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MOTIVATION OF ENTREPRENEURIAL ACTIVITY IN RURAL TOURISM (RUSSIA’S EXPERIENCE)

Abstract

The article covers incentives necessary for business activity growth in rural areas where entrepreneurial business is often the only way to exist and survive. The authors investigate the key component of motivation, namely the Ũnancial incentives, as the standards of living in rural areas is quite low, and this is the most important reason for the population outlow. The development of rural agrotourism requires implementation of a motivation model of entrepreneurial activity aimed at both forming business potential and its reproduction.


1. Introduction

The necessity to meet personal needs provoke economic entities on dynamic social activity, one of the most important variants of which is entrepreneurship. As soon as these needs are realized, there occurs the interest in conditions and ways to meet them. These interests may affect people’s behavior; they may become internal and external reasons for people’s activity in case of a real possibility for them to be realized – motives and stimuli as incentives ruling people’s behavior which is brought to light as soon as internal and external circumstances concur. Motives and stimuli may be reasoned by person’s ambitions for either possessing those things which do not belong to him or, by contrast, preventing such possession; by ambitions for getting satisfaction from the available things, which he wants to keep, or by discomfort from such possession or further will to get rid of the thing. For example, interesting job brings a person to his satisfaction, and he is ready to work almost for free; otherwise, he agrees to do everything to escape the job [11].

Labour motive is built only if labour activity is one of the conditions (or the only condition) for obtaining goods. If those goods to be obtained do not require special efforts, or they are extremely difˊcult to obtain, labour motive can hardly occur. The power of motive depends on the relevance of the need: the more pressing the need for beneˊts is and the stronger the ambition to get it becomes, the more actively the person performs.

Thus,  a  definite  logic  scheme  occurs  as far as economic science is concerned: needs → motives → interests → stimuli. As a result, here we focus on realization of interests while the focal point is associated with motives being dialectical unity of needs and stimuli. The motive does not exist without a need. Neither does it exist without a stimulus because of the lack of conditions for realization of the need itself.   

Motives are rather ćexible and of various nature. Stimuli are more stable; they regulate needs. In spite of a variety of stimuli, there should exist a basic one, which triggers the occurrence of labour motive as the person’s internal need. We believe every ordinary person associates such stimulus with property. As a result, the following dialectical chain occurs: stimulus – property as a real condition for motivation mechanism to occur; labour motive as an internal need for social activity. The unity of both provokes a need for the evelopment of production and consumption. 

Motives for activity are deˊned by various circumstances, and their stability takes place only in case of absence of all the contradictions between appropriation and disposal. In this process, labour motive can appear as the internal need for activity [14].  

Motivated activity in its narrow sense can be  deˊned  as  free  intrinsically  motivated  actions of a person, aimed at achieving definite goals and realizing deˊnite interests [9].

The process, by which conditions are built that encourage people to carry out a labour activity, under a single goal shared by the individual and the organization. This process comprises two elements: external goal-oriented inćuence on a person through relevant conditions and his internal psychological activity on creating motivation mechanism (targeting, sorting of goals, development of achievement programs). Hence, motivation can be intrinsic (attitude to work, moral obligations, etc.) and extrinsic (activities of other people, who create conditions and provide opportunities for activity). Extrinsic motivation is signiˊcant since it builds external environment for labour. However, being internally motivated, people act calmer, faster, and more scrupulously, expend less energy, deeply understand a task, and master new skills and knowledge better. In other words, they become more self-conˊdent even in aggressive external environment.               

If a motive encourages acting, motivational expectations reason the aim, which is desirable for the potential entrepreneur, and determine an efficient activity algorithm. Hence, a motive refers to the need, and motivational expectations refer to the subject (object), to which activity is directed. The vector “motive - motivational expectations” serves for the entrepreneur  as  a  compass  deˊning  structure  and dynamics of all other components of entrepreneurial labour and follow-up activities. The vector "motive - motivational expectations" influences  intrinsic motivation while stimuli affect conditions of reproduction of entrepreneurial labour, which, in their turn affect extrinsic motivation, i.e., motivational inćuence, motivational stimulation of entrepreneurship. The extrinsic motivation has an impact on motives through conditions and stimuli, changing their hierarchy as well as values and motivational expectations of potential entrepreneurs, thus displacing the vector "motive - motivational expectations". As far as needs exist in a dialectical unity with motives, interests and stimuli, to create a favorable entrepreneurial environment or entrepreneurial climate it is necessary to overcome the external and internal restrictions preventing the development of entrepreneurial activity and to create strong and stable motives for entrepreneurial activity for an economically active population. This requires creation of the stimuli, which provoke personal interest to entrepreneurship and increase entrepreneurial activity.

If motivational inćuence turns to be insufficient or even negative in the presence of entrepreneurial potential in the country, it testifies to absence of stimuli necessary for appearance of entrepreneurial activity (for example, a private property, a freedom of choice, institutes of civil society); this possibly means that there exists a forced entrepreneurship, which is distinguished mainly by its speculative character and negatively affecting economic development. 

This situation can exist within entrepreneurial activity in rural territories. On the condition that there is enough entrepreneurial potential in rural territories – occasionally rural entrepreneurship is the only chance to live and survive – essential stimuli for growth of entrepreneurial activity either are low or even don’t exist in some regions. This article analyzes the peculiarities of motivation for entrepreneurial activity in rural tourism, and gives recommendations on stimulation of rural entrepreneurial activity.       

Problems of motivation or entrepreneurial activity in rural tourism

Under the market transformations, a spatial structure of Russia’s economy is experiencing system crashes that affect a competitive power of territories. This situation is particularly urgent for rural territories, social and economic development of which is much lower than that of cities. Even under favourable foreign economic conditions, in early 2000’s a number of depressive rural regions increased on rather than decreased. One of the main problems for rural regions of contemporary Russia is poverty.     

The living standards for rural population remain extremely low, while the income gap between the city and the country continues to grow. If in 1997 per capita resources of rural private households were equal to 69% of the urban level, then in 2009 they reached 61%. Poverty ruins rural labour and genetic potential and remains a mass phenomenon. We may say that poverty localizes in rural territories, which account for 42% of Russia’s total population living in poverty (by the available resources) whereas rural population accounts for 27% of the total population of the country [6].    

A stable development of rural population and solving of its problems should become a priority for the development of the state, since these are associated with one of the pacing factors for a conćict-free democratic development of Russia’s society, its economic and social wellbeing [4]. In this respect, there is an urgent need in practical instruments and mechanisms for providing a competitive power to rural territories. We believe one of such instruments must deal with rural tourism. 

Rural tourism is a comparatively new and perspective trend, which allows city-dwellers to initiate into a traditional rural life. This kind of tourism is focused on leisure in rural zones, where all accommodation services (including catering, leisure activities, servicing, etc.) are undertaken by a single host family. Rural tourism gives opportunity to those, who cannot afford other tourism for any reason. Its attractive features are pure air, cozy feel, wild nature, silence, and hasteless life. As estimated by specialists, the potential annual demand for the given type of tourism amounts to approximately 600 thousand people [12].       

Along with the development of agriculture, rural areas witness that the spheres of non-agrarian employment is becoming a source of additional income all over the world; and one of these spheres is dealt with rural tourism in particular. Since 1972, agrotourism has existed as a separate branch of economy. In countries of Western Europe, rural tourism has been characterized by a sustainable development since the beginning of the 1960s. Nowadays this phenomenon is common for every region though regional models of functioning significantly differ for  destinations of this type [10]. Rural tourism is well-developed in Italy, Ireland, France, Switzerland, Austria, and Germany. For instance, for a considerable part of the Spanish farms (up to 60 %) agrotourism is one of the main sources of income, and in Switzerland two thirds of tourism revenues are funded by rural tourism. However, the development of European rural tourism has been triggered not only by a great demand for these services. The European Union is currently aware of a possibility for rural tourism to recover the economy of the countryside.

Historically, European rural tourism began its intensive development in 1950-1960’s, as a response to a drastic outflow of rural population to the cities. Thus, agricultural sector experienced a fast decrease in the number of unemployed, which was resulted in worsening of the quality of life. Agrotourism was aimed at developing an alternative type of employment and entrepreneurship in rural areas and at becoming a source of the income for rural households.

The global best practices in the development of agrotourism testifies to a high socio-economic importance of the rural entrepreneurship of this type for a competitive power of rural areas under the process of adding values to a tour product. The development of rural entrepreneurship contributes to decreasing social tension in rural areas by creating additional work places [3], reducing unemployment and increasing a quality of rural life.

It is worthwhile to note that in the last few years Russia has been experiencing the development of this tourism. Currently, this type of recreation is being actively developed in the Altai Krai, the regions of Kaliningrad, Leningrad and Pskov, Krasnodar Krai, and the Republic of Bashkortostan. Russia is unique in its natural conditions and runs far ahead all neighboring tourism-oriented countries. This country conserved outstanding monuments of the ancient architecture and ethnography, and shows a favourable ecological climate in many regions. Russia has already experienced the creation of agrotouristic entrepreneurial structures of the following models: “boardinghouse”, “nomadic tenting tour”, “national village”, “VIP-village”, “rural hotel”, etc. The recreational resources of Russian provinces are currently in demand, as evidenced by the flow of unorganized tourists, taking place in popular areas of central Russia. Dozens of projects on “green” tourism are currently being realized, including “Green House” (the Altai Mountains), “Going to Grandma’s in the Countryside” (Central Russia), a chain of so-called “Bed & Breakfast Inns” (the Baikal Region). To develop agricultural entrepreneurship, the Krasnodar Krai uses Cossack traditions [5].

The development of rural tourism between Moscow and Saint-Petersburg is extremely promising. A significant number of abandoned and ruined villages demonstrate the high investment attractiveness of the region, as these lands are still rural and can more easily host ethnographic villages, i.e. guesthouses.

Russia’s rural tourism can be performed by private entrepreneurs, farmers, and any organizations with a legal form of establishment and operation. The last type, including wood farms, entrepreneurial structures of agriculture, agroindustry and various recreations, features particular capabilities, as these structures are close in their status to nature and the land and experienced in performing entrepreneurial activities.

Russia’s agrotourism must become an attractive type of entrepreneurial activity in rural territories. The relevance of this type is evidenced by affecting the economy and solving the socio-cultural problems of a village.

Under the implemented target-oriented development programs, rural tourism positively influences the conservation and development of rural areas, as well as the rational use of their resource potential, and stimulates the development of personal households, expanding the demand for organic and natural products, and promotes the facilitation of rural territories, rural building, folk crafts, culture, and identity: i.e., in general it influences the solution of socio-economic problems of rural areas, paying a particular attention to the employment problems of rural population [8]. All these are resulted in affecting a level of rural areas’ competitiveness evident by the increased level of population welfare.

All the facts mentioned above evidence that the idea of rural tourism is rather attractive for the rural population and for the development of agricultural entrepreneurship, as well as for the organizations of agrarian and recreational spheres of Russia’s economy. But the motivation of entrepreneurial activity in rural areas is prevented by real problems. The problems, which prevent rural entrepreneurship from the development, are as follows [7]:

1) Numerous norms and restrictions for entrepreneurial activity with a large scale of components, licensing of the most of which builds a serious barrier for small business;

2) A high level of socialization in the agrarian sphere, and a small ratio of the private sector generally represented by farmers and private households, which don’t stimulate entrepreneurship “at own risks”. Being non-formalized in general, rural business representatives cannot receive personal economic and financial support including concessional loans and credits for the development. This means the funds which are allocated by the RF’s government for supporting rural entrepreneurship don’t fulfill their main task, they don’t reach rural businesses.

3) A low income level throughout Russia’s rural population doesn’t allow initial capital to be invested into any business;

4) Lack of a definite image of Russia as a tour country for foreign audience doesn’t stimulate the foreign demand for this product;

5) Undeveloped rural infrastructure, bad services and little comfort scare off the clients;

6) Undeveloped advertising system and that of marketing in general prevent potential clients from receiving information;

7) Lack of definite systems to support this new business, staff training and consulting services.

In the contemporary situation, the key motivation components must be associated with financial stimuli, since a level of life in rural territories is rather low, which reasons the population outflow from rural areas. Motivation for economic activity in rural territories is possible within the process of raising a level of economic education for the managing staffs of entrepreneurial entities. At the moment, many rural entrepreneurs are not economically educated enough for effective entrepreneurial activity. This motivation can be aimed at decreasing costs of rehabilitative measures, at creating favourable living conditions for an entrepreneur and his family, and at solving problems with staff in rural areas. Regarding the importance of the material basis to motivate the development of entrepreneurship, it is necessary to reinforce the mechanism of social partnership as a start-up basis.

To improve the proportion of small and medium-sized businesses in the structure of rural tourism with further overall development of rural territories, it is essential to implement a set of measures for attracting investments into the reinforcement of tourism infrastructure in rural areas, and to create a system of strategic planning for the development of rural tourism. Here we speak about not only the federal target-oriented program on rural tourism development but also programs on socio-economic development for municipal institutions at all levels from rural settlements to rural and urban districts. To create an integrated strategy on the development of rural tourism in the RF’s territory, featuring a definite indicative implementation mechanism, it is necessary to determine a level of contemporary situation and development prospects for this segment of tourism market. To reach this objective, SWOT-analysis of the RF’s rural tourism segment has been carried out.

Based on the analysis of the condition for this segment of the Russian tourism market, we revealed capabilities and restrictions, advantages and disadvantages while building a rural tourism development strategy (see. Table 1).

The given SWOT-analysis showed the Russian Federation, undoubtedly, possesses natural and recreation resources for rural tourism to be developed. However, it is obvious that there exist urgent systemic problems regarding rural tourism development.

There exist much more problems than preconditions for the development of this tourism branch in the RF. To solve these problems, the state should implement a new approach and a program-oriented method, which will allow the competitive power to be increased for rural areas, the growing demand to be satisfied for tourist services of high quality, and the conditions to be provided for a stable development of rural tourism.

Comparing the weak points of rural tourism and current capabilities of the RF’s market for tourism services, the following conclusion should be drawn: the contemporary management system, legislation basis, marketing system for rural tourist product promotion, staff and investment potential, and tourism rural infrastructure prevent the RF’s agrotourism development capabilities from a complete realization. The current conditions of Russia’s tourism industry make a brisk development hardly possible for rural tourism, thus affecting a level of both tourism development and the competitive power for rural areas.

Entrepreneurship motivation model for rural tourism

For the overall development of agrotourism in rural areas, it is essential to implement entrepreneurship motivation model aimed at not only building the entrepreneurial potential on the basis of stimuli and a need for entrepreneurial labour but also its reproduction, which is influenced by extrinsic motivators (economic, administrative, social and psychological) and resulted in the increased entrepreneurial activity in rural areas, improved entrepreneurial climate, national wealth and welfare.

Building the entrepreneurial environment is a controlled process. However, the tools for management can be neither administrative nor directive in their nature, as they should be based on measures for providing favourable conditions in order to let this entities occur and prosper.

Personal Entreprenurial Potential (PEP) is the key motivation for entrepreneurial labour. The personal entrepreneurial potential must be built and developed at several levels: personal level – to develop individual entrepreneurial skills; organizational level – to build conditions for the PEP’s realization; socio-economic level – government support, to create favourable environment for the development of rural entrepreneurship and rural tourism in particular.

Generally, the motivation model for entrepreneurial labour in rural areas is given in Fig.1.

Extrinsic motivation must be aimed at breaking internal and external restrictions, which prevent entrepreneurial activity from its development. The development of extrinsic motivators stimulating the society’s entrepreneurial potential to demonstration of continuous entrepreneurial activity must be performed in several directions: administrative, economic, social, and personal and psychological. This means Russia needs to build the following extrinsic motivators:

1. Administrative motivation is stimulation to entrepreneurial activity by the state, which is associated with introducing relevant sanctions for non-compliance with norms. The administrative motivators include:

– Creation of legal basis to regulate the rural tourism market;

– Development of loyal tax legislation;

– Flexible system of crediting for firsttime entrepreneurs in rural areas. The business should be supported by self-organized micro-financial organizations and associations of venture capitalists while payment of credit liabilities should be guaranteed by the state. For example, business should be provided with an opportunity not to repay a credit within the first two years, and repay only the interests amounted to 3-4% in the third year with further repayment of the remaining sum;

– Well-ordered system for control over activities of entrepreneurial structures, monitoring of small and medium-sized start-ups.

2. Economic motivation is an external stimulation to entrepreneurial activity with the levers of the competitive marketing mechanism including profits, dividends, etc. The entrepreneurial activity in rural areas has the following motivators:

– Qualitative monitoring of industrial portfolios for small and medium-sized businesses, analysis of the regions to determine competitive niches and opportunities;

– Regional target-oriented supporting programs on preserving natural, cultural and historical heritage;

– Development of tourism infrastructure in municipal entities;

– Target-oriented public funding and public support for small businesses interested in the development of rural tourism;

– Maintenance of the technology level for contemporary small and medium-sized businesses providing tourism-related services; stimulation of their development;

– Stimulation of the investment into the development of domestic rural tourism; development grant making. Grants have been already tested in Chelubinsky District of Kemerovo Region. They will allow the development of entrepreneurial activity to be funded in those particular industries and spheres, which experience a need of urgent finances. One more advantage of grants can be associated with the possibility to choose those with real potential entrepreneurial skills.

3. Status motivation is aimed at changing the entrepreneur’s status through public recognition of his achievements, professional and moral prestige, and generally at creating a positive image of entrepreneurial activity. Status motivators are as follows:

– Legalization and integration of migrants' business into the Russian society; Recently, there has been an increase in a number of migrants, who build a new wave of small and medium-sized businesses in agricultural, recycling, building sectors and various services, etc. With due account for both Russia’s demographic crisis and common global trend of accelerated migration, the experts believe their number will continue the increase. As the flow is still unregistered and poorly (unsuccessfully) treated, this is resulted in a negative attitude of the society to this kind of migration. It is essential to modernize the current system of quotation for the attraction of foreign labour forces, to use a successful experience of other countries in “economic migration”, which deals with the attraction of foreign entrepreneurs and investors for a permanent stay;

– Development of educational programs, which are based on public educational standards aimed at training highly-qualified staffs, including those of rural tourism and the related sectors, and creation of education establishment network, which implements educational programs for the entities engaged in entrepreneurial activity. Undoubtedly, one should be born to do business rather than learn how to become an entrepreneur. But this doesn’t exclude the necessity to determine the youth’s level of their vocational preparation for entrepreneurial activity. The current level of knowledge and economy reached by the society create necessary preconditions for the development of entrepreneurial skills. Entrepreneur training has two possible directions: first, it is vocational training depending on the nature (sort) of activity; secondly, it is preparation dealt with human relations. It is necessary to implement programs for introduction to business activity at the level of secondary education, and to train students of technical colleges in skills for business-running (unfortunately, a considerable part of our engineering institutes of higher education are still training "generals for the past war" or employees for state plants and factories instead of training engineers as technological managers for medium-sized businesses) [13];

– Countrywide implementation of systems for information about entrepreneurship, social promotion of small and medium-sized businesses via mass media, cinemas, theatres, various publications; creation of its positive image, as well as creation of Russia’s positive image as a territory attractive for domestic and incoming rural tourism. Alexandr Yuryevich Chepurenko, Dean of the HSE’s Faculty of Sociology, was correct in his statement: “What can we learn about businessmen from newspapers and magazines? Who was one "shaking or shaken down"? Who was imprisoned? On whom was a hit put out? We almost don't see positively written stories about success; nevertheless, after all they help to get rid of the fear of failures. People should see that business failure means a single failure in a definite project rather than that of the whole life; and this is a chance to accumulate useful experience, which will help to avoid future mistakes and to achieve future success. Well and, of course, we should know the stars who have no failures. Every successful entrepreneurial economy holds various competitions: for the best businessman of the state or the county; for the best young businessman; etc. Magazines publish huge reports, let me see, about those children who gamble on the stock exchange and develop own business projects. All these aren’t less important than the construction of science and technology parks, business incubators, and other "silicon valleys", as all these support the entrepreneurial drive in the society." [13]

– Implementation of relevant entrepreneurial ethic norms, entrepreneurial culture (codes of entrepreneurial morality);

– Development of sincere charity, which enables significant changes in public attitude to contemporary entrepreneurs;

– Development of partnership between the society and the state, which is aimed at replacing state and municipal structures by qualified and absolutely new businesses in socially important structures. This will become possible only if there are a sufficient number of new businessmen willing to perform in these sectors, new packages of "ready decisions" for effective businesses in these branches, the systems for mass preparation of businessmen; the mechanism which would prevent businesses from entering barriers built by officials in these branches by the time the state is ready to “exit”. Now the state’s "exit" from socially significant spheres doesn't create new opportunities for competitive services oriented to the improvement of their quality. Experts have noted that the most possible scenario, which is currently being realized, demonstrates that newly-emerged niches aren't replaced with new entrepreneurial companies. Most often, those officials who supervised these branches create friendly pseudo-business companies, which keep methods for their performance similar with those of the state structures. In the situation when the material and moral resources of the branch became outdated, such way of substitution for the state participation worsens a situation and provokes stagnation. As a result, as all these spheres are socially significant, the state will have to either return its control over these branches or refuse social obligations (that threatens with serious social shocks) [2];

– Support for promotion of regional rural tourist products in domestic and foreign tourism markets;

– Implementation of differential policy in the domestic market regarding social groups.

4. Psychological motivation is concerned with stimulation of entrepreneurial activity via psychological aid in overcoming personal restriction and barriers, which prevent from entrepreneurial activity under the presence of need or desire to become an entrepreneur. Psychological motivators are as follows:

– A system of insurance schemes for start-up enterprises in case of business failure in order to reduce property loss risks in the situation of unsuccessful startup.

– Psychological aid and support for firsttime entrepreneurs that is aimed at relief from negative attitudes and patterns provoking a fear of personal responsibility and that of independent decision-making. This project is being successfully realized at Semenovsky Center for Employment in Nizhny Novgorod Region, which accommodate the office for psychological support of first-time entrepreneurs. The main objectives of the office deals with consulting in difficult situations, development of market thinking, creation of entrepreneurial culture. We believe a large effect could be reached if this office becomes a single independent structure, as the sphere of employment centers’ activity deal only with the category of unemployed people rather than the whole economically active population. This service becomes extremely useful in rural areas, where the risks of running new business are rather high.

“Policies recommendations that improve the flexibility of labor, communications and market openness while eliminating bureaucracy and red tape,” said Mike Herrington, director of the Centre for Innovation and Entrepreneurship at the University of Cape Town, South Africa. “Cultures that reward hard work and creativity, rather than political connections, will also encourage entrepreneurship. Governments ensuring that political interests do not supersede economic concerns are also more likely to create conditions in which entrepreneurs can grow and prosper. This is particularly important and relevant in many developing economies.”

“To create energy for making positive changes, societies must consider that entrepreneurship is not the heroic act of a few individuals, but the accomplishments of many people who pursue their ambitions in a supportive cultural and institutional environment.”

Russia possesses significant resources for the development of rural tourism. Using correct approach to the creation and promotion of rural tourist product, the RF can receive enormous socio-economic dividends. Rural tourism can become a self-organized system able to solve main socio-economic problems of rural territories. In general, a developed segment of rural tourism will add to a competitive power of rural areas and will contribute to the following:

– Employment of rural population (primarily for the youth);

– Incomes of rural population;

– Development of social and engineering infrastructures of rural territories;

– Diversification of rural economy;

– Revival of Russia’s villages;

– Sales of products for private households;

– Stoppage of migration for rural population into the cities;

– Decrease of anthropogenic pressure on the environment (in coastal regions through a switch of tourist flows from coastal to rural regions) [3].

– Creation of the rural middle class, increase in the level and quality of life.

A stable development of entrepreneurship in rural areas will provoke a stable increase in the population’s welfare, a reinforced national security and dynamic development of the whole economy in a long-term period. 

 

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