Entrepreneurial Intentions The Influence Of Self Efficacy Commerce Essay

Entrepreneurship, as an activity, is instrumental in promoting economic growth and development in different regional and national economies of the world. The growth of any economy largely depends upon the entrepreneurial activities undertaken by its citizens. However, inspite of its manifold advantages, only a small proportion of the Indian population chooses entrepreneurship as a career. There are various social, personal and psychological factors that influence the intentions of individuals when entrepreneurial career choice is concerned. Many studies round the world have analyzed the entrepreneurial intention and its determinant factors amongst people.

This study, by the means of a structured questionnaire, intends to explore the factors that have an impact on the intentions of individuals to become an entrepreneur. An effort is made to analyze the relationship between entrepreneurial intention and risk taking behaviour, self efficacy and general attitude towards entrepreneurship. The questionnaire was administered on 120 respondents (belonging to the age group of 17 to 18) of Jaipur and Ajmer City of Rajasthan. Descriptive statistics and correlation were used to draw significant findings. Results show how these variables affect intention and, as a result actual entrepreneurial behavior.

INTRODUCTION

An entrepreneur is a businessperson who not only conceives and organizes ventures but also frequently takes risks in doing so. He is one who wants a greater sense of responsibility and control over his life and has the confidence to experiment. Entrepreneurship can provide a satisfying and rewarding working life, providing a flexible lifestyle and considerable business autonomy. An entrepreneur possesses a complex personality and there are certain personality characteristics that make him quite different from an ordinary human being. Some of the characteristics possessed by entrepreneur are inborn and some are acquired through the process of socialization. Intention is defined as an anticipated outcome that is intended or that guide one’s planned actions. Intention is related with the attitudes, more concretely concerning the perceived desirability and feasibility (Gatewood, Shaver, & Gartner, 1995). In this context, the intention to create a firm and the propensity to act (Krueger, 1993) are considered as the main forces that make the creation of a firm possible. Entrepreneurial intentions, in turn, are a deciding factor for performing entrepreneurial behavior (Kolvereid & Isaksen, 2006). Forming an intention to develop an entrepreneurial career is the first step in the often long process of venture creation (Gartner, Shaver, Gatewood, & Katz, 1994).

Entrepreneurial development, no doubt, is of great significance as entrepreneurs are the catalysts of industrial development contributing to employment generation, enhancement of per capita income, revenue to the Government in the form of taxes and duties (Popli and Rao, 2010). The paper examines the impact of factors like gender, self efficacy and risk taking attitude on entrepreneurial intentions.

REVIEW OF LITERATURE

Schumpeter (1934) rightly describes the psychology of an entrepreneur motivated by the lines “the dream and the will to found a private kingdom…the will to conquer, the impulse to fight, to prove oneself superior to others, to succeed for the sake, not of the fruits of success, but of success itself….” Entrepreneurs possess some distinct characteristics; some of the important as given by Teng (2007) include innovation, strategic renovation, creation of new firms, assuming risk, etc. Many studies have revealed that entrepreneurial intention could be influenced from two sources, internal and external. Internal factors include a strong motivation and personal characteristics while external factors cover the external environment that may support or hinder entrepreneurial intention among people (Soetanto et al., 2010).

Starting a new firm is a complicated decision due to high uncertainty and perceived risk. Douglas and Shepherd (2002) found that attitudes to independence, risk and income are related to the individual’s intention to be self employed. The above discussion leads to the formation of the following hypothesis:

H1: There is a relationship between risk taking attitude and entrepreneurial intention

Various studies have pointed to the importance and impact of different characteristics such as age, gender, origin, religion, level of studies, labour experience, and so on (Reynolds et al., 1994) on entrepreneurial intentions, however the results are not unidirectional. A research conducted by Soetanto et al. (2010) says that there is no evidence that years in education, gender and academic achievement have a positive influence on a person’s decision regarding entrepreneurship. The career psychology literature provides a substantial amount of evidence that gender is a significant variable in understanding differences in career self efficacy (Lent & Hackett, 1987). Overall, empirical evidence suggests that women are likely to have lower expectations than men for success in a wide range of occupations (Eccles, 1994). The UK Global Entrepreneurship Report (GEM UK 2001) says that men are around two and a half times more likely to be an entrepreneur than women. Women are relatively more likely than men to believe that they will create no jobs in the next five years. Men are nearly twice as likely to think that they have the skills to start a business as a woman. All these facts indicate some clear differences in factors which affect the attitudes and motivations of women – and therefore clear implications for the type of support and funding which women require to get started. The above discussion results in the formulation of the following hypothesis:

H2: There is an impact of gender on entrepreneurial intention.

Douglas and Fitzsimmons (2005) found some evidence that attitudes to ownership, independence and income were related to the individual’s intention to engage in entrepreneurial behavior. In a study by Lynn (1991), competitiveness and valuation of money were the most important variables which influence the decision of self employment. Also, according to Storey (1994) the need to be one’s own boss or to have independence is the most significant factor which motivates entrepreneurial intention among people.

Self Efficacy Theory (SET) contributes to explaining various relationships between beliefs, attitudes, intentions, and behavior. Self efficacy was proposed by Bandura in 1977, which came from Social Cognitive theory. According to Bandura, expectations such as motivation, performance, and feelings of frustration associated with repeated failures determine affect and behavioral reactions. Bandura (1986) separated expectations into two distinct types: self-efficacy and outcome expectancy. He defined self-efficacy as the conviction that one can successfully execute the behavior required to produce the outcomes. He states that self-efficacy is the most important precondition for behavioral change, since it determines the initiation of coping behavior. Previous investigations have shown that peoples’ behavior is strongly influenced by their confidence in their ability to perform that behavior (Bandura et al., 1980). Armitage and Conner (2001) conclude that self-efficacy is more clearly defined and more strongly correlated with intentions than perceived behavioral control (PBC). In fact, self-efficacy has replaced PBC in numerous studies (Kolvereid & Isaksen, 2006), and it is strongly positively related to business creation and entrepreneurial success (Rauch & Frese, 2007). Boyd and Vozikis (1994) argue that a person’ intentions to create a new business will be strongest when he or she has a high degree of self-efficacy resulting from mastery experience, entrepreneurial role model, social persuasion, and a high degree of goal setting. The above discussion leads to the formation of the following hypothesis:

H3: There exists a positive relationship between high self efficacy and positive attitude towards entrepreneurial career.

Two people may hold an equally strong belief that entrepreneurship involves facing new challenges, but one of them may view these challenges positively while the other may consider them unpleasant (Moriano et al., 2011). The Theory of Planned Behavior as proposed by Icek Ajzen in 1985 through his article “From intentions to actions: A theory of planned behavior” contends that intentions are a function of three sets of factors: attitudes, subjective norms, and perceived behavioral control (PBC).

Normative belief is defined as an individual’s perception about particular behavior, which is influenced by the judgment of significant others (e.g., parents, spouse, friends, teachers). They are concerned with the perceived probability that important referent individuals or groups will approve or reject a given behavior; they set the norm that specifies how the subject should behave. Depending on the social environment, these pressures can become a trigger or a barrier to the development of an entrepreneurial career. Subjective norm is defined as an individual’s perception of social normative pressures, or relevant others’ beliefs that he or she should or should not perform such behavior.

In the context of entrepreneurship, the theory of planned behavior asserts that entrepreneurial intention is dependent on an individual’s attitude toward the desirability of an entrepreneurial career, subjective norms including perceived family expectations and beliefs to perform the behavior, and perceived behavioral control or the perceived ability to execute the intended behavior of entering entrepreneurship.

Students with more positive attitudes, stronger subjective norms, and more perceived behavioral control with respect to entrepreneurship, will have stronger entrepreneurial intentions. The above discussion leads to the formation of the following hypothesis:

H4: There exists a relationship between positive attitude towards entrepreneurship and positive entrepreneurial intentions.

OBJECTIVES:

The study was carried with the following objectives:

To evaluate the relationship between gender and entrepreneurial intention.

To assess the relationship between self efficacy and entrepreneurial intention.

To study whether positive attitude towards entrepreneurship have an impact on entrepreneurial intention.

To assess the relationship between risk taking attitude and entrepreneurial intention.

RESEARCH DESIGN

The study was conducted in Ajmer and Jaipur city. For data collection both primary and secondary sources were used. For collecting primary data, a structured questionnaire was prepared which was filled by 120 respondents belonging to the age group of 17 to 18. This particular age group was selected as these are the most probable years when a person decides about his/her future career options; convenience sampling method was used to reach the respondents. The sample profile is summarized in Table 1.

(Table 1 about here)

Entrepreneurial intention was measured using a five-item scale in which each item assessed the perceived likelihood of an individual to choose an entrepreneurial career. The sample responded on a five point Likert scale ranging from ‘strongly disagree’ to ‘strongly agree’. Higher scores reflect stronger entrepreneurial intentions. Similarly the sample responded on a 5-point Likert scales wherein they answered questions pertaining to self efficacy, general attitude towards entrepreneurship and risk taking behavior. Chi-Square and correlation were used to draw significant findings. Data was analyzed using SPSS.

FACTS AND FINDINGS

H1: There is a relationship between risk taking attitude and entrepreneurial intention

Interpretation: Variables like “would you like to invest your money in a high risk and high return project” etc. were responded on a five point Likert scale to determine the risk taking attitude of the respondents. Entrepreneurial intention was judged on statements like “You will choose a career as a self-employed entrepreneur” etc. The current study revealed that there exist a high positive correlation of .703 between risk taking attitude and positive entrepreneurial intention. This can be attributed to the fact that running one’s own enterprise involves risks of failure, shut downs etc. It also involves investing a good amount of money and therefore a risk of losses too. So it may be difficult for a person with a risk aversive attitude to choose entrepreneurship as a career.

Hypothesis 2: There is an impact of gender on Entrepreneurial intentions

Interpretation: To know the impact of gender on entrepreneurial intentions, respondents from both the genders were taken. Chi-square was used to know the effect of gender on entrepreneurial intentions. Table 2 shows the results. As the critical value (3.841) is less than calculated value (19.068), we cannot reject the hypothesis. Result indicate that gender do have a significant impact on entrepreneurial intentions. This can be used to infer that males as compared to females are more likely to take entrepreneurship as their career.

(Table 2 about here)

Hypothesis 3: There exists a positive relationship between high self efficacy and positive attitude towards entrepreneurial career

Interpretation: Variables like “You do feel that you have the talent of becoming a successful entrepreneur” were responded on 5 point Likert scale to determine the self efficacy. Study revealed that there exists a high correlation of .756 between self efficacy and positive entrepreneurial intention.

Hypothesis 4: There exists a relationship between positive attitude towards entrepreneurship and positive entrepreneurial intentions.

Interpretation: Statements such as “entrepreneurship leads to the development of the economy”, “being an entrepreneur/self employed is better than having a job”, etc were used to determine the respondent’s general attitude towards entrepreneurship and what they think about it. It was found that there exists a positive correlation of .492 between positive attitude towards entrepreneurship and positive entrepreneurial intentions. It shows that a favourable attitude towards entrepreneurship strengthens one’s intentions of pursuing it as a career.

DISCUSSION AND CONCLUSION

The study investigated the relationship of gender, self efficacy, positive attitude towards entrepreneurship and risk taking behavior with entrepreneurial intentions. It corroborates with previous findings of some researches in the area of entrepreneurship.

The study revealed that individuals with a risk taking attitude are slightly more inclined to take up entrepreneurship as a career as they depict positive entrepreneurial intentions. The analysis also suggests that males are more inclined to entrepreneurship than females. This is quite evident in Indian patriarchal society. Though females show lower propensity towards entrepreneurship, contemporary trends do show that females are slowly but surely taking their strides towards self employment. However this can be debated as whether such a trend is a result of choice or demand of personal or family situations.

We also find that individuals who hold a positive attitude towards entrepreneurship show positive entrepreneurial intentions. So in order to nurture entrepreneurial talent, an effort can be made to build positive attitude towards entrepreneurship by fostering entrepreneurial education. As confirmed by various other studies (Boyd and Vozikis, 1994), this study also finds that people who have strong beliefs regarding their capabilities i.e. with higher entrepreneurial self efficacy will be more persistent in their efforts and will be intended to take up entrepreneurship as a career. Belief in one’s own capabilities motivates a person to test and expose oneself to challenging situations.

LIMITATIONS OF RESEARCH

The study focused only on a few variables, however there are other factors also like education, family background, prior entrepreneurial experience, etc. that have an impact on entrepreneurial intentions. There is a scope of a comprehensive research covering all such factors. The study tries to assess some factors influencing entrepreneurial intentions but intentions may not necessarily lead to actual taking up of entrepreneurship as a career. However an effort is made to cover some cities of Rajasthan, a larger sample could be taken to better generalize the results. This opens up an opportunity for further research in the complex area of entrepreneurial research.

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