurial intentions should be transferred more effectively into real actions toward starting up, paired with supportive entrepreneurship education.Social implicationsThe study results show that developing positive attitudes towards entrepreneurship and providing relevant competencies through the education system are relevant factors in all stages of becoming an entrepreneur, thus enabling entrepreneurial activities in society.Originality/valueFirst, the authors investigate the factors of entrepreneurship separately during the three stages in the journey of becoming an entrepreneur, starting from intentions, followed by preparation actions and finalized by real enterprise creation. Second, the analysis of this study is based on the original Environment-Readiness Entrepreneurship Intention model, which emphasizes the role of the external environment in entrepreneurial processes. Ten factors of the external environment are extracted using exploratory analysis instead of using three traditional predefined factors of the economic, political and socio-cultural environment. Third, our focus on Estonia broadens the knowledge about entrepreneurship in the Central and Eastern European region in general and in the Baltic region, more specifically.