Description
On this particular detailed criteria define a comparative study on entrepreneurial opportunity recognition.
A COMPARATIVE STUDY ON ENTREPRENEURIAL OPPORTUNITY
RECOGNITION AND THE ROLE OF EDUCATION AMONG FINNISH BUSINESS
SCHOOL STUDENTS
Malin Brännback, Åbo Akademi University, Finland*)
Jarna Heinonen, Turku School of Economics and Business Administration, Finland
Isa Hudd, Åbo Akademi University, Finland
Kaisu Paasio, Turku School of Economics and Business Administration, Finland
*), Åbo Akademi University, Henriksgatan 7, FIN-20500 Åbo, Finland, P: +358-2-
21531, F: +358-2-2154806, E- mail: [email protected]
ABSTRACT
Is entrepreneurship seen as a viable opportunity? To understand what makes people
recognize entrepreneurship as an opportunity is important for educators as well as
policymakers. Perceptions of entrepreneurship and the impact of education is studied by
identifying what factors drive perceptions of entrepreneurial intentionality, perceived
personal desirability, and perceived personal feasibility among a sample from two
Finnish business schools. Additionally, the role of education on differences in perceptions
is analyzed. Results show that there is a clear difference between how the two groups
perceive entrepreneurship. In both groups the probability of starting a firm is low, i.e.
entrepreneurship is not attractive. However, the groups who had participated in
entrepreneurship education had a clear opportunistic view whereas the other saw
entrepreneurship as a necessary last alternative. Entrepreneurial lifestyle seemed to excite
respondents in both groups, but again the excitement was generated by quite different
factors
INTRODUCTION
Finland has recently been rated the most competitive nation in the world. National
investment in R&D in 2003 was 3.4% of GDP. Yet, entrepreneurial activity is low
despite increasing efforts by policymakers to support and improve the situation for start-
up entrepreneurs. Based on the GEM data from 2003 the total entrepreneurial activity
was 6.9%. Of these, 5.8% are opportunistic and only 0.6% necessity entrepreneurs.
Previous studies have also shown a low (10%) entrepreneurial activity among Finnish
engineering students.
The measures taken by policymakers have mostly focused on helping entrepreneurs
getting started, ranging from serious and quite extensive measures by the National
Technology Agency (TEKES), the foundation of regional development centers for
supporting regional development through support for starting firms to increasing public
endorsement by policymakers that entrepreneurship is good for the economy and
something which is highly welcomed by society. Most of the measures have meant
developing financial instruments, i.e. financial support, or the lack of financial support
has been identified as the fundamental reason for low entrepreneurial activity. It is true,
that starting a firm requires money. But, whether it requires some, more or a lot of it
depends on the opportunity the entrepreneur decides to pursue. Moreover, actions have
been taken to increase the entrepreneurial skills among start-up entrepreneurs taking the
form of business plan writing courses, education on how to manage intellectual property,
etc.
However, there is one step prior to stretching out the hand and ask for funding. That is
when the would-be entrepreneur recognizes an opportunity and/or decides to become an
entrepreneur. Very little has been done to improve opportunity recognition or to generate
the spark that ignites entrepreneurial activity. This is odd, to say the least, as opportunity
recognition is the most distinctive and fundamental entrepreneurial behavior (Bird, 1988,
Katz and Gartner, 1988, Gaglio and Katz, 2001). The literature on opportunity
recognition is extensive (Kirzner, 1997, Venkataraman, 1997, Krueger, 1998, Shane,
2000, 2003, Shane and Venkatarman, 2000, Gaglio and Katz, 2001, Eckhart and Shane,
2003). However, few studies have addressed the problem of seeing entrepreneurship as
an opportunity in itself.
Entrepreneurial intentionality studies (Bird, 1988, Carsrud et al, 1987, Krueger and
Carsrud, 1993, Krueger et al, 2000) have analyzed a variety of factors impacting
intentions, drawing on Ajzen (1987) and Shapero (1982) among others. Attitudes, traits,
mentors and networks have proved to impact entrepreneurial behavior, i.e. social norm
plays a key role. Krueger (1998) argues for the necessity for individuals to perceive a
prospective new course of action as a credible opportunity, which requires the
opportunity to not just be viable, but to be perceived as viable.
We have conducted a study in two Finnish schools among under-graduate students. In A
237 questionnaires were distributed and 191 returned, i.e. 80.6% response rate. In B 74
questionnaires were distributed and 72 returned, i.e. 97% response rate. Based on the
results we will argue that in addition to recognizing an opportunity it is important for the
would-be entrepreneur to first and foremost perceive entrepreneurship as an opportunity
in it self, i.e., as an alternative employment route that also can be understood as a life-
style decision. We will argue that although society sees entrepreneurship as good both in
the form of espoused values and supporting measures for starting entrepreneurs it is
highly unlikely to lead to the actual increase of entrepreneurial activity if
entrepreneurship is not seen as an opportunity or if, for example there is a social norm
which encourages other type of behavior. Additionally, we will argue that the social norm
may fertilize the development of a misperception of who would be most suitable as an
entrepreneur, a mistaken role identity.
Our study seeks to provide insights to the following research questions: To what degree is
entrepreneurship seen as an opportunity? To what degree does education impact the
ability to regard entrepreneurship as an opportunity? Are there mental prototypes of what
being an entrepreneur entails? Does a mental model impact the students’ ability to see
entrepreneurship as an opportunity?
OPPORTUNITY RECOGNITION AND ENTREPRENEURIAL INTENT -
HYPOTHESES
Opportunity recognition as an area within entrepreneurship research has recently attracted
much attention in fact there are already a number of schools of thought (Shane, 2000).
The Equilibrium School assumes that everyone can recognize all entrepreneurial
opportunities and that whether this actually takes place is dependent on fundamental
attributes of people. In other words, it is possible to identify individuals who want to
become entrepreneurs and that these are less risk averse than those who choose to
become employees. Hence we can formulate our first hypothesis:
H1: It is possible to identify a mental prototype of who is more suitable to become an
entrepreneur
The Psychological School argues that fundamental attributes of people, rather than
information about opportunities determine who becomes an entrepreneur and this again
depends on a person’s willingness and ability to take action (Krueger et al, 2001). Much
attention within this school of thought has been given entrepreneurial intentionality
studies and it has been argued and shown that attitude towards behavior, social norm, and
perceived behavioral control influence a person’s intentions to act, although social norm
has also been shown not to have a significant impact (Ajzen, 1987, Krueger et al, 2001).
Intentions reflect critical underlying attitudes and manifest themselves in three
perception: (i) perceived personally desirable, (ii) perceived supported by social norm,
and (iii) perceived as feasible. Expected values are a prerequisite for what is perceived as
personally desirable, normative beliefs for social norm, and self- efficacy for perceived
feasibility.
H2: There is a significant relationship between perceived personal desirability and
entrepreneurial intent
H3: There is a significant relationship between perceived personal feasibility and
entrepreneurial intent
H4: Perceived supporting social norm will impact entrepreneurial intent
Moreover, studies have shown that perceived role identity impact on attitudes and
intentions towards entrepreneurship and that they can be changed significantly through
education (Fiet, 2000a, 2000b, Klofsten, 2000, Gibb, 2002). Role identity is here
understood to be influenced by the perception of the existence of a particular educational
basis and level of education that would be more suitable for an entrepreneur. It reflects
the perception who becomes an entrepreneur and who does not. Role identity also
includes the existence of role models either within the family or close friend(s).
H5: Role models in within the family will impact entrepreneurial intent
The Austrian School builds on the idea of information asymmetry as the driving force.
People cannot recognize all entrepreneurial opportunities, and that information about
opportunities will drive entrepreneurial opportunity recognition rather than a willingness
to take action (Kirzner, 1997, Shane 2000). However, the Austrian school does not
indicate what kind of information would generate a higher ability to opportunity
recognition, but it does carry the notion of more information. Finally, this school of
thought does not tie information asymmetry to success, i.e. if information is the trigger,
will it result in more successful firms.
The idea of information asymmetry as the driving force is tempting in particular with
respect to high technology entrepreneurship as it implicitly indicates that higher educated
persons would be more prone to recognize entrepreneurial opportunities. To elaborate on
that notion would mean that a country with a high proportion of the adult population
having a university degree should show a high rate of entrepreneurial activity. Thus, in
Finland, where 38,5% of the adult population aged 24-35 years having a university
degree should show a high rate of entrepreneurial activity. The reality is quite the
opposite with a total entrepreneurial activity of 6.9%, which gives a strong indication of
that there are other factors than having knowledge and skills involved, e.g. willingness to
act.
H6: There is a relationship between knowledge and skills and entrepreneurial intent
THE STUDY
The sample
The study was conducted in two Finnish business schools in the same city in the fall
2004. The questionnaire was constructed in accordance with previous studies (Krueger et
al, 2001, Autio et al, 2001). What makes this study different from others is that we target
business school students. The other interesting issue is that the two business school
represent the two official languages in Finland; in A the teaching language is Finnish and
the school recruits primarily from the Finnish speaking population; in B the teaching
language is Swedish and recruits primarily its students from the country’s 6% minority.
Thus, the students have a different linguistic background, which also means that they
have a different cultural background and they have different regional backgrounds. In this
paper we have not analyzed further these issues, but let the two schools represent proxies
for them.
Initially 313 questionnaires were distributed, 237 in A and 74 in B, a total of 2263 were
returned (total response rate 84%. Thus we had two groups:
A: 191 respondents and a response rate of 80.6%
B: 72 respondents and a response rate of 97%
Table 1: Gender distribution of the sample
Gender
1 female 2 male
Total
1 A 88 95 183 B-school
2 B 44 28 72
Total 132 123 255
The gender distribution for the total sample differs significantly (?
2
=3.510, p=.061)
(Table 1). In Table 1 the number of respondents differ (n=183) from the real sample size
as there were 8 persons who failed to indicate there gender.
Data and Measures
The dependent variables
Entrepreneurial intent: How probable is it that you will start a firm within 5 years? (scale
0-100)
Perceived personal desirability: How attractive would it be for you to start a firm? (scale
0-100)
Perceived personal feasibility: How easy would it be for you to start a firm? (scale 0-100)
The independent variables
The respondents was then given a battery of 17 statements which they were to rank on a
5-point scale.
1. I would be more independent as an entrepreneur as an employee
2. I would be constantly overworked as an entrepreneur
3. I could reach my goal in life as an entrepreneur
4. I could earn more money as an entrepreneur than if an employee
5. It requires too much money to start a firm
6. I would be less appreciated as an entrepreneur
7. Only if I don’t get a job will I become an entrepreneur
8. It would be the best way to benefit from my education
9. I’m precisely the kind of person who would become an entrepreneur
10. The lifestyle of an entrepreneur excites me
11. I know of a good market opportunity
12. I have a good business idea
13. I have skills and knowledge to become an entrepreneur
14. The example of family and relatives encourages me
15. The example of friends encourages me
16. I’d be interested to join with others as an owner/founder
17. Starting a firm is difficult for me
The role of family (parents and grand-parents, sisters) and friends were also controlled
for. Finally, the respondents were asked to indicate what educational basis and level of
education would be most suitable for becoming an entrepreneur.
The data was analyzed using step-wise regression analysis as well as the statistical
significance of the strength of association through cross-tabulation was analyzed.
RESULTS
Entrepreneurial Intent
13.5% of the total sample regards the probability to become an entrepreneur higher than
50%, but only 4.6% (18 persons) give it an 80% or higher probability. In A the
corresponding frequencies are 14.4% and 4.8% and in B 11.1% and 4.2%.
Our study confirms the results from previous studies and show that entrepreneurial intent
(R
2
=.45) is significantly dependent on perceived personal desirability (ß=.50, p=.000) and
perceived personal feasibility (ß=.26, p=.000). In a path analysis (R
2
=.52) results also
show that there are two other factors directly linked to entrepreneurial intent, with the ß-
value lower for desirability (ß=.27, p=.001) and feasibility (ß=.34, p=.000). These factors
are the lifestyle of an entrepreneur excites me (ß=.22, p=.004) and only if I don’t get a job
((ß=.13, p=.014).
There is a significant difference in perceived personal desirability (t=.015) between A
(n=191; mean 49.37) and B (n=72; mean 49.88) but not in perceived personal feasibility
(t=.071) between A (n= 191; mean 55.03) and B (n=72; mean 49.29). There is a
significant difference in perceived personal desirability (t=.006) between women (n=132;
mean 47.12) and men (n=123; mean 64.97) and in perceived personal feasibility (t=.001)
between women (n= 132; mean 48.79) and men (n=123; mean 58.04).
When analyzing the groups separately we find that for A (R
2
=.50) entrepreneurial intent
is dependent on perceived personal desirability (ß=.24, p=.016), perceived personal
feasibility (ß=.26, p=.001), I know of a market opportunity (ß=.16, p=.04), and The
lifestyle excites me (ß=.22, p=.03). For B (R
2
=.68) we find that entrepreneurial intent is
dependent on perceived personal feasibility (ß=.45, p=.000) and Only if I don’t get a job
(ß=.42, p=.000). There is no significant link between perceived personal desirability and
intent.
Hence we find a mixed support for Hypothesis 2, i.e. despite overall support we find that
this is true only for group A whereas there is no significant link between perceived
personal desirability and entrepreneurial intent in group B. However, Hypothesis 3 is
fully supported. However, as we found we when studying the relationship of the 17
statements to entrepreneurial intent (Table 2), perceived personal desirability (Table 3),
and perceived personal feasibility (Table 4) using step-wise regression analysis for the
groups together and separately, we found that the groups have quite different mental
maps of entrepreneurial intent, desirability and feasibility.
Table 2. Factors with a significant link to entrepreneurial intent
Total A B
1. Lifestyle of entrepreneur
excites me (ß=.36, p=.00)
1. Lifestyle of entrepreneur
excites me (ß=.40, p=.00)
1. Only if I don’t get a job
(ß=.51, p=.00)
2. Only if it’s easy (ß=.19,
p=.00)
2. I have a good business
idea (ß=.21, p=.01)
2. Only if it’s easy (ß=.41,
p=.00)
3. I have the skills and
knowledge (ß=.17, p=.01)
3. I have the skills and
knowledge (ß=.18, p=.03)
4. I know a market
opportunity (ß=.16, p=.01)
5. If it doesn’ t require too
much money (ß=.12, p=.05)
R
2
=.44 R
2
=.43 R
2
=.61
Table 3. Factors with a significant link to perceived personal desirability
Total A B
1. Lifestyle of entrepreneur
excites me (ß=.39, p=.00)
1. Lifestyle of entrepreneur
excites me (ß=.40, p=.00)
1. Lifestyle of entrepreneur
excites me (ß=.35, p=.00)
2. I’m precisely the type to
become an entrepreneur
(ß=.19, p=.00)
2. I have the skills and
knowledge (ß=.18, p=.03)
2. I’m precisely the type to
become an entrepreneur
(ß=.35, p=.00)
3. I have the skills and
knowledge (ß=.18, p=.00)
3. I could earn more money
as an entrepreneur (ß=.19,
p=.00)
3. Only if I don’t get a job
(ß=.23, p=.03)
4. It’s the best way to
benefit from my education
(ß=.14, p=.01)
4. I could join with others
as an owner (ß=.22, p=.03)
5. I could reach my goal in
life (ß=.15, p=.01)
R
2
=.61 R
2
=.60 R
2
=.64
Table 4. Factors with a significant link to perceived personal feasibility
Total A B
1. I have the skills and
knowledge (ß=.47, p=.00)
1. If it doesn’t require too
much money (ß=.30, p=.00)
1. I have the skills and
knowledge (ß=.34, p=.00)
2. Only if it’s easy (ß=.43,
p=.00)
2. I have the skills and
knowledge (ß=.26, p=.00)
2. If it doesn’t require too
much money (ß=.30, p=.00)
3. I would be more
independent as an
entrepreneur (ß=.20, p=.01)
3. Only if it’s easy (ß=.18,
p=.01)
4. Lifestyle of entrepreneur
excites me (ß=.19, p=.03)
4. I would be more
independent as an
entrepreneur (ß=.15, p=.02)
R
2
=.59 R
2
=.41 R
2
=.45
Entrepreneurial mental prototype
Research has for a long time tried to draw a picture of the typical entrepreneur with very
little luck. As already indicated above we see that the cognitive maps of the two groups as
to what drives entrepreneurial intent, perceived desirability, and feasibility are quite
different. A rough estimate would suggest that group A is far more opportunistic, whereas
group B sees entrepreneurship in terms of necessity. Therefore, additional analysis was
conducted by comparing the rating of the factors on a five-point scale of the 17
statements supplemented with questions concerning what kind of educational background
and level of education would be suitable for entrepreneurs.
Table 5. The factors rated with significant difference between group A and B
Statement Measures
1. As an entrepreneur I would be more independent ?
2
=30.37;p=.00
2. As an entrepreneur I could reach my goals in life ?
2
=13.34;p=.01
3. As an entrepreneur I could earn more money ?
2
=22.18;p=.00
4. Starting a firm requires too much money ?
2
=15.50;p=.00
5. As an employee I would be more appreciated than as an
entrepreneur
?
2
=17.13;p=.00
6. Only those who do not get a job become entrepreneurs ?
2
=53.00;p=.00
7. I have a good business idea ?
2
=67.42;p=.00
8. I know of a good market opportunity ?
2
=61.35;p=.00
9. I have the skill and knowledge ?
2
=11.38;p=.02
10. The example of family/relatives encourages me ?
2
=19.37;p=.00
11. The example of friends encourages me ?
2
=19.64;p=.00
12. Starting a firm is easy to me ?
2
=16.52;p=.00
Out of 17 statements 12 showed a significant (p
On this particular detailed criteria define a comparative study on entrepreneurial opportunity recognition.
A COMPARATIVE STUDY ON ENTREPRENEURIAL OPPORTUNITY
RECOGNITION AND THE ROLE OF EDUCATION AMONG FINNISH BUSINESS
SCHOOL STUDENTS
Malin Brännback, Åbo Akademi University, Finland*)
Jarna Heinonen, Turku School of Economics and Business Administration, Finland
Isa Hudd, Åbo Akademi University, Finland
Kaisu Paasio, Turku School of Economics and Business Administration, Finland
*), Åbo Akademi University, Henriksgatan 7, FIN-20500 Åbo, Finland, P: +358-2-
21531, F: +358-2-2154806, E- mail: [email protected]
ABSTRACT
Is entrepreneurship seen as a viable opportunity? To understand what makes people
recognize entrepreneurship as an opportunity is important for educators as well as
policymakers. Perceptions of entrepreneurship and the impact of education is studied by
identifying what factors drive perceptions of entrepreneurial intentionality, perceived
personal desirability, and perceived personal feasibility among a sample from two
Finnish business schools. Additionally, the role of education on differences in perceptions
is analyzed. Results show that there is a clear difference between how the two groups
perceive entrepreneurship. In both groups the probability of starting a firm is low, i.e.
entrepreneurship is not attractive. However, the groups who had participated in
entrepreneurship education had a clear opportunistic view whereas the other saw
entrepreneurship as a necessary last alternative. Entrepreneurial lifestyle seemed to excite
respondents in both groups, but again the excitement was generated by quite different
factors
INTRODUCTION
Finland has recently been rated the most competitive nation in the world. National
investment in R&D in 2003 was 3.4% of GDP. Yet, entrepreneurial activity is low
despite increasing efforts by policymakers to support and improve the situation for start-
up entrepreneurs. Based on the GEM data from 2003 the total entrepreneurial activity
was 6.9%. Of these, 5.8% are opportunistic and only 0.6% necessity entrepreneurs.
Previous studies have also shown a low (10%) entrepreneurial activity among Finnish
engineering students.
The measures taken by policymakers have mostly focused on helping entrepreneurs
getting started, ranging from serious and quite extensive measures by the National
Technology Agency (TEKES), the foundation of regional development centers for
supporting regional development through support for starting firms to increasing public
endorsement by policymakers that entrepreneurship is good for the economy and
something which is highly welcomed by society. Most of the measures have meant
developing financial instruments, i.e. financial support, or the lack of financial support
has been identified as the fundamental reason for low entrepreneurial activity. It is true,
that starting a firm requires money. But, whether it requires some, more or a lot of it
depends on the opportunity the entrepreneur decides to pursue. Moreover, actions have
been taken to increase the entrepreneurial skills among start-up entrepreneurs taking the
form of business plan writing courses, education on how to manage intellectual property,
etc.
However, there is one step prior to stretching out the hand and ask for funding. That is
when the would-be entrepreneur recognizes an opportunity and/or decides to become an
entrepreneur. Very little has been done to improve opportunity recognition or to generate
the spark that ignites entrepreneurial activity. This is odd, to say the least, as opportunity
recognition is the most distinctive and fundamental entrepreneurial behavior (Bird, 1988,
Katz and Gartner, 1988, Gaglio and Katz, 2001). The literature on opportunity
recognition is extensive (Kirzner, 1997, Venkataraman, 1997, Krueger, 1998, Shane,
2000, 2003, Shane and Venkatarman, 2000, Gaglio and Katz, 2001, Eckhart and Shane,
2003). However, few studies have addressed the problem of seeing entrepreneurship as
an opportunity in itself.
Entrepreneurial intentionality studies (Bird, 1988, Carsrud et al, 1987, Krueger and
Carsrud, 1993, Krueger et al, 2000) have analyzed a variety of factors impacting
intentions, drawing on Ajzen (1987) and Shapero (1982) among others. Attitudes, traits,
mentors and networks have proved to impact entrepreneurial behavior, i.e. social norm
plays a key role. Krueger (1998) argues for the necessity for individuals to perceive a
prospective new course of action as a credible opportunity, which requires the
opportunity to not just be viable, but to be perceived as viable.
We have conducted a study in two Finnish schools among under-graduate students. In A
237 questionnaires were distributed and 191 returned, i.e. 80.6% response rate. In B 74
questionnaires were distributed and 72 returned, i.e. 97% response rate. Based on the
results we will argue that in addition to recognizing an opportunity it is important for the
would-be entrepreneur to first and foremost perceive entrepreneurship as an opportunity
in it self, i.e., as an alternative employment route that also can be understood as a life-
style decision. We will argue that although society sees entrepreneurship as good both in
the form of espoused values and supporting measures for starting entrepreneurs it is
highly unlikely to lead to the actual increase of entrepreneurial activity if
entrepreneurship is not seen as an opportunity or if, for example there is a social norm
which encourages other type of behavior. Additionally, we will argue that the social norm
may fertilize the development of a misperception of who would be most suitable as an
entrepreneur, a mistaken role identity.
Our study seeks to provide insights to the following research questions: To what degree is
entrepreneurship seen as an opportunity? To what degree does education impact the
ability to regard entrepreneurship as an opportunity? Are there mental prototypes of what
being an entrepreneur entails? Does a mental model impact the students’ ability to see
entrepreneurship as an opportunity?
OPPORTUNITY RECOGNITION AND ENTREPRENEURIAL INTENT -
HYPOTHESES
Opportunity recognition as an area within entrepreneurship research has recently attracted
much attention in fact there are already a number of schools of thought (Shane, 2000).
The Equilibrium School assumes that everyone can recognize all entrepreneurial
opportunities and that whether this actually takes place is dependent on fundamental
attributes of people. In other words, it is possible to identify individuals who want to
become entrepreneurs and that these are less risk averse than those who choose to
become employees. Hence we can formulate our first hypothesis:
H1: It is possible to identify a mental prototype of who is more suitable to become an
entrepreneur
The Psychological School argues that fundamental attributes of people, rather than
information about opportunities determine who becomes an entrepreneur and this again
depends on a person’s willingness and ability to take action (Krueger et al, 2001). Much
attention within this school of thought has been given entrepreneurial intentionality
studies and it has been argued and shown that attitude towards behavior, social norm, and
perceived behavioral control influence a person’s intentions to act, although social norm
has also been shown not to have a significant impact (Ajzen, 1987, Krueger et al, 2001).
Intentions reflect critical underlying attitudes and manifest themselves in three
perception: (i) perceived personally desirable, (ii) perceived supported by social norm,
and (iii) perceived as feasible. Expected values are a prerequisite for what is perceived as
personally desirable, normative beliefs for social norm, and self- efficacy for perceived
feasibility.
H2: There is a significant relationship between perceived personal desirability and
entrepreneurial intent
H3: There is a significant relationship between perceived personal feasibility and
entrepreneurial intent
H4: Perceived supporting social norm will impact entrepreneurial intent
Moreover, studies have shown that perceived role identity impact on attitudes and
intentions towards entrepreneurship and that they can be changed significantly through
education (Fiet, 2000a, 2000b, Klofsten, 2000, Gibb, 2002). Role identity is here
understood to be influenced by the perception of the existence of a particular educational
basis and level of education that would be more suitable for an entrepreneur. It reflects
the perception who becomes an entrepreneur and who does not. Role identity also
includes the existence of role models either within the family or close friend(s).
H5: Role models in within the family will impact entrepreneurial intent
The Austrian School builds on the idea of information asymmetry as the driving force.
People cannot recognize all entrepreneurial opportunities, and that information about
opportunities will drive entrepreneurial opportunity recognition rather than a willingness
to take action (Kirzner, 1997, Shane 2000). However, the Austrian school does not
indicate what kind of information would generate a higher ability to opportunity
recognition, but it does carry the notion of more information. Finally, this school of
thought does not tie information asymmetry to success, i.e. if information is the trigger,
will it result in more successful firms.
The idea of information asymmetry as the driving force is tempting in particular with
respect to high technology entrepreneurship as it implicitly indicates that higher educated
persons would be more prone to recognize entrepreneurial opportunities. To elaborate on
that notion would mean that a country with a high proportion of the adult population
having a university degree should show a high rate of entrepreneurial activity. Thus, in
Finland, where 38,5% of the adult population aged 24-35 years having a university
degree should show a high rate of entrepreneurial activity. The reality is quite the
opposite with a total entrepreneurial activity of 6.9%, which gives a strong indication of
that there are other factors than having knowledge and skills involved, e.g. willingness to
act.
H6: There is a relationship between knowledge and skills and entrepreneurial intent
THE STUDY
The sample
The study was conducted in two Finnish business schools in the same city in the fall
2004. The questionnaire was constructed in accordance with previous studies (Krueger et
al, 2001, Autio et al, 2001). What makes this study different from others is that we target
business school students. The other interesting issue is that the two business school
represent the two official languages in Finland; in A the teaching language is Finnish and
the school recruits primarily from the Finnish speaking population; in B the teaching
language is Swedish and recruits primarily its students from the country’s 6% minority.
Thus, the students have a different linguistic background, which also means that they
have a different cultural background and they have different regional backgrounds. In this
paper we have not analyzed further these issues, but let the two schools represent proxies
for them.
Initially 313 questionnaires were distributed, 237 in A and 74 in B, a total of 2263 were
returned (total response rate 84%. Thus we had two groups:
A: 191 respondents and a response rate of 80.6%
B: 72 respondents and a response rate of 97%
Table 1: Gender distribution of the sample
Gender
1 female 2 male
Total
1 A 88 95 183 B-school
2 B 44 28 72
Total 132 123 255
The gender distribution for the total sample differs significantly (?
2
=3.510, p=.061)
(Table 1). In Table 1 the number of respondents differ (n=183) from the real sample size
as there were 8 persons who failed to indicate there gender.
Data and Measures
The dependent variables
Entrepreneurial intent: How probable is it that you will start a firm within 5 years? (scale
0-100)
Perceived personal desirability: How attractive would it be for you to start a firm? (scale
0-100)
Perceived personal feasibility: How easy would it be for you to start a firm? (scale 0-100)
The independent variables
The respondents was then given a battery of 17 statements which they were to rank on a
5-point scale.
1. I would be more independent as an entrepreneur as an employee
2. I would be constantly overworked as an entrepreneur
3. I could reach my goal in life as an entrepreneur
4. I could earn more money as an entrepreneur than if an employee
5. It requires too much money to start a firm
6. I would be less appreciated as an entrepreneur
7. Only if I don’t get a job will I become an entrepreneur
8. It would be the best way to benefit from my education
9. I’m precisely the kind of person who would become an entrepreneur
10. The lifestyle of an entrepreneur excites me
11. I know of a good market opportunity
12. I have a good business idea
13. I have skills and knowledge to become an entrepreneur
14. The example of family and relatives encourages me
15. The example of friends encourages me
16. I’d be interested to join with others as an owner/founder
17. Starting a firm is difficult for me
The role of family (parents and grand-parents, sisters) and friends were also controlled
for. Finally, the respondents were asked to indicate what educational basis and level of
education would be most suitable for becoming an entrepreneur.
The data was analyzed using step-wise regression analysis as well as the statistical
significance of the strength of association through cross-tabulation was analyzed.
RESULTS
Entrepreneurial Intent
13.5% of the total sample regards the probability to become an entrepreneur higher than
50%, but only 4.6% (18 persons) give it an 80% or higher probability. In A the
corresponding frequencies are 14.4% and 4.8% and in B 11.1% and 4.2%.
Our study confirms the results from previous studies and show that entrepreneurial intent
(R
2
=.45) is significantly dependent on perceived personal desirability (ß=.50, p=.000) and
perceived personal feasibility (ß=.26, p=.000). In a path analysis (R
2
=.52) results also
show that there are two other factors directly linked to entrepreneurial intent, with the ß-
value lower for desirability (ß=.27, p=.001) and feasibility (ß=.34, p=.000). These factors
are the lifestyle of an entrepreneur excites me (ß=.22, p=.004) and only if I don’t get a job
((ß=.13, p=.014).
There is a significant difference in perceived personal desirability (t=.015) between A
(n=191; mean 49.37) and B (n=72; mean 49.88) but not in perceived personal feasibility
(t=.071) between A (n= 191; mean 55.03) and B (n=72; mean 49.29). There is a
significant difference in perceived personal desirability (t=.006) between women (n=132;
mean 47.12) and men (n=123; mean 64.97) and in perceived personal feasibility (t=.001)
between women (n= 132; mean 48.79) and men (n=123; mean 58.04).
When analyzing the groups separately we find that for A (R
2
=.50) entrepreneurial intent
is dependent on perceived personal desirability (ß=.24, p=.016), perceived personal
feasibility (ß=.26, p=.001), I know of a market opportunity (ß=.16, p=.04), and The
lifestyle excites me (ß=.22, p=.03). For B (R
2
=.68) we find that entrepreneurial intent is
dependent on perceived personal feasibility (ß=.45, p=.000) and Only if I don’t get a job
(ß=.42, p=.000). There is no significant link between perceived personal desirability and
intent.
Hence we find a mixed support for Hypothesis 2, i.e. despite overall support we find that
this is true only for group A whereas there is no significant link between perceived
personal desirability and entrepreneurial intent in group B. However, Hypothesis 3 is
fully supported. However, as we found we when studying the relationship of the 17
statements to entrepreneurial intent (Table 2), perceived personal desirability (Table 3),
and perceived personal feasibility (Table 4) using step-wise regression analysis for the
groups together and separately, we found that the groups have quite different mental
maps of entrepreneurial intent, desirability and feasibility.
Table 2. Factors with a significant link to entrepreneurial intent
Total A B
1. Lifestyle of entrepreneur
excites me (ß=.36, p=.00)
1. Lifestyle of entrepreneur
excites me (ß=.40, p=.00)
1. Only if I don’t get a job
(ß=.51, p=.00)
2. Only if it’s easy (ß=.19,
p=.00)
2. I have a good business
idea (ß=.21, p=.01)
2. Only if it’s easy (ß=.41,
p=.00)
3. I have the skills and
knowledge (ß=.17, p=.01)
3. I have the skills and
knowledge (ß=.18, p=.03)
4. I know a market
opportunity (ß=.16, p=.01)
5. If it doesn’ t require too
much money (ß=.12, p=.05)
R
2
=.44 R
2
=.43 R
2
=.61
Table 3. Factors with a significant link to perceived personal desirability
Total A B
1. Lifestyle of entrepreneur
excites me (ß=.39, p=.00)
1. Lifestyle of entrepreneur
excites me (ß=.40, p=.00)
1. Lifestyle of entrepreneur
excites me (ß=.35, p=.00)
2. I’m precisely the type to
become an entrepreneur
(ß=.19, p=.00)
2. I have the skills and
knowledge (ß=.18, p=.03)
2. I’m precisely the type to
become an entrepreneur
(ß=.35, p=.00)
3. I have the skills and
knowledge (ß=.18, p=.00)
3. I could earn more money
as an entrepreneur (ß=.19,
p=.00)
3. Only if I don’t get a job
(ß=.23, p=.03)
4. It’s the best way to
benefit from my education
(ß=.14, p=.01)
4. I could join with others
as an owner (ß=.22, p=.03)
5. I could reach my goal in
life (ß=.15, p=.01)
R
2
=.61 R
2
=.60 R
2
=.64
Table 4. Factors with a significant link to perceived personal feasibility
Total A B
1. I have the skills and
knowledge (ß=.47, p=.00)
1. If it doesn’t require too
much money (ß=.30, p=.00)
1. I have the skills and
knowledge (ß=.34, p=.00)
2. Only if it’s easy (ß=.43,
p=.00)
2. I have the skills and
knowledge (ß=.26, p=.00)
2. If it doesn’t require too
much money (ß=.30, p=.00)
3. I would be more
independent as an
entrepreneur (ß=.20, p=.01)
3. Only if it’s easy (ß=.18,
p=.01)
4. Lifestyle of entrepreneur
excites me (ß=.19, p=.03)
4. I would be more
independent as an
entrepreneur (ß=.15, p=.02)
R
2
=.59 R
2
=.41 R
2
=.45
Entrepreneurial mental prototype
Research has for a long time tried to draw a picture of the typical entrepreneur with very
little luck. As already indicated above we see that the cognitive maps of the two groups as
to what drives entrepreneurial intent, perceived desirability, and feasibility are quite
different. A rough estimate would suggest that group A is far more opportunistic, whereas
group B sees entrepreneurship in terms of necessity. Therefore, additional analysis was
conducted by comparing the rating of the factors on a five-point scale of the 17
statements supplemented with questions concerning what kind of educational background
and level of education would be suitable for entrepreneurs.
Table 5. The factors rated with significant difference between group A and B
Statement Measures
1. As an entrepreneur I would be more independent ?
2
=30.37;p=.00
2. As an entrepreneur I could reach my goals in life ?
2
=13.34;p=.01
3. As an entrepreneur I could earn more money ?
2
=22.18;p=.00
4. Starting a firm requires too much money ?
2
=15.50;p=.00
5. As an employee I would be more appreciated than as an
entrepreneur
?
2
=17.13;p=.00
6. Only those who do not get a job become entrepreneurs ?
2
=53.00;p=.00
7. I have a good business idea ?
2
=67.42;p=.00
8. I know of a good market opportunity ?
2
=61.35;p=.00
9. I have the skill and knowledge ?
2
=11.38;p=.02
10. The example of family/relatives encourages me ?
2
=19.37;p=.00
11. The example of friends encourages me ?
2
=19.64;p=.00
12. Starting a firm is easy to me ?
2
=16.52;p=.00
Out of 17 statements 12 showed a significant (p