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The Effect of Entrepreneurial Skills on Business Growth in Bambili

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This study is out to examine the effect of entrepreneurial skills on business growth in Bambili. Entrepreneurship education, innovation skill, and management skill were tested to see their effect on business growth. Business growth in this case is measured in terms of sales.

The questionnaire survey method was employed to collect data for conducting the study. A total of 70 questionnaires were given out and 60 business owners/managers responded. Descriptive statistics and multiple linear regressions have been used as statistical tools for analysis.

The findings of the study show there is a positive relationship between entrepreneurship education, innovative skills, and management skills, and business growth, however, this relationship was only indicant for managerial skills and innovative skills.

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1.1 Background of the study

Every successful entrepreneur must be endowed with skills and take advantage of opportunities. several decades since entrepreneurial ventures were described by Schumpeter, (1947) as an agent of development, there still exist acute want of information on the challenges and prospects of entrepreneurial ventures in many developing countries. According to Schumpeter, (1947), entrepreneurial activity lay in the creation of “new combinations” that disrupted the competitive equilibrium of existing markets, products, processes, and organizations and drives the economy forward. According to Hitt, Ireland, Sirmon, and Trahms (2011) development is achieved thanks to the ability of entrepreneurs to identify, assess and exploit business opportunities, create new firms, and renew existing ones.

Small and medium-size enterprises are the main engine of economic growth in most developing countries. They play a very vital role by employing a very large part of the labor force of Cameroon. The relationship between entrepreneurial skills and firm performance is confirmed by previous studies (Chell, 2013, Hayton, 2015). EntreNews (2004) confirms that the main challenge facing different countries including South Africa is how to motivate individuals to become entrepreneurs and how to equip them with the right skills to turn opportunities into successful ventures

.  Governments have introduced a range of policies to encourage educational institutions and private sector training providers to develop entrepreneurial education and training programs.  Such programs do not only aim to develop entrepreneurial behaviors but also attempt to raise awareness of enterprise and entrepreneurship as a  potential way of life and a future career (EntreNews, 2004).

The world is becoming a place where each individual wants to be at the forefront of any new creative idea and project. Developing countries are more than ever before linked to entrepreneurship; meanwhile many economies that have gotten their development today based their plans on the role of entrepreneurship. Economic development is a discovery process propelled by competition among alert entrepreneurs who are lured by the scent of profit, locate pockets of market ignorance and then exploit untapped opportunities for specialization and trade in the network of economic transactions. The entrepreneurial-driven process of economic development thus mobilizes hidden and fragmented bits of knowledge in the economy that would otherwise lie dormant and unutilized (Haper, 2003).

In developing countries today, entrepreneurship and establishing small and medium entities are regarded as one of the most important economic issues. Certainly, this renewed gift regarding the importance of the competitive spirit came as a result of economic depression, several fluctuations, and the high rate of unemployment in the international cycle. On the other hand, globalization, the increase in competition, customer satisfaction, and innovation can lead to a series of challenges (Roomi, 2005).

These conditions, in various countries, are inevitable and research has intensified the importance of entrepreneurship in economic growth and development all around the world. Actually, from the economic authorities’ perspective, entrepreneurship is considered as the main source of innovations, creativity, employment, reduction of unemployment, and increase in social and economic welfare.

This idea of developing the world of entrepreneurship began as long as the period when the earth began. It was derived in the seventeenth century from the French word “entrepreneur” which means to undertake. Gaining its grounds from the French coinage, the first writer of the latter was first being recognized by French writer, Richard Cantillion in 1955. It later gained ground when the English saw its importance and used it in developing most economies (Epo, 2012).

Entrepreneurship has been recognized as the determinant or pivotal element of economic growth and development (Roomi, 2005). This is because Entrepreneurship leads to the creation of small and medium scale businesses, providing employment opportunities, income generation, uplifting of the standard of living, and utilization of human, material as well as financial resources of a country in the right direction. Many countries have placed intensive and frantic efforts and programs towards the development of Entrepreneurship.

Since then, entrepreneurship has grown to a wider range and a changing perception of the world. It is the ability to build a founding team to complement your own skills and talents. The innovative and creative initiative which the person who undertakes entrepreneurial ventures are often at times, not the product of the environment in which they meet and take advantage but rather, a product of the interplay between the entrepreneur’s own creativity (creative discovery) of something. Entrepreneurship comprises belief and action directed towards generating new economic activity that emerges gradually as the entrepreneurial process of the business venture continues.

This belief and action are being incorporated in the knowledge of gathering pieces of information in such a way that the entrepreneur uses acquired knowledge and previous experiences to assemble a whole new piece through creative thinking. This experience of entrepreneurs is often at times being acquired from the action of parents and practices which the entrepreneur observes from other persons who do similar activities. This has gone a long way in contributing to build-up entrepreneurship (Cunha, 2007).

Institutions and individuals promoting development of most economies now see entrepreneurship as a strategic development intervention that could accelerate the royal development process. Furthermore, institutions and individuals seems to agree on the urgent need to promote enterprises through the private sector by putting funds in the hands of entrepreneurs to come out of their shells and implement the ideas which they have at hand (Epo, 2012). Entrepreneurial orientation accepts entrepreneurship as a central force of economic growth and development. Without it, other factors of development will be wasted or filtered away (Reynolds et al., 2002). What is needed in order to develop entrepreneurship is much dependent on an environment enabling entrepreneurship in a depressed economy. The existence of such an environment largely depends on policies promoting rural entrepreneurship as well as the conceptual framework of entrepreneurship, i.e. what it is and where it comes from.

Reynolds et al. (2002) describe entrepreneurship as one of the two necessary conditions for economic development, with increased output of capital for Small and medium size enterprises (SMEs) being an important position in a country’s economy. SMEs typically employ 35%-45% of work force, stimulate growth and help diversify economic activity. They are flexible and can adapt quickly to market changes and drive innovation (Cunha, 2007).

The economic circumstances in the mid-80s led Cameroon into an economic crisis, mainly as a result of the fall in export income due to price decrease in export products (coffee, cocoa, oil,) in the international market. Following a rise in the real exchange rate of the local currency (CFAF), increase in external debt and the budgetary deficit in 1994, prompted the government to withdraw from economic activities and so creating a conducive environment that favored the emergence of the private sector (African Development Bank, 2007).

The development of the private sector in Cameroon is perceived to be the solution to youth unemployment that constitutes a larger part of the population. The private sector is focused on the development of business activities and industrial production in agriculture, natural resources, and mining sectors while the government is concerned with the development of strategic sectors such as infrastructure, energy, health, In the Cameroon vision 2035 working paper of the ministry of economy and planning the government place emphases on job creation and poverty reduction as two of the most urgent economy and social priorities.

The goal is to move Cameroon to the status of a middle-income country, achieve a 10% GDP growth rate by 2020, increase the manufacturing share of GDP to 23% and reduce the level of poverty to 10%. Development of the private sector is at the core of the government growth and employment strategy paper release in 2009, with a strong emphasis on the development of SMEs and their formalization as a critical component for economic sustainability and growth (Ricardo, 2009).

In recent years, the government has carried out a number of reforms and regulations governing commercial activities. They include the remover of the prior license for several business activities, the establishment of one-stop shops for business creation and investment, the liberalization of prices, and the creation of the National Anticorruption Commission to reduce the number of defaulters of the law and to ensure proper and good governance.

In addition, the investment charter which was adopted in 2002 aims at promoting investment in Cameroon with the goal to create jobs; strengthen the completeness of local industries and increase its capacity to export; create and modernize the basic infrastructure; encourage investment in export industries and economic sectors employing raw materials and other local products; create SMEs and micro-enterprise development around large firms; and transfer the necessary and appropriate technologies (Epo, 2012).

The Cameroon economy which is considered by the World Bank as less economically developed in mid-July 2015 realized that the development of its nation cannot be solely done by the public sector. Hence, it has put forth much emphasis in SMEs like the bank of small and medium-size enterprises to enable small businesses and entrepreneurs to get loans at very low rate and expand their businesses, while developing the immediate environment.

During the 90s, public companies that were mainly agro-industries were privatized, the prevailing economic crisis at this time led to an increase in the number of jobless people, who developed a lot of survival economic activities to support themselves. This saw the emergence of the private sector nationwide. After the crisis, the Cameroon government adopted many reforms to promote private investment. The adoption of the investment code in 2002 stressed the characteristics of investments and investors which also include some fiscal advantage to private investment according to given categories of the firms (Ricardo, 2009).

Recent reforms including the creation of the enterprise registration center in 2010 to facilitate the official procedures of all licenses needed for entrepreneurs to acquire a legal statute. To improve dialogue between public actors and private actors, the government created the Cameroon Business Forum in 2010. The government also created Small and Medium size Bank, the National Agency of SMEs Promotion, and the Agricultural Bank in 2013 to support economic activities.

1.2 Statement of Problem

In Cameroon, small and medium-sized enterprises are regarded as vectors for job creation. They play an important role in the socio-economic development of the country. Their significance can be seen in terms of contribution towards economic growth, employment creation, poverty reduction, and development.

Growth is an important phenomenon in small enterprises. In fact, their survival essentially depends on their power to participate in the market with other big companies. Growth decreases the possibility of closing small businesses (Rauch & Rijskik, 2013).

In a study carried out by St-Pierre et al (2015) on challenges affecting the growth of Small and Medium Size Enterprises (SME) in Cameroon, he concluded that businesses in Cameroon are slow, stagnant, and collapse after a short period because the business environment does not provide sufficient quantities and qualities of physical, financial, human, information and relationship resources. Other researchers such as Ngorora & Mago (2013), Richardson, et al. (2004) concentrated mostly on external challenges affecting enterprises in less developed countries.

The need for entrepreneurial skills for product position/value development evolved as a result of the strong gaps or lack of qualification often faced by small and medium-scale enterprise (SMEs)  owners,  which leads to some set back such as liquidation,  low profit, and product offering reaching the decline stage within a short period.

Promoting entrepreneurial skills in Cameroon economy will facilitate business growth, reduce the dependency ratio on the state, and ameliorate living conditions of the minorities, which can also go a long way to better up the professional skills of most Cameroonians in production, innovations and creativity hence responding to most of the objectives of the Cameroon government through the sustainable development goals.

  This research therefore aimed at studying the effect of entrepreneurial skill on business growth in Bambili will be of great importance in fostering growth.

1.3 Research Questions

1.3.1 Main Research Question

The main research question to this study is;

What is the effect of entrepreneurial skills on business growth in Bambili?

1.3.2 Specific Research Questions

  1. What is the effect of entrepreneurship education on business growth in Bambili?
  2. What is the effect of innovation skill on business growth in Bambili?
  3. What is the effect of management skill on business growth in Bambili?
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