Entrepreneurship Policy, Enterprise Diversification ...

Entrepreneurship Policy, Enterprise Diversification and the Motivation Factor: The Case of Botswana ZORORO MURANDA', THUSO MPHELA^ MORVYN NYAKUDYA^ ABSTRACT Thepaper interrogates the link between entrepreneurshippolicy, motivation in business start-ups, growth and enterprise diversification. The link has received considerable attention in developed economies but only limited attention in developing economies. The aim of the study therefore, was to establish the extent of policy influence on motivation and growth, and SME diversification as a prelude to wider economic diversification. The paper is based on a nationwide survey of small and medium enterprises undertaken in Botswana. The study surveyed 226 enterprises covering ten economic sectors. Factor analysis was used to derive factors whose dimensions were assumed to have a close relationship with motivation to SME start-up and growth. The results indicate that policy pronouncements have not always had the push influence on SME start-up and enterprise diversiflcation. Instead key policies such as the tender policy and preferential purchasing policy with clauses meant to assist SMEs have not had a trickle-down effect. Entrepreneurs considered the demands of local authorities an impediment to enterprise start-up and growth. The study, inter alia, recommends the communication of policy right down to the bottom ofthe entrepreneurial pyramid, as a way of encouraging SMÈ start-up and growth. An intervention to make it mandatory for private financial institutions to lend to SMEs is also recommended. ' ^ '

Professor Zororo Muranda, Department of Management, University of Botswana, Gaborone, Botswana. Email: [email protected] (Corresponding author). Thuso Mphela Lecturer, Department of Management, University of Botswana, Gaborone, Botswana. Morvyn Nyakudya. Lecturer, Department of Management, University of Botswana, Gaborone, Botswana.

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KEYWORDS: Botswana, entrepreneurship, policy, motivation, diversification, SMEs Introduction THE IMPORTANCE OF small and medium enterprises (SMEs) in industrial development strategy has long been recognized by the Govemment of Botswana through the design and implementation of a variety of SME policies and programmes since the 1970s. Policy and programme interventions have primarily focused on financial and technical assistance to aspiring entrepreneurs. These initiatives include the establishment of the Botswana Development Corporation (BDC) in 1970, the Botswana Entrepreneurial Development Unit (BEDU) in 1974, The Financial Assistance Policy (FAP) in 1982, The Citizen Entrepreneurial Development Agency (CEDA) in 2001, the Small Business Council (SBC) and the Local Enterprise Authority (LEA) in 2003. Besides, efforts have also focused on entrepreneurial culture and awareness among citizens. In spite of these provisions, the pace of development of SMEs in Botswana has been slow. A nationwide study of SMEs conducted in 2006 found that there had been considerable development support for SMEs in Botswana. However, this support had not had the desired impact due to lack of coordination and focus which resulted in overlaps and duplication. That study also established that the SME sector was rather weak, essentially due to lack of a business culture, an unfriendly business environment for SMEs growth and development (Botswana Institute of Development and Policy Analysis, 2006). It is these findings which generated interest to do further research on the subject.

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Problem Investigated In order to provide grounding to the SME institutional framework, the government in 1999, pronounced an SMME (small micro and medium enterprises) Policy, and since then, the country has been implementing this entrepreneurship policy. The policy is aimed at motivating SME start-up, growth and diversification yet the outcomes remain constrained. The aim of the (current) study was to investigate reasons for the limited motivation to start, grow and diversify own enterprises by entrepreneurs in Botswana despite the existence of a supportive entrepreneurial policy. The study pursed the following questions: 1.

To what extent is the policy framework regarded by entrepreneurs as a motivating factor to start, grow and or diversify the business?

2.

What are the antecedents to entrepreneurial motivation?

3.

What influences entrepreneurs to diversify their enterprise activities?

4.

What mainly motivates Batswana towards entrepreneurship - is it necessity or opportunity?

5.

Is enterprise diversification a strategic priority for SMEs?


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Figure 1: Conceptué Framework starting a Business ^ / Entrepreneurial Policy

-

^ Entrepren eurial

Entrepreneurial ~~^

-

Diversity

Motivation

Desire to Grow

Source: Authors. The conceptual model presented above presupposes the antecedents to entrepreneurial diversity are entrepreneurial policy and individual motivation. Policy does not only provide the environmental framework upon which to act, but it also provides the basis for enterprise motivation. The depth of individual motivation and entrepreneurial culture influences the frequency of start-ups, growth plans and enterprise diversity. Strong entrepreneurial motivation has to pre-exist the desire to start a business or grow an existing business. For economic diversification to exist, there also has to exist motivation to diversify by individual entrepreneurs. In this model therefore, entrepreneurial diversity is the outcome of the cumulative influence of policy and sustained motivation to start businesses or diversify existing enterprises taking cognizance of the risk attendant in new venture creations. The paper did not investigate economic diversification per se. However, it assumed that enterprise diversification is an antecedent to economic diversification.

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Literature Review Motivation and entrepreneurial intent Historically, entrepreneurship has always been associated with and recognized as a kingpin to economic development. Recent studies conducted through the Global Entrepreneurship Monitor (GEM) have confirmed that entrepreneurs drive innovation, speed up structural changes in the economy and force old existing companies to reflect on their competitiveness. Reynolds, Hay and Camp (1999) have shown that one third of the differences in national economic growth rates among countries can be attributed to the level of entrepreneurship in each country. A couple of questions can be posed: What drives entrepreneurial intention? And what drives entrepreneurial motivation? Psychological variables have been noted to have a powerful effect on entrepreneurial intention. Kaiser (1990) modeled the entrepreneur on the basis of many historical characterizations, and concluded that the major characteristics of the entrepreneur -innovator, risk taker, and resource allocator - are complementary and inseparable facets of entrepreneurship. In his research on psychological factors, Gartner (1989) classified this path as the trait approach. Psychological variables that have been found to be influential include: the need for achievement (McClelland, 1985; Aviram, 2006), risk taking (Tan, 2001), ambition, desire for independence (Lee & Chan, 1998) and responsibility. Aviram (2006) further identifies inclination to entrepreneurship, knowledge, self-efficacy, and propensity to act as explanatory variables to entrepreneurial activity. In that study, knowledge was singled out as the dominant variable. This says much about the background of the individual. Individuals who strive to achieve have been found to gravitate toward situations in which they can attain results through their own efforts, pursue moderately difficult goals, and VOL. 26 NO. 1. JANUARY 2011 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA

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receive prompt feedback on how they are doing (McClelland, 1985). To date research has shown that the desire to achieve has been a powerful predictor of entrepreneurship (Collins, Hanges & Lock 2004). Holtz-Eakin, Joulfaian, and Rosen (1994) and Blanchflower and Oswald (1998) showed that an individual's inheritance increases the probability of entering and succeeding in an entrepreneurial venture. A background of inheritance therefore provides a motivational effect to go into business due to the inherited capacity. Inquiries into factors that influence business start-up have come to the conclusion that this is a function of a combination of two factors, namely, personality and the business environment. The convergence in influence between perception and external environment and the motivation to be an entrepreneur may be based on the practicality that in economic recession or depression the environment tends to be unfavourable to both nascent and experienced entrepreneurs and by extension favourable in economic peak periods. Studies by Wennekers and Thurik (1999) and Henrekson (2005) have shown that most persons involved in new firm formation have no growth aspiration and little is known about the entrepreneurs' devotion to enterprise diversification and growth. Entrepreneurs have been observed to always start businesses with the desire for profits, or autonomy, or are simply forced by circumstances into entrepreneurship because they have no other options (Shane, Locke, and Collins, 2003; Locke and Baum, 2007). Research on motivation to start a business has revealed "push" and "pull" factors as motivators for business start-ups (Gilad & Levine, 1986; Watson, Hogarth-Scott & Wilson, 1998). 'Pull' factors are those that make starting a business attractive (e.g. having extra income to invest) while 'push' factors are those that impel a person to start a business in order to avoid some undesirable situation (e.g. a job that leaves little time for the family). Birley and Westhead (1994) found that 80

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people started businesses mainly because of pull factors. Segal, Borgia and Schoenfeld (2005) also concluded that pull factors outweighed other factors in influencing entry into entrepreneurship. Shane, Locke and Collins (2003) and Locke and Baum (2007) emphasize that it is important to understand the role of entrepreneurial motivations when trying to understand entrepreneurial outcomes. Studies of reasons for starting businesses show that pull factors (such as autonomy or independence) are more prevalent and dominant in developed countries whereas push factors (such as unemployment) tend to be predominant in developing economies (Shane, Kolvereid, .& Westhead, 1991; Baum, 1993; Reynolds, Bygrave, Autio, Cox & Hay (2002); Reynolds, Bygrave, Autio, Cox, and Hay (2002; Grilo «& Thurik, (2006). It is therefore rewarding to devote attention to the enhancement of aspiration levels among independent entrepreneurs. Previous studies (e.g. McClelland, 1961), had concluded that a 'high' need for achievement was a personality trait common to entrepreneurs, whilst Baumöl (1990) suggested that entrepreneurs are motivated by the reward structure in the economy. However, Frank, Lueger and Kurunka (2007) argue that personality traits influencing business start-ups wane over time to almost non-existence in explaining business success. Individuals who perceived higher earnings, perceived feasibility and surmountable risk in entrepreneurship will pursue an entrepreneurial career. Shaver and Scott (1991) emphasized that new ventures emerge because of deliberate choices by individuals. The antecedents to new venture creation lay in feasibility and desirability of the entrepreneurial choice. A Global Entrepreneurship Monitor (GEM) study of 2008 concluded that although rriost individuals are pulled into entrepreneurial activity because of opportunity recognition, others are pushed into entrepreneurship because they have no other means of making a living VOL. 26 NO. 1. JANUARY 2011 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA

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or because they fear becoming unemployed in the near future. For those who are pulled into entrepreneurship, two major drivers of opportunity entrepreneurship can be identified: those who are pulled primarily because they desire independence, and those who are primarily pulled to entrepreneurship because they want to increase their income as compared to, for instance, being an employee. Opportunity entrepreneurs develop their new firms on perceived business opportunities, whereas necessity entrepreneurs are pushed into entrepreneurship because all other options for work are either absent or unsatisfactory (Bosma & Harding, 2007). Necessity entrepreneurs are less inclined to growth than opportunity entrepreneurs. Developing countries have been observed to exhibit higher shares of necessity-based entrepreneurship because of the need for self support and lack of employment opportunities. The remainder includes people who maintain that they have no other way of earning a living (necessity-motivated entrepreneurs) and people who became involved in entrepreneurial activity primarily to maintain their income. Necessity motives tend to occur when unemployment forces people into self-employment (Hessels, van Gelderen, & Thutik, 2008). Since necessity-motivated entrepreneurs are likely to depend heavily on their firm for daily economic survival, this may positively affect aspirations they have for their firm (Hessels et al., 2008). In looking at start-up motivations these authors have proposed three classifications: the independence motive; the wealth increase motive, and the necessity motive. They further note that the policy implication is that entrepreneurs motivated to start a business out of necessity are not likely to have higher ambitions. A 2007 GEM study reported that institutional characteristics, demography, entrepreneurial culture, and the degree of economic welfare also combine to shape a country's entrepreneurial landscape. 82



Perceptions on entrepreneurship have long been found to affect both the supply and the demand sides of entrepreneurship. On the supply side important perceptions include both willingness and perceived ability to become an entrepreneur (Davidsson, 1991). Policy and entrepreneurial environment Motivation to create a new venture and to stay in business has been noted to be highly associated with government policy and environmental munificence. Policy discussions have centered on the idea that governments seeking to stimulate their economies should reduce constraints on entrepreneurship (Acs, Audretsch, Braunerhlelm & Carlsson 2004; Minniti, Bygrave & Autio, 2006). According to Fisher and Reuber (2003) and Smallbone, Balddock & Burgess (2002), in niany countries entrepreneurship policies are shifting away from quantity toward quality as reflected in the policy of high growth entrepreneurship. Globally industrial policies have undergone a significant shift in which smaller and more dynamic ventures have been acknowledged as drivers of innovation, and a new set of interventions designed to promote entrepreneurial activity has emerged to promote the viability of such firms (Gilbert, McDougall & Audretsch, 2006). North ( 1990) has observed that the institutional environment determines formal and informal rules of the game, places constraints on human action, and reduces uncertainty. Therefore institutions and the policies that shape them are crucial in determining entrepreneurial behaviour. Entrepreneurship is the mechanism through which economic growth takes place, but institutional frameworks such as the policy environment are what allocate entrepreneurial efforts toward productive and unproductive activities by influencing the relative incentives and payoffs offered by the economy to such activities. Government policies mold institutional structures for entrepreneurial action, encouraging VOL. 26 NO. 1. JANUARY 2011 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA

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some activities and discouraging others. In a friendly and benign environment, entrepreneurs are at all times alert to opportunities (Yu, 2001). Entrepreneurs competing in a munificent environment draw from encouraging government policies, abundant financial resources, positive social attitudes and stable economic conditions to "switch on" their alertness to profit opportunities. Bouchiki (1993) asserted that the sociological and economic environments of the entrepreneurial process highlight the most critical sources of venture success or failure. Entrepreneurial munificence can be grouped as coming from five sources: government policies and procedures, socioeconomic conditions, entrepreneurial and business skills, financial support to businesses, and non-financial support to businesses (Gnyawali & Fogel, 1994). A munificent environment enhances entrepreneurial alertness through a favourable attitude of society toward entrepreneurship and widespread public support for entrepreneurial activities. The nature of the environment in terms of hostility, munificence, and dynamism therefore impacts on entrepreneurial motivation. Minniti (2008) has stressed the need for a policy to be designed in the local context within which entrepreneurship takes place. He states that this is what breeds entrepreneurial diversity. It is always vital that policy-makers know what factors within their sphere of influence correlate with individual entrepreneurial motivation (Hessels et al., 2008). Woolley and Rottner (2008) have observed that whereas liberation of innovation policy in terms of implementation is a welcome idea, there have been negative consequences in countries such as the USA. They further argue that every individual may interpret the same policy differently which leads to inconsistencies in performance. This calls for the oversight role of government. Although this may attract criticism, it however fosters some environmental certainties. At government level, Minniti (2008) 84

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suggests "manipulation of taxes" that has an effect on corporate profitability. Some governments through policy offer tax havens to encourage entrepreneurship. Florida (2002) proposes focusing on making geographical areas attractive to bring in and nourish creative entrepreneurial individuals instead of putting all efforts on developing capital. However, Henderson (2002) reiterates that the availability of financial resources in an area, especially venture capital investment, is vital to developing entrepreneurs. Finance, which could be a major constraint to entrepreneurship, can also be taken care of by the introduction offinancialvehicles like mutual credit guarantees, and microfinance schemes as opposed to bank loans. Financial institutions, governmental concessionary finance schemes and non-governmental programmes may be unwilling to give loans in declining economic environments. On the other hand, when the economic environment is favourable, these same institutions are more willing to give loans. Venture capital investment funds flow towards states and or countries with already established entrepreneurial activity (Kreft & Sobel, 2005). The authors conclude that focusing development efforts on attracting more venture funding will not be an effective method of encouraging the higher levels of entrepreneurial activity necessary for economic growth. Rather attracting and promoting underlying entrepreneurial activity must be the focus of development efforts and venturefiandingwill automatically and naturally, flow into the area to support this activity. Methodological Issues The sample units were selectedfi-ommajor centres namely Gaborone (the capital), Mahalapye, Palapye, Selibe Phikwe, Francistown and the peri-urban environs of these centres. Due to the spatial development of VOL.26NO. 1.JANUARY2011 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA

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Botswana, the sites are mainly located along the eastem corridor of the country. These sites also constitute the bulk of commercial activity in the country. The sites were therefore identified on the basis that they have the potential of being the locations of choice for most SMEs in the country. The study involved the use of the survey method, which was in two stages: the pilot survey which targeted 5% (15 units) of the target sample to test the validity and reliability of the questionnaire. The second part of the survey involved the study proper which targeted 300 sample units. The simple random sampling technique was employed in selecting the sample units from clusters. These were drawn from the Local Enterprises Authority (LEA) and the Citizen Entrepreneurship Development Agency (CEDA) databases because most of these entrepreneurs interact with the two organizations. Part of the sample was drawn from the Botswana Confederation of Commerce, Industry and Manpower (BOCCIM) membership directory. BOCCIM had 1597 registered members as of 2006/07, the period for the last published directory at the time of the study. These companies/members are grouped into 20 sectors as identified by BOCCIM. The research adopted these sectors as natural clusters. Out of twenty clusters the researchers judgmentally chose 10 clusters from which to select the sample. Companies from the other two databases were distributed into the clusters identified under the BOCCIM directory so as to select all sample elements using the same approach. Of the 300 targeted sample elements 226 responded thus achieving a response rate of 75.33%. The sampling unit during data collection was the owner-manager. The gender distribution in the sample was 125 males and 101 females. Table 1 below shows the clusters and target sample units from each cluster:

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Table 1 : Sector population and selected samples by sector Sector

Number

Proportion

Agriculture

38

8

Transport and

48

10

Wholesale and Retail Trade

279

61

Education

54

12

Hotel and Tourism

55

16

Health

57

12

Engineering

75

16

Construction

96

20

Manufacturing

166

36

Professional Services

504

109

Total

1372

300

Communication

The questionnaire was interviewer administered. Constructs in the questionnaire were mainly identified from literature and from responses to the pilot test. In situations where the sample elements were not immediately available, the researchers had to use the self administered questionnaire approach. Where self-administration was used, adequate guidelines had been provided on how to fill the questionnaire. The questionnaire used the 5-point Likert scale and reserved a few open ended questions for respondents' general comments. For purposes of testing reliability of questions, the instrument was subjected to Cronbach's a test. The reliability benchmark was set at a > 0.70. Only questions or question groups fulfilling this criterion were administered. Open-ended questions were not subject to this test because of the VOL. 26 NO. 1. JANUARY 2011 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA

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potential variability in responses. The reliability coefficient of the questionnaire is a> 0.73. To test non-response bias, the responses of those who responded early were compared to those who responded late to determine if there are any statistical differences (Lessler & Kalsbeek, 1992). There were no statistical differences between the early and late responses. Study Results Variables explained Results from the study were subjected to two levels of analysis: Principal Components Analysis and chi-square tests. Due to the fact that very little is known about what motivates SME entrepreneurs in Botswana, variables under motivation were subjected to factor analysis in order to identify a relatively small and manageable number of factors to represent the relationship among sets of interrelated variables. Motivation was originally tested / represented by seventeen variables and it was necessary to find a smaller number of underlying dimensions that could explain both immediate and future interventions. The advantage of using the Principal Components method is that this helps identify the best combination of variables by accounting for most of the variance in the entire data. Below is the Principal Components Analysis done of the motivation variables (See Table 2 and Table 3 below):



Table 2: Factor Extraction (Principal C omponents) Total Variance Explained Component

Extraction Sums of Squared Initial Eigenvalues Total

Loadings '

%of Variance

Cumulative %

Total

%of Variance

Cumulative %

1

3.330

19.591

19.591

3.330

19.591

19.591

2

1.776

10.445

30.036

1.776

10.445

30.036

3

1.540

9.056

39.091

1.540

9.056

39.091

4

1.211

7.123

46.215

1.211

7.123

46.215

5

.999

5.878

52.093

6

.955

5.616

57.709

7

.923

5.428

63.136

8

.884

5.202

68.339

9

.866

5.093

73.432

10

.818

4.813

78.244

11

.744

4.376

82.621

12

.587

3.453

86.074

13

.568

3.341

89.415

14

.516

3.037

92.452

15

.467

2.750

95.202

16

.459

2.697

97.899

17

.357

2.101

100.000

Extraction Method: Principal Component Analysis.


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Table 3: Factor Loadings for 17 variables Rotated Component Matrix" Component 1

2

3

to be recognized support family

,526 .674

personal security .505

lost job family income

-.563

321

educational background

.510

own boss employment dissatisfaction

.515

become business person footsteps of family desire to achieve former occupation imitating others try new idea opportunity recognition control own destiny acquire wealth

4

.639 .742 .681 .696 .669 .671 .688

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 8 iterations.

In arriving at the factors, only those factors with eigenvalue of more than 1 were considered. A scree plot was used to confrm the break between factors with eigenvalue greater than 1 and therefore important for further analysis and those lower than 1. For purposes of interpretation 90

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only factor loadings greater than 0.5 have been maintained in the rotated matrix table. Principal Component 1 comprises five factors i.e. become business person, desire to achieve, opportunity recognition, control own destiny and acquire wealth. The five factors represent 19.6% of the total variance. The variables that load on factor 1 relate to a strong drive to be a successfiil and established entrepreneur with control over one's fiiture. The name assigned to this variable is Drive to Achieve. The drive to achieve has been recognized in past research to be the principal motivation for engaging in entrepreneurship e.g. McClelland (1961). It reñects individuals' orientation, willingness, and drive for satisfaction or sense of accomplishment (Sirec & Mocnik, 2010). Entrepreneurs with a strong drive to achieve are also in the main opportunity entrepreneurs. Principal Component 2 comprises three factors: lost job; employment dissatisfaction; and imitating others. The three variables explain 10.4% of the total variance. The variables that load on factor 2 relate to employment status. These are motivational factors in which self-employment is the ultimate pursuit having recognized other entrepreneurs who have achieved through that route. The name assigned to this variable is Need for Autonomy. Principal Component 3 comprises two factors: educational background and former occupation. The two variables account for 9.1%. The variables load on a factor related to background skills of the entrepreneur. The name assigned to this factor is Entrepreneurial Skills. Entrepreneurial skills, especially skills that have been acquired through experience in another enterprise are a major motivator for starting own enterprises. Experiential knowledge becomes a foundation for both the establishment and growth of the enterprise. Principal Component 4 comprises four factors: family support; VOL. 26 NO. 1. JANUARY 2011 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA

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personal security; family income and own boss. The four variables account for 7.1% of the total variance. The variables load on a factor related to individual and family wellbeing. The assigned name to this factor is Family welfare. Policy Theoretically policies that prevail in a given economy have influence on the level of entrepreneurial activity. The policy prepares the breeding ground for entrepreneurship. Policies that are hostile stifle entrepreneurship especially at inception stage. On the contrary policies that are favourable encourage business start-ups. The policy components of the research were subjected to a chi-square {-f) to test the following hypotheses (See Table 4 below for H, -H^): Hf Entrepreneurs perceive policy on business premises as favourable Local authorities are the custodians of businesses in a number of ways. This factor was designed to determine the extent to which the policy on business premises is unfavourable to entrepreneurs. A chi-square {y^) value of 68.796 (a=0.05, d.f =5) as per table 3 above is greater than the critical value. Therefore the null hypothesis is rejected. This implies that the policy on business premises is unfavourable. H^: Business tendering policies are favourable Businesses thrive on sales. The government of Botswana has established bodies like PPDAB to facilitate tendering activities for government consumption. The observation is that most small businesses in Botswana are very much dependent upon government to give them business. Based on the y^ value of 76.389 against the critical value of 9.49 the null hypothesis is rejected. Small businesses find tendering policies unfavourable to their operations.

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//j.Preferential purchasing policy is favourable to entrepreneurs The govemment of Botswana in review of its policies saw the need for a preferential purchasing policy. This came in the form of the "use of locally manufactured goods" directive from the govemment. Through this policy, businesses whose operations are resident in Botswana especially with high proportion of local ownership would be given priority over others as long as their prices were competitive. The policy was meant to drive local empowerment and creation of employment through economic activities. The -f value of 72.673 against the critical value of 9.49 at 95% confidence level rejects the null hypothesis. Entrepreneurs perceive preferential purchasing policy as unfavourable. There are a number of reasons to this. H^: The perception of entrepreneurs on government permits and licenses is positive This factor was designed to determine the extent to which the issuing of permits and licenses to business is unfavourable to entrepreneurs. A chi-square {-f) value of 56.212 (a=0.05, d.f=5) rejects the hypothesis. Table 4: Chi-square tests: General Perceptions on Policy Test Statistics authority policy

Business tendering policy

Preferentid purchasing poli(y

Permis and licaices

Govanment enccuragemert to invest

68.796»

76.389^

72.673"

56.212»

109.89^»

5

4

4

5

5

.000

.000

.000

.000

.000

\jocu

Chi-square Df As>inp. Sig.

a. Ocelb(.O%) have expectediequencia less than 5The minimumjcectedcellfiequerKy is 37.7. b. 0 cells (.0%) have expected frequencies tess than 5. The minimum expected cell frequency is 45.2.


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H^: The smaller the size of the enterprise the more unfavourable the entrepreneur's perception on preferential purchasing policy The size of an enterprise (measured in terms of annual turnover) has an influence on the preferential purchasing policy. Micro and small entrepreneurs (annual turnover less than BWPl, 5 million) perceive the preferential purchasing policy as unfavourable to them. As Table 5 below demonstrates, a chi-square test {y^ =28.657; d.f =16; p=0.026) of entrepreneurs' perception to this policy shows we cannot reject the hypothesis that the size of the enterprise shapes opinion on policy. Table 5: Influence of size