Entrepreneurial Competencies and Performance of Informal Micro-Enterprises in Malaysia

Literature on informal economic activities has identified the significant role of informal micro-enterprises in national development and the role of entrepreneurial competencies in micro-enterprise performance. This study, therefore, examined the role of entrepreneurial competencies, i.e., risk-taking propensity, need for achievement, self-efficacy, and experience in informal micro-enterprise performance in Kelantan, Malaysia. This study used a cross-sectional design and collected quantitative data from 197 informal micro-entrepreneurs. Findings of the path analysis using variance-based structural equation modeling (SEM-PLS) revealed that informal micro-entrepreneurs’ risk-taking propensity and self-efficacy have a significant positive effect on micro-enterprise performance. Development programs and policies should, therefore, focus on increasing low-income informal micro-entrepreneurs’ self-efficacy and ability to take risks in order to take advantage of all the income-generating opportunities available to them, which would ultimately lead to the improvement of the socio-economic condition of low income households in Malaysia. DOI: 10.5901/mjss.2016.v7n3p273