ENTREPRENEURIAL INTENTION: ASSESSING THE ...

ENTREPRENEURIAL INTENTION: ASSESSING THE PREDICTORS AMONG MANAGEMENT STUDENTS OF AHMEDABAD

By Dr. Reshmi Manna, Associate Professor, Department of Management (PGPM) IBS-Gurgaon, Haryana, India Mobile: +91 8010169116, 8130811226 Email: [email protected], [email protected] Address: IBS-G, IDPL Complex, Old Delhi Gurgaon Road, Dundahera, Gurgaon-122016

and

Ankit Singh, Student (PGPM) IBS-Gurgaon, Haryana, India Mobile: +91 7503211343 Email: [email protected] Address: IBS-G, IDPL Complex, Old Delhi Gurgaon Road, Dundahera, Gurgaon-122016

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Entrepreneurial intention: Assessing the predictors among management students of Ahmedabad

Entrepreneurial intention: Assessing the predictors among management students of Ahmedabad Abstract The purpose of this study is to present an exploratory investigation of entrepreneurial intentions among students belonging business background family and non-business background family. The study adapted items from overview of literature to construct entrepreneurial intentions scale. Data were gathered through questionnaire survey from 182 students in Ahmedabad, India. ‘t’ Test was performed for calculating mean differences among students who are from business background family and non-business background family about entrepreneurial intentions. The output showed a difference in entrepreneurial intention and entrepreneurial attitude alone was found predictor for entrepreneurial intention. Individual traits have no roles to play as predictors of intention to start a new business. Key word: Entrepreneurial Intention, Entrepreneurial Attitude, Traits, Environment, Family Background, Economic Growth.

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Entrepreneurial intention: Assessing the predictors among management students of Ahmedabad 1. Introduction In few last decades’ it is seen that Entrepreneurial intention has emerged as a leading construct among literature of entrepreneurship (Drennan, et al. 2005). Researchers from wide array have extensively studied entrepreneurial intention and orientation in the US context, but its investigation in emerging developing country, such as India, Africa is very limited as per (Tang et al. 2007). Entrepreneurial intention is defined as state of mind when people have desire to start new organization or have a desire to add some new values in an existing organization. (Wu, Wu, 2008; Nabi, et al., 2006; Guerrero, et al., 2008). Gartner (1988) defined entrepreneurial intention as an intensive search to gather information that manifest the aim of new venture creation. However, entrepreneurial (or intrapreneurial) intentions formation of an individual is dependent of his/her perceived desirability, feasibility of entrepreneurial behavior (Krueger, 1993; Krueger & Brazeal, 1994). Perceived desirability of an action is dependent of individual’s attitudes towards outcomes of particular action. The outcomes of any action related entrepreneurship include revenue, autonomy (independence), ownership (possession), risk taking and work effort necessary. The intention to behave like entrepreneur have been examined from three main perspectives of human motivation and cognition, capital and perceived self-efficacy (Mohammed and Aparna, 2011). Hence Entrepreneurial intention have been, grounded with cognitive psychology which attempts towards explaining or predicting human behaviour. Ajzen’s theory (1991) of planned behaviour, Shapero and Sokol’s (1982) model which is based on social learning and have all vital factors of theories explained and predicted individual’s behaviour with respect to entrepreneurship. Theory of planned behavior focused on attitudes such as act, social norms and perceived behavioural control as best predictors of intention. Hence entrepreneurial occurrence which is suggested by entrepreneurial intentions has perceived feasibility and perceived desirability of the prospect of initialing a business along with the tendency to act. Model proposed by Bird’s was further reconstructed by Boyd and Vozikis (1994) to include self-efficacy concept which was taken from Bandura’s (1986) theory of social learning. Other authors found the intentions for start-up business with other different predictors are

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presented in Table I below: Table I: The Literature Overview of Predictors of Entrepreneurial Intention Author (Year) Armitage

Predictors

Description of Predictors

& i. Desires (to start business) The decision of becoming an entrepreneur

Conner (2001)

ii. Preferences Plans (to may be voluntary and conscious. start business) Behavioral expectancy

Lee, et al., (2005) Entrepreneurship

Entrepreneurship-related knowledge and

education

skills, teamwork experience are explored.

Pruett, et. al.,

i. Culture/Country;

One who entry or start-up new venture

(2009)

ii. Personal role models;

ignoring barriers, including lack of

iii. Entrepreneurial

knowledge, start-up capital

disposition;

or operating risks.

iv. Perception of motives; v. Perception of barriers Ahmed et al.,

i. Innovativeness;

Self-efficacy (it’s an ability for executing

(2010)

ii. Entrepreneurial

some targets, Such as: obstacles, support

Education;

And personal capacities, ability for

iii. Family Background; iv. executing an tenacity) Gender Differences Sánchez, (2011)

Personality traits

Individual

with

self-efficacy,

proactiveness, risk taking are probable predictor of intention to start new firm. Guzmán-Cuevas, i. Feasibility;

The perception regarding one’s own

(2012)

capacity to become an entrepreneur.

iii. Desirability

Desirability is defined as the degree of attractiveness for the person to create a new business. Dohse and

i. Individual-level

Access to knowledge about

Walter,

entrepreneurial

materialistically support, need for

(2012)

Intention;

achievement and opportunity, risk-taking,

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ii. Regional-level

independence, propensity, past work

controls

experience, perception are necessary at personal level. Unemployment, qualification, share of large firms and population density are consider at regional level.

Sata (2013)

i.

Family

Business The

exposure

to

entrepreneurship

background,

environment has implication to the

ii. Perceived Desirability,

development of the attitude and intention.

Iii. Perceived Efficacy

The favorable environments facilitate acceptance and support of intention to become entrepreneur.

Pretheeba (2014)

i.

Theory

of

Planned Intention to start a new venture is an

Behaviour;

individual attitude, perceived normative

ii. Demographic Factors

beliefs and perceived behavioral control; influenced by demographic variables like gender, steam of study.

The Table I indicates that researchers analyse entrepreneurial intention considering different aspects or phenomena, i.e. some of them take a deeper look at the personal factors such as motivation, attitude, marital status or social relations, while others include external factors like economic, institutional and demographic etc. Kolvereid and Moen (1997), Galloway and Keogh (2006), and Wu and Wu (2008) with the help of their researches revealed that, business students and other discipline students have disparity in intention to start a new business organisation and initial time taken by business students is less than other students to start their business. Hytti et al. (2005) found students with engineering background were less likely to set up a new firm compared to the business and social science background students. Matthews and Moser (1996) discovered men were more interested than women; however showed a declined entrepreneurial intention with time. The Baud (2010), Yordanova and Tarrazon (2010) in their studies found that women have low entrepreneurial intentions comparing with men. Sanchez and Licciardello (2012) in their studies also explored that men comparing with women were more efficient and

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more oriented towards creating a new business and also have high intentions than women. Durgassa (2012) during their research work found that male management and engineering discipline students have high intention (desires) for starting their career as an entrepreneur and have high subjective norms, self-efficacy and achievement comparing with female counterparts. All researches were conducted in the western countries, thus the gender difference in the entrepreneurial intention in a developing country like India is questionable. Later on researchers included other demographic variable such as age, gender, family background, religion, education, experience, and so on (Reynolds et al., 1994; Robinson et al., 1991; Hisrich and Peters, 1989 and Krueger, 1993) as an antecedent to entrepreneurial intention. The economic-psychological model of Davidsson (1991) is another entrepreneurial intention model, which indicated individual’s conviction to start and run his/hr own firm is determinant of one’s entrepreneurial intention for starting a new venture. While Conviction has relation with some personal variables which includes education, gender, age,radical change experience and vicarious experience. This study aims to explore the factors leading students to consider entrepreneur as a career option. The study considers family background as demographic variable, willingness for taking risk, self-efficacy, proactive personality and locus of control (internal) as the trait variable and entrepreneurial attitude as antecedents to entrepreneurial intentions. This study empirically evaluates an entrepreneurial intention which might predict the scope of increase in the entrepreneurial business. 2. Research Approach 2.1 Statement of Purpose Exploring the predictors of entrepreneurial intentions among management students. The probability of student’s intention to start entrepreneurship. 2.2 Objectives a) To explore factors leading management students to opt career as entrepreneur. b) To analyze predictors of entrepreneurial intentions, to make an assumption on expected future entrepreneur numbers, who may contribute towards the growth of Indian economic. 2.3 Questionnaire item adaptation

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Taking into consideration the existing literature on entrepreneurial intention, the following adapted items (with authors and year) are formulated: Entrepreneurship Intention Scale (EIS) A. Internal factors / Traits i.

Willingness to take risks: Chen et al., (1998); adapted on risk perception of

entrepreneur; Weber (2006) adapted social and financial risk for each. ii.

Locus of control (Internal): Sharma and Raina (2010).

iii. Self-Efficacy: Avallone et al., (2007). iv. Proactive Personality: Kickul & Gundry, (2002). B. External factors /Environment i.

Education background: 2 self generated items

ii.

Family background: 2 self generated items

iii. Gender: 1 self generated item C. Attitude towards Entrepreneurship: Autio et al. (2001); Carayannis et al., (2003) Lüthje and Franke,( 2003); Krueger et al., ( 2000) and Francis et al., (2004). D. Entrepreneurial Intention: Lüthje and Franke, (2003) Krueger et al., (2000) and selfgenerated item. 2.4 Hypothesis formulation: The null hypothesis are assumed as Ho = 0 and alternative hypothesis are assumed as Ha ≠. 0. The alternative hypothesis are assumed as the vice versa case of null hypothesis. H1 = No entrepreneurial intention difference between manage students with business family back ground and students with non-business family back. H2 = No entrepreneurial attitude difference between manage students with business family back ground and students with non-business family back. H3 = No internal traits difference between manage students with business family back ground and students with non-business family back. H4 = Internal trait is not the predictor of entrepreneurial intention. H5 = Entrepreneurial attitude are not the predictor of entrepreneurial intention 2.4 Field of study and Sampling For testing above hypotheses, an empirical study was carried out on randomly selected sample of final-year full-time students who follow the post-graduate degree course

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in business management and engineering during the academic year 2012-2013 from 12 educational institutes located at Ahmedabad, Gujrat of India.The respondents include both the gender of boys and girls in between the age group of 22-26 years old. 2.5 Research Procedure The questionnaire designed to collect primary data on entrepreneurial intention has two sections; first the cover letter and background information, second section contains the items of the questionnaire to test factors like internal traits, environment entrepreneurial attitude and entrepreneurial intention. Initially the questionnaire contains 39 items representing independent variables traits (24 items), environment (3 items), entrepreneurial attitude (9 items) and dependent variable as entrepreneurial intention (4 items). The statements of environment were measured through Guttman scale, other factors such as traits, attitude were measured with the help of point 4 Likert scale (0=Not True to 3= Absolutely True) and entrepreneurial intention was measured with point 4 Likert scale (0=Never Thought to 3= Definitely Consider). The scale includes “Not at all True” measured 0 to analyze the percentage of student population who are not willing their career as entrepreneur. The questionnaires were distributed to a sample of 182 respondents. To evaluate the construct validity of a factor, principal component analysis (PCA) with Varimax was applied to determine the variance of variables within a factor. The components which were either cross-loaded or loading valued below 0.50 were deleted as indicated in the Table I below. Table I: Principal Component Analysis of Entrepreneurship Intention Sl Variable No. 1. Willingness to take risk

2.

Locus of control (Internal)

No. of Items 7

Score Range 0 - 21

KMO & Bartlett's Test 0.872*

5

0 - 15

.775*

Statement Indicator Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q14 Q15

Factor Loading 0.800 0.775 0.651 0.752 0.748 0.814 0.642 0.733 0.695 0.724 0.673 0.723

Cronbach Alpha 0.863

0.752

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3.

Self-Efficacy

5

0 - 15

0.805*

Q16 0.718 0.759 Q17 0.695 Q18 0.731 Q19 0.815 Q21 0.610 4. Proactive 4 0 - 12 0.688* Q23 0.687 0.721 Personality Q24 0.632 Q25 0.858 Q26 0.778 5. Entrepreneur 5 0 - 15 0.841* Q27 0.784 0.820 ial Attitude Q28 0.836 Q31 0.741 Q32 0.698 Q33 0.749 6. Entrepreneur 3 0-6 0.767* Q34 0.975 0.969 ial Intention Q35 0.979 Q36 0.960 After factor analysis two items Q3 and Q15 were deleted from the usability factor and one item Q23 deleted from engagement factor and the final data processing was done with 22 items as indicated in Table 1 below in the next section. 'Factorial validity' has been reported as construct validity by Nunnally (1978) (p. 111). A similar concept was also acknowledged by Guilford (1946) that " factorial validity of any test is given by its loading in meaningful, common, reference factors. The KMO & Bartlett's Test of the factors considered for the test found to significant and all above threshold of 0.60 indicating that the sample size selected for the exploration study was adequate to conduct principle component analysis. All the items indicating loading above 0.60 were considered for further analysis. The items of the factors have good internal consistency, as all the factors cronbach alpha was above 0.70. This indicated that the questionnaire developed with items of other researcher was well integrated and constructed properly. However, questionnaire required to undergo construct validity after confirmatory factor analysis would be done. This have not conducted confirmatory factor analysis due to delay in receiving responses from the respondents. 3. Results and Discussion Kolmogorov-Smirnov normality test was performed to select appropriate tool for this study. Since, significance value of Kolmogrove-Smirnove were greater than 0.05, it have been proved that the variables concerned are normally distributed. Hence it was decided to use

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parametric tools for the study. Table II: ‘t’ Test Between Students of Family Business Background and Non Business Background NS: Non Significant Group Statistics Business

N

Mean

Background Entrepreneurial_Intention

Risk

Locus_of_Control_(I)

Self_Efficacy

Proactiveness

Entrepreneurial_Attitude

Std.

F

Sig.

.787

0.376(NS)

.362

0.548(NS)

.761

0.384(NS)

.711

0.056(NS)

.657

0.419(NS)

.174

0.677(NS)

Deviation

Yes

81

5.3827

2.75485

No

101

5.2772

2.61197

Yes

81

12.3951

4.82877

No

101

11.6733

4.75417

Yes

81

7.8148

3.44642

No

101

7.1683

3.11149

Yes

81

10.1111

2.90689

No

101

9.7327

3.35825

Yes

81

8.3457

2.38831

No

101

8.2574

2.65576

Yes

81

8.6543

3.39912

No

101

7.8614

3.64151

The one tail ‘t’ test with df (1,180) indicated that the p-valus of the t-test were greater than 0.05, indicating that there was no difference among students of family business background and non business background for any of factors mentioned above. Hence null hypothesis (H1, H2 and H3,) cannot be rejected at 95% confidence level and plausible to consider for further analysis. Regression Analysis: Entrepreneurial Intention versus Risk (R), Locus of Control (Internal) (LOC), Self-Efficacy (SE), Proactive Personality (PP), Entrepreneurial Attitude (EA) The regression equation is EI = 5.00 - 0.144 R - 0.129 LOC + 0.131 SE - 0.0033 PP + 0.212 EA Table IV: Coefficient of Predictors

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Predictor

Coef

SE Coef

t

p

Constant

4.9991

0.9415

5.31

0.000

Risk

-0.14395

0.08188

-1.76

0.080

LOC

-0.12855

0.09543

-1.35

0.180

SE

0.13055

0.06825

1.91

0.057

PP

-0.00332

0.08243

-0.04

0.968

EA

0.21245

0.09673

2.20

0.029

The analysis on the basis of coefficient p-value indicated that EA was significant predictor of regression equation. Thus this indicated that the EA played a key role in influencing the entrepreneurial intention and all other factors of the internal traits have found to be non-significant in predicting the entrepreneurial intention Table V: Regression Model Model Summaryb Mode

R

R Square

l 1

.270a

.073

Adjusted R

Std. Error of

Durbin-

Square

the Estimate

Watson

.047

2.60661

1.611

a. Predictors: (Constant), Entrepreneurial_Attitude b. Dependent Variable: Entrepreneurial_Intention Only EA predicted 7.3% of variation in entrepreneurial intention and the rest internal traits factor were not predictors as indicated in the stepwise regression. This model also indicated either the study should be conducted on larger sample or there may be other variable playing key role for entrepreneurial intention. Thus the null hypothesis H4 was not rejected as the internal traits had no significant role as predictors for entrepreneurial intension. The null hypothesis H5 was rejected as EA was found as only predictor of entrepreneurial intention among the management students.

Table VI: ANOVA of Regression

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ANOVAa Model

Sum of

df

Mean

Squares Regression 1

F

Sig.

Square

94.056

5

18.811

Residual

1195.817

176

6.794

Total

1289.874

181

2.769

.020b

a. Dependent Variable: Entrepreneurial_Intention b. Predictors: (Constant), Entrepreneurial_Attitude The ANOVA of regression F (5,176) and p < 0.05 between regression and residual have the critical value of 4.36. Figure I: Histogram of Entrepreneurial Intention

The Figure I is histogram of the dependent variable indicates normal distribution of the data. Figure II: Regression Plot of Entrepreneurial Intention 12


The Figure II the linear distribution of the data point of entrepreneurial intention. Table VII: Residuals Statistics of Entrepreneurial Intention Residuals Statisticsa

Predicted Value Residual Std. Predicted Value Std. Residual

Minimu

Maximu

m

m

Mean

Std.

N

Deviation

3.5634

7.0188

5.3242

.72087

182

-7.01883

4.99111

.00000

2.57036

182

-2.443

2.351

.000

1.000

182

-2.693

1.915

.000

.986

182

a. Dependent Variable: Entrepreneurial_Intention

Figure III: Residual Plot of Entrepreneurial Intention

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The residual plots were not scattered, thus the residual followed normal distribution with mean=0 and constant variance. This was again conformed by residual plot (p=0.005