Entrepreneurial enablers, risk perception, motivational factors and behavioral intention: evidence from Vietnam

Entrepreneurial enablers, risk perception, motivational factors and behavioral intention: Evidence from Vietnam NGUYEN HUU KHOI University of Economics HCMC, Nha Trang University – kho

Entrepreneurial enablers, risk perception, motivational factors and behavioral intention:

Evidence from Vietnam

NGUYEN HUU KHOI University of Economics HCMC, Nha Trang University – khoinh@ntu.edu.vn

LE NHAT HANH School of Management, University of Economics HCMC – hanhln@ueh.edu.vn

NGUYEN THI HONG University of Economics HCMC, HCMC University of Technology and Education –

hongnguyen.ute@gmail.com NGUYEN THI DUY QUYEN International School of Business, University of Economics HCMC –

duyquyen.nguyen90@gmail.com

Abstract

This study discusses and tests the role of the entrepreneurial enablers (i.e., subjective norms and social supports), risk perception, and motivational factors (i.e., perceived desirability and feasibility of entrepreneurship) toward the forming of entrepreneurial intention in the context of Vietnam, based on Shapero’s (1982) entrepreneurial event (SEE) model Also, this study explores the moderation effects of demographic variables (i.e., gender, income, job position, and experience) on causal relationships in the proposed research model Based on the self-administered survey of 201 Vietnamese MBA students, a structural equation modeling approach with latent constructs is used to test the hypotheses The results show that subjective norms are found to have a stronger effect on enhancing perceived desirability than on increasing perceived feasibility of entrepreneurship In contrast, social supports induce the perception of feasibility more than the one of desirability Perceived risks have a stronger negative influence on perceived feasibility In addition, entrepreneurial intention is strongly determined by perceived desirability, the perception of feasibility also drives the intention to run a business, but at a weaker degree

Further, the moderating results of the demographic factors indicate that some causal relationships such as between perceived risks/subjective norms and motivational factors vary across different levels of income and types of job position Hence, this study has contributions in both academic and practical ways

Keywords: Perceived desirability, perceived feasibility, entrepreneurial intention, subjective

norms, social support, risk perception

1 Introduction

Entrepreneurship refers to the discovery of a potential opportunity, and then establishes a new business to provide a novel good or service in response to such an opportunity (Shane, 2000; Reynolds, 2005) Entrepreneurial activities have become an important economic area and attracted attentions from both researchers and

practitioners in both developed and developing countries (Acs, 2006; Wong et al., 2005)

Substantial efforts and government-supported programs have been devoted to promote entrepreneurial activities, such as Young Enterprise Company Program in the United Kingdom, NYC Business Solutions in America, Global Entrepreneurship Program in America, the Entrepreneurship Support Program for Refugee Empowerment in Japan (Krueger, 2000; Souitaris, 2007; Ahmad & Hoffman, 2007; Nabi & Liñán, F, 2011) to name just a few Some supportive programs have had a positive impact, while others have reached limited success only The mixed results of such efforts may reflect inadequate understandings on the part of policy makers regarding essential drivers of entrepreneurial intention and behavior

The literature review indicates that there is a positive and close connection between behavioral intentions and actual behaviors (Armitage & Conner, 2001; Zeffane, 2013;

Shirokova et al., 2016), thus it is important to study entrepreneurial intention which is

defined as an individual’s commitment to start a venture (Krueger, 1993) Many prior researches show that perceived feasibility and perceived desirability are two key

antecedents with impact on the entrepreneurial intention (Shapero, 1982; Krueger et al.,

2000).However, there is less research into the relationship among perceived desirability and perceived feasibility and the factors which nurture those early entrepreneurial intentions, such as subjective norms, risk perception, and social support Understanding why and how people start their businesses may facilitate the development of appropriate policies and foster entrepreneurial activities more efficiently

Vietnam has recognized the importance of small and medium enterprises since

1986, the government has formulated and changed Enterprise Law many times to

encourage and support entrepreneurs In 2016, the government approved the Proposal

844 on “Development of National Innovation and Entrepreneurship Ecosystem Toward 2020” to improve the ecosystem/environment for entrepreneurs The number of small and medium sized enterprises increased considerably; 50,534 new enterprises were established/were founded in the first 5 months of 2017, which represents a growth rate

of 12.9% per year (General Statistics Office, 2017) Some recent studies concentrate on Vietnam’s entrepreneurial performance as well as entrepreneurs’ interests, on the aspect

of motivation such as King-Kauanui et al.’s (2006) research into human resources and entrepreneur performance while Baughn et al (2006) compare entrepreneurs’

motivation between China, Vietnam and Philippine However, most of the previous researchers just focus on demographic characteristics and problems/particularities, and

do not concentrate on Vietnamese entrepreneurs’ motivation for starting a business or

on the factors necessary for success (Benzing et al., 2005)

With the characteristics of an emerging economy and collective culture, the application

of the SEE model in the context of Vietnam may provide a different result Therefore, this research aims to understand the precursors of Vietnamese entrepreneurial intention Particularly, this research investigates: (1) the relationship between perceived feasibility, perceived desirability and entrepreneurial intention, (2) the impacts of entrepreneurial enablers (i.e., subjective norms and social support) and risk perceptions on perceived desirability and feasibility The results can contribute to the development of supporting programs to further promote entrepreneurial activities effectively

2 Literature review and proposed hypotheses

Entrepreneurship is defined as an activity that involves discovery, evaluation, and exploitation of opportunities to introduce new goods and services, ways of organizing markets, processes, and procurement through organizing efforts that previously have not existed (Sirec & Mocnik, 2010) According to Alfonso & Cuevas (2012), McClelland (1978)

is one of the pioneer entrepreneurship studies which identifies the entrepreneur’s attributes throughout typical psychological characteristics and personality traits of a successful entrepreneur Up to the 1980s and early 1990s, other researchers have focused

on the importance of the entrepreneurial intention as an antecedent to entrepreneurial behavior Numerous studies about entrepreneurship base on two main entrepreneurial intention models which are the SEE model (Shapero, 1982; Dissanayake, 2013; Fitzsimmons & Douglas, 2011) and the theory of planned behavior (Ajzen, 1991) Both of them are widely adopted by entrepreneurial intention research to analyze new venture

creation and have emerged in the literature as the main theory-driver models (Alfonso & Cuevas, 2012)

Many studies have extended to some new factors that are known as perceived desirability which involves the attitude of someone and perceived feasibility that relates

to the self-efficacy or perceived behavioral control (Krueger & Bazeal, 1994; Guerrero et

al., 2006; Devonish et al., 2010; Byabashaija et al., 2010) Furthermore, previous

researchers concern about antecedents of two primary factors (i.e., perceived feasibility and perceived desirability) These antecedents are considered as subjective norm, empathy, moral, social support as well as environment/ environmental factors (Kennedy

et al., 2003; Mair & Noboa, 2003) As a result, this study is established on the model of

Krueger & Bazeal’s (1994) However, it also focuses on antecedents of primary factors The conceptual model represents an alternative explanation of entrepreneurial intentions using similar variables of previous models (Krueger, 1993; Shapero, 1982) The model is based on a social-cognitive approach to the study of entrepreneurial intentions This model presents the relationship between perceived feasibility and perceived desirability and entrepreneurial intention Furthermore, it also predicts the impact of subjective norms on perceived desirability and social support on perceived feasibility Finally, this model explores the role of risk perception as a threat to the two motivational factors of entrepreneurial intention

Figure 1 Conceptual model

Hypotheses development

Subjective

norms

Social support

Risk as threat

Perceived Feasibility

of entrepreneurship

Entrepreneuria

l Intention

Perceived Desirability of entrepreneurship

H 2a

H 2b

H 3a

H 3b

H 4a

H 4b

H 1a

H 1b

Motivational factors and entrepreneurial intention

According to Drost (2010), entrepreneurial intention refers to one's intention to engage in entrepreneurship and one`s intention to start one`s own business or become self-employed, driven by the desire for autonomy and the expectation of sustainable economic gain/growth Motivational factors include perceived desirability and feasibility Perceived desirability is understood as the attractiveness of an idea to do a start-up business In previous studies, perceived desirability is considered as an attitude toward

entrepreneurship or a personal attitude to have one’s own business (Devonish et al.,

2010) Whereas, perceived feasibility means the individual’s assessment of the chances that entrepreneurial activities will succeed given the balance of supporting and

constraining contextual influences (Byabashaija et al., 2010) Perceived feasibility is equivalent to perceived self-efficacy (Devonish et al., 2010)

According to Ajzen (1991), the intention to do something is affected by a person’s attitude toward behavior, subjective norms and perceived behavioral control In terms of

attitude toward entrepreneurship, Robinson et al (1991) recognize the importance of

domain-specific attitudes in explaining entrepreneurial intention and behavior In that research, attitude toward entrepreneurship also acts as a primary determinant of students’ willingness to be self-employed that refers to the individual’s perception of the personal desirability of performing the behavior, i.e creation of a new venture, and corresponds to the attitude toward the act in the Ajzen’s theory of planned behavior Obviously, the stronger people are interested in a self-employed business, the more they intent to choose the entrepreneurial career path Furthermore, previous literature argues that people will develop an intention to become an entrepreneur based on their entrepreneurial attitudes, and that the attitudes held toward the greater decision-making autonomy, firm ownership, risk management, hard work, and other perquisites/benefits tend to be associated with entrepreneurship According to Douglas & Shepherd (2000), individuals desiring more income, more independence, and more net perquisites are more likely to want to engage in entrepreneurial behavior Likewise, an individual with a higher tolerance for risk and positive attitude toward work effort should be expected to

be more likely to want to engage in entrepreneurial behavior Fitzsimmons & Douglas (2005) find that attitude toward ownership is a better predictor of entrepreneurial intentions than is independence They also find out that the stronger individuals have the desire to establish their own business, the more intention they have to become entrepreneurs

With regard to perceived behavioral control, entrepreneurial intentions have been shown to depend on perceived self-efficacy (Fitzsimmons & Douglas, 2005) Self-efficacy refers to the strength of an individual’s belief that he/she can accomplish a specific task

or series of related tasks It is related to self-confidence and individual capabilities, and these are dependent on prior experience, vicarious learning, social encouragement, and physiological issues (Boyd & Vozikis, 1994) Moreover, several researchers also test the impact of perceived feasibility and desirability on self-employment intentions

Fitzsimmons & Douglas (2011) and Segal et al (2002) find that entrepreneurial intentions

are positively related to both perceived feasibility and perceived desirability Base on the aforementioned arguments, the following two hypotheses are formulated

Hypothesis 1: (a) Perceived feasibility and (b) Perceived desirability of entrepreneurship are positively associated with entrepreneurial intentions

Subjective norms, perceived feasibility and desirability

Subjective norms refers to an impact that the society or important people have on the

thinking and behavior of a person (Ajzen, 1991; Kennedy et al., 2003) Previous

entrepreneurial intention research has proven subjective norms to be important (Krueger, 1993) One reason for this might be that generally students are still in the stage

of finding out their career choice preferences The opinions of parents, partners, friends and important others might be influential in this process In the current research, subjective norms are considered as a degree to which the individual perceive the university environment to encourage entrepreneurship, and the degree to which entrepreneurship is perceived as an acceptable career alternative after graduation

It is argued that when individuals recognize the success of others coming from entrepreneurial activities or university encouragement about start–ups, they feel more attracted by entrepreneurship All of these effects from university can influence their attitude towards having their own business Previous studies reveal that subjective norms

affect the perceived desirability (Byabashaija et al., 2010) However, some studies

concentrate on the influence of perceived desirability and feasibility on entrepreneurial intentions but neglect the role of subjective norms as emphasized by Azjen (as cited in Audet, 2001), thus we suggest the next hypothesis:

Hypothesis 2: Subjective norms are positively associated with (a) perceived feasibility and (b) perceived desirability of entrepreneurship

Social support and perceived feasibility and desirability

Social support is conceived as trust and cooperation derived from social networks/networking (Mair & Noboa, 2003) Baron and Markman (2000) also suppose that social supports are actual and potential resources from others as being a part of their social network In the entrepreneurial field, social support can come from family, friends and it can be financial or spiritual support Since perceived feasibility of entrepreneurship

is a strong confidence or belief in success when they start and control a new venture, it is clear that individuals’ perceived behavioral control is stronger when they have good social support The important factor affecting an entrepreneur’s success is efficient networking that is defined as all kind of relationships pertaining to venture capitalists, suppliers and facilitators (Mair & Noboa, 2003) Some authors have discovered a close link between social support and entrepreneurship They consider entrepreneurship as rooted in networks of recurrent social relations, which can act as a facilitator not a constraint Therefore, the next proposed hypothesis could be as follows:

Hypothesis 3: Social supports are positively associated with (a) perceived feasibility and (b) perceived desirability of entrepreneurship

Risk as threat in relation to perceived desirability and feasibility

Risk perception has been conceptualized as a multidimensional psychological construct comprising two elements: risk as opportunity (focusing on the upside of risk) and risk as threat (focusing on the downside of risk) (Nabi & Linan, 2013) Risk perception

as threat means that people perceive risk as failure, difficulties as well as challenges that they could face when conducting a new venture while risk perception as opportunities is considered as a chance to bring new and better things/services When someone intents

to establish a new business, they usually consider many different factors, one of them is risk that they can take Some people perceive risk as a chance to challenge their ability, but others recognize it as threat of failure they can face if they start their own company

It means that there is a contrast between someone who perceives risk as a threat and others who perceive risk/it as an opportunity to entrepreneurial intention However, risk perception also affects the level of perceived self-efficacy and attitude to start a new business directly (Macko & Tyszka, 2009) It can be understood that when risk is considered as threat, individual’s confidence to success can be lower Likewise, interest to

do something can also be less However, it contrasts the situation when risk is perceived

as an opportunity This current research just focuses on risk as a threat only, so the corresponding hypothesis is formulated as below:

Hypothesis 4: Risk as threat (i.e fear of failure) is negatively associated with (a) perceived feasibility and (b) perceived desirability of entrepreneurship

3 Research methodology

Measurement scales

The measurement scales of all the studied constructs were adapted from previous studies and the seven-point Likert-type scales were applied Entrepreneurial intentions were measure by three items, adopted from Kennedy et al (2003) Perceived desirability and feasibility of entrepreneur of entrepreneurship were measured by four and five items adapted from Krueger et al (2000) and Kennedy et al (2003) respectively Subjective norm which refers to the expectation or pressure exerted by family, friends, and society

at large on people to pursue certain employment careers and not others was measured

by using four items in accordance to Autio et al (1997) The seven items scale for social support was adapted from Zimet et al (1990) Finally, risk perception as threat was measured by six items adapted from Nabi & Linan (2013)

Data collection

Respondents were MBA students in Ho Chi Minh City, the questionnaires were distributed and sent via the internet using Google docs By this way, the survey link was sent to respondents via Gmail and Facebook The respondents could answer the survey

by clicking on the link and keying in their answers and submitting the link to the researcher Data collection was conducted within a period of 2 weeks There were about

400 questionnaires sent over that online channel, respondents returned 209 questionnaires After checking and removing the invalid sample elements, defined as where answers were incomplete or where the same answer was given for all the questions, the usable datasets for this study were 201 observations

4 Data analysis results

First of all, the characteristics of the dataset are presented Cronbach‘s alpha and Confirmatory Factor Analysis (CFA) were applied to ensure that all items in one scale were valid and reliable Finally, Structural Equation Modeling (SEM) is used to check the hypotheses and the concept model

Sample characteristics:

The sample of 201 respondents included 104 female (occupied 51.7 percent) and 97 male (48.3 percent) master students In terms of age, the majority were master students aged from 25 to 30 (102 students, 50 percent), the younger master students from 22 to under 25 made up about 28.4 percent (57 students) that was higher than the students group aged over 30 years (42 students, accounted for 20.9 percent) Regarding income per month, 93 (46.3 percent) of the master students range within 5 to 10 million VND The second group of higher income was from 10 to 20 million VND with approximately

27 percent (54 students) of total sample There were just 11.9 percent of the students who had an income of under 5 million VND per month Besides, there were 30 master students (14.9 percent) with a monthly income over 20 million VND Most of the interviewed master students were staff (128 respondents, 63.7 percent), over a quarter of the sample were manager (52 respondents) There were only 6 percent of master students in a supervisory position The rest of sample included full-time master students and freelancers (9 students or 4.5 percent) 96 students (nearly 48 percent) report Business Administration as their primary postgraduate major, followed by Finance stated by 54 students or about 27%

Table 1

Sample Characteristics

Description Frequency Percentage (%)

Scale accuracy test

As presented in Table 2, the remained item loadings on the corresponding constructs were all significant (p < 0.001; t-value > 1.96) with values ranging from 0.64 to 0.92, after the removal of some loadings that were lower than the threshold of 0.5 The values

of Cronbach’s alpha were higher than the stipulated benchmark of 0.70 and the composite reliability (CR) measures exceeded the minimum value of 0.60 In addition, all of the average variances extracted (AVE) surpassed the recommended threshold of 0.50 These results were showing that the reliability and convergent validity of the constructs were acceptable Moreover, all the correlations were less than 0.80 and the squared correlations between each of the constructs were less than the average variance extracted (AVE) from each pair of constructs, thus demonstrating discriminant validity

Table 2

Constructs and indicators

loadings t - value

Subjective norms (Cronbach’s α: 0.84; CR: 0.84; AVE: 0.58)

I know many people in my university who have successfully started up their

In my university, people are actively encouraged to pursue their own ideas 0.81 12.92

In my university, you get to meet lots of people with good ideas for a new

There is a well-functioning support infrastructure in place to support the

Social Support (Cronbach’s α: 0.90; CR: 0.85; AVE: 0.65) There is always a person who is around when I am in need 0.90 15.89 There is always a person with whom I can share my joys and sorrows 0.79 12.87