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Research Journal of Social Sciences ISSN: 1815-9125

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2015 September; 8(7): pages 178-183.

Published Online 14 September 2015.

Research Article

Determinant Factor for Poverty Alleviation on Women Entrepreneurship Nik Syuhailah Nik Hussin, Zuraimi Abdul Aziz, Mohd Rafi Yaacob, Nik Madeeha Nik Mohd Munir, Siti Fariha Muhamad Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, Malaysia Received: 23 July 2015; Revised: 28 August 2015; Accepted: 1 September 2015

Copyright © 2015 by authors and American-Eurasian Network for Scientific Information. This work is licensed under the Creative Commons Attribution International License (CC BY). http://creativecommons.org/licenses/by/4.0/

ABSTRACT Poverty reduction became a major objective in of improving the socioeconomic. It has becomes main targets and attention at many developing and developed countries. The Government continued to play the leading role in poverty eradication efforts by promoting income-generating projects, providing amenities to improve the quality of life and implementing program to inculcate positive values among the poor. The objective of this research is to find out the determinant factors towards to poverty alleviation for women entrepreneurship. The respondents in this study consisted of 300 women entrepreneurs who were running the business within three selected states in Malaysia. Data analyses were conducted using SPSS 20.0. The finding indicated that microfinance had a most significant relationship with poverty alleviation. In a nutshell, it was pointed that microfinance program is becoming more significant as the main contributor in creating new job opportunities and generating income for increasing social wellbeing and economic status of the poor and eradicating poverty. Keywords: Women Entrepreneurship; Poverty Alleviation; Microfinance

INTRODUCTION Ever since independence in 1957, Malaysia has successfully transformed itself from a poor country into a middle-income nation. The Malaysian economy has seen a periodic growth despite challenging external factors. It can also definitely claim its success of combat against poverty. Despite its poverty reduction success, there still remains a vulnerable group of people in the country experiencing poverty for some geographical and societal reasons. Adjustments were made to the poverty line in its earliest form, for differences in

mean household size and cost of living among the three main regions of Malaysia-Peninsular Malaysia, Sabah and Sarawak. The development of New Economic Policy and National Development Policy in Malaysia has established a major objective for poverty reduction in Malaysian development plan. The strategies devised in Malaysia to mitigate poverty took on several important fronts. A combination of continued welfarism and a new drive towards independent living were incorporated in the strategy. Hence, improved capacity building was enhanced and new programs were introduced in order to take care of the

Corresponding Author: Nik Syuhailah Nik Hussin, Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, Malaysia. Tel: 609-7717000; Fax: 609-7717252; E-mail: [email protected]

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vulnerable or the so called bottom million of society. The Government continued to play the leading role in poverty eradication efforts by promoting income-generating projects, providing amenities to improve the quality of life and implementing program to inculcate positive values among the poor. Inspired by the microcredit program in Bangladesh, as pioneered by Muhammad Yunus, Malaysia introduced a program as one poverty eradication program in the country. Despite the need to eradicate poverty, the microfinance program also hoped to reduce the dependency of poor people on the government by promoting the concept of selfreliance. Obviously, women unlike men are motivated enough to increase economic status of their families, they are working hard for their family and they have entrepreneurial inclination which yet explored and developed. On top of that women are good payers of loan that they committed. Women have been starting their own business in unprecedented numbers in recent years. The rapid increase in women-owned enterprises is important because small business provided the major source of new job growth ever since 1980s. According to [1] women has been initiating business at twice rate compared to men in the era of 1980s. But nevertheless, women access to finance especially from conventional banks in developing countries is limited, hampering poverty alleviation. In this regard, if ones want address poverty it is paramount importance to equip women with entrepreneurial knowledge and skills together will microfinance assistance as a means for them to embark on small-scale business [2]. Malaysia has successfully transformed itself from a poor country into middle-income nation. The Malaysian economy has seen a periodic growth despite challenging external factor. It can also definitely claim its success of combat against poverty. Despite its poverty reduction success, there still remains a vulnerable group of people in the country people in the country experiencing poverty for some geographical and societal especially in Terengganu, Kelantan and Sabah. The main aim of this research is to investigate the role played by the determinant factors that contribute to alleviate the poverty. The rational of choosing these states is because they are the three poorest states in Malaysia which majority of population is indigenous. According to [3], based on 2007 figure, the state of Sabah had the highest poverty rate at 23%, followed by Terengganu 15% and Kelantan 11%. Based on the latest statistics released by The World Bank’s 2010 report, Sabah still the poorest state in Malaysia where the state has 10% of the Malaysian population but more than 40% of all poor people in Malaysia live in Sabah [4]. 2. Literature Review:

Personality trait: Personality traits are identified as antecedents of entrepreneurial watchfulness to business opportunities [5]. The possession of certain personal traits enables entrepreneurs to perform their roles well. The absence of certain traits may disable an individual from emerging as an entrepreneur. Different personal traits of entrepreneurs have been investigated in the previous research such as desire for independence, need for achievement, selfconfidence, locus of control, risk taking propensity, knowledge and information and recognition of opportunity. Self-efficacy is the assurance in your own powers. It indicates one’s belief in one’s capabilities to practice control over outcomes in one’s life [6]. Thither is a possibility that the perception of selfefficacy is one of the most distinctive personality traits of the entrepreneur. People with an inner locus of control believe that they can determine their life. Masses with a higher internal focus of control seem to be more entrepreneurial than ones with a lower internal locus of control [7]. Various studies confirm that with entrepreneurs the ability of internal command is more expressed than with others [8]. People who are internally motivated to create companies that survive [9], as well as companies that are rising quicker than others [10]. A tendency for risk-taking is a tremendously significant dimension in the area of entrepreneurship and refers to the people who are predisposed to accept risks when faced with situations that could be uncertain [11]. Cultural: Refinement is an important ingredient in any discussion on entrepreneurship because it refers to the attitudes of people towards the foundation of entrepreneurship [12]. Each civilization generates its own example of entrepreneurship, according to the specific demands of the host company; however, entrepreneurship has also been explained consistently using terms such as innovative, holistic, risk-taking and coordinating ways of orientation [13]. Some cultural traditions may encourage, or deter, entry into entrepreneurship. Therefore, it is hinted that the culture of societies and the characteristics of its people will persuade or dissuade the degree in which entrepreneurship is based. The concept of cultural difference has been construed by some as a powerful determinant of regional or national variation in the supply of entrepreneurship [14]. In one of the case study on female entrepreneurs in Catalonia, Spain, [15] mentioned, “fear of failure” and “perceived capabilities” are the most important socio-cultural factors on the probability of becoming a successful women entrepreneur. In order to develop the personal values mentioned above, more educational programs and support policies to promote

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entrepreneurial activity should be held often. Moreover, the literature on entrepreneurship suggests that socio-cultural factors; the presence of role models, family background and beliefs, fear of failure, perceived capabilities, perceived opportunities are the most significant in accelerating an entrepreneurial behavior [16]. Environment: Business environment factors seem to be more significant to the success of women entrepreneurial activity. The local surroundings for business, available market access, stable condition of the country’s labor force, available raw material, proper process of product development are all fundamental constituents of job environment. Production and marketing efficiency are significant determinants of entrepreneurial success. Unfortunately, many women entrepreneurs cannot ensure their output and marketing efficiency due to their poor managerial and technical skills [17]. The business environment factors pose a set of challenges to business because they are outside the control of the job proprietor. Business factors play a larger part in entrepreneurial activity, despite the possession of the requisite personal entrepreneurial characteristics such as instruction, right attitude to risk, motivation, energy and working experience; the environment may hinder women entrepreneurs from exploiting entrepreneurial opportunities [17, 18]. Knowledge also is a major component of the business environment. It includes knowledge of the product scope and market movements. Job skills include expert and managerial skills, which could be acquired through adequate training [19]. Genderrelated discriminations, among other business, environmental factors, especially in rising countries, also pose hindrance to women entrepreneurial activity. Microfinance: There have been many studies on the economic and social impacts of microcredit, and the results have been mixed. [20], for example, studied the impact of two microfinance interventions in Africa (Sinapi Alba Trust (SAT) in Ghana during 1997 and Semeto Microfinance Development Program (SOMED) in South Africa during 1998). The results indicate that microfinance interventions achieved significant increases in business incomes, access to life-enhancing facilities and the empowerment of people, particularly women. Microfinance clients also experienced enhanced public respect, acceptance and self-esteem participated more in community activities and made greater monetary contributions to social projects. Microfinance has gained a universal consensus as an effective tool for alleviating poverty and wellbeing improvement [21, 22]. It is also seen as an approach to help the local economy. The dynamic

growth of microfinance activities can lead to the achievement of a wide range of development objectives, including: the fulfillment of selfemployment, new firms formation, and income distribution [21, 23]. The role of microfinance goes beyond business investment, to include the improvement of the economic wellbeing of households. Microfinance also considers as an essential approach to empower poor especially [24]. It enables them to make their decision independently, improve the quality of their life and dignity [25]. Study by [26] examined the three phases of poverty reduction, microfinance and entrepreneurial success. The first phase is the failure phase with limited vision due to poverty clouds which covering the women were in this phase before accessing the microfinance facility and entrepreneurship opportunities. The second phase is improvement, resulting from empowerment and enterprise that provides a broader vision due to access to finance and achieving some of the attributes of entrepreneurial skills. The women whether starting new business or running an existing family business moves toward this phase when they use microfinance loan in their business. The third phase is about on the microfinance institutions provide finance, trainings, product knowledge and help them in establishing business networks and peer mentoring facilities. In their study, the result reported that women in the sample have enjoyed significant enhancement in the quality of their life after accessing microfinance. This is evidenced from the fact that 30% of the women moved from Phase 2 to 3 because access to finance offered greater entrepreneurial opportunities of training, business networks, peer mentoring, product knowledge and budgeting and finance that enabled 20% of the women to move into Phase 3 of success where they experienced significant poverty reduction and greater opportunities to enhance their entrepreneurial skills to break out of poverty cycle. Poverty alleviation: Now a day’s poverty alleviation is a very important issue in all over the world. It was come in the front when the failure of the past macroeconomic development strategies in eradicating poverty in a sustainable manner pave the way for changes in the development strategy to specifically for the targeted poverty. With the increasing diversity in human poverty, an increasing percentage of world population is going under poverty line every year. While it was difficult for conventional financial institutions to extend financial help to continue the growth potentials of every human being, microfinance came with revolutionary approach by providing the poor the accessibility to the credit to increase their productivity, for reducing vulnerability, and to alleviate poverty through selfemployed economic activities

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One of the main tasks in eradicating poverty would be to define poverty while understanding the different dimensions of poverty; and to identify who are the poor based on the definition. With many definitions and concepts available in literatures written by various parties, four common underlying concepts of poverty emerged: monetary, capability, social exclusion and participatory [27]. These definitions range from defining poverty through a conceptual but physical poverty line to a definition more focused on the deeper psychosocial meaning to the individuals. Poverty means the lack of income or shortage of assets; the lack of competence, confidence, disempowerment, etc.; has also deprivation of national currency; it is also common to speak of an poor understanding, or culture, or spirit [28]. Poverty may arise from low productivity of the households and they face financial constraints and lack of other incentives of entrepreneurship [29] while poverty alleviation is all about improving human wellbeing (the life people live, what they can do or cannot do), in particular that of the poor people [30]. Materials and Methods In this study, a quantitative approach had been adopted to determine women entrepreneurship and poverty alleviation. The survey instrument was a self-administered questionnaire. The questionnaire consisted three sections; Section A measured respondents on the factors to alleviate the poverty. Section B is measuring for respondent’s poverty alleviation. Likert scale is used in these sections Table1: Reliability Test Dimension Personality traits Cultural Environment Microfinance Poverty alleviation

Items 5 5 8 8 8

4 . Findings: Table 2 shows the demographic characteristics of the respondents. From the data that we obtained, the majority of the respondents were aged between 40 -49 years old, which is 33% of the total respondents. In the data we collected, there are total 160 persons had attended primary school, which hold 53% under this group. For category of level of respondent’s skill involved in the business, Table 2: Demographic Characteristics Demographic Variable Categories 20-29 years old Age 30-39 years old 40-49 years old Above 50 years old Non-formal education Education Primary school Secondary school

which ranging from “Strongly disagree” (1) to “Strongly agree” (5). In the section C, was designed to extract women entrepreneurs’ profile, which contains age, race, level of education, skill, business premises and possession of business. To be qualified as potential respondents, small businesses were selected when they met the following criteria; the firm must have not more than 75 full-time employees; it must have been in operation for at least one year and above; the respondent must be the owner or manager of the firm; and a participant of a microfinance program regardless from which organization. Our study take place at the 3 selected states in Malaysia such as Terengganu, Kelantan and Sabah. 360 questionnaires had been distributed to the identified respondents. However, after about three months of the data collection exercise, 300 questionnaires were accepted and the others were rejected because some of the questions were not answered by the respondents. The data then was analyzed using SPSS 20.0 to obtain the result. The survey questionnaires were adapted from previous literatures. The reliability test of Cronbach Alpha was conducted to check the internal consistency of the scales. The reliability coefficients of the five dimensions exhibit consistency; personality traits as measured by 5 items produce 0.842, cultural with 5 items yield a coefficient value of 0.782, environment of 8 items exhibit coefficient value of 0.886, microfinance with 8 items produce 0.911, and poverty alleviation as measured by 8 items produce 0.922 as shown in Table I. Cronbach’s Alpha coefficient 0.842 0.782 0.886 0.911 0.922

respondents with non-formal training are the highest rate with 218 persons, which hold 73% under this group. Among the respondents that answered our questions, 158 of them were running the business at their shop, which is 53% of the total respondents. For the category possession of business, respondents that owned sole proprietorships are the highest rate under this category, which are 266 persons or 89% of overall. Frequency (n=300) 48 61 97 94 37 64 160

Percentage (%) 16 20 33 31 12 21 53

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Skill

Type of business premises

Possession of business

Diploma Degree Postgraduate Non-formal training Vocational training Part time training Training at College Stall Shop Kiosk Sole proprietorships Partnerships Branches

27 9 3 218 31 40 11 135 158 7 266 24 10

The standardized regression coefficients presented at Table 3 shows that microfinance has the most significant positive relationship with poverty alleviation. Microfinance has p-value lower than chosen 5% level of significance. The t-value represented by the variable microfinance shows at 7.151. The beta value on microfinance scored 0.400, which is relatively higher than the other variables. Therefore, the variable of microfinance had the most significant relationship with the poverty alleviation

10 3 1 73 10 13 4 45 53 2 89 8 3

on women entrepreneurship. The next variable, which is personal trait and environment has p-value lower than 5% level of significance. The beta value scored by the personality traits and environment were 0.305 and 0.169 respectively while t-value at 5.713 for personality trait and at 2.858 for environment. The last variable cultural scored p-value higher than chosen 5% level of significance, therefore, not statistically significant.

Table 3: Regression Coefficients Beta (Constant) Personality trait Cultural Environment Microfinance

t 1.504 5.713 -.195 2.858 7.151

.305 -.010 .169 .400

Conclusion: This study identified four variables namely personality trait, cultural, environment and microfinance on women entrepreneurship towards to poverty alleviation. The result revealed that microfinance has the most influential component and significant relationship to affect women entrepreneurship in alleviating the poverty. As conclusion, our findings are considered applicable to women entrepreneurship because we are able to indicate that microfinance was the most important factors when they are running business. This is because, according to [31], microfinance factor creates opportunity for entrepreneurial activity in a positive relationship. The role of microfinance goes beyond business investment, to include the improvement of the economic wellbeing of households. Its program contributed excessively in financing the poor, impressive loan recuperation and a positive impact on poverty reduction [32, 33]. In addition, microfinance program is becoming more significant as the main contributor in creating new job opportunities and generating income for increasing social wellbeing and economic status of the poor and eradicating poverty. This is because by providing access to financial services, microfinance plays an important role in the fight against poverty.

Sig. .134 .000 .845 .005 .000

Authors are very thankful to the Universiti Malaysia Kelantan for the financial support through the Short Grant Research Scheme to carry out this study REFERENCES 1.

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