ENTREPRENEURIAL INTENT AMONG STUDENTS: ARE BUSINESS UNDERGRADUATES DIFFERENT?

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1 ENTREPRENEURIAL INTENT AMONG STUDENTS: ARE BUSINESS UNDERGRADUATES DIFFERENT? Wolfgang Grassl, St. Norbert College Joseph Jones, St. Norbert College ABSTRACT Entrepreneurial intent has been investigated based on representative and independent samples of all students and of business students at St. Norbert College. Intent is relatively weak among all students but significantly stronger among business students. Differences are due to motivational structures rather than situational variables. INTRODUCTION The literature examining motivations and personality traits of entrepreneurs has become very extensive. Despite abundant studies, results are still mixed and largely inconclusive regarding personality traits, social influences, and motivational factors as explanatory variables (Shaver and Scott, 1991; Liñán, Rodríguez-Cohard and Rueda-Cantuche, 2010). Cognitive approaches have attracted considerable interest, but the explanatory power of personality traits or demographic characteristics is still considered. Therefore, there is a need to clarify which elements play the most influential role in shaping the personal decision to start a firm. Whereas a distinction between push and pull factors is widely accepted, the relative predominance of negative external forces or personal motivation is not entirely clear (Gilad and Levine, 1986; Amit and Mueller, 1996). Many studies verge towards pull factors in explaining entrepreneurship, especially the need for achievement, an internal locus of control, and desire for profit (Orhan and Scott, 2001). But push factors have equally found to be relevant, particularly job dissatisfaction, unemployment, career setbacks, saturation in the existing market, immigrant status, and low family income (Kumar, 2007). Other research explains entrepreneurial intention as a function of two immediate antecedents desirability and perceived feasibility (Shaver and Scott, 1991). There is no prospect yet of converging theories in entrepreneurship research. Within this literature, a special stream has developed that investigates the factors that predispose students to consider entrepreneurship or actually become entrepreneurs. These studies tend to differ from other research on entrepreneurship by also considering the influence of families and other reference groups and of institutional factors such as support by colleges and universities (Kennedy et al., 2003). The i of certain explanatory variables such as sex and field of studies are nearly always measured whereas other attitudes and beliefs are often ignored. Fields of study are often used as variables that are meant to explain differences in entrepreneurial inclinations (Autio et al., 2001; Liñán and Chen, 2006). One might assume that students of business administration have a higher propensity for entrepreneurship (Sexton and Bowman, 1986). Very little work, however, has been published to investigate this hypothesis, and there is also contrary evidence (Hostager and Decker 1999). Moreover, most studies in the United States have been undertaken on the campuses of state universities, with results that may not be valid for business students nationwide. In order to close this gap in the research literature, a survey was developed at St. Norbert College, a small Catholic college in Wisconsin. Two identical questionnaires collected data from a randomly selected sample of students of all disciplines and from business students. In order to measure not only differences between these groups but also to provide a better picture of the latter group, these students were given additional questions. ENTREPRENEURIAL INTENT Explanatory Model Entrepreneurial action falls clearly into the category of intentional behavior. The dominant paradigm in the study of intention is the theory of planned behavior (Ajzen and Fishbein, 1980; Ajzen, 1987; Ajzen, 1991; Krueger and Carsrud, 1993; Veciana, Aponte, and Urbano, 2005). It suggests three conceptually independent antecedents of intention. The first is the attitude toward the behavior. This refers to the degree to which a person has a favorable appraisal of the behavior in question. The second predictor of intention is the subjective norm, or the perceived social pressure to perform the

2 behavior. The third antecedent of intention is the degree of perceived behavioral control, which refers to the perceived ease of performing the behavior. Perceived behavioral control reflects past experience as well as anticipated impediments and obstacles. The more favorable the attitude and subjective norm with respect to the behavior, and the greater the perceived behavioral control, the stronger the intention to perform the behavior. A later version of the model starts with the subjective norm and represents the other two predictors as the perceived desirability and the perceived feasibility of what is intended, with situational variables influencing the transformation (Figure 1). SUBJECTIVE NORM FEASIBILITY DESIRABILITY SITUATIONAL VARIABLES ENTREPRE- NEURIAL INTENTION Figure 1: Generic intentions model (Ajzen 1991) Situational factors are highly important, because intent alone is a poor predictor of actual entrepreneurship behavior (Kennedy et al., 2003). One study has found that though 30% of those who claimed intent followed up during the subsequent four-year period, only 8.7% actually entered self-employment (Katz, 1988). The theory of planned behavior has been used in practical applications as well as in basic research (Krueger and Carsrud, 1993). Attitudes have been shown to explain about 50% of the variance in intentions, and intentions to explain about 30% of the variance in behavior. These results compare favorably with trait measures, which typically explain about 10% of behavioral variance (Ajzen, 1991). These studies suggest that the greater the degree to which the behavior can be controlled, the greater is the influence of intent on eventual behavior. The generic intentions model was elaborated into an explanatory model on which the questionnaire was based (Figure 2): PERSONALITY TYPE Proactive Innovativeness Achievement motivation Materialism / Idealism Entrepreneurial Drive FEASIBILITY Practicality Workload Knowledge Feeling (affective) DESIRABILITY Attractiveness Feeling (affective) Enthusiasm (affective) QUESTIONS FOR BUSINESS STUDENTS College support Coursework Areas of business Major Concentration SITUATIONAL VARIABLES (Field of studies) Class rank Gender Entrepreneurial legacy in family Friends as entrepreneurs Religious affinity Employment Citizenship ENTREPRENEURIAL INTENTION Thinking Feeling (affective) Likelihood (behavioral) Figure 2: Explanatory Model

3 In the model, background variables about personality types (which stand for the subjective norm in the theory of planned behavior) are viewed as influencing the perceived feasibility and the perceived desirability of entrepreneurship. Since subjective social norms in the theory of planned behavior have consistently been shown to have weak explanatory power (Krueger, Reilly and Carsrud, 2000), substitution by personality traits in which social norms are at least partially reflected was expected to increase significance. Perceived desirability may be understood as being composed of the attitude towards entrepreneurship as supported by the relevant personality traits. Perceived feasibility expresses self-efficacy as the degree to which personality traits and other resources are perceived to match the requirements of building up and managing an organization. Together the two attitudes constitute the entrepreneurial drive of individuals (Florin, Karri and Rossiter, 2007). Determination of the ratio between these variables will be crucial, since the relation between the desire for entrepreneurial careers and the perceived feasibility of such aspirations would indicate not only the presence or absence of a can-do attitude but also the level of perceived access to resources. Situational variables include general demographics and those that are specific to students, such as breadth of work experience, class rank, and field of studies. For researching the intentions of business students, this model was augmented by a larger set of situational variables that can be manipulated through policy intervention, specifically about the perceived level of support coming from the College and the degree to which courses prepare students for entrepreneurship. The question about fields of studies in the general survey was replaced by questions about which of three business majors (business administration, accounting, or international business) students were pursuing, which of five concentrations within business administration, and in which industry or activity they would most like to start a business. Operationalization and Measurement With the Entrepreneurial Intention Questionnaire (EIQ) (Liñán, Rodríguez-Cohard and Rueda-Cantuche, 2010), there exists at least one validated instrument for measuring intention. However, the underlying explanatory model is different from the one chosen for this study, and the instrument was therefore not used. Rather, most items were adapted from the Entrepreneurial Attitude Orientation (EAO) scale (Robinson and Hayes, 1991; Florin, Karri and Rossiter, 2007). Personality type was operationalized through 12 items measuring both cognitive and affective dimensions being proactive, innovative, motivated to achieve, and materialistic. The perceived desirability of entrepreneurship was measured through three items, the perceived feasibility through six, in both cases referring to both cognitive and affective dimensions. The dependent variable entrepreneurial intentions was operationalized by its cognitive, affective, and behavioral dimensions, with one item each. The literature recommends this for the measurement of attitudes in order to determine which dimension predominates. Items were built as 7-point Likert-type scales. The three items for intention use a 7-point itemized rating scale (where the item measuring the behavioral dimension only has the endpoints labeled). Data Collection and Samples Data were collected in two waves in the fourth week of March and the first week of April 2010 through selfadministered questionnaires. Two samples were used: (1) ALL comprises students of all academic disciplines who were polled on paper; (2) BUS comprises students of business fields (accounting, business administration, and international business), who were polled by with a link to an augmented questionnaire online. Achieved sample size for ALL was 202 out of a population of 2,113 (or 9.56%), and sample size for BUS was 145 out of a population of 481 (or 30.1%). The structures of both were fairly close to the distribution of the student body in terms of class ranks, sex, and religious affiliation (particularly the number of self-designated Catholics). Students of business administration and of education were somewhat overrepresented in ALL. Sample sizes may in both cases count as sufficient and as large in comparison with other studies at universities. For purposes of comparison, data were also compiled into a composite sample ALL+BUS. RELIABILITY AND FACTOR ANALYSIS Confirmatory factor analysis based on principal components was used for assessing the validity of empirical measures for the samples. The Varimax method revealed 6 components, which for ALL+BUS accounted for a variance of 64.61%. Factors can readily be identified with the main components of the explanatory model. Reliability tests showed that the measures are internally consistent. Alpha for ALL+BUS was.799. Because of alpha =.904 in BUS, the three independent items may be treated as a unitary construct: ALL BUS KMO Test of Sampling Adequacy Bartlett s Test of Sphericity: chi-square = 1, , p < Variance explained by components (%) Cronbach s Alpha (all Likert-scale items) Cronbach s Alpha (dependent var. items)

4 DESCRIPTIVES AND DIFFERENCES Results were evaluated separately by the two samples because ALL will certainly also include cases included in BUS, and double-counting must be avoided. The frequency tables of the intention measures for the two samples show significant differences in means between groups (Table 1). Chi-square values are , and , with df = 6 and p <.000 in all cases. ANOVA confirmed these differences (Table 2): Table 1: Descriptive Statistics Table 2: Analysis of Variance If the three highest points on the 7-point scale are cumulatively taken to express intention, 24.8% of all students have already thought about starting their own business, 68.4% are excited by this idea, but only 37.1% see a high chance that they will actually do it. However, a safer estimate for real intention will only take the two highest scale points into account. The share of students who have thought about starting a business is then only 12.9%, with 37.2% being excited by the idea, and 14.3% wanting to act on it. Among business students, the scores for the top-three points are 46.1%, 42.8%, and 32.4%, and for the highest two points they are 22.7%, 24.9%, and 15.2%. Although business students have thought about entrepreneurship much more frequently than all students, a much smaller share is actually excited about it. Looking at the topthree scale points, business students express a lower inclination to follow up on it, and only the combined answers for the top-two scale points show business students slightly more likely to become entrepreneurs only by 15.2% compared to 14.3% for all students. These differences are interesting and require explanation. One hypothesis is that business students are confronted with issues of entrepreneurship in their courses and have considered this option but are less excited about it, maybe because they have a more realistic picture. Knowledge may then drive out excitement and still lead to a higher behavioral intention. Business students hold more to the view that it is hard to start a business, and although they believe to have more of the required knowledge, they are less convinced that they would succeed (all differences at p <. 000).

5 The pool of potential entrepreneurs at the College must be regarded as rather small. Under the more conservative measure, around 15% of the student body is likely to start a business. Men show significantly higher mean values than women on thinking about entrepreneurship (4.13 and 3.08, F = , p <.000) and intent (4.56 and 3.32, F = , p <.000), only on the affective dimension the higher mean for males (5.23) is no longer different at the 95% confidence level (F =.061, p <.061) from the mean for females (4.92). Class rank, religious affiliation, and citizenship had no effect on entrepreneurial intention. Surprisingly, having family members or friends who are entrepreneurs did not increase intention. The respective results for business students are different. Although on the three dimensions of intention men recorded higher means than women, these are not statistically significant: cognitive 4.51 and 4.19 (F = 2.023, p <.157), affective 4.44 and 4.12 (F = 1.652, p <.201), and conative 4.19 and 3.84 (F = 2.572, p <.111). It seems that business education is an equalizing factor here. Women also come close to men in selfassessed knowledge about starting a company (means = 4.45 and 4.00, F = 2.829, p <.095) whereas this difference is more robust for all students (means = 3.86 and 2.86, F = , p <.000). RELATIONSHIPS AMONG COMPONENTS Linear regression was chosen as an instrument for revealing the relative impact of model components on intention. Results for individual items are not reported here. The results for the model components for BUS are as follows (Table 3): Items R R-squared Standardized Personality type ** ** Perceived feasibility 5.591** ** Perceived desirability 3.367* * Situational variables 8.252* * Questions for BUS 5.231* ** p <.001, * p <.05, F = , p <.001 Table 3: Relationships among the elements of the model CONCLUSION Among business students, it is largely personality factors (and among these mainly a proactive attitude and achievement motivation) together with the perceived feasibility that determine intention. How students perceive the difficulty and chances of success outweighs desirability as a determinant of intention although the mean values for desirability are higher than for feasibility. Because of a high standard deviation on desirability, it contributes less to explaining intention, which speaks to the realism of students. Variables reflecting personal and family situations make also only relatively weak contributions to explaining intention. The pool of potential entrepreneurs at St. Norbert College has been estimated at around 15% of the student body, with a slightly higher tendency among business and a slightly lower tendency among other students, this result is subject to several limitations. Declared intentions are not necessarily a good predictor for actual behavior. The survey may reflect a systematic bias in favor of pull and against push motivations, the latter being more difficult to predict. And external validity may be low. The latter issue deserves most attention. The results may then be compared with a selection of those obtained for undergraduate students at other U.S. tertiary institutions regardless of differences in structure (Table 4): Study Institution Year n Measured intention All students/ business students Levenburg et al. (2006) Grand Valley State University % All quoted in Teixeira (2008) West Virginia University % Business quoted in Teixeira (2008) MIT % Business Table 4: Comparison of Entrepreneurship Intention in U.S. Undergraduate Institutions The results for St. Norbert College obviously reflect local and institutional particularities. Entrepreneurship intention is low although a more significant comparison could only be made with other Catholic undergraduate colleges. But the results may also dovetail into a declining support for entrepreneurship among the younger generation. In 2007, the desire to be self-employed was 42% in the United States, with a

6 downward trend. About 25% of all Americans seriously thought about starting a business, and 10% were taking steps towards that goal (Gallup Organization 2007). This is compatible with our findings about students. An even more important result, however, is that business students do in fact have a stronger inclination towards entrepreneurship, which contradicts some of the literature which sees a stronger intent for students enrolled in entrepreneurship programs but not business students in general (Hostager and Decker 1999). The data collected allow for analysis at much greater detail, particularly with regard to motivational structure, the relative importance of push and pull factors, and differences by major areas of study. It must be suppressed in this forum. BIBLIOGRAPHY Ajzen, I. (1991), The Theory of Planned Behavior, Organizational Behavior and Human Decision Processes, 50, Ajzen, I., and Fishbein, M. (1980), Understanding Attitudes and Predicting Social Behavior. Englewood Cliffs, NJ: Prentice-Hall. Amit, R. and Mueller, E. (1996), Push and Pull Entrepreneurship. Small Business and Entrepreneurship, 12, Autio, E., Klofsten, M., Keeley, H. and Parker, G.G. (2001), Entrepreneurial Intent Among Students of Technology and Sciences in Scandinavia and in the USA, Enterprise and Innovation Management Studies 2, Florin, J., Karri, R. and Rossiter, N. (2007), Fostering Entrepreneurial Drive in Business Education: An Attitudinal Approach, Journal of Management Education 31, Gallup Organization (2007), Entrepreneurship Survey of the EU (25 Member States), United States, Iceland and Norway. (Eurobarometer no. 192) Gilad, B. and Levine, P. (1986), A Behavioral Model of Entrepreneurial Supply, Journal of Small Business Management 24, Hostager, T.J. and Decker, R.L. (1999), The Effects of an Entrepreneurship Program on Achievement Motivation. SBIDA, San Francisco, CA: Small Business Institute Director's Association, Krueger, N. F. and Carsrud, A. (1993), Entrepreneurial Intentions: Applying the Theory of Planned Behavior. Entrepreneurship and Regional Development 5, Krueger, N.F., Reilly, M.D. and Carsrud, A.L. (2000), Competing Models of Entrepreneurial Intentions, Journal of Business Venturing 15, Kumar, M. (2007), Explaining Entrepreneurial Success: A Conceptual Model, Academy of Entrepreneurship Journal 13: Levenburg, N.M., Lane, P.M. and Schwarz, T.V. (2006), Interdisciplinary Dimensions in Entrepreneurship, Journal of Education for Business 81, Liñán, F. and Chen, Yi-Wen (2006), Testing the Entrepreneurial Intention Model on a Two-Country Sample. Barcelona: Departament d'economia de l Empresa, Universitat Autònoma de Barcelona (Working Paper no. 06/7). Liñán, F., Rodríguez-Cohard, J.C., and Rueda-Cantuche, J.M. (2010), Factors Affecting Entrepreneurial Intention Levels: A Role for Education. International Entrepreneurship and Management Journal 6. Orhan, M. and Scott, D. (2001), Why Women Enter into Entrepreneurship: An Explanatory Model, Women in Management Review 16(5), Robinson, R. and Haynes, M. (1991), Entrepreneurship Education in America s Major Universities, Entrepreneurship Theory and Practice 15, Sexton, D.L. and Bowman, N. B. (1986), Validation of a Personality Index: Comparative Psychological Characteristics Analysis of Female Entrepreneurs, Managers, Entrepreneurship Students and Business Students. In Ronstadt, J.A., Honraday, A., Peterson, R. and Vesper, K.H. (eds.), Frontiers of Entrepreneurship Research, Wellesley, MA: Babson College, Shaver, K.G. and Scott, L.R. (1991), Person, Process, Choice: The Psychology of New Venture Creation, Entrepreneurship Theory and Practice 16, Teixeira, A.A.C. (2008), Entrepreneurial Potential in Chemistry and Pharmacy. Journal of Business Chemistry 5, Veciana, J.M., Aponte, M. and Urbano, D. (2005), University Students Attitudes Towards Entrepreneurship: A Two Countries Comparison, International Entrepreneurship and Management Journal 1,