A STUDY ON ENGINEERING STUDENT INTENT TOWARDS ENTREPRENEURIAL CAREER IN CHENNAI

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1 International Journal of Business Management & Research (IJBMR) ISSN Vol. 3, Issue 1, Mar 2013, 1-10 TJPRC Pvt. Ltd. A STUDY ON ENGINEERING STUDENT INTENT TOWARDS ENTREPRENEURIAL CAREER IN CHENNAI C. SUNDAR & B. MADHAVAN 1 Professor & Head, School of Management SRM University, Ramapuram, Chennai, Tamilnadu, India 2 Director, ITM, Chennai, Tamilnadu, India ABSTRACT The present study is to examine the entrepreneurial propensity among engineering students in Chennai, (Tamil Nadu, India). Identifying and nurturing entrepreneurial potential among students can have long-term implications for Indian economic development. Statistics revealed that in the next ten years, million Indian citizens will be searching for jobs, including million looking for their first jobs; that s seven times Australia s population. Engineering colleges are producing graduates in large numbers than they can manage to find placement for or industry can absorb. The educated unemployed will become revolutionaries, who will destroy social order because of their mounting frustration and the prevailing inequity and injustice. The paper examined the influences of entrepreneurial traits, (identified from literature review) among students especially, (technology). The paper also studied the significance of entrepreneurial support agencies in the development of entrepreneurship among technical students. The paper reveals the role of educational institutions in promoting entrepreneurial culture. The findings have important implication for the policy makers (Government and University) and the promotional agencies in the development of entrepreneurship. KEYWORDS: Entrepreneurial Intent, Engineering Students INTRODUCTION Entrepreneurship is the dynamic process of creating incremental wealth. The wealth is created by individuals who assume the major risks in terms of equity, time and /or career commitment or provide value for some product or service. The product or service may or may not be new or unique but value must somehow be infused by the entrepreneur by receiving and allocating the necessary skills and resources (Ronstadt (1984, 28)). In recent years, fostering entrepreneurship has become a topic of the highest priority in public policy throughout most industrial countries. In this context, well educated entrepreneurs are of paramount interest. The development of entrepreneurial talent is important to sustaining a competitive advantage in a global economy that is catalyzed by innovation. The role of quality entrepreneurship education and training in identifying and nurturing this entrepreneurial potential among youth is becoming apparent to student, policy makers, and educators. THE PROBLEM OF UNEMPLOYMENT The Youth unemployment rates have been growing annually at more than 15 percent all over the world. According to a UN 2000 report on Youth unemployment the problem is worse in Asia. Asia accounts for 54 percent of worlds unemployed youth population. India accounts for a major chunk of Asia s unemployed. By 2011, there were 270 million young people in India, but only23.6 percent could be absorbed in the labor force.

2 2 C. Sundar & B. Madhavan The problem may be enlisted as below in today s Indian economy: 1. A high level of structural unemployment. 2. Unequal access to the means of productivity. 3. An unequal income distribution. 4. Low levels of economic development. 5. Low productivity levels. 6. Inadequate infrastructure. 7. Less than optimal health service. The educated unemployed will become revolutionaries, who will destroy social order because of their mounting frustration and the prevailing inequity and injustice 3.Large scale unemployment thus contributes to the excessively high crime and violence statistics, which have affected many countries. This fundamental question has to be addressed and remedies applied now, even if the effect will be seen only after 10 to 15 years. The policy makers have to be sensitized to this issue. With the economic reforms under the way, there is a trend of downsizing of government activities. Viewed from this angle, there is an urgent need for promoting self employment among youth 4.Economic development should therefore provide for the young s. India has the third largest scientific and technical manpower in the world. There are more than 36 million educated unemployed. To combat these problems, to relive poverty and to improve the standard of living of its entire people, a society requires economic development resulting in the creation of employment opportunities and to achieve this end, India needs more number of entrepreneurs. THE LOOMING UNEMPLOYMENT OF ENGINEERING GRADUATES Engineering colleges are producing graduates in large numbers than they can manage to find placement for or industry can absorb. In India, now a days, the numerous private self financed engineering colleges and self finance universities turnout the majority of engineering graduates. Their growth is phenomenal with the privatization to higher education. Employment opuurtinties for the engineering graduates coming out of these private engineering colleges are very bleak. The main reason often said and discussed; the opinion of the industry has about these private self finance engineering colleges regarding the quality of education imparted by them. The lack of efforts to bridge the gap between the industry- institutions also contributes to the woes of engineering students. The engineering education also does not make the young engineering graduates to stent on their own. Entrepreneurship Development of the young engineering graduates is a solution, amongst many other solutions, to tackle the problem of unemployment of engineering graduates 5. This urged the researcher to do a study on the Entrepreneurial propensity among engineering students in and around Chennai. By identifying the propensity level and also the traits inducing them to prefer entrepreneurial career, it will helpful to the policy makers to develop the strategies on the entrepreneurial climate with educational institutions to generate more number of entrepreneurs. LITERATURE REVIEW Entrepreneurship Development Prior research suggests that identifying and nurturing potential entrepreneurs throughout the education process could produce many long-term economic benefits. A venture support system based on entrepreneurship education designed to stimulate and facilitate entrepreneurial activities, could result in a lower unemployment rate, increased establishment of

3 A Study on Engineering Student Intent towards Entrepreneurial Career in Chennai 3 new companies, and fewer failures of existing businesses (Hatten & Ruhland, 1995; Ronstadt, 1985; & Hansemark,1998). Entrepreneurship education can be an important component of economic strategies for fostering job creation (McMullan & Long, 1987). Vesper (1990) found that university entrepreneurship educators facilitate the entrepreneurial process by creating awareness; however not much has been written on the pre-collegiate level. Gasse (1985) recommended that entrepreneurial potential should be identified and evaluated at the secondary school level, during the developmental stage whenthe possibility of self-employment as a career option is still open. However, Chamard(1989) concluded that the formal education system is not particularly supportive of entrepreneurship and possibly suppresses the more important entrepreneurial characteristics. In fact, Kourilsky (1990) found that 25% of kindergartners demonstrate important entrepreneurial characteristics (need for achievement and risk taking) compared to 3% of high school students. Singh (1990) also suggested that traditional education actually inhibits entrepreneurship and the school systems needto be reoriented to emphasize and value entrepreneurship in order to cultivate an enterprise culture. Entrepreneurial Intent A long tradition of research is devoted to the question of why some people choose to be self-employed and start their own businesses and others are rather inclined to seek traditional wage or salary employment. A number of conceptual models structure the various factors that affect this process (e.g., Bygrave 1989, Moore 1986). Although not specifically developed for students, they might explain their entrepreneurial intentions as well as the intentions of any other population. Most approaches distinguish between internal and external (environmental) factors. After detailed study of Entrepreneurial Propensity and traits, the following competencies were identified as the most crucial in predicting superior entrepreneurial performance and also used as Entrepreneurial Traits in this study. 1. Goal setting and Perseverance. 2. Human Relations Ability. 3. Communication Ability. 4. Self confidence and self determination. 5. Risk taking Ability. 6. Energy Level. 7. Taking Initiative and seeking Personal responsibilities. 8. Thinking Ability and Technical Knowledge. 9. Money sense. Objectives of the Study 1. To carry out a comprehensive study in order to establish the degree of Entrepreneurial Propensity among engineering students. 2. To study the influence of Demographical factors on entrepreneurial traits in preference of entrepreneurial career among students. 3. To study the significant role of Entrepreneurship Development cell and National Entrepreneurship Network (NEN) in promoting the entrepreneurship among engineering students.

4 4 C. Sundar & B. Madhavan METHODOLOGY The study was done with the help of structured questionnaire and stratified sampling method was used to collect the data. The sample size of 810 of Final year B.E, B.Tech, B.Arch students of both genders in Chennai. The data thus collected was analyzed by various statistical tools like, Percentage analysis, One way ANOVA, Chi-square test, t-sample test, Friedman test, and Multiple regression analysis. By distributing the self assessment questionnaire to the respondents, the researchers identified the respondent s levels of disposition towards entrepreneurship. The demographical factors used in the study were- courses (i.e. B.E (CSE, ECE, EEE etc.), Location, Fathers occupation, Monthly family income, Percentage of marks in U.G, Community, Birth order etc. Descriptive Statistics on Sample Table 1: F Frequency of Branch Wise Distribution of the Respondents From the above table it is inferred that, 19.88% of respondents are belongs to B.E civil, 18.27% respondents belongs to B.E Electronics and Communication, 14.44% of respondents are belongs to B.E Mechanical, 13.27% of respondents are belongs to B.E Electrical and Electronics, 13.21% respondents are belongs to B.E Computer Science Engineering, and 8.02% of respondent are belongs to B.Arch. It appears majority of the students from Civil, Mech, EEE, ECE, IT, CSE branches. Table 2: Frequency Distribution of Gender Gender Frequency Percentage Male Female Total It is inferred that, %of respondents are Male and 32.47% of respondents are Female. It appears that the majority of the respondents are Male.

5 A Study on Engineering Student Intent towards Entrepreneurial Career in Chennai 5 Table 3: Shows that the Entrepreneurial Propensity Levels is Measured by using Self Assessment Questionnaire Designed by Dr. B. Albert Friedman Sl. No Particulars SD SWD UD SWA 1 I plan to operate my own business immediately after graduation. 2 Starting one s own business is a great opportunity for success. 3 I am developing the skills necessary to successfully operate my own 4 I don t like to work for someone else. 5 I have lot of respect for successful small business owners. 6 With all the regulation and red tape today, it is simply too difficult to run 7 Starting a business for my own is too risky. 8 I would rather operate a small business than be Middle manager in large organization. ammi modified manager with a larger organisation. 9 Starting business because large resources are available with me. 10 I am venturing into business to become rich in a short period. From the results of the above table, the researcher developed the composite score maximum 50 (10 item * 5) to categories the entrepreneurial propensity level into three segments 1. High propensity whose score is above 38, 2. Moderate Propensity whose score is between and Low propensity whose score is up to 30. Table 4: Shows that Frequency Distribution of Propensity Level among the Respondents Levels of Frequency Percentage propensity Low Moderate High Total From the above table, it is inferred that 46.54% of respondents shows moderate propensity towards entrepreneurship and 26.67% respondents are having high propensity towards entrepreneurship. The propensity levels are used to design the training for entrepreneurial development and motivation. Hypothesis H1:- To Test the Significance between Entrepreneurial Propensity with Regard to Entrepreneurial Traits Table 5: ANOVA for Significant Difference between the Levels of Disposition towards Entrepreneurship with Regard to Dimension of Entrepreneurial Traits Dimension of Entrepreneurial F value P value Levels of Disposition towards Entrepreneurship Traits Low Moderate High HR Ability ** a b c Communication Ability ** a b c Self Confidence ** a b c Energy Level ** a b c Thinking Ability ** a b Goal Setting ** a b c Taking Initiative ** a b c Risk Taking ** a b c Note: Different alphabet between Levels of disposition towards entrepreneurship denotes significant at 5% Level using Duncan Multiple range test.

6 6 C. Sundar & B. Madhavan Since the P value is less than 0.01, the null hypothesis is rejected at 1% level of significant with regard to related factors of Entrepreneurial traits like Human Resource Ability, Communication Ability, and Energy level, Thinking Ability, Goal setting, self confidence, Risk taking and Taking imitative. Hence there is significant difference between Levels of disposition towards entrepreneurship with regard to dimension of entrepreneurial traits like Human Resource Ability, Communication Ability, and Energy level, Thinking Ability, Goal setting, self confidence, Risk taking and Taking imitative. It is observed that, there is more significant with high sprit of entrepreneurship and various related factors of entrepreneurial traits. Based on Duncan Multiple Range test, Those respondents having high sprit of entrepreneurship are significantly differ from those are having moderate and low level of entrepreneurial spirit at 1% level of significance with regard to Human Resource Ability, Communication Ability, Self-Confidence, Energy Level, Thinking Ability, Goal Setting, Taking Initiative, and Risk Taking The respondents having Moderate level of entrepreneurial spirit are significantly differ from the respondents of Low level sprit of Entrepreneurship at 1% level of significance with regard to Human Relations Ability, Communication Ability, Self-Confidence, Energy Level, Thinking Ability, Goal Setting, Taking Initiative, and Risk Taking. From the above table it can be absorbed that, to become an entrepreneurs, he/she should posses the entrepreneurial traits like, Human Relations Ability, Communication Ability, Self-Confidence, Energy Level, Thinking Ability, Goal Setting, Taking Initiative, and Risk Taking etc. Those respondents shown interest in entrepreneurial career properly motivate and develop their skill and traits through training programmes. H2:- To Test the Relationship between Demographical Factors and Entrepreneurial Propensity Demographical factors like Gender, Community, Locality, Family Income, Birth order are tested with the Entrepreneurial propensity. Gender There is no relationship between male and female with levels of disposition towards entrepreneurship, since P value is greater than It appears that male respondents show more intent towards entrepreneurship compare to female respondents. Locality There is no relationship between Locality of the respondents with levels of disposition towards entrepreneurship, since P value is greater than 0.05.so form the above findings it is inferred that location factors is not influencing the propensity level among the students. Community There is relationship between community and Entrepreneurial propensity. From the findings it is known that respondents from B.C and MBC community shown more intent towards entrepreneurial career. Monthly Income There is relationship between monthly family income and the respondent s propensity level. It is observed that the family income is high their intent level also high.

7 A Study on Engineering Student Intent towards Entrepreneurial Career in Chennai 7 Birth order There is no relationship between birth order and the Entrepreneurial propensity. It is observed that birth order is not influenced the respondents entrepreneurial propensity level. H3:- To Test the Significance of Entrepreneurial Development Agencies with the Entrepreneurial Propensity Table 6: Chi Square for Relationship between Member of ED Cell and Levels of Disposition towards Entrepreneurship Member of ED Cell Yes No Levels of Disposition towards Entrepreneurship Low Moderate High (29.4) (35.3) (35.3) (26.4) (48.2) (25.4) Total Total Chi Square Value P Value ** Since P value is less than 0.05, the null hypothesis is rejected at 5% level of significant; hence there is relationship between member in ED cell and level of disposition towards entrepreneurship. Even though the majority of the respondents are not member in the entrepreneur development cell of two reasons, 1) College does not have the ED cell 2) Respondents are not member of the ED cell. It is important inference made in the present study that, the respondent who are member of ED cell having high sprit of entrepreneurship. So steps to be taken to establish the ED cell in all the educational institution especially those are provide technical education. Table 7: Chi Square for between Member of NEN and Levels of Disposition towards Entrepreneurship Levels of Disposition towards of Member Entrepreneurship Total in NEN Low Moderate High Yes 114 (31.6) (31.6) (36.8) No 181 (26.0) 696 (49.0) (25.0) Total Chi Square Value P value ** Since P value is less than 0.01, the null hypothesis is rejected at 1% level of significant; hence there is relationship between member in ED cell and level of disposition towards entrepreneurship. National Entrepreneurship Network (NEN) is formed by Wadhwani foundation with IIT Mumbai, Plays a significant role in the development and promoting the entrepreneurial culture among students. It appears that, the respondent s member in NEN and having high sprit towards entrepreneurship. Discussions and Implication for the Development of Entrepreneurial Culture among Technical Students The present study examines the significance of entrepreneurial traits towards entrepreneurial career of the students. Traits such as Risk taking, Initiative, and Thinking ability are having strong relevance towards entrepreneurship. Also the study identified the entrepreneurial propensity levels among respondents using self assessment questionnaire designed by Dr. B. Albert Friedman. By knowing the propensity level, Designing of entrepreneurial training will be more effective. Hypothesis 3 indicates that there is strong relationship between entrepreneurial support agencies and the entrepreneurial development among the students. The policy maker should design the effective strategies to use of these agencies in the development of entrepreneurial culture among the technical students. The study also observed that the

8 8 C. Sundar & B. Madhavan majority of the respondents are not aware of the Government schemes and benefits to the entrepreneurs. This factor also causes the motivation level among the respondents. The study also suggest the role of educational institution is more significant by giving equal importance to development of entrepreneurship as par with placements. REFERENCES 1. Abelson, R. P. (1982), Three models of attitude-behavior consistency. Consistency in social behavior, Zanna, M. P. Ed., Hillsdale, NJ:Erlbaum, Ajzen, I. and Fishbein, M. (1980) Understanding attitudes and predicting social behavior. Englewood Cliffs: Prentice-Hall. 3. Ajzen, I. and Madden, T.J. (1986) Prediction of goal-directed behavior: Attitudes, intentions, and perceived behavioral control.journal of Experimental Social Psychology, 22 (5), Autio, E. et al. (1997) Entrepreneurial intent among students: Testing an intent model in Asia, Scandinavia, and USA, Frontiers of Entrepreneurship Research, Vol. 17, Babson College/Kauffman entrepreneurship research conference, Center for Entrepreneurial Studies, Babson College, Wellesley. 5. Hytti, Ulla Paasio, Kaisu Pukkinen, Tomm, Entrepreneurial Intentions of University Students And Graduates A Finnish Perspective. 6. Kolvereid, L. (1996), Prediction of employment status choice intentions, Entrepreneurship Theory & Practice, 21(1): Narendra C. Bhandari,(2006),Intentions for entrepreneurship among students in India, Journal of Entrepreneurship, Vol. 15, No. 2, Sexton, D.L. and Bowman-Upton, N. (1987), Evaluation of an Innovative Approach to Teaching Entrepreneurship, Journal of Small Business Management, 25(1): Scott, M.G. & Twomey, D.F. (1988), The Long Term Supply of Entrepreneurs: Students Career Aspirations in Relation to Entrepreneurship, Journal of Small Business Management, October: Dr C.Sundar (2010), A Study on entrepreneurial propensity among engineering students in Chennai, unpublished doctoral thesis, Sathyabama University. 11. Vesper, K.H. (eds.), Encyclopedia of Entrepreneurship, Englewood Cliffs NJ, Prentice Hall,

9 A Study on Engineering Student Intent towards Entrepreneurial Career in Chennai 9 AUTHORS PROFILE DR. B. MADHAVAN, DIRECTOR, ITM Chennai Ph.D from Berhampur University, in HR Discipline Specific topic - Training and Development for Executives. P.G Degree in Personnel Management and Industrial Relations - I class, April 1975 (University of Madras). 32 years experience with a blend of Industry & Academics Professor, MBA Department, Sathyabama University, Chennai - 13 Years Held top Management positions in HR Department of Hindustan Aeronautics Limited 17 years. Mr. C. SUNDAR, Research Scholar, Sathyabama University, Chennai I have about 12 Years of research, Training and teaching experience in the field of Management. I have published paper in national journals and presented in national and international conferences. I had also received the AICTE grant to conduct of National seminar on Entrepreneurial Motivation and Development. I have also organized value added programme to small scale entrepreneurs in marketing and Human resources area. I had also been served as N.S.S Programme coordinator and organized special camps with various themes given by Govt. of India. Iam also perusing my PhD in the area of entrepreneurship in Sathyabama University.