Determinants of Entrepreneurial Intention among College Students in China and USA

Transcription

1 Journal of Global Entrepreneurship Research, Winter & Spring, 20, Vol., No., pp Determinants of among College Students in China and USA Wenjun Wang Wei Lu 2 John Kent Millington 3 Abstract This paper examines the Shapero and Sokol (982) Event (SEE) model in the context of college students performance. The results affirm the impacts of propensity to act, perceived desirability and perceived feasibility on entrepreneurial intention. A significant difference we find in the SEE model, is that propensity to act is not directly impacting the intention but is imposing the impact by the mediation of perceived desirability and perceived feasibility. Moreover, as a bi-country study, this paper also examines the various factors that are impacting entrepreneurial intentions among college students in China and in the US. Work experience and family background will play significant roles in the formation of entrepreneurial intentions in both countries. Keywords:, Students, Desiarability,, Personality Introduction ntrepreneurship is a process integrating opportunity, resources and people/the E entrepreneurs (Timmons & Spinelli, 2009). Opportunity identification is the very first step in entrepreneurship and this process is clearly an intentional process. Therefore, entrepreneurial intention merits scholarly research. And it has been empirically proved to be the best and unbiased predictor of entrepreneurial behavior. Understanding the antecedents of entrepreneurial intention allows teachers, consultants, advisors and policy makers to get a clearer picture of how intentions are formed and how new venture founders beliefs, perceptions and motives impact the intent to start a business. Therefore, knowledge of the determinants of entrepreneurial intention can help entrepreneurial training find the right way to mold the intention and enhance the probability of the consequent behavior new venture creation.. Researcher, Hefei University of Technology; Corresponding Author's wwjun@mail.ustc.edu.cn 2. Associate professor, University of Science and Technology of China 3. Director, Technology Commercialization, Utah Valley University

2 Colleges are the places where new products and processes, that lay and consolidate the foundation of new firms and enterprises, are created. More specifically, college students are the most promising sources of entrepreneurship (Veciana et al., 2005). In Lu et al., (200), the differences of Chinese and American college students on entrepreneurial intention were compared in the framework of Shapero and Sokol (982) entrepreneurial event model, but what influences the entrepreneurial intention of college students in both countries has not been identified. In this paper, by applying the SEE model, the factors impacting college students entrepreneurial intention will be analyzed in both China and US. Litreture Reivew Shapero and Sokol (982) in the Enterpreneurial Event model (SEE) in Figure assumes that people are held on a given path by a sum of vectors in their life: family, job, social status, etc. Inertia guides their behavior until something displaces that inertia. Displacement could be positive like winning a lottery, negative like loss of a job, or neutral like graduation. Any of these displacements has the potential to cause a shift in one s life path and could act as a major force that pushes someone to engage in the start-up of a business. These displacements are called trigger events in the SEE model. Shapero and Sokol (982) reported that job-related displacements are the most commonly observed trigger event. Loss of job, a sense of boredom, and transfers are all examples of job triggers (Summers, 2000). In the SEE model, intentions to start a business derive from a propensity to act upon opportunities and from perceptions of desirability and feasibility. Perceptions of desirability and feasibility are products of cultural and social environments and help determine which actions will be seriously considered and subsequently taken (Shapero & Sokol, 982) into account. Summers (2000) stated propensity to act as someone has the psychological traits that make them likely candidates to attempt to become an entrepreneur upon a trigger event. Many people believe that entrepreneurs have a special personality and that these traits cannot be taught.the research from psychological models has established several significant traits that distinguish business owners from non-entrepreneurs. The entrepreneurial psychological traits that are often discussed in the literature include: risk-taking propensity (Brockhaus, 987; Luthje & Franke, 2003; Ang & Hong, 2000) innovativeness (Ang & Hong, 2000; Rauch & Frese, 2007) independence (Ang & Hong, 2000) and internal locus of control (Brockhaus, 987). After displacement in one s life path, not everyone will take the initiative of starting a business and the psychological differences will help to explain different subsequent consequences (Shapero & Sokol, 982). Propensity to Act Desirability Fig.. Shapero and Sokol (982) Event Model Krueger (993) described perceived desirability in the SEE model as the degree to which one finds the prospects of starting a business to be attractive; in essence, it reflects one s Determinants of Entrepreneurship among College Students in China and USA 36

3 affection toward entrepreneurship. Empirical support for the impact of perceived desirability on the intention is strong (Summers, 2000). feasibility is the degree to which one believes that he or she is personally capable of starting a business (Krueger, 993). This element in the SEE model is essentially the same as the element of self-efficacy in Ajzen s Theory of Planned Behavior model, which is shown in Figure 2 and is also a commonly examined model in the research on entrepreneurial intention. Prior studies have identified self-efficacy as a key contributor to entrepreneurial intentions (Krueger, 993; Krueger et al., 2000). Expected Values Attitude Toward the Act Normative Beliefs Subjective Norms Self-Efficacy Fig. 2. Ajzen s Theory of Planned Behavior Model Shapero and Sokol (982) stated that perception of desirability and feasibility are products of social and cultural environments. The impacts on the perception of desirability and feasibility will come from family, education, availability of financial and social support as well as cultural values. These impacts have been examined in many previous studies. For example, the impact of family business background has been proven in Hout et al. (999) Blanchflower et al. (2007) and White, et al. (2007). Due to the example of the self-employed parents, children with family business background have a higher probability to become entrepreneurs. Moreover, self-employed parents can provide more financial and (or) social support to their children to start their own business. Also, the financial status of the family has been observed to have an impact on the child s choice of entrepreneurship (Hsu, et al., 2007). Richer parents are capable of providing more financial support for the children. Also, born in a rich family, the children may have less pressure to make a living by finding a stable job and tend to be more risk-taking. These factors indirectly impact entrepreneurial intention through the perception of desirability and feasibility. Methodology n this project of college student entrepreneurial intentions in the United States and IChina, a questionnaire survey was conducted from September 2008 to June The questionnaire was first designed in Chinese, and then carefully translated into English by native speakers. The questionnaire was given to 0 students to be pre-tested and proved to be both comprehensible and clear. The questionnaire includes six parts: Personal Information, Personality Traits, Personal Experience, Recognition and Understanding of Starting a Business, Preparations and Difficulties. All of the partially close-ended questions in the questionnaire are constructed with choices in 5-point Likert scales. The respondents are 37 Journal of Global Entrepreneurship Research, Winter & Spring 20, Vol., No., pp

4 required to score their answers to questions by marking numbers to 5: indicating definitely no and 5 indicating absolutely yes. The 5-point Likert scales used in the three parts of Personality Traits, Personal Experience, and Difficulties are proved to be with high reliability, with calculated Cronbach s alpha of 0.906, and respectively. In the rest of this paper, all the items examined are measured by the 5-point Likert scales described above otherwise specified. Table. The Number of Questionnaires Distributed and Collected Country Universities Number of questionnaires distributed Number of questionnaires collected Response rate Number of valid questionnaires China US USTC % 76 HFUT % 04 SWUST % 02 Sub-Total % 282 UVU % 20 BYUH % 4 BYU % 2 GMU % 35 Sub-Total % 7 Total % 399 The questionnaires were distributed in seven universities, three in China and four in the US. The three universities in China are: University of Science and Technology of China (USTC), Hefei University of Technology (HFUT), Southwest University of Science and Technology (SWUST). The four universities in US are: Utah Valley University (UVU), Brigham Young University Hawaii (BYUH), Brigham Young University (BYU) and George Mason University (GMU). The numbers of questionnaires distributed and collected in each university are listed in Table. Table shows that the average response rate is 67.5%. The number of valid cases is 399 in total, 282 from China and 7 from US. A brief overview of the distribution of the samples is shown in Table 2. Variables and Measurements intention has been measured in different ways in different studies. Krueger (993) used a dichotomous variable, with a yes/no statement: Do you think you ll ever start a business? Davidsson (995) used an index of three questions: () Have you ever considered founding your own firm? and (2 3) How likely do you consider it to be that within one (or five) years from now you ll be running your own firm? In our questionnaire, we asked the question: Will you start your own business? Their choices are: (A) I will definitely not, (B) I thought of that before, but have given up now, (C) Probably I will in the future, (D) Definitely I will in the future, (E) I have already started a business. For those whose choice is C, they are required to give the probability of starting a business in the future. Hence, in this study, entrepreneurial intention is measured by the perceived probability of the individual to start his or her own business in the future. For those whose choice is either A or B, their entrepreneurial Determinants of Entrepreneurship among College Students in China and USA 38

5 probability is recognized as zero and for those whose choice is D or E, the probability is recognized as one. Table 2. A Brief Overview of the Distribution of the Samples China US Total Gender Degree Expected Current Status Status Female Male Total Bachelor Master MBA 2 3 Doctorate 2 3 Total First Year Second Year Third Year Fourth Year Total Have not Started Already Started Total Trigger Event Shapero and Sokol (982) reported that job-related displacements are the most commonly observed trigger event. Since our sample is composed of college students, the majority of whom are in their second or third years of undergraduate study with an average age of 2.9, here we would only use work experience to describe this dimension of the model. Every respondent is asked to report whether he or she has work experience. So, the variable to describe work experience is a dichotomous variable, for "having experience" and 0 for "not having any experience". Desirability In this study, we measure the perceived desirability using an attitude scale. The attitude toward college student entrepreneurship is measured by a variable with five values: is strong opposition, 2 is opposition, 3 is no objection, 4 is support and 5 is strong support. In the questionnaire, we address the self-efficacy issue using three questions: () Do your personality traits qualify you as an entrepreneur? (2)Do your experiences qualify you as an entrepreneur? (3) Do your knowledge and skills about entrepreneurship qualify you as an entrepreneur? The final score on self-efficacy is the average of the scores on the above three questions. 39 Journal of Global Entrepreneurship Research, Winter & Spring 20, Vol., No., pp

6 Additional Factors We have considered certain factors relating to personal information background that are proposed in the SEE model to have indirect impact on entrepreneurial intention through perceived desirability and perceived feasibility. These factors, inter alia, include: () family business background, which is measured by a dichotomous variable with the value of if both parents are not business owners and 2 if either of the parents is; (2) family annual income, which is measured by five scores: for lower than $ 25,000; 2 for $ 25,000-50,000; 3 for $ 50,000-00,000; 4 for $ 00,000-50,000 and 5 for more than $ 50,000. Results tructural Equation Modeling is used in this study. We first conduct a factor analysis in S a measurement model to express the Personality and then use it in a path model to describe the causal relationship among propensity to act, perceived desirability, perceived feasibility and entrepreneurial intention. The model is shown in Figure 3. The mean and standard deviation of the variables and the correlation among them are reported in Table 3. We have also demonstrated the Variance Inflation Factor (VIF) of the predictive variables. It can be seen that the multicollinearity will not cause any problem to the estimation and there is no redundant variable. Amos is used to estimate the model. The estimation results are reported in Table 4. e e2 e3 e4 Risk taking Innovativeness Self-determination Independence Personality e5 Work Experience e7 e6 Desirability Family Business Background Family Annual Income Fig. 3. Model Determinants of Entrepreneurship among College Students in China and USA 40

7 The estimation results on the model shown in Table 4 are listed in the column under Model. The absolute fit indexes of GFI and RMR 2 of the models are quite satisfactory (GFI both larger than 0.90 and RMR both smaller than 0.0). It can be seen that the paths in the SEE model are all supported by our data from the whole sample and from both countries except that the role of entrepreneurial personality is not significant. However, as shown above, there are many prior studies that have proven the effect of psychological traits on entrepreneurial intention. So we tried to estimate a second model, adding the effect from the entrepreneurial personality on the perceived desirability and perceived feasibility, while considering the indirect impact of entrepreneurial personality on entrepreneurial intention. The estimation results are shown in Table 4 in the columns under Model 2. It can be seen that Model 2 has a significant decrease in the values of Chi-square thus a significantly better model fit, which is also proven by the increased GFI and decreased RMR. So we claim that Model 2 is a better model. The following results will be drawn based on Model 2. Table 3. Mean, Standard Deviation, VIF and Correlations Among the Variables Desirability.477(**).269(**).272(**).284(**).248(**).236(**).266(**) -.42(**) (**).305(**).483(**).366(**).490(**).338(**).30(**) -.97(**).208(**).269(**).305(**).39(**).20(*).78(**).63(**).7(*) -.9(*) Independence.272(**).483(**).39(**).399(**).666(**).49(**).96(**) (**) 5 Innovativeness.284(**).366(**).20(*).399(**).426(**).343(**).47(**) -.29(*).09(*) 6 Self- Determination 7 Risk Taking.236(**).338(**).63(**).49(**).343(**).498(**).05(*) Work Experience 9 Family Business Background 0 Family Annual Income (**) (**).09(*).83(**) (**) -.279(**).248(**).490(**).78(**).666(**).426(**).498(**).202(**) (**).266(**).30(**).7(*).96(**).47(**).202(**).05(*) (**) -.42(**) -.97(**) -.9(*) (*) (**) Mean Std. Deviation VIF Using data from both countries, the direct impacts of perceived desirability, feasibility and work experience on entrepreneurial intention are proven. The impact of perceived feasibility on intention has valuable implication for practice since it is shown that if feasibility to start a business is perceived to be higher, then there will be a stronger entrepreneurial intention. Therefore, this points to a direction of the work that teachers and policy makers can direct to. Goodness of Fit Index 2. Root Mean Square Residual 4 Journal of Global Entrepreneurship Research, Winter & Spring 20, Vol., No., pp

8 help shape a stronger entrepreneurial intention. It is also proven that perceived desirability has an impact on perceived feasibility which is reasonable because those who perceive starting a business as desirable would have a stronger tendency to actively acquire related knowledge and skills. Moreover, our findings in terms of family business background are consistent with previous studies and common understanding. Family business background will contributing to the formation of entrepreneurial intention, by positively impacting the perceived desirability and feasibility of starting a business. Finally, the entrepreneurial personality is shown to have impact on the perceived desirability and perceived feasibility, and thus, indirect impact on entrepreneurial intention. Table 4. Estimation Results Model Model 2 Whole China US Whole China US Family Annual Desirability Income *** *** Family Business Desirability Background 0.262*** *** 0.293** Desirability Work Experience 0.75*** Work Experience 0.430*** 0.26*** *** 0.39** Family Annual Income 0.097*** Family Business Background 0.290*** *** 0.276*** *** Desirability0.284*** 0.28*** 0.266*** 0.83*** *** Work Experience 0.083*** 0.096*** *** 0.096*** 0.03 Desirability0.055*** 0.034*** 0.09*** 0.055*** *** 0.40*** 0.096*** 0.85*** 0.36*** 0.088*** 0.78*** Personality Desirability Personality 0.267*** 0.45** 0.340*** Personality 0.799*** 0.624***.227*** Model Fit index Chi-sqaure Degree of freedom p-value GFI RMR *** The value is significant at 5% level. ** The value is significant at 0% level. As to the difference(s) in each country, firstly, the role that the work experience plays in the formation of entrepreneurial intention is significantly different between the two countries. Work experience has direct impact as well as indirect impact through perceived feasibility on entrepreneurial intention in China. Students with work experience are perceived to be more capable of starting a business and thus have a stronger entrepreneurial intention. However, in the US, work experience does not affect perceived desirability or feasibility or the intention. Secondly, the family income status does not impact the entrepreneurial desirability or Determinants of Entrepreneurship among College Students in China and USA 42

9 feasibility perceived by the Chinese students. By contrast, the family annual income level has a negative impact on the entrepreneurial desirability perceived by the US students. This could be explained by the fact that entrepreneurship is a process which involves some uncertainties and the risks are recognized by the US students. Thus the children from high-income families have more negative attitude toward college student entrepreneurship while those from low-income families are more favorable of taking the risk and try to make more money. Thirdly, family business background will positively impact the perceived desirability among the Chinese students while it positively impacts the perceived feasibility among the US students. The lack of relationship between the family business background and the perceived feasibility in China may reveal that entrepreneur parents in China should provide more support to their children in preparing for starting a business besides acting as a role model for the children. Conclusion his paper is the first one to quantitatively compare the entrepreneurial intention Tamong college students in China and US. We apply Shapero and Sokol (982) Event model to examine the determinants of entrepreneurial intention among the two groups of college students. It is found that Shapero and Sokol (982) entrepreneurial event model is partially supported in the context of college students except for the role of entrepreneurial personality. The positive impacts of perceived desirability and perceived feasibility on entrepreneurial intention are proven. However, different from previous research, entrepreneurial personality is observed to have an indirect instead of a direct impact on entrepreneurial intention. The entrepreneurial personalities positively impact the entrepreneurial intention through their effects on perceived desirability and perceived feasibility. The decisive impact of perceived feasibility on entrepreneurial intention has important practical implications. If the feasibility to start a business is perceived to be higher, then there will be stronger entrepreneurial intention. This shows a direction that could be followed to promote entrepreneurial intention. Universities especially have important obligation to fulfill in this field. Our modeling also reveals some significant differences between the Chinese college students and their counterparts in the US. Work experience plays an important role among Chinese students in forming entrepreneurial intention. It affects the Chinese students perceived self-efficacy in starting a business and will also directly affect the entrepreneurial intention. We observe in this study that the Chinese students lack work experience, as just over one-third of them have reported that they have full-time internship or work experience while this percentage is 68.4% in the US. On the other hand, the Chinese students place much emphasis on the role of work experience in preparing themselves to start a business. Therefore, helping the Chinese students to gain more work experience would be a reasonable direction to choose for promoting their entrepreneurial intention. Another significant difference between the two countries is the role that entrepreneur parents play in the formation of children s entrepreneur intention. In China, the entrepreneur parents do establish a role model by positively affecting the children s desirability toward entrepreneurship. However, they do not help to prepare the children for starting a business, since the Chinese students perceived feasibility of entrepreneurship is not impacted by whether or not their parents are entrepreneurs. By contrast, the impact of family business background on children s perceived feasibility is significant in the US, showing that the US entrepreneur parents may be giving more help to their children in preparing to start a business than the Chinese entrepreneur parents. Our results provide some implications for universities, governments, entrepreneurship trainers as well as families on how to cultivate entrepreneurial intention among college 43 Journal of Global Entrepreneurship Research, Winter & Spring 20, Vol., No., pp

10 students. There are certainly some limitations in our study. Firstly, our measurement of entrepreneurial personality is not a standard way of measuring psychological traits. Further studies should choose widely used measurement scales. Secondly, since our exploratory analysis of the survey data does not show any correlation between some demographic factors such as gender and ethnic group and the intention, we have not incorporated these demographic factors into our structural model to avoid model complexity. However, these factors are shown in some prior studies to have impact on entrepreneurial intention. Thirdly, the indirect impact of entrepreneurial personality on entrepreneurial intention needs to be further studied and clarified. References Ang, S. H., & Hong, D. (2000). spirit among East Asian Chinese. Thunderbird International Business Review, 42, Blanchflower, D. G., & Oswald, A. J. (2007). What makes a young entrepreneur? IZA Discussion Paper, 339. Brockhaus, R. H. (987). folklore. Journal of Small Business Management, 25, 6. Davidsson, P. (995). Determinants of entrepreneurial intentions, RENT IX Workshop in Entrepreneurship Research, Piacenza, Italy. Delmar, F., & Davidson, P. (2000). Where do they come from? Prevalence and characteristics of nascent entrepreneurs. Entrepreneurship and Regional Development, 2, 23. Gupta, V. K., Turban, D. B., & Bhawe, N. M. (2008). The effect of gender stereotype activation on entrepreneurial intentions. Journal of Applied Psychology, 93, Hout, M., & Rosen, H. S. (999). Self-employment, family background and race. Working paper. Retrieved from Hsu, D. H., Roberts, E. B., & Eesley, C. E. (2007). Entrepreneurs from technology-based universities: Evidence from MIT. Research Policy, 36, Kline, R. B. (998). Principles and practice of structural equation modeling. New York: The Guilford Press. Krueger, N. F. (993). The impact of prior entrepreneurial exposure on perceptions of new venture feasibility and desirability, Entrepreneurship Theory and Practice, 5, 5 2. Krueger, N. F. Jr., Reilly, M. D., & Carsrud, A. L. (995). intentions: A competing model Approach. Paper presented at the United States Association of Small Business and Entrepreneurship. Boulder, CO. Krueger, N. F., Reilly, M. D., & Carsrud, A. L. (2000). Competing models of entrepreneurial intentions. Journal of Business Venturing, 5 (5/6), Lu, W., Wang, W. J., & Millington, J. K. (200). Comparison of among College Students in the US and China, International Journal of Pluralism and Economics Education,, Luthje, C., & Franke, N. (2003). The making of an entrepreneur: testing a model of entrepreneurial intent among engineering students at MIT. R&D Management, 33, Shapero, A., & Sokol, L. (982). The social dimension of entrepreneurship. In: Kent, C.A., Sexton, D. L., & Vesper, K.H. (eds.) The Encyclopedia of Entrepreneurship. Englewood Cliffs, NJ.: Prentice- Hall. Summers, D. F. (2000). The formation of entrepreneurial intentions. New York: Garland Publishing. Timmons, J. A., & Spinelli, S. ( 2009). New Venture Creation: Entrepreneurship for the 2st Century, 8th edition, NY: McGraw-Hill. Veciana, J. M., Aponte M., & Urbano, D. (2005). University students attitudes towards entrepreneurship: A two countries comparison. International Entrepreneurship and Management Journal,, Wang, C. K., & Wong, P. K. (2004). interest of university students in Singapore, Technovation, 24, White, R. E., Thornhill, S., & Hampson, E. (2007). A biosocial model of entrepreneurship: the combined effects of nurture and nature. Journal of Organizational Behavior, 28, Determinants of Entrepreneurship among College Students in China and USA 44