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Fazal, S.A.;  Mamun, A.A.;  Alshebami, A.S.;  Muniady, R.;  Ali, M.H.;  Shami, S.S.A.A.;  Marri, S.H.A.;  Seraj, A.H.A.;  Thomran, M.;  Algobaei, F. Entrepreneurial Motivation, Competency and Micro-Enterprise Sustainability Performance. Encyclopedia. Available online: (accessed on 20 June 2024).
Fazal SA,  Mamun AA,  Alshebami AS,  Muniady R,  Ali MH,  Shami SSAA, et al. Entrepreneurial Motivation, Competency and Micro-Enterprise Sustainability Performance. Encyclopedia. Available at: Accessed June 20, 2024.
Fazal, Syed Ali, Abdullah Al Mamun, Ali Saleh Alshebami, Rajennd Muniady, Mohd Helmi Ali, Sayed Samer Ali Al Shami, Salem Handhal Al Marri, Abdullah Hamoud Ali Seraj, Murad Thomran, Faiz Algobaei. "Entrepreneurial Motivation, Competency and Micro-Enterprise Sustainability Performance" Encyclopedia, (accessed June 20, 2024).
Fazal, S.A.,  Mamun, A.A.,  Alshebami, A.S.,  Muniady, R.,  Ali, M.H.,  Shami, S.S.A.A.,  Marri, S.H.A.,  Seraj, A.H.A.,  Thomran, M., & Algobaei, F. (2022, October 27). Entrepreneurial Motivation, Competency and Micro-Enterprise Sustainability Performance. In Encyclopedia.
Fazal, Syed Ali, et al. "Entrepreneurial Motivation, Competency and Micro-Enterprise Sustainability Performance." Encyclopedia. Web. 27 October, 2022.
Entrepreneurial Motivation, Competency and Micro-Enterprise Sustainability Performance

Entrepreneurial activities are perceived as a crucial driver for economic development and expansion. Particularly, entrepreneurial activities by small and medium-sized enterprises (SMEs) contribute to the socio-economic development of every country. They are crucial for regional advancement and sustainable development in comparison to their larger counterparts. According to Alshebami, SMEs drive economic growth by creating job opportunities, mitigating poverty, and improving the standard of living of residents. Micro and small-sized enterprises, on the other hand, contribute to economic development through an increase in household income and provision of employment. Micro, small, and medium enterprises play a key role in growing developing countries’ economies.

self-improvement self-confidence openness to change need for achievement entrepreneurial competency sustainability

1. Introduction

Entrepreneurial activities are perceived as a crucial driver for economic development and expansion [1]. Particularly, entrepreneurial activities by small and medium-sized enterprises (SMEs) contribute to the socio-economic development of every country [2]. They are crucial for regional advancement and sustainable development in comparison to their larger counterparts [3]. According to Alshebami [4], SMEs drive economic growth by creating job opportunities, mitigating poverty, and improving the standard of living of residents. Micro and small-sized enterprises, on the other hand, contribute to economic development through an increase in household income and provision of employment [5]. Micro, small, and medium enterprises play a key role in growing developing countries’ economies [6]. In Malaysia, 75 percent of SMEs contribute to the national economy [7]. Specifically, informal micro-enterprises in Malaysia generate income that contributes to the gross domestic product and employment [8].
In the adverse post-pandemic world, psychological characteristics act as key factors for directing individual behavior towards entrepreneurial activities [4]. In fact, sustainable entrepreneurship requires individuals with unique competencies and traits that can determine organizational success [9]. According to Tehseen et al. [2], entrepreneurial competencies can ensure the growth of SMEs. In the case of small and micro enterprises, they can improve the performance and continuity when the owner(s) and employees acquire certain knowledge, skills, and entrepreneurial traits to conduct their business activities [10]. Mitchelmore and Rowley [11] defined entrepreneurial competencies as individual traits that succeed entrepreneurship. These competencies can be used to make a business successful with sustainable competitive advantage [12]. In Malaysia, relevant competencies strongly determine SME success [13], and hence are expected to positively influence micro-enterprise performance, in the present context [14].
Building competencies is one of the entrepreneurial stages. It is a cognitive and motivational factor that reflects a person’s ability and willingness to act [15]. Entrepreneurial motivation is a salient predictor of entrepreneurial performance among small enterprises [16]. Entrepreneurs accomplish their business ownership through behavioral patterns indirectly; wherein, motivation strongly influences the success of a business, particularly in the context of micro-entrepreneurship [17]. A few groups of researchers highlight that those entrepreneurial motivations can affect entrepreneurial intention [18][19] and other entrepreneurial outcomes [20]. In particular, Eijdenberg and Masurel [21] argue that research attention has been directed to entrepreneurship motivation.
From an emerging economy perspective, the vision is that entrepreneurial motivation can enrich an entrepreneur’s behavioral pattern and its subsequent impact on business performance [17]. Unfortunately, the human motivator in entrepreneurship research has received insufficient consideration [15] in a non-Western context [21], which reflects a gap in the existing literature. Moreover, although successful SMEs can flourish in the socio-economic condition, it is imperative to understand the competencies among entrepreneurs [2]. In Malaysia, SMEs suffer from loss of competitive advantage, low productivity, and poor performance because of inadequate competencies [2][7][12]. A recent study highlighted that the impact of relevant competencies on enterprise sustainability performance remains underexplored [22]. This further establishes the rationale herein that is the most timely and significant. Additionally, Joddar [23] noted that the sustainability of microenterprises facing a competitive market is a major challenge, thanks to globalization, coupled with global changes in technology and the market integration of economy. In line with this, Masama and Bruwer [24] found that small, medium, and micro-enterprises have high failure rates, which indicates a strong need for research to ascertain the factors that influence micro-enterprise sustainability.
Deducing from the aforesaid, it is strongly argued that survival and sustainable performance are pressing issues globally and locally, wherein entrepreneurial motivation and competencies could be the missing link. It was acknowledged that earlier attempts to examine motivation, competency, and performance separately exist in related previous studies. For example, Eijdenberg and Masurel [21] focused solely on push and pull factors to investigate entrepreneurial motivation in the least developed countries. In a local context, Tehseen et al. [2] studied entrepreneurial competencies among entrepreneurs in Malaysian retail SMEs to present a novel theoretical framework. Empirically, Al Mamun et al. [22] revealed the effect of selected entrepreneurial traits (i.e., locus of control and vision) on competency, performance, and enterprise sustainability. However, it is differed from existing literature by examining the effect of multiple motivational dimensions on entrepreneurial competency and sustainability performance in a single holistic framework, thereby offering a nuanced understanding of the interplay between competencies, motivational dimensions, and sustainability performance. Moreover, herein, the related conceptual investigations were extended  [2][12] by forwarding empirical evidence portraying the interactions between motivational dimensions, competencies, and sustainability performance. Furthermore, drawing data from Malaysia, the gap of non-western studies was address [21] by adding the emerging economy’s perspective to the literature. Based on the above, the research question herein could be worded as: How the diverse motivational dimensions effect entrepreneurial competencies and sustainability performance among micro-enterprises? In order to address the research question, the primary goal herein was to examine the effect of entrepreneurial motivation dimensions on competency and sustainability performance among micro-entrepreneurs, using Malaysia as a data source.

2. Entrepreneurial Motivation, Competency and Micro-Enterprise Sustainability Performance

2.1. Context of Study

Micro, Small, and Medium Enterprises are the life blood of national economy globally, thanks to their potential to support fundamental socio-economic objectives, such as creation of employment opportunities, distribution of wealth, as well as alleviation of poverty [24]. According to Joddar [23], the sustainability of microenterprises could reduce the vulnerability of rural masses. Malaysia represents an emerging economy, wherein SMEs comprise 98.5% of all business entities [25]. According to Zainol et al. [8], micro-enterprises act as a platform to enhance the entrepreneurs’ skills and have significant contribution towards the Malaysian economy and gross domestic product through generation employment, income, and community development. Research has highlighted that SMEs in Malaysia fail majorly due to various challenges such as their inability to sustain themselves, either because of the lack of the managerial and competency skills, or due to having less resources and so on [2][7][12].
In Malaysia, SMEs have been categorized into micro, small, and medium enterprises based on annual sales turnover and full-time employees [25]. A micro enterprise is defined as having fewer than 5 employees. Small enterprises, on the other hand, could have between 5 and 75 employees in case of manufacturing and between 5 and less than 30 employees for other sectors. As for medium enterprises, they may accommodate between 75 employees and 200 employees in the case of manufacturing and between 30 and 75 employees for other sectors. In term of sales turnover, micro enterprises are defined as earning less than RM 300,000 annually. Small enterprises, on the other hand, are defined as earning between RM 300,000 and less than RM 15 million in case of manufacturing and between RM 300,000 and less than RM 3 million for other sectors. Finally, medium enterprises could report a sales turnover of between RM 15 million and RM 50 million annually for the manufacturing sector and between RM 3 million and RM 20 million for other sectors. The focus is on micro-entrepreneurs who fit into the definition of micro enterprises. Malaysian SMEs are majorly engaged in mining and quarrying, agriculture, construction, manufacturing, and services. In terms of GDP, SMEs contributions totals at 38.9%. As for employment, 48.4% of Malaysia’s employments are among SMEs [25].

2.2. Resource-Based View

From a resource-based perspective, it is crucial to understand how a firm’s competitive advantage is gained [26]. According to the resource-based theory, competitive advantages are derived from rare, valuable, and inimitable resources that enable organizations to outperform their major competitors [10][26][27]. In micro-enterprises, this process is presumed to depend on the entrepreneurs’ ability to acquire, develop, and use resources [12][26]. As a result of being individual-specific, RBV considers entrepreneurial competencies as intangible unique resources that give rise to an organization’s competitive advantage sustainably [12]. RBV, thus, supports the possible effect of entrepreneurial competencies on sustainable competitive advantage. However, it is important to ascertain motivators that facilitate the formation and development of competencies. Hence, based on Murnieks et al. [28], it is argued that a nuanced understanding of what motivates entrepreneurs through the RBV lens is immensely important. Moreover, when major transformation occurs due to natural and social constraints, valuable resources may not guarantee a strong competitive edge. Therefore, firms need to evaluate choices regarding allocation and utilization of unique resources to achieve corporate, social, and environmental performance [26][29]. As entrepreneurial competencies are given attention, entrepreneurial motivations such as self-improvement, self-confidence, openness to change, pull factors, and need for achievement are required to develop an enterprise sustainability. Based on the above, RBV was applied to examine the influence of entrepreneurial motivations on competency and enterprise sustainability among micro-entrepreneurs, using data from Malaysia.

2.3. Selecting Motivational Components

Entrepreneurial motivation refers to the beliefs and expectations in regard to personal outcomes of pursuing entrepreneurship [18][19]. Entrepreneurial motivation is the goal and objective entrepreneurs seek to accomplish through business ownership [17]. Literature of entrepreneurial motivation includes an individual’s need for achievement, locus of control, desire for independence, vision, passion, goal setting, self-efficacy, and self-drive [15].
Eijdenberg and Masurel [21] categorized “pull” and “push” factors as entrepreneurial motivators. Levesque, Shepherd, and Douglas [30] stressed that entrepreneurial motivation is strongly associated with age. In addition, factors such as sex, age, and level of education can influence entrepreneurship engagement [31]. Entrepreneurs are motivated by a reward structure where an entrepreneurial initiation focuses on the entrepreneurship’s, usefulness, utility, or desirability [32]. Campbell [33] pointed out that expected net present economic benefits in comparison to the expected gains from waged labour are the key motivator of entrepreneurship. When the anticipated benefits outweigh the employment wages, individuals can take part in entrepreneurship [34].
As the present study focused on low-income entrepreneurs, their unique traits should be given attention instead of their actions [35]. The following entrepreneurial motivational components were chosen because entrepreneurship is encouraged by an individual’s cognitive and motivational factors, ability, and willingness to act [15]. Moreover, Murnieks et al. [28] highlighted that the majority of entrepreneurial motivation studies emphasized on the role of endogenous factors such as self-regulatory or affective constructs.

2.4. Self-Improvement and Entrepreneurial Competency

Self-improvement illustrates the reasons for running a new business that is self-directed [36]. Competency, on the other side, refers to a specific set of individual-specific traits that help achieve a task [11][37]. According to Anoke et al. [38], self-improvement covers activities that improve awareness, identify capabilities, develop talents and potential that help in building human capital, escalate employment opportunities, and drive entrepreneurial intent. Theoretically, RBV supports the relationship between entrepreneurial competency and self-improvement. Entrepreneurial competency is an individual trait that instigates specific capabilities to achieve competitive advantage [26]. According to Zaripova et al. [39], project-technical competency can be measured by the degree of self-identity, relevant knowledge, abilities, skills, and self-improvement motives. Komelina et al. [40] noted that self-improvement can influence the development of economic competencies and character traits that capture social, economic, professional, and informational orientation. In fact, competency promotes the integration of knowledge, self-organization, self-improvement, personal reflection, and self-development [41].

2.5. Self-Improvement and Enterprise Sustainability

Enterprise sustainability refers to the stakeholder-focused enterprise systems that address the integrated aspects of business performance over a period under the constraints set by both society and environment [42]. As supported by RBV, business managers with valuable knowledge, skills, beliefs, and capabilities can facilitate firm performance [12][26]. Self-improvement helps firms to achieve economic, social, and environmental performance [29]. Porath and Bateman [43] identified self-improvement as an opportunity for gaining higher education to improve performance. Zaripova et al. [39] reported that the aspiration for self-improvement, self-realization, and awareness can enhance professional activities through education and self-development. Self-improvement allows individuals to perform professional, political, social, economic, scientific, psychological, pedagogical, and methodical activities [40]. In Malaysian SMEs, Dangi et al. [44] asserted that self-improvement motivation, entrepreneur’s attitude, networking, and a positive relationship with suppliers are related to sustainability.

2.6. Self-Confidence and Entrepreneurial Competency

Self-confidence reflects a person’s capability to accumulate and employ the resources, skills, and competencies necessary for completing a task [15]. Reverting to RBV, entrepreneurial competency is a highly needed capability for acquiring a firm’s competitive advantage induced by self-confidence [26]. Self-confidence is a strong predictor of general traits, motives, specific skills, visions, strategic actions, and competencies [44]. According to research [45][46], self-confidence represents a necessary attribute for an entrepreneur and influence entrepreneurial intentions. Jordan and Cartwright [47] highlighted that self-confidence, emotional stability, intellectual capability, and openness to new experiences can determine global competencies. Self-confidence can motivate entrepreneurial activities, and when necessary, competencies are acquired [48]. It can also be translated into business and entrepreneurial competencies [49]. Self-confidence, quality of life, and self-realization dictate the formation of valuable orientation to determine an individual’s profession [40]. Erdyneeva et al. [41] noted that personal competencies are associated with relationship skills and self-confidence.

2.7. Self-Confidence and Enterprise Sustainability

Self-confidence affects an individual’s inclination to take risks along with their acceptance of ambiguity that in turn enables entrepreneurs to handle uncertainty, form good judgments, and deal with failure and success [46]. Drawing on RBV, entrepreneurs with a higher level of self-confidence can facilitate economic, social, and environmental performance [26][29]. Relationship skills and self-confidence are potent predictors of success [41]. Raudeliūnienė, Tvaronavičienė, and Dzemyda [50] stated that communication, planning, problem-solving skills, perseverance, creativity, self-confidence, teamwork, negotiation skills, and foresight are significant to successful business development. Self-confidence is a straightforward antecedent of entrepreneurial knowledge that can predict enterprise performance and growth [51].

2.8. Openness to Change and Entrepreneurial Competency

Openness to change is conceptualized as the willingness to support change with a positive attitude with regards to the possible consequences of adopting such change. For Murnieks et al. [28] to argue that for entrepreneurs’ motives could change between different phases of their endeavours and hence Openness to Change reflect a crucial construct to study in present context wherein unpredictable changes inheriting the entrepreneurial environments provides a standard setting to investigate changes in entrepreneurial motivation. As stated in RBV, being open to change is an entrepreneurial competency that enables an organization to gain competitive advantages [26]. In a turbulent market condition, individuals with flexibility, openness to change, and skill can facilitate their competencies that enable them to cope with the ever-changing reality [52]. The competencies can be approached through the ability to change and transact business, knowledge of business structure, professional contacts, business issues, flexibility, ethnocentrism, and openness. Moreover, openness to new experience coupled with intellectual capability, self-confidence, as well as emotional stability can determine global competencies [47].

2.9. Openness to Change and Enterprise Sustainability

Entrepreneurship is driven by technology and innovation changes that generate economic growth [15]. RBV explains that openness to change is an entrepreneur’s rare, inimitable, and valuable capability, leading to excellent economic, social, and environmental performance [26][29]. Strategic flexibility is considered as the ability to comply with environmental changes that influence firm performance [53]. Undeniably, openness towards change is associated with job satisfaction, work-related irritation, and withdrawal intention. It is a person’s capability to be open towards innovation, new ideas, as well as independent decisions making [19]. In fact, organizations that manage changes regularly can retain their competitive position. Successful entrepreneurship requires a high level of managerial competencies and openness to learning from other firms, regulators, and consumers.

2.10. Pull Factors and Entrepreneurial Competency

Pull factors denotes entrepreneurial motivators that attract people to explore business opportunity. According to Haynie and Shepherd [54] motivations to become entrepreneurs is derived from pull factors. RBV states that unique resources can mobilize the formation of specific capabilities that ensure better performance [26]. Undoubtedly, pull factors are valuable resources that form the entrepreneurial competencies required for running a successful business. These factors can be considered as unforced personal desires that transform competencies to venture into entrepreneurship [19]. It is posited that pull factors bring about entrepreneurial motives to select, drive, and direct behaviors and achieve goals that are different from others. Specifically, career-related pull factors can guarantee competencies required for bridge employment.

2.11. Pull Factors and Enterprise Sustainability

As suggested by RBV, firms within the same sector may vary in performance using unique firm-specific resources [26]. In other words, pull factors are individual resources that determine a firm’s economic, social, and environmental performance. These factors are associated with entrepreneurial opportunities required for accomplishing business performance [55]. Buhalis and Main [3] mentioned that pull factors result from governmental, economic, and social influence that “pull” advanced technologies, which cause sustainable performance. Since environmental performance is a cornerstone of sustainability, a firm’s decision to introduce eco-innovation and environmentally friendly products can be influenced by pull factors [56].

2.12. Need for Achievement and Entrepreneurial Competency

Need for achievement could be worded as a desire to perform better for one’s inner feeling instead of prestige or societal acceptance [57]. It is known that entrepreneurs possess greater achievement motivation than others and hence this construct is significantly relevant for present context [58]. Consistent with RBV, the need for achievement represents a valuable unique resource that forms specific competencies required for operating a successful business [26]. Entrepreneurs with a need for achievement are interested to engage in business activities and build up their competency [57]. Ahmad et al. [13] highlighted that personal competency can be reflected by the confidence level, the capability to realize goals, determination, desire to overpower obstacles, determination to achieve goals, and action-oriented great need for achievement. Carraher, Buchanan, and Puia [59] noted that the dynamics of achievement related to motivation are important to promote competencies and participate in entrepreneurial activities. Additionally, Murnieks et al. [28] mentioned that self-regulatory mechanisms may develop strong motivation among entrepreneurs.

2.13. Need for Achievement and Enterprise Sustainability

RBV explains that organization within a sector may vary in performance because of their firm-specific capabilities [26]. This means that need for achievement is a rare and inimitable capability that ensures a firm’s outstanding performance. According to Carraher et al. [58], the need for achievement is important for both entrepreneurs and economic development. Vliet, Born, and Molen [60] found that the need for power, need for achievement, and need for affiliation are associated with work performance and social wellbeing. However, Parboteeah, Addae, and Cullen [61] implied that the need for achievement values individuals who can perform, translating that performance orientation negatively corelates to the propensity of supporting sustainability initiatives.

2.14. Entrepreneurial Competency and Enterprise Sustainability

Enterprise sustainability refers to the stakeholder-focused enterprise systems that address integrated performance within environmental and societal restrains [42]. RBV categorizes entrepreneurial competencies as valuable skills, knowledge, and abilities that can ensure high economic, social, and environmental performance [12][26][29]. Enterprise sustainability for small businesses is developed from core competences [61][62]. For micro and small enterprises to survive, the owners must own a quality skillset [63][64]. In a nutshell, developing businesses that are driven by sustainability require competent and innovative entrepreneurs [65].

2.15. The Mediating Role of Entrepreneurial Competency

As it is considered that self-improvement, self-confidence, openness to change, pull factors, and need for achievement as dimensions of entrepreneurial competency, entrepreneurial competency is expected to mediate the association between self-improvement, self-confidence, openness to change, pull factors, and need for achievement, as well as enterprise sustainability. Based on RBV, self-improvement, self-confidence, openness to change, pull factors, and need for achievement are rare, inimitable, and valuable resources that initiate entrepreneurial competency to improve economic, societal, and environmental performance [26][29]. Rehman et al. [66] found entrepreneurial competencies mediate the effect of selected antecedents on business performance, suggesting a possible mediating role of competency in present context. Additionally, Al Mamun and Fazal’s research [67] demonstrated the importance of entrepreneurial competency in mediating the links between a number of variables of entrepreneurial orientation and company success, which indicates that competence could mediate the effect of identified dimension on enterprise sustainability.


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