Entrepreneurial motivation and entrepreneurial leadership of entrepreneurs: evidence from the formal and informal economies

Micro, small and medium enterprises (MSMEs) have played a
pivotal role in the economy of developing countries. Intriguingly, only a small
fraction of MSMEs are legally registered as formal enterprises, and they
typically lack entrepreneurial management. Our paper is to test the influence of
formality status on entrepreneurial motivation and leadership among active
entrepreneurs. To gather data, we surveyed formal and informal entrepreneurs
in East Java, Indonesia. Our results show that formal entrepreneurs score
higher in all dimensions of the entrepreneurial motivation variable compared to
informal entrepreneurs, except for desire for wealth. Yet, only entrepreneurial
opportunity is statistically significant among all the entrepreneurial motivation
dimensions. Furthermore, while informal entrepreneurs seem to accept more
risk and have higher achievement than their counterpart in the formal sector,
this does not apply to the other dimensions of entrepreneurial leadership. For
this variable, only proactive behaviour is significantly different from zero.