1

9
th
International Conference on Sri Lanka Studies
Full Paper Number 103








The Impact of Socio Cultural Background of the Entrepreneur on
Management and Business Practices of selected Small and Medium
Scale Businesses in Sri Lanka







W.P.Gamini de Alwis

R Senathiraja





Address for Correspondence

Department of Commerce,
Faculty Management and Finance,
University of Colombo, Sri Lanka.
Email:gda@webmail.cmb.ac.lk



Paper submitted for the


9
th
International conference on Sri Lanka Studies,
28
th
30
th
November 2003,
Matara, Sri Lanka



2

The Impact of Socio Cultural Background of the Entrepreneur
on Management and Business Practices of selected Small and
Medium Scale Businesses in Sri Lanka.

W.P.Gamini DE Alwis
R Senathiraja

ABSTRACT
Businesses practices are way of transform of business values in to practice.
Business values forms by either owner or managers. Business value formation is influenced
by the socio cultural and personal background factor such as age, ethnicity, religion and
education, of the decision makers. The research concludes that out of those factors
ethnicity play a dominant role in determining business practices other than religion,
education and age. But the ethical natures of business practices are determine by the
religion. Both Sinhalese and Tamil highly religious businessmen are more ethical but they
are not the high performers. Relatively Tamils are more predispositions for entrepreneurs
than Buddhist and inferiority feeling s of Tamils has led to develop more business links and
to be more competitive oriented. There is a gap in business practices between Sri Lankan
entrepreneurs and that of westerners.

1. INTRODUCTION
1.1 Relationship between businessmen and business culture
It is clearly seen that Small Medium Enterprises (SMEs) perform a strategic role in
developing economies in countries like Sri Lanka. Not even in Sri Lanka but in all other
countries too. The SMEs in Sri Lanka are at a high percentage when compared with other
industrial and business establishments in developing countries. But a crucial question has
risen in the process of advanced industrialization how and what will the Asian country
SMEs adapt to run parallel to the changing economic environment to maintain their higher
productivity and competitiveness in global markets.

Entrepreneurs must possess high qualities such as, integrity, social systems, decent
attitudes towards life for effectual industrial patterns and economic growth of the country,


3
as he is an key figure in the development process. Therefore, to create a healthy business
environment what is needed is an active social and cultural behavior of the population, an
efficient economy, meaningful policies, and principles that motivates a friendly and fruitful
environment by the government. According to Hofstede, (1980) market and political
conditions should be given priority for entrepreneur development.

There are several studies on the impact of economic and political environment on
entrepreneurs business performance, but just a few studies on the impact his (entrepreneur
cultural and personal background) environment on business practices. An entrepreneur is
thought of on the lines of a dynamic behavioral or cultural force. In fact, it is his system of
values, beliefs and artifacts that determine his mindset how he should govern his personal
behavior. In fact, this mindset is the result of his past experimental learning, from socio
cultural environment.

The Sociologists study an entrepreneurs role in the socio-cultural aspects that
includes his family, social status, caste, religion and other affiliations. This proves that an
entrepreneur is closely related to specific society traits. How will these cultural and
demographic factors influence his business performance? An entrepreneurs organizational
performance directly relates to his day-to-day business practices, and as such differs from
one to another. Therefore, it is important to study what kind of impact he has on
organizational cultural factors and business practices within the organization.
On the other hand with the globalization and technological development interaction
between countries are remarkably increasing and as a result business sector going toward a
common business practices rather than developing its own systems. According to east
meet west article there is no considerable difference in management practices between
east and west. Even western countries are implementing some best management practices
introduce by Japanese businessmen. Same time some argue that it is difficult to implement
foreign management and business practices as it is and it should be localized.
In this new millennium, it is seen clearly and proved that, the present world markets
are engaged in sweeping radical and confused changes in all organizations and individuals
leaving a crucial question: Are cultural ethos and modern managements compatible? In


4
other words: Can they endorse these changes and form a synergistic relationship? It is
compulsory that the researcher should answer the question and answer it in the affirmative.
The important and crucial issue is that although SME play an important role in
every country, the failure rate of SME is considerably high and the rate of development too
very slow. If they have not followed so-called developed management and business
practices that indicate the ineffectiveness of their practices. If those practices are based on
their own values and beliefs system then probable conclusion is that those values and
beliefs are not encouraging or supporting (negative influence) success of business
activities. If they have followed those so-called successful practices then the probable
conclusion is that there is misfit of those practices in the local environment. This is the
interesting area to be studied.

1.2 The research Problem statement
To what extent and how the background (social cultural factors) of entrepreneur affect
their management and business practices and is there a big gap between these practices and
accepted western practices.
1.3 Literature review
The literature review will be examined the research and reviews on impact of social
cultural factors (personal background factors) on management and business practices.
1.3.1 The reasons for failure of small and medium businesses
Berryman J (1983) suggested that the personal characteristics of owner interacting with
managerial defects produce weaknesses in the firm. Theng and Boon did an exploratory
study on factors, which affects the failure of local small and medium enterprises. They also
said that, the failure of the small business is also due to the entrepreneurs personal
shortcomings. Henry S. R. Kao (1999) studied Management and Cultural Values of
organizations in Asia. He provides examples from China, Japan, Korea, Hong Kong,
Thailand, Taiwan and India. It deals with conceptual and theoretical issues of


5
indigenization in the work setting, work culture and the way in which it is influenced by
socio-cultural values and historical and cultural forces which impact on Asian styles of
Managerial leadership.
1.3.2 Persons background factors that influence business values and practices
1.3.2.1 Ethnicity and business values
Roger Waldinger (1990) in his Ethnic Entrepreneurs study, highlights, how the cultural
background influence their ethnic business. He highlights that, the business success with
strategies, heavily depends on the nature of ties among co-ethnics and on the shape of
social networks in which immigrants are embedded. Simon (1995) studied the enterprise
culture and how an entrepreneur influence to act in such a way. Shapero.A (1975) argues
that ethnic groups that have produced high number of entrepreneurship are also displaced
groups. Ashis Gupta (Undated) has stated that culture is a barrier for entrepreneur activity.
It is clear that especially among minority businessmen ethnic feeling play an important
role in determining the type of business, location of the business and business links. Edna
(1980) has described this aspect in his research.
Figure: 1 Ethnic solidarity, social hostility and small business are interrelated.
Ethnic
Solidarity

Social Small Business
Hostility Concentration
(Source- Edna B. J. M: 20 The economic basis of ethnic solidarity small business in
Japanese Amerial community, 1980, University of California press, London)
Petersen.W (1980) said that Ethnic is an adjective that refers to differences between
categories of people. In our research purpose, we begin with the assumption that, what is
ethnic about ethnic business. Our conceptualization implies that emergence of ethnic


6
communities and networks may generate the entrepreneurial actions in small and medium.
Roger. W (1990) said that Ethnic business development is built on two dimensions:
opportunity structures and characteristics of the ethnic groups. It is shown in the following
model.
Figure No 2 : Ethnic and Opportunistic structure


(Source: Roger waldinger, (1990:22) Ethnic entrepreneurs, sage publication New Delhi)
1.3.2.2 Impact of education on business practices
As the culture is learned behavior, formal, non formal and informal education plays an
important role transferring cultural values from one generation to another. However Hagen
E. E. (1962) said that education plays a subsidiary role in promoting entrepreneurship,
because entrepreneurs are born. But some researchers emphasized that The concept of the
mind which stresses that, education is important in terms of results and behavior of
enterprise business. It is often articulated that the supply of entrepreneurs will ultimately be
increased more if awareness of the feasibility and desirability of starting a business is
Market
condition
Lthnic
consumer
product
Non ethnic
,open market
Access to ownership
Business
acancies
Competition
or acancies
Goernment
politics

Lthnic
strategies

Resource
mobilization
Close ties to
co-ethnics
Lthnic social
network
Goernment
policies
Predisposing
factors
Blocked
mobility
Selectie
migration
Aspiration
leels


7
established at a young age. Thus education system is assisted to foster support and
encourage those interested in knowing what it is like to run a business in Sri Lanka. Sudatta
Ranasinghe (1996) also noted that, most of the successful entrepreneurs have not gone
through higher education or formal courses in entrepreneurship. Studies also show that,
only a few of the entrepreneurs have had family business connections at the time they
started a business. However prior experience and skills gains through informal learning
have been useful in making a start.
1.3.2.3 Impact of religion on businesses
Most of the cultural in any society basically develop due to religion. It provides the
philosophical foundation for beliefs and values. There are two primary reasons for a study
of religions in the world economy. One is the religion is a major element of the cultural
environment. The second reason is that religion is a mainspring of culture, an inner
determination of many of the external manifestation of culture. (Vern terpstra pg 29)
\eber Max ,1930, suggested that the Protestant aith, particularly Calinism which
emphasizes the duty to be diligent, thrity, prudent and sober, entails increase o the
indiiduals. 1he impact o Buddhism on Sinhalese community is unique and persuasie. In
early times it contributed to community liing and thereore to sel-reliance. Rural community
actiity was based on the concept o lelp the Neighbor` which helped the people to learn to
lie together and be sel-reliant whateer happened outside the world o Kings and Princesses.
\ith colonialism sel-reliance got gradually eroded to be dependence. Ling. 1 ,198:5, said
that Buddhist alues were relected in the acceptance o things as they are with Karmic
Stoicism. Some scholars conclude that traditional Sinhalese Buddhism bears some
responsibility or retarding economic deelopment through merit making practices, non-
rational attitudes to lie and population increase .Nanayakkara. G (1999) observed that Sri
Lankan cultural context, the child rearing practices as well as values transmitted by the
elders to the children have created a dependence syndrome and making the child
continuously depend on the family. Sri Lankan family based value system as well as
religious values is not favorable in generating an individual achievement oriented work
ethic similar to the Protestant work ethic of the west. According to this view, a man would


8
prove his worth by accumulating wealth through hard work and this would qualify such a
person to receive the grace of God.
1.3.2.4 Impact of Age and business practices
It is observed factor that young people are very aggressive, impatient and ready
to take risk. Hence this factor may influence on business practices of entrepreneurs. The
individuals are socialized to behave in ways that meet with the approval of their role set. To
take an example, a young person with a business owning parent may well be expected to
join the family business and not to do so would create a vacuum in the business. If we
accept that entrepreneurs require ideas, opportunities, resources skills and motivation for
success, then the social structures and situations to which they are exposed will impact on
the choice process. Simon (1998:55) found that actual and perceive entrepreneurial skills
are acquired overtime and consequently and age has an impact on entrepreneurship. For
example it has been suggested that many people age thirty or less may not have acquired
sufficient organizational experience while those age forty five or more may no longer
posses the acquired energy. However Longenelker. M. (1991:17) said that there are no hard
and fast rules concerning the right age for starting a business.
1.3.3 Culture and Work Ethics
Wilpert. B (1990) has defined it as the set sentiments and evaluations of people
concerning the right correct and morally justified or required behavior in activities which
they define as work which simply means Attitude to Work. Work ethics in a society is
largely influenced by its culture and it has a direct relationship to its value systems. Every
society has a set of values and it is this that differentiates people from one another.
Max Weber saw consistent relationship between Protestant Religions, beliefs and
the involvement of Protestants in whatever the occupation they were engaged. Weber
stressed two factors. Firstly, the religious belief was that a mans primary responsibility
was to do his best in whatever his role is. God has assigned in life rather than to withdraw
from society and devote himself entirely to God, which was to be the highest deal as
thought by Catholic Church. Secondly, the Protestants have believed that God determined


9
in advance which souls should enter heaven, hence the belief that a man might feel
assumed that he could be one of those elected souls if he made a consistent effort to do his
duty in the world not simply by good deeds, but by working hard. The Protestant ethic is
considered as the driving force behind modern Capitalism.
V. T. Navaratne (1987) said that In Japan the most important attribute was the
loyalty if the individual to the group. Henry S.R Kao (1999:60) With regard to Indian
society, meaningful, emotional linkages have primacy. And he said that, people of India
have assimilated cultural values, retained family ties and maintained traditions, which is
what make them so warm, caring with immense capacity to celebrate life in sharp contrast
to people in the west who more often than not live uprooted lives. Traditional traders in
India, especially in North India Management believe that the stomach of workers should
never be allowed to be full. As soon as it is full they begin to create trouble.
The Chinese people are said to be sensitive and intolerant of income gaps that are
regarded as potentially disruptive in a collective society that places group harmony and
social integration as a top priority. (Ibid 1999:174). Habermas. J. (1987:24) has identified
roughly there are twenty-nine values could be considered as business ethics. Some values
are required to be optimized. such as Controlled greed, stoic dignity, pursuit of pleasure,
righteousness in envy, pride, anger and violence ,efficiency and work ethics camaraderie
and fraternity, truth, trust and cooperation, transparency and honesty, tolerance, pluralism,
and meliorism ,compassion and charity, gratitude and respectfulness, piety, harmony with
self, society and nature, sacrifice evolutionary destiny. Values in the nature of rights
beneficiaries. Such as, right to privacy, right to a minimum standard of life, right of
individual choice. All these ethics are emphasized by Thirukural (1994) and Swami Prabha
Pala. A.C. (1994) in detailed.
1.3.4 Entrepreneur culture
Rao and Abraham (1986) said that the value based Entrepreneurial Culture refers
to the sum total of dynamic and innovative ways and means in which an organization
responds to changes in the environment. The value base refers to the spirit of openness,
conformity, trust, authenticity, proactively, creativity, innovation, collaboration,


10
experimentation and confrontation. These values form a corporate culture where everyone
works as a member of an effective organizational team so as to contribute to the
achievement of organizational goals and derive satisfaction from doing so.
Gibb A A. (1987: 11) suggested that an enterprise culture is the set of values,
attitudes and beliefs supporting the exercise in the community of independent
entrepreneurial behavior in a business context. The implication of this approach is that
enterprising individuals differ from others in at least some of their values and beliefs and in
their goals and ambitions, although these are not necessarily directly observerable
characteristics. And he describes enterprise as the exercise of its attributes and the
entrepreneur, he suggests, is someone who demonstrates a more use of these attributes in a
particular task or context, usually in business or commerce.

Hofstede (1994:14) defines culture as mental programming. Every person carries
within himself or herself patterns of thinking feelings and potential acting which were
learnt throughout their lifetime. It is the collective programming of the mind, which
distinguishes the members of ones group or category of people from another. Redding
(1986) noted that culture may be a major influence on entrepreneurial attitudes and
behavior. Certain ethnic groups may have a greater predisposition to entrepreneurial than
other groups. The more extensive study of culture and management has been Hofstedes
culture consequences. Kingship or inter-familiar bonding is one such aspect of culture
that persist in a more prescriptive yet traditional form in eastern societies in spite of the
existence of strong individuation of forces against it. Hofstede indicated that there is a
relationship between the three categories of entrepreneurship. They are 1. Individualism 2.
Uncertainty Avoidance and 3. Masculinity. Entrepreneurs tend to be very individualistic
and they pursue their own dreams and ideas. Entrepreneur shapes their values among the
members and imposes their vision on enterprise members. Therefore value-based factors
could explore entrepreneur culture.
Matthew (1998:63-67) explains that Daniel Denison of the University of Michigan
Business School has also defined an organizational culture in terms of mission,


11
involvement, consistency and adaptability. He also tries to identify the relationship
between the organizational culture and bottom line business performance.
1.3.5 Sri Lanka experiences in entrepreneurship development
To induce entrepreneurial spirit among the people to initiate business ventures, Sri
Lanka has been engaged since the 1960s in training prospective entrepreneurs. However,
Buddhadasa. S: (1999) indicated that the results of such endeavors in Sri Lanka have not
adequately able to contribute to the achievement of expected economic standards
Sri Lankan entrepreneur is culturally different from that of a western entrepreneur.
Travis Perera (1990) describes that social power is a key motivator of the Sri Lankan
entrepreneur and this is how net works that extent beyond family and ethnicity bind
resource persons together to promote entrepreneurship. Travis Perera (1996) recommends
that Entrepreneurship like other types of management behavior is culture bound. While
culture changes over time, pattern and persistence and if entrepreneur has to be encouraged
and developed in Sri Lanka. Gunapala and Nanayakkara (1999) studied the Sri Lankan
culture and society and discussed the elements of the socio-cultural system inclusive of the
family, caste, ethnicity, class, religion and education and noted the philosophical
foundations of the Sri Lankan culture and society. According to their explanation of culture
and behavior matrix, they stated that there is a relationship between cultural institutions to
individual. Navaratne. V.T. (1987) studied and indicated that among Sri Lankan there is a
marked absence of commitment, an absence of total involvement that enables one to carry a
task from start to finish through trials and tribulations and feeling of autonomy. Further he
says that South Asians including Sri Lankan have difficulties in expressing intense
feelings especially of aggression and anxiety. Exhibited a remarkable faith in the efficacy
and power of words. Do not believe in the value of time. Lack of emphasis on skills,
knowledge and ability.





12
2. The research Study
Sample and methodology
In order to study the above mentioned problem the researchers selected the Colombo
metropolitan area as most of the small and medium business institutions are located in this
area. Among the SME we selected Jewelary and textile industry for the purpose of study.
The basic methodology was the case study. In order to select the units for in depth study
first we conducted a questionnaire survey among 175 business units which represent
following factors. Business type (jewellary or textile), ownership (manage by owner or
family members), ethnicity (Tamil or sinhala). The questionnaire consists of 37 structured
questions. Out of 37 questions 10 questions to get demographic information, another 25
about business practices, and other 2 questions which included 28 sub questions to collect
information about their basic values beliefs and attitudes. The number questionnaires
returned was 161. These data were used to get general idea about the about their business
practices and basic business values, beliefs and attitudes. Hence we researchers used the
both type of information for the purpose of analysis
Based on the first round analysis, the areas that should be studied in detail were identified
and those issues were studied through 10 case studies.
3. Data presentation
3.1 Level of performance
The following table shows the level of performance of the sample.
Table No: 01
% of businessmen based on their performance
Level of performance Sinhalese Tamil Total
High (5) 8 (17) 17 (22) 14
Medium (31) 48 (69) 71 (100) 62
Low (28) 44 (11) 12 (39) 24
Total 64 97 161
(Survey data)
According to the table only 14% was belong to high performance category and
majority remain as medium and slow growth. This is a common feature of the small and


13
medium business in general. But among two ethnic groups, one group (t) has shown little
better performance than the (s) other group.
3.2 Relationship between performance and the business cultural values
The following table 2 will provide an idea about the relationship between the level of
performance and cultural feature (business values) based on the ethnic differences.
Table No: 02
Percentage of number of entrepreneurs business values based on the ethnicity
Cultural elements Hi medi low high Medium low High medium low
Individual
initiative
29

15 56 0

13

87

48

17

35

Risk tolerance 34 23 43 6

11

83

52

31

17
Supportive
leadership
25 52 23 16 58 26 32 47 21
Control 35 33 32 6 22 72 54 40 6
Reward system*
(formal&
informal)
63
*

37
*
28*

72*
86*

14*

Conflict handling 34 24 42 5 8 87 52 35 13
Open system 32 49 19 3 58 39 52 42 6
Communication 34 53 13 9 69 22 51 43 6
(Survey data)
*not based on level of performance








14
Figure No: 3
Comparison of the Nature of the business values based on ethnic background of
businessmen
Sinhalese Tamil Total western*
H M L H M L H M L H M L
Cultural elements
Individual initiative
Risk tolerance
Supportive leadership
Control
Conflict tolerance
Open system
Communication
Reward system
(Formal and non formal)
(Based on survey data)
* based on information provided different studies

According to the above chart it is very clear that two ethnic groups have different business values
system. Only common value is the supportive leadership. In general in general Sri Lankan entrepreneurs have
value system different to that western. Relatively Tamil businessmen are dynamic than Sinhalese due to
minority feelings. This factor proved the personal interviews had with businessmen. Especially
communication and business links among Tamils are greater than the Sinhalese.
Table No :3
Level of % of implementation of cultural practices based on the performance
and ethnic category
High performance medium performance low performance
Cultural
elements
high medium low high medium low high Medium low
Individual
initiative (s)
20 80 13 87 11 89
(t) 35 24 41 52 13 35 46 27 27
Risk tolerance (s) 20 80 10 13 77 4 7 89
(t) 41 41 18 50 30 20 64 18 18
Supportive 60 40 13 68 19 22 46 32


15
leadership (s)
(t) 47 30 23 25 52 23 55 45
Open system (S) 60 40 6 61 33 54 46
(T) 47 47 6 52 41 7 55 45
Conflict handling
(s)
40 60 3 10 87 7 93
(T) 30 47 23 54 36 10 82 9 9
Communication
(S)
80 20 6 82 12 14 54 32
(T) 41 53 6 54 41 5 45 45 10
Control (s) 60 40 6 12 82 7 25 68
(t) 47 41 12 58 38 4 36 54 10
Reward system*
(performance
based) (s)
(t)


0
35





3
49


4
36

Fixed (s)
(t)
20
6
3
19
15
18

Profit based (s)
(t)
0
53
19
19
15
18

Favorism S
T
60
6
58
10
51
10

Other S
T
20
0
17
3
15
18

(Survey data)
Business values of high performers
Figure 4: Comparison of business values of high performance businessmen based on
ethnic background
Sinhalese Tamil total
Cultural elements
Individual initiative low low low
Risk tolerance low medium medium
Supportive leadership medium high high
Control medium high medium
Reward system low high high


16
(Formal and non formal high low low
Conflict handling low mediu medium
Open system medium medium medium
Communication medium medium medium
Reward (priorities)
Performance based 0 2 2
Fixed rate 2 3 4
Profit based 0 1 1
Favorisum 1 3 3
Other 2 4 4
(Based on survey data)
According to the above chart supportive leadership has played a very important and crucial
factor which helps the success of the organization. They maintain very tight control, status
gap (distance relationship), loosely defined responsibility and authority system, and
centralized decision making process. Tamil leadership is more autocratic than Sinhalese.
Tamil have used high control as important practice. Even in general the success or high
performance is not a result of more positive cultural value but due to tight controlling
method and financial rewards. We can conclude saying that high perform small businesses
have somewhat different business value system to that of western.
3.3 Entrepreneurs Business Practices and Managing Practices

As we argued business and management practices of an enterprise/entrepreneur are
developed based on the entrepreneur culture/organization culture. Following tables
describe the business practices of the entrepreneurs based on their ethnic background.

Table No: 4 Business practices relate to human relation
Business Practices Way of practice Practices of Entrepreneurs
Human Recourse management General Sinhalese Tamils
Recruitment policy Formal Informal Informal Informal Informal
Training
Rewarding
Job description

Formal
Finance
Formal
Informal
Non finance
Informal
Informal
Both
informal
Informal
Both
Informal
Informal
Both
Informal
(Survey data)
According to the above table most of the entrepreneurs follow informal practices in relation
to human relation function.


17

Table No: 5 Business practices relate to marketing management
Business Practices Way of practice Practices of Entrepreneurs
Marketing
management
General Sinhalese Tamils
Pricing Fixed Competitive Competitive Competitive Competitive
Publicity Personal Impersonal impersonal impersonal impersonal
Keeping
customers
personal Impersonal impersonal impersonal impersonal
(Survey data)
Marketing practices are concern using of modern marketing techniques such as customer
care etc are not practicing. Personal relationship is the most common marketing strategy
they used. Risk avoidance and market regulation managed through personal relations.
These commons to businessmen belong to both ethnic groups.

Table No: 6 Business practices relate to financial management
Business Practices Way of practice Practices of Entrepreneurs
Financial management General Sinhalese Tamils
Expansion of investment High/Medium low Medium High Medium
Using modern financial facilities High/Medium low Medium Low Medium
(Survey data)
The above table reveals that most of the entrepreneurs do not want to expand their business
activities beyond some level and them still not willing to use modern financial market
facilities.
Table No: 7 Business practices relate to planning function
Managing Practices Way of practice Practices of Entrepreneurs
Planning Practices General Sinhalese Tamils
Planning Practices Yes No No No No
Period of planning Short Medium/long Medium Medium Medium
Decision making Personal Collective Both Collective Both
(Survey data)
No businessmen believe planning as a practice and they dont have long term objectives.
Table No 8: Business practices relate to organizing function
Managing
Practices
Way of practice Practices of Entrepreneurs
Organizing
Practices
General Sinhalese Tamils
Delegation Decentralization Centralization Centralization Centralization Centralization
Work
division
General Specialized General General General
Assigning
responsibility
Specific Non specific Non specific Non specific Non specific
(Survey data)
Irrespective of ethnic difference both groups maintain very similar organizing practices.
Reluctant delegate authority, general position rather than specialization are common
features.


18

Table No: 9 Business practices relate e to leading function based on ethnicity
Managing
Practices
Way of practice Practices of Entrepreneurs
Leading Practices General Sinhalese Tamils
Leading Practices Personal Impersonal Impersonal Impersonal Impersonal
Role of the leader Supportive Autocratic Supportive Supportive Supportive

(Survey data)
The leadership is highly centralized and personalized. Employees are not involved in
decision making. Authority is centralized and maintains organic type of design and
charismatic leadership. To some extent the leadership can be identified as benevolent
authoritarian.

Table No: 10 Business practices relate to controlling function based on ethnicity
Managing Practices Way of practice Practices of Entrepreneurs
Controlling
Practices
General Sinhalese Tamils
Controlling
Practices
Regular Irregular Irregular Irregular Irregular
Method of
controlling
Rules &
Procedures
Loyalty Or Self Control Both Loyalty
Or Self
Control
Both
(Survey data)
The controlling practices are based on loyalty. All responsible key positions are held by
family members and they personally handle the control activities. Case studies reveal that
most of the businessmen have a belief that controlling is the key success factor. Hence they
maintain tight control as well as power distance.

3.4 Entrepreneur personal background, performance and application of business
practices
As the main objective of the research is to examine the impact of personal background of
entrepreneurs on their business values and how is that business values influence their
business practices following table were constructed based on the questionnaire survey data.
The following table shows the relationship between the religion and their performance.
Here the religion mean the extent to what the entrepreneurs are religious oriented.






19
3.4.1 Religion and Performance
Table No: 11 level of performance of entrepreneurs based on ethnicity and
religiosity
Religion Performance of Sinhalese Religion Performance of Tamil
High medium low High medium low
Sinhalese-
Bud-(54)
H
1 (2%) 3(5%) 2(4%) Tamils
Hindus(79)
H
9(10) 35(39%) 3(4%)
M 2(4%) 18(33%) 13(24%) M 6(7%) 15(17%) 1(1%)
L 1(2%) 4(7%) 10
(19%)
L 1(1%) 13(14%) 6(7%)
Sinhalese-
Christian
(10)-H


0


0


0
Tamils-
Christian(8)
H


1(13%)


4 (50%)


1(13%)
M 1(10%) 3 (30%) 3 (30%) M 0(0%) 1(13%) 0 (0%)
L 0(0%) 3 (30%) 0(0%) L 0(0%) 1(13%) 0 (0%)
Survey data
The above table shows that highly religious highly religious Christians business
performance is greater than that of Buddhist and Hindus. On the other hand medium and
low religious Buddhist and Hindus performance are greater than that of high religious
people. Through case studies it is revealed that highly religious Buddhists and Hindus give
more value to honesty, equity and congruity than others. In other word it is difficult to
identify clear differences between Sinhalese and Tamil entrepreneur business practices
based on religion.

Table No 12: Performance of entrepreneurs based on their religiosity
Performance of total Entrepreneurs
High Medium Low
Buddhist 11(7%) 42 (26%) 6 (4%)
Hindus 9 (6%) 37 (23%) 25(16%)
Catholic 21(13%) 21(13%) 16
(10%)
(Survey data)

3.4.2 Age and performance
Table No: 13: Level of Performance of entrepreneurs based on ethnicity and age
Performance of Sinhalese Performance of Tamils Performance of total
entrepreneurs
Age H M L H M L H M L
Young 0(0%) 5(8%) 8(12%) 11(12%) 27
(28%)
5(5%) 11(7%) 32
(20%)
13(8%)
Old 5(8%) 26(41%) 20(31%) 6(6%) 42(43%) 6
(6%)
11(7%) 68(42%) 26(16%)


20

(Survey data)
As far as age is concern people need some period to get experiences in business field.
Hence up to 40 years considered as young and above that as old. According to the above
table shows that in both age groups high performance percentage is low and medium is the
highest. That indicates their maturity level in business field is not very high and according
to business practices table it was revealed that they do not even follow modern business
practices.

3.4.3 Education and performance
Table No: 14: Level of Performance based on ethnicity and level of education

Performance of
Sinhalese
Entrepreneurs
Performance of Tamil
Entrepreneurs
Total Performance of
entrepreneurs
EDUC
A
H M L H M L H M L
H 1(2%
)
13
(20%
)
12(18
%)
14(15
%)
42(43
%)
10(10
%)
15
(9%)
55(34
%)
22(13
%)
M 3(5%
)
14
(22%
)
15(23
%)
3(3%) 24(25
%)
1(1%) 6(4%
)
38(24
%)
16(10
%)
L 1(2%
)
4
(6%)
1(2%) 0(0%) 3(3%) 0(0%) 1(1%
)
7(4%) 1(1%)
(Survey data)

Education is factors that can be make some changes in business field. Education is main
factor of changing value system of a person. Hence Learning and application of modern
business practices is up to some extent depend on level and type of education and
qualification of entrepreneurs. The table revealed two special characteristics of this sector.
First factor is more educated people are not remaining this business sector and the
businessmen who have secondly the businessmen who have medium level education
perform fairly better than other people. Through case study it was found that most of the
families involved in business need at least one child to prepare for the continuation of their
business. Hence instead of allow that identified to continue education from teenage period
he was asked get experience in business activities. That is one reason for the education
level is low of the businessmen. In one incident it was found that the business family
purposefully sent his son abroad to get higher qualification in order to manage their
business successfully.

4. Conclusion
Nanayakkara (1997) has concluded his article by saying despite or as a result of the
sophistication of Asian societies there has developed some unique norms and values which
are reflected in the conduct of business and management of organizations. These norms and


21
values have close resemblance to some aspects of Buddhist ways of life as practiced within
many reformulations of Buddhism in different parts of Asia.
The data and the analysis of the research propose the conclusion that Asian (Sri
Lankan) has developed some business norms and values which are different to
that of western. But this uniqueness is not due to only religious values but also
due to norms and value based on ethnic factor. Especially among small and
medium entrepreneurs religious values are in a transition period. Still this sector
is relatively confined to people with low education. This picture could be
drastically changed if educated people are attracted to the sector.
Sri Lankan small and medium businessmen maintain following business values in
contrast to western business values, as follows:
1. low individual initiative ( no clear responsibility, less freedom, no participation for
decision making)
2. low risk tolerance ( less encourage for aggressiveness, innovative and risk seeking)
3. medium management support ( less clear communication, personal level assistance
support based favorism)
4. high control ( more informal rules and regulation, high direct supervision that is
used to over see and control employee behavior)
5. high level reward system ( allocation of reward based on profit, employee
seniority, loyalty and favorism)
6. low conflict tolerance ( employee are not encourage to air conflicts and criticisms)
7. less communication pattern ( one way and informal communication)
8. medium open system ( slow reaction to external changes)
Tamils have greater predisposition to entrepreneur than Sinhalese. High
religious entrepreneur give more emphasis on honesty, ethical business
practices than the development of their business.
Among the personal background factors (religion, ethnicity, age and
education) other than ethnicity, all other factor factors have affected
business performance relatively negative. Still ethnic factor support to
improve business links and to regulate competition. In other word ethnic
solidarity play a supportive or positive role.



22


5. Suggestions for Further research
As this study is limited to two ethnic groups there is a need to get other ethnic groups to
make a generalization.
This is confine to two business trade. Some time there may be differences in business
practices relate to that particular industry or business. There may be industry bias business
practices.
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