Description
On this detailed data in regard to factors influencing entrepreneurial value creation in the uae an exploratory study.
International Journal of Business and Social Science Vol. 2 No. 6; April 2011
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Factors influencing Entrepreneurial value creation in the UAE- An Exploratory
Study
Dr. Arijit Sikdar
Associate Professor and Dean
Faculty of Business and Management, University of Wollongong in Dubai
Knowledge Village, Block 15, P.O.Box: 20183
Dubai, UAE
E-mail: [email protected], Phone: +971504834820
Dr. K. Prakash Vel
Assistant Professor and Program Director-GFC & MSM,
Faculty of Business and Management,
University of Wollongong in Dubai,
Knowledge Village, Block 14, P.O.Box: 20183,
Dubai, UAE
E-mail: [email protected], Phone: +971507249575
Abstract
The policy shift of United Arab Emirates (UAE) from dependence on oil resources to other sources for the
growth of its economy is opening opportunities for Entrepreneurship as a career. In this context, it is
important to understand the factors that would facilitate the process of entrepreneurial value creation. The
process model of entrepreneurship is used as the basis to understand the various processes that an
entrepreneur undertakes in creating his entrepreneurial venture. A sample of 30 case studies of UAE
entrepreneurs’ experience with the entrepreneurial process was studied and content analysis of the case
studies carried out. A major conclusion is the lack of institutional support for entrepreneurship, related to
training, mentoring and information availability, which hinders the ability of the entrepreneurs in the UAE to
successfully navigate their venture creation process. The findings of the study are one of the first to provide an
insight into the entrepreneurial climate of UAE, when entrepreneurship is at a nascent stage in the country.
Keywords: Entrepreneurship, Value creation
1. I ntroduction
According to Shane and Venkataraman (2000), entrepreneurship as a field of business, seeks to understand
how opportunities to create something new (new products or services, new markets, new production processes,
new ways of organizing) are discovered or created by individuals (entrepreneurs) and how various means are
used to exploit or develop these opportunities into business ventures. To put it simply, entrepreneurship
involves recognizing an opportunity to create a new business venture (Eckhardt & Shane, 2003).
Entrepreneurship has been considered as the engine of economic growth (Schumpeter, 1942) and has gained
importance over the years. Data has shown that entrepreneurs have played a major role in creating new
businesses by creating new jobs through self-employment such that about one in eight adult in United States is
self employed (US SBA, 2002) and by employing others whereby 51% of private sector workers in United
States are employed by entrepreneurs (US SBA, 2001). This growing interest in entrepreneurship has spread
beyond the United States to encompass other nations that entrepreneurship is seen as a vital engine of any
nation?s growth.
Entrepreneurship is now considered a major field of study within the business discipline and business schools
across the globe have entrepreneurship focused studies as part of the curricula. Academicians have concluded
that success of entrepreneurship depends not only on external environmental factors that influence the start-up
but also on the behaviours and thoughts of the individual behind the start-up (Baron & Shane, 2005). This has
brought in the importance of understanding the process of how the entrepreneur converts the recognition of an
opportunity into a successful new venture. One of the focuses of entrepreneurship has been on understanding
the personality and characteristics that an individual would require to become a successful entrepreneur
(Romanelli, 1989). However, evidences also suggested that in addition to the individual characteristics, the
process followed by the individual also plays an important role in determining the success of the venture (Bird,
1988). According to McMullen and Shepherd (2006), entrepreneurship involves two key phases or activities-
firstly the individual recognizing an opportunity and secondly the individual evaluating the opportunity to
determine whether it can be developed or not.
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This framework highlights the importance of individual motivation and perception (Shapiro, 1982), skills and
knowledge (Kaish & Gilad, 1991; Busenitz, 1996) in entrepreneurial action. Extending the focus on the
entrepreneurial action, Sarasvathy (2004) suggests that the focus should shift from the specific individual to
the barriers that prevent some individuals from becoming entrepreneurs and on how entrepreneurs convert
their ideas and skills into means for exploiting opportunities. This establishes the importance of the process of
entrepreneurship as an important issue in the understanding of entrepreneurship.
According to the process perspective of entrepreneurship (Bygrave & Hofer, 1991), the key phases of the
process are as follows:
A. recognition of an opportunity
B. Deciding to proceed
C. Assemble the essential resources
D. launching a new venture
E. building success and managing growth
F. harvesting the rewards
Viewing entrepreneurship as an ongoing process draws attention to the key activities entrepreneurs must
perform as the idea is converted into successful business and also draws attention to the different factors that
affect the various activities during the conversion of the idea to a successful business venture. Based on this,
the process perspective of entrepreneurship could be represented as given in Figure 1
Figure 1: Process Model of Entrepreneurship
Source: Bygrave & Hofer (1991), “Theorizing about entrepreneurship”, Entrepreneurship Theory
and Practice, 16 (2), 13-22.
However, the various factors that influence the process of entrepreneurial venture creation are highly
contextual and therefore the practices that are relevant in one context may not be relevant in another. For
example studies of national culture?s impact on entrepreneurship have shown that national cultures that value
and reward entrepreneurial behavior promote a propensity to develop and introduce radical innovation,
whereas national cultures that reinforce conformity, group interests, and control over the future are not likely
to show risk-taking and entrepreneurial behavior (Herbig & Miller, 1992; Shane, 1993). Also the rate and
shape of entrepreneurial activity in a country is strongly influenced by its institutional environment (Busenitz
et al, 2000). Even individual motivation may differ. Shane et al (1991) have found that entrepreneurs from
New Zealand and Britain were motivated by status and prestige associated with venture creation while
Norwegians were motivated by the desire to develop an idea and continue learning.
Accordingly, Low and MacMillan (1988) suggested that research into entrepreneurial behavior should
consider contextual issues and identify the processes that explain rather than merely describe the
entrepreneurial phenomenon. In line with the above thinking, it could be suggested factors that facilitate or
hinder entrepreneurial venture creation in United Arab Emirates (UAE) would be different from the process of
entrepreneurship as identified in the western world/ developed country context, due to the fact that UAE?s
cultural, political and economic context is different from the western world. Majority of the western world
countries are driven by the tradition of Protestant ethic and follow pluralistic democratic form of governance.
On the other hand, UAE is a monarchy based on the traditions of Islam and where the economic activity is
heavily dependent on expatriates and production of oil.
A B C D E F
All phases are influenced by
these three level of variables
? Individual level variables: skills, motives, etc
? Group level variables: interaction with others, etc.
? Societal level variables: govt policies, etc. economic
conditions, etc.
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Moreover, doing business in the UAE is characterised by government regulations (Brunetti et al, 1997),
reliance on „wasta? (personal connection) (Izraeli, 1997), extended family ties providing material, emotional
and social support (Basu & Altinay, 2002). This attributes create a societal cluster that is distinctly different
from the Anglo Saxon societal cluster (Gupta et al, 2002), which has influenced the theory behind
entrepreneurial venture creation process. This therefore calls for an investigation what would constitute the
factors that facilitate or hinder creation of successful entrepreneurial ventures in the UAE context.
2. Role of Entrepreneurship in UAE
As part of future economic planning of the UAE, it has been the objective of the government to depend more
on non-oil resources and development projects (small scale and large scale) as a basis of economic growth.
One of the pioneering attempts made by the government includes Sheikh Rashid Establishment for Young
Business Leaders for developing entrepreneurs in the UAE. The Small and Medium Enterprise (SME) sector
has been making significant growth in the UAE and its contribution to the GDP is expected to become 30-40
% by 2030 (Ramavarman, 2009). According to AT Kearney Middle East, 2 Million jobs could be created by
SMEs with more active government support (Gulf News, 2010). Also a number of people are thinking of
entrepreneurship as a good career and self- employment is emerging as an alternative to Emiratisation in rhe
country?s private sector (Ramavarman, 2009).
A recent study by Global Entrepreneurship Monitor (GEM) on the entrepreneurial activities in the UAE has
placed the UAE in an advanced position on the "Entrepreneurial Environment Scoreboard", rating it as one of
the most supportive environments for entrepreneurial activities. However, more than 50 per cent of the
individuals included in the study confirmed that they would fear failure in starting up a new business due to
lack of knowledge and skills to start a business (Khaleej Times, 2007). Therefore, this calls for a more
structured understanding of entrepreneurial activities within the UAE in terms of the dynamics involved in
developing and sustaining entrepreneurial ventures. With this objective the research was formulated to
understand the process of creating and sustaining entrepreneurial ventures in the UAE so as to identify the
factors that facilitate and inhibit them.
3. Research Design
As the objective of the research was to understand the entrepreneurial process in creating a successful venture,
the focus of the study was on existing entrepreneurs in the UAE who have already created ventures and are
managing them. For this purpose the success of the entrepreneurial venture was defined by the fact that the
ventures are in existence since their creation, as a major factor of entrepreneurial failure is the closing down of
ventures that have been created. As the study was investigating the process of entrepreneurial venture
creation which is a complex phenomena involving interaction between individual and environmental
characteristics that are not easy to sift apart, case study methodology was considered to be the most
appropriate (Yin, 1994). However, the focus of this study was to identify the factors that facilitate or inhibit
the process of entrepreneurial venture creation, which would call for identification of specific variables as
done through a survey research. Therefore, the methodology involved combining the case study approach with
the survey research approach. Based on review of the literature on entrepreneurship, a questionnaire was
developed capturing the various dimensions that impact the entrepreneurial process – individual psychology
and cognition (Shook et al, 2003), role of social capital (Stam & Elfring, 2008), opportunity identification and
development (Eckhardt & Shane, 2003), dimensions of institutional environment (Busenitz et al, 2000).
In order to facilitate the case study approach the questionnaire consisted of both close and open ended
questions regarding the process the entrepreneurs had to undergo in the creation and sustenance of their
venture. Data was collected from 30 entrepreneurs identified through interaction with the chamber of
commerce and interaction with industry. The questionnaire was administered in Arabic to facilitate better
understanding by the respondent entrepreneur so that they are able to provide their response, as many local
entrepreneurs may not be familiar with the English language. To prepare the Arabic version, the back
translation method was adopted (Brislin, 1980). The English version was first translated into Arabic and then
back translated into English by two different individuals who are bilingual. Any discrepancy between the
original English version and the translated version was resolved by the two translators. As the purpose of the
research was exploratory in nature and most of the questions were open ended, it was decided to carry out
content analysis of the data to draw relevant conclusions.
4. Analysis & Discussion
4.1 Motivation
Motivation to start and sustain an entrepreneurial venture is an important force for the entrepreneur as
individual intentions have been found to play a critical role in directing attention towards the goal of
establishing a new venture (Bird, 1992; Gartner, 1985).
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For the entrepreneur, the motivation to start a venture could include factors like having a source of additional
income or the need for independence through self employment or having identified an interesting marketing
opportunity or being influenced by the success of other entrepreneurs or even the intention to contribute to the
society, etc. According to Shapero (1992), motivation is derived based on the perceived attractiveness (both
intra-personal and extra-personal) of starting a new business. In the case of UAE, for majority of the
entrepreneurs, the major motivation to start a venture was the source of having an additional income and the
possibility of gaining independence due to self-employment. However, the role of reference groups in
influencing entrepreneurial thinking was found to be minimal. This finding shows that entrepreneurial role
models influencing entrepreneurial intention of individual (Boyd & Vozikis, 1994) is not well supported in the
case of UAE. Possibly, this could be explained by the fact of UAE being a relatively nascent entrepreneurial
society that limits the availability of effective entrepreneurial role models.
There was an evidence of a balanced position found in terms of intention to serve the society, for some of
them this acted as strong and for some acted as weak motivator. One major factor that hinders an entrepreneur
in starting a venture is the lack of fallback option if the venture fails. This uncertainty of support could prevent
a venture taking off as perceived feasibility of the venture has been found to be an important factor explaining
variance in intention toward entrepreneurship (Krueger, 1993). However, in the case of UAE entrepreneurs,
majority of them were already in other income generating activities and hence that provided resource cushion
for them to get into the entrepreneurial venture. This is probable as UAE nationals get support fro the
government for housing marriage, jobs, etc. that venture failure does not act as a big deterrence to influence
the entrepreneurial intention negatively.
4.2 Identification of market needs
A major hindrance to successful entrepreneurial venture creation is the lack of proper identification of market
needs by the entrepreneur due to their lack of prior knowledge about the market. Lack of proper identification
of market needs would create an entrepreneurial opportunity that is not significantly different from the
universally shared belief thus leading to limited profits (Casson, 1982). However, the study revealed that UAE
entrepreneurs had taken a planned approach in entering into entrepreneurship ventures, as reflected by their
approach to identify suitable market opportunities before entering into their respective ventures. The research
revealed that entrepreneurs had given possible efforts to identify market gaps before starting their ventures.
The entrepreneurs were not myopic but took a long-term perspective in planning the initiation and
development of their entrepreneurial ventures. Also, efforts were made to gather sufficient information about
the markets and the venture before initiating the venture. Gaps identified in the market knowledge were filled
up by suitable ideas and information and hence the whole effort to get into the entrepreneurship venture was
totally planned. This supports the earlier findings where entrepreneurs were seen to carry out a systematic
search for opportunities (Kaish & Gilad, 1991; Busenitz, 1996).
4.3 Nature of mentoring
In the process of entrepreneurial venture creation sometimes the lack of knowledge is substituted by the
mentor who acts as a friend, philosopher and guide to the entrepreneur and helps the entrepreneur over the
uncertainty surrounding the venture. This is supported by the finding that network of relationships provide
entrepreneurs access to information (Birley, 1985) and emotional support (Bruderl & Preisendorfer, 1998). An
effort was made to understand the nature of mentoring, profile of the mentors and the extent of use enjoyed by
the entrepreneurs from mentors. Majority of the entrepreneurs had not received support or encouragement
from mentors. One reason for this could be the fact that the entrepreneurs were well prepared in their planning
efforts that they did not require the need of the mentor?s support to that extent. Also given the nascent nature
of entrepreneurship in UAE, sufficient mentors were not readily available.
However, those mentors who had extended their support did so in the form of providing encouragement,
helping entrepreneurs reengineer their goals, providing training on specific business related issues. Also most
of the mentors were from the entrepreneur?s own acquaintance like family and friends. This showed that
entrepreneurs are willing to seek support from those whom they know rather than from unknown persons
which could be due the fact that entrepreneurs may want to protect their venture from competition. Secondly,
in Islamic societies as family ties provide material, emotional and social support necessary to navigate through
life (Basu & Altinay, 2002), mentors who are entrepreneur?s own acquaintances could do the job better than
unknown persons. This contrasts with the findings on network relationships used by entrepreneurs in the
western context that seem to be driven more by knowledge ties rather than familial ties (Stam & Elfring,
2008).
4.4 Knowledge of the entrepreneurial venture
Most of the UAE entrepreneurs seem to have prior operational experience in their relevant entrepreneurship
ventures.
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However, those who didn?t have background experience demonstrated an active search for information from
outside sources to understand the business and a good amount of research efforts have been maintained by the
entrepreneurs in actively searching for information. This proves that entrepreneurs intend to act when they are
confident that they have the capability to succeed, either through prior knowledge or acquired knowledge.
This finds support from the existing findings which suggest that entrepreneurial self-efficacy, belief they can
succeed because they possess the capability, positively influences their intention to create entrepreneurial
venture (Kolvereid, 1996).
4.5 Type of support received for entrepreneurial ventures
At the time of starting entrepreneurship ventures, the type of support received from primary institutions like
family and secondary reference groups like friends become essential for successful operations. According to
Baron (2008), such support would create positive affect (feeling and mood) leading to positive influence on
entrepreneurial venture creation process. In this regard, most of the UAE entrepreneurs have received positive
support and motivation from their friends, families and their peers. Also the entrepreneurs by planning and
preparing in terms of their financial position before getting into their ventures ensured that their families were
not affected in the event of their venture failing. This reduced the amount of stress they faced. Therefore, both
the motivation and reduction of stress would have led to a positive affect on the entrepreneur thereby
facilitating their venture creation process.
4.6 Problems encountered in starting entrepreneurship ventures
In the initial stages of starting an entrepreneurship venture, a lot of problems are possible to be faced by
entrepreneurs. Some of the problems include finding relevant information, obtaining trade license, securing
initial capital, recruiting skilled workers, getting in touch with customers, lack of proper infrastructure, lack of
reliable suppliers, obtaining permission from relevant authorities, getting credit from suppliers, production
hiccups, maintaining quality, competitive action of rivals and other related problems. Out of the problems
detailed above, the three major problems faced by UAE entrepreneurs include recruiting skilled workers,
securing initial capital and competitive action of rivals. Problem in recruitment of skilled workers is expected
as UAE is heavily dependent on expatriate skills which are sometimes difficult to obtain. As entrepreneurship
is at a nascent state in UAE, the major source of funding for entrepreneurs would be banks.
However, banks being risk averse are less likely to support new entrepreneurial ventures, thereby making it
difficult for entrepreneurs to secure initial funding. Also as UAE?s economy is heavily dependent on the
outside world, this increases the competitive pressure on most businesses in UAE leading to increase in
competition for UAE entrepreneurs. The aspects that were not considered a problem pertained to obtaining
trade licences and finding suitable information to start up their ventures, which goes to speak positively about
the support extended by the UAE government to its entrepreneurs. This finds support from the findings that
institutional environment in Dubai is favourable for entrepreneurs (Gupta et al 2010). The other problems
have not been felt to be as difficult as that of the three problems indicated above. These findings indicate the
role that is to be played by the government and financial institutions in creating an impetus to entrepreneurial
growth. Apart from this the talent set of the existing manpower also needs to be improved by suitably
customised training programmes in different technical and non-technical areas as desired by the
entrepreneurial ventures.
4.7 Sources and intensity of competition faced by entrepreneurs
Entrepreneurs in UAE, when they started their ventures, had faced different sources of competition and in
different degree of intensity. The sources range from the problems caused by small UAE firms, small foreign
firms, large established local firms and Multinational Companies (MNC). The major intensity of competition
was posed by MNC firms and this was expected given UAE?s dependence on the outside world. The MNC
firms enjoy core competence in their respective areas of operation and thus pose greater competitive challenge.
This observation is consistent with the earlier finding, pertaining to lack of skilled manpower, as felt by
entrepreneurs.
4.8 Strategies taken by entrepreneurs to fend off competition
The entrepreneur?s reaction to the competitive pressures is an important ingredient in maintaining and
improving their operations in the UAE. They have taken different strategies to face competition. Some of
them include the following:
? Keeping the profit margin low in the initial period to reach the marketplace and increasing it after
sustaining and enhancing their brand image.
? Enhancing their efficiency of operation and reach of the market, thereby enjoying the relevant
economies and reflecting them as benefits to be passed on to their customers.
? Reducing the turnaround time of their projects, so that the lead time is systematically reduced to an
optimum level.
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? Quality assurance and on-time delivery to clients.
? Developing an effective public relations plan and offering a good level of service to their customers.
? Develop synergies in non-competing areas and optimise them to put resources available to a better use.
? Carve a niche by selecting areas of production, where a high amount of core competence is needed to
venture into production.
? Managerial solutions to be customised to the local market conditions. Solutions which are copied
from foreign soils don?t seem to be working and hence the need for absolutely customised solutions.
? Do competitive research to focus on relative strengths and weaknesses to focus on untapped markets.
4.9 Data availability and strategies to resolve the problem of non-availability of data
There was a mixed response in terms of availability of secondary data pertaining to competition and also in
terms of the difficulty of getting it. The problems with data were basically found to be:
? Lack of availability of structured secondary data on industry and competition.
? The current data available being outdated.
? Lack of published information.
? Limited statistical data available on demand of the product category.
Most entrepreneurs in UAE felt that this lack of secondary information was hampering their desire for swift
response to competitive opportunities as they had to collect data from non-traditional sources before launching
their venture. The strategies used by the entrepreneurs in countering non-availability of data were:
? Generate own database out of available secondary data and by depending on primary sources of data,
by initiating fresh research in the industry of interest.
? Reducing the dependence on secondary data and conceiving and implementing new research
initiatives.
The above discussion brings to light the extent of importance and orientation given to “right kind” of
information by the entrepreneurs. At the same time, it also indicates the non-availability of secondary data,
which is vital for development of entrepreneurs in the UAE.
4.10 Incidence and adoption of influence from role models
Role models have been found to be influential in individual and group development and accordingly are an
important aspect to be studied in specific relevance to entrepreneurship. Majority of the UAE entrepreneurs
did not have a role model and those who had, for them their role model were their family members and other
entrepreneurs from the UAE. This is expected as entrepreneurship being a recent phenomenon in UAE, there
would be lack of sufficient role models that could be emulated. Moreover, the strong family orientation in the
UAE?s culture (Basu & Altinay, 2002) would make the choice of role model within the family more
predominant.
4.11 Knowledge acquisition by entrepreneurs and the role of training
The role of training becomes an essential tool in acquiring the necessary skill resources for successful
entrepreneurship. In this regard, the nature of training received by UAE entrepreneurs was analysed. It was
found that most of the entrepreneurs have not received any formal training. Also, training bodies and
resources were available only to a limited extent locally.The above findings showed that UAE entrepreneurs
were disadvantaged by not having adequate training towards running their entrepreneurial venture
successfully. This could hamper the development of entrepreneurial ventures within UAE. According to the
UAE entrepreneurs, they lacked adequate knowledge and skills related to UAE Labour law, customer service
and client relationship, negotiation skills, dealing with bureaucracy, cash flow management and networking.
According to the UAE entrepreneurs, this lack of knowledge prevented them from competing effectively with
other firms.
4.12 Networking
The specific benefits and the nature of „networking? for UAE entrepreneurs were studied along with the
modus operandi behind development of networking and the observations were as follows:
? Networking seems to be an important expectation by most of the entrepreneurs.
? Most of the entrepreneurs wanted a combination of networking namely from within and outside the
industry.
? Most of the networking has been developed using trade interaction and social interaction.
? Internets as a source of developing networks was used the least.
? The major uses of networking to the entrepreneurs were for developing good public relations; faster
processing of work and results; and marketing and client development.
For majority of the entrepreneurs, networking played an important role of providing information where it was
lacking and entrepreneurs cultivated networking to offset the lack of proper information about the
environment.
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This is consistent with earlier finding that networking provides access to information (Birley, 1985).
4.13 Challenges faced by the entrepreneurs in managing entrepreneurship
The major challenges faced by the UAE entrepreneurs were in the areas of getting financial resources, getting
right manpower and work-family-life balance. The specific areas where support for entrepreneurial growth
was lacking include:
? Lack of bridging finance.
? Details on how to set-up an entrepreneurial venture in the UAE.
? A „buddy? system to encourage other emerging entrepreneurs.
? Lack of right management knowledge
? Need for professionally trained sales and marketing professionals.
? Government sponsored training programmes.
? Reliable and accessible statistical data.
? Lack of qualified and well trained professionals in different areas of industry.
Therefore, addressing the areas of lacunae as mentioned above becomes important for the development of
entrepreneurship in the UAE.
5. Conclusion
This study was initiated with a specific purpose of understanding the gaps or the lacunae in the present climate
and support system available for developing entrepreneurship in the UAE. Accordingly, the study had tried to
identify the practices of successful entrepreneurs in UAE in order to distil the important factors that would
lead to success for entrepreneurship in UAE. Some of the challenges that have been faced by UAE
entrepreneurs are similar to those faced by entrepreneurs all over. However, the study also indentifies the
challenges that are unique in the UAE context. A major finding has been that entrepreneurs in UAE lack the
necessary institutional support to facilitate their success. Two important areas of institutional support that
entrepreneurs in UAE lacked were related to inadequate training and mentoring for entrepreneurship. To
overcome these obstacles, entrepreneurs in UAE have developed mechanisms to supplement like using
networking or generating their own database. Thus it is necessary for the government to provide the necessary
infrastructural support related to training so as to skills necessary to succeed in entrepreneurial ventures.
This could be done by setting up government support institutions for developing entrepreneurial skills as may
be necessary for entrepreneurship in UAE. A systematic and planned approach followed by governmental
institutions and entrepreneurship development forums would go a long way in enhancing the efficiency of
entrepreneurial operations in the UAE.Another important issue the entrepreneurs in UAE encounter is the
non-availability of relevant information about the market that could be accessed in a structure manner. To
overcome this problem, entrepreneurs have developed individual efforts to generate relevant information from
what is available. We believe that this process entails cost on the entrepreneur and thereby impacts their
motivation to start the venture. Here again the government can play a role by developing institutions that
entrepreneurs can access information relatively easily. The findings show the importance of the family in the
UAE entrepreneur?s venture creation process. The family not only provided the support but also the role
model. This is expected given the importance of family ties in the UAE?s cultural life. However, the greater
dependence on family may act as a barrier for the entrepreneur to access new ideas and external resources,
which may be necessary for the entrepreneur to make their venture succeed.
The importance of the family for the entrepreneur could also bee seen from the entrepreneur?s attempt to
dissociate the family responsibility from the venture outcome so in the event of the venture failing the family
is not adversely affected. This reduces the stress on the individual entrepreneur thereby ensuring better
decisions in business, an important ingredient for success. This would act as a source of learning for budding
entrepreneurs to ensure that they dissociate their family responsibilities from the business venture outcome so
that they can concentrate better on business decisions. The motivation of the UAE entrepreneur is driven by
additional income or need for independence through self employment. This could act a barrier for
entrepreneurship to contribute significantly to the growth of the economy as entrepreneurs by not focusing on
higher motivational issues of venture creation like impacting the society would miss out on opportunities. The
sample size used for the study is small. However, the study being exploratory provides some insight into the
nature of entrepreneurial climate in UAE. To understand this phenomenon more deeply, it calls for further in-
depth research to understand the entrepreneurial climate in UAE using a larger sample size.
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doc_833546012.pdf
On this detailed data in regard to factors influencing entrepreneurial value creation in the uae an exploratory study.
International Journal of Business and Social Science Vol. 2 No. 6; April 2011
77
Factors influencing Entrepreneurial value creation in the UAE- An Exploratory
Study
Dr. Arijit Sikdar
Associate Professor and Dean
Faculty of Business and Management, University of Wollongong in Dubai
Knowledge Village, Block 15, P.O.Box: 20183
Dubai, UAE
E-mail: [email protected], Phone: +971504834820
Dr. K. Prakash Vel
Assistant Professor and Program Director-GFC & MSM,
Faculty of Business and Management,
University of Wollongong in Dubai,
Knowledge Village, Block 14, P.O.Box: 20183,
Dubai, UAE
E-mail: [email protected], Phone: +971507249575
Abstract
The policy shift of United Arab Emirates (UAE) from dependence on oil resources to other sources for the
growth of its economy is opening opportunities for Entrepreneurship as a career. In this context, it is
important to understand the factors that would facilitate the process of entrepreneurial value creation. The
process model of entrepreneurship is used as the basis to understand the various processes that an
entrepreneur undertakes in creating his entrepreneurial venture. A sample of 30 case studies of UAE
entrepreneurs’ experience with the entrepreneurial process was studied and content analysis of the case
studies carried out. A major conclusion is the lack of institutional support for entrepreneurship, related to
training, mentoring and information availability, which hinders the ability of the entrepreneurs in the UAE to
successfully navigate their venture creation process. The findings of the study are one of the first to provide an
insight into the entrepreneurial climate of UAE, when entrepreneurship is at a nascent stage in the country.
Keywords: Entrepreneurship, Value creation
1. I ntroduction
According to Shane and Venkataraman (2000), entrepreneurship as a field of business, seeks to understand
how opportunities to create something new (new products or services, new markets, new production processes,
new ways of organizing) are discovered or created by individuals (entrepreneurs) and how various means are
used to exploit or develop these opportunities into business ventures. To put it simply, entrepreneurship
involves recognizing an opportunity to create a new business venture (Eckhardt & Shane, 2003).
Entrepreneurship has been considered as the engine of economic growth (Schumpeter, 1942) and has gained
importance over the years. Data has shown that entrepreneurs have played a major role in creating new
businesses by creating new jobs through self-employment such that about one in eight adult in United States is
self employed (US SBA, 2002) and by employing others whereby 51% of private sector workers in United
States are employed by entrepreneurs (US SBA, 2001). This growing interest in entrepreneurship has spread
beyond the United States to encompass other nations that entrepreneurship is seen as a vital engine of any
nation?s growth.
Entrepreneurship is now considered a major field of study within the business discipline and business schools
across the globe have entrepreneurship focused studies as part of the curricula. Academicians have concluded
that success of entrepreneurship depends not only on external environmental factors that influence the start-up
but also on the behaviours and thoughts of the individual behind the start-up (Baron & Shane, 2005). This has
brought in the importance of understanding the process of how the entrepreneur converts the recognition of an
opportunity into a successful new venture. One of the focuses of entrepreneurship has been on understanding
the personality and characteristics that an individual would require to become a successful entrepreneur
(Romanelli, 1989). However, evidences also suggested that in addition to the individual characteristics, the
process followed by the individual also plays an important role in determining the success of the venture (Bird,
1988). According to McMullen and Shepherd (2006), entrepreneurship involves two key phases or activities-
firstly the individual recognizing an opportunity and secondly the individual evaluating the opportunity to
determine whether it can be developed or not.
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This framework highlights the importance of individual motivation and perception (Shapiro, 1982), skills and
knowledge (Kaish & Gilad, 1991; Busenitz, 1996) in entrepreneurial action. Extending the focus on the
entrepreneurial action, Sarasvathy (2004) suggests that the focus should shift from the specific individual to
the barriers that prevent some individuals from becoming entrepreneurs and on how entrepreneurs convert
their ideas and skills into means for exploiting opportunities. This establishes the importance of the process of
entrepreneurship as an important issue in the understanding of entrepreneurship.
According to the process perspective of entrepreneurship (Bygrave & Hofer, 1991), the key phases of the
process are as follows:
A. recognition of an opportunity
B. Deciding to proceed
C. Assemble the essential resources
D. launching a new venture
E. building success and managing growth
F. harvesting the rewards
Viewing entrepreneurship as an ongoing process draws attention to the key activities entrepreneurs must
perform as the idea is converted into successful business and also draws attention to the different factors that
affect the various activities during the conversion of the idea to a successful business venture. Based on this,
the process perspective of entrepreneurship could be represented as given in Figure 1
Figure 1: Process Model of Entrepreneurship
Source: Bygrave & Hofer (1991), “Theorizing about entrepreneurship”, Entrepreneurship Theory
and Practice, 16 (2), 13-22.
However, the various factors that influence the process of entrepreneurial venture creation are highly
contextual and therefore the practices that are relevant in one context may not be relevant in another. For
example studies of national culture?s impact on entrepreneurship have shown that national cultures that value
and reward entrepreneurial behavior promote a propensity to develop and introduce radical innovation,
whereas national cultures that reinforce conformity, group interests, and control over the future are not likely
to show risk-taking and entrepreneurial behavior (Herbig & Miller, 1992; Shane, 1993). Also the rate and
shape of entrepreneurial activity in a country is strongly influenced by its institutional environment (Busenitz
et al, 2000). Even individual motivation may differ. Shane et al (1991) have found that entrepreneurs from
New Zealand and Britain were motivated by status and prestige associated with venture creation while
Norwegians were motivated by the desire to develop an idea and continue learning.
Accordingly, Low and MacMillan (1988) suggested that research into entrepreneurial behavior should
consider contextual issues and identify the processes that explain rather than merely describe the
entrepreneurial phenomenon. In line with the above thinking, it could be suggested factors that facilitate or
hinder entrepreneurial venture creation in United Arab Emirates (UAE) would be different from the process of
entrepreneurship as identified in the western world/ developed country context, due to the fact that UAE?s
cultural, political and economic context is different from the western world. Majority of the western world
countries are driven by the tradition of Protestant ethic and follow pluralistic democratic form of governance.
On the other hand, UAE is a monarchy based on the traditions of Islam and where the economic activity is
heavily dependent on expatriates and production of oil.
A B C D E F
All phases are influenced by
these three level of variables
? Individual level variables: skills, motives, etc
? Group level variables: interaction with others, etc.
? Societal level variables: govt policies, etc. economic
conditions, etc.
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79
Moreover, doing business in the UAE is characterised by government regulations (Brunetti et al, 1997),
reliance on „wasta? (personal connection) (Izraeli, 1997), extended family ties providing material, emotional
and social support (Basu & Altinay, 2002). This attributes create a societal cluster that is distinctly different
from the Anglo Saxon societal cluster (Gupta et al, 2002), which has influenced the theory behind
entrepreneurial venture creation process. This therefore calls for an investigation what would constitute the
factors that facilitate or hinder creation of successful entrepreneurial ventures in the UAE context.
2. Role of Entrepreneurship in UAE
As part of future economic planning of the UAE, it has been the objective of the government to depend more
on non-oil resources and development projects (small scale and large scale) as a basis of economic growth.
One of the pioneering attempts made by the government includes Sheikh Rashid Establishment for Young
Business Leaders for developing entrepreneurs in the UAE. The Small and Medium Enterprise (SME) sector
has been making significant growth in the UAE and its contribution to the GDP is expected to become 30-40
% by 2030 (Ramavarman, 2009). According to AT Kearney Middle East, 2 Million jobs could be created by
SMEs with more active government support (Gulf News, 2010). Also a number of people are thinking of
entrepreneurship as a good career and self- employment is emerging as an alternative to Emiratisation in rhe
country?s private sector (Ramavarman, 2009).
A recent study by Global Entrepreneurship Monitor (GEM) on the entrepreneurial activities in the UAE has
placed the UAE in an advanced position on the "Entrepreneurial Environment Scoreboard", rating it as one of
the most supportive environments for entrepreneurial activities. However, more than 50 per cent of the
individuals included in the study confirmed that they would fear failure in starting up a new business due to
lack of knowledge and skills to start a business (Khaleej Times, 2007). Therefore, this calls for a more
structured understanding of entrepreneurial activities within the UAE in terms of the dynamics involved in
developing and sustaining entrepreneurial ventures. With this objective the research was formulated to
understand the process of creating and sustaining entrepreneurial ventures in the UAE so as to identify the
factors that facilitate and inhibit them.
3. Research Design
As the objective of the research was to understand the entrepreneurial process in creating a successful venture,
the focus of the study was on existing entrepreneurs in the UAE who have already created ventures and are
managing them. For this purpose the success of the entrepreneurial venture was defined by the fact that the
ventures are in existence since their creation, as a major factor of entrepreneurial failure is the closing down of
ventures that have been created. As the study was investigating the process of entrepreneurial venture
creation which is a complex phenomena involving interaction between individual and environmental
characteristics that are not easy to sift apart, case study methodology was considered to be the most
appropriate (Yin, 1994). However, the focus of this study was to identify the factors that facilitate or inhibit
the process of entrepreneurial venture creation, which would call for identification of specific variables as
done through a survey research. Therefore, the methodology involved combining the case study approach with
the survey research approach. Based on review of the literature on entrepreneurship, a questionnaire was
developed capturing the various dimensions that impact the entrepreneurial process – individual psychology
and cognition (Shook et al, 2003), role of social capital (Stam & Elfring, 2008), opportunity identification and
development (Eckhardt & Shane, 2003), dimensions of institutional environment (Busenitz et al, 2000).
In order to facilitate the case study approach the questionnaire consisted of both close and open ended
questions regarding the process the entrepreneurs had to undergo in the creation and sustenance of their
venture. Data was collected from 30 entrepreneurs identified through interaction with the chamber of
commerce and interaction with industry. The questionnaire was administered in Arabic to facilitate better
understanding by the respondent entrepreneur so that they are able to provide their response, as many local
entrepreneurs may not be familiar with the English language. To prepare the Arabic version, the back
translation method was adopted (Brislin, 1980). The English version was first translated into Arabic and then
back translated into English by two different individuals who are bilingual. Any discrepancy between the
original English version and the translated version was resolved by the two translators. As the purpose of the
research was exploratory in nature and most of the questions were open ended, it was decided to carry out
content analysis of the data to draw relevant conclusions.
4. Analysis & Discussion
4.1 Motivation
Motivation to start and sustain an entrepreneurial venture is an important force for the entrepreneur as
individual intentions have been found to play a critical role in directing attention towards the goal of
establishing a new venture (Bird, 1992; Gartner, 1985).
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For the entrepreneur, the motivation to start a venture could include factors like having a source of additional
income or the need for independence through self employment or having identified an interesting marketing
opportunity or being influenced by the success of other entrepreneurs or even the intention to contribute to the
society, etc. According to Shapero (1992), motivation is derived based on the perceived attractiveness (both
intra-personal and extra-personal) of starting a new business. In the case of UAE, for majority of the
entrepreneurs, the major motivation to start a venture was the source of having an additional income and the
possibility of gaining independence due to self-employment. However, the role of reference groups in
influencing entrepreneurial thinking was found to be minimal. This finding shows that entrepreneurial role
models influencing entrepreneurial intention of individual (Boyd & Vozikis, 1994) is not well supported in the
case of UAE. Possibly, this could be explained by the fact of UAE being a relatively nascent entrepreneurial
society that limits the availability of effective entrepreneurial role models.
There was an evidence of a balanced position found in terms of intention to serve the society, for some of
them this acted as strong and for some acted as weak motivator. One major factor that hinders an entrepreneur
in starting a venture is the lack of fallback option if the venture fails. This uncertainty of support could prevent
a venture taking off as perceived feasibility of the venture has been found to be an important factor explaining
variance in intention toward entrepreneurship (Krueger, 1993). However, in the case of UAE entrepreneurs,
majority of them were already in other income generating activities and hence that provided resource cushion
for them to get into the entrepreneurial venture. This is probable as UAE nationals get support fro the
government for housing marriage, jobs, etc. that venture failure does not act as a big deterrence to influence
the entrepreneurial intention negatively.
4.2 Identification of market needs
A major hindrance to successful entrepreneurial venture creation is the lack of proper identification of market
needs by the entrepreneur due to their lack of prior knowledge about the market. Lack of proper identification
of market needs would create an entrepreneurial opportunity that is not significantly different from the
universally shared belief thus leading to limited profits (Casson, 1982). However, the study revealed that UAE
entrepreneurs had taken a planned approach in entering into entrepreneurship ventures, as reflected by their
approach to identify suitable market opportunities before entering into their respective ventures. The research
revealed that entrepreneurs had given possible efforts to identify market gaps before starting their ventures.
The entrepreneurs were not myopic but took a long-term perspective in planning the initiation and
development of their entrepreneurial ventures. Also, efforts were made to gather sufficient information about
the markets and the venture before initiating the venture. Gaps identified in the market knowledge were filled
up by suitable ideas and information and hence the whole effort to get into the entrepreneurship venture was
totally planned. This supports the earlier findings where entrepreneurs were seen to carry out a systematic
search for opportunities (Kaish & Gilad, 1991; Busenitz, 1996).
4.3 Nature of mentoring
In the process of entrepreneurial venture creation sometimes the lack of knowledge is substituted by the
mentor who acts as a friend, philosopher and guide to the entrepreneur and helps the entrepreneur over the
uncertainty surrounding the venture. This is supported by the finding that network of relationships provide
entrepreneurs access to information (Birley, 1985) and emotional support (Bruderl & Preisendorfer, 1998). An
effort was made to understand the nature of mentoring, profile of the mentors and the extent of use enjoyed by
the entrepreneurs from mentors. Majority of the entrepreneurs had not received support or encouragement
from mentors. One reason for this could be the fact that the entrepreneurs were well prepared in their planning
efforts that they did not require the need of the mentor?s support to that extent. Also given the nascent nature
of entrepreneurship in UAE, sufficient mentors were not readily available.
However, those mentors who had extended their support did so in the form of providing encouragement,
helping entrepreneurs reengineer their goals, providing training on specific business related issues. Also most
of the mentors were from the entrepreneur?s own acquaintance like family and friends. This showed that
entrepreneurs are willing to seek support from those whom they know rather than from unknown persons
which could be due the fact that entrepreneurs may want to protect their venture from competition. Secondly,
in Islamic societies as family ties provide material, emotional and social support necessary to navigate through
life (Basu & Altinay, 2002), mentors who are entrepreneur?s own acquaintances could do the job better than
unknown persons. This contrasts with the findings on network relationships used by entrepreneurs in the
western context that seem to be driven more by knowledge ties rather than familial ties (Stam & Elfring,
2008).
4.4 Knowledge of the entrepreneurial venture
Most of the UAE entrepreneurs seem to have prior operational experience in their relevant entrepreneurship
ventures.
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However, those who didn?t have background experience demonstrated an active search for information from
outside sources to understand the business and a good amount of research efforts have been maintained by the
entrepreneurs in actively searching for information. This proves that entrepreneurs intend to act when they are
confident that they have the capability to succeed, either through prior knowledge or acquired knowledge.
This finds support from the existing findings which suggest that entrepreneurial self-efficacy, belief they can
succeed because they possess the capability, positively influences their intention to create entrepreneurial
venture (Kolvereid, 1996).
4.5 Type of support received for entrepreneurial ventures
At the time of starting entrepreneurship ventures, the type of support received from primary institutions like
family and secondary reference groups like friends become essential for successful operations. According to
Baron (2008), such support would create positive affect (feeling and mood) leading to positive influence on
entrepreneurial venture creation process. In this regard, most of the UAE entrepreneurs have received positive
support and motivation from their friends, families and their peers. Also the entrepreneurs by planning and
preparing in terms of their financial position before getting into their ventures ensured that their families were
not affected in the event of their venture failing. This reduced the amount of stress they faced. Therefore, both
the motivation and reduction of stress would have led to a positive affect on the entrepreneur thereby
facilitating their venture creation process.
4.6 Problems encountered in starting entrepreneurship ventures
In the initial stages of starting an entrepreneurship venture, a lot of problems are possible to be faced by
entrepreneurs. Some of the problems include finding relevant information, obtaining trade license, securing
initial capital, recruiting skilled workers, getting in touch with customers, lack of proper infrastructure, lack of
reliable suppliers, obtaining permission from relevant authorities, getting credit from suppliers, production
hiccups, maintaining quality, competitive action of rivals and other related problems. Out of the problems
detailed above, the three major problems faced by UAE entrepreneurs include recruiting skilled workers,
securing initial capital and competitive action of rivals. Problem in recruitment of skilled workers is expected
as UAE is heavily dependent on expatriate skills which are sometimes difficult to obtain. As entrepreneurship
is at a nascent state in UAE, the major source of funding for entrepreneurs would be banks.
However, banks being risk averse are less likely to support new entrepreneurial ventures, thereby making it
difficult for entrepreneurs to secure initial funding. Also as UAE?s economy is heavily dependent on the
outside world, this increases the competitive pressure on most businesses in UAE leading to increase in
competition for UAE entrepreneurs. The aspects that were not considered a problem pertained to obtaining
trade licences and finding suitable information to start up their ventures, which goes to speak positively about
the support extended by the UAE government to its entrepreneurs. This finds support from the findings that
institutional environment in Dubai is favourable for entrepreneurs (Gupta et al 2010). The other problems
have not been felt to be as difficult as that of the three problems indicated above. These findings indicate the
role that is to be played by the government and financial institutions in creating an impetus to entrepreneurial
growth. Apart from this the talent set of the existing manpower also needs to be improved by suitably
customised training programmes in different technical and non-technical areas as desired by the
entrepreneurial ventures.
4.7 Sources and intensity of competition faced by entrepreneurs
Entrepreneurs in UAE, when they started their ventures, had faced different sources of competition and in
different degree of intensity. The sources range from the problems caused by small UAE firms, small foreign
firms, large established local firms and Multinational Companies (MNC). The major intensity of competition
was posed by MNC firms and this was expected given UAE?s dependence on the outside world. The MNC
firms enjoy core competence in their respective areas of operation and thus pose greater competitive challenge.
This observation is consistent with the earlier finding, pertaining to lack of skilled manpower, as felt by
entrepreneurs.
4.8 Strategies taken by entrepreneurs to fend off competition
The entrepreneur?s reaction to the competitive pressures is an important ingredient in maintaining and
improving their operations in the UAE. They have taken different strategies to face competition. Some of
them include the following:
? Keeping the profit margin low in the initial period to reach the marketplace and increasing it after
sustaining and enhancing their brand image.
? Enhancing their efficiency of operation and reach of the market, thereby enjoying the relevant
economies and reflecting them as benefits to be passed on to their customers.
? Reducing the turnaround time of their projects, so that the lead time is systematically reduced to an
optimum level.
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? Quality assurance and on-time delivery to clients.
? Developing an effective public relations plan and offering a good level of service to their customers.
? Develop synergies in non-competing areas and optimise them to put resources available to a better use.
? Carve a niche by selecting areas of production, where a high amount of core competence is needed to
venture into production.
? Managerial solutions to be customised to the local market conditions. Solutions which are copied
from foreign soils don?t seem to be working and hence the need for absolutely customised solutions.
? Do competitive research to focus on relative strengths and weaknesses to focus on untapped markets.
4.9 Data availability and strategies to resolve the problem of non-availability of data
There was a mixed response in terms of availability of secondary data pertaining to competition and also in
terms of the difficulty of getting it. The problems with data were basically found to be:
? Lack of availability of structured secondary data on industry and competition.
? The current data available being outdated.
? Lack of published information.
? Limited statistical data available on demand of the product category.
Most entrepreneurs in UAE felt that this lack of secondary information was hampering their desire for swift
response to competitive opportunities as they had to collect data from non-traditional sources before launching
their venture. The strategies used by the entrepreneurs in countering non-availability of data were:
? Generate own database out of available secondary data and by depending on primary sources of data,
by initiating fresh research in the industry of interest.
? Reducing the dependence on secondary data and conceiving and implementing new research
initiatives.
The above discussion brings to light the extent of importance and orientation given to “right kind” of
information by the entrepreneurs. At the same time, it also indicates the non-availability of secondary data,
which is vital for development of entrepreneurs in the UAE.
4.10 Incidence and adoption of influence from role models
Role models have been found to be influential in individual and group development and accordingly are an
important aspect to be studied in specific relevance to entrepreneurship. Majority of the UAE entrepreneurs
did not have a role model and those who had, for them their role model were their family members and other
entrepreneurs from the UAE. This is expected as entrepreneurship being a recent phenomenon in UAE, there
would be lack of sufficient role models that could be emulated. Moreover, the strong family orientation in the
UAE?s culture (Basu & Altinay, 2002) would make the choice of role model within the family more
predominant.
4.11 Knowledge acquisition by entrepreneurs and the role of training
The role of training becomes an essential tool in acquiring the necessary skill resources for successful
entrepreneurship. In this regard, the nature of training received by UAE entrepreneurs was analysed. It was
found that most of the entrepreneurs have not received any formal training. Also, training bodies and
resources were available only to a limited extent locally.The above findings showed that UAE entrepreneurs
were disadvantaged by not having adequate training towards running their entrepreneurial venture
successfully. This could hamper the development of entrepreneurial ventures within UAE. According to the
UAE entrepreneurs, they lacked adequate knowledge and skills related to UAE Labour law, customer service
and client relationship, negotiation skills, dealing with bureaucracy, cash flow management and networking.
According to the UAE entrepreneurs, this lack of knowledge prevented them from competing effectively with
other firms.
4.12 Networking
The specific benefits and the nature of „networking? for UAE entrepreneurs were studied along with the
modus operandi behind development of networking and the observations were as follows:
? Networking seems to be an important expectation by most of the entrepreneurs.
? Most of the entrepreneurs wanted a combination of networking namely from within and outside the
industry.
? Most of the networking has been developed using trade interaction and social interaction.
? Internets as a source of developing networks was used the least.
? The major uses of networking to the entrepreneurs were for developing good public relations; faster
processing of work and results; and marketing and client development.
For majority of the entrepreneurs, networking played an important role of providing information where it was
lacking and entrepreneurs cultivated networking to offset the lack of proper information about the
environment.
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This is consistent with earlier finding that networking provides access to information (Birley, 1985).
4.13 Challenges faced by the entrepreneurs in managing entrepreneurship
The major challenges faced by the UAE entrepreneurs were in the areas of getting financial resources, getting
right manpower and work-family-life balance. The specific areas where support for entrepreneurial growth
was lacking include:
? Lack of bridging finance.
? Details on how to set-up an entrepreneurial venture in the UAE.
? A „buddy? system to encourage other emerging entrepreneurs.
? Lack of right management knowledge
? Need for professionally trained sales and marketing professionals.
? Government sponsored training programmes.
? Reliable and accessible statistical data.
? Lack of qualified and well trained professionals in different areas of industry.
Therefore, addressing the areas of lacunae as mentioned above becomes important for the development of
entrepreneurship in the UAE.
5. Conclusion
This study was initiated with a specific purpose of understanding the gaps or the lacunae in the present climate
and support system available for developing entrepreneurship in the UAE. Accordingly, the study had tried to
identify the practices of successful entrepreneurs in UAE in order to distil the important factors that would
lead to success for entrepreneurship in UAE. Some of the challenges that have been faced by UAE
entrepreneurs are similar to those faced by entrepreneurs all over. However, the study also indentifies the
challenges that are unique in the UAE context. A major finding has been that entrepreneurs in UAE lack the
necessary institutional support to facilitate their success. Two important areas of institutional support that
entrepreneurs in UAE lacked were related to inadequate training and mentoring for entrepreneurship. To
overcome these obstacles, entrepreneurs in UAE have developed mechanisms to supplement like using
networking or generating their own database. Thus it is necessary for the government to provide the necessary
infrastructural support related to training so as to skills necessary to succeed in entrepreneurial ventures.
This could be done by setting up government support institutions for developing entrepreneurial skills as may
be necessary for entrepreneurship in UAE. A systematic and planned approach followed by governmental
institutions and entrepreneurship development forums would go a long way in enhancing the efficiency of
entrepreneurial operations in the UAE.Another important issue the entrepreneurs in UAE encounter is the
non-availability of relevant information about the market that could be accessed in a structure manner. To
overcome this problem, entrepreneurs have developed individual efforts to generate relevant information from
what is available. We believe that this process entails cost on the entrepreneur and thereby impacts their
motivation to start the venture. Here again the government can play a role by developing institutions that
entrepreneurs can access information relatively easily. The findings show the importance of the family in the
UAE entrepreneur?s venture creation process. The family not only provided the support but also the role
model. This is expected given the importance of family ties in the UAE?s cultural life. However, the greater
dependence on family may act as a barrier for the entrepreneur to access new ideas and external resources,
which may be necessary for the entrepreneur to make their venture succeed.
The importance of the family for the entrepreneur could also bee seen from the entrepreneur?s attempt to
dissociate the family responsibility from the venture outcome so in the event of the venture failing the family
is not adversely affected. This reduces the stress on the individual entrepreneur thereby ensuring better
decisions in business, an important ingredient for success. This would act as a source of learning for budding
entrepreneurs to ensure that they dissociate their family responsibilities from the business venture outcome so
that they can concentrate better on business decisions. The motivation of the UAE entrepreneur is driven by
additional income or need for independence through self employment. This could act a barrier for
entrepreneurship to contribute significantly to the growth of the economy as entrepreneurs by not focusing on
higher motivational issues of venture creation like impacting the society would miss out on opportunities. The
sample size used for the study is small. However, the study being exploratory provides some insight into the
nature of entrepreneurial climate in UAE. To understand this phenomenon more deeply, it calls for further in-
depth research to understand the entrepreneurial climate in UAE using a larger sample size.
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