Factors affecting entrepreneurial intent, a study of business students in vietnam

ABSTRACT The research examines the ability of attitude, social norms, perceived behavioural control and proactive personality in predicting entrepreneurial intent, in which the model is

Prof Nguyen Dong Phong

Ho Chi Minh City – Year 2014

in supervising process, even with my minor and unwise questions

I wish to give a big thank you for my dear colleagues, friends and classmates for their invaluable support and encouragement when I encountered a lot of difficulties and stresses during the process of thesis writing

Last but not least, I would like to thank all students, lecturers and staff from International School of Business-UEH, ERC International, University of Economics HCMC, and Foreign Trade University for their time with facilitating and answering my questionnaires

ABSTRACT

The research examines the ability of attitude, social norms, perceived behavioural control and proactive personality in predicting entrepreneurial intent, in which the model is operationalized as a combination between variables from Ajzen (1991) and Batteman and Crant (1993)’s theory Using a data set form a sample of 396 business students, the research adopts multiple regression analysis to test the proposed model and its hypotheses The result shows that both theories can be applied in Vietnamese context, in which attitude and social norms toward entrepreneurship and proactive personality

do affect the entrepreneurial intent of business students in Vietnam; whereas perceived behavioural intention toward entrepreneurship does not These findings suggest that if business students in Vietnam are lack of confidence in their ability to starting new businesses, and they should be trained/ educated in

a way of developing soft-skills rather than focusing only in textbook

Keywords – Entrepreneurial intention, Theory of Planned Behaviour (TPB),

Proactive Personality

ACKOWLEDGEMENT

ABSTRACT

TABLE OF CONTENTS

LIST OF FIGURE

TABLE OF CONTENTS

CHAPTER 1 8

INTRODUCTION 8

1.1 Background 8

1.1.1 History of entrepreneurship in Vietnam 8

1.1.2 Entrepreneurial activities in Vietnam 10

1.2 Research gap 11

1.3 Research objectives 12

1.4 Research scope 12

1.5 Contributions and implications 12

1.6 Structure of the research 13

CHAPTER 2 14

LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT 14

2.1 Theoretical background 14

2.1.1 The application of Ajzen’s (1991) Theory Planned Behaviour (TPB) model in predicting entrepreneurial intent 14

2.1.2 Proactive Personality (Batteman and Crant, 1993) in predicting entrepreneurial intent 18

2.2 Review on “Entrepreneurial intent” 19

2.3 Hypotheses development 22

CHAPTER 3 28

RESEARCH METHODOLOGY 28

3.1 Research design 28

3.2 Measurement scales 28

3.3 Sampling design 31

3.3.1 Population 31

3.3.2 Sample size 31

3.4 Sampling techniques 32

3.5 Data collection methods 32

3.6 Data analysis method 33

3.6.1 Statistical method 33

3.6.2 Descriptive statistics 33

3.6.3 Reliability analysis 33

3.6.4 Exploratory factor analysis (EFA) 33

3.6.5 Multiple regression analysis 34

CHAPTER 4 35

DATA ANALYSIS 35

4.1 Descriptive analysis 35

4.2 Assessment and refinement of measurement scale 36

4.2.1 Cronbach’s Alpha 37

4.2.2 Exploratory Factor Analysis (EFA) 39

4.3 Multiple Linear Regression 45

4.3.1 Test of assumptions 47

4.3.2 Regression analysis 47

CHAPTER 5 50

CONCLUSION 50

5.1 Summary of research finding 50

5.1.1 The application of Ajzen’s planned behavior model on entrepreneurial intent in Vietnam’s context 50

5.1.2 The application of proactive personality construct (Crant, 1993) in

Vietnam market 52

5.1.3 Summary of findings 52

5.2 Managerial implications 53

5.2.1 General managerial implications 53

5.2.2 Implications for Educators 53

5.2.3 Implications for Practitioners 54

5.2.4 Implications for Public policy makers 55

5.2.5 Summary of Implications 55

5.3 Limitation and further research direction 56 APENDICES

Appendix A: Questionnaire (English and Vietnamese version)

Appendix B: Multiple Liner Regression

LIST OF FIGURES

Figure 2.1: Shapero’s (1982) model of the “Entrepreneur Event” (SEE) 14

Figure 2.2: Ajzen’s theory of planned behavior (1991) 15

Figure 2.3: The proposed model 28

Figure 3.1: Measurement scales 32

Figure 4.1: Cronbach’s Alpha of remaining variables 39

Figure 4.2: KMO and Bartlett’s Test of Dependent Factor (EI) and Total Variance Explained of Dependent Factor 40

Figure 4.3: EFA result 45

Figure 4.4: KMO and Bartlett’s Test of Dependent Factor (EI) and Total Variance Explained of Independent Factor 44

Figure 4.5: Multiple linear regression 48

CHAPTER 1 INTRODUCTION 1.1 Background

1.1.1 History of entrepreneurship in Vietnam

During Vietnam’s Subsidy Period, everything was controlled by the government, so foods, goods, and services were purchased with coupons or food stamps The country’s economy was close to nepotism and controlling power manipulated by those with a position in government, i.e they received more coupons and had access to special shops In contrast, for those without special status, they spent almost a day waiting in line to buy rice and other basic commodities Ho (n.d) states that in 1986, Vietnam’s government approved a strategy of gradual integration into the world economy by

launching a political and economic renewal campaign “Doi Moi” - a balanced

approach to develop both industry and agriculture with a mix of state, collective, and private ownership, which facilitated the transition from a centrally planned economy to form of a market socialism officially termed

"Socialist-oriented market economy - Kinh te thi truong" Since then, the

establishment and development of private business in the production of consumer goods and foreign investment has played a crucial role in the country’s economy growth According to Library of Congress Federal Research Division (2005), by the late 1990s, more than 30,000 private businesses had been created, and the economy was growing at an annual rate

of more than 7% However, according to report of Bertelsmann Stiftung’s Transformation Index (BTI) in 2014, due to the key structural issue in the banking sector and state-owned enterprises (SOEs), the economy expanded by just 5.03% in 2012, the fifth consecutive year growth had been below the 7% average of the 1990s and early 2000s In contrast, the private sector has been proved its contribution to the wealth of country by accounting for roughly 60% of the country’s GDP (Per capita GDP at current U.S prices reached

$1,523 in 2012, up from $1,224 in 2010, the year Vietnam achieved

middle-income status according to World Bank criteria), covering about 29% the country budget in the form of taxes in 2010 (compared to 18% in 2006), creating 3.2 million jobs during the 2006 - 2010 period (four times more than state-owned businesses) The investment capital ratio of the private sector stood at 36.1% in 2010 and 35.2% in 2011 Thus, it is said that Vietnam has made impressive economic progress as demonstrated by the consecutively positive record of the growth of gross domestic product (GDP) during the past decade, and private enterprises have been contributing to the success and they should be received an appropriate concern for its sustainable growth

Company Law and Law on Private Enterprise first adopted in 1990, which was revised into New Enterprise Law in 1999 created a desiring environment for the development of entrepreneurial activities in Vietnam The later law version not only revoked unnecessary business licenses restrictions in 145 industries, trades and services to ease private entry in the market, but also allowed private investment funds besides the unique source of public investment capital financed by the state budget For two years (2000 and 2001) after the New Enterprise Law’s implementation, the number of new enterprises grew to 35,447, more new enterprises than were generated by the former Company Law and Law on Private Enterprise in eight years As a result, there had been the birth of a new class/ career called “entrepreneur”

(“Doanh nhan khoi nghiep”) The entrepreneurship development in the form

of Small and Medium Enterprises (SMEs) has emerged as a strong agent for socio‐economic diversification as it encouraged de‐collectivization SMEs were defined formally in document 681/CP-KNT issued by the government in

1998 Accordingly, SMEs are those independent business and production establishments that have registered their business under the current legislation

“Small Enterprises” are referred to those with registered capital less than VND1 billion and number of maximum 50 employees, while “Medium Enterprises” are referred to those that have capital ranging from VND1 to VND5 billion with the number of employees ranging from 51 to 200 (Ho, n.d., p.1-2)

1.1.2 Entrepreneurial activities in Vietnam

successful faces of the first entrepreneurial generation in Vietnam has been recently followed by many popular entrepreneurs It is said that entrepreneurial activity has significantly increased and played an important role in Vietnam’s economic map; it also become a trend for the youth, especially university students Two typical key words of entrepreneurial activities in Vietnam like on searching engine like Google “Doanh nhan tai Viet Nam” shows 14,400,000 results in 34 seconds or “Khoi nghiep kinh doanh tai Viet Nam” shows 1,090,000 results in 51 seconds with hundreds of websites, associations, clubs, competitions, activities and communities for entrepreneurs in Vietnam The result illustrates an eventful and dynamic of entrepreneurial activities, ranging from university students to adults, from local Vietnamese to Viet Kieu or foreigners; and startup is becoming a tendency and facing strong expectations for their role to be key players these days and in the upcoming time There are many reasons leads to the trend of being self-employed in the country such as current high rate of unemployment, low opportunity cost of starting own businesses compared to being employed, unfavorable policy for office worker, family tradition, etc Regarding this, Ngan (2013) figured out some figures from General Statistic

of Vietnam as a good explanation for the high rate of startups in Vietnam In

2013, 76,955 enterprises were established (10.1% higher than 2012); however, 60,737 enterprises went bankrupt or stopped operating (12.0% higher than 2012) The reasons of declaring bankruptcy included continuing losses (56.4%), management ability (5.1%) and lack of capital and market (38.5%) Meanwhile, Diep (2013) pointed out the number of unemployment graduates (21-29 age range) was up to 101,000, accounting for 9.89% the total unemployment number

1.2 Research gap

According to Alfonso and Cuevas (2012), in recent decades, research field of entrepreneurship phenomenon has significantly increased in both quantity and sophistication They argued that the rising interest in entrepreneurship parallel with its “contribution in the economic growth, rejuvenation of productive structure, relaunch of certain regions, dynamization of the innovative process and generation of employment” (p.722) Krueger et al (2000) argue that the need to predict behavioral intentions of individuals has increased together with the tendency of starting own businesses in society According to Tung and Mui (2011), a numbers of researches on personal and environmental-based determinants of entrepreneurial intent such as personality traits, attitude,

or social environment have been extensively discussed (Davison, 1995; Begley et al., 1997; Branstatter, 1997; Segal et el., 2005); yet, the results obtained are inconclusive or even contradictory Moreover, throughout history

of literature review on entrepreneurial intention, previous studies have also demonstrated the insufficient explanation of external factor and the fundamental role of cognitive-based factors In Vietnam, paradoxically, while creating new business venture has been becoming a tendency, the interest in studying entrepreneur seems not to be thoroughly investigated There have been some researches about entrepreneurship in Vietnam (Do, 2009; Ho, n.d.), yet the cognitive-based factors influencing in entrepreneurial intent have not been identified Therefore, to get the big picture of what leads to real venture creation, the need of studying the cognitive-based factors affecting entrepreneurial intention in Vietnam is in demand The primary objective of this study is to examine the degree to which the Ajzen model’s variables (attitude, social norms and perceived behavioral control) and personality scale (Batteman & Crant, 1993), as operationalized in this study, can be used to predict entrepreneurial intention of business students in Vietnam Moreover, the research also proves that the combination between the four mentioned antecedents is the new point in the history of literature

1.3 Research objectives

The objective of this research is to identify main contributions in the fields of entrepreneurial intention models and to ascertain if they are able to predict the startup initiative of business students in Vietnam For this propose, the theory

of planned behavior by Ajzen (1991) will be used as it gathers specifically all the factors largely taken into consideration in the literature throughout time regarding entrepreneurial intention In addition, this study also tests the effect

of proactive personality (Batteman and Crant, 1993) on entrepreneurial intent SPSS will be used to check whether determinant factors of entrepreneurial intention actually influence over the entrepreneurial intention; additionally, through the same method, the study will verify if entrepreneurial intention really explained new venture creation behavior (i.e starting up a business) of business students in Vietnam

1.4 Research scope

This study focuses on business students and alumni from undergraduate and postgraduate programs of universities in Vietnam, both local universities and foreign universities having campuses in Vietnam Specifically, questionnaires are collected from students of Advanced Diploma, Bachelor, MBA and second-degree programs from University of Economics (UEH), International Business School (ISB - UEH), ERC International Business School and Foreign Trade University (FTU) The research time frames were July and August of 2014

1.5 Contributions and implications

This research contributes to the understanding of the cognitive processes leading to entrepreneurial activities, their measurement, and the generalizability of the model applied in Vietnam At the same time, it can guide not only individuals in their decision-making process of becoming an entrepreneur but also educators, investors, economists and policy makers in their efforts to promote entrepreneurial activity and economic development

1.6 Structure of the research

The research is derived from general introduction to the literature review and hypothesis development, and the research methodology Chapter one named

“Introduction”, the research problem and importance of studying factors influencing entrepreneurial intent in Vietnam are discussed The section is followed by chapter two named “Literature review” explaining some basic concepts and hypothesis development related to research model Following on that, chapter three named “Research methodology” concerning how to conduct the study and chapter four named “Data analysis” explaining the collected data are discussed to provide insights for conclusion and recommendation sections at the final chapter of the research

CHAPTER 2 LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT 2.1 Theoretical background

2.1.1 The application of Ajzen’s (1991) Theory Planned Behaviour (TPB) model in predicting entrepreneurial intent

Many entrepreneurship studies have been done in an attempt to identify the situational and environmental factors that predict entrepreneurial behavior However, Krueger et al (2000) argue that “intentions are the single best predictor of any planned behavior, including entrepreneurship” (p 412) and entrepreneurial activity is intentionally planned behavior That is because when behavior is difficult to observed, intentions offer crucial insights into underlying process as exogenous factors only affect intentions and behavior indirectly through attitude changes (Ajzen, 1991) In 2005, Segal et al (2005)

in their study of motivation to become an entrepreneur reassures this groundwork knowledge They point out there is no relationship between these external forces and entrepreneurial activity as external factors are just consider

as a “trigger” and provide a more conducive environment supporting entrepreneurship Later on, many of the recent entrepreneurship-related models are developed based on cognitive process model, in which salient beliefs in entrepreneurial performance are focal Upon modest reflection, Shapero’s (1982) model of the “Entrepreneur Event” (SEE) is an entrepreneurial intention model which is also based on cognitive process model, though not having be tested well According Krueger et al (2000), the SEE (1982) figures out three factors that control the intention to become an entrepreneur are perceived desirability (the degree to which an individual is attracted by creating their own business), perceived feasibility (the perception regarding his own capacity to become an entrepreneur) and propensity to act upon opportunities (which depends on the desire to gain control by taking action) Besides, the entrepreneurial intention can be increased when

“displacement” events occurs (i.e social pressure) and influences the

desirability of the individual Another factor increases the desirability and creditability of social pressure would affect the entrepreneurial intention is having some family members who are self-employed Shapero and Sokol (1982) set up three steps in the venture creation process: (1) preliminary phase including some “displacement” events would lead individual to create a venture, (2) transforming phase including a set of circumstances (such as training, studies, family or friends) would transform a possible to a potential entrepreneur, and (3) deciding phase including a access to sources of finance, human or technical would trigger the individual to become an entrepreneur Alfonso and Cuevas (2012) in summarize Shapero’s study, state that the intent

to launching a new venture is predicted by individual’s desirability and feasibility towards that intent, which is triggered by propensity to act on opportunities and a displacement event (p.723) Also, Krueger et al (2000) prove that SEE (1982) thus requires the potential venture creation to establish before the displacement and a propensity to act afterwards

Figure 2.1 Shapero’s (1982) model of the “Entrepreneur Event” (SEE)

Source: Krueger et al (2000)

The other intention model has been widely used as the main theory-driver model is theory of planned behavior (TPB) (Ajzen, 1991) According to Engle

et al (2008) in their study of predicting the behavior of people in twelve countries about a specific action like venture creation, they state that one approach used by researchers in an attempt to explain an individual’s particular action is the application of cognitive theory They find that although

Perceived desirability

Perceived feasibility

“cognitive processes include the perceiving, storing, retrieving, responding to, and evaluating of information”, the emphasis on the cognitive process still keep “human animal lost in thought” which may “potentially result in little insight into the reasons for a person’s ultimate actions” (p.37) According to Segal et al (2005), along the history of researches on predicting behavioral intention, the theories of reasoned action (TRA) (Fishbein & Ajzen, 1975; Ajzen & Fishbein, 1980) and the theory of planned behavior (TPB) (Ajzen,

1987, 1991) are the most widely applied theories The TRA includes two construct called attitude towards the behavior and subjective norm The TPB (Ajzen, 1991) is an extension of the TRA and filled the limitation in the TRA where it adds another construct called perceived behavioral control (PBC)

Figure 2.2 Ajzen’s theory of planned behavior (1991)

Attitude toward the behavior refers to the degree to which an individual has

favorable or unfavorable assessment towards a specific behavior which is determined by the total set of beliefs to many outcomes and attributes (Ajzen, 1991) McClelland, Shapero, and Val Gelderen and Jasen (as cited in Engle et al., 2008) found that the construct “attitude toward the behavior” consists of three variables: autonomy, personal wealth and achievement motivation Specifically, autonomy includes the concepts of “independence” and

“freedom”, personal wealth is often accepted as a financial motivation and achievement motivation can be described as the need an individual places on

Actual Action

being successful, i.e., it is the degree to which one sets and strives to reach goal Generally, the more an individual believes in the positive result of an intentional behavioral, the more he/she possesses a favorable attitude toward that behavior

Subjective norm refers to the “likelihood that important referent individuals

or groups approve or disapprove of performing a given behavior.” (Ajzen,

1991, p.195) It is related to the perception of the individual about what people

in his/her social environment support the behavior Bandura’s observation in 1977b (as cited in Engle et al., 2008) suggested that individuals are in favor

of adopting behavior observed in family and close friends or mentors, especially when the outcomes of such behavior are positive Furthermore, Gopi and Ramayah (2007), in reporting study of Vankatesh and Davis (2000) state that under the social influence and social pressure on behavioral intention, the individual would perform the behavior even he/she are not in favor of performing that behavior

Perceived behavioral control reflects an individual’s perception concerning

his/her own capacity to achieve desired outcomes Even an individual possesses a positive attitude toward behavior and a supportive subjective norm; the behavior could not be adopted due to the lack of opportunities and resources Based on previous model, Ajzen (1991) included other construct so-called perceived behavioral control to deal with situation where the individual is lack of complete volitional control over the behavior Perceived behavioral control can be accumulated from experience, information exchange between individual and surrounding environment and factors influenced the perceived difficulty of performing the behavior

Entrepreneurship is a way of thinking emphasizes opportunities over threats, which can be consider as an intentional process, and, therefore, intentions consistently and robustly predict planned entrepreneurial activity As proving earlier in this study, while personal and situational variables typically have an

indirect influence on entrepreneurial activity, intention-based models offer not only insights into psychological aspect of targeted individuals but also mechanisms to assess exogenous parties influencing creating new ventures (Krueger et al., 2000) The Ajzen’s (1991) TPB model is probably the most widely accepted approach in predicting the intention to create new venture, even it not purely emphasizes on entrepreneurial behaviour but in all kind of conducts (Alfonso & Cuevas, 2012) Empirically, the application of Ajzen’s (1991) model has been proven through many research in entrepreneurial intention along the literature history in both micro and macro scale (Krueger and Brazeal, 1994; Kruegr et al., 2000; Engle et al., 2008) and the overwhelming majority of these studies support the usefulness of Ajzen’s theory and his view that behavioral intent is a powerful predictor of the targeted behavior Following on that, Christopher and Michael (2014) in their findings of the meta-analyses about the application of Ajzen’s model (1991) also summarize that the relationship between attitude and entrepreneurial intent, between social norms and entrepreneurial intent, between entrepreneurial intent and perceived behavioral control are all positive and statistically significant

2.1.2 Proactive Personality (Batteman and Crant, 1993) in predicting entrepreneurial intent

Batteman and Crant (1993) develop the Proactive Personality concept with a measurement scale of 17 items, which is a relatively stable behavioural tendency and separate from self-consciousness, need for achievement, need for dominance, and locus of control People with so-called “proactive behaviour” directly alters environments and “proactive personality is one who

is relatively unconstrained by situational forces, and who effects environmental change” and they “scan for opportunities, show initiative, take action, and persevere until they reach closure by bringing about change” (p.105) Crant (1996) also point out that more proactive people tend to envision seeking out the desirable environment surrounding him/her to

capitalize on individual strengths and needs In contrast, people without proactive personality show little initiative and fail to seize the opportunities, they even passively endure circumstances and rely on others to be forced to change Regarding the relationship with entrepreneurial intention, Timmons (1994, p.7, as cited in Becherer & Maurer, 1999) define an entrepreneur as someone who “pursues an opportunity regardless of the resources they control” which fits the proactive personality’s definition Crant (1996) finds that proactive personality is positively associated with entrepreneurial intention and its measurement scale explain a significant amount of additional variance in entrepreneurial intention even when other variables like gender, education and having entrepreneurial parents are added in regression model

2.2 Review on “Entrepreneurial intent”

Entrepreneurship Entrepreneurship can be defined as the transformation of

innovation into a new product, service, or business in order to take advantage

of market opportunity (McGuire, 2003, as cited in Prabhu et al., 2011) Entrepreneurship is a way of thinking that emphasizes opportunities over threats The opportunity identification process is “clearly an intentional process, and, therefore, entrepreneurial intention clearly merit our attention” (Krueger et al., 2000, p.411) Moreover, they also point out that “much of human behavior is planned” and a nascent firm is not simply launched as a conditioned response to a stimulus In favor of this, Alfonso and Cuevas (2012) state that intention to start a firm can precede any attempt in entrepreneurial behavior and it is influenced by different factors; thus, “it is assumed that we can manage these elements in order to affect the entrepreneurial intent in a positive way, and, indirectly, over the venture creation and entrepreneurial behavior in a given territory, as well as over the economic growth at the same time” (p.722)

Conceptions of Individual Entrepreneurial Intent According to Thompson

(2009), although the “intentionality” of would-be entrepreneurs has long been stressed as an important variable in understanding the formation of new business ventures, the term “entrepreneurial intent” has been closely used as some concepts such as career orientation, vocational aspirations, nascent entrepreneurs, outlook on self-employment, and the desire to own a business Hence, the need to clarify the concept of individual entrepreneurial intent is required Firstly, he argues that the intent to own a business or to be self-employed are quite different from entrepreneurially setting up a new firm, e.g

an individual can own a firm by simply buying an existing firm and then retain or put in place managers to run it without undertaking any activities associated with entrepreneurship, or by buying a franchise or right to sell Secondly, he distinguishes the term “nascent entrepreneurs” from

“entrepreneurial intent” “Nascent entrepreneurs” is often referred to

“individual whose conscious intention to set up a business has progressed from an early stage of initial interest and formative plans onto a relative advanced stage at which concrete actions are being undertaken to effect the reasonably imminent possible birth of a new firm” (p 674) He also cited other studies which refer nascent entrepreneurs to those who show interest in starting a firm but may not have yet reached a “relatively advanced stage at which concrete action are being undertaken to affect the reasonably imminent possible birth of a new firm” (p 674) Specifically, when an individual involves in a process of many stages, in which first stage is being conscious of intending to become an entrepreneur and last stage is “a period of setting up and operating a new firm, such as creating a legal structure, hiring personnel,

or renting space are undertaken” (p.675) – the individual can be termed as a nascent entrepreneur Thirdly, he stated that entrepreneurial intent differentiates from entrepreneurial disposition or personality Individuals with entrepreneurial intent have given some degree of conscious consideration to the possibility of starting a new business at some stage in the future and they have not rejected such a possibility; meanwhile, those with just an

entrepreneurial disposition may either possess any consciousness of a possible startup or even reject such possibility when it comes In light of the above findings, this study supports the concept of individual with entrepreneurial intent is the one who meets three criteria cited in Thompson (2009)’s study

Definition of Individual Entrepreneurial Intent Following on the above

discussion, Thompson (2009) defines the construct as a self-acknowledged conviction of a person who possesses intent to start a business venture and consciously plan to do so at some point in the future, they even not actually set up a new business due to unpredictable circumstances In case those individuals undertake some advanced actions to go further on the process of setting up new firms, they may advance to being nascent entrepreneurs; and entrepreneurial intent becomes a necessary condition for a nascent entrepreneur while the vice versa is not true Prabhu et al (2011) are in the same page with the above idea when stating that individuals with entrepreneurial intent process much more readily than people without any intent to start a new business Individual’s actual behavior may differ from intended one, the intent to act toward a planned behavior can predict actual; meanwhile, “entrepreneurial intent refers to the intention of an individual to start a new business” (Engle et al., 2008, p 38) However, the above definition seems to be right, but not enough when applying in Vietnam market because entrepreneurs in this developing market is a diversified community founded from many classes, and is different from developed countries, which the definition of “entrepreneurial intent” comes from Do (2009) stated that entrepreneurs in Vietnam can be identified by three criteria: (1) their activities and behaviors aim at earning profit by delivering products or services to market; (2) they possess conditions to run their own business and appropriately psychological characteristics to the business (time, capital, material, point of view, knowledge and skills, etc., i.e they meet the standard

of entrepreneur characteristics; (3) their own business is the main income, i.e

it can secure both their life and their family’s life and create a chance for their development (My translate)

Definition of “Individual entrepreneurial intent” applied in the study In

this paper, individual with “entrepreneurial intent” is defined as who wishes to start a business venture and consciously plan to do so at some point in the future, they even not actually set up a new business due to unpredictable circumstances - the new business should meet the three criteria stated above, i.e if one possesses a business with too small scale, too low-skilled manufacturing level, or even does not supply any products or services in the market, he or she should not be considered as an individual with entrepreneurial intent

2.3 Hypotheses development

Hypotheses development In the words of Ajzen when explaining the

relationship between variables in his theory of planned behaviour (1991), he stated that an individual possesses a stronger intent to perform the behaviour when the three antecedents are more favourable, and, at the same time, “the stronger the intention to engage a behavior, the more likely should be its performance” (Ajzen, 1991, p 188) Specifically, Ajzen’s theory stated that behavioral performance can be predicted from a person’s plan and intention towards the behavior Intentions are therefore:

[ .] assumed to capture the motivational factors that influence behavior; they are indications of how hard people are willing to try, of how much effort they are planning to exert, in order to perform a behavior As a general rule, the stronger the intention to engage in a behavior, the more likely should be its performance (Ajzen, 1991, p.181, as cited in Engle et al., p.38)

Attitude toward entrepreneurship In TRA, attitude is preferred as the

evaluation of an individual in performing a particular behavior; it can be either

positive or negative feeling (Fishben & Ajzen, 1975) The definition has been

considered as the most updated one in which attitude is the degree an individual feel towards a psychological object, it can be favorable or unfavorable (Ajzen & Fisben, 2000) This construct can be described as the need of being successful, i.e the effort of a person to achieve set goals Similarly, attitude toward entrepreneurship defined in this paper is the degree

of an individual feel toward entrepreneurship, it can be favorable or unfavorable Krueger et al (2000) empirically show that intentions successfully predict behavior, and attitudes successfully predict intentions (over 50.0% of the variance in intentions) Alfonso and Cuevas (2012) conclude that Latin America has quite favorable attitudes toward entrepreneurship and starting a business in those countries is a common event; and, the higher the attitudes towards entrepreneurship, the stronger the entrepreneurial intention; and consequently, the stronger the possibilities of initiating a business Another research also proves the positive relationship between attitude and entrepreneurial intent of students from three universities

in the Ukraine (Solesvik , 2012), which indicates that if they perceives doing business in a country as being difficult, unattractive, risky, or bringing low benefits, their attitude towards entrepreneurship might be negative

Krueger et al (2000) also point out that an individual’s attitudes lead to the decision to start a business long before many entrepreneurs scan for opportunities It can be explained by we “learn to favor behaviors we believe have largely desirable consequences and we form unfavorable attitudes towards behaviors we associate with mostly undesirable consequences.” (Ajzen, 1991, p 191), i.e., those entrepreneurs expect that the outcomes of the behavior will satisfy their needs and wants Following on that, Krueger et al (2000) also argue that samples of university business students with favorable attitudes toward entrepreneurship will reveal vocational preferences at a time when they face important career decisions Generally, the paper supports the hypothesis stating that the more an individual believes in the positive result of

becoming an entrepreneur, the more he/she possesses a favorable attitude toward entrepreneurship

H1: There is a positive relationship between attitudes toward entrepreneurship and entrepreneurial intention

Social norms toward entrepreneurship The second construct named social

norms or subjective norms of model refers to the likelihood that important

referent individuals or groups approve or disapprove of performing a given behavior (Krueger et al., 2000) Similarly, the construct is defined in this paper as the likelihood of important referent individuals or groups approve or disapprove an individual in setting up a new business It is related to the perception of the individuals about what family members, friends and mentors think and evaluate the behavior (Ajzen, 1991) Studies have shown mixed result regarding subjective norm as a predictor of intention Gopi and Ramayah (2007) point out some studies have shown no significant relationship between social norms and intention and some studies have shown significant relationship between them In addition to this, they also state that models using the TRA and TPB framework have shown social norms to have significant relationship with intention Engle et al (2008), in the research about entrepreneurial intent of twelve countries including Bangladesh, China, Costa Rica, Egypt, Finland, France, Germany, Ghana, Russia, Spain, Sweden and USA, they reassure “All 12 countries had social norms as a significant predictor (in Costa Rica it alone accounted for 40 percent of the variance in entrepreneurial intent)” (p.50) Hence, it can be said social norms have an effect on individuals’ intent to start own business Some people even have the intent to establish their own business when unfavorable conditions exist just because they have observed the experience of operating own businesses from their family members or friends This original construct from TRA also shows that an individual would processes the entrepreneur intent under significant social influence and social pressure, and would perform the process of establishing their own business, even though he/she is not in favor of being an

entrepreneur (Gopi & Ramayah, 2007) According to Alfonso and Cuevas (2012), this may well be the explanation for the situation in many high-income European countries where the absence of a so-called “Entrepreneurial Culture” weakens the intention of becoming an entrepreneur This is because

in those countries, existing huge red tapes and excessive protection of workers assumes a high cost of opportunity of self-employment in comparison with alternative forms This study is in favor of supporting the hypothesis in which social norms are positively associated with entrepreneur intent

H2: There is a positive relationship between social norms toward entrepreneurship and entrepreneurial intent

Perceived behavioral control toward entrepreneurship Alfonso and Cuevas

(2012) notice some studies show that even if an individual has a good attitude and favorable support from close people, the behavior cannot take place necessarily due to some factors such as opportunities and resources (money, time, skills, etc.) Ajzen (1991) also recognize the limitation of TRA model, so

he review it and add a new factor determining the intent called perceived behavioral control which “reflects the individual’s perception concerning the ability to achieve the specific result” (p.724) Thus, this new model fulfills the gap of the previous one by setting as general rule that, in the words of Ajzen,

“the more favorable the attitude and subjective norm with respect to a behavior, and the greater the perceived behavioral control, the stronger should

be an individual’s intention to perform the behavior under consideration” (Ajzen, 1991, p 181); and, at the same time, “the stronger the intention to engage a behavior, the more likely should be its performance” (Ajzen, 1991,

p 188) By other words, it is the degree to which one feels personally capable

of starting a business and appears central to intentions toward entrepreneurship (Scherer et al., 1989, as cited in Krueger and Brazeal, 1994) This construct is alternatively called self-efficacy (Byabashaija & Katono, 2011) and represents a distinctive trait distinguishing entrepreneurs from population (Krueger and Brazeal, 1994) In other word, depends on the extent

to which the individual feels capable of performing the behavior based on the appraisal of obstacles on performing behavior, i.e the/she is more likely to investigate obstacles than someone whose intention is not salient This paper

is in light of the hypothesis in which the more believable information and stronger support an individual can receive, the stronger that person believe in his/her capability on setting up a new business venture and consciously plan to

do so at some point in the future becoming an entrepreneur and will perform the action

H3: There is a positive relationship between perceived behavioral control toward entrepreneurship and entrepreneurial intent

Proactive personality Batteman and Crant (1993)’s Proactive Personality

scale identifies differences among people in the extent to which they take action to influence their environments A prototypical proactive personality is

an individual affects environmental change, specifically, they “identify opportunities and act on them, show initiative, take action, and persevere until meaningful change occurs” (Crant, 2000, p.439) As an entrepreneurial disposition, proactivity represents an interface between the potential entrepreneurial orientation and his/her view of the environment In a study of

215 presidents of small companies explores the relationship between proactive personality and entrepreneurial behavior, Becherer and Maurer (1999) indicate that a proactive personality disposition is related to entrepreneurship Specifically, a more proactive president, the more likely he/she will definitely create an organization that scans for opportunities and takes an aggressive approach to the market Analysis of variance showed that proactive presidents are more likely to start more businesses rather than buying or inheriting a one

In addition, another typical proactive personality study of Crant (1996) present data from undergraduate and MBA students demonstrating a positive

correlation between proactive personality and entrepreneurial intent (r =.48)

Proactive personality explained an additional 17% of the variance in entrepreneurial intention even after gender, education, and having

entrepreneurial parents were added to the model Taken together, these studies suggest that PP is a construct positively affecting entrepreneurial intention

H4: The extent to which people possess a proactive personality will be positively associated with entrepreneurial intent

The proposed model is developed based on the above hypothesis which

developed from Ajzen’s Theory of planned behavior (1991) and Proactive Personality construct (Batteman & Crant, 1993) applying on entrepreneurial intent

Figure 2.3 The proposed model

H1

H2

H3

H4

CHAPTER 3 RESEARCH METHODOLOGY 3.1 Research design

The first step in design of research was to identify research objective which was followed by literature review in order to gather relevant concepts of theory of planned behaviour, proactive personality and their influence on dependent variable “entrepreneurial intent”, then the proposed model was appropriately created to fit in Vietnam’s circumstances Following on that, this paper explained research methodology including collecting data method, source, measurement scale, sampling techniques and data analysis method

An understandable and effective questionnaire was based on previous studied scales and translated to Vietnamese A pilot test with the participant of 20 business students in Ho Chi Minh City which was conducted to ensure that the final questions would be well understood and attempted to predict an appropriate sample size and improve upon the study design prior to performance of a full-scale research project The pilot test was followed by a final questionnaire in both English and Vietnamese version sent to business students in local universities and foreign universities having branches in Vietnam After all responses had been collected, the data analysis process was conducted to draw the insights from collected data in order to make suitable useful recommendation for the entrepreneurial activities in Vietnam

3.2 Measurement scales

The overall objective of this study was to test the antecedents of entrepreneurial intent of business students in Vietnam, using scales adopted from Ajzen’s TPB model (attitude, social norms and perceived behavioural control) and the proactive personality construct (Batteman & Crant, 1993) Specifically, individual with “entrepreneurial intent” was defined as who wishes to start a business venture and consciously plan to do so at some point

in the future, they even not actually set up a new business due to unpredictable circumstances The construct “attitude towards becoming an entrepreneur”,

“social norms towards entrepreneurship” and “perceived behavioural control” had been worded to specifically address the entrepreneurial activity (Solesvik, 2012); the construct “proactive personality” was measured by 17-item scale developed by Batteman and Crant (1993); and the construct “entrepreneurial intent” had been adopted from scale of Engle et al (2008) With reference to each statement, personal coding and a seven-point scoring system was employed, whereby a score of 1 suggested “absolutely disagree” / “extremely low level”, 4 suggested “neutral”, and a score of 7 suggested “absolutely agree” / “extremely high level”

Construct 1- Attitude toward entrepreneurship Solesvik

A career as an entrepreneur is attractive for me

If I had the opportunity and resources, I would love to start a

business

Being an entrepreneur would give me great satisfaction

Among various options, I would rather be an entrepreneur

Construct 2 - Social norm toward entrepreneurship

SN1 My closest family members think that I should pursue a career as

members think as you decide on whether or not to pursue a

career as self-employed?

SN5 To what extent do you care about what your closest friends think

as you decide on whether or not to pursue a career as

self-employed?

Construct 3 - Perceived behavioural control toward

entrepreneurship

PB1 If I wanted to, I could easily become an entrepreneur

business

prevent me from becoming an entrepreneur (excluded)

PB4 It is entirely up to me whether or not I become an entrepreneur

Construct 4 - Individual's proactive personality Batteman

and Crant (1993)

the world

P3 I tend to let others take the initiative to start new projects

constructive change

P7 If I see something I don't like, I fix it

happen

opposition

P10 I excel at identifying opportunities

P12 If I believe in an idea, no obstacle will prevent me from making

it happen

P13 I love to challenge the status quo

P15 I am great at turning problems into opportunities

P17 If I see someone in trouble, I help in any way I can

Construct 5 - Entrepreneurial intent Engle et al

(2008)

EI3 How likely is it that you are going to start your own business

within the next five years?

Figure 3.1 Measurement scales

3.3 Sampling design

3.3.1 Population

The subjects in this study were university business students and alumni in

Vietnam, both local and transitional business universities The sampling

method would be convenient Specifically, questionnaires were collected from

students of Advanced Diploma, Bachelor, MBA and second-degree program

from University of Economics (UEH), International Business School (ISB -

UEH), ERC International Business School and Foreign Trade University The

research time frames were July and August of 2014

3.3.2 Sample size

According to Williams et al (2010), as sample size is important in factor

analysis, there are several guiding rules of thumb are cited in the literature

The minimum sample size was 100 and not less than five times of items (Hair

et al., 2010), thus:

n > 100 and n = 5k (where k is the number of items) Thus, the minimum

sample size was 5x34 = 170 samples

In addition, based on four independent factors of the conceptual model, the multiple regression analysis required sample size at least (Tabachnick & Fidell, 2007):

50 + (8xm) = 50 + (8x4) = 82 samples (Where m: is the number of independent factors of the model)

Hair et al (1998) also stated that factor loading is an important criteria in ensuring practical significant of Exploratory factor analysis (EFA) in multivariable data analysis, in which factor loading should be above 0.3 to meet the minimum value In this case, he suggested that sample size should be

at least 350

Consequently, the research aimed at the minimum sample size of 350

3.4 Sampling techniques

The research used convenience sampling technique with a sample size of 396

to explore factors affecting entrepreneurial intent of students from University

of Economics (UEH), International Business School (ISB - UEH), ERC International Business School and Foreign Trade University (FTU)

3.5 Data collection methods

The primary data of quantitative analysis was collected via questionnaires (printing version), which was physically distributed to business students in targeted universities With the purpose of generalizing the results to the whole population, a draft questionnaire was sent to 20 business students to investigate whether the measurement scale was appropriate for the research topic, i.e whether the translation or original words caused any misunderstandings or confusion to the respondents Then, all the suggestions were taken into consideration and the measurement scale and its translation were adjusted accordingly The original questionnaire and its translation version were in Appendix A

3.6 Data analysis method

3.6.3 Reliability analysis

To assess the internal consistency of the data used for the survey, Cronbach’s alpha and the item-to-total Correlation coefficients were used to reject the inappropriate items From formula for the standardized Cronbach’s alpha, it could be seen that alpha would be increased if the number of items was up and alpha would be decreased if the average inter-item correlation was down Like most of the social science researches, this paper rejected any variables with Cronbach’s alpha less than 0.6

3.6.4 Exploratory factor analysis (EFA)

After filtering data from Reliability analysis, EFA was applied to explore the inter relationship between the variables EFA represented a large number of relationship among interval-level variables in a simpler way, i.e it was

directed at understanding the relations among variables by understanding the constructs that underlie them (Leech et al., 2005)

• Barlett’s test was smaller than 0.05: indicates sufficient items for each factor

• KMO index was greater than 0.7 (the range from 0 to 1): indicates that the correlation matrix is significantly different from an identity matrix

The factor is considered to be useful when Eigenvalues (a measure of explained variance) when it is greater than 1.0 All analyses in this chapter were used an orthogonal rotation (Varimax), which showed final factors would be as uncorrelated as possible with each other As a result, we could assume that the information explained by one factor was independent of the information in the other factors

3.6.5 Multiple regression analysis

The multiple regression was used for hypothesis testing, in order to study the correlation and determine the variation in four independent variables predicted

by one dependent variable According to Leech et al (2005), the multiple regression required many assumptions but there are six major things: (1) A linear relationship between predictor variables and dependent variable, (2) Independence of residuals (errors), (3) Homoscedasticity of residuals / equal error variances, (4) No multicollinerarity, (5) No significant outliers, and (6) Residuals/ errors are normally distributed

To sum up, the chapter presented the research process, from building the measurement scale to use the measurement scale in official questionnaire to collect data It also mentioned the method to release sample size and sampling technique The data collection method was also concerned in this chapter

The descriptive statistics shown in Table 1 (Appendix B) described characteristics of sample size in which the percentage of male and female respondents was quite balanced (female respondents accounting for 58.8% of the sample while male accounted for 41.2%) The 20-24 age group marked 51.8% of the sample, which was followed by 28.3% of the 16-19 age group This could be explained by the percentage of undergraduate students in sample (84.3% of the total respondents) and of the distribution of the total occupation in sample size (68.5% is College/University students and 19.7% is white-collar worker, staff level) From that, it was not surprised when the majority of respondents (65.6%) earned less than VND5 millions/month and from VND5 millions to less than VND10 millions/month (23.5%) The percentage of respondents owning at least one business besides their main occupation covered 70.5% of the total number, meanwhile less than 38% of them agreed that their closest family members and friends also owned

businesses From that, it could be implied that the data source was healthy and well represented for the whole population because the majority of sample size was the exact target respondent, more than that, they did possess entrepreneur intent at the early stage in their life

4.2 Assessment and refinement of measurement scale

In this part of research, the measurement scales were assessed and refined by:

- Cronbach alpha to test the reliability of measurement scales

- Exploratory factor analysis (EFA) to test the validity of measurement scales

Firstly, to assess whether the items in each measurement scale form a reliable scale, Cronbach’s alpha were computed, and alpha should be above 0.70 However, it is common to have the 0.60 - 0.69 range of alpha (Leech et al., 2005) The two most useful outputs of analysing process were Corrected Item-Total Correlation and the Cronbach’s alpha if Item Deleted The items will be considered at least moderately correlated with most of the other items and make a good component of this summated scale if Corrected Item-Total Correlation was 0.40 and above, hence they should be kept for next step of analysing

Secondly, the EFA was also conducted to test the validity of the measurement scales EFA helps investigators represent a large number of relationship among interval-level variables in a simpler way, i.e it is directed at understanding the relations among variables by understanding the constructs that underlie them (Leech et al., 2005) In that, KMO greater than 0.70 indicates sufficient items for each factor, Bartlett’s Test of Sphericity should

be significant, say less than 0.50, which indicates that the correlation matrix is significantly different from an identity matrix (correlations between variables are all zero) The factor is considered to be useful when Eigenvalues (a measure of explained variance) when it is greater than 1.0 All analyses in this

chapter were used an orthogonal rotation (Varimax), which showed final factors would be as uncorrelated as possible with each other As a result, we could assume that the information explained by one factor was independent of the information in the other factors

4.2.1 Cronbach’s Alpha

In Appendix B, table 2 showed original Cronbach’s alpha while table 3 explained the reliability statistic after appropriate modifying, i.e the result of Cronbach’s alpha in table 3 was used for the next step of data analysis progress

Reliability of EI Scale The reliability of Entrepreneurial Intention scale

including three items EI1, EI2 and EI3 With Cronbach’s Alpha = 0.802 > 0.6 and Corrected Item-Total Correlation of 03 items > 0.4, it could be concluded that EI1, EI2 and EI3 made a good component of EI summated scale and should be kept for exploratory factor analysis (EFA) later

Reliability of AT scale AT scale had Cronbach’s Alpha = 0.833 > 0.6, which

was acceptable for EFA Among 05 items, although the Corrected Item-Total Correlation of AT2, AT3, AT4 and AT5 were larger than 0.4, this figure of AT1 was only 0.34 and should be omitted After omitting AT1, Cronbach’s Alpha significantly increased to 0.881, which meant that AT2, AT3, AT4 and AT5 form a more reliable scale than before and they were accepted for EFA later

Reliability of SN scale The original Cronbach’s Alpha of scale = 0.794 > 0.6

and Corrected Item-Total Correlation of all items were higher than 0.4 (Acceptable) However, SN4 and SN5 were omitted in order to enhance the reliability of SN scale As a result, table 4.6 showed the increases of all figures, especially Cronbach’s Alpha jumped to 0.826 and the remaining items were accepted for EFA later