THE RISK PREFERENCES OF ENTREPRENEURS IN INDONESIA. (9th June 2016)

• Record Type: Journal Article
• Authors: Sohn, Kitae
• Is Part Of: Bulletin of economic research. Volume 69:Number 3(2017:Jul.)
• Page Start: 271
• Page End: 287
• Publication Date: 2016-06-09
• Subjects: risk aversion, entrepreneurship, self‐employment, developing country -- Indonesian Family Life Survey -- D81 -- M13 -- O53; Economics -- Periodicals; Great Britain -- Economic conditions -- Periodicals; 330.05
• DOI: 10.1111/boer.12088
• Languages: English
• ISSNs: 0307-3378

Abstract

ABSTRACT: Entrepreneurship is known to be important for innovation and economic growth, but relatively little attention has been paid to entrepreneurs in developing countries. We examined an important aspect of entrepreneurship: risk‐taking. We analysed the Indonesian Family Life Survey and compared risk preferences between entrepreneurs and non‐entrepreneurs. We found that risk tolerant workers were more likely to be entrepreneurs than risk averse workers by about 5 percentage points, or about 20 percent of the proportion of entrepreneurs in the labour force. The results imply that not all entrepreneurs in Indonesia are pushed into the sector; some actively take risks and seek innovations.