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Study Identifies Factors Impeding Entrepreneurial Growth in Oman

  • 11/29/2017 10:38:00 AM
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Study Identifies Factors Impeding Entrepreneurial Growth in Oman

SQU Media/Santhosh Muthalath

A group of researchers from Sultan Qaboos University (SQU) carried out a study that investigated the entrepreneurial behavior and performance of Small and Medium Enterprise (SME) owners in their business in order to gain insight into any barriers impeding entrepreneurial growth of businesses and entrepreneurial culture in Oman. The researchers from the Department of Natural Resources Economics of the College of Agricultural & Marine Sciences at SQU selected this topic for their study as promotion of entrepreneurship through small and medium enterprise development is given top priority in government’s policy agenda. The Principal Investigators Dr. Hemesiri Kotagama and Dr. Sarath Kodithuwakku, carried out this project with the support of Dr. Houcine Boughanmi, Mr. Said Al Maqbali and Ms. Aaisha Saleh Al Maamari from the same academic department.

The findings of this study shed light on the entrepreneurial behavior and performance of SME owners regarding their business and entrepreneurial characteristics, entrepreneurial motivations, entrepreneurial activities, and entrepreneurial growth. Data for this study was collected using a structured questionnaire from a random sample of ninety “Entrepreneurship Card Holders” registered in the Public Authority for SME Development in Oman that is operating within the Muscat governorate.

Personality traits of an effective entrepreneur were measured under five traits namely: proactiveness, risk-taking, autonomy, creativity and locus of control.  Findings revealed, based on an index measuring degree of entrepreneurship, that majority (79%) of the respondents lack entrepreneurial orientation in terms of proactiveness. In contrast, in the areas of risk-taking, creativity and autonomy, the majority of them were found to be neutral in terms of their entrepreneurial orientation. However, 34% and 19% of the respondents are found to be highly entrepreneurial oriented in terms of their tendency to take a risk as well as creativity and autonomy. All in all, findings suggest that majority these small and medium enterprise owners are moderately entrepreneurial oriented in terms of their personality traits.

Dynamic and successful entrepreneurs are expected to have an entrepreneurial management orientation vis-a-vis administrative management orientation. Majority of the respondents were placed in the middle of the continuum ranging from administrative and entrepreneurial oriented management styles. It was evident that about 20.00% of SMEs are highly entrepreneurial oriented, and the majority of the respondents (42%) are placed in the middle of the continuum slightly towards entrepreneurial oriented management styles whereas about 9% was found to be having administrative oriented management styles.

The average age of the entrepreneurs in Oman is 41 years and the majority of them are in the age group of 31 to 40 years, indicative of a rather young age profile. Finding revealed that the entrepreneurs have considered their brothers (32.20%) followed by cousins (25.42%) and uncles (16.95%) as their role models that have influenced them for starting their businesses. The majority (78%) has had one or more paid jobs before starting their own business. The majority (74.44%) of the respondents is the sole owners of their businesses. The majority of the respondents (37.78%) have started their business career in the construction field, indicating a possible need to diversify. About 42.22% of respondents have initiated their first businesses during the period 2001 to 2010, indicating a significant growth in the initiation of businesses after 2001. About 26.66% of the respondents have discontinued their businesses and discontinuation had taken place on average 2.5 years after the start-up.

More than 95% of entrepreneurs have relied on their own thoughts when coming up with business ideas. Furthermore, more than 50% of respondents have developed a written business plan for all their businesses. Findings also reveal that business owners have invested on average about 57,542 Omani Riyals (OMR) for their first business. The major sources of start-up capital for setting up of almost all the businesses had been their savings where the percentages of business owners who have self-funded their businesses were 72.22%, 66.67%, 78.95% and 81.82% for the 1st, 2nd, 3rd and the newest businesses respectively. This indicates that small and medium business relies less on formal financial institutions for start-up capital, despite the many initiatives taken by these initiatives and the government.

The majority of businesses are catering to the regional market, i.e. within the Muscat region (85.56%). It is also evident from the findings that about 87 percent of SMEs are catering to local Souqs (towns). Thus, there is an opportunity for SMEs to diversify and expand their businesses into international markets. 

The most severe problems faced during the start-up phase of SMEs were reported as; complex administration procedures adopted by government institutions (56.67%), slow responses of institutions in terms of approval/clearance license (56.67%) and the difficulties imposed by the government labor laws (53.33%). These findings show that there are possibilities for the government to enhance its facilitating role in SME development in Oman. 

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