Theory of Planned Behavior Approach

INFLUENCING FACTORS OF ENTREPRENEURIAL INTENTION IN STUDENTS

Abstract

Using the Theory of Planned Behavior approach, this study aimed to examine the structural equation model (SEM) of factors that cause the formation of entrepreneurial intention in college students. In addition, this study also provides an illustration of what the underlying factors correlated with the formation of entrepreneurial intentions in male students and the underlying factors correlated with the formation of entrepreneurial intention in female students, given the sex role is correlated to parenting style. Research data collection methods were questionnaire and scale of Personal Attraction, Subjective Norm, and Self-Efficacy. Multiple regression analysis and structural equation model (SEM), is used to analyze the correlations between the factors that cause the entrepreneurial intention in male and female students. From the results of model testing on both male and female students, it can be concluded that this research model meets the goodness of fit structural equation. From SEM it can be concluded also that the factor of self-efficacy is the main influencing factor of entrepreneurial intention of both male and female students. In addition to self-efficacy, in male students, another influencing factor of entrepreneurial intention is Personal Attraction, while in female students is subjective-norm.

Key word: Entrepreneurial intention, Theory of Planned Behavior, Personal Attraction, Subjective-norm, Self-Efficacy, SEM

INTRODUCTION

The number of unemployed in Indonesia in February 2010 reached 8.59 million people or 7.41 percent of the total workforce. Although in general Unemployment rate (TPT) is likely to decline, which in August 2009 at 7.87 percent and in February 2009 at 8.14 percent, but the TPT for Diploma and Bachelor Degree levels were increased, 2.05 percent and 1.16 respectively (BPS, 2012). In this case, it has become the focus of the government to provide new jobs, but Yudhoyono as president of Indonesia asked the public to foster an entrepreneurial spirit as one of the labor-absorbing sectors. “Be entrepreneurs who created the product market, and new business” he said (Kompas, 2011).

In developing the entrepreneurial spirit, a question that often comes to policy makers is: “What makes some people more entrepreneurial than others?” (Licht, 2007). In this case Baron (2004) argues that cognitive understanding of the individual in personal decision-making is important. Therefore, in the theory of designed behavior is exploited in entrepreneurship ever since the 1990s, and it has facilitated a new approach to the intention conception. In line with the popularity of designed theory of entrepreneurship, a visible increase of in the field of entrepreneurship education and training has also taken place in recent years. Planned Behavior (Ajzen, 1991) has been defined as, one of the most common psychological theories used to explain and predict human behavior, Including entrepreneurship (Kolvereid, 1996). Entrepreneurship scholars argue Generally That entrepreneurial behavior is intentional and so best predicted by the measure of intentions of an individual (Bird, 1988). Ajzen (1991) defines intentions as “Indications of how hard individuals are willing to try, of how much of an effort to exert They are planning, to perform the behavior”. The Stronger the intention to engage in a behavior, the more Likely should be its actual performance.

This study follows the cognitive approach, through the application of an Entrepreneurial Intention model. A number of works are being published Lately about this issue. However, a lot of research is still needed to better comprehend the which the factors affecting entrepreneurial Perceptions (and, through them, intention) are. In particular, our knowledge is specially limited in a specific areas. Cross-cultural studies are needed so That the effect of different cultures and values on the entrepreneurial intention is increasingly Understood. The research was conducted in Yogyakarta Indonesia, where the nuances of culture in this city is very thick. With influenced by the culture in which one lives, the parenting style will color the way to teach the children that men and women to behave and act towards the tendency to be an entrepreneur or not.

The main purpose of this paper isclearly in line with those needs. First, we try to test the adequacy of the Entrepreneurial Intention Model on male and female students who became the subject of this study. And, secondly, we also try to know what factors are most influential in predicting entrepreneurial intentions of university students both male and female.

These results will hopefully shed some light on a number of issues. It will serve as a confirmation of the applicability of this cognitive model to the entrepreneurial decision. In this case, our sample comes from kota yang mungkin berbeda cultural and social structure dibandingkan penelitian-penelitian terdahulu. Perbedaan pada mahasiswa pria dan wanita juga dilihat faktor antesedent yang membentuk intensi kewirausahaannya. It will also contribute to clarify the specific pattern of relationships among the antecedents of intention. Finally, relevant implications for educators and policy-makers could be derived.

ENTREPRENEURIAL INTENTION MODEL

From the perspective express by Krueger et al (2000) explain that since the decision to become an entrepreneur may be plausibly considered as voluntary and conscious, it seems reasonable to analyze how that decision is taken. Entrepreneurship may be viewed as a process that occurs over time (Gartner et al., 1994). In this sense, entrepreneurial intentions would be the first step in the evolving and -sometimes- long-term process of venture creation (Lee and Wong, 2004). The intention to start up, then, would be a previous and determinant element towards performing entrepreneurial behaviors (Kolvereid, 1996). In addition, intentions toward a behavior would be the single best predictor of that behavior (Fishbein and Ajzen, 1975, Ajzen, 1991, 2001).

In turn, the intention of carrying out a given behavior may be affected by several factors, such as needs, values, wants, habits, and beliefs (Bird, 1988; Lee and Wong, 2004). In particular, Ajzen (1991) calls “antecedents” the set of cognitive variables that would exert their influence on intention (personal attitude towards the behavior, perceived social norms, and perceived behavioral control). More favorable “antecedents” would make more feasible the intention of carrying that behavior out, and the other way round (Linan, 2004). Obviously, situational factors also influence entrepreneurial intentions (Boyd and Vozikis, 1994). Variables such as time constraints, task difficulty, and the influence of other people through social pressure could be examples of these situational factors (Lee and Wong, 2004). Therefore, exogenous factors also influence one’s attitudes toward entrepreneurship (Krueger, 1993).

From the previous researches on entrepreneurial intention, there are some differences in their results. Indarti and Rosiani (2008) states that self-efficacy proved to affect the intentions of entrepreneurship in students, while Wijaya (2008) and Segal, et al. (2005), states that self-efficacy is not proven to affect entrepreneurial intentions. In the study of Alstete (2002) concluded that the external environment such as unemployment, frustration with previous employment and the need to get a decent life, effect on entrepreneurial intentions, but the study of Ismail (2009) and Zain et al. (2010) environmental factors was not proven to emerge entrepreneurial intention.

Because of the inconsistencies of those entrepreneurial intentions studies, so it is still relevant to post the question of what exactly the factors influencing a person’s entrepreneurial intention. Does Attitude towards the behavior (Personal Attraction), subjective norm (subjective norm), and self-efficacy (self-efficacy) have an influence on the entrepreneurial intention of students, as well as whether environmental differences demographics (sex, gender, age, and family background) distinguish level of entrepreneurial intention of students. Because it is becoming very important for a person when they want to choose a career path of his life (Ajzen, 2001; Kolvereid, 1996). Intention becomes the fundamental element towards explaining behavior. It indicates the effort that the person will make to carry out that entrepreneurial behavior (Linan, 2004). And so, it captures the three motivational factors that influence behavior (Ajzen, 1991): (1) Attitude towards the behavior (Personal Attraction, PA) refers to the degree to which the individual holds a positive or negative personal valuation about being an entrepreneur (Ajzen, 2002, Kolvereid, 1996). It would include not only affective (I like it, it makes me feel good, it is pleasant), but also evaluative considerations (it is more profitable, has more advantages). (2) Perceived Social Norms or Subjective Norm (SN) would measure the perceived social pressure to carry out -or not to carry out- that entrepreneurial behavior. In particular, it would refer to the perception that “reference people” would approve of the decision to become an entrepreneur, or not (Ajzen, 2001). (3) Perceived Behavioral Control (PBC) would be defined as the perception of the easiness or difficulty in the fulfillment of the behavior of interest (becoming an entrepreneur). It is, therefore, a concept quite similar to perceived self-efficacy (SE) (Bandura, 1997). In the same way, it is also very similar to Shapero and Sokol’s (1982) vision about perceived feasibility. In all three instances, the important thing is the sense of capacity regarding the fulfillment of firm creation behaviors. Nevertheless, recent work has emphasized the difference between PBC and self-efficacy (Ajzen, 2002). PBC would include not only the feeling of being able, but also the perception about behavior controllability. That is, the extent to which performing it or not is up to the person.

On the other hand, as mentioned above, situational or “demographic” factors have an influence on intentions (Boyd and Vozikis, 1994; Lee and Wong, 2004). In particular, a greater knowledge of different entrepreneurial aspects will surely contribute to more realistic perceptions about the entrepreneurial activity (Ajzen, 2002), thus influencing intentions indirectly, but due to the limitations of this study, the gender factor which will be considered as a demographic factor that affecting another three antecedent factors of entrepreneurial intentions.

In Figure 1, therefore, we summarize the model we will be using as a starting point for our analysis. Apart from the explicit inclusion of external variables, this Figure 1 is quite similar to the Theory of Planned Behavior described by Ajzen (1991), and used by Kolvereid (1996), and Linan (2004). One particularity, however, is that we have specifically hypothesized what the pattern of relationships among the so-called antecedents of intention is. Social norms are assumed to influence both personal attraction and self-efficacy perceptions (Kennedy, et. al., 2003). However, due to demographic variable is nominal data, the effect of sex on the entrepreneurial intention model is analyzed by comparing the baseline model of entrepreneurial intention model on a sample of male, female sample and total sample of male and female.

METHODS

Entrepreneurial intention has been measured through a scale with 7 alternatives of answer. These are general sentences indicating different aspects of intention. A similar system has already been used by Zhao et al., (in Linan & Chen, 2006 ). However, Armitage and Conner (2001) identified three distinct kinds of intention measures: desire (I want to ), self-prediction (How likely it is ) and behavioral intention (I intend to ). The Entrepreneurial Intention scale was modified from the Entrepreneurial Intention Questionare (EIQ) from Linan & Chen (2006). Aspects of this scale are (1) the purpose ofhis life to be an entrepreneur (2) preparing yourself to become an entrepreneur, (3) strong-willed to try to become an entrepreneur, and (4) seriously consider setting up a business. The Cronbach alpha reliability for this scale was 0.84.

Personal attraction has also been measured through an aggregate attitude scale. This scale was modified from the scale of Linan & Chen (2006) and Kennedy, at. al. (2003). This scale has the aspect (1) interest in entrepreneurship compare to other job areas, (2) belief in the success of a career in entrepreneurship, (3) gain confidence, including higher salaries, when becomes an entrepreneur, and (5) to be enthusiastic and have satisfaction when becomes an entrepreneur. The Cronbach alpha reliability for this scale was 0.77.

Subjective norms, or Perceived social valuation, according to Ajzen (1991), should be approached through an aggregate measure of the kind “what do important others think?” Subjective norm refers to the perceived social pressure to perform or not to perform that behavior. It is based on beliefs concerning whether important referent individuals or groups approve or disapprove of an individual establishing a business, and to what extent this approval or disapproval matters to the individual. Generally speaking, the more the opinion of a particular referent group or individual matters to the individual and the more encouraging the individual thinks it is of enterprising activity, the stronger should be the individual’s intention to start a business. This scale refers to the aspects raised by Linan & Chen (2006) which reveal aspects of how large the opinions of people who are considered important by the subject (the opinions of family, friends, and the closest people) about the work as an entrepreneur. The Cronbach alpha reliability for this scale was 0.80.

Self-efficacy scalerates their level of agreement withseveral general statements about the feeling of capacity regarding firm creation. In a recent work, Ajzen (2002) considers that perceived behavioral control is a concept somewhat wider than self-efficacy. It would also include a measure of controllability (the extent to which successfully performing the behavior is up to the person). Four aspects of this scale are (1) believe that can start forming a new company, (2) believe that can run entrepreneurial ventures relatively smoothly, (3) understand the things what to do when running a project, (4) believe that the entrepreneurial ventures established will be successful. The Cronbach alpha reliability for this scale was 0.79.

RESULTS AND DISCUSSION

The entrepreneurial intention model to be tested has been presented in Figure 1. Structural equation modeling was used to test its empirical validity. Diperoleh hasil goodness of fit dari ketiga baseline model yang ada (lihat table 1). We estimated the models using the maximum likelihood (ML) estimation procedure of AMOS 5.

Table 1: Multiple goodness’s of fit measures of the baseline model

Model

XA?

XA?/DF

CFI

RMSEA

NFI

GFI

Male

2.523

2.523

.953

.076

.852

.962

Female

2.495

2.495

.956

.075

.856

.982

Male & Female

1.741

1.741

.970

.052

.774

.950

We start with some important global goodness of fit. According to Ghozali (2008), a reference to indicators of Goodness of Fit test can be viewed with at least 6 criteria. (1) A first measure is the chi-square value. Fundamental test equipment to measure the overall fit is the likelihood ratio chi square statistic. The model considered good if it has a chi square = 0, which means there is no difference. The recommended level of acceptance is significant if p a‰? 0.05, which means the actual input matrix with that, predicted input matrices were not statistically different, (2) We report the normalized chi-square, where it is adjusted by the degree of freedom (df) to evaluate model fit (I‡A?/df). The normalized chi-square should be less than 2.0 or 3.0 for models with adequate fit. (3) The next measure to report is Bentler’s comparative fit index (CFI). This index is based on a comparison of the hypothesized model against the independence model as baseline model. The range of the CFI is form 0 to 1. A value > 0.9 is considered representative of a good-fit model (Byrne, 2001). (4) The next measure is the root mean square error of approximation (RMSEA). RMSEA (Root Mean Square Error of Approximation). RMSEA values aˆ‹aˆ‹indicate goodness of fit is expected when the model is estimated in the population. RMSEA value of less than or equal to 0.08 is an index to the receipt of the models show a close fit of the model was based degree of freedom. RMSEA is an index of measurement is not influenced by the size of the sample so that the index is typically used to measure the fit of the model on the number of samples, (5) The Normed Fit Index (NFI) compares minimum fit function value of the actual model with the baseline model (worst fitted “Independence Model”). NFI values range from 0 to 1, with higher values indicating better fit. Values greater than .90 are typically interpreted as indicating a good fit. (6) GFI (Goodness of Fit Index) used to calculate the weighted proportion of the variance in the sample covariance matrix that described by the estimated population covariance matrix. This index reflects the overall level of fitness model that calculated from the residual quadratic model predicted that compared with the actual data. Goodness of Fit Index value is usually from 0 to 1. Better value close to 1 indicates the model we tested has a good fitness value is said to be good GFI a‰? 0.90. Table 1 shows some Important Multiple goodness’s of fit baseline measures of our three models, while the three baseline for the SEM images can be seen in figure 2.

From the study it can be concluded that the male-female baseline model, PA (Personal Attraction), SN (Subjective Norm), and SE (Self-Efficacy) otherwise affect the entrepreneurial intention. This is supported by the results of multiple measurements of the three baseline regression model coefficients obtained results of multiple regression .604 (male baseline model), .643 (female baseline model), .584 (male-female baseline model). In each of the baseline model (male, female, and male-female), the variable PA, SN, and SE simultaneously accounted for 36.5%, 41.4%, and 34.1% in predicting entrepreneurial intention (see Table 2).

Table 2: Multiple regression measures of the baseline model

Baseline Model

R

R Square

F

Sig

Male

.604^a

.365

74.624

.000^a

Female

.643^a

.414

43.739

.000^a

Male & Female

.584^a

.341

34.511

.000^a

a. Predictors: (Constant), Self-Efficacy, Subjective Norm, Personal Attraction; Dependent Variable: Enterpreneurial Intention

Pengaruh masing masing variabel exogenousterhadap endogenouspada setiap baseline model dapat dilihat pada tabel 3. Secara keseluruhan sampel penelitian (male-female baseline model) dapat disimpulkan konsisten dengan Theory of Planned Behavior (Ajzen, 1991, 2001) bahwa ke tiga antecedent (PA, SN, dan SE) berpengaruh terhadap tinggi-rendahnya entrepreneurial intention seorang mahasiswa, dan dari ketiga faktor yang mempengaruhi entrepreneurial intention tersebut, prediktor Self-Efficacy yang paling kuat mempengaruhi Entrepreneurial intention (lihat figure 2, dan table 3).Penelitian terdahulu shows a main effect of entrepreneurial self-efficacy on entrepreneurial output including entrepreneurial intention, disimpulkan oleh Krueger and Brazeal 1994; Zhao, Seibert and Hills 2005. Hal serupa juga dapat ditunjukkan pada hasil penelitian Ramayah & Harun, 2005; Zhao et al, 2005, yang menunjukkan adanya hubungan positif antara efikasi diri dan intensiberwirausaha.

Influence of each exogenous to endogenous variables on each baseline model can be seen in Table 3. Overall the study sample (male-female baseline model) can be inferred is consistent with the Theory of Planned Behavior (Ajzen, 1991, 2001) that the three antecedent (PA, SN, and SE) high-low effect on entrepreneurial intention of a student, and from the three influencing factorsof entrepreneurial intention, the predictors of Self-Efficacy has the most powerful influence to Entrepreneurial intention (see figure 2 and table 3). Previous research showed a main effect of entrepreneurial self-efficacy on entrepreneurial output Including entrepreneurial intention, inferred by Krueger and Brazeal 1994; Zhao, Seibert and Hills, 2005. The same can be shown in the results of the study Ramayah & Aaron, 2005; Zhao et al, 2005, which showed a positive relationship between self-efficacy and entrepreneurial intentions.

Personal Attraction is an important predictor, in addition to self-efficacy, in predicting the level of entrepreneurial intention in the group of male, while in the group of women Subjective Norm functions become very central in addition to Self Efficacy (see figure 2 and table 3).

Table 3: Koefisien regresi antar variabel PA, SN, SE, EI of the baseline model

Baseline Model

Relationship

Male

Female

Male & Female

SE < ---- SN

-.078

.354**

.101

PA < ---- SN

-.003

.118

.029

EI < ---- SN

.107

.254**

.181**

EI < ---- SE

.316**

.262**

.301**

EI < ---- PA

.213**

.093

.171**

PA: Personal Attraction; SN: Subjective Norm; SE: Self-Efficacy; EI: Entrepreneurial Intention

*: p < .05 **: p < .01

This is probably due to the group of male students (men) tend to not pay attention to the opinions of those around him. They look more independent in decision-making to determine his career. Women may be due to upbringing as a child accustomed to a more gender roles into consideration the environment surrounding their career life, so thattheir entrepreneurial intentions was affected by it. In Indonesia the research that states that the position of women becomes a disadvantage in Small and Medium Enterprises which are caused by the culture, so they face the double burden and are rarely involved in decision-making process (Asian Development Bank-GFA-Swiss Contact Management, 2000 in Mahastanti & Nugrahanti, 2010). It’s just interesting it was found that among men and women did not differ in terms of intentions kewirausaannya, although in the case of Personal Attraction, Subjective Norm, and Self Efficacy gained significant difference. Group of male students showed Personal Attraction and Self-Efficacy higher than in women. However, groups of women showed higher levels of Subjective Normsthan those in group of men (see table 4).

Table 4: Male & Female t-test value and mean for each variable

Variables

Group

Mean

t-test

Sig

Entrepreneurial Intention

Male

81.20

.716

.398

Female

80.45

Personal Attraction

Male

43.77

8.362

.004

Female

40.88

Subjective Norm

Male

42.81

35.393

.000

Female

49.81

Self-Efficacy

Male

57.83

18.730

.000

Female

52.58

Papalia, Olds & Feldman (2001) with social psychological approach to explaining why the men and women of any difference of behavior patterns and psychological state that is due to the existence of gender defferences. Papalia et al. (2001) explains that gender defferences obtained of how the pattern of care received from the small children of men and women differently, they are educated with parenting interests, attitudes, and behaviors are different. As a result, through the gender typing, character / trait and skill of its men and women will be different too, because they adopt the traits, attitudes, and behaviors which are culturally inappropriate for him. In the study Ahmed, Aamir and Ijaz (2011), theirfindings of the study suggest that economic factors have a weak and insignificant impact on the entrepreneurial intentions of students, while structural factors have significant and weak relationship with entrepreneurial intentions. Social factors are the factors That have modest but significant effect on entrepreneurial intentions of university students. It can be inferred That like social support, support from family, colleagues, friends, public etc. has direct and Important influence on the entrepreneurial career preferences of students. So Wang and Wong (2004) have found gender and education level as significant factors in Explaining entrepreneurial intentions. Only Research & Rani Kundu (2007) which examines gender issues related to the level of confidence and job performance found that there are differences between men and women in terms of confidence levels, but no difference in job performance. Even from the research of Ali & Davies (2003) concluded that there are differences in job performance between men and women, more women have higher job performance than men. This also might be able to answer this research results dynamics which concluded that there was no difference between entrepreneurial intention in male and female students.

CONCLUSIONS & SUGGESTIONS

Overall the structural conceptual model is designed based on goodness of fit of the three have met the eligibility baseline model (fit), so it can be interpreted in accordance with empirical conditions a graduate student. Theoretical research model is an adaptation of the concept of theory of planned behavior. Appropriate research model, Personal Attraction, Subjective Norm, and Self-Efficacy, positive influence on Entrepreneurial Intention. Of the three antecedent variables, Self Efficacy variables that most impact. Specific results acquired in the male student group, Subjective Norm did not significantly affect the Entrepreneurial Intention, whereas in the group of female college students personal atraction not significantly influence entrepreneurial intention.

Based on research, in practice it can be suggested that efforts need to be done to improve one’s Self-Efficacy for increased one’s entrepreneurial intention. This can be done by increasing knowledge and skills so that students become more confident and willing to take risks that can be calculated solution.

For future studies are expected to include more demographic variables, such as parental background, education, education level, in order to conduct counseling for male and female students become more focused.

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