Designing a Path Analysis Model of Institutional Factors Affecting the Development of Entrepreneurship (Case Study: Nesa Rural Area in Karaj County)

Document Type : Original Article

Authors

Javad Zahmatkesh Momtaz ¹

Hassan Afrakhteh ²

Vahid Riahi ¹

¹ Kharazmi University, Iran

² Kharazmi University, Iran.

10.22067/jrrp.v13i1.2310-1089

Abstract

Purpose- The goal of this research is to identify institutional variables affecting entrepreneurship in Nesa rural Area in Karaj County.
Design/methodology/approach-This is a fundamental, applied research that uses a descriptive survey method for data collection. The statistical population of the research comprises the residents of Nesa Rural district. The sample size was calculated using Cochran's formula (n = 216) and its distribution among the villages was proportional to the number of households in each village and the sampling was conducted using a simple random method. The research instrument is a researcher-designed questionnaire. In this research, the confirmatory factor analysis method was used to assess the validity and reliability of the questionnaire, and the partial least squares path analysis method was adopted to test the conceptual model of the research. The relationship between the variables was measured with the Pearson correlation test.
Findings- The findings of the research on the state of entrepreneurship suggest that self-employment driven by a small family business approach, mostly without innovation, has been the predominant entrepreneurial activity in the study area. The results of the conceptual research model showed that the institutional variables of economic stability, transparency and accountability, and educational system and skills training have the most direct impact on the state of rural entrepreneurship. The analysis of fit indices of the model revealed that the coefficient of determination for the dependent variable of the rural entrepreneurial status was 0.683. Accordingly, the independent and mediating variables of the model can explain 68.3% of the variance in the rural entrepreneurial status, indicating the explanatory power of the model.
Practical implications- The results of the research suggested that rural entrepreneurship is in a deplorable condition and despite the direct and indirect effects of institutional variables on rural entrepreneurship, institutional factors play a weak and inefficient role in rural areas. Hence, it is necessary to pay attention to the role of institutional factors such as political stability, enforcement of the rule of law among citizens, control of corruption, and payment of rewards in proportion to the endeavors and creativity of individuals to promote rural entrepreneurship.

Keywords

Institutional variables

Entrepreneurship

Nesa rural area

Karaj County

Subjects

• Rural Studies

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