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ENTREPRENEURIAL BEHAVIOR IN A TRANSITIONAL ENVIRONMENT
ARIZONA STATE UNIVERSITY
ENT 305 - PRINCIPLES OF ENTREPRENEURSHIP
WEEK 5
10.1 INTRODUCTION
This paper discusses entrepreneurial behavior in hostile environments, where market
reforms are slow or only partially implemented. The term "transition" is often used to describe
economies with such characteristics, which, when used, should not be taken to mean that the
country is already on the path to a more market-based economy. In practice, this is the case in
many countries of the former Soviet Union, which is increasingly distinguishable from former
socialist countries that have recently joined the EU, such as Poland and the Baltic states.
Under these circumstances, the institutional context becomes an important factor
affecting entrepreneurial development, as the government still has to create the framework
conditions for private sector development to be embedded and sustainable. In such a situation,
the external environment plays a major role in influencing entrepreneurial behavior; and the
type of adaptive reactions that entrepreneurs make can vary, as several studies have shown.
This chapter explores entrepreneurial behavior in such environments by drawing on various
empirically-based projects that both authors have been involved in. The following section
presents examples of different "strategies" employed by entrepreneurs in transition countries,
in the context of the specific external conditions they experience. This is followed by a brief
conclusion.
10.2 CONCEPTUAL FRAMEWORK FOR ANALYZING ENTREPRENEURIAL
BEHAVIOR:
The framework used to analyze entrepreneurial behavior in transitional contexts draws
on institutional theory, which has become important in recent research analyzing
entrepreneurship, particularly in transitional environments (e.g., Aidis 2005; Dallago 1997;
Feige 1997; North 2005; Peng 2000, 2003; Smallbone and Welter 2006b; Welter and
Smallbone 2003), where the environment has a greater influence on entrepreneurial action
than in most mature market economies. In such a context, "Institutional theory offers some
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unique insights into the organization-environment relationship and the way organizations
react to institutional processes. Institutional theory also draws attention to the causal impact of
state, societal, and cultural pressures". (Oliver 1991, p. 151)
The framework used to analyze the role of institutions is that proposed by Douglass
North, who characterizes institutions as representing the "rules of the game". North (1990)
introduces a distinction between formal and informal institutions. While the former represent
the legal and organizational framework for entrepreneurial activities, the latter consist of the
values, norms and attitudes of society and individuals towards entrepreneurship. Since
informal institutions are embedded Informal boundaries, which are embedded in society and
reflected in individual behavior, tend to change more slowly than formal institutions, and this
is particularly relevant in situations where external conditions are turbulent and changing
rapidly, as in many transitional environments. "Although formal rules can change in an instant
as a result of political and legal decisions, informal boundaries are much more resistant to
deliberate policies". (North 1990, p. 6). Informal institutions, such as cultural traditions,
community customs, or human rights generally have a spontaneous origin (Williamson 2000),
i.e. they are self-organizing; whereas formal institutions arise from human action.
These forces influence entrepreneurial behavior to the extent that entrepreneurs can
utilize previously "learned" strategies based on informal values and attitudes acquired in
Soviet times that conflict with the formal rules of the market economy. In this regard, Oliver
(1991) suggests a typology of strategic responses to institutions and institutional change,
including five types of strategies, namely acquiescence, compromise, avoidance, deviation
and manipulation, with specific tactics associated with each strategy.
Strategies of acquiescence and compromise include tactics that recognize the existing
institutional framework. In terms of compromise and bargaining tactics, this includes attempts
to negotiate with institutional stakeholders, although this is less of an option for new and
small firms, without market power and legitimacy, than for established firms. These strategies
signal that entrepreneurs have become aware of the changing institutional framework and are
adjusting their behavior accordingly.
Avoidance, defiance, and manipulation constitute the other end of the institutional
response, as they all signify nonconforming behavior to varying degrees. According to Oliver
(1991, p. 154), organizations achieve avoidance by "hiding their nonconformity, protecting
themselves from institutional pressure, or escaping institutional rules and expectations", by
changing their line of business. Defiance characterizes a "more active form of resistance" to
institutional pressures. This includes organizations and entrepreneurs ignoring or
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circumventing institutional rules, which is especially the case in situations where the potential
for external enforcement is low such as those in transition. Defiance also refers to
organizations that openly challenge regulations or even attack them, which again is less of an
option for new and small companies that lack power and reputation than for established
companies. This also applies to Oliver's fifth strategy of "manipulation", which involves
actively trying to change the institutional environment.
In his analysis of entrepreneurial behavior, Peng (2000) suggests a threefold typology
that integrates elements of Oliver's framework, while taking into account the transition
context. He identifies prospecting, networking, and boundary blurring as a strategy specific to
new and small businesses in transitional environments. The term "prospector" is used to
characterize companies "with constantly changing markets, a focus on innovation and change
and a flexible organizational structure". Peng contrasts "prospectors" with so-called
"defenders", i.e. companies with narrow markets, stable customer groups, and established
organizational structures. While prospecting may present an idealized picture given that most
entrepreneurs are in countries in transition, networks are particularly important in these
environments, as they facilitate economic exchange. Boundary blurring is similar to Oliver's
pattern of evasion and defiance, where entrepreneurs work illegally and legally due to
inadequate institutional frameworks.
In summary, in situations where "learned" norms and values (as reflected in individual
behavior) no longer fit the newly established institutional framework, entrepreneurs may be
expected to over-adjust, to re-establish legitimacy in the new order, and/or exhibit patterns of
avoidance and defiance in their entrepreneurial behavior. Based on Oliver and Peng's
framework, empirical investigations show evidence that entrepreneurs in hostile and turbulent
environments adopt different avoidance strategies, financing patterns and networks, in
response to the institutional deficiencies seen in such conditions. The evidence supporting this
is presented in the following section.
10.3 EXAMPLES OF ENTREPRENEURIAL BEHAVIOR:
In this section, data from different projects that the two authors participated in are
explored to describe entrepreneurial behavior in an environment, characterized by frequent
changes in laws and regulations affecting business activities and frequent hostile attitudes of
the government and society towards small firms and entrepreneurs. The emphasis is on
explaining how entrepreneurs deal with the legal framework in that environment, as well as
exploring the role of networks and sources of social capital.
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Ignoring and Disregarding the Legal Framework: Implementing Avoidance Strategies
Frequent changes in legal regulations and the tax system, coupled with excessively
high tax rates, unpredictable behavior of state officials in implementing legal and tax
regulations, as well as inadequate access to external capital encourage entrepreneurs to use
avoidance strategies to reduce tax payments with the fundamental aim of maintaining their
corporate capital base.
A study involving both authors related to labor behavior in Russia and Moldova serves
to illustrate the various elements of such countermeasure behavior, related to labor
regulations. Example Firstly, avoidance refers to tax and social security payments, paid by
employers and workers. The results of large-scale surveys and case studies show the
predominance of informal payments used to reduce social security contributions (Welter and
Smallbone 2003). In-depth case studies, involving employers and their employees, show that
informal payments are made in almost all enterprises to reduce taxes and social security
contributions. A common method is to pay an officially calculated minimum wage, with
bonuses paid as informal payments. Other companies provide "informal" insurance to their
employees rather than paying the full social security payment. Evidence from other empirical
surveys confirms these results (e.g., Chepurenko 1999; Clarke and Borisov 1999; Frye and
Shleifer 1997; Gustafson 1999; Hendley et al., 2000). For example, a survey of firms in
Russia showed that at the end of 1998, half of the firms surveyed paid no taxes at all; those
entrepreneurs who filed tax returns reported only 30% of their turnover and paid only 10% of
their salaries to social security (Chepurenko 1999).
The second example of an avoidance strategy refers to the avoidance of legal
regulations. With respect to employment contracts, in the study on employment in SMEs in
Russia, mentioned above, the majority of employers stated, in the survey, to have established
written employment contracts. However, 20% reported that they enrolled "on command" (i.e.,
the company's management issued an order to hire the employee), or through an oral
agreement, and not based on a legally enforceable contract, thus violating labor laws. Case
study evidence suggests that few employment contracts are actually used in practice, which
suggests the unreliability of survey data when some questions may prompt respondents to
admit that they are breaking the law. Employers are either reluctant to discuss employment
contracts or they voluntarily violate labor laws.
For example, Viktor, the owner of a small publishing company, does not have written
employment contracts because "it gives us too much headache". He reports that he has
discussed the legal implications of switching his work to a written contract system with a
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lawyer on more than one occasion, but "there are many obstacles there!" In support of this,
Viktor cites his own experience of starting to work on a contract basis a few years ago, when
he was a Professor at a university. "Contracts were made on a voluntary basis. But lecturers
without contracts continue to work as before. Once the qualification committee certifies a
lecturer for five years, no one can force him to sign a contract for one year". Since he reported
facing similar problems in his company, he finally gave up on the idea of creating a written
contract.
Employees interviewed as part of the company case studies typically stated that they
did not have a contract or did not know whether or not they had one. Although the
implementation of these practices resulted in increased work flexibility for employers, it can
lead to reduced job security for employees. For example, Dmitri, who works as an advertising
manager at a Russian SME, complained to the interviewer that his employer unilaterally
extended his probationary period beyond the period agreed upon when he was hired. What's
more, his current salary differs significantly from the salary verbally agreed upon at the
outset. So, while she acknowledged the benefits of not having a contract, she said: "What if I
quit in a month? No need to ruin my service record", she also appreciates the greater job
security that a contract should provide her. Another example is Galina, a pharmacy employee
who refused to answer questions about unofficial remuneration. However, when asked
whether she was confident that the company would pay the contributions it was supposed to
make to the Pension Fund, she stated that she "strongly doubted this". According to him,
supervision of insurance premiums paid by employers to their workers should be one of the
functions of the state. But in practice, he referred to: "The Tax Office as we know it today has
long been bought by interested parties". A further example of the behavior of a Russian SME
owner faced with strict labor laws is Sergei, who works as a programmer in Viktor's
publishing company. On payday, he signed for a certain amount of money, which differed
from the actual salary he received. This worries him a lot, "because retirement is not far
away".
The countermeasures and evasion behaviors described in relation to labor laws are also
found in relation to other aspects of the legal and regulatory framework, reflecting
deficiencies in business regulations and/or their implementation. Deficiencies in laws and
regulations leave too much room for official interpretation, which in turn contributes to
corruption. In this regard, Boris, the owner of a small window and door factory in Moscow,
explained the current practice in his company, regarding tax and social security payments.
According to him, his company would benefit greatly from the current labor remuneration
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policy: "The state has taken its own decision by setting the minimum wage. Therefore, my
financial statements also show the minimum figure. What does the tax service say? They turn
a blind eye to this. We are just little children to them".
This kind of behavior is prevalent in most transitional environments where the legal
framework is not functioning properly, as illustrated by another case experienced by a female
entrepreneur, Olga, from Kiev in Ukraine: "At the initial stage (of the business) there were
problems with tax agencies and customs. After three months of operation, the tax inspector
did not approve our report because there was no 'movement of funds'." Olga explains that no
goods were sold during these first three months because they were banned by customs. She
had little experience with customs officials and was unable to resolve this issue until she
found someone who served as an "authorized agent" of customs officials. This person
received bribes and documents from him, which were he is alleged to have handed over to the
official, because after that, the goods were allowed to enter Ukraine. This case illustrates the
common practice of informal intermediaries acting between importers and customs officials.
The examples outlined in this section show that in transition countries where the
institutional framework conditions for sustainable entrepreneurship are not yet in place, a
common coping strategy used by entrepreneurs is non-compliance or partial compliance with
labor, tax and other regulations. An analysis of the case study evidence suggests that this
pattern of behavior is not due to greed, or an unwillingness to operate legally, but rather a
result of a regulatory framework that makes it difficult for private enterprises to operate fully
within the law and be profitable. Moreover, with respect to labor laws, for example, it can be
argued that entrepreneurial development makes a positive contribution to increasing the
degree of flexibility in the labor market.
Addressing Institutional Framework Deficiencies: Business Financing:
In the hostile and unpredictable environment of "transition", an additional mechanism
used by entrepreneurs to overcome the restrictive legal framework is to establish multiple
firms, which represents a typical form of portfolio entrepreneurship. In some cases, this
involves registering a second "fictitious" company, to lower or avoid taxes (Smallbone and
Welter 2001; Welter and Smallbone 2003). However, forms of portfolio entrepreneurship, as
well as serial entrepreneurship, also serve to finance business activities. In these
circumstances, they represent a "bootstrapping" solution to raise the financial resources
necessary to start and/or grow a business, in contexts where the financial system and access to
external funding are inadequate. Essentially, this process involves reinvesting profits, but
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between different businesses, either sequentially or in parallel. (Small Bones and Welter
2001).
A common phenomenon is that entrepreneurs who now own large businesses began
entrepreneurship through shuttle trading, which involves purchasing goods abroad and
bringing them back to their country for sale, sometimes avoiding import duties in the process.
A common case of shuttle trading activity is that of two sisters in Grodno, Belarus, both in
their thirties, who trade on the windowsill, assisted by their mother (Welter et al., 2006b).2
This business activity started 6 years ago, mainly to increase family income. Today, they have
two trading places in the markets in Grodno: one is a 2 m "plastic cell"2 ; the other is their
own small shop. The respondent travels to Poland to look for suitable products on the market
there. The business is based on demand from their customers. This involves bringing the
purchased products to the border, where they are distributed among so-called "transporters",
who carry the goods across the border. Since these people must be trusted by entrepreneurs,
then finding such people is an obstacle in the development of the potential of certain trade
activities. Larger businesses in the field of window ledge will require documents confirming
sales in Poland, as a requirement for respondents to register and pay customs fees and import
goods in excess of individual customs-free limits.
However, since most sales partners operate semi-legally, the brothers had to change
business partners in order to run their business legally. Alternatively, they can use the cash
they earn from shuttle trading activities to set up a larger, legally operating business.
However, the inhospitable nature of the environment for private business in Belarus under
President Lukashenko does not provide much incentive for them to do this. In contrast, in
Poland, it is easier to find examples of SME owners who started their entrepreneurial careers
through shuttle trading activities, using it as a financial springboard in circumstances (e.g., in
the early/mid 1990s) where external funding was very difficult to obtain.
In situations where entrepreneurial frameworks are lacking, serial entrepreneurship is
one solution for entrepreneurs to overcome the lack of (access to) financial resources to set up
ventures in activities that require more capital investment. This involves cash generated in one
business being reinvested in subsequent enterprises, often operating at a higher level of added
value. In addition, empirical research has shown portfolio entrepreneurship to be a common
feature of enterprise development in transition countries, along with the extensive use of
diversification, to ensure enterprise survival (Welter and Smallbone 2003). For example, in
Ukraine, Belarus and Moldova, every fifth of the total 563 entrepreneurs surveyed owned
more than one enterprise, especially in industries such as construction and manufacturing,
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which require higher financial investment than the service sector.
Empirical results from two surveys confirm the overall incidence and importance of
diversification (Welter and Smallbone 2003). The majority of SMEs, interviewed in 1997 in
Ukraine, Belarus and Moldova and in 1999 in Russia and Moldova, undertake two or three
activities. As with portfolio entrepreneurship, diversification differs across sectors, reflecting
different capital requirements. Most SMEs in manufacturing and construction undertake
additional activities in trade or services, which helps finance their main product line in
situations where access to external capital is scarce and demand for products is highly variable
over time. Although this type of vertical integration is found among manufacturing SMEs in
mature market economies, such as the UK, the lack of external sources of funding for SMEs is
a key driver in transitional conditions with major shortages of financial institutions.
Diversification by SMEs mainly occurs in hostile environments, such as in Belarus.
The authors' survey data shows that more than 80% of Belarusian SMEs are engaged in two
or more activities, due to the lack of legal, financial and political framework for
entrepreneurship in the country (Smallbone and Welter 2006b). In such a context,
diversification behavior is more of a financial strategy to secure firm survival than a strategy
for risk minimization, firm growth and development (Peng and Heath 1996). Although our
empirical evidence also implies that the motives for diversification strategies can be
opportunity-driven, the role of portfolio entrepreneurship and diversification in securing a
firm's financial base is more important. This can be illustrated with reference to the case of a
female entrepreneur who privatized the state optical company in the Namangan region of
Uzbekistan, as she saw a niche market opportunity. She initially established a business of
wholesale and retail trade in pharmaceuticals, which provided her with the capital to privatize
her previous workplace. However, strict import regulations posed problems that could not be
solved for him, both in relation to optics and pharmaceuticals. As a consequence, he currently
sells products from his own farm, and is considering diversifying by purchasing his own
livestock.
Overall, however, such behavior often results in a broad and unconnected portfolio of
business activities, thus reflecting a short-term behavioral response to address immediate
financial and environmental constraints, rather than a strategic response (Welter and
Smallbone 2003).
Use of Private Networks and Networks:
The use of networks and networking is a common theme in entrepreneurship studies in
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countries with mature market economies. However, in fragile environments such as the
countries of the former Soviet Union, where the formal institutional framework for
entrepreneurship does not function well or has not been established, the role of networks and
networking has additional dimensions. For example, it can facilitate market entry and
influence the chosen field of business. Personal networks and contacts can also enable day-to-
day business operations in such an environment. In many ways, such behavior is reminiscent
of the Soviet period, where "exchange of favors" ("blat") was a necessary response to the
persistent shortage of raw materials during the socialist period. Several studies have described
how in hostile and unstable environments, individuals utilize social contacts and individual
networks dominated by mutual trust to conduct business activities (e.g., Ledeneva 1998, 2006;
Manolova and Yan 2002; Peng 2000; Smallbone and Welter 2001, 2006a,b; Welter 2005;
Welter and Smallbone 2003; Welter et al., 2003; Yan and Manolova 1998). One theme that
emerges from some of these studies is the influence of the qualitative composition of the
entrepreneur's network, which affects the extent to which the network can be viewed as a
potential asset for start-up and business development purposes. Networking and the use of
personal contacts is not limited to the mere exchange of favors, but is often accompanied by
gifts (Adler and Kwon 2002), involving people outside the kinship group.
Case studies from a project related to women's entrepreneurship (which included a
male control group) in Ukraine, Moldova and Belarus show that entrepreneurs make extensive
use of informal sources of information and advice, such as family, friends and business
partners to solve their business problems (Welter et al., 2006a). Although the tendency to
utilize informal sources of information and advice does not differ significantly between men
and women, the case study evidence suggests some differences in the qualitative
characteristics of networks used by men and women.
In Moldova and Uzbekistan, women entrepreneurs make use of information sources
and informal assistance, both when starting a business, for example when developing a
business idea, and when dealing with current business issues. Evidence from Ukraine shows
how assistance from formal sources to register a business, such as legal counsel, is often
reported; illustrating how scarce resources need to be applied to a process, which in an
entrepreneurial society should be available at minimal compliance costs.
In utilizing their networks, women entrepreneurs often incorporate input from multiple
sources within their personal networks. This can be illustrated with reference to an interior
design business in Moldova. In this case, it was the entrepreneur's father who proposed the
business idea, as the entrepreneur had no experience in the field. The father also helped his
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daughter to hire a design specialist and provided most of the funds necessary to register the
company and renovate the business. A friend of the entrepreneur offered her space in his own
shop, without payment for half a year, while her brother, an artist, helped her by working in
his company. Another example is a small hairdressing salon in Chisinau, Moldova. In this
case, a brother helped his sister in the early stages of setting up the business, by renovating the
premises and delivering and repairing equipment, while other relatives supplemented the
entrepreneur's savings with loans.
Loans to entrepreneurs from informal sources within personal networks were
commonly mentioned in the case studies of women entrepreneurs, with one respondent
describing this as "traditional for our family". In fact, financing provided by spouses and/or
family is one of the differences in "support" received by male and female entrepreneurs, as
shown in Table 1.
10.1 and 10.2. Entrepreneurs surveyed in all three countries were asked whether their families
support their businesses and, if so, how. Similarly, male and female entrepreneurs were asked
whether their spouses support their businesses. The table shows that in the majority of cases,
both gender and family entrepreneurs reported that their families and spouses provide support
for their businesses.
At the same time, qualitative differences can be observed in the nature of support
received. The most significant difference between men and women shown in these tables is in
terms of finance, perhaps reflecting the fact that women have fewer financial resources to
offer to their male partners than vice versa. However, the very low proportion of male
entrepreneurs utilizing family financial support, compared to female entrepreneurs, suggests
that there may be other or additional explanations, such as a greater desire on the part of men
to be financially independent or fewer financial resources available within the family. Smaller
differences between male and female entrepreneurs can also be observed in terms of the use of
family labor (more common in women-owned businesses); and emotional support, which
women receive less frequently from their families and partners than men, possibly reflecting
differences in social perceptions of men's and women's roles.
Case study evidence suggests that other examples of informal support range from
advice on business ideas; physical assistance in setting up the company; help with the process
of setting up the company; and assistance in setting up the company.
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accessing financial resources from other sources; and assistance in finding customers and
securing supplies. Women entrepreneurs also often turn to informal contacts to help them
liaise with authorities, either to access assistance in registering a company or to troubleshoot
licensing, tax payments and similar requirements. "My husband helps me with his personal
contacts", which illustrates how women's entrepreneurship under transitional conditions often
needs to be interpreted in a household context, in the sense that other household members can
provide input to the (micro)enterprise sector. "I have informal contacts with the authorities".
This is a typical statement of women entrepreneurs in the case studies conducted in
Uzbekistan, Ukraine and Moldova, reflecting the importance of establishing good relations
with officials in doing business (Ledeneva 1998). This example also illustrates the influence
of the qualitative composition of an entrepreneur's personal network on the extent to which it
is seen as a business asset.
In Uzbekistan, the specific local environment (the so-called mahallya, i.e. local
neighborhood community) plays an additional role in enabling (or inhibiting) women's self-
employment. This is mainly related to neighbors' attitudes towards women's entrepreneurship.
The case study from Uzbekistan paints an ambiguous picture, where women entrepreneurs
who set up their businesses in the local neighborhood, are envious of some neighbors ("they
don't send their daughters to my tailoring school, but take them to other areas"). Often women
entrepreneurs support the community by providing training to local girls or offering discounts
to local community members. This type of community-based social capital is also reflected in
research on ethnic minority businesses in mature market economies, which emphasizes the
role of family and local communities in offering social capital to sole proprietors (Fadahunsi
et al., 2000). It is particularly the proximity of the family or community, which allows ethnic,
or in this case women entrepreneurs, to access social capital.
The case study evidence shows instances where women entrepreneurs utilized help
from their spouses and/or family heads. This can be interpreted as reflecting the "rise of
patriarchy" (Zhurzhenko 1999, P. 246) in post-Soviet society. Moreover, in a country like
Uzbekistan, where traditional social values lead to the expectation that widows and young
women will not act alone, help from family sources becomes a necessity. This can be
illustrated with reference to the case of a woman, aged 34, who set up a sewing company in
the Namagan region. In this case, the mother accompanied her daughter to the authorities to
register her company. However, as a business develops, and the woman entrepreneur gains
confidence and contacts of her own, this particular feature of social capital may lose its
importance. Disapproval from the male partner If this is the case, it seems to be more common
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in certain business activities such as trading and micro-enterprises, which some men may find
demeaning. At the same time, the narrow emphasis on the reforming impact of traditional
values on gender roles as an explanation for the role of social capital for women entrepreneurs
ignores the diversity of women's entrepreneurship. In countries such as Uzbekistan, Ukraine
and Moldova, many women go into entrepreneurship to support themselves and their families,
but sometimes they are not able to do so.
they face rejection from their families and partners.
Another scenario is illustrated by case study evidence showing spouses working in
companies with subordinate roles, tacitly accepting their wives as business owners. For
example, one of the case study companies in Ukraine was involved in the manufacture and
sale of women's dresses in associated retail outlets. The female owner, who started the
business to make ends meet for her household, described her husband, who worked in the
company as a manager and driver, as "reliable, but lacking initiative". Another example is a
small retail business selling flowers, where the woman took the initiative to set up the
business to supplement the family income, despite strong opposition from her husband.
Interestingly, survey evidence shows that the number of divorced entrepreneurs in
transitional environments is higher among women (14%) than men (5%), encouraging women
to view business ownership as a path to survival. The same survey also shows that more
women entrepreneurs are widowed (4.5% of women, 0.5% of men), particularly in Uzbekistan
(7.5% of women, 0 men). The case studies illustrate that women in these situations also start
and act on their own, putting the new concept of patriarchy in post-Soviet countries into
perspective.
Another form of social capital is cooperation. While less than half of the surveyed
entrepreneurs reported some form of cooperation, a minority reported it: 42% overall or 48%
of men and 41% of women entrepreneurs. The main partners are other companies or
entrepreneurs in the same sector. While not many entrepreneurs recognize the potential value
of collaborating with their competitors, some emphasize this as a tacit investment, and expect
future reciprocity. For example, a female entrepreneur from Moldova stated: "If I can't serve a
customer (for example, when the company is overloaded with work and we can't execute an
order on time, or if we don't offer a product or service order that the client needs), I send it to
a competitor. I know the competitors would act the same way in a similar situation".
The case studies also illustrate that entrepreneurs often utilize advice from their
business partners without considering it as cooperation, but rather a "natural form of human
connection". Business partners are an important source of social capital for both women and
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men entrepreneurs, based on the principle of reciprocity, However, qualitative differences can
be identified in the nature of the process of receiving assistance. In this context, the study
revealed few cases where women entrepreneurs utilized assistance from formal sources,
particularly in terms of helping to register the company and/or attend business-related
training. In other words, women entrepreneurs felt more comfortable using assistance from
informal sources, such as personal networks, which they valued highly. At the same time,
some of the case study evidence suggests informal sources acted as a substitute for formal
assistance, partly because the formal business support infrastructure did not exist when
women set up their businesses.
Overall, our evidence supports the proposition that social capital can be a
complementary resource and substitute for assistance from formal sources, especially in
vulnerable environments where adequate formal support structures are lacking. Therefore, in
contexts where formal resources for enterprise support are lacking and institutional
weaknesses seem to be commonplace, social capital becomes an important element in the
resource base of entrepreneurs. Moreover, the lack of trust in formal institutions encourages
entrepreneurs to rely on trust-based relationships within their personal networks, as a means to
access resources. This is true for both men and women, although the nature and role of social
capital shows some gender variation.
Conclusion:
It has been emphasized before that if businesses are to thrive and grow in a hostile and
transitional environment, they are often forced to rely on the kinds of behaviours that are
useful to the firm in achieving its short-term survival goals, but are not necessarily entirely
positive from an economic development perspective (Smallbone and Welter 2006 a, b; Welter
and Smallbone 2003). This is because development paths that involve the types of
adjustments to institutional deficiencies described in this chapter do not encourage productive
entrepreneurship and often waste resources that could be put to more useful use. In some
cases, this forces firms to allocate their resources to unproductive activities and also limits the
total number of firms that are able to survive and sustain. The picture that emerges from the
evidence presented here is that coping with a distorted legal framework involves repeated
deviant behavior, ignoring existing regulations because entrepreneurs perceive that the
government has little potential to enforce the legal framework. "Boundary blurring", to use
Peng's characterization of the lack of distinction between legitimate and illegitimate actions, is
commonplace, thus not helping to promote a positive image of entrepreneurship to the wider
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public.
The cases reported in this chapter provide evidence that entrepreneurs themselves are
aware of the contradictions and ethical dilemmas posed by such behavior. This can be
illustrated with reference to Valeri, the owner of a company offering construction and
renovation services and the installation of sanitary and ventilation equipment in Moscow.
When interviewed, he admitted that "payment under the counter" is just a small link in the
chain of illegal activities that his company conducts. According to him, the "dark operation"
starts at the stage of signing contracts with employees, hiring "illegal labor" and ends at the
stage of final payment with clients. The main reason an entrepreneur puts part of his activity
"in the shadows" in this way is his genuine desire to obtain "some" profit, in a context where
the cost of fully complying is prohibitive. Valeri argues that there are no truly law-abiding
managers among those who are genuinely trying to grow their business. When asked about
the conditions under which he could legalize his business activities, he became agitated and
stated: "Not in Russia, it is impossible to do fair business here. Tax deductions won't help.
Businessmen in Russia have the brains of thieves. It will take several generations before
civilized businessmen appear in Russia".
The problem under these circumstances is how to break the vicious cycle. Initially,
many firms can survive and grow by using network-based strategies based on personal trust
and informal agreements between managers and officials to overcome institutional uncertainty
(Peng and Heath 1996). However, extensive and sustainable development of private
entrepreneurship will only occur if the economy in transition moves from a personalized and
relationship-based transaction structure to a rule-based and impersonal exchange regime. This
is necessary to allow "unknown, previously untransactable parties" to rely on third-party
enforcement rules, thereby entering into business relationships with each other (Johnson et al.,
2000).
SUCCESSFUL RURAL TRANSPORTATION IN WESTERN AUSTRALIA
11.1 INTRODUCTION:
Geographers' views on tourism pay particular attention to the inherent differences
between urban and rural tourism areas. This draws legitimate attention to the impacts of
transportation and access on tourism, as well as the alternating and often competing land use
pressures that determine carrying capacity and broader concerns about sustainability (Hall and
Page 2002).
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However, the focus on the location of tourism assets ignores the human involvement in
production of rural tourism and leisure services. What are the characteristics and
correlates of success of rural entrepreneurs? This chapter uses data collected from a survey
offered to all identifiable accommodation owners in Western Australia to explore this
question. We find that gender is one area where there are significant differences.
Many of the hosted accommodation businesses in this study are conducted on
farmland, often not because of the ideal location of the farm. Rather, this was due to the
pragmatic decision of farm-based business owners to diversify income-generating activities so
that land could be retained. With many farms having a traditional patriarchal farming heritage,
it appears that it is the family matriarch who often develops and manages non-core farming
activities such as bed and breakfast businesses or lodging accommodation on the farm.
In difficult times in rural areas, these non-core activities contribute significantly to the
survival of farmers and farm families. However, as farms modernize and attitudes towards
gender roles evolve, there may be hope that the gap between the roles and responsibilities of
male and female farm owners will reduce as suggested by Still et al. (2005). However, the
research discussed in this chapter reveals that gender differences in rural Western Australia
are still significant and sizeable. It appears that women run rural enterprises with lower levels
of capital and lower levels of success than their male counterparts. While we can only
speculate on the reasons for this, the overall focus of the research agenda allows for several
potential explanations for this gender inequality.
11.2 RESEARCH CONDUCTED:
Research focusing on owners of accommodated accommodation in Western Australia
was conducted in late 2004 and early 2005 through a mail questionnaire to 650 urban and
rural businesses. The research aimed to understand the characteristics of owners, how they
define and measure success, and how successful their business is.
The data presented in this chapter report some significant differences between
rural and urban owners in the comprehensive study. The variables measured include owner-
focused and business-focused items, among others:
❖
Demographic characteristics such as age, gender, number of children and education level
❖
Personal experience (years of management, business ownership, and industry experience)
❖
Personal financial satisfaction
❖
Personal net worth
❖
Private networks (time spent on these networks)
150
❖
Overall success (subjective self-assessment)
❖
Personal health (using scales commonly used to self-report physical and mental health)
❖
Personal values (such as commitment to marriage and frugality)
❖
Working hours in this business
❖
Use of the Internet in business
❖
Annual sales forecast
❖
Occupancy rate.
The main demographic difference between hosted accommodation and other small businesses
in general is the gender balance. It was found that hosted accommodation was dominated by
female participants. This female gender bias was also examined in terms of characteristics and
success. Valid responses for special treatment of this data were received from 132 owners in
rural areas, and 35 owners in urban areas. In line with the Australian Bureau of Statistics'
definition of rural location (Australian Bureau of Statistics 2006b), all businesses in Western
Australia outside the Perth metropolitan area (the capital of Western Australia) were classified
as rural. The analysis and findings are discussed later, but first it is worth considering the
context of rural farming families in Western Australia.
11.3 RURAL FARM FAMILIES:
The number of farming families in Australia has declined by 22% between 1986 and
2001. For most of the remaining farming families, income from the agricultural sector has
been reduced due to declining profit margins requiring family members to earn off-farm
income. Adding to this financial burden, more than half (54%) of farming families in
Australia have dependent children (Australian Bureau of Statistics 2003a). Australian farming
families have an average of 1.8 children, slightly higher than urban farming families.
The disproportionate burden borne by women in childcare is one of the factors driving
women's entrepreneurship (Birley 1989). Evidence that larger family size in the rural sample
coupled with reduced employment opportunities in rural communities (Australian Bureau of
Statistics 2003a) may be a catalyst for the start of some ancillary businesses in the agricultural
sector such as farmstay accommodation. Other factors contributing to the choice to start a host
accommodation business include the presence of suitable buildings on the farm and generally
the increasing role of women in generating non-farm income for farming families.
Farmers often work well beyond the early retirement age of 55. In 2001, more than
15% of farmers were still working on farms after the age of 65. There is evidence that the age
of farm owners is increasing. The average age of farmers in Australia is
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51 years in 2001, which government statisticians say is an indication of an aging farm-owning
population when compared to previous estimates (Australian Bureau of Statistics 2003b).
Hosted Accommodation Assets, Utilizing a Family Home or Ranch: One of the factors
driving the demographic profile of hosted accommodation owners is the need to have access
to a large dwelling suitable for hosting guests. Such assets are usually large capital
investments that take years to acquire. There are three general pathways to the substantial
property ownership required. The first is through family ownership (family farmland) where
underutilized farm buildings are converted into farm lodging accommodation.
Second, through large purchases of private homes by non-owners.
agriculture, using wealth accumulated before starting the business. Such wealth may be
accumulated through other unrelated businesses or through their main occupation or
profession and invested in rural property by those who are not looking for a high return on
investment but rather a rural lifestyle (Kelly 2003). This third pathway to property ownership
occurs when retirement savings held in government-approved funds can be accessed after age
55 (Kehl 2002). Government pension regulations favor large family home ownership as a way
to preserve assets, as these assets are partly excluded from asset testing for pension benefits.
The first farm business path is often motivated by the need to supplement income under stress
(Jennings and Stehlik 1999). The second and third paths are often motivated by lifestyle
desires, which will be discussed later.
Whichever pathway to hosted accommodation ownership is relevant on a case-by-case
basis, the expectation is that rural hosted accommodation owners will be relatively asset-rich
individuals to enter this type of business. National data on wealth distribution includes
estimates of the net personal wealth of rural communities in 2003-2004 (Australian Bureau of
Statistics 2006a). The average net personal wealth of all rural Western Australians was
$452,619,000 In the age groups dominant in this study, the 55 to 64 age group had
$727,800,000 and the 65 to 74 age group had $632,100,000 in Western Australia (Australian
Bureau of Statistics 2006a). This information allows some comparison with the sample mean
from our study although the time difference (2003-04 vs. 2005) does introduce potential error.
Once owned, farmland and rural residences may represent
A large proportion of the owner's personal net worth, giving rise to various financial pressures
that lead to attempts to earn greater marginal returns from property investments (Kelly 2003).
In the case of family farms, hosted accommodation is sometimes a marginal activity intended
as a complement to the main farming activity (Andersson et al. 2002).
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11.4 CAREER STAGES AND LIFESTYLES
Some of the characteristics of organized accommodation enterprises appear to
encourage the entry of late-career participants, who for various reasons are not ready or able
to retire from work. Two common reasons for late career entry into small businesses are the
lack of viable alternatives (Creagh 2004; Hughes 2003; Platman 2002) and to obtain
temporary employment until full retirement is desired (Baucus and Human 1994; Clark and
Quinn 2002; Kellard et al. 2004; Quinn 1996). These new career entrants have a variety of
motives for entering the host accommodation industry and some of these motives have been
shown by previous research to be non-financial lifestyle (Ateljevic and Doorne 2000; Carlsen
and Getz 2000; Hall and Rusher 2004; Lynch 1998; Stringer 1981). These goals have been
described by entrepreneurship and small business theorists as intrinsic motivations (Buttner
and Moore 1997; Kuratko et al. 1997). This is not to say that earning an income is
unimportant, but it may be less important to many overnight accommodation owners.
11.5 GENDER TYPE:
Wall and Norris (2003) believe that it is not always possible to provide a convincing
link between gender relations and tourism, but we should recognize that such a link is
important and does exist. Gender has also been highlighted as an important issue in small
business research (Still et al., 2004, 2005). Some researchers argue that national longitudinal
studies of Australian businesses show that women tend to choose lower risk and lower profit
industry sectors (Watson 2003) such as accommodated accommodation. However, little is
known about the reasons why these choices are made, or whether they are truly a choice, or
rather a lack of alternatives.
The importance and recognition of women in the context of Australian agriculture
is increasing. However, the current structure and behavior of farming families are still
influenced by social norms that Pini describes as "...popular and media constructions of rural
[farmers], in government reports of farm work that are neglect of women workers, in
patrilineal inheritance in the family. agriculture and
exclusion of women from agricultural training" (Pini 2005).
In 2001, 91% of farmers in Australia were members of a household, yet only one-third
of the women in the household declared their occupation as farming (Australian Bureau of
Statistics 2003a). Although men still dominate the population of traditional farm businesses,
the role of generating additional income through other on-farm activities such as hosted
accommodation might be expected to fall more heavily on 'non-farming' female partners.
153
Hosted accommodation has a very different demographic profile to small businesses in
general, but with some similarities. In Western Australia, men aged over 50 years account for
almost 70% of all small businesses in this age group (Australian Bureau of Statistics 2003c).
This profile has remained relatively consistent over recent years (see Table 11.1), with only a
2% shift in the gender balance of the small business population (Australian Bureau of
Statistics 1997, 1999, 2001, 2003c, 2004a).
Table 11.1. Gender and age composition of small business owners in Australia
Year
Men In
Under
30
Years
(%)
Female
30-50
Year (%)
Men More
than 50
Years
(%)
Overall
Female
(%)
Mal
e
(%)
Female
(%)
Mal
e
(%)
Female
(%)
1997
64
36
63
37
69
31
65
35
1999
68
32
66
34
70
30
67
33
2001
65
35
65
35
72
28
67
33
2003
65
35
65
35
70
30
67
33
Source: Australian Bureau of Statistics (1997, 1999,
2001, 2003c)
The profile obtained from our research project shows that hosted accommodation is
dominated by older participants, with an average age of 57 years for the total sample (n =
167). However, contrary to the gender balance in the wider small business community, the
majority of hosted accommodation owners are female (66.5%) and this is very similar to the
results obtained by Getz and Carlsen (2000) who found that women make up 59% of small
business owners in their study. 59% of owners in their study.
It is possible that the older age group of business owners in accommodated
accommodation creates a reverse gender bias towards female ownership. This is partly due to;
in the Western Australian population there are only 82 men for every 100 women in the over
65 age range (Australian Bureau of Statistics 2004b). Women live longer than their partners,
so a number of financial and social pressures impact on the gender profile of accommodated
accommodation. Gender is clearly an important point of differentiation for hosted
accommodation. The gendered risk profile and social norms of Australian agriculture are also
investigated in this chapter.
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11.6 SUCCESS IN HOSTED ACCOMMODATION
In the early stages of this research, the authors sought to derive some useful and stingy
measures of success for the accommodation owners who host them. Success in terms of
intrinsic and extrinsic motivation/goals has been investigated in various ways by many
previous studies (Andersson et al., 2002; Carlsen and Getz 2000; Getz and Carlsen 2000;
Kuratko et al., 1997; Still et al., 2003). From the previous research stage, three main success
measures were identified for use:
•
A one-item measure used by the ABS (Australian Bureau of Statistics 1997) of owners'
opinions on their success.
•
A four-item scale proposed by Kaufman et al. (1996) that focuses on achieving personal
goals and financial goals through business. This scale has been previously used and
validated on accommodated accommodation owners.
•
Hall and Page (2002) describe one variant of measuring occupancy rates as basic
occupancy, the percentage of rooms occupied each day. This research chose this base
occupancy as an appropriate measure of business success. A method is derived to report
the estimated occupancy rate on a monthly basis that takes into account months that the
business is intentionally closed.
This chapter examines enterprise success in rural versus urban areas and between male
and female participants using the above measures of success, and reports significant
differences, where applicable. Due to the size difference between the two groups, some of the
mean differences reported are outside the acceptable parameters for an equality of means t-
test. However, the larger number of rural respondents in the sample allows for some
interesting comparisons and observations. Table 11.2 shows the main differences between
rural and urban owners.
Table 11.2. Differences between urban and rural overnight accommodation owners
Variables or characteristics
Mean
Urban
Mean
Rural
Significance
Two sides
Dependent children
0,23
0,45
0,085
Other businesses owned
0,34
0,49
0,168
Business experience (years)
11.49
15.27
0,048
155
Time spent on
networking with business partners
(hours per month)
3.03
1.52
0,065
Estimated annual sales (dollars)
66.998
34.899
0,108
Hours worked in business (per
week)
27.15
32.48
0,228
Internet Usage (%)
100
89
0,000
Urban: N = 35, Rural: N = 132
The picture that emerges is one of rural accommodation owners earning less than half
the average annual income of their urban counterparts. This is despite them having higher
levels of business experience (often considered a correlate of success) and longer hours in the
business. It appears from the data that rural accommodation owners also have to deal with
reduced capacity to use business tools such as the internet, while supporting larger families
with fewer business networking opportunities.
Given all the burdens imposed on accommodation owners in the countryside, people
might expect that their level of satisfaction with their success would be lower. However, this
was not seen across the sample. Using the ABS measure of personal success (Australian
Bureau of Statistics 1997) as well as Kaufman's measure of personal success (Kaufman et al.,
1996), there was very little, if any, difference between rural and urban participants.
11.7 EXAMINING GENDER DIFFERENCES IN RURAL BUSINESS:
If the analysis were conducted at a rural/urban level of aggregation, it might be
tempting to assume that rural accommodation owners are generally willing to accept lower
profits and face a more hectic and isolated life, as no significant differences in terms of
income levels of intrinsic success (overall success or Kaufman's success scale) between urban
and rural respondents were detected. It may be reasonable to propose that in exchange for
lower profits, rural owners will gain lifestyle advantages often expressed by rural
accommodation business owners (Carlsen and Getz 2000; Hall and Rusher 2004; Kelly 2003).
However, the decision to separate and focus on rural respondents' responses by gender
paints a different and somewhat confusing picture. This picture is seen in Table 11.3 below
where women involved in business have far less management or business experience, only
two-thirds of the net worth of their male counterparts and 16% lower occupancy rates than
male respondents. Table 11.3 also shows that whatever the reason, women do less formal
156
networking with community, charity and religious groups that are often perceived as having
influence and advantages in rural communities (Miller et al., 2001).
Table 11.3. Gender differences in rural hosted accommodation (t-test)
Variables or characteristics
Mean
Male
Mean
Female
Significance of
two
side
Age at last birthday
59
55
0,025
Number of dependent children
0,42
0,47
Not significant
Number of children
2.67
2.25
0,049
Business experience: defined as
years of running your own business.
18.47
13.73
0,034
Management experience: defined
as years of management experience.
23.42
12.76
0,000
Networking: contacts with communities,
agencies
charities and religious groups (hours
per month)
1,95
0,33
0,001
Satisfaction with current financial situation,
score 0-10 with 10 being highest
satisfaction and 0 being lowest satisfaction
(see
Appendix 1)
6.47
5.51
0,021
Estimated personal net worth (IDR 0,000)
943
634
0,006
Overall success (score
reverse) 1 = very successful, 3 =
unsuccessful
1.70
1.92
0,035
Occupancy rate
29,14%
24,25%
0,068
Rural respondents N = 132, male = 43,
female = 89
Based on these findings, how do women working in rural accommodation businesses
rate their success compared to their male counterparts? Unsurprisingly, they are less satisfied,
157
and score significantly lower satisfaction with overall success. They also showed lower levels
of satisfaction with their current financial situation.
It is interesting to note that women have a much lower average personal net worth of
IDR 634,000,000 compared to men who report an average value of IDR 943,000,000. Given
this apparent and sizeable gap, women with accommodated accommodation still appear to be
relatively financially well-off, with the average personal wealth of the entire rural population
in Western Australia much lower at IDR 452,619,000 (Australian Bureau of Statistics 2006a).
Male and female owners of accommodation have stronger personal net worth positions
than is normal in rural Western Australia. However, personal net worth measures can mask
other financial strains when some individuals have strong assets but low incomes. An
additional question in our research questionnaire asked whether respondents felt they had
sufficient assets to retire fully. On this retirement readiness question, two-thirds of women
answered no (64%), while almost half of the men surveyed answered yes (48.8%). A Chi
Square check of the expected amount revealed a two-sided significance of 0.157 indicating a
significant difference. When viewed in terms of their age, retirement intentions would be quite
prominent for male respondents in rural areas who are on average 59 years old and women are
on average 55 years old. It is possible that the asset-rich but income-poor scenario mentioned
above can be seen here.
In larger comprehensive studies, a number of independent variables are used
to isolate and investigate accommodation owners' personal resources that may correlate with
their age. Although this age relationship is not part of the analysis presented in this chapter,
the core variables of this study provide further opportunities to investigate gender differences
at a deeper level. Table 11.4 displays the core variables considered and their sources in the
literature are provided below so that interested readers can investigate further.
There were few significant correlations between the measures of success used and the
gender of the rural respondents in the sample. There are performance differences between
women and men in entrepreneurship, but the relationship is complex (Fischer et al., 1993). A
bivariate correlation matrix between personal resources and success measures was
investigated to look for evidence of a relationship between male and female rural
accommodation owners.
Table 11.4. Core variables of personal resources, scale property, and resources
Variable categories
Scale used
Scale properties
Source
158
Personal health
Health status SF12 v
2 Physical and
mental components
Twelve items combined
provide a summary health
score
ranging from 0 to 100
Ware et al.
(2002)
Personal experience
Three items
measuring business
experience,
management and
industry
Scale ratios are looking for
years of experience in this
role, additionally
Chandler (1996)
Personal finance
resources
Satisfaction with
access to capital
financial (past)
Single item size, 7-point
interval scale
Wiklund and
Shepherd
(2005)
Financial satisfaction
personal (now)
Single item size, scale
interval (10 points)
Joo and Grable
(2004)
Private network
Time spent on
personal networks
(sum score of seven
categories)
On a ratio scale, the
hours spent with each
network each month
were summed to show
the total time spent in
network
Dodd et al.
Personal values
Simplicity
Eight item interval scale
Likert
Lastovicka et al.
(1999)
Commitment to
marriage
Five item interval scale
Likert
Johnson et al.
(1999)
Business success
Room occupancy rate
Ratio size, percentage
occupied space (average
actual capacity)
Banteng (1995)
Personal success
Summed scores of
the four 'Measures of
Success' items
The average score on all
four items should be
greater than 2 and the total
score greater
of 15, summation scale
Kaufman et al.
(1996)
159
Some previous research on gender differences in small businesses found that women-
owned small businesses perform lower than men-owned small businesses because they tend to
lack relevant management and entrepreneurial experience (Hisrich and Brush 1984). Other
research on gender and performance that measures success through firm survival does not
support the benefits of management or business experience (Kalleberg and Leicht 1991).
The differences in management and business experience between genders in rural
accommodations are statistically significant in our sample and large in absolute terms. Men
had almost 5 more years of business experience and more than 10 years of management
experience than women. However, the bivariate correlation assessment between experience
and success did not show any significant relationship. In fact, the only significant relationship
was the inverse relationship between management experience and business success
(occupancy rate) among rural male respondents (0.352, significant at the 0.05 level). This is a
puzzling result. Why would men with more management experience tend to run
accommodation businesses in rural areas with lower occupancy rates? There is no clear
explanation for this unexpected finding, which is an interesting but counterintuitive anomaly.
In further analysis of the bivariate correlation matrix of the variables in this study, the
only significant correlation of note for rural male respondents was a 0.400 Pearson's R
(significant at the 0.01 level) between personal net worth and time spent in charitable and
community networks. This relationship may be more related to the philanthropic activities of
successful owners, rather than networking for the success of the business itself.
With respect to the group of women hosted accommodation owners in rural areas,
there was no significant bivariate relationship between the personal resources investigated and
the measures of success applied. Thus, while there were clear differences between men and
women, there was no possibility of a relationship between these differences and success.
Conclusions and Recommendations:
This research highlights some very real and substantial differences in the
characteristics of urban and rural accommodation owners. It also points to gender differences
in rural environments that require further, focused attention. It would not be appropriate to
attempt to extrapolate further to The findings were used to identify causal relationships from
the data collected with the aim of identifying descriptive characteristics. However, this
chapter shows that there are significant differences between accommodation owners living in
urban and rural areas in Western Australia.
The most fundamental difference between rural and urban owners relates to the
160
superior level of business experience and greater annual sales enjoyed by urban owners.
Annual sales may be explained by the geographical advantage enjoyed by urban locations, but
there appears to be no logical explanation for the relationship between geographical location
and level of business experience. Other differences such as internet usage, networking with
business associates, and working hours in the business all favored urban accommodation
owners.
A closer examination of gender differences among rural respondents revealed that
women performed lower than men on the key business success measure of occupancy. If
women have different business motivators and goals as suggested by others (Buttner and
Moore 1997; King 2002), then this lower occupancy rate may not be a significant finding.
However, the responses from women owners themselves suggest a real performance gap
through lower satisfaction with their self-reported overall level of success.
If the position of Still et al. (2005) position is taken (there is currently little difference
between the motivational
and gendered goals in small businesses) then there appear to be real barriers to success for
rural women. The large difference between the resources available to men and women may be
a factor, as rural men have almost IDR 300,000,000 more personal net worth. Women's
relatively lower involvement in local community and charity networks may be another
contributing factor.
One limitation of this study that must be acknowledged is that the definition of 'rural'
adopted is very broad. This study adopted the Australian Bureau of Statistics' methodology for
dividing rural and urban locations. While this allows for closer comparisons with national data
on small businesses and farm families, it raises new issues. This definitional mismatch mainly
resulted in some regional towns being treated as rural areas in our results. In reality,
accommodation owners in some of these regional towns may have more in common with their
urban counterparts. It is possible that if we reclassify the regional businesses in these towns
into urban businesses, the gender differences in the more remote rural locations will be even
greater.
The limitations of this rural/urban definition point to one area that may need to be
investigated in the future - that of better understanding the existence of gendered advantages
or disadvantages in remote rural areas. The tyranny of distance involved in this kind of
research in Western Australia's vast rural areas and the sparsely populated will be a challenge.
But so are the difficulties faced by accommodation owners who stay in diverse and far-flung
locations.
161
This research shows that accommodations are accommodated in rural areas in
Western Australia is not a lucrative or fulfilling business, especially for women, but
confusingly, it is still a common choice. The marginal nature of many rural farming
communities and enterprises may be one factor leading to the establishment of low-return
enterprises whose primary purpose is to supplement a small amount of farm income through
greater use of farm infrastructure. It appears that women run a disproportionate number of
rural hosted accommodation businesses, with more than two-thirds of hosted accommodation
owner-managers being women. This is in contrast to the wider SME community where
women represent only one-third of all business owners.
Armed with that knowledge, some commentators will be tempted to apply gender
stereotypes and dismiss these businesses as hobbies with no significance to the local or wider
economy. However, if (as the author believes) these small accommodation businesses are
often born out of the need to support a farm under financial pressure, then this phenomenon is
worthy of closer investigation. Could there be some small Australian businesses in rural areas
that 'rode the sheep' and now rely on tourists as alternative transportation?
What has been recognized at the beginning of this chapter is the lack of distinction between
environmental
rural and rural 'towns' in this study. The fact that Western Australia is a relatively sparsely
populated region (by world standards) gives us this freedom. However, it must be recognized
that the nuances of urban tourism itself cannot be removed from the data presented. The
concern over the lack of focus on urban tourism is well summarized by Professor Gregory
Ashworth who states that "The relationship between cities and tourism is not symmetrical.
Cities are important to tourism but this does not automatically mean that tourism is important
to cities" (Ashworth 2003, p. 157).
This study shows the need to further investigate the motivations and goals of rural
women entrepreneurs in particular. It is hoped that future research in this area can explain
why rural women entrepreneurs seem to underperform their male counterparts and are
unhappy with this outcome. The authors suspect altruistic motives to support the family and
farm to 'stay afloat', which warrants further, more targeted investigation in the future.
