Description
This detailed outline pertaining to new venture creation determinant factors of social muslimpreneurs.
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
ISSN: 0128-7702 © Universiti Putra Malaysia Press
SOCIAL SCIENCES & HUMANITIES
Journal homepage: http://www.pertanika.upm.edu.my/
ARTICLE INFO
Article history:
Received: 30 March 2015
Accepted: 30 June 2015
E-mail addresses:
[email protected] (Seun, A. O.),
[email protected] (Kalsom, A. W.)
* Corresponding author
New Venture Creation Determinant Factors of Social
Muslimpreneurs
Seun, A. O.* and Kalsom, A. W.
Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, 71800, Bandar Baru, Nilai,
Negeri Sembilan
ABSTRACT
This study aims to investigate new venture determinant factors of Muslimpreneurs.
Muslimpreneurs is conceptualised as capabilities of driving innovative societal change
on the principles of the al-Quran and al-Sunah not solely for proft, but above all to
beneft all of mankind. The two main research questions are, “What factors determine
new venture creation?” and “Does training moderate new venture creation?” The study
employs the hypothetical deductive approach using the multivariate regressions analysis.
Four constructs, namely, Islamic motivation, entrepreneurial capabilities, Muslimpreneur
characteristics and social capital are regressed as determinants of new venture creation
readiness. Data were gathered from Universiti Sains Islam Malaysia students across
all faculties (N=439). The results reveal that all factors are signifcantly related to new
venture creation except social capital and training does moderate the relationship. The
fndings might be helpful in developing Muslimpreneurs as the main players of Islamic
entrepreneurialism that would be the thrust of social enterprises development.
Keywords: Entrepreneurial capabilities, Muslimpreneurs, new venture creation, social capital, social
enterprise
INTRODUCTION
In the recent times social enterprise
research has received attention from
scholars due to huge benefts in relation to
societal well-being. Many businesses were
created in the past through the concept of
capitalism but not all were able to stand
the test of time after a global economic
meltdown. Hence, there is a need to look
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
18
inwards by looking at the third sector,
which is socialism. It is important for
businesses today especially in an Islamic
economy to utilise the benefts of social
enterprise in order to cater for social needs
and to reduce poverty drastically.
Social entrepreneurial activities
existed in the life time of the noble prophet
Muhammad (peace be upon him) and he
was a great mentor to entrepreneurs due
to his success in business activities. There
are many Muslims who are successful
entrepreneurs today. Islam invites all
Muslims to be innovative and active
entrepreneurs (Faizal et al. 2013b).
Unfortunately, most Muslims seem to
have lost their confdence as well as their
character and soul over time (Faizal et al.,
2013b). Most Islamic economies today are
controlled by capitalist practices (Kayed
& Hassan, 2011). Therefore, it is very
important for Islamic economies to look
back on how prospective Muslimpreneurs
can be trained to engage in ethical business
that will have direct impact on societal
welfare.
At the World Economic Forum in
2008, Bill Gates shared his view that
businesses should be created to fnd
optimum solutions for the problem of
poverty. There should be a sustainable way
to reduce poverty through proft-making.
Gates explained how businesses could
sustain their activities without exploiting
the poor. For sustainability, one needs to use
proft incentives wherever there is a proft.
If businesses aim to serve the society proft
as expected may not be realised. Hence,
there is a need to employ another business
indicator i.e. recognition. Recognition
strengthens organisational image, attracts
customers and appeals good individuals to
such organization.
It is very important to realise that
social enterprise cannot exist in isolation;
it must be run by a Muslimpreneur or a
group of Muslimpreneurs with adequate
entrepreneurial capabilities that can drive
enterprise to higher heights. While not
all social enterprise works in reality,
social enterprise with Muslimpreneurs
characteristics, Islamic motivation and
social capital, coupled with the capabilities
of the Muslimpreneurs can help to realise
the goals of enterprise.
RESEARCH OBJECTIVE
The main objectives of the study were to
examine the factors that could infuence
new venture creation and determine if
training moderates the factors that drive
readiness for new venture creation.
LITERATURE REVIEW AND
THEORETICAL FRAMEWORK
Defnitions
Despite the fact that there is no clear
defnition of social enterprise, most
defnitions are either based on social
impact direction or social surplus. Social
enterprise has been defned in recent
times as “a business operation which has
social or environmental objectives which
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
19
signifcantly modify its commercial
orientation” (Smith & Darko, 2014,
p. 3). According to Hoskins (2014) “a
social enterprise is an organisation that
uses business strategies to maximise
its social or environmental impact.” In
essence this depicts that social impact can
be maximised through innovative new
ways of operating for public beneft. This
impact can arise by employing people who
typically have more diffculty in fnding
jobs such as persons with disabilities,
beggars, newcomers or those with health
or addiction issues. Muslimpreneurs are
described as Muslim entrepreneurs (Faizal
et al., 2013a). Therefore, the concept
“social Muslimpreneurs” based on the
context of this study can be described as
the ability of Muslim entrepreneurs to
create innovative enterprise for societal
well-being.
Islamic Entrepreneurship Training
Training is believed to have a positive
impact on the moral attitude of students in
infuencing their readiness towards setting
up a social enterprise venture (Kalsom &
Seun, 2014). USIM Muslim students are
taught various kinds of knowledge on both
Islamic and conventional subjects so that
they can meet the demands of society at
large. This knowledge includes Islamic
entrepreneurship.
Training the poor may be quite diffcult
because the poor are looking for what
can sustain them daily. In other words,
empowering youth, especially students,
to set up a business venture would be a
great idea for an economy that seeks the
societal well-being of its community as
well as economic development. Therefore,
a number of policies, initiatives and
objectives should be focused on building
social enterprise through the empowerment
of youth. However, empowering youth can
change the mindset of Muslimpreneurs
regarding fair production, which is taught
by Islam. If youths are trained along the
tenet of Islamic entrepreneurship, they can,
in turn, employ others who are living in
abject poverty.This enterprise can employ
the needy in order to provide for their
social well-being.
Theoretical Framework
The theoretical framework of this study
was adopted from Faizal et al. (2013a),
Timmon (1994), Sharma et al. (1979)
and Gibbs and Ritchie (1982). Faizal et al.
(2013a) developed most of the concepts
used in this study such as Muslimpreneur
characteristics and Islamic motivation
variables. Entrepreneur capabilities was
developed by Timmon (1994) and Gibbs
and Ritchie (1982). Entrepreneurship
training and motivation were part of the
model developed by Sharma et al. (1979)
for developing Muslim countries in Asia.
The new venture creation proposed in this
study was developed from this research
base (see Fig.1).
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
20
NEW VENTURE CREATION DETERMINANT
TABLES AND FIGURES
Figure 1: Theoretical framework of the study.
Muslimpreneur
Characteristics
Education+
Taqwa+
Ethics+
Readiness for
Creating Social
Enterprise
Islamic
Entrepreneurship
Training
Islamic Motivation
Ibadah+
al-Falah+
Wealth+
Social Capital
Family Value+
Entrepreneurs’
Capabilities
Opportunity+
Ability+
Resources+
Fig.1: Theoretical framework of the study.
Source: Adapted from Faizal et. al. (2013), Gibbs and Ritchie (1982), Sharma et al. (1979) and Timmons (1994).
to Beekun (1996), Muslim scholars have
outlined various characteristics to be seen
in Muslim entrepreneurs. Some of the
characteristics are examined thus:
Taqwa. The relevance and importance
of taqwa (piety, righteousness) has been
established from the Qur’an (2:197).
Imam Ghazali et al. (n.d., p. 1) shed more
light on the meaning of this verse. Imam
Ghazali et al. (n.d.) explained that taqwa
is an abundant treasure, a precious trait, an
honourable substance and a great success,
Muslimpreneur Characteristics
Past studies indicated that the human capital
theory was usually used as a theoretical
framework for assessing entrepreneurs’
characteristics as predictors of success.
Based on this theory, entrepreneurs who
possess higher skills should be more
productive than others (Davidsson & Honig,
2003; Ucbasaran et al., 2008). Therefore,
Muslimpreneurs with higher skills and
knowledge will be much more productive
than those with lower input. According
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
21
and it assembles the best of both worlds.
These virtues are characteristics that are
expected of Muslimpreneurs in creating
social enterprise that will earn them the
reward of the world and hereafter.
Abu Darda (cited in Imam Ghazali)
states that the complete form of taqwa is to
fear Allah so much that one begins to fear
Him from a mustard seed (the potential
sin) and until one leaves what might be
halal in the fear that it could be haram.
This implies that consuming and creating
lawful products have a positive impact on
one’s closeness to almighty Allah and on
the acceptance of one’s prayer.
Education. Knowledge is very important
in Islam (Faizal et al., 2013a). The
importance of education is established in
the Qur’an 2:239.This verse suggests that
Muslimpreneurs can learn various aspects
of knowledge that they did not know before.
Knowledge of social enterprise can be
learned through entrepreneurship training.
The Holy Prophet(s) of Islam stated
that, “Seeking knowledge is incumbent
upon every Muslim, male and female.”
(Al-Majlisi Bihar al-Anwar, vol. 1. p. 177).
Every Muslimpreneur is expected to seek
knowledge that will add to the input of
society. In essence, youths can be empowered
through entrepreneurial skills and training
so that social enterprise can be established.
The short term beneft is that the needy can
be employed. The knowledge economy will
infuence economic development through
its long-term effect.
Ethics. Islam places great emphasis on the
importance of ethics and its signifcance
for the development of individuals and
society (Rahim, 2013, p. 511). Good
Muslimpreneurs may produce a good
society at large. This is explained in
the Qur’an (3:104). Building an ethical
enterprise culture in the mindset of
youths may promote economic growth
and improve the welfare of the society.
Every Islamic business should be based
on good ethics. Training Muslim students
on various business ethics can shape their
business values in the future.
Islam has laid down the guidelines for
the setting up of high moral value businesses.
Islam does not encourage unethical trade
practices such as bribery (Qur’an, 2:188);
riba (interest) (Qur’an, 2:188); fraud
(Qur’an, 3:161); stealing and robbery
(Qur’an,5:38); gambling; trade in wine and
related businesses (Qur’an, 5:90) and income
from sources of vulgarity (Qur’an, 24:19).
Based on the discussion above, the
following hypotheses were proposed:
H1a = Muslimpreneur characteristics are
positively related on readiness for
new venture creation.
H1b = Training moderates the interaction
between Muslimpreneur
characteristics and readiness for
new venture creation.
Islamic Motivation
Previous studies have explained the
importance of Islamic motivation in creating
new frms. Therefore, this study intended
to look at what motivates Muslimpreneurs
to create new ventures and how the Islamic
perspective can be adhered to.
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
22
Act of worship (ibadah). Mushtaq (2001)
suggested generosity and motivation to help
others as one of the motives of setting up a
new venture. Love of Allah makes one see
every business activity as an act of ibadah.
There are various Islamic teachings from
the Holy Qur’an that encourage Muslims
to be productive and to be close to God.
This is evidenced from the
Qur’an (62:10).This verse shows that
Muslimpreneurs must put Allah frst in all
their business activities. Allah determines
success and successful business activities.
Muslim entrepreneurs are bound by Islamic
guidelines in the exercise of their business
activities. In view of Nooh and Sabri
(2005), Muslimpreneurs possess the ability
to run business in a proper, transparent
and fair manner by staying away from all
the prohibitions as stated in the Quran and
the hadith. This is one of the uniqueness
of Muslimpreneurs compared to Western
entrepreneurs.
Al-falah motive. Al-falah can be achieved
only through a moral approach to human
affairs (Kalsom & Ahmad, 2014). Yousef
(2001) defned al-falah as the way to
achieve higher order needs by seeking
the pleasure of Allah. Rahim (2007, p. 6)
further explained the meaning of al-falah
as the desire to achieve success in the
hereafter. From this defnition al-falah
refers to the achievement motive in the
here and the hereafter.
In the study of Kalsom and Ahmad
(2014, p. 1537), the fndings show that
fve Islamic business practices i.e.Islamic
work ethics, Muslim worldview, Muslim
personal help and Muslim practices are
positively related to the entrepreneurs’ al-
falah. Al-falah would motivate and inspire
every Muslim to put every effort into
their work. Islam provides motivation on
various economic activities in order to earn
a halal living, encourages entrepreneurship
development for economic growth and
accords business a place of high esteem
(Solaiman & Yasmin, 2012).
Wealth motive. Yusuf and Amin (2007)
pointed out that the main objective of a
new frm was not only to acquire wealth,
but also to attain social optimality as
requested by the accountability and
leadership axioms of the Islamic economic
system foundational principles. Therefore,
social enterprise should be established not
just to accumulate wealth but to cater for
society at large.
Faizal et al.’s (2013b, p. 195) fndings
show that Prophet Muhammad cared
for the society and also encouraged his
followers to care for their aged parents and
the elderly. Based on the discussions above,
the following hypotheses were proposed:
H2a = Islamic motivation is positively
related on readiness for new venture
creation.
H2b = Training moderates the interaction
between Islamic motivation and
readiness for new venture creation.
Social Capital
Social capital can be defned as the norms
and networks that enable people to act
collectively (Woolcock & Narayan, 2000,
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
23
p. 3). Friends and family can infuence
an individual’s decisions related to the
emotional, social and economic. The
features of social capital have been
empirically researched in the past and
have practical implications on growth and
poverty reduction.
Furthermore, those studying
entrepreneurship realise the positive
perception of their family and friends
about being an entrepreneur, they will
be encouraged to become entrepreneurs.
Having entrepreneurial-minded friends
will also help them (Souitaris et al., 2007).
Hence, social capital has both costs as well
as benefts. Based on the discussion above,
the following hypotheses were proposed:
H3a = Social Capital is positively related
on readiness for new venture
creation.
H3b = Training moderates the interaction
between social capital and
readiness for new venture creation.
Entrepreneurial Capabilities
Entrepreneurial Capabilities can be
described as the ability to sense, select,
shape and synchronise internal and external
conditions for the exploration (recognition,
discovery and creation) and exploitation
of opportunities (Zahra, 2011). For the
purpose of this study entrepreneurial
capabilities are categorised thus:
Opportunity. Schumpeter (1993, p. 125)
describes innovative entrepreneurs as paths
to open up new territory and turn dreams
into reality. For opportunity to be turned
into business activities entrepreneurs must
be innovative in nature. New products
and technology should be typically better
than existing products. The availability
of improved products and technology
increases consumer demand. Therefore,
creative destruction stimulates economic
activities (Barringer & Ireland, 2010).
Furthermore, Islam is not against
identifying new business opportunity
through innovation. Based on the Islamic
perspective, innovative Muslimpreneurs
can be described as individuals who
have the creativity to create an idea and
generate new ways of looking at issues
and opportunities (Suherman, 2008, p. 19).
This innovative Muslimpreneur cannot
just be focused on something new but
must also have the mindset and ability to
provide added value to existing products
using the latest methods in order to meet
current market demand (Abdullah, 2013,
p. 335). Hence, to enter the market, it is
almost a necessity to know how to identify
opportunity; in addition, innovation is
crucial for survival.
Resources. Resource is meant as activities
which could be thought of as a strength
or weakness of a given frm (Wernerfelt,
1984, p. 172). According to Barney (2002,
p. 155), frm resources can be categorised
into all assets, capabilities, organisational
processes, frm attributes, information,
knowledge etc. that are controlled by a
frm that enable the frm to conceive and
implement strategies that will improve its
effciency and effectiveness.
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
24
Entrepreneurs who obtain essential
fnancial and human resources often need
to persuade others of the value or potential
of a new venture and its positive effects
(Baron, 2008, p. 333). Using few resources
to achieve greater results is an important
tool that a new venture can use to succeed
in the competitive market (Bygrave &
Timmons, 1992). Effective new ventures
can strive to control resources although
they may not necessarily own them.
Owning resources sometimes can restrict
the proft of an organisation.
According to Timmons (1994), every
new venture should strategise whether its
assets for the business, team, the business
plan or start-up or growth capital should
come frst. Successful entrepreneurs think
cash last because this brings prudence
and the discipline of leanness as they are
aware of every cash fow. This concept
of Timmons can help in creating social
enterprise without making money or proft
as the main aim.
Ability. Abilities can be acquired through
various skills and knowledge. Human
capital (HC) is generally used when
referring to a hierarchy of skills and
knowledge (Ucbasaran et al., 2008). There
are various kinds of skills that are required
by Muslimpreneurs in order to be successful
in creating new frms. There are various
skills that can be used for sustainability of
new ventures such as managerial, fnancial
and the ability to write effective business
plans and to build a team (Kalsom & Seun,
2014).
Khaliq (2004) mentioned that even
though an organisational environment for
Islamic skills and knowledge is becoming
more important daily, only a few Muslims
are pursuing accurate ways of achieving
the objectives of Islam in organisations.
Others may be able to contribute something
to his or her organisation but only work
in a non-Islamic culture, and some others
may be involved in healthy competition
between frms but with a wrong Islamic
background. Based on the discussion, the
following hypotheses were proposed:
H4a = Entrepreneurial capabilities are
positively related on readiness for
new venture creation.
H4b = Training moderates the interaction
between entrepreneurial capabilities
and readiness for new venture
creation.
MATERIALS AND METHODS
Population and Sampling Frame
The population of USIM students is
about 10,000. The sample was drawn
from this population. According to
Sekaran (2003, p. 294) the required
sample size for populations of 10,000 is
370 samples. Four hundred and thirty-nine
out of 540 questionnaires were randomly
collected to represent the sample size.
With this sample size the respondents
were adequately represented. The
research used the structured questionnaire
on undergraduate students of USIM. The
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
25
unit of analysis was individual. The time
horizon was cross sectional since the
survey only collected data at a point in
time.
Instrumentation and Method of Data
Analysis
This survey used probability sampling
techniques through the simple random
survey. The measurement of the variables
consisted of the four independent
variables, one moderating variable and the
dependent variable. Eighteen items with
a 5-point Likert-scale were used as the
variables in the questionnaire. It is reliable
if the test retest produces a Cronbach’s
alpha of higher than 0.70 (DeVellis, 2003).
Taqwa and ibadah were measured through
the use of an index. The descriptive analysis
shows the demographic characteristics
of the students. A hierarchical multiple
regression analysis was conducted to see
the relationship between the dependent
and independents and the inclusion of
a moderating variable. The regression
equations are represented thus:
Direct effect:
Y=?
0
+?
1
X
1
+?
2
X
2
+?
3
X
3
+?
4
X
4
+e [1]
Moderating effect:
Y=?
0
+?(?
1
X
1
+?
2
X
2
+?
3
X
3
+?
4
X
4
)+?
m
M+
?
j
I
i
+e [2]
?
0
=intercept; ?
1-4=
coeffcient of the
independent variables from 1 to 4;
?m=coeffcient of moderator (training);
?
j
=coeffcients of interaction effect e=error
term.
Descriptive Analysis
In this analysis, the majority of the
students were female (71.1%) within the
age range 20-25 years old and the male
students had 28.9%. About 40.9% of the
students had parents who engaged in
family businesses while the remaining
59.1% of the students’ parents engaged in
other occupational activities such as civil
servant.
Reliability and Validity
Table 1 is the result of the exploratory
factor analysis and reliability test. All of
these variables were consistent internally
with an alpha value of more than 0.70 as
the cut-off point (Nunally, 1978). All the
six constructs had a co-effcient that
exceeded the 0.8 threshold. The total
number of items used was 18 and the total
calculated variance of all the constructs
was 77.1%. The Cronbach’s alpha of
all the constructs showed a very high
factor loading of .876. This shows that
all the constructs were reliable in this
research. Factor analysis of the data was
also examined via signifcance of the
Bartlett test of sphericity while sampling
adequacy was measure using Kaiser-
Meyer-Olkin (KMO). Both tests resulted
in a good outcome. The Bartlett test of
sphericity was signifcant at p<0.00,
c
2
(N=439). The KMO with a value of
0.868 was above the adequate sampling
value of 0.6 (Tabachnick & Fidell,
2007).
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
26
TABLE 1
Results of the Exploratory Factor Analysis and Reliability Scores
Factors Number
of items
Mean Cronbach’s
Alpha score of
factors
Entrepreneurial
Capabilities
3 3.2032 .856 Kaiser-Meyer-Olkin Measure of
Sampling Adequacy=.868
Entrepreneurship
Training
4 3.8105 .870 Bartlett’s Test of Sphericity Approx.
Chi-Square=1728.083
Sig.=.000
Readiness 4 3.4287 .861
Muslimpreneur
Characteristics
3 3.5342 .865
Islamic Motivation 3 3.6096 .867
Social Capital 1 3.8581 .862
Total Number of Items 18
Total Calculated
Variance
77.113 Total Cronbach’s
Alpha
.876
standardised residual and with a skewedness
of -0.086(S.E=0.0117) and a Kurtosis
value of 0.044(S.E=0.233) for studentised
residual (Crammer, 1998; Crammer &
Howith, 2004; Doane & Steward, 2011).
The box plot suggested that symmetry in
the distribution was not unreasonable.
The P-P plot showed that there was no
mark or deviation from a straight line
that is consistent with expectations since
the sample size was drawn from a normal
population.
The Pearson correlation coeffcients
showed normality and linearity (Bryman &
Cramer, 2001). Table 2 presents a Pearson
correlation matrix of the independent
constructs. All the correlations are less
than 0.01 level of signifcance. A Shapiro-
Wilk’s test (p>0.05) (Shapiro & Wilk,
1965; Razali & Wah, 2011) showed that
the data were normally distributed for
both standardised and studentised with a
skewedness of -0.073(S.E=0.117) and a
Kurtosis value of -0.064(S.E=.233) for
TABLE 2
Pearson Correlation Matrix of Independent Variables
(X1) (X2) (X3) (X4)
Social Capital (X1)
1 .396
**
.341
**
-.034
.000 .000 .475
Muslimpreneur Characteristics (X2)
1 .361
**
.059
.000 .222
Islamic Motivation (X3)
1 -.026
.594
Entrepreneurial Capabilities (X4)
1
**Correlation is signifcant at the 0.01 level (2-tailed)
*Correlation is signifcant at the 0.05 level (2-tailed)
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
27
RESULTS AND DISCUSSION
In Table 3, all the items used such as Ethics
(t=2.052, sig=.041), Al-falah (t=3.912,
sig=.000), family value (t=2.046,
sig=.041), opportunity (t=4.126, sig=.000)
and resources (t=1.996, sig=.047) were
signifcant and supported at 5% and 10%
level of signifcance, while Education
(t=1.593, sig.=.112), Taqwa (t=1.599,
sig.=.111), Ibadah (t=1.043, sig=.297),
Wealth (t=1.154, sig=.249) and Ability
(t=1.275, sig=.203) were not signifcant.
NEW VENTURE CREATION DETERMINANT
Figure 2: Normal P-P plot and box plot of Regression Standardized Residual.
Fig.2: Normal P-P plot and box plot of Regression Standardized Residual.
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
28
TABLE 3
Multiple Regression Analysis of Readiness for New Venture Creation
Model
R=.679R-
Square=.461
Adjusted R
Square=.448
F=36.449
Sig.=0.000
b
Unstandardised
Coeffcients
T Sig. Collinearity
Statistics
B Std. Error Tolerance VIF Decision rule
1 (Constant) .169 .209 .809 .419
Education .041 .026 1.593 .112 .979 1.022 Not supported
Taqwa .056 .035 1.599 .111 .765 1.307 Not supported
Ethics .080 .039 2.052 .041** .634 1.578 Supported
al-Falah .170 .043 3.912 .000** .542 1.847 Supported
Ibadah .038 .036 1.043 .297 .569 1.759 Not supported
Wealth .040 .034 1.154 .249 .789 1.268 Not supported
Family Value .095 .046 2.046 .041** .398 2.513 Supported
Opportunity .299 .072 4.126 .000** .300 3.330 Supported
Resources .083 .042 1.996 .047** .809 1.235 Supported
Ability .041 .032 1.275 .203 .736 1.359 Not supported
In Table 4, the fndings depict that there
was positive relationship between readiness
for creating social enterprise and the four
independent variables. Considering the
assumption of no multicollinearity, Menard
(1995) suggested that a tolerance level less
than 0.1 indicates a serious collinearity
problem. Also, a VIF value greater than
10 is a cause for concern. For this model,
observed VIF values that ranged from
1.009 to 1.652 and the Tolerance value
were all well above 0.6, hence the values
were free from a multicollinearity problem.
The direct effect regression is shown thus:
Y= 1.046+.284X
1
+.204X
2
+.173X
3
+.035X
4
+.167 [1]
The fndings supported hypotheses H
1
a,
H
2
a and H
3
a but not H
4
a. “Social capital”
(t=8.141, Sig.=0.000), “Muslimpreneur
characteristics” (t=5.506, Sig.=.000)
and “Islamic motivation” (t=5.436,
Sig=.000) were found to be signifcant
towards readiness on new venture creation
(p<0.05, p<0.01) while “Entrepreneurial
capability”(t=1.312, Sig.=.190) was the
only independent variable that was not
signifcant at the earlier stage.
After the introduction of
entrepreneurship training as a moderator
in the model, the signifcance level of all
the variables changed. “Social capital”
(t=7.158, Sig.=.000), “Islamic motivation”
(t=5.763, Sig=.000), “Muslimpreneurs
characteristics” (t=3.579, Sig.=.000),
Entrepreneurship training (t=3.498,
Sig=.000) and Entrepreneurial capabilities
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
29
(t=1.883, Sig.=.060) were found to be
signifcant for new venture creation (p<0.05,
p<0.10). The interaction effects were all
signifcant and supported except for social
capital interaction. The R-square indicated
approximately only 38.2%. This improved
to 46.1% after the training and explained the
variance of readiness for new venture creation.
The results showed that the predictive value
of the moderator had a signifcant t-test on
the four constructs. The general form of the
equation is represented thus:
Y= .719+.248X
1
+.137X
2
+.11X
3
+ .050X
4
+.160M+.011I
11
+.092I
12
+.120I
13
+.08
6I
14
+.200 [2]
The fndings support all the hypotheses
H
1
b, H
2
b, H
3
b H
4
b at 0.1 level of signifcance;
however, interaction effect of social capital
was not signifcant at both 0.05 and 0.1
level of signifcance. Since the moderator
was signifcant, therefore there was partial
moderation of entrepreneurship training on
readiness to create social enterprise.
TABLE 4
Hierarchical Regression Model
Model Unstandardised
Coeffcients
T Sig. Collinearity
Statistics
B Std.
Error
Tolerance VIF Decision Rule
1 (Constant) 1.046 .167 6.273 .000
Entrepreneurial
Capabilities (X4)
.035 .027 1.312 .190 .991 1.009 Not
Supported
Muslimpreneur
Characteristics (X2)
.204 .037 5.506 .000** .780 1.282 Supported
Islamic Motivation (X3) .173 .032 5.436 .000** .824 1.214 Supported
Social Capital (X1) .284 .035 8.141 .000** .797 1.254 Supported
R=.618 R Square=.382 Adjusted R Square=.377 F=67.043 Sig.(F)=.000
2 (Constant) .719 .200 3.601 .000
Entrepreneurial
Capabilities
.050 .026 1.883 .060* .971 1.030 Supported
Muslimpreneur
Characteristics
.137 .038 3.579 .000** .684 1.463 Supported
Islamic Motivation .181 .031 5.763 .000** .790 1.266 Supported
Social Capital .248 .035 7.158 .000** .750 1.333 Supported
X4_Training (I
14
) .086 .042 2.032 .043** .948 1.055 Supported
X2_Training (I
12
) .092 .044 2.115 .035** .618 1.617 Supported
X1_Training (I
11
) .011 .045 .245 .806 .605 1.652 Not Supported
X3_Training (I
13
) .120 .043 2.781 .006** .795 1.257 Supported
Training .160 .046 3.498 .001** .702 1.425 Supported
R=.656 R Square=.430 Adjusted R Square=.418 F=35.842 Sig.(F)=.000
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
30
CONCLUSION
The purpose of this study was to ascertain
the determinant factors that can prompt
readiness for new venture creation and
to determine if training moderates new
venture creation. Using readiness for
new venture creation as the dependent
variable, the fndings showed that the four
independent variables, moderating variable
and their interaction effects were positively
related to readiness of Muslim students to
create new ventures.
This model has shown that
entrepreneurship training can moderate
readiness for new venture creation. From
the model above the fndings revealed that
the determinant factors that could infuence
new venture creation were Islamic
motivation, entrepreneurial capabilities,
Muslimpreneur characteristics and social
capital. Islamic motivation, entrepreneurial
capabilities and Muslimpreneur
characteristics were all signifcant and
supported and therefore, can be moderated
through training.
Social capital on the other hand,
showed that there was direct relationship
between social ties on readiness for
creating new ventures. Unfortunately,
training does not moderate social
capital. Even after engaging in various
entrepreneurship training, parents can
still infuence their children’s decisions
on their readiness to invest in new venture
creation. Most parents worry their children
will “fall in with the wrong decision” and
that peer pressure and a strong desire for
acceptance affect their success in creating
new frms while others will fully support
their children due to their experience in
family business. Hence, social ties can be
both a blessing and a blight and this may
have greater implication on the career of a
graduate Muslimpreneur.
In addition, given the nature of the
model in this study, it would be appropriate
to conduct qualitative research so that an
open-ended questionnaire and interview
can be performed on the components of
Islamic social enterprise.
In conclusion, youth should fear
Allah and aim to achieve more success for
the hereafter through business creation.
Muslimpreneurs should identify ethical
business opportunity, utilise available
resources, improve their knowledge and
seek Allah blessings for the success of
their business and to have greater impact
on society.
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doc_316679903.pdf
This detailed outline pertaining to new venture creation determinant factors of social muslimpreneurs.
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
ISSN: 0128-7702 © Universiti Putra Malaysia Press
SOCIAL SCIENCES & HUMANITIES
Journal homepage: http://www.pertanika.upm.edu.my/
ARTICLE INFO
Article history:
Received: 30 March 2015
Accepted: 30 June 2015
E-mail addresses:
[email protected] (Seun, A. O.),
[email protected] (Kalsom, A. W.)
* Corresponding author
New Venture Creation Determinant Factors of Social
Muslimpreneurs
Seun, A. O.* and Kalsom, A. W.
Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, 71800, Bandar Baru, Nilai,
Negeri Sembilan
ABSTRACT
This study aims to investigate new venture determinant factors of Muslimpreneurs.
Muslimpreneurs is conceptualised as capabilities of driving innovative societal change
on the principles of the al-Quran and al-Sunah not solely for proft, but above all to
beneft all of mankind. The two main research questions are, “What factors determine
new venture creation?” and “Does training moderate new venture creation?” The study
employs the hypothetical deductive approach using the multivariate regressions analysis.
Four constructs, namely, Islamic motivation, entrepreneurial capabilities, Muslimpreneur
characteristics and social capital are regressed as determinants of new venture creation
readiness. Data were gathered from Universiti Sains Islam Malaysia students across
all faculties (N=439). The results reveal that all factors are signifcantly related to new
venture creation except social capital and training does moderate the relationship. The
fndings might be helpful in developing Muslimpreneurs as the main players of Islamic
entrepreneurialism that would be the thrust of social enterprises development.
Keywords: Entrepreneurial capabilities, Muslimpreneurs, new venture creation, social capital, social
enterprise
INTRODUCTION
In the recent times social enterprise
research has received attention from
scholars due to huge benefts in relation to
societal well-being. Many businesses were
created in the past through the concept of
capitalism but not all were able to stand
the test of time after a global economic
meltdown. Hence, there is a need to look
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
18
inwards by looking at the third sector,
which is socialism. It is important for
businesses today especially in an Islamic
economy to utilise the benefts of social
enterprise in order to cater for social needs
and to reduce poverty drastically.
Social entrepreneurial activities
existed in the life time of the noble prophet
Muhammad (peace be upon him) and he
was a great mentor to entrepreneurs due
to his success in business activities. There
are many Muslims who are successful
entrepreneurs today. Islam invites all
Muslims to be innovative and active
entrepreneurs (Faizal et al. 2013b).
Unfortunately, most Muslims seem to
have lost their confdence as well as their
character and soul over time (Faizal et al.,
2013b). Most Islamic economies today are
controlled by capitalist practices (Kayed
& Hassan, 2011). Therefore, it is very
important for Islamic economies to look
back on how prospective Muslimpreneurs
can be trained to engage in ethical business
that will have direct impact on societal
welfare.
At the World Economic Forum in
2008, Bill Gates shared his view that
businesses should be created to fnd
optimum solutions for the problem of
poverty. There should be a sustainable way
to reduce poverty through proft-making.
Gates explained how businesses could
sustain their activities without exploiting
the poor. For sustainability, one needs to use
proft incentives wherever there is a proft.
If businesses aim to serve the society proft
as expected may not be realised. Hence,
there is a need to employ another business
indicator i.e. recognition. Recognition
strengthens organisational image, attracts
customers and appeals good individuals to
such organization.
It is very important to realise that
social enterprise cannot exist in isolation;
it must be run by a Muslimpreneur or a
group of Muslimpreneurs with adequate
entrepreneurial capabilities that can drive
enterprise to higher heights. While not
all social enterprise works in reality,
social enterprise with Muslimpreneurs
characteristics, Islamic motivation and
social capital, coupled with the capabilities
of the Muslimpreneurs can help to realise
the goals of enterprise.
RESEARCH OBJECTIVE
The main objectives of the study were to
examine the factors that could infuence
new venture creation and determine if
training moderates the factors that drive
readiness for new venture creation.
LITERATURE REVIEW AND
THEORETICAL FRAMEWORK
Defnitions
Despite the fact that there is no clear
defnition of social enterprise, most
defnitions are either based on social
impact direction or social surplus. Social
enterprise has been defned in recent
times as “a business operation which has
social or environmental objectives which
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
19
signifcantly modify its commercial
orientation” (Smith & Darko, 2014,
p. 3). According to Hoskins (2014) “a
social enterprise is an organisation that
uses business strategies to maximise
its social or environmental impact.” In
essence this depicts that social impact can
be maximised through innovative new
ways of operating for public beneft. This
impact can arise by employing people who
typically have more diffculty in fnding
jobs such as persons with disabilities,
beggars, newcomers or those with health
or addiction issues. Muslimpreneurs are
described as Muslim entrepreneurs (Faizal
et al., 2013a). Therefore, the concept
“social Muslimpreneurs” based on the
context of this study can be described as
the ability of Muslim entrepreneurs to
create innovative enterprise for societal
well-being.
Islamic Entrepreneurship Training
Training is believed to have a positive
impact on the moral attitude of students in
infuencing their readiness towards setting
up a social enterprise venture (Kalsom &
Seun, 2014). USIM Muslim students are
taught various kinds of knowledge on both
Islamic and conventional subjects so that
they can meet the demands of society at
large. This knowledge includes Islamic
entrepreneurship.
Training the poor may be quite diffcult
because the poor are looking for what
can sustain them daily. In other words,
empowering youth, especially students,
to set up a business venture would be a
great idea for an economy that seeks the
societal well-being of its community as
well as economic development. Therefore,
a number of policies, initiatives and
objectives should be focused on building
social enterprise through the empowerment
of youth. However, empowering youth can
change the mindset of Muslimpreneurs
regarding fair production, which is taught
by Islam. If youths are trained along the
tenet of Islamic entrepreneurship, they can,
in turn, employ others who are living in
abject poverty.This enterprise can employ
the needy in order to provide for their
social well-being.
Theoretical Framework
The theoretical framework of this study
was adopted from Faizal et al. (2013a),
Timmon (1994), Sharma et al. (1979)
and Gibbs and Ritchie (1982). Faizal et al.
(2013a) developed most of the concepts
used in this study such as Muslimpreneur
characteristics and Islamic motivation
variables. Entrepreneur capabilities was
developed by Timmon (1994) and Gibbs
and Ritchie (1982). Entrepreneurship
training and motivation were part of the
model developed by Sharma et al. (1979)
for developing Muslim countries in Asia.
The new venture creation proposed in this
study was developed from this research
base (see Fig.1).
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
20
NEW VENTURE CREATION DETERMINANT
TABLES AND FIGURES
Figure 1: Theoretical framework of the study.
Muslimpreneur
Characteristics
Education+
Taqwa+
Ethics+
Readiness for
Creating Social
Enterprise
Islamic
Entrepreneurship
Training
Islamic Motivation
Ibadah+
al-Falah+
Wealth+
Social Capital
Family Value+
Entrepreneurs’
Capabilities
Opportunity+
Ability+
Resources+
Fig.1: Theoretical framework of the study.
Source: Adapted from Faizal et. al. (2013), Gibbs and Ritchie (1982), Sharma et al. (1979) and Timmons (1994).
to Beekun (1996), Muslim scholars have
outlined various characteristics to be seen
in Muslim entrepreneurs. Some of the
characteristics are examined thus:
Taqwa. The relevance and importance
of taqwa (piety, righteousness) has been
established from the Qur’an (2:197).
Imam Ghazali et al. (n.d., p. 1) shed more
light on the meaning of this verse. Imam
Ghazali et al. (n.d.) explained that taqwa
is an abundant treasure, a precious trait, an
honourable substance and a great success,
Muslimpreneur Characteristics
Past studies indicated that the human capital
theory was usually used as a theoretical
framework for assessing entrepreneurs’
characteristics as predictors of success.
Based on this theory, entrepreneurs who
possess higher skills should be more
productive than others (Davidsson & Honig,
2003; Ucbasaran et al., 2008). Therefore,
Muslimpreneurs with higher skills and
knowledge will be much more productive
than those with lower input. According
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
21
and it assembles the best of both worlds.
These virtues are characteristics that are
expected of Muslimpreneurs in creating
social enterprise that will earn them the
reward of the world and hereafter.
Abu Darda (cited in Imam Ghazali)
states that the complete form of taqwa is to
fear Allah so much that one begins to fear
Him from a mustard seed (the potential
sin) and until one leaves what might be
halal in the fear that it could be haram.
This implies that consuming and creating
lawful products have a positive impact on
one’s closeness to almighty Allah and on
the acceptance of one’s prayer.
Education. Knowledge is very important
in Islam (Faizal et al., 2013a). The
importance of education is established in
the Qur’an 2:239.This verse suggests that
Muslimpreneurs can learn various aspects
of knowledge that they did not know before.
Knowledge of social enterprise can be
learned through entrepreneurship training.
The Holy Prophet(s) of Islam stated
that, “Seeking knowledge is incumbent
upon every Muslim, male and female.”
(Al-Majlisi Bihar al-Anwar, vol. 1. p. 177).
Every Muslimpreneur is expected to seek
knowledge that will add to the input of
society. In essence, youths can be empowered
through entrepreneurial skills and training
so that social enterprise can be established.
The short term beneft is that the needy can
be employed. The knowledge economy will
infuence economic development through
its long-term effect.
Ethics. Islam places great emphasis on the
importance of ethics and its signifcance
for the development of individuals and
society (Rahim, 2013, p. 511). Good
Muslimpreneurs may produce a good
society at large. This is explained in
the Qur’an (3:104). Building an ethical
enterprise culture in the mindset of
youths may promote economic growth
and improve the welfare of the society.
Every Islamic business should be based
on good ethics. Training Muslim students
on various business ethics can shape their
business values in the future.
Islam has laid down the guidelines for
the setting up of high moral value businesses.
Islam does not encourage unethical trade
practices such as bribery (Qur’an, 2:188);
riba (interest) (Qur’an, 2:188); fraud
(Qur’an, 3:161); stealing and robbery
(Qur’an,5:38); gambling; trade in wine and
related businesses (Qur’an, 5:90) and income
from sources of vulgarity (Qur’an, 24:19).
Based on the discussion above, the
following hypotheses were proposed:
H1a = Muslimpreneur characteristics are
positively related on readiness for
new venture creation.
H1b = Training moderates the interaction
between Muslimpreneur
characteristics and readiness for
new venture creation.
Islamic Motivation
Previous studies have explained the
importance of Islamic motivation in creating
new frms. Therefore, this study intended
to look at what motivates Muslimpreneurs
to create new ventures and how the Islamic
perspective can be adhered to.
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
22
Act of worship (ibadah). Mushtaq (2001)
suggested generosity and motivation to help
others as one of the motives of setting up a
new venture. Love of Allah makes one see
every business activity as an act of ibadah.
There are various Islamic teachings from
the Holy Qur’an that encourage Muslims
to be productive and to be close to God.
This is evidenced from the
Qur’an (62:10).This verse shows that
Muslimpreneurs must put Allah frst in all
their business activities. Allah determines
success and successful business activities.
Muslim entrepreneurs are bound by Islamic
guidelines in the exercise of their business
activities. In view of Nooh and Sabri
(2005), Muslimpreneurs possess the ability
to run business in a proper, transparent
and fair manner by staying away from all
the prohibitions as stated in the Quran and
the hadith. This is one of the uniqueness
of Muslimpreneurs compared to Western
entrepreneurs.
Al-falah motive. Al-falah can be achieved
only through a moral approach to human
affairs (Kalsom & Ahmad, 2014). Yousef
(2001) defned al-falah as the way to
achieve higher order needs by seeking
the pleasure of Allah. Rahim (2007, p. 6)
further explained the meaning of al-falah
as the desire to achieve success in the
hereafter. From this defnition al-falah
refers to the achievement motive in the
here and the hereafter.
In the study of Kalsom and Ahmad
(2014, p. 1537), the fndings show that
fve Islamic business practices i.e.Islamic
work ethics, Muslim worldview, Muslim
personal help and Muslim practices are
positively related to the entrepreneurs’ al-
falah. Al-falah would motivate and inspire
every Muslim to put every effort into
their work. Islam provides motivation on
various economic activities in order to earn
a halal living, encourages entrepreneurship
development for economic growth and
accords business a place of high esteem
(Solaiman & Yasmin, 2012).
Wealth motive. Yusuf and Amin (2007)
pointed out that the main objective of a
new frm was not only to acquire wealth,
but also to attain social optimality as
requested by the accountability and
leadership axioms of the Islamic economic
system foundational principles. Therefore,
social enterprise should be established not
just to accumulate wealth but to cater for
society at large.
Faizal et al.’s (2013b, p. 195) fndings
show that Prophet Muhammad cared
for the society and also encouraged his
followers to care for their aged parents and
the elderly. Based on the discussions above,
the following hypotheses were proposed:
H2a = Islamic motivation is positively
related on readiness for new venture
creation.
H2b = Training moderates the interaction
between Islamic motivation and
readiness for new venture creation.
Social Capital
Social capital can be defned as the norms
and networks that enable people to act
collectively (Woolcock & Narayan, 2000,
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
23
p. 3). Friends and family can infuence
an individual’s decisions related to the
emotional, social and economic. The
features of social capital have been
empirically researched in the past and
have practical implications on growth and
poverty reduction.
Furthermore, those studying
entrepreneurship realise the positive
perception of their family and friends
about being an entrepreneur, they will
be encouraged to become entrepreneurs.
Having entrepreneurial-minded friends
will also help them (Souitaris et al., 2007).
Hence, social capital has both costs as well
as benefts. Based on the discussion above,
the following hypotheses were proposed:
H3a = Social Capital is positively related
on readiness for new venture
creation.
H3b = Training moderates the interaction
between social capital and
readiness for new venture creation.
Entrepreneurial Capabilities
Entrepreneurial Capabilities can be
described as the ability to sense, select,
shape and synchronise internal and external
conditions for the exploration (recognition,
discovery and creation) and exploitation
of opportunities (Zahra, 2011). For the
purpose of this study entrepreneurial
capabilities are categorised thus:
Opportunity. Schumpeter (1993, p. 125)
describes innovative entrepreneurs as paths
to open up new territory and turn dreams
into reality. For opportunity to be turned
into business activities entrepreneurs must
be innovative in nature. New products
and technology should be typically better
than existing products. The availability
of improved products and technology
increases consumer demand. Therefore,
creative destruction stimulates economic
activities (Barringer & Ireland, 2010).
Furthermore, Islam is not against
identifying new business opportunity
through innovation. Based on the Islamic
perspective, innovative Muslimpreneurs
can be described as individuals who
have the creativity to create an idea and
generate new ways of looking at issues
and opportunities (Suherman, 2008, p. 19).
This innovative Muslimpreneur cannot
just be focused on something new but
must also have the mindset and ability to
provide added value to existing products
using the latest methods in order to meet
current market demand (Abdullah, 2013,
p. 335). Hence, to enter the market, it is
almost a necessity to know how to identify
opportunity; in addition, innovation is
crucial for survival.
Resources. Resource is meant as activities
which could be thought of as a strength
or weakness of a given frm (Wernerfelt,
1984, p. 172). According to Barney (2002,
p. 155), frm resources can be categorised
into all assets, capabilities, organisational
processes, frm attributes, information,
knowledge etc. that are controlled by a
frm that enable the frm to conceive and
implement strategies that will improve its
effciency and effectiveness.
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
24
Entrepreneurs who obtain essential
fnancial and human resources often need
to persuade others of the value or potential
of a new venture and its positive effects
(Baron, 2008, p. 333). Using few resources
to achieve greater results is an important
tool that a new venture can use to succeed
in the competitive market (Bygrave &
Timmons, 1992). Effective new ventures
can strive to control resources although
they may not necessarily own them.
Owning resources sometimes can restrict
the proft of an organisation.
According to Timmons (1994), every
new venture should strategise whether its
assets for the business, team, the business
plan or start-up or growth capital should
come frst. Successful entrepreneurs think
cash last because this brings prudence
and the discipline of leanness as they are
aware of every cash fow. This concept
of Timmons can help in creating social
enterprise without making money or proft
as the main aim.
Ability. Abilities can be acquired through
various skills and knowledge. Human
capital (HC) is generally used when
referring to a hierarchy of skills and
knowledge (Ucbasaran et al., 2008). There
are various kinds of skills that are required
by Muslimpreneurs in order to be successful
in creating new frms. There are various
skills that can be used for sustainability of
new ventures such as managerial, fnancial
and the ability to write effective business
plans and to build a team (Kalsom & Seun,
2014).
Khaliq (2004) mentioned that even
though an organisational environment for
Islamic skills and knowledge is becoming
more important daily, only a few Muslims
are pursuing accurate ways of achieving
the objectives of Islam in organisations.
Others may be able to contribute something
to his or her organisation but only work
in a non-Islamic culture, and some others
may be involved in healthy competition
between frms but with a wrong Islamic
background. Based on the discussion, the
following hypotheses were proposed:
H4a = Entrepreneurial capabilities are
positively related on readiness for
new venture creation.
H4b = Training moderates the interaction
between entrepreneurial capabilities
and readiness for new venture
creation.
MATERIALS AND METHODS
Population and Sampling Frame
The population of USIM students is
about 10,000. The sample was drawn
from this population. According to
Sekaran (2003, p. 294) the required
sample size for populations of 10,000 is
370 samples. Four hundred and thirty-nine
out of 540 questionnaires were randomly
collected to represent the sample size.
With this sample size the respondents
were adequately represented. The
research used the structured questionnaire
on undergraduate students of USIM. The
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
25
unit of analysis was individual. The time
horizon was cross sectional since the
survey only collected data at a point in
time.
Instrumentation and Method of Data
Analysis
This survey used probability sampling
techniques through the simple random
survey. The measurement of the variables
consisted of the four independent
variables, one moderating variable and the
dependent variable. Eighteen items with
a 5-point Likert-scale were used as the
variables in the questionnaire. It is reliable
if the test retest produces a Cronbach’s
alpha of higher than 0.70 (DeVellis, 2003).
Taqwa and ibadah were measured through
the use of an index. The descriptive analysis
shows the demographic characteristics
of the students. A hierarchical multiple
regression analysis was conducted to see
the relationship between the dependent
and independents and the inclusion of
a moderating variable. The regression
equations are represented thus:
Direct effect:
Y=?
0
+?
1
X
1
+?
2
X
2
+?
3
X
3
+?
4
X
4
+e [1]
Moderating effect:
Y=?
0
+?(?
1
X
1
+?
2
X
2
+?
3
X
3
+?
4
X
4
)+?
m
M+
?
j
I
i
+e [2]
?
0
=intercept; ?
1-4=
coeffcient of the
independent variables from 1 to 4;
?m=coeffcient of moderator (training);
?
j
=coeffcients of interaction effect e=error
term.
Descriptive Analysis
In this analysis, the majority of the
students were female (71.1%) within the
age range 20-25 years old and the male
students had 28.9%. About 40.9% of the
students had parents who engaged in
family businesses while the remaining
59.1% of the students’ parents engaged in
other occupational activities such as civil
servant.
Reliability and Validity
Table 1 is the result of the exploratory
factor analysis and reliability test. All of
these variables were consistent internally
with an alpha value of more than 0.70 as
the cut-off point (Nunally, 1978). All the
six constructs had a co-effcient that
exceeded the 0.8 threshold. The total
number of items used was 18 and the total
calculated variance of all the constructs
was 77.1%. The Cronbach’s alpha of
all the constructs showed a very high
factor loading of .876. This shows that
all the constructs were reliable in this
research. Factor analysis of the data was
also examined via signifcance of the
Bartlett test of sphericity while sampling
adequacy was measure using Kaiser-
Meyer-Olkin (KMO). Both tests resulted
in a good outcome. The Bartlett test of
sphericity was signifcant at p<0.00,
c
2
(N=439). The KMO with a value of
0.868 was above the adequate sampling
value of 0.6 (Tabachnick & Fidell,
2007).
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
26
TABLE 1
Results of the Exploratory Factor Analysis and Reliability Scores
Factors Number
of items
Mean Cronbach’s
Alpha score of
factors
Entrepreneurial
Capabilities
3 3.2032 .856 Kaiser-Meyer-Olkin Measure of
Sampling Adequacy=.868
Entrepreneurship
Training
4 3.8105 .870 Bartlett’s Test of Sphericity Approx.
Chi-Square=1728.083
Sig.=.000
Readiness 4 3.4287 .861
Muslimpreneur
Characteristics
3 3.5342 .865
Islamic Motivation 3 3.6096 .867
Social Capital 1 3.8581 .862
Total Number of Items 18
Total Calculated
Variance
77.113 Total Cronbach’s
Alpha
.876
standardised residual and with a skewedness
of -0.086(S.E=0.0117) and a Kurtosis
value of 0.044(S.E=0.233) for studentised
residual (Crammer, 1998; Crammer &
Howith, 2004; Doane & Steward, 2011).
The box plot suggested that symmetry in
the distribution was not unreasonable.
The P-P plot showed that there was no
mark or deviation from a straight line
that is consistent with expectations since
the sample size was drawn from a normal
population.
The Pearson correlation coeffcients
showed normality and linearity (Bryman &
Cramer, 2001). Table 2 presents a Pearson
correlation matrix of the independent
constructs. All the correlations are less
than 0.01 level of signifcance. A Shapiro-
Wilk’s test (p>0.05) (Shapiro & Wilk,
1965; Razali & Wah, 2011) showed that
the data were normally distributed for
both standardised and studentised with a
skewedness of -0.073(S.E=0.117) and a
Kurtosis value of -0.064(S.E=.233) for
TABLE 2
Pearson Correlation Matrix of Independent Variables
(X1) (X2) (X3) (X4)
Social Capital (X1)
1 .396
**
.341
**
-.034
.000 .000 .475
Muslimpreneur Characteristics (X2)
1 .361
**
.059
.000 .222
Islamic Motivation (X3)
1 -.026
.594
Entrepreneurial Capabilities (X4)
1
**Correlation is signifcant at the 0.01 level (2-tailed)
*Correlation is signifcant at the 0.05 level (2-tailed)
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
27
RESULTS AND DISCUSSION
In Table 3, all the items used such as Ethics
(t=2.052, sig=.041), Al-falah (t=3.912,
sig=.000), family value (t=2.046,
sig=.041), opportunity (t=4.126, sig=.000)
and resources (t=1.996, sig=.047) were
signifcant and supported at 5% and 10%
level of signifcance, while Education
(t=1.593, sig.=.112), Taqwa (t=1.599,
sig.=.111), Ibadah (t=1.043, sig=.297),
Wealth (t=1.154, sig=.249) and Ability
(t=1.275, sig=.203) were not signifcant.
NEW VENTURE CREATION DETERMINANT
Figure 2: Normal P-P plot and box plot of Regression Standardized Residual.
Fig.2: Normal P-P plot and box plot of Regression Standardized Residual.
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
28
TABLE 3
Multiple Regression Analysis of Readiness for New Venture Creation
Model
R=.679R-
Square=.461
Adjusted R
Square=.448
F=36.449
Sig.=0.000
b
Unstandardised
Coeffcients
T Sig. Collinearity
Statistics
B Std. Error Tolerance VIF Decision rule
1 (Constant) .169 .209 .809 .419
Education .041 .026 1.593 .112 .979 1.022 Not supported
Taqwa .056 .035 1.599 .111 .765 1.307 Not supported
Ethics .080 .039 2.052 .041** .634 1.578 Supported
al-Falah .170 .043 3.912 .000** .542 1.847 Supported
Ibadah .038 .036 1.043 .297 .569 1.759 Not supported
Wealth .040 .034 1.154 .249 .789 1.268 Not supported
Family Value .095 .046 2.046 .041** .398 2.513 Supported
Opportunity .299 .072 4.126 .000** .300 3.330 Supported
Resources .083 .042 1.996 .047** .809 1.235 Supported
Ability .041 .032 1.275 .203 .736 1.359 Not supported
In Table 4, the fndings depict that there
was positive relationship between readiness
for creating social enterprise and the four
independent variables. Considering the
assumption of no multicollinearity, Menard
(1995) suggested that a tolerance level less
than 0.1 indicates a serious collinearity
problem. Also, a VIF value greater than
10 is a cause for concern. For this model,
observed VIF values that ranged from
1.009 to 1.652 and the Tolerance value
were all well above 0.6, hence the values
were free from a multicollinearity problem.
The direct effect regression is shown thus:
Y= 1.046+.284X
1
+.204X
2
+.173X
3
+.035X
4
+.167 [1]
The fndings supported hypotheses H
1
a,
H
2
a and H
3
a but not H
4
a. “Social capital”
(t=8.141, Sig.=0.000), “Muslimpreneur
characteristics” (t=5.506, Sig.=.000)
and “Islamic motivation” (t=5.436,
Sig=.000) were found to be signifcant
towards readiness on new venture creation
(p<0.05, p<0.01) while “Entrepreneurial
capability”(t=1.312, Sig.=.190) was the
only independent variable that was not
signifcant at the earlier stage.
After the introduction of
entrepreneurship training as a moderator
in the model, the signifcance level of all
the variables changed. “Social capital”
(t=7.158, Sig.=.000), “Islamic motivation”
(t=5.763, Sig=.000), “Muslimpreneurs
characteristics” (t=3.579, Sig.=.000),
Entrepreneurship training (t=3.498,
Sig=.000) and Entrepreneurial capabilities
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
New Venture Creation Determinant Factors
29
(t=1.883, Sig.=.060) were found to be
signifcant for new venture creation (p<0.05,
p<0.10). The interaction effects were all
signifcant and supported except for social
capital interaction. The R-square indicated
approximately only 38.2%. This improved
to 46.1% after the training and explained the
variance of readiness for new venture creation.
The results showed that the predictive value
of the moderator had a signifcant t-test on
the four constructs. The general form of the
equation is represented thus:
Y= .719+.248X
1
+.137X
2
+.11X
3
+ .050X
4
+.160M+.011I
11
+.092I
12
+.120I
13
+.08
6I
14
+.200 [2]
The fndings support all the hypotheses
H
1
b, H
2
b, H
3
b H
4
b at 0.1 level of signifcance;
however, interaction effect of social capital
was not signifcant at both 0.05 and 0.1
level of signifcance. Since the moderator
was signifcant, therefore there was partial
moderation of entrepreneurship training on
readiness to create social enterprise.
TABLE 4
Hierarchical Regression Model
Model Unstandardised
Coeffcients
T Sig. Collinearity
Statistics
B Std.
Error
Tolerance VIF Decision Rule
1 (Constant) 1.046 .167 6.273 .000
Entrepreneurial
Capabilities (X4)
.035 .027 1.312 .190 .991 1.009 Not
Supported
Muslimpreneur
Characteristics (X2)
.204 .037 5.506 .000** .780 1.282 Supported
Islamic Motivation (X3) .173 .032 5.436 .000** .824 1.214 Supported
Social Capital (X1) .284 .035 8.141 .000** .797 1.254 Supported
R=.618 R Square=.382 Adjusted R Square=.377 F=67.043 Sig.(F)=.000
2 (Constant) .719 .200 3.601 .000
Entrepreneurial
Capabilities
.050 .026 1.883 .060* .971 1.030 Supported
Muslimpreneur
Characteristics
.137 .038 3.579 .000** .684 1.463 Supported
Islamic Motivation .181 .031 5.763 .000** .790 1.266 Supported
Social Capital .248 .035 7.158 .000** .750 1.333 Supported
X4_Training (I
14
) .086 .042 2.032 .043** .948 1.055 Supported
X2_Training (I
12
) .092 .044 2.115 .035** .618 1.617 Supported
X1_Training (I
11
) .011 .045 .245 .806 .605 1.652 Not Supported
X3_Training (I
13
) .120 .043 2.781 .006** .795 1.257 Supported
Training .160 .046 3.498 .001** .702 1.425 Supported
R=.656 R Square=.430 Adjusted R Square=.418 F=35.842 Sig.(F)=.000
Pertanika J. Soc. Sci. & Hum. 23 (S): 17 – 32 (2015)
Seun, A. O. and Kalsom, A. W.
30
CONCLUSION
The purpose of this study was to ascertain
the determinant factors that can prompt
readiness for new venture creation and
to determine if training moderates new
venture creation. Using readiness for
new venture creation as the dependent
variable, the fndings showed that the four
independent variables, moderating variable
and their interaction effects were positively
related to readiness of Muslim students to
create new ventures.
This model has shown that
entrepreneurship training can moderate
readiness for new venture creation. From
the model above the fndings revealed that
the determinant factors that could infuence
new venture creation were Islamic
motivation, entrepreneurial capabilities,
Muslimpreneur characteristics and social
capital. Islamic motivation, entrepreneurial
capabilities and Muslimpreneur
characteristics were all signifcant and
supported and therefore, can be moderated
through training.
Social capital on the other hand,
showed that there was direct relationship
between social ties on readiness for
creating new ventures. Unfortunately,
training does not moderate social
capital. Even after engaging in various
entrepreneurship training, parents can
still infuence their children’s decisions
on their readiness to invest in new venture
creation. Most parents worry their children
will “fall in with the wrong decision” and
that peer pressure and a strong desire for
acceptance affect their success in creating
new frms while others will fully support
their children due to their experience in
family business. Hence, social ties can be
both a blessing and a blight and this may
have greater implication on the career of a
graduate Muslimpreneur.
In addition, given the nature of the
model in this study, it would be appropriate
to conduct qualitative research so that an
open-ended questionnaire and interview
can be performed on the components of
Islamic social enterprise.
In conclusion, youth should fear
Allah and aim to achieve more success for
the hereafter through business creation.
Muslimpreneurs should identify ethical
business opportunity, utilise available
resources, improve their knowledge and
seek Allah blessings for the success of
their business and to have greater impact
on society.
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