Available online at GlobalIlluminators. Full Paper Proceeding GTAR-2014, Vol. 1, GTAR-14

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1 Available online at GlobalIlluminators Full Paper Proceeding GTAR-2014, Vol. 1, FULL PAPER PROCEEDING Multidisciplinary Studies ISBN: GTAR-14 Women Entrepreneurial Intentions in Micro and Small Enterprises (mses) in Indonesia: The Influence of Environmental Factors on Perceived Behavioral Control Grisna Anggadwita 1* and Wawan Dhewanto 2 Bandung Institute of Technology Indonesia Abstract In Indonesia, the potential development of women entrepreneurs is huge considering the number of women in Indonesia is very large. Intention is arguably as a key predictor in determining one's behavior in making decisions, so there is a necessary to conduct research underlying women decision to run a business. This paper aims to analyze the influence of environmental factors on perceived behavior control (PBC) toward the entrepreneurial intention among women entrepreneurs involved in the MSEs sector in Indonesia. This study uses quantitative methods with survey approach. Questionnaire are distributed and gather responses from 222 women entrepreneurs in Indonesia. The responses analysis use structural equation modeling (SEM) to test the hypothesis. The results shows that perceived behavioral control significantly influence women entrepreneurial intentions. The study also shows that perceived behavioral control is significantly influenced by competitive environment rather than government support; while government support are not directly influence on it, yet significantly influencing competitive environment. The implications of this study indicate that the government is expected to enhance its role in making the policy or program to be taken to develop women entrepreneurship The Authors. Published by Global Illuminators. This is an open access article under the CC BY-NC-ND license ( Peer-review under responsibility of the Scientific & Review committee of GTAR Keywords PBC; Mses; Women Entrepreneurial Intention; SEM. Introduction Today, number of women entrepreneurs in developing countries especially Indonesia experienced a significant increase. Based on Indonesian Statistics Central Agency (BPS, 2013), number of women in Indonesia currently account for percent of the population (242 million). So, Indonesia has a broad potential to develop women entrepreneurial or entrepreneurship in women groups. The women development aims to women's empowerment and social transformation, which in turn could reduce poverty and improve the country's economic development. *All correspondence related to this article should be directed to Grisna Anggadwita, Bandung Institute of Technology Indonesia grisna@sbm-itb.ac.id 2015 The Authors. Published by Global Illuminators. This is an open access article under the CC BY-NC-ND license ( Peer-review under responsibility of the Scientific & Review committee of GTAR-2015.

2 According to Ajzen (1991), entrepreneurship is an attitude that reflects the motivation and the ability to identify opportunities and generate new value to economic success. Entrepreneur is the person who runs the entrepreneurship activity. A country can be said to be prosperous if it has a minimum number of entrepreneurs are 2 percent of the total population (McClelland, 1978). The number of entrepreneurs in Indonesia is 1.56 percent, and the number of women entrepreneurs is still less than 0.1 percent of the total population in Indonesia (BPS, 2012). Indonesia has potential to increase the number of entrepreneurs considering the total population in Indonesia is large, especially increasing the number of women to become entrepreneurs. Among the many social and cultural backgrounds that influence the presence of women entrepreneurs, the intention is regarded as an early predictor of behavior in influencing the decision or a woman's desire to be an entrepreneur and her ability to survive as an entrepreneur (Ajzen 1991). In the entrepreneurship literature many scholars have focused on intentions (Bird, 1988; Krueger et al., 2000). Intentions have proven to be the best predictor of one's behavior, especially when the behavior is difficult to observe (Krueger & Brazeal, 1994). The literature identified individual domains and contextual variables as a twodimensional responsible for the formation of entrepreneurial intentions (Bird, 1988; Fini et al., 2009). Another scholar learned that environmental influences (Morris & Lewis, 1995) and environmental support (Luthje & Franke, 2003) have an impact on entrepreneurial intentions. Previous studies about the intention that consider the context of women entrepreneurship is still very limited. This study will analyze the influence of the competitive environment (Man et al., 2002), and government support (Beck et al, 2005; Fini, et al., 2009) on the perceived behavioral control on the formation of entrepreneurial intentions among women entrepreneurs in micro and small enterprises (MSEs) in Indonesia. A different approach to identify the entrepreneurial intentions is based on the theory of planned behavior (Ajzen, 1991). TPB predicts that the individual intention is the positive key to influence in the next action, and focus on how these intentions are developed. This study uses quantitative methods with survey approach. Total respondents who participated in the survey were 222 women entrepreneurs in Indonesia. The responses analysis use structural equation modeling (SEM) to test the hypothesis. SEM data processing uses LISREL This study consisted of several sections, the next section is the literature review and theoretical framework as the basis of this study. The third section is the methodology used in this study. Then, the fourth section contains analysis and result of this research. The fifth section is a research discussion, and the last section is the conclusions and implications of this research. Women Entrepreneurs in MSEs in Indonesia Literature Review And Theoretical Framework Women entrepreneurs are women who participated in the total activities of 249

3 entrepreneurship, able to take risks, and able to identify opportunities in their environments to combine resources in a unique way so as to take advantage of the business they do. Women entrepreneurs have an important role in life. Besides as housewives and primary children educators, they have a significant role in economic activity. Productive activities of women aim as an effort to empower them economically and enable them to contribute more to economic growth. Women in entrepreneurial activity mostly involved in the home business for the production of micro and small enterprises (MSEs), or formal and informal sector (ILO, 1998). Entrepreneurial activity of women is not only for their economic needs but also have a social impact for the women themselves and their social environment (UNIDO, 2001). Currently, the number of MSMEs in Indonesia reached 56.5 million units and have contributed approximately 57 percent of the total Gross Domestic Product (GDP) (BPS, 2013). So, we need further research on women entrepreneurs intention in running MSEs. Women entrepreneurs are closely linked to the development of micro and small enterprises. Micro, Small and Medium Enterprises (MSMEs) are the real strength of the nation's economy, more than 92 percent of the workforce in Indonesia working in the sector. The Government encourages the emergence of women entrepreneurs because the numbers are still far from ideal. The evidence suggests that micro and small enterprises sector in Indonesia is the most survive of the financial crisis, economic, food, and energy that hit the world and Indonesia in the last 10 years. Micro and small enterprises in Indonesia possessed role as a good starting point for the mobilization of women talent as entrepreneurs. Women Entrepreneurial Intention Several studies have shown theoretically and empirically that intention is the most effective predictor of behavior (Bagozzi et al, 1989; Ajzen, 1991; Sutton, 1998). Bird (1988) defines intention as a state of mind to direct one's attention toward a particular goal, or a way to achieve something. Identifying opportunities is clearly a deliberate process, therefore, important for the explanation of entrepreneurial intentions (Krueger et al., 2000). The goal of entrepreneurship is the formation of a new independent company and create new value to the new company or add value to existing companies (Bird, 1988; Shane & Venkataraman, 2000). Intention can be used as an indicator to measure the planned effort by an individual to perform the behavior of firm creation. In this study will analyze the formation of intentions based on individual perceived behavioral control and several environment factors (government support and competitive environment). Government Support. External support affects the individual control to have the ability to apply entrepreneurial behavior. The government have a significant role in supporting economic development initiatives to strengthen the local economy. In Indonesia, the government have a role in improving the performance of MSEs by initiating many programs and incentives such as infrastructure strengthening, building of capacity and capability, and improving access to finance. When an individual believes that they have particular external support from government, individuals feel more confident to show the behavior (high 250

4 behavioral control) and have a strong intention to show such behavior. Based on these facts, we hypothesized that: H1 : Government support significantly influence perceived behavioral control H2 : Government support significantly influence competitive environment Competitive Environment. Environment is one of the factors that influence the formation of entrepreneurial intentions and behavior. Competitive environment is the environment in which entrepreneurs must take action in order to ensure their product is acceptable and competitive in the market. This relates to the opportunities available to companies and influenced by the competitive rivalry, competitors and product differentiation (Porter, 1980), and specifically for the competition in the scope of gender, women find men entrepreneurs is one of their strong competitors. Zahra (1993) argue that the industry should be able to give values on new product for creating and maintaining a competitive position. In a dynamic competitive environment, the greater the need for innovation and the greater the likelihood that the company would be innovative (Meyers & Marquis, 1969). So, the hypothesis are : H3 : Competitive environment significantly influence perceived behavioral control Perceived Behavioral Control. Perceived Behavioral Control describes the feeling of selfefficacy or ability of the individual to perform a behavior. Ajzen (1991) explains that one's behavior is controlled not only by themself, but also requires of external control, for example the availability of resources and opportunities even certain skills. Perceived behavior control is a belief about whether or not the factors that facilitate and hinder an individual to perform a behavior. Therefore, the hypothesis established in this study are: H4 : Perceived behavioral control significantly influence on women entrepreneurial intentions Government H1 Perceived H2 H4 Women H3 Behavioral Control Entrepreneurial Intention Competitive Figure 1: Theoretical Framework 251

5 Methodology Population and Sample This study aims to analyzes of the influence of government support, competitive environment, and perceived behavioral control on women entrepreneurial intention through hypothesis testing. The population in this study are women entrepreneurs in micro and small enterprises in Indonesia. Sampling using a non-probability method based on purposive sampling, where respondents do not have the same probability of being selected as a sample (Sekaran, 2003). This research was conducted only on women who run their own businesses and property. The sample selection of the sample only in some cities / districts in Indonesia, which is famous for small industries. And, the criteria of MSEs according to Indonesian Law No. 20 Year 2008 with the criteria : micro-enterprises have assets of less than 50 million IDR and sales revenue per year less than 300 million IDR; and small enterprises have assets million IDR and sales revenue per year 300 million 2.5 billion IDR. There is no limit on the duration of running the business. A total of 222 women entrepreneurs involved in micro and small enterprises in any field participated in this survey. Data Collection and Measurement This study used a questionnaire to collect data and then used the analysis of structural equation modeling (SEM) in data processing to get the results of the purposes of this study. Distribution of questionnaires conducted with the visit and explain the questionnaire directly to the respondents and waiting to be taken back from women entrepreneurs. The measurement data of this study uses a six-likert scale, ranging from 1 = "strongly disagree" and 6 = "strongly agree". The use of a six-likert scale to avoid neutral or biased opinion. As presented in the conceptual framework, there are four variables in this study: women entrepreneurial intentions, perceived behavioral control, government support and competitive environment. Variable measurement of entrepreneurial women intention and perceived behavioral control adopts from Linan and Chen (2009). Competitive environment is Measured based on competitors and product differentiation (Porter, 1980), and importance new products / services (Zahra, 1993). And measurement variables of government support are added by the author based on the role of government in the MSES sectors listed in Indonesian Law No. 20 year All the measurement and structural models were tested using LISREL 8.80 program (Joreskog et al., 1984). The measurement test of the model indicates that a variable has a good validity of the construct or latent variable if t-value of loading factors 1.96 and the standardized loading factors (SLF) 0.70 (Rigdon and Ferguson, 1991: Doll et al., 1994). To measure the reliability of a construct, the value of the construct reliability (CR) 0.70, and the variance exctracted (VE) 0.50 (Hair et al, 1998). Overall model fit is indicated by the chi-square test was not significant, RMSEA < 0.08, SRMR < 0.05, and NNFI and CFI 0.90 (Browne & Cudeck, 1993; Hu & Bentler, 1995; Bentler & Bonnet, 1980). 252

6 Table 1: Measurement of Observed Variables Component and Manifest Variable SLF t-value CR VE Women Entrepreneurial Intentions Y1 My career goal is to become an entrepreneur 0.78 ** Y2 I am ready to do anything to be an entrepreneur Y3 With the self-employed can make more money Y4 Being an entrepreneur can be a balance between work and personal life Y5 I want to create jobs for others Perceived Behavioral Control Y6 Easy for me to start a business and keep working 0.54 ** Y7 I can control the creation process of a new firm Y8 I know the details necessary for starting a business Y9 I know how to develop a business Y10 If I try to start a business, I would have a high chance to succeed Government Support X1 Government provide an easy access in setting up the business licensing 0.74 ** X2 The government provides the facility of information and technology X3 Government provides an easy access to funding (capital loans to banks) X4 Government provides facilities business development (training, mentoring, business fairs, etc.) Competitive Environment X5 Businesses that I run has advantages compared with other competitors 0.72 ** X6 My strong competitor is the man entrepreneurs who runs the business in the same field X7 People can receive new product that I created Note : ** = Default set by LISREL, t-value was not estimated 253

7 Analysis And Result The Measurement Model Table 1. shows almost all indicators have passed the test of validity except Y4 because it does not meet the requirements for standardized loading factors > Although the t- value of Y4 1.96, but do not meet the standards SLF so that the indicator is removed because of lack to represent variable of women entrepreneurial intentions. Reliability test of all latent variables produce good value of Construct Realibility (CR) 0.70, so that all latent variables have a good consistency. In addition, to see the reliability of construct is through Variance Extracted (VE), where VE value obtained was Based on Table 1 only the competitive environment variable that shows VE 0.50, but this way is optional or not required (Hair et al., 1998). So that all latent variables have good reliability in this study. Structural Model Analysis of overall model fit or in LISREL called Goodness of Fit (GOF) is conducted to evaluate whether the resulting model is a model fit or not. Table 2 below presents the results of the GOF of this research model. Table 2: Goodness of Fit Index for the Structural Equation Model χ 2 Df RMSEA SRMSR NFI CFI AGFI ** N = 222; ** p < 0.01; SRMSR = Standardized root mean squared residual; NFI = Norm fit index; CFI = Comparative fit index; AGFI = Adjusted goodness of fit index Table 2 shows that the NFI and CFI 0.90 which indicates a good fit. The results of RMSEA is , RMSEA values between demonstrated marginal fit (McCallum, 1996). AGFI value is , AGFI values of 0.80 < AGFI 0.90 showed a marginal fit (Joreskog & Sorbom, 1984). While, SRMSR value 0.05 indicated poor fit. Based on the combination of various sizes, in general we can conclude that the overall model has a good fit. To analyze the hypothesis that has been proposed, it can be seen in Figure 2 below. Perceived behavioral control ( =.41, p <.001) proved to predict women entrepreneurial intentions. The environmental factors that influence the perceived behavioral control is a 254

8 competitive environment ( =.45, p <.001). While government support factor is not directly influence the perceived behavioral control ( =.074, ns) but significantly influence competitive environment ( =.025, p <.001). Therefore, perceived behavioral control as an exogen dimension of theory of planned behavior is the best predictor of intentions directly, and mediates the influence of competitive environment factor. While government support proved to have no direct influence on perceived behavioral control, yet significantly influencing on competitive environment. Government Support.074 n.s R 2 =.20 R 2 = *** Perceived Behavioral Control.41 *** Women Entrepreneurial Intention.45 *** Competitive Environment R 2 =.21 Figure 2: Structure Model Standardized Coefficients, Two-sided significance tests; * = p<.05; ** = p<.01; *** = p<.001 Discussion The results showed that the hypothesis 1, the government support significantly influence perceived behavioral control failed to predict women entrepreneurial intentions. This indicates that government support is irrelevant in forming women entrepreneurial intentions. Therefore, the government is expected to take a role to enhance intention in the entrepreneurial community. While the hypothesis 2 shows that government support significantly influence competitive environment ( =.025, p <.001). This means that government policies have a significant role in shaping appropriate competitive environment. In the hypothesis 3 that competitive environment significantly influence perceived behavioral control, indicating that the hypothesis is accepted ( =.41, p <.001). It shows that competitive environment influence the individual's control to have the ability to apply entrepreneurial behavior. When individual believes that they are able to survive in a competitive environment then the individual has high control to demonstrate entrepreneurial intentions. 255

9 The hypothesis 4 result proven that the women entrepreneurial intentions are significantly influenced by perceived behavioral control ( =.41, p <.001). Based on the theory of planned behavior (Ajzen, 1991) are proved the perceived behavioral control directly influence women entrepreneurial intentions and serves as a mediator of environmental factors on women entrepreneurial intentions. Conclusion And Implications This study analyzed the entrepreneurial intentions from women entrepreneurs perspective. The results of this study serve to validate the correlation between the competitive environment and government support as a factor of entrepreneurial intentions. The results showed that perceived behavioral control is significanlty influenced by competitive environment. Competitive environment is a powerful control that is perceived by women to start a business, where they feel that they have a competitiveness with male entrepreneurs and produce competitive products in the market, it will cause a strong intention to behave entrepreneurship. This study also show that government support has no direct influence on the perceived behavioral control but influence on competitive environment. Based on this research, the government role is still lacking in enhancing women entrepreneurial intention. Entrepreneurship training conducted by the government still does not reach the rural areas, so many women entrepreneurs are lack managerial knowledge. To enhance the intention of women entrepreneurs, the government must have an active role in facilitating women. Coaching and mentoring programs are an effective way to enhance the women entrepreneurial intentions, especially in rural areas. Therefore, the promotion of women's entrepreneurship as social choice will be very relevant instrument to enhance women entrepreneurial intention. Future Research In further research it is necessary to conduct a qualitative study to ascertain the results of these findings to stakeholders such as governments, banks, NGOs, and others. So it can be used as a reference for stakeholders to determine policies and programs to be carried out on women entrepreneurs in the MSEs sector. References Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2), Bagozzi, R. P., Baumgartner, J., & Yi, Y. (1989) : An investigation into the role of intentions as mediators of the attitude behavior relationship, Journal of Economic Psychology,10, Beck, T., Demirgüç Kunt, A., & Maksimovic, V. (2005): Financial and legal constraints to firm growth: does size matter? Journal of Finance, 60(1),

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