Academic journal article Journal of Small Business Management

Major Elements in Entrepreneurial Development in Central Mexico

Academic journal article Journal of Small Business Management

Major Elements in Entrepreneurial Development in Central Mexico

Article excerpt

In the last three years, many centrally planned economies have given way to market economies. Private firms rather than state-owned enterprises are now seen as the key building block in economic development. This change has occurred over a wide spectrum of political and economic systems. One of the most recent and dramatic transitions is in Mexico, where President Carlos Salinas de Gortari has spearheaded a drive begun in the early 1980s to move Mexico into the mainstream of international business and finance.

This vision of a modern Mexico is not based on bold promises, accompanied by cautious accomplishment, but rather on fundamental and far-reaching moves. For example, Sanderson and Hayes (1990, 40) noted the following:

About 750 state enterprises have been sold, merged, or transferred to the private sector or to local governments since 1982; the banking and telephone industries were the latest to be privatized. There are now only about 400 state-owned companies left.

However, to sustain the changes and expand them in ever-widening circles until there is a dominant and dynamic private sector, a strong and capable group of domestic entrepreneurs--the focal point of this study--is needed.

On the basis of the assumption that the entrepreneur has a pivotal role in the development of Mexico, it is important to examine this research question: What are the major factors influencing entrepreneurial development in Mexico?

In addressing this question, four factors were identified: two facilitating and two inhibiting. The two positive factors are entrepreneurial motivation and encouraging support groups. The negative factors are start-up obstacles and recurring problems.

From a time perspective, the start-up process begins in the "venture feasibility" stage, during which the entrepreneur moves from an initial desire to go into business to identifying and evaluating the alternatives to writing a proposal and actually starting the business. "Support groups" become a critical factor in helping make the final "go ahead" decision. The entrepreneur still may encounter formidable "obstacles" that impede the actual start-up process. Once the business has been started, the entrepreneur continues to encounter problems in the process of growth. Each of these factors are examined in turn. Motivation for Starting a Business

Entrepreneurs are motivated by a myriad of factors which include financial rewards, achievement, social, career, and personal fulfillment. These factors have been discussed in Hisrich and Peters (1992) and Kuratko and Hodgetts (1992). The purpose of this study was to document the strength of these motives among Mexican entrepreneurs. The question addressed is: Which of these motivations appear and how are they prioritized?

Encouraging Support Groups

The family is an important factor in the start-up decision. The family as a traditional force is not only the natural focus of individual emotion but also represents the strongest social unit in Mexico. In fact, the family enterprise plays a leading role in the development of the private sector. In addition to family members, other groups, such as business associates, professional associations, suppliers, customers, and social friends, are all in a position to provide encouragement (or discouragement), support, and resources. The question is: Which of these groups provides the most support to the entrepreneur starting his or her own business?

Obstacles to Start-up

The category of "obstacles" includes the set of inhibiting factors which the entrepreneur assesses as requiring significant resources to resolve. These factors were identified by in-depth field work in the United States and Mexico and a literature review. Three types of obstacles were constructed to reflect the primary categories in Mexico: (1) business, (2) individual, (3) family.

Business: obtaining a loan, finding a good location, obtaining extension of credit from suppliers, lack of guidance and counsel, and lack of knowledge of information services. …

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