Factors Influencing Entrepreneurial Intention Among University Students

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  INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND HUMANITY STUDIES Vol 3, No 1, 2011 ISSN: 1309-8063 (Online)   487 FACTORS INFLUENCING ENTREPRENEURIAL INTENTION AMONG UNIVERSITY STUDENTS Xue Fa Tong Faculty of Business & Law /    Multimedia University E-mail: xftong@mmu.edu.my David Yoon Kin Tong   Faculty of Business & Law /    Multimedia University E-mail: yktong@mmu.edu.my Liang Chen Loy Faculty of Business & Law /    Multimedia University  ─  Abstract  ─     Many universities have introduced entrepreneurship education to promote the interest of under graduates to becoming future entrepreneurs. Here, we seek the undergraduates’ perceptions on factors that influence them to entrepreneurial intentions. Based on literature search, we identify validated factors used for  predicting entrepreneurial intention. These factors were adapted to explore on students’ perceptions. Survey questionnaires were distributed to four local universities by convenient sampling. A total of 196 valid data were analyzed using  Multiple Regressions. The results show entrepreneurial intention was predicted by the need for achievement, family business background, and subjective norms except the desire for independence. Key Words: need for achievement, desire for independence, family business background, subjective norm   JEL Classification: L26 Entrepreneurship 1. INTRODUCTION Entrepreneurs play a key role in economic growth and job creation of a country. Entrepreneurial education has been argued as an effective way to promote and bolster the interest of entrepreneurship among university students. Exposures to this knowledge may instil positive attitudes towards entrepreneurship among  INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND HUMANITY STUDIES Vol 3, No 1, 2011 ISSN: 1309-8063 (Online)   488 students (Basu & Virick, 2008). Entrepreneurship education has been introduced since mid-1990s as an outcome of economic growth and to-date there are nineteen (19) accredited courses offer in universities in Malaysia (www.uniguru.com). However, past studies have shown students having mixed feelings of becoming an entrepreneur upon graduation and not all would pursue entrepreneur career. In Turkey et al., (2009)’s study indicated level of confidence of potential entrepreneurs is not affected by educational support. Similarly, Schwarz et al., (2009) found students with positive attitude towards competitiveness do not warrant entrepreneurial intention. For these reasons, we propose to conduct an empirical study on local students’ perception on entrepreneurial intention. 2. LITERATURE REVIEW AND HYPOTHESES  University students represent the future contributors to any country’s economy. While there are many precedent studies investigating the entrepreneurial intention of existing entrepreneurs, empirical studies on entrepreneurial intentions amongst university students are inadequate, particularly in Malaysia. 2.1. Need for Achievement Sagie & Elizur (1999) described the need for achievement as an impetus drive in undertaking obligated responsibilities perfectly and achieving success. That is, individual who possess a high level in need for achievement has the higher probability to involve them in entrepreneurial activity. In motivation theory, McClelland (1961) states that high achievers who possess a high level of need for achievement correspondingly indicate themselves as moderate risk takers. However, Hansemark (2003) study proves otherwise. With this contradiction, we postulate that:  H1: There is a positive relationship between the need for achievement and entrepreneurial intentions of students to start a business. 2.2. Desire for Independence   Previous studies described desire for independence as the most frequent mentioned factor to new business start-up (Douglas & Fitzsimmons, 2005). Generally, individuals who possess high need for independence will seek for careers with more freedom (Lee & Wong, 2004). Wilson, et al.  (2004) resolved that teenagers in Hispanic and African American who like entrepreneurship are motivated by motivational factor such as desire for independence. Based on these literatures, this implies that students with a strong desire for independence are  INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND HUMANITY STUDIES Vol 3, No 1, 2011 ISSN: 1309-8063 (Online)   489 likely to possess a higher level in entrepreneurial intentions. Thus, we postulate that:  H2: There is a positive relationship between desire for independence and entrepreneurial intentions of students to start a business. 2.3. Family Business Background  Family with a business background often influence and motivate their siblings to involve in entrepreneurial activity and they are expected to possess higher propensity to launch a business in future (Van Auken et al., 2006). In Singapore and Australia, students are more likely to commence new ventures upon graduation if their parents are in businesses (Phan et al., 2002; Breen, 1998). Interestingly, in terms of household gender role influence, fathers have a stronger influence on their children’s decisions to become entrepreneurs than mothers’ self-employment (Kirkwood, 2007). Based on the reasons, we are uncertain of this factor in Malaysia context and we therefore hypothesize that:  H3: There is a  positive relationship between family business background and entrepreneurial intentions of students to start a business. 2.4. Subjective Norms  Azjen (1975) describes subjective norm as “perceived social pressure to engage or not to engage in behaviour”. Subjective norm and social norm has been used interchangeably (Engle at el., 2010) and is social pressure from the opinions of individuals’ parents, friends, partners or other important role. Alsos et al., (2006) study of 252 secondary school students in Nordland in Norway highlights subjective norms affect entrepreneurial intentions. However, Linan et al., (2005) findings from Spanish two universities prove otherwise. Therefore, in this study, we include subjective norm as predictor and hypothesize that:  H4: There is a  positive relationship between subjective norms and entrepreneurial intentions of students to start a business. The above variables are used as predictors for entrepreneurial intention. Entrepreneurial intention refers to individual decision to implement a business concept and direct it towards a new business creation (Bird, 1988) and it is a reliable measure of entrepreneurial activity and behaviour (Krueger et al.,   2000).  INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND HUMANITY STUDIES Vol 3, No 1, 2011 ISSN: 1309-8063 (Online)   490 3.0 METHODOLOGY 3.1. Sample size, data collection and analysis  A total of 196 valid data was collected and adequate and justifiable for the intended multiple regressions analysis (Field, 2005). This data was analysed using the SPSS version 17.0. Demographic analysis, descriptive statistical analysis, correlations, reliability analysis are presented in Table 1 . The survey instrument consists of two parts. Part A describes the user’s demographics information, Part B uses a five-point Likert scale (1=strongly disagree to 5=strongly agree) on five constructs. The questionnaires were distributed by non-probability snowball sampling method. 4. RESULTS 4.1. Descriptive Statistics Table 1   shows the results of students’ demography with male respondents, 101 (51.5 percent) and female, 95 (48.5 percent). The Cronbach alpha for all variables are within 0.754 to 0.857. Table 1 – Demographic Information of Students Information Number Percentage Age ( Mean: 1.66, SD: 0.535)   18 - 20   73 37.2 21 - 25   118 60.2 26 or above   5 2.6 University of Study ( Mean: 1.67, SD: 0.827 )   Multimedia University (MMU)   104 53.1 University Utara Malaysia (UUM)   54 27.6 INTI International University 34 17.3 University Putra Malaysia (UPM)   4 2 4.2. Multiple Linear Regressions In testing the hypotheses, the data was initially evaluated to check whether it meets the assumption tests such as Homoscedasticity, collinearity and others (Field, 2005). The four variables results in Model 1 show significant  R 2   of 0.340 and adjusted  R 2  of 0.320 (F (4, 191) = 24.590, p = 0.000) for predicting entrepreneurial intention among the students. This means 34% of the variance of
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