International Journal of Civil Engineering and Technology (IJCIET)

Volume 8, Issue 6, June 2017, pp. 491–499, Article ID: IJCIET_08_06_054

Available online at http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=8&IType=6
ISSN Print: 0976-6308 and ISSN Online: 0976-6316

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ENTREPRENEURSHIP IN CONSTRUCTION
INDUSTRY: MOTIVES AND BARRIERS
Ali Raza Khoso, FidaHussain Siddiqui
Lecturer, Department of Civil Engineering,
Mehran University of Engineering & Technology, Jamshoro, Pakistan

Shabir Hussain Khahro

Lecturer, Department of Engineering Management,
Prince Sultan University, Riyadh, Saudi Arabia

Muhammad Akram Akhund

PhD Student, Department of Civil Engineering,
Mehran University of Engineering & Technology, Jamshoro, Pakistan

ABSTRACT
Amongst various other issues of the developing countries, unemployment is the
extremely serious problem. Construction industry is a sector where lot of business
opportunities can be created if the knowledge of entrepreneurship become wide
spread. Fresh engineers and architects can run their own business. But to start new
construction business is still a challengeable issue. This research work identified the
critical factors hindering to start new construction business. The factors are divided in
two major categories i.e. Motives and Barriers. Study of literature, experts’ interviews
and questionnaire survey helped in data collection phase. The data was analyzed by
Average index method using SPSS. The result of the study indicates that Financial
resources of owner, Collaboration of team and Communication skills in owner are top
three motives and Risk of failure in future, More competition in market and Irregular
working schedule are top three barriers in view of business owner. The result of study
is the first step guidance for fresh graduates to start their own business.
Key words: Entrepreneurship, Unemployment, Fresh Engineers, Architect,
Construction Industry
Cite this Article: Ali Raza Khoso, FidaHussain Siddiqui, Shabir Hussain Khahro and
Muhammad Akram Akhund Entrepreneurship in Construction Industry: Motives And
Barriers. International Journal of Civil Engineering and Technology, 8(6), 2017, pp.
491–499.
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 Ali Raza Khoso, FidaHussain Siddiqui, Shabir Hussain Khahro And Muhammad Akram Akhund

1. INTRODUCTION
An effective government policy to decrease unemployment is to stimulate the number of new
businesses opportunities specially for the youth. Another way to reduce the unemployment is
entrepreneurship. Entrepreneurship fuels the economic development of countries. Although,
there are some disputes about the exact numbers; recent empirical work indicates that new
small business starts account for a large proportion of job creation. Moreover, entrepreneurs
tend to have a history as job hoppers (Astebro and Thompson, 2011).Entrepreneurship is an
ability and willingness to organize, develop, and manage a business venture along with any of
its risks in order to make profit. It is often represented as a risky, unstable career choice. Most
periods of entrepreneurship are relatively short lived. For example, a study by Kaiser and
Malchow-Moller (2011) using Danish data found that among new entrepreneurs, only 35.6%
had persisted in entrepreneurship after five years. Hence, entrepreneurship may be viewed as
a transitory occupation as entrepreneurs leave relatively quick.
The current limited job opportunities have caused the unemployment rate to hit the roof.
The poor ability to adapt of formal university graduates in satisfying the job market demands
is increasingly coming into question in the effort to overcome unemployment. Trading
Economics global macro models and analysts expectations claimed that unemployment rate in
Pakistan is expected to be 6.10 percent by the end of this quarter. In the long-term, the
Pakistan Unemployment rate is projected to trend around 5.70 percent in 2020. After Yemen,
Pakistan has second highest percentage of youth population. Youth bulge means a peak in the
share of the persons aged 15-24 in the population (UNICEF 2012). Out of 180 million, 60
percent of Pakistan’s population comprises of youth. Around 8% youth is unemployed
(according to World Bank Statistics, 2014) with no vocational and technical skills. According
to Fuller (1995) and Heinsohn (2003), high population especially of young male adult leads to
unrest, conflict, violence, war and terrorism if uninvolved in development era.
The construction industry of Pakistan added the share in GDP. The rising demand of
infrastructure activities is making this sector highly profitable. A report by Global
Entrepreneurship Monitor (2012) survey claimed that in Pakistan 42.7% of working age
individuals were not engaged in entrepreneurial activity and had no intention of starting a
business within the next three years. A further 27.5% expected to start a business in the next
three years, but were not actively trying to start a business or running an existing business. A
further 13.7% were nascent entrepreneurs and an additional 16.1% were new business owner/
managers. Furthermore, the various data regarding Entrepreneurial Ecosystem has been
depicted in Figure 1.

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 Entrepreneurship In Construction Industry: Motives And Barriers

Figure 1 Entrepreneurial Ecosystem of Pakistan (Source: Global Entrepreneurship Monitor 2012)

Pakistan being developing country is suffering seriously from several issue of
entrepreneurship. According to Entrepreneurial Ecosystem of Pakistan, support from
Government to develop policies for entrepreneur in the country is very poor. The government
should organize seminars, programs and workshop to motivate business owner to widen their
business circle. But the graduates of country are much deprived from this area too. Beside
these issue, Pakistan as reported by GEM, suffering several other issues like, lack of
entrepreneurship education at school stage, lack of entrepreneurship education at post school
stage like colleges and universities, less market demand due to certain reasons, lack of social
norms to adopt new business, lack of commercial and legal infrastructure, lot of taxes and
bureaucracy are major hindrances in entrepreneurship in Pakistan.
This research provides suggestions to engineers and architects which would help them to
step up as an entrepreneur and become job provider rather than job seeker. Also, the second
part of the study is concerned with the barriers that create hurdles in the construction industry
business.

2. LITERATURE REVIEW
The creation of new firms results in economic development of the society, as they are context-
dependent and social processes are flourished as well. Skill/potential of a person is found to
be main aspect in business startup. Various startup barriers and motivators have been
investigated. (Nader Abdul-Hadi et al. 2005) focused on business process re-engineering, the
author investigated barriers such as lack of resources i.e. finance, time, money, human
resource etc., construction knowledge, and decision making ability of owner. Nader focused
on successful lean construction means, and suggested few important barriers of starting a new
business. As Entrepreneurship is vital for sustainable development (Markus Larsson, 2012)
worked on sustainable economic development and concluded that corporation, collaboration,
trust and members’ engagement are critical factors of the firm growth.
Culture has significance impact on entrepreneurship. Laura Brancuet. al., (2012)focused
on student’s motivation about entrepreneurship in Romania based upon cultural differences.
The study highlighted the various critical factors of motivation and barriers in business of
Romania. Finance and human capital are two important parameters for entrepreneurship. It is
often argued that the individuals most likely to become entrepreneurs having higher personal
net worth and stronger human capital credentials than non-entrants (Shane, 2003). A study by
(Magnus Lustrum et al. 2014) studied the causal relationships between the financial and

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 Ali Raza Khoso, FidaHussain Siddiqui, Shabir Hussain Khahro And Muhammad Akram Akhund

human capital resources in context of entrepreneurs. According to Mambula (2002), one of

great obstacle in doing business is finance, government policies and corruption. Independency
also has a leading role to be an entrepreneur. According to a study by Hung et. al (2011)
people want to start their business because they want to be independent, free of control and
they don’t like the bosses over them. Finance and life security are important parameter to run
business. According to Noor et al. (2014) the main factors to conduct the business is finance
and the family security.
Business is much dependent on the relevant experience. According to Jose (2014)
business has significance relationship with the experience. Entrepreneurship starts with the
smaller businesses. The study of motives and barriers on smaller businesses done by
SitiFahazarinaHazudin (2015), found that finance, security of life, success, easy schedule,
experience, self-satisfaction, to be independent are the motives for the self-business. The same
study revealed that, low management experience, corruption and lack of knowledge to control
cost are the top barriers of small business startup. Hard and soft skills that affect
entrepreneurship development are studied by various authors, such as (Cashton & Sadler-
Smith, 2012; Comunian, Chaplain, & Clifton, 2010). Business maturity and entrepreneurs'
qualification are classified as hard skills. The maturity usually comes through the experience.
On the other side, the soft skills are mostly related to entrepreneurs' emotional intelligence
(Mayer, Di Paolo, & Salovey, 1990) and personality characteristics (Robinson & Stubberud,
2014). The mentioned parameters help building risk averting skills (Bolton & Lane, 2012). A
study by Anil & Azize (2014) found that entrepreneur should have the ability of taking risks.
To run the business is a sort of risky task, nevertheless a successful entrepreneur will always
take the risk. The risk-taking ability of owner accepts the new challenges which is positive for
the business. Business market has two major impacts on business, first the greater competition
yields more number of entrepreneurs, secondly it affects negatively to the environment.
Market failure gives birth to various negative effects (Johanna Gast et al. 2017). One
important reason to be entrepreneur is the job stability. A recent research by (VirgilioFaillaa
et al. 2017) suggested that, though entrepreneurship is very risky and unstable but become
more reliable and secure at later stage.
Several authors determined the factors affecting on job creation through entrepreneurship
i.e. education is very important factor of entrepreneurship (Block et al, 2013), prior
knowledge for opportunity recognition (Cohen & Levinthal, 1990) individuals' perception of
personal expectations , life experiences for the discovery of opportunity (Venkataraman,
1997), knowledge of specific markets (Colombier & Masclet, 2008; Román, Congregado,
&Milan, 2011), and embeddedness through social networking (Farashah, 2015).
The literature related to starting of new business is rich however construction related
literature is lacking. Current research consists of two major factors i.e. motives and barriers
related to construction industry business. This research can fulfill the gap in literature and
prove to be a guide for new graduates to be an entrepreneur in construction market.

3. RESEARCH AIMS & OBJECTIVES

The aim of this paper is to highlight the importance of entrepreneurship in construction to
reduce the unemployment of fresh engineers and architects. On the basis of critical literature,
the study aims to show the important parameters required for a beginner to run construction
business. At second stage, this study aims to investigate the key causes that, why fresh
business owners are not interested in starting their own construction business. To successfully
achieve the above aim, following objectives are designed;
i) To identify motivation factors to start construction business

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 Entrepreneurship In Construction Industry: Motives And Barriers

ii) To highlight the major hindrances towards adoption of construction business in

Pakistan.

4. RESEARCH METHODOLOGY
To achieve the goal of research, initially the factors were assessed from the critical review of
literature available on construction industry business and entrepreneurship. The entire flow of
research work is shown in figure 2.

Figure 2: Research Flow Chart

After reviewing the literature, the author conducted unstructured interviews with the field
experts mainly those who are engaged in their personal construction business. More factors
had been added from the views of experts and finally a questionnaire was designed.The
factors were then analyzed in Statistical Packages for Social Sciences (SPSS), using average
index technique because of its easiness and results. Finally, the study highlights the critical
motives and barriers related to business in construction industry and the results of study are
discussed.

5. RESULTS & DISCUSSION

Motivating factors are the positive points which are essential for starting a new business. The
study highlights the top five factors as critical factors of the study. As per the results of study,
the 1st ranked factor in the opinion of business owner is “financial resources of the owner”.
Owner does require the capital to invest initially, as finance is foremost important
requirement. The financial assets of the owner become a key to start the business.
The 2nd ranked factor is “collaboration of team”, because this is very difficult for a
business owner to run huge business without effective collaboration of his team. The team
efforts make a successful business. The 3rd ranked factor of the study is “communication
skills”, because to run any business, its owner should have good potential in terms of
communication skills. Owners of business require good skills of negotiations in dealing with
the concerned market stakeholders. The complete rank of the factors is shown in figure 3.

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 Ali Raza Khoso, FidaHussain Siddiqui, Shabir Hussain Khahro And Muhammad Akram Akhund

FINANCIAL RESOURCES OF OWNER 4.45

COLLABORATION OF TEAM 4.44
COMMUNICATION SKILLS IN OWNER 4.32
TECHNICAL SKILLS OF OWNER 4.25
LEADERSHIP SKILL IN OWNER 4.12
EXPERIENCE OF OWNER IN CONSTRUCTION… 4.11
OWNERS TRUST IN TEAM 4.1
QUALIFICATION/EXPERTISE OF TEAM 4.09
ABILITY OF SURVIVAL OF FIRM OWNER 4.02
MANAGERIAL SKILLS OF FIRM OWNER 3.95
MARKETING ABILITY OF OWNER 3.92
NEED OF EFFICIENT BUSINESS PARTNER 3.72
QUALIFICATION/EXPERTISE OF OWNER 3.7
POTENTIAL OF BUSINESS TO EXPAND 3.45
RISK TAKING ABILITY OF OWNER 3.42

Figure 3: Motivating Factors for Entrepreneurship

The “Technical skills of owner” and “Leadership skills in owner” are 4th and 5th ranked
factors respectively. The construction business requires the technical knowledge as different
activities involved in construction are oriented technically. Owner without technical
knowledge is less privileged in the construction business. The leadership skills are again of
vital importance; without good leadership, it’s not possible to run the business but for the
good experienced person; this factor may be less important as compared to finance, which is
clear from the results too.
Barriers are the negative aspects/hurdles in the way of a task being successful. The
identified barriers for construction business/entrepreneurship are mentioned in figure 4 below.

IRREGULAR WORKING SCHEDULE 4.2

POLITICAL POLICIES OF GOVERNMENT 4.12
LAKE OF SOCIAL COMMUNICATION 4.05
TIGHT (FIXED) PROFIT MARGINS IN MARKETS 4
SECURITY OF INVESTMENT 3.97
LACK OF GOOD QUALITY ENTREPRENEURSHIP… 3.87
NATURE OF CHANGE IN POLITICAL POLICIES 3.77
OWNERS WANT TO GET THE MOST OUT OF… 3.7
LACK OF TECHNICAL PERSONS IN THE FIELD AT… 3.7
HIGH INITIAL COSTS OF WORK 3.67
INVOLVEMENT OF BUREAUCRACY 3.65
LIFE SECURITY OF OWNER 3.6
COMPLEX NATURE OF CONSTRUCTION WORK 3.22

Figure 4: Barriers for Entrepreneurship

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 Entrepreneurship In Construction Industry: Motives And Barriers

The results shows that irregular working schedule, policies of Government, lack of social
communication and tight profit margins in market are the major barriers to start a self-
business in construction industry followed by others shown in the figure above.

6. CONCLUSION
This paper is designed to enrich concept and awareness of entrepreneurship in construction
industry. Globally, the rate of unemployment is increasing and Pakistan is not an exception.
Entrepreneurship is a key element to tackle this issue. Numerous opportunities can be
provided by introducing strategies to start up new construction business. Fresh graduates are
talented and have good potential but they have less knowledge and experience of business.
The issue can be resolved by motivating the young graduates and providing necessary
awareness and opportunities of business. This paper highlighted the main motivating factors
and barriers for starting new construction business. The study concludes that for an effective
construction business other than finance, collaboration of team, communication, technical and
leadership skills of owner play vital role for entrepreneurship. The paper further suggests that
entrepreneurship in construction has potential of risk. High competition in market and tough
working schedule also hinders as per views of experts. Young graduates are more social hence
they consider that this business will cut them off from society. Also the main hindrance
perceived by the fresh graduates is lack of entrepreneurship education. The perspective
offered by this paper can help the young graduates to start their business. The study further
suggests pondering over these hindrances and trying to find suitable measures so that
construction business can rise at its optimum stage to make the sector healthier, by lowering
down the rate of unemployment

ACKNOWLEDGMENT
The authors are thankful to faculty and students of Civil Engineering department, MUET
Jamshoro and Mr. YaseenMemon remained helpful throughout.

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