Muslims To Become Entrepreneurs In Malaysia Business Essay

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This paper discusses the reasons that motivate Muslims to become entrepreneurs in various states throughout Malaysia. In 2009, a semi-structured interview of 150 Muslim entrepreneurs was done throughout various states in Malaysia who involved in a wide range of business activities. Grounded theory methodology was applied to identify these possible reasons. The findings suggested that passion and interest in managing own business greatly explain the motivation for people to be involved in entrepreneurship. The passion guided them to overcome obstacles and challenges arising from competitions and ensuring sustainability of the business. The second reason was money consideration or income generated from the business as this will eventually used to support their families and improve their condition of life. The third reason was the independence and freedom that self-employed provides as compared to being employed in the private or public sector. Other notable reason was their family background whom also involved in own businesses. The results of this study calls for the academia to develop teaching methods and conduct students' activities that helps to fosters students' interest and passion in the field of entrepreneurship. Future research in this area might be an exploration on the differing attributes such work ethics, work culture, decision making behavior of Muslim and non-Muslim entrepreneurs.

Keywords: Entrepreneurship, Motivation, Factors, Start up business

Introduction

Malaysia has a vibrant entrepreneurial base with a huge potential to become a global player. Non-Muslim (mainly Chinese) companies are spreading their reaches overseas, proving that Malaysian companies can succeed in the global arena. Nevertheless, as evidenced by the drastic decline in Muslims businesses and corporate equity following the economic crisis, the quality and level of competitiveness of the majority of Muslims companies could be improved so that they are more resilient to the ups and downs of economic cycles. Indeed, more Muslims should be involved in business tremendously.

We are aware that entrepreneurship plays a significant goal of a countries well being. Therefore, the government of Malaysia is currently looking forward for the students in Malaysia to have this entrepreneurial skill. In the conditions of high unemployment and low real wages it is important for economies to increase labour demand and create new sources of income. The creation of new firms is favourable because it generates not only new jobs but also profits for their owners. In this context, the economy could benefit from the entrepreneurial activities.

The main contribution of this study is to identify the reasons people become entrepreneurs in the Malaysian context? Recent research has indicated that some of the variance in those becoming an entrepreneur is accounted for by genetic factors (Hunkin and Spector, 2008). Unfortunately, to date, little research were conducted about how genetic factors might influence this tendency. As such, this study attempts to identify whether genetic factors can be one of the motivating factors for people to become entrepreneurs.

Historically, the Chinese (and to an extent the Indian-Muslim community) have had a long tradition of entrepreneurship, and their community members had less resistance to the whole notion of entrepreneurship. In fact, the handing over of family businesses from father to son is the cultural norm. This was in contrast for Muslims community, where being an entrepreneur is not part of their traditional job. They were either being employed in the government sector or self-employed as agricultural farmers.

However, from the current explosion of the number of enterprise is being created. Attitude toward entrepreneurship have indeed improved. The high-profile and celebrity status attached to successful millionaire Bumiputera entrepreneurs in the late 1980s and 1990s, such as Halim Saad of the Renong Group, Tajudin Ramli of TRI and Wan Azmi of Land and General, plays an important role in changing the Malay attitudes towards entrepreneurship. Therefore, this paper attempts to examine the motivational factors of becoming entrepreneurs especially for the Malay Muslim in various states throughout Malaysia.

Nature and Traits of Entrepreneur

Psychologists have hypothesized the important of nature, the individual characteristics or traits associated with entrepreneurship, in determining who are able to become entrepreneur. The desire to have better life, have motivate individuals to involve in entrepreneurship world. Involvement in the business is one the approach in solving the current financial constraints (Evans and Jovanovic, 1989), as well as to gain extra income (Bewayo, 1995).

Involvement in the business will help the entrepreneur achieving better job and life satisfaction. Entrepreneurial group reported obvious greater well being than equivalent employees, whereas their job and life satisfaction are higher (Blanchflower, 2007). As a result, individuals would prefer self employed (Blanchflower, 2007; Fairlie and Robb 2007) because it will make them happier and more freedom (Blanchflower and Oswald, 2004; Blancflower 2004, 2007) and (Blancflower and Shadforth, 2007). Lazear (2004, 2005) concluded that individuals, who are innately well versed in a variety of fields, being all-rounder, have higher chances of becoming entrepreneurs.

Nuture In Shaping Entrepreneur

An alternative perspective is focusing on nuture, the sociological variables that are shaping entrepreneurship. It involve two components, which are values (Cochran, 1971) and social network (Young, 1971). In addition to that, social networks, work through various channels. Self employed parent (Dunn and Holtz-Eakin, 2000; Blanchflower, 2007), involvement of family members in business (Hisrich, 1989; Bewayo, 1995), as well as culture (Iyer and Schoar, 2007).

Recent study in Brazil, by Djankov et. al. (2007) prove the social environment (nuture) determine the decision to become an entrepreneur, whereas the strongest influence is family characteristics, which is similar with the study done in Rusia and China (Djankov et. al. (2005, 2006a, 2006b). The receive of cash inheritance or give, contribute positive relationship with self employement (Blanchflower and Oswald (1998).

In relation to this, the traditional theories explained the role of innovation as the main determinants of selection into entrepreneurship (Baumol, 1990; Holmes and Schmitz, 1990). Many new firms are started by entrepreneurs who got the idea while working for their previous employer (Hellman, 2002). While performing their assigned tasks, employees may explore new ideas about possible innovation that fall outside the firm's core activity. Lazear (2002) mentioned that most entrepreneurs have special ability to acquire general skills that is applied in their business. These skills were gained from their numerous previous employments that are usually short tenured in nature.

Methodology

The study employs grounded theory methodology as the main intention of this study is to generate or discover a theory that relates to a particular situation (Creswell, 1998). In this case, the theory will be closely related to the issue being discussed; motivation to become an entrepreneur.

The primary data involved in this study were derived in 2009 from semi-structured interviews with various Muslims entrepreneurs all over Malaysia. Random selection samplings were used to select the entrepreneurs across various states in Malaysia. The interviews were designed in order to understand the reason that motivates people to become entrepreneurs. Furthermore, the interview had gained credibility because the respondents were experienced and have first-hand knowledge about the problem being studied (Rubin and Rubin, 2005).

In the data analysis stage, open coding, axial coding and selective coding were used consecutively in order to refine the data and the understanding of data being gathered thus transforming it into a meaningful theory. The interviews were recorded verbatim. Then, open coding was performed through literally reading the data line by line (Hesse-Biber and Leavy, 2006). It was concerned with identifying, aiming, categorizing, and describing phenomena found in the text.

Then, axial coding was performed whereby it involves moving to a higher level of abstraction and had achieved by specifying relationships and delineating a core category or construct around which the other concepts revolve (Goulding, 2002).

Then, selective coding was performed where all the categories in the axial coding were integrated and conditional propositions or hypotheses are presented. (Creswell, 1998). The data reaches saturation point when four factors consistently appear as having the highest percentage of respondents providing similar reasons that motivate them to become entrepreneurs. Detailed discussions of the results are discussed in the following section.

Results and Discussion

Background of Respondents

150 respondents were interviewed to determine the reasons or factors that motivate them to become entrepreneurs. The respondents were involved in a variety of businesses as presented in Table 1 below. Majority of the respondents involved in food and beverages business (40%), followed by textile (13%), retail (8%), health and beauty and information technology (both at 7%). The textile category includes wholesaler of clothing and small stores selling clothing and hijab. The retail category consists of mainly small shops selling grocery items. The health and beauty category comprise of entrepreneurs selling health and beauty product (i.e. Herbalife, HPA and etc). Finally, information and technology category includes cyber cafes and shops selling computer peripherals. Table 1 had summarised the categories of business under study.

Table 1: Categories of Business

Category of Businesses

No. of Respondents

Percentage

Food and beverage

60

40%

Textile

19

13%

Retail

12

8%

Health & Beauty

11

7%

Information & Technology

11

7%

Jewellery, Souvenir & Decoration

9

6%

Agriculture

7

5%

Advertising

3

2%

Construction

3

2%

Mechanic Workshop

3

2%

Bookstore

2

1%

Insurance

2

1%

Tailor

2

1%

Others*

6

4%

Total

150

100%*Others comprised of business in education, electronics, optical, photography, shipping, watch shop.

Their businesses were located in various states throughout Malaysia as shown in Table 2. Majority of the businesses are located in Negeri Sembilan (34%), followed by Kelantan (21%) and Selangor (23%).

Table 2: Business Locations

States

No. of Respondents

Percentage

Negeri Sembilan

51

34%

Kelantan

32

21%

Selangor

34

23%

Pahang

11

7%

Kuala Lumpur

9

6%

Johor

5

3%

Pulau Pinang

1

1%

Perak

2

1%

Terengganu

2

1%

Kedah

1

1%

Melaka

1

1%

Sabah

1

1%

Total

150

100%

The gender tabulation of the respondents where 67% of the respondents were male and 33% were female. In the following section, the findings from the semi-structured interviews will be discussed.

Reasons that Motivate Muslims to Become Entrepreneurs

Based on the analysis conducted, the following reasons in Table 3 had been identified as the factors that explain why people become entrepreneurs.

Table 3: Ranking Factors that Motivate Muslims to Become Entrepreneurs

No.

Factors / Reasons

Percentage of respondents*

1

Passion

63%

2

Money consideration & Improve condition of life

56%

3

Independence and freedom

27%

4

Family were also entrepreneur

17%

5

Encouragement from family

14%

6

Challenging

13%

7

To support family

12%

8

Religion

12%

9

Flexible time

8%

10

Job satisfaction

4%

11

Skills in business

4%

12

Awareness from education

3%

13

Help others and give job opportunities

3%

14

Financial support from government agencies

1%

15

No qualification to become government servant

1%

*Percentages are based on the number of respondents providing the respective reasons or factors over the total number of respondents.

Majority of the respondents (63%) involved in businesses due to their passion or interest that were developed since childhood. They observed others whose involvement in small business can easily generate income and indirectly help to support their family.

Furthermore, the passion that developed in most of the respondents probably came from families that already involved in businesses. Respondents being brought up in such an environment tend to develop such passion or interest towards entrepreneurship at an early age. This passion drives them to overcome obstacles and challenges that arise from start up until sustaining the business performance. Here, the passion was the most likely developed through their exploration to managing business as they observed parents or other family members that were already involved in running their own businesses. As shown in Table 3, the reason that their families were also entrepreneurs represents the fourth factor that explains the motivation for them to become entrepreneurs as well (i.e. 17%). This was similar to findings from Bewayo (1995) and Hisrich (1989) where entrepreneurs tend to come from families with entrepreneurial parents. A study by Dunn and Holtz-Eakin (2000) in the United States also found that the probability of self-employment ws substantially higher among the children of business owners compared to the children of non-business owners.

As most of the respondents were from families with businesses, it is logical that they receive moral support and encouragement from their families. Even some of the respondents receive capital support to start up their business from their parents and other family members. This factor ranks at number five and represents 14% of the respondents.

The second highest reasons why people were interested to become entrepreneurs were due to money considerations (56%). Most respondents who involved in businesses were to make a living and earn more income. Additionally, this improved their life condition as some respondents came from a poor family background and they did not want their future generations to be in the same condition as they were facing. They believed that by running their own business was one easy method to generate income and assist them to realize their dreams of having material wealth. The reason 'to support family' was also stated as one of the factors and represents 12% of the entrepreneurs interviewed. This was similar to findings by Bewayo (1995) where majority of entrepreneurs in Uganda were involved in business to make money or earn money and support their families.

The third highest reason that explains why a person wants to become an entrepreneur was because of the nature of managing their own business that provides the independence and freedom that was lacking if they are merely an employee. This reason represents 27% of the entrepreneurs being interviewed. Most respondents cited that they were bored with the rigidness of being employed and inflexibility of time and mobility that was needed to manage a growing family. Additionally, the factor 'flexible time' was also stated as one of the reason why the respondents chose to become entrepreneurs (8%). Obviously, respondents prefer the independence of action accorded by being one's own boss. This finding is also supported by research performed by Bewayo (1995) where a person were likely to enter into their own business due to the autonomy, freedom and independence that is available more for the entrepreneur than being employed.

An interesting finding to note is the eighth factor that represents 12% of the respondents, which was religion that motivates them to become entrepreneurs. As most of the respondents were Muslim entrepreneurs, they stated that they involved in business in order to follow what was preached by the prophet Muhammad p.b.u. The prophet stated that 90% of lawful income was generated from businesses. This finding was supported by Audretsch et al. (2007), where they found that religion does matter in influencing its followers to become involved in entrepreneurship. They found that Islamic religion and Christianity were more conducive to entrepreneurship compared to Hinduism.

According to Muslim scholars Yusuf al-Qaradawi (1972) and Shahadah al-Natur et al. (1996), muslims are called to practice entrepreneurial activities as entrepreneurship is one of the best forms of livelihood or occupation. In exercising entrepreneurship, honest and sincere are important and highly recognized in Islam. According to surah al-Fatir and al-Rum, Allah the Almighty had forbids his followers from earning living on sinful resources, instead encourage his followers to earn a living through business, trade and expend to various places such as to go internationally. From the perception of Hamid, Solahuddin and Sa'ari, Che Zarrina (2011), muslim entrepreneurs should differ from other entrepreneurs in their motives and aims and if they manage their business successfully, they should also have good performance in terms of faith and belief towards Allah the Almighty.

Abu Sa'id narrates that Rasulullah p.b.u.h. said:

انتَّاجِرُ انصَّدُوقُ انْأَمِينُ مَعَ اننَّبِيِينَ وَانصِّدِيقِينَ وَانشُّهَدَاء

"An honest and sincere businessman will be placed with the prophets, siddiqin and al-syuhada‟" (Hadith Hasan) (al-Tirmidhi, 1987)

Conclusion

The paper highlighted the factors that motivate people to become entrepreneurs. The results of the study indicate three major factors contributing to their motivation, which are passion and interest, money consideration and autonomy and freedom in working time. These findings provide the challenge for higher education institution and academia to identify and develop curriculum, teaching methods and students' activities that will foster the passion and interest among university students to be involved in entrepreneurship. Additionally, there should also be close collaboration between university, policy making body such as Small and Medium Enterprise Corporation Malaysia (SMECorp) and entrepreneurs to allow students the exposure of being involved in business. Such experiential learning is hoped to develop the passion and interest to become an entrepreneur. Future research in this area might be an exploration on the differing attributes such work ethics, work culture, decision making behaviour of Muslim and non-Muslim entrepreneurs.

In the current uncertain economic condition, graduates cannot afford to solely focus in joining the private or public sector to make a living. The knowledge and exposure to entrepreneurship skills will definitely assist them to start and manage their own business when they graduate. In addition, increased involvement in entrepreneurship activity will help increase economic development for the nation. This will create a chain reaction effect as these successful entrepreneurs will expand their business locally and globally, thus generating more job opportunities for others.

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