Risk taking propensity among micro and small business owners in Kelantan and Terengganu

• Main Author: Fauzilah Salleh
• Format: UMK Etheses
• Published: 2011
• Online Access: http://discol.umk.edu.my/id/eprint/10350/
• Institution: Universiti Malaysia Kelantan

The purpose of this study is to investigate the relationship between demographic and business characteristics and level of risk taking propensity of Malaysian MSEs owners. The study proposed four demographic characteristics and seven business characteristics to be associated with those predictor variables and risk taking propensity (criterion variable). In conducting the research, questionnaires were distributed to 260 respondents who are business owners of small and medium business enterprises at Terengganu and Kelantan and registered with Small and Medium Industries Development Corporation (SME Corp). Out of 260 questionnaires distributed, 237 sets were completed and used for data analysis- yielding a response rate of 91 per cent. The survey instrument includes a cover letter. The cover letter is an opening statement, placed in the first page of the questionnaire. It is designed to explain the purpose of the study and request the respondents’ co-operation regarding the interview. The questionnaire to this study is designed to measure nine variables and was adapted and modified from a previous study done by Gene Calvert (1993) to suit the local context. The questionnaire for this study is design to measure (1) size, (2) length of operation, (3) types of business (4) amount of start up financing, (5) source of start up financing (6) business location, (7) number of employees, (8) personal factors – gender, age, education level and experience, and (9) risk taking propensity. Factors 1 to 8 forms the independent variables and factor 9 is the dependant variable. The data solicited were then analyzed using SPSS software where several statistical techniques are employed. As a result of Pearson product-moment correlation analyses, all predictor variables i.e., size, length of operation, types of business, amount of start up financing, source of start up financing, business location and number of employees, shows no significant relationship with risk taking propensity. T-test and ANOVA were run to see the mean differences in risk taking propensity based on demographic factors of MSEs owners. All the stated hypotheses were rejected. Finally, correlation analyses were done to see whether there are relationships between predictor’s variables and risk taking propensity. All the predictor’s variables were found to have no relationships with the risk taking propensity. This situation shows that MSEs demographic and business characteristics have no significant affect to their risk taking propensity. As a conclusion, the present study has led to the building of theoretical models which make a vital contribution to entrepreneurs’ development theory and also entrepreneurship sector in Malaysia.