Description
Detailed data related to the making of an entrepreneur testing a model of entrepreneurial intent among engineering students at mit.
The ‘making’ of an entrepreneur:
testing a model of entrepreneurial
intent among engineering students
at MIT
Christian Lu¨ thje
1
and Nikolaus Franke
2
1
Institute of Technology and Innovation Management, Technical University of Hamburg,
Schwarzenbergstr. 95, 21073 Hamburg, Germany.
[email protected]
2
Department of Entrepreneurship and Innovation. Vienna University of Economics and Business
Administration. Augasse 2-6, 1090 Vienna, Austria.
[email protected]
In the present study a covariance structure model is tested to identify the causes of
entrepreneurial intent among engineering students. Speci?cally, we explore whether steady
personal dispositions or whether perceptions of contextual founding conditions have an impact
on the intention to found one’s own business.
The survey of 512 students at the MIT School of Engineering broadly con?rms the model.
Personality traits have a strong impact on the attitude towards self-employment. The
entrepreneurial attitude is strongly linked with the intention to start a new venture. The
students’ personality therefore shows an indirect effect on intentions. Furthermore,
the entrepreneurial intent is directly affected by perceived barriers and support factors in
the entrepreneurship-related context. The ?ndings have important implications for policy
makers inside and outside universities.
1. Introduction
F
ostering entrepreneurship has become a
topic of the highest priority in public policy.
In times of increasing concern about technologi-
cal advance and strong international competition,
entrepreneurial activities are regarded as a driv-
ing force for innovation (Drucker, 1999). Conse-
quently a broad array of programmes and
services have been implemented to provide a
better infrastructure for new ventures. Part of
these initiatives, e.g. business plan competitions,
education centres and chairs for entrepreneurship
are targeted on students as future entrepreneurs.
Graduates in technical disciplines are more than
others expected to found companies in dynamic
and innovative areas, thus promoting signi?cant
economic growth and increase in employment
(Roberts, 1991).
In fact, successful research universities such as
the Massachusetts Institute of Technology in
Cambridge seem to foster entrepreneurial activ-
ities. Approximately 4,000 MIT-related compa-
nies exist today, with total employment exceeding
R&D Management 33, 2, 2003. r Blackwell Publishing Ltd, 2003. Published by Blackwell Publishing Ltd, 135
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
1.1 million people and annual sales of $232
billion. If the companies founded by MIT
graduates and faculty formed an independent
nation, the companies would make that nation
the 24th largest economy in the world (Ayers,
1997). Similar success stories are reported from
Stanford University which is closely associated
with most of the cutting-edge companies in
Silicon Valley (Pfeiffer, 1997). Many US business
schools present the number of companies founded
by alumni and faculty as an indicator of their
outstanding quality. Economic studies in different
European regions indicate that the impact of
universities on company creation can be observed
outside the USA as well (Harhoff, 1999).
While there has been signi?cant research on the
causes of entrepreneurial propensity (Greenber-
ger and Sexton, 1988; Learned, 1992; Naffziger
et al., 1994; Brandsta¨ tter, 1997), only a limited
number of studies has focused on the entrepre-
neurial intent among students. It is not widely
known whether contextual founding conditions
or personality traits drive the students’ career
decision towards self-employment. In order to
design effective programmes, policy makers have
to know which of these factors are decisive (Scott
and Twomey, 1988). If the readiness to set up a
new business is primarily shaped by the founding-
related conditions, a change in these conditions
should have an effect on the entrepreneurial
intent. In this case, government and university
policy makers would be well advised to sustain
and expand their activities to improve education,
infrastructure, legal conditions and ?nancial
support for potential business founders. How-
ever, these programs would be less likely to foster
entrepreneurship if the founding intentions
were primarily grounded not on contextual
factors, but on the students’ personality. Person-
ality traits are comparatively stable and hard to
change in the short term. To encourage new
venture activities of students, a university would
have to rely mainly on a (self-)selection of
promising freshmen.
This discussion shows that a better under-
standing of the antecedents to career choices
seems promising, both from an academic and a
practical point of view. The research reported in
this paper attempts to answer the following
question: Is the students’ entrepreneurial intent
primarily pre-determined by steady personality
characteristics or is it possible to foster propen-
sity to self-employment through pragmatic gov-
ernment and university programmes?
The paper starts in section 2 with a short
review of relevant literature on graduate entre-
preneurship. On the basis of the presented
?ndings, we develop in section 3 a structural
model dedicated to explore the impact of
contextual and personality factors on entrepre-
neurial propensity. In section 4 the research
method is outlined. The ?ndings are presented
in section 5. In the ?nal section 6 we discuss the
implications of the ?ndings on the design of
entrepreneurship programmes.
2. Research on students’ entrepreneurial
behavior
Business college students and graduates often see
the founding of a company as an attractive
alternative to wage or salary employment. This
may partly originate from an increasing disap-
pointment with traditional occupations in (large)
companies which in turn increases the desirability
of self-employment (Kolvereid, 1996). As a
reaction to international competition, organiza-
tions have gone through major cost cutting and
restructuring processes. The employment-related
advantages of established companies, mainly job
security, reward of loyalty and stability, have lost
their attraction (Jackson and Vitberg, 1987). At
the same time, the work values usually connected
with self-employment such as independence,
challenge, and self-realization, have become more
desirable in the work environment.
Empirical ?ndings provide support for this
trend. In a survey of English students 25% of the
respondents indicated that they had a business
idea and 41% were inclined to self-employment.
Hart and Harrison (1992) explored the attitudes
of high-school students in Northern Ireland and
report that 47% expressed the wish to run their
own business. The result of a survey in Ireland
indicates a high average self-reported inclination
to become an entrepreneur (Fleming, 1994).
Similar ?ndings exist for the USA. A study
conducted by Karr (1985) shows that 46% of the
college students consider an own business as a
good opportunity to get ahead. A more pro-
nounced enthusiasm for entrepreneurship was
expressed by MBA students from top business
schools across the USA. 44% of the students
Christian Lu¨thje and Nikolaus Franke
136 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
selected ‘to become an independent entrepreneur’
as their primary long-term career goal (Sanholtz,
1990).
A lower level of entrepreneurial intent is found
by Brenner et al. (1991). Although 55% of the
responding senior students in business preferred,
given a free choice, to operate their own business,
only 5% of all students indicated this as their
most probable employment status. Similar
results are reported by Kolvereid (1996) for a
sample of Norwegian business students. Approxi-
mately 43% preferred a career as self-employed,
however, only 7% of all respondents estimated
the chance to become entrepreneurs to be 75%
or higher. Statistics support the comparatively
low percentage of graduates starting a new
business from scratch. In the early nineties
between 2 and 2.5% of English alumni started
a business immediately after graduation
(Brown, 1990).
These ?ndings reveal a difference between the
attitude about entrepreneurship on the one side
and entrepreneurial intent and actual behaviour
on the other side. The question arises which
factors determine the career choice of students
and which factors may explain the inconsistency
between attitudes and intentions.
Interdisciplinary research has been conducted
to answer this question.
1
Psychological models
strove to identify personality characteristics that
distinguish business founders from non-entrepre-
neurs (Shaver and Scott, 1991; Brandsta¨ tter,
1997). This research ?eld has established a
number of signi?cant traits, including risk taking
propensity (Brockhaus, 1987; Hisrich and Peters,
1995), need for achievement (Johnson, 1990), and
locus of control (Bonnett and Furnham, 1991)
and has focused on particular attitudes towards
entrepreneurship as antecedents of the career
path choice (Robinson et al., 1991b). Sociological
theories emphasize a variety of social, cultural
and economic contextual variables that may
in?uence the readiness to undertake a new
venture. The studies explore factors such as
societal attitudes towards entrepreneurship, the
availability of funds or the existence of small
business incubators (Shapero, 1984). Similar to
personality traits, these factors have been found
to be important facilitators for entrepreneurial
activities (Pennings and Kimberly, 1997; Hisrich
and Peters, 1995). Some researchers have inves-
tigated the individual within the context of his/
her environment to explain entrepreneurial in-
tent. They propose models which include inter-
actions between personality and environmental
factors (Dubini, 1988; Greenberger and Sexton,
1988; Learned, 1992; Herron and Sapienza, 1992;
Naffziger et al., 1994).
Most of the cited studies are based on samples
of professionals who have either founded a
company (entrepreneurs) or have work experi-
ence as employees of organizations. It seems
questionable to generalize these ?ndings to
students and graduates. Both populations can
differ in a variety of important entrepreneurial
characteristics which in turn would lead to
inconsistent results (Robinson et al., 1991a).
The few empirical studies based on student
samples suggest that courses in entrepreneurship
and the image of business founders within the
university encourage graduates to become self-
employed. A survey of technology students from
four different countries reveals that the career
preferences and entrepreneurial convictions are
in?uenced by the image of entrepreneurship as a
career alternative and the support received from
the university environment (Autio et al., 1997). A
multi-country survey with MBA students points
out that the social status of entrepreneurship is a
good predictor of interest in starting a business
(Begley et al., 1997). In a survey of MBA students
at a large US college, Chen et al. (1998) ?nd that
the number of management courses the students
had taken were positively related to entrepreneur-
ial intention. Further empirical evidence results
from a comparison of small business students and
students with other business and economics
majors. The small business students have a higher
need for achievement which in turn has a positive
effect on the readiness to found a company (Sagie
and Elizur, 1999). However, it is not clear
whether self-selection effects or causal effects of
the entrepreneurship courses are responsible for
these results. Furthermore, Hostager and Decker
(1999) in their preliminary study of students
involved in an entrepreneurship programme
cannot ?nd a relationship between education
and achievement motivation. An even more
pessimistic view of the effects of universities on
entrepreneurial propensity results from a long-
itudinal study of 89 business students: after four
years of business courses the interest in pursuing
self-employment seemed to dissipate (Whitlock
and Masters,1996).
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 137
Other studies which explore the effects of the
university environment on entrepreneurship ac-
tivities focus more on faculty and university staff
than on students (BenDaniel, 1999). Taken
together, empirical research has seldom explored
students as entrepreneurial subjects. The few
?ndings that exist are partly inconsistent. Conse-
quently, there is a lack of understanding how
public policy and universities can effectively
develop future high-tech business founders. The
following survey is aimed to provide new insights
concerning this topic.
3. A structural model of entrepreneurial
intent
Based upon the existing literature, it appears
promising to integrate both, individual traits and
contextual factors into a structural model of
entrepreneurial intent.
A combination of an extensive literature review
and serial interviews with students and experts in
entrepreneurship suggested to integrate the two
personal characteristics ‘risk taking propensity’
and ‘locus of control’ into the structural model.
Both constructs have frequently been enumerated
as part of the ‘personality’ of new venture
creators and have proven their importance in
affecting the level of aspiration towards self-
employment (Brockhaus and Horwitz, 1986;
Shaver and Scott, 1991; Lumpkin and Erdogan,
1999; Robinson et al., 1991b; Stewart, 1996;
Bonnett and Furnham, 1991).
2
In order to compile a large set of contextual
factors which might in?uence the intention to
found a company, we conducted explorative
interviews and scanned the relevant literature
(e.g. Pennings and Kimberly, 1997; Naffziger
et al., 1994). As a result, 44 items were generated.
A questionnaire with these items was adminis-
tered to 12 business students who were asked to
assess the importance of each item for the
decision to found a company. The ten items with
the highest average importance score were
selected. A con?rmatory factor analysis suggested
that these items can be segregated in perceived
support factors and perceived barriers for found-
ing a company.
In sum, the designed model focuses on four
(latent) constructs to predict the propensity to
start a new venture, namely the risk taking
propensity, the locus of control, the environmen-
tal support, and the contextual barriers. All four
constructs are expected to reveal a causal effect
on entrepreneurial behaviour. Therefore, they
should determine whether students decide in a
positive or negative way concerning self-employ-
ment.
In alignment with new research evidence, the
model proposes that the intention to become a
business founder is moderated by the attitude
about entrepreneurship. Attitude instruments
tend to account for a big part of the variance of
a wide range of behaviours (Ajzen and Madden,
1986; Ajzen and Fishbein, 1980). Consequently,
many researchers have also recognized and
proved the importance of domain-speci?c atti-
tudes in understanding (future) business founders
(Autio et al., 1997; Kolvereid, 1996; Robinson et
al., 1991b). In the present model, attitudes act as
the link between general personality traits and
speci?c entrepreneurial behaviour. It is assumed
that the characteristics of the individual indirectly
in?uence the intention to become an entrepreneur
through their effect on attitude. This leads us to
the following three hypothesis:
H
1
: Individuals with a high risk taking propensity
are more likely to have a positive attitude
towards entrepreneurship.
H
2
: Individuals with an internal locus of control
are more likely to have a positive attitude
towards entrepreneurship.
H
3
: The more favourable the attitude with respect
to becoming self-employed, the stronger the
individuals’ intention to become self-employed.
The model proposes a direct impact of the
perceptions of contextual factors (support and
barriers) on entrepreneurial intentions. Hence,
the environment is assumed to be responsible for
the lack of a perfect attitude-intention correlation
reported above (see chapter 2). A student might
be willing to found a company, regardless of his
comparatively bad attitude towards entrepre-
neurship, because he perceives the founding
conditions as very favourable (trigger effect).
Inversely, graduates with a positive attitude
towards new venture creation may not decide to
start their own business due to a negative
perception of salient factors in the environment.
This line of reasoning is known in attitude models
as the contextual in?uence on the attitude-
behaviour relationship (Abelson, 1982). Based
Christian Lu¨thje and Nikolaus Franke
138 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
on these arguments we propose two additional
hypotheses:
H
4
: The more insurmountable a student perceives
barriers for founding a company to be, the
weaker the individual’s intention to become
self-employed – irrespective of his attitude
towards entrepreneurship.
H
5
: The more favourable a student perceives
supporting contextual factors to start up a
new business to be, the stronger the indivi-
dual’s intention to become self-employed –
irrespective of his attitude towards entrepre-
neurship.
The factor which affect the entrepreneurial
intent are presented in a structural model in
Figure 1.
4. Research methodology
Previous to the main survey, eight preliminary
studies involving 139 subjects were conducted to
develop valid scales for the constructs in the
model (see Figure 2). Most of the factors were
designed through a standard scale development
process for theoretical constructs (Bagozzi et al.,
1991). First, based on exploratory surveys and/or
expert and student judges, a list of items is
generated for each construct. Next, this list is
screened and the number of items is narrowed
through standard validity and reliability criterion
(Cronbach a and exploratory factor analysis).
The remaining items are the basis of the ques-
tionnaire in the main survey. Finally, a second
validation of the scales is done on the basis of the
survey data applying Cronbach a and con?rma-
tory factors analysis.
Since entrepreneurial intent is the ultimate
dependent construct in the model, considerable
attention was turned to the design of the
intention-scale. Similar to the operationalization
used by Autio et al. (1997), the respondents were
asked to rate the likeliness to become self-
employed in the foreseeable future after gradua-
tion. In a ?rst version, we designed a ?ve-point
scale and tested the validity in an exploratory
study involving 15 students. The results revealed
a skewed distribution: while the respondents
often marked the middle scale-point, almost no
student chose ‘quite probable’ and ‘very prob-
able’. A second preliminary study was conducted
based on a four-point-scale (n ¼26). The subjects
were asked to make their ratings on the basis of
the scale and to write a short statement concern-
ing their career plans and their readiness to found
a company. The statements were reviewed by
independent raters and associated with one point
on the scale. These judgements were linked with
the original students’ ratings leading to a correla-
tion higher than 0.9. The four-point scale seems
therefore to ensure a high-validity measurement
of the individuals entrepreneurial intent.
The setting of the preliminary studies was
provided by students in Germany. Thus, the
questionnaire used in this study was ?rst designed
in German, slightly modi?ed and than carefully
translated into English by native speakers. The
translation was pre-tested with business and
technical students at MIT and proved to be both
comprehensible and clear. Since e-mail and the
internet are the most popular communication
attitude towards
entrepreneurship
entrepreneurial
intent
risk taking
propensity
internal locus
of control
perceived
barriers
perceived
support
contextual factors
personality traits
endogenous variables
H
1
(+)
H
2
(+)
H
4
(-) H
5
(+)
H
3
(+)
Figure 1. Structural model of entrepreneurial intent.
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 139
means used by students, an online-version of the
questionnaire was designed.
The data for the main survey were collected
from the target population of electrical engineer-
ing/computer science and mechanical engineering
students at MIT School of Engineering. All
students who were members of the of?cial MIT
e-mail list of the two departments were asked to
participate. The target population (all students in
the two departments) is bigger than the selected
user population (students in mailing lists). How-
ever, the problem of ‘undercoverage’ does not
seem to be critical. The of?cial e-mail lists are
used to disseminate important course and exam
information. According to students’ of?ce admin-
istrators, the e-mail directories may therefore be
viewed as a nearly complete listing of students in
the two MIT departments. The combined sample
size is 2,193 engineering students, of whom 1,536
were students in the electrical engineering/com-
puter science department and 657 students had
their major in mechanical engineering.
The students received an e-mail with a short
explanation of the survey and a hypertext-link to
the online-questionnaire. One week after the ?rst
mailing a reminder was sent. In all, 524 ques-
tionnaires were completed. The response rates
were 24.2% in the electrical engineering/compu-
ter science department (n ¼378) and 22.2%
(n ¼l46) in the department of mechanical en-
gineering. Twelve answers had to be excluded
from further analysis leading to a number of 512
usable questionnaires. Descriptive information
about the respondents is provided in Appendix 1.
5. Results
The research ?ndings will be presented in two
parts. First, we explore whether graduates can in
fact be viewed as an important source of future
business founders. The exploration of entrepre-
neurial activities among students is relevant only
if a minimum of entrepreneurial spirit exists.
Then, the covariance structure model is estimated
in order to examine the causes of entrepreneurial
intent.
5.1. Descriptive ?ndings on students’
entrepreneurial activities and plans
The descriptives show that the engineering
students seldom undertake entrepreneurial
literature review, expert interviews
selection of constructs
entrepreneurial
behaviour
entrepreneurial
intent
risk taking
propensity locus of control
attitudes towards
entrepreneurship
perception
of context
personal
background
standard item-scale
(Hisrich/Peters 1995)
? 10 items
Preliminary survey 6:
item selection through
exploratory questionnaire
n=21
criterion: Cronbach?,
exploratory factor analysis
? selection of 4 items
standard item-scale
(Hisrich/Peters 1995)
? 10 items
Preliminary survey 4:
item generation
through group discussion
n=10
? 27 items
Preliminary survey 5:
item selection through
exploratory questionnaire
n=30
criterion: Cronbach ?,
exploratory factor analysis
? selection of 4 items
item generation
through literature review
? 27 items
Preliminary survey 7:
item generation through
exploratory interviews
n=12
? additional 23 items
Preliminary survey 8:
item selection through
questionnaire n=12
average importance
scores ? selection of 5
barrier and 11 support items
(5 external, 6 university)
Preliminary survey 2:
examination of validity of
the five-point-scale through
exploratory questionnaire
with open questions
n=15
? unsatisfactory validity
Preliminary survey 3:
scale modification to a
four-point-scale
exploratory questionnaire
with open questions
n=29
? very high validity
Preliminary survey 1:
item generation
through group discussion
n=10
? 13 variables
Modified item-list
from
Franke (1999)
? 9 variables
main survey n=512
second item selection:
criterion: Cronbach ?,
confirmatory factor
analysis etc.
? selection of 3 items
second item selection:
criterion: Cronbach ?,
confirmatory factor
analysis etc.
? selection of 2 items
second item selection:
criterion: Cronbach ? ,
confirmatory factor
analysis etc. ? selection of
3 barriers, 3 support items
(2 external, 1 university)
9 variables 1 four-point-scale 13 variables second item selection:
criterion: Cronbach ?,
confirmatory factor
analysis etc.
? selection of 3 items
Preliminary survey 6:
item selection through
exploratory questionnaire
n=21
criterion: Cronbach ? ,
exploratory factor analysis
? selection of 3 items
Figure 2. Operationalization of the model.
Christian Lu¨thje and Nikolaus Franke
140 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
efforts in the course of study (see left column of
Figure 3). Only 3.4% of the respondents in-
dicated to be self-employed. This ?nding may be
explained by the high opportunity cost of self-
employment due to the extreme workload and the
high tuition fees at MIT. However, the self-
employed students run businesses of some im-
portance. Almost half of them develop IT
hardware and software, on average they have
invested $31,000 and one out of two self-
employed students already has employees.
More signi?cant than the entrepreneurial
activities in the course of study is the intention
to start a new venture someday after graduation
(see right column of Figure 3). More than half of
the respondents indicate that they will ‘quite
probably’ (44.0%) or ‘very probably’ (10.6%) run
their own company in the foreseeable future after
leaving university. The planned activities focus on
dynamic and innovative areas such as IT hard-
ware and software (23%), high-tech consulting
(22%), and product development and design
(13%). These companies, if realized, can be
expected to have a signi?cant impact on econom-
ic growth and increase in employment. On
average the students plan to employ 96.6 people
three years after founding. Taken together, the
respondents in this sample who prefer to start a
business may have more than 20,000 employees
three years after starting the new business. These
self-
employed
3.4%
very
probable
10.6%
not self-
employed
very
improbable
quite
improbable
quite
probable
44.0%
33.4%
11.0%
Are you currently self-employed? Do you plan to be self-employed in the
foreseeable future after graduation?
96.6%
Characteristics of business
Weekly workload ? 17.1 hours
% of total income earned
through self-employment
? 65.5%
Money invested ? $ 30,955
Monthly turnover higher
than $ 5.000 ?
17.6% yes
Employees? 52.9% yes
If yes:
Number of employees?
? 3.1 people
Venture founded by a
team?
41.2% yes
If yes:
Number of team members
? 2.6 people
IT/
Softw.
23%
Consul-
ting
Prod.
dev./
Design
Bio-
tech
Un-
known
Other
22%
13%
4%
31%
7%
IT/
Softw.
47%
Consul-
ting
Prod.
dev./
Design
Bio-
tech
Other
35%
12%
0%
6%
Entrepreneurial activities
during studies
Entrepreneurial plans
after graduation
What line of business? What line of business?
Characteristics of business
Planned time between
graduation and founding
? 5.2 years
Plan to start up new
venture in a team?
81.4% yes
If yes:
Number of team members
? 3.2 people
Number of employees 3
years after founding
? 96.6 people
Figure 3. Descriptive ?ndings concerning entrepreneurial activities and plans.
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 141
?ndings seem to ful?ll the hopes of economic
policy makers. Students at technical research
universities are apparently a promising source
of future high-tech entrepreneurs.
5.2. Model testing
The covariance structure model was estimated in
order to explore the antecedents of the intentions
to choose the entrepreneurial career path. Speci-
?cally, we investigate whether founding activities
may be fostered by a favourable context inside
and outside the university or are rather deter-
mined by students’ personality.
The assessment of ?t reveals that the model
satisfactorily reproduces the sample matrix of
variance and covariance (see Figure 4 and
Appendix 2). All global goodness-of-?t measures
reach a level that is usually regarded as accep-
table: GFI ¼0.952, AGFI ¼0.933, RSMEA¼
0.047, CFI ¼0.939, w
2
/df ¼2.11. The ‘difference
of chi-square test’ compares the original model
with competing models obtained by constraining
one of the free parameters (Long, 1983). The
results of this test indicate that the model
constructs have a high discriminant validity (see
Appendix 3).
The model parameters were estimated using the
maximum likelihood method and are reported in
Figure 4. The attitude towards entrepreneurship
emerges as the most important antecedent of the
intention to become self-employed. The attitude
has a strong and highly signi?cant effect on
entrepreneurial conviction (b¼0.508***). Hy-
pothesis 5 is therefore con?rmed by the analysis.
If public policy and university administration
want to raise the number of graduates who decide
to start their own business, an improvement of
the students’ attitude towards entrepreneurship
apparently is an effective lever.
This attitude is in?uenced by the personality of
the respondents (H
1
and H
2
are supported). In
particular, the risk taking propensity stands out
as a very strong in?uence, with a Beta of
0.464***. The impact of an internal locus of
control on the attitude is also fairly high
(b¼0.300**). Taken together, the ?ndings imply
that students who are willing to accept risks and
who perceive control over the events in their life
have a more favourable attitude towards running
an own business. This way, personality traits have
an indirect impact on the readiness to become
self-employed.
H
4
and H
5
stated that the perceptions of
entrepreneurship-related barriers and supporting
factors contribute a direct explanation for the
preferred employment status of the students. The
?ndings support both hypothesis. The path
between the perceived barriers and intentions is
signi?cant (b ¼À0.127**). If students realize an
antagonistic environment for business founders,
e.g., because they think that banks do not readily
give loans, or because they rate the state laws
as being too restrictive, they are less likely
to become entrepreneurs. The path coef?cient
attitude towards
entrepreneurship
entrepreneurial
intent
risk taking
propensity
internal locus
of control
perceived
barriers
perceived
support
context
personality traits
endogenous
variables
0.464***
0.300**
-0.127 ** 0.183**
0.508***
? ? ? ? ? ?
? ?
?
? ? ?
?
?
?
?
?
?
ML estimation with AMOS
AGFI = 0.93; ?² = 204.2; df = 176; n = 495
one-tailed test of significance
Ind1
Ind1
Ind2
Ind3
Ind1
Ind2
Ind1
Ind1 Ind2 Ind3 Ind1 Ind2 Ind3
Ind2 Ind2 Ind3
Figure 4. Results of model testing.
Christian Lu¨thje and Nikolaus Franke
142 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
between the perceived support factors and
entrepreneurial intent point in the same direction
(b¼0.183**). An optimistic evaluation of help
and facilities, which are available to potential
business founders, is associated with a higher
propensity to pursue a career as an entrepreneur.
Overall, the perceptions of the context factors
for entrepreneurship have a moderating
in?uence on the attitude-intention relation-
ship. This effect may explain why a student,
despite a positive attitude about being self-
employed, may not be willing to risk a new
venture because he/she perceives the context
as hostile. Inversely, students with a less favour-
able attitude may be encouraged to run their
own business due to an optimistic perception
of the environmental conditions for entrepre-
neurs.
The ?ndings allow us to answer the research
question of the present paper: the intentions of
students to become business founders is in?u-
enced both indirectly by steady personality
traits and directly by contextual factors, which
are usually easier to modify. It has to be
taken into account that we have not explored
the ‘objective’, but the perceived contextual
factors. Therefore, initiatives addressed to im-
prove the founding conditions do not necessa-
rily lead to an immediate improvement of
entrepreneurial intentions and to higher business
‘birth rates’.
To decide which of the two construct groups –
personality traits or contextual founding condi-
tions – has the stronger impact on the preferred
career alternative, the causal effects represented
by the path parameters are added up. The
personal characteristics have a total indirect
effect of (0.300 þ0.464)*0.508 ¼0.388. The con-
text factors show an overall direct impact of
(0.127 þ0.183) ¼0.31. This comparison is limited
by the fact that the personality and the context
are not entirely covered by the constructs
included in the present research. However, for
this sample of technical students at MIT both
construct areas seem to have a similar effect on
entrepreneurial intent.
6. Implications
The present survey provides evidence that the
perceived contextual barriers and support factors
play a signi?cant role for the entrepreneurial
behaviour of technical students. These percep-
tions may be altered and improved by suitable
initiatives. Thus, public policy and universities
would be well advised to intensify their activities
to implement educational, research and resource
programmes on entrepreneurship. Such pro-
grammes have to remove the perceived and the
objective context factors which are adverse to
starting a company. Furthermore, the image of
entrepreneurship as a career alternative should be
improved and support from the public and
university environment should be intensi?ed.
The actions could entail, for example, using
positive role models in teaching, establishing
entrepreneurial support networks, and arranging
business plan competitions.
Next, the ?ndings also indicate that the
conviction to start up a new venture is to some
extent a question of personality structure. Those
who are in charge of an economic policy meant to
encourage technical students to found high-tech
companies should be aware that the measures we
propose will not have the same effects on all
people. It seems more promising to focus the
stimulating activities on the right students,
particularly those with a propensity to high risk
taking and an internal locus of control. In
order to avoid misdirected budgets, policy makers
and university faculty need to identify these
students and encourage them to take part in
entrepreneurship programmes. For instance,
universities could try to base their selection
process for courses in entrepreneurship partly
on information provided by students about
personality traits and preferences regarding en-
trepreneurship.
Finally, the attitude towards entrepreneurship
proved to contribute the strongest explanation
for entrepreneurial intentions of the technical
students. We have focused on personality traits as
causes of the attitude. However, other variables
may have an impact on this attitude as well.
If these factors are open to change, entrepre-
neurial attitudes may be in?uenced by educators,
policy makers, and successful founders who
can be powerful role models. Further research
in the area of attitude formation holds
promise for enhancing the understanding of
the entrepreneurial intent and the effective
cultivation of a business founding spirit among
students.
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 143
Acknowledgement
The authors would like to thank the administra-
tion staff at MIT School of Engineering, Profes-
sor Tom Allen from MIT Sloan School of
Management, Professor Dietmar Harhoff from
the University of Munich, and Rosemarie Wilcox
for their support and advice.
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Appendix
Appendix 1. Information about respondents
Age Nationality Gender Student status
0–20 40.0% USA/Canada 69.0% Female 23.9% Undergraduate 71.6%
21–22 36.9% Asia 21.3% Male 76.1% Graduate 28.4%
23–24 12.0% Europe 4.2% Self-employed parents Department
25–26 5.0% Rest America 4.9% Yes 30.1% Electr./Comp. 72.7%
27– 6.1% Other 0.6% No 69.9% Mechanical 27.3%
Mean 21.7
Std. dev. 5.2
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 145
Appendix 2. Results model testing
Appendix 3. Test of discriminant validity (w
2
-Test of difference)
Number in cells: Difference of w
2
between original model and model with one additional (difference should be
higher than 3.841).
Factor Indicator Indicator
reliability
Revalue of
factor
loadings
Item
total
correlat
Cornback
a
Explained
variance
by f-factor
Factor
retiability
Average
explained
variance
Risk 1 0.808 – 0.382
2 0.570 7.366 0.525 0.642 58.7% 0.652 0.388
3 0.389 7.809 0.457
Locus 4 0.667 – 0.315 0.478 65.7% 0.562 0.423
6 0.147 2.372 0.315
Barriers 7 0.417 – 0.405
8 0.204 5.086 0.309 0.533 52.2% 0.547 0.294
9 0.262 5.070 0.343
Support 10 0.361 – 0.371
11 0.213 4.895 0.306 0.522 51.2% 0.527 0.275
12 0.245 4.873 0.334
Attitude 13 0.788 – 0.606
14 0.243 9.764 0.426 0.690 62.1% 0.705 0.452
19 0.394 12.003 0.492
Entrep. 20 0.932 – 0.8643 0.867 93.22% 0.941 0.906
Intent 21 0.798 22.358 0.8643
Global w
2
¼204.2 GFI ¼0.952
Fit df ¼97 AGFI ¼0.933
Measures p ¼0.000 RMSEA ¼0.047
w
2
/df ¼2.11 CFI ¼0.939 n ¼495
Risk Locus Barriers Support Attitude Entrep. intent.
Risk
Locus. 202.1
Barriers 294.31 258.73
Support 169.23 203.52 282.29
Attitude 13.58 15.46 17.3 13.2
Entrep. intent. 69.61 41.20 37.2 64.9 321.6
Christian Lu¨thje and Nikolaus Franke
146 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
Appendix 4. Items in analysis
Construct Formulation of items
Risk taking
propensity
5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items; ‘When
I travel I tend to use new routes’; ‘I like to try new things (e.g. exotic food or
going to new places’: ‘I have taken a risk in the last six months’.
Locus of control 5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items: ‘I often
feel ‘That’ just what the things are and there’ nothing I can do about it’
(scale inversed), ‘When everything goes right, I think that it’ mostly luck’
(scale inversed).
Perceived barriers 5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items: ‘Banks
do not readily give credit to start up companies’; ‘State laws (rules and
regulations) are adverse to running a company’; ‘It is hard to ?nd a business
idea for a business that hasn’t been realized before’.
Perceived support factors 5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items:
‘Entrepreneurs have a positive image with American society’; ‘Quali?ed
consultant and service support for new companies is available’; ‘The creative
MIT atmosphere inspires to develop ideas for new businesses’.
Attitude towards entrepreneurship 5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items: ‘I’d
rather be my own boss than have a secure job’; ‘You can only make big
money if you are self-employed’; ‘I’d rather found a new company than be
the manager of an existing one’.
Entrepreneurial intent ‘Do you plan to be self-employed in the foreseeable future after you leave
the MIT?’ 4-point rating scale (1 ¼very probable, 2 ¼quite probable,
3 ¼quite improbable; 4 ¼very improbable) and ‘Are you currently self-
employed’ (yes/no).
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 147
doc_603842022.pdf
Detailed data related to the making of an entrepreneur testing a model of entrepreneurial intent among engineering students at mit.
The ‘making’ of an entrepreneur:
testing a model of entrepreneurial
intent among engineering students
at MIT
Christian Lu¨ thje
1
and Nikolaus Franke
2
1
Institute of Technology and Innovation Management, Technical University of Hamburg,
Schwarzenbergstr. 95, 21073 Hamburg, Germany.
[email protected]
2
Department of Entrepreneurship and Innovation. Vienna University of Economics and Business
Administration. Augasse 2-6, 1090 Vienna, Austria.
[email protected]
In the present study a covariance structure model is tested to identify the causes of
entrepreneurial intent among engineering students. Speci?cally, we explore whether steady
personal dispositions or whether perceptions of contextual founding conditions have an impact
on the intention to found one’s own business.
The survey of 512 students at the MIT School of Engineering broadly con?rms the model.
Personality traits have a strong impact on the attitude towards self-employment. The
entrepreneurial attitude is strongly linked with the intention to start a new venture. The
students’ personality therefore shows an indirect effect on intentions. Furthermore,
the entrepreneurial intent is directly affected by perceived barriers and support factors in
the entrepreneurship-related context. The ?ndings have important implications for policy
makers inside and outside universities.
1. Introduction
F
ostering entrepreneurship has become a
topic of the highest priority in public policy.
In times of increasing concern about technologi-
cal advance and strong international competition,
entrepreneurial activities are regarded as a driv-
ing force for innovation (Drucker, 1999). Conse-
quently a broad array of programmes and
services have been implemented to provide a
better infrastructure for new ventures. Part of
these initiatives, e.g. business plan competitions,
education centres and chairs for entrepreneurship
are targeted on students as future entrepreneurs.
Graduates in technical disciplines are more than
others expected to found companies in dynamic
and innovative areas, thus promoting signi?cant
economic growth and increase in employment
(Roberts, 1991).
In fact, successful research universities such as
the Massachusetts Institute of Technology in
Cambridge seem to foster entrepreneurial activ-
ities. Approximately 4,000 MIT-related compa-
nies exist today, with total employment exceeding
R&D Management 33, 2, 2003. r Blackwell Publishing Ltd, 2003. Published by Blackwell Publishing Ltd, 135
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
1.1 million people and annual sales of $232
billion. If the companies founded by MIT
graduates and faculty formed an independent
nation, the companies would make that nation
the 24th largest economy in the world (Ayers,
1997). Similar success stories are reported from
Stanford University which is closely associated
with most of the cutting-edge companies in
Silicon Valley (Pfeiffer, 1997). Many US business
schools present the number of companies founded
by alumni and faculty as an indicator of their
outstanding quality. Economic studies in different
European regions indicate that the impact of
universities on company creation can be observed
outside the USA as well (Harhoff, 1999).
While there has been signi?cant research on the
causes of entrepreneurial propensity (Greenber-
ger and Sexton, 1988; Learned, 1992; Naffziger
et al., 1994; Brandsta¨ tter, 1997), only a limited
number of studies has focused on the entrepre-
neurial intent among students. It is not widely
known whether contextual founding conditions
or personality traits drive the students’ career
decision towards self-employment. In order to
design effective programmes, policy makers have
to know which of these factors are decisive (Scott
and Twomey, 1988). If the readiness to set up a
new business is primarily shaped by the founding-
related conditions, a change in these conditions
should have an effect on the entrepreneurial
intent. In this case, government and university
policy makers would be well advised to sustain
and expand their activities to improve education,
infrastructure, legal conditions and ?nancial
support for potential business founders. How-
ever, these programs would be less likely to foster
entrepreneurship if the founding intentions
were primarily grounded not on contextual
factors, but on the students’ personality. Person-
ality traits are comparatively stable and hard to
change in the short term. To encourage new
venture activities of students, a university would
have to rely mainly on a (self-)selection of
promising freshmen.
This discussion shows that a better under-
standing of the antecedents to career choices
seems promising, both from an academic and a
practical point of view. The research reported in
this paper attempts to answer the following
question: Is the students’ entrepreneurial intent
primarily pre-determined by steady personality
characteristics or is it possible to foster propen-
sity to self-employment through pragmatic gov-
ernment and university programmes?
The paper starts in section 2 with a short
review of relevant literature on graduate entre-
preneurship. On the basis of the presented
?ndings, we develop in section 3 a structural
model dedicated to explore the impact of
contextual and personality factors on entrepre-
neurial propensity. In section 4 the research
method is outlined. The ?ndings are presented
in section 5. In the ?nal section 6 we discuss the
implications of the ?ndings on the design of
entrepreneurship programmes.
2. Research on students’ entrepreneurial
behavior
Business college students and graduates often see
the founding of a company as an attractive
alternative to wage or salary employment. This
may partly originate from an increasing disap-
pointment with traditional occupations in (large)
companies which in turn increases the desirability
of self-employment (Kolvereid, 1996). As a
reaction to international competition, organiza-
tions have gone through major cost cutting and
restructuring processes. The employment-related
advantages of established companies, mainly job
security, reward of loyalty and stability, have lost
their attraction (Jackson and Vitberg, 1987). At
the same time, the work values usually connected
with self-employment such as independence,
challenge, and self-realization, have become more
desirable in the work environment.
Empirical ?ndings provide support for this
trend. In a survey of English students 25% of the
respondents indicated that they had a business
idea and 41% were inclined to self-employment.
Hart and Harrison (1992) explored the attitudes
of high-school students in Northern Ireland and
report that 47% expressed the wish to run their
own business. The result of a survey in Ireland
indicates a high average self-reported inclination
to become an entrepreneur (Fleming, 1994).
Similar ?ndings exist for the USA. A study
conducted by Karr (1985) shows that 46% of the
college students consider an own business as a
good opportunity to get ahead. A more pro-
nounced enthusiasm for entrepreneurship was
expressed by MBA students from top business
schools across the USA. 44% of the students
Christian Lu¨thje and Nikolaus Franke
136 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
selected ‘to become an independent entrepreneur’
as their primary long-term career goal (Sanholtz,
1990).
A lower level of entrepreneurial intent is found
by Brenner et al. (1991). Although 55% of the
responding senior students in business preferred,
given a free choice, to operate their own business,
only 5% of all students indicated this as their
most probable employment status. Similar
results are reported by Kolvereid (1996) for a
sample of Norwegian business students. Approxi-
mately 43% preferred a career as self-employed,
however, only 7% of all respondents estimated
the chance to become entrepreneurs to be 75%
or higher. Statistics support the comparatively
low percentage of graduates starting a new
business from scratch. In the early nineties
between 2 and 2.5% of English alumni started
a business immediately after graduation
(Brown, 1990).
These ?ndings reveal a difference between the
attitude about entrepreneurship on the one side
and entrepreneurial intent and actual behaviour
on the other side. The question arises which
factors determine the career choice of students
and which factors may explain the inconsistency
between attitudes and intentions.
Interdisciplinary research has been conducted
to answer this question.
1
Psychological models
strove to identify personality characteristics that
distinguish business founders from non-entrepre-
neurs (Shaver and Scott, 1991; Brandsta¨ tter,
1997). This research ?eld has established a
number of signi?cant traits, including risk taking
propensity (Brockhaus, 1987; Hisrich and Peters,
1995), need for achievement (Johnson, 1990), and
locus of control (Bonnett and Furnham, 1991)
and has focused on particular attitudes towards
entrepreneurship as antecedents of the career
path choice (Robinson et al., 1991b). Sociological
theories emphasize a variety of social, cultural
and economic contextual variables that may
in?uence the readiness to undertake a new
venture. The studies explore factors such as
societal attitudes towards entrepreneurship, the
availability of funds or the existence of small
business incubators (Shapero, 1984). Similar to
personality traits, these factors have been found
to be important facilitators for entrepreneurial
activities (Pennings and Kimberly, 1997; Hisrich
and Peters, 1995). Some researchers have inves-
tigated the individual within the context of his/
her environment to explain entrepreneurial in-
tent. They propose models which include inter-
actions between personality and environmental
factors (Dubini, 1988; Greenberger and Sexton,
1988; Learned, 1992; Herron and Sapienza, 1992;
Naffziger et al., 1994).
Most of the cited studies are based on samples
of professionals who have either founded a
company (entrepreneurs) or have work experi-
ence as employees of organizations. It seems
questionable to generalize these ?ndings to
students and graduates. Both populations can
differ in a variety of important entrepreneurial
characteristics which in turn would lead to
inconsistent results (Robinson et al., 1991a).
The few empirical studies based on student
samples suggest that courses in entrepreneurship
and the image of business founders within the
university encourage graduates to become self-
employed. A survey of technology students from
four different countries reveals that the career
preferences and entrepreneurial convictions are
in?uenced by the image of entrepreneurship as a
career alternative and the support received from
the university environment (Autio et al., 1997). A
multi-country survey with MBA students points
out that the social status of entrepreneurship is a
good predictor of interest in starting a business
(Begley et al., 1997). In a survey of MBA students
at a large US college, Chen et al. (1998) ?nd that
the number of management courses the students
had taken were positively related to entrepreneur-
ial intention. Further empirical evidence results
from a comparison of small business students and
students with other business and economics
majors. The small business students have a higher
need for achievement which in turn has a positive
effect on the readiness to found a company (Sagie
and Elizur, 1999). However, it is not clear
whether self-selection effects or causal effects of
the entrepreneurship courses are responsible for
these results. Furthermore, Hostager and Decker
(1999) in their preliminary study of students
involved in an entrepreneurship programme
cannot ?nd a relationship between education
and achievement motivation. An even more
pessimistic view of the effects of universities on
entrepreneurial propensity results from a long-
itudinal study of 89 business students: after four
years of business courses the interest in pursuing
self-employment seemed to dissipate (Whitlock
and Masters,1996).
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 137
Other studies which explore the effects of the
university environment on entrepreneurship ac-
tivities focus more on faculty and university staff
than on students (BenDaniel, 1999). Taken
together, empirical research has seldom explored
students as entrepreneurial subjects. The few
?ndings that exist are partly inconsistent. Conse-
quently, there is a lack of understanding how
public policy and universities can effectively
develop future high-tech business founders. The
following survey is aimed to provide new insights
concerning this topic.
3. A structural model of entrepreneurial
intent
Based upon the existing literature, it appears
promising to integrate both, individual traits and
contextual factors into a structural model of
entrepreneurial intent.
A combination of an extensive literature review
and serial interviews with students and experts in
entrepreneurship suggested to integrate the two
personal characteristics ‘risk taking propensity’
and ‘locus of control’ into the structural model.
Both constructs have frequently been enumerated
as part of the ‘personality’ of new venture
creators and have proven their importance in
affecting the level of aspiration towards self-
employment (Brockhaus and Horwitz, 1986;
Shaver and Scott, 1991; Lumpkin and Erdogan,
1999; Robinson et al., 1991b; Stewart, 1996;
Bonnett and Furnham, 1991).
2
In order to compile a large set of contextual
factors which might in?uence the intention to
found a company, we conducted explorative
interviews and scanned the relevant literature
(e.g. Pennings and Kimberly, 1997; Naffziger
et al., 1994). As a result, 44 items were generated.
A questionnaire with these items was adminis-
tered to 12 business students who were asked to
assess the importance of each item for the
decision to found a company. The ten items with
the highest average importance score were
selected. A con?rmatory factor analysis suggested
that these items can be segregated in perceived
support factors and perceived barriers for found-
ing a company.
In sum, the designed model focuses on four
(latent) constructs to predict the propensity to
start a new venture, namely the risk taking
propensity, the locus of control, the environmen-
tal support, and the contextual barriers. All four
constructs are expected to reveal a causal effect
on entrepreneurial behaviour. Therefore, they
should determine whether students decide in a
positive or negative way concerning self-employ-
ment.
In alignment with new research evidence, the
model proposes that the intention to become a
business founder is moderated by the attitude
about entrepreneurship. Attitude instruments
tend to account for a big part of the variance of
a wide range of behaviours (Ajzen and Madden,
1986; Ajzen and Fishbein, 1980). Consequently,
many researchers have also recognized and
proved the importance of domain-speci?c atti-
tudes in understanding (future) business founders
(Autio et al., 1997; Kolvereid, 1996; Robinson et
al., 1991b). In the present model, attitudes act as
the link between general personality traits and
speci?c entrepreneurial behaviour. It is assumed
that the characteristics of the individual indirectly
in?uence the intention to become an entrepreneur
through their effect on attitude. This leads us to
the following three hypothesis:
H
1
: Individuals with a high risk taking propensity
are more likely to have a positive attitude
towards entrepreneurship.
H
2
: Individuals with an internal locus of control
are more likely to have a positive attitude
towards entrepreneurship.
H
3
: The more favourable the attitude with respect
to becoming self-employed, the stronger the
individuals’ intention to become self-employed.
The model proposes a direct impact of the
perceptions of contextual factors (support and
barriers) on entrepreneurial intentions. Hence,
the environment is assumed to be responsible for
the lack of a perfect attitude-intention correlation
reported above (see chapter 2). A student might
be willing to found a company, regardless of his
comparatively bad attitude towards entrepre-
neurship, because he perceives the founding
conditions as very favourable (trigger effect).
Inversely, graduates with a positive attitude
towards new venture creation may not decide to
start their own business due to a negative
perception of salient factors in the environment.
This line of reasoning is known in attitude models
as the contextual in?uence on the attitude-
behaviour relationship (Abelson, 1982). Based
Christian Lu¨thje and Nikolaus Franke
138 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
on these arguments we propose two additional
hypotheses:
H
4
: The more insurmountable a student perceives
barriers for founding a company to be, the
weaker the individual’s intention to become
self-employed – irrespective of his attitude
towards entrepreneurship.
H
5
: The more favourable a student perceives
supporting contextual factors to start up a
new business to be, the stronger the indivi-
dual’s intention to become self-employed –
irrespective of his attitude towards entrepre-
neurship.
The factor which affect the entrepreneurial
intent are presented in a structural model in
Figure 1.
4. Research methodology
Previous to the main survey, eight preliminary
studies involving 139 subjects were conducted to
develop valid scales for the constructs in the
model (see Figure 2). Most of the factors were
designed through a standard scale development
process for theoretical constructs (Bagozzi et al.,
1991). First, based on exploratory surveys and/or
expert and student judges, a list of items is
generated for each construct. Next, this list is
screened and the number of items is narrowed
through standard validity and reliability criterion
(Cronbach a and exploratory factor analysis).
The remaining items are the basis of the ques-
tionnaire in the main survey. Finally, a second
validation of the scales is done on the basis of the
survey data applying Cronbach a and con?rma-
tory factors analysis.
Since entrepreneurial intent is the ultimate
dependent construct in the model, considerable
attention was turned to the design of the
intention-scale. Similar to the operationalization
used by Autio et al. (1997), the respondents were
asked to rate the likeliness to become self-
employed in the foreseeable future after gradua-
tion. In a ?rst version, we designed a ?ve-point
scale and tested the validity in an exploratory
study involving 15 students. The results revealed
a skewed distribution: while the respondents
often marked the middle scale-point, almost no
student chose ‘quite probable’ and ‘very prob-
able’. A second preliminary study was conducted
based on a four-point-scale (n ¼26). The subjects
were asked to make their ratings on the basis of
the scale and to write a short statement concern-
ing their career plans and their readiness to found
a company. The statements were reviewed by
independent raters and associated with one point
on the scale. These judgements were linked with
the original students’ ratings leading to a correla-
tion higher than 0.9. The four-point scale seems
therefore to ensure a high-validity measurement
of the individuals entrepreneurial intent.
The setting of the preliminary studies was
provided by students in Germany. Thus, the
questionnaire used in this study was ?rst designed
in German, slightly modi?ed and than carefully
translated into English by native speakers. The
translation was pre-tested with business and
technical students at MIT and proved to be both
comprehensible and clear. Since e-mail and the
internet are the most popular communication
attitude towards
entrepreneurship
entrepreneurial
intent
risk taking
propensity
internal locus
of control
perceived
barriers
perceived
support
contextual factors
personality traits
endogenous variables
H
1
(+)
H
2
(+)
H
4
(-) H
5
(+)
H
3
(+)
Figure 1. Structural model of entrepreneurial intent.
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 139
means used by students, an online-version of the
questionnaire was designed.
The data for the main survey were collected
from the target population of electrical engineer-
ing/computer science and mechanical engineering
students at MIT School of Engineering. All
students who were members of the of?cial MIT
e-mail list of the two departments were asked to
participate. The target population (all students in
the two departments) is bigger than the selected
user population (students in mailing lists). How-
ever, the problem of ‘undercoverage’ does not
seem to be critical. The of?cial e-mail lists are
used to disseminate important course and exam
information. According to students’ of?ce admin-
istrators, the e-mail directories may therefore be
viewed as a nearly complete listing of students in
the two MIT departments. The combined sample
size is 2,193 engineering students, of whom 1,536
were students in the electrical engineering/com-
puter science department and 657 students had
their major in mechanical engineering.
The students received an e-mail with a short
explanation of the survey and a hypertext-link to
the online-questionnaire. One week after the ?rst
mailing a reminder was sent. In all, 524 ques-
tionnaires were completed. The response rates
were 24.2% in the electrical engineering/compu-
ter science department (n ¼378) and 22.2%
(n ¼l46) in the department of mechanical en-
gineering. Twelve answers had to be excluded
from further analysis leading to a number of 512
usable questionnaires. Descriptive information
about the respondents is provided in Appendix 1.
5. Results
The research ?ndings will be presented in two
parts. First, we explore whether graduates can in
fact be viewed as an important source of future
business founders. The exploration of entrepre-
neurial activities among students is relevant only
if a minimum of entrepreneurial spirit exists.
Then, the covariance structure model is estimated
in order to examine the causes of entrepreneurial
intent.
5.1. Descriptive ?ndings on students’
entrepreneurial activities and plans
The descriptives show that the engineering
students seldom undertake entrepreneurial
literature review, expert interviews
selection of constructs
entrepreneurial
behaviour
entrepreneurial
intent
risk taking
propensity locus of control
attitudes towards
entrepreneurship
perception
of context
personal
background
standard item-scale
(Hisrich/Peters 1995)
? 10 items
Preliminary survey 6:
item selection through
exploratory questionnaire
n=21
criterion: Cronbach?,
exploratory factor analysis
? selection of 4 items
standard item-scale
(Hisrich/Peters 1995)
? 10 items
Preliminary survey 4:
item generation
through group discussion
n=10
? 27 items
Preliminary survey 5:
item selection through
exploratory questionnaire
n=30
criterion: Cronbach ?,
exploratory factor analysis
? selection of 4 items
item generation
through literature review
? 27 items
Preliminary survey 7:
item generation through
exploratory interviews
n=12
? additional 23 items
Preliminary survey 8:
item selection through
questionnaire n=12
average importance
scores ? selection of 5
barrier and 11 support items
(5 external, 6 university)
Preliminary survey 2:
examination of validity of
the five-point-scale through
exploratory questionnaire
with open questions
n=15
? unsatisfactory validity
Preliminary survey 3:
scale modification to a
four-point-scale
exploratory questionnaire
with open questions
n=29
? very high validity
Preliminary survey 1:
item generation
through group discussion
n=10
? 13 variables
Modified item-list
from
Franke (1999)
? 9 variables
main survey n=512
second item selection:
criterion: Cronbach ?,
confirmatory factor
analysis etc.
? selection of 3 items
second item selection:
criterion: Cronbach ?,
confirmatory factor
analysis etc.
? selection of 2 items
second item selection:
criterion: Cronbach ? ,
confirmatory factor
analysis etc. ? selection of
3 barriers, 3 support items
(2 external, 1 university)
9 variables 1 four-point-scale 13 variables second item selection:
criterion: Cronbach ?,
confirmatory factor
analysis etc.
? selection of 3 items
Preliminary survey 6:
item selection through
exploratory questionnaire
n=21
criterion: Cronbach ? ,
exploratory factor analysis
? selection of 3 items
Figure 2. Operationalization of the model.
Christian Lu¨thje and Nikolaus Franke
140 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
efforts in the course of study (see left column of
Figure 3). Only 3.4% of the respondents in-
dicated to be self-employed. This ?nding may be
explained by the high opportunity cost of self-
employment due to the extreme workload and the
high tuition fees at MIT. However, the self-
employed students run businesses of some im-
portance. Almost half of them develop IT
hardware and software, on average they have
invested $31,000 and one out of two self-
employed students already has employees.
More signi?cant than the entrepreneurial
activities in the course of study is the intention
to start a new venture someday after graduation
(see right column of Figure 3). More than half of
the respondents indicate that they will ‘quite
probably’ (44.0%) or ‘very probably’ (10.6%) run
their own company in the foreseeable future after
leaving university. The planned activities focus on
dynamic and innovative areas such as IT hard-
ware and software (23%), high-tech consulting
(22%), and product development and design
(13%). These companies, if realized, can be
expected to have a signi?cant impact on econom-
ic growth and increase in employment. On
average the students plan to employ 96.6 people
three years after founding. Taken together, the
respondents in this sample who prefer to start a
business may have more than 20,000 employees
three years after starting the new business. These
self-
employed
3.4%
very
probable
10.6%
not self-
employed
very
improbable
quite
improbable
quite
probable
44.0%
33.4%
11.0%
Are you currently self-employed? Do you plan to be self-employed in the
foreseeable future after graduation?
96.6%
Characteristics of business
Weekly workload ? 17.1 hours
% of total income earned
through self-employment
? 65.5%
Money invested ? $ 30,955
Monthly turnover higher
than $ 5.000 ?
17.6% yes
Employees? 52.9% yes
If yes:
Number of employees?
? 3.1 people
Venture founded by a
team?
41.2% yes
If yes:
Number of team members
? 2.6 people
IT/
Softw.
23%
Consul-
ting
Prod.
dev./
Design
Bio-
tech
Un-
known
Other
22%
13%
4%
31%
7%
IT/
Softw.
47%
Consul-
ting
Prod.
dev./
Design
Bio-
tech
Other
35%
12%
0%
6%
Entrepreneurial activities
during studies
Entrepreneurial plans
after graduation
What line of business? What line of business?
Characteristics of business
Planned time between
graduation and founding
? 5.2 years
Plan to start up new
venture in a team?
81.4% yes
If yes:
Number of team members
? 3.2 people
Number of employees 3
years after founding
? 96.6 people
Figure 3. Descriptive ?ndings concerning entrepreneurial activities and plans.
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 141
?ndings seem to ful?ll the hopes of economic
policy makers. Students at technical research
universities are apparently a promising source
of future high-tech entrepreneurs.
5.2. Model testing
The covariance structure model was estimated in
order to explore the antecedents of the intentions
to choose the entrepreneurial career path. Speci-
?cally, we investigate whether founding activities
may be fostered by a favourable context inside
and outside the university or are rather deter-
mined by students’ personality.
The assessment of ?t reveals that the model
satisfactorily reproduces the sample matrix of
variance and covariance (see Figure 4 and
Appendix 2). All global goodness-of-?t measures
reach a level that is usually regarded as accep-
table: GFI ¼0.952, AGFI ¼0.933, RSMEA¼
0.047, CFI ¼0.939, w
2
/df ¼2.11. The ‘difference
of chi-square test’ compares the original model
with competing models obtained by constraining
one of the free parameters (Long, 1983). The
results of this test indicate that the model
constructs have a high discriminant validity (see
Appendix 3).
The model parameters were estimated using the
maximum likelihood method and are reported in
Figure 4. The attitude towards entrepreneurship
emerges as the most important antecedent of the
intention to become self-employed. The attitude
has a strong and highly signi?cant effect on
entrepreneurial conviction (b¼0.508***). Hy-
pothesis 5 is therefore con?rmed by the analysis.
If public policy and university administration
want to raise the number of graduates who decide
to start their own business, an improvement of
the students’ attitude towards entrepreneurship
apparently is an effective lever.
This attitude is in?uenced by the personality of
the respondents (H
1
and H
2
are supported). In
particular, the risk taking propensity stands out
as a very strong in?uence, with a Beta of
0.464***. The impact of an internal locus of
control on the attitude is also fairly high
(b¼0.300**). Taken together, the ?ndings imply
that students who are willing to accept risks and
who perceive control over the events in their life
have a more favourable attitude towards running
an own business. This way, personality traits have
an indirect impact on the readiness to become
self-employed.
H
4
and H
5
stated that the perceptions of
entrepreneurship-related barriers and supporting
factors contribute a direct explanation for the
preferred employment status of the students. The
?ndings support both hypothesis. The path
between the perceived barriers and intentions is
signi?cant (b ¼À0.127**). If students realize an
antagonistic environment for business founders,
e.g., because they think that banks do not readily
give loans, or because they rate the state laws
as being too restrictive, they are less likely
to become entrepreneurs. The path coef?cient
attitude towards
entrepreneurship
entrepreneurial
intent
risk taking
propensity
internal locus
of control
perceived
barriers
perceived
support
context
personality traits
endogenous
variables
0.464***
0.300**
-0.127 ** 0.183**
0.508***
? ? ? ? ? ?
? ?
?
? ? ?
?
?
?
?
?
?
ML estimation with AMOS
AGFI = 0.93; ?² = 204.2; df = 176; n = 495
one-tailed test of significance
Ind1
Ind1
Ind2
Ind3
Ind1
Ind2
Ind1
Ind1 Ind2 Ind3 Ind1 Ind2 Ind3
Ind2 Ind2 Ind3
Figure 4. Results of model testing.
Christian Lu¨thje and Nikolaus Franke
142 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
between the perceived support factors and
entrepreneurial intent point in the same direction
(b¼0.183**). An optimistic evaluation of help
and facilities, which are available to potential
business founders, is associated with a higher
propensity to pursue a career as an entrepreneur.
Overall, the perceptions of the context factors
for entrepreneurship have a moderating
in?uence on the attitude-intention relation-
ship. This effect may explain why a student,
despite a positive attitude about being self-
employed, may not be willing to risk a new
venture because he/she perceives the context
as hostile. Inversely, students with a less favour-
able attitude may be encouraged to run their
own business due to an optimistic perception
of the environmental conditions for entrepre-
neurs.
The ?ndings allow us to answer the research
question of the present paper: the intentions of
students to become business founders is in?u-
enced both indirectly by steady personality
traits and directly by contextual factors, which
are usually easier to modify. It has to be
taken into account that we have not explored
the ‘objective’, but the perceived contextual
factors. Therefore, initiatives addressed to im-
prove the founding conditions do not necessa-
rily lead to an immediate improvement of
entrepreneurial intentions and to higher business
‘birth rates’.
To decide which of the two construct groups –
personality traits or contextual founding condi-
tions – has the stronger impact on the preferred
career alternative, the causal effects represented
by the path parameters are added up. The
personal characteristics have a total indirect
effect of (0.300 þ0.464)*0.508 ¼0.388. The con-
text factors show an overall direct impact of
(0.127 þ0.183) ¼0.31. This comparison is limited
by the fact that the personality and the context
are not entirely covered by the constructs
included in the present research. However, for
this sample of technical students at MIT both
construct areas seem to have a similar effect on
entrepreneurial intent.
6. Implications
The present survey provides evidence that the
perceived contextual barriers and support factors
play a signi?cant role for the entrepreneurial
behaviour of technical students. These percep-
tions may be altered and improved by suitable
initiatives. Thus, public policy and universities
would be well advised to intensify their activities
to implement educational, research and resource
programmes on entrepreneurship. Such pro-
grammes have to remove the perceived and the
objective context factors which are adverse to
starting a company. Furthermore, the image of
entrepreneurship as a career alternative should be
improved and support from the public and
university environment should be intensi?ed.
The actions could entail, for example, using
positive role models in teaching, establishing
entrepreneurial support networks, and arranging
business plan competitions.
Next, the ?ndings also indicate that the
conviction to start up a new venture is to some
extent a question of personality structure. Those
who are in charge of an economic policy meant to
encourage technical students to found high-tech
companies should be aware that the measures we
propose will not have the same effects on all
people. It seems more promising to focus the
stimulating activities on the right students,
particularly those with a propensity to high risk
taking and an internal locus of control. In
order to avoid misdirected budgets, policy makers
and university faculty need to identify these
students and encourage them to take part in
entrepreneurship programmes. For instance,
universities could try to base their selection
process for courses in entrepreneurship partly
on information provided by students about
personality traits and preferences regarding en-
trepreneurship.
Finally, the attitude towards entrepreneurship
proved to contribute the strongest explanation
for entrepreneurial intentions of the technical
students. We have focused on personality traits as
causes of the attitude. However, other variables
may have an impact on this attitude as well.
If these factors are open to change, entrepre-
neurial attitudes may be in?uenced by educators,
policy makers, and successful founders who
can be powerful role models. Further research
in the area of attitude formation holds
promise for enhancing the understanding of
the entrepreneurial intent and the effective
cultivation of a business founding spirit among
students.
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 143
Acknowledgement
The authors would like to thank the administra-
tion staff at MIT School of Engineering, Profes-
sor Tom Allen from MIT Sloan School of
Management, Professor Dietmar Harhoff from
the University of Munich, and Rosemarie Wilcox
for their support and advice.
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Notes
1. ‘No one discipline or conceptual scheme can provide
an adequate understanding of all aspects of en-
trepreneurship’ (Reynolds 1991, p. 67).
2. Only two constructs were taken into consideration
in order to keep the strain for the respondents on a
low level.
Appendix
Appendix 1. Information about respondents
Age Nationality Gender Student status
0–20 40.0% USA/Canada 69.0% Female 23.9% Undergraduate 71.6%
21–22 36.9% Asia 21.3% Male 76.1% Graduate 28.4%
23–24 12.0% Europe 4.2% Self-employed parents Department
25–26 5.0% Rest America 4.9% Yes 30.1% Electr./Comp. 72.7%
27– 6.1% Other 0.6% No 69.9% Mechanical 27.3%
Mean 21.7
Std. dev. 5.2
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 145
Appendix 2. Results model testing
Appendix 3. Test of discriminant validity (w
2
-Test of difference)
Number in cells: Difference of w
2
between original model and model with one additional (difference should be
higher than 3.841).
Factor Indicator Indicator
reliability
Revalue of
factor
loadings
Item
total
correlat
Cornback
a
Explained
variance
by f-factor
Factor
retiability
Average
explained
variance
Risk 1 0.808 – 0.382
2 0.570 7.366 0.525 0.642 58.7% 0.652 0.388
3 0.389 7.809 0.457
Locus 4 0.667 – 0.315 0.478 65.7% 0.562 0.423
6 0.147 2.372 0.315
Barriers 7 0.417 – 0.405
8 0.204 5.086 0.309 0.533 52.2% 0.547 0.294
9 0.262 5.070 0.343
Support 10 0.361 – 0.371
11 0.213 4.895 0.306 0.522 51.2% 0.527 0.275
12 0.245 4.873 0.334
Attitude 13 0.788 – 0.606
14 0.243 9.764 0.426 0.690 62.1% 0.705 0.452
19 0.394 12.003 0.492
Entrep. 20 0.932 – 0.8643 0.867 93.22% 0.941 0.906
Intent 21 0.798 22.358 0.8643
Global w
2
¼204.2 GFI ¼0.952
Fit df ¼97 AGFI ¼0.933
Measures p ¼0.000 RMSEA ¼0.047
w
2
/df ¼2.11 CFI ¼0.939 n ¼495
Risk Locus Barriers Support Attitude Entrep. intent.
Risk
Locus. 202.1
Barriers 294.31 258.73
Support 169.23 203.52 282.29
Attitude 13.58 15.46 17.3 13.2
Entrep. intent. 69.61 41.20 37.2 64.9 321.6
Christian Lu¨thje and Nikolaus Franke
146 R&D Management 33, 2, 2003 r Blackwell Publishing Ltd 2003
Appendix 4. Items in analysis
Construct Formulation of items
Risk taking
propensity
5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items; ‘When
I travel I tend to use new routes’; ‘I like to try new things (e.g. exotic food or
going to new places’: ‘I have taken a risk in the last six months’.
Locus of control 5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items: ‘I often
feel ‘That’ just what the things are and there’ nothing I can do about it’
(scale inversed), ‘When everything goes right, I think that it’ mostly luck’
(scale inversed).
Perceived barriers 5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items: ‘Banks
do not readily give credit to start up companies’; ‘State laws (rules and
regulations) are adverse to running a company’; ‘It is hard to ?nd a business
idea for a business that hasn’t been realized before’.
Perceived support factors 5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items:
‘Entrepreneurs have a positive image with American society’; ‘Quali?ed
consultant and service support for new companies is available’; ‘The creative
MIT atmosphere inspires to develop ideas for new businesses’.
Attitude towards entrepreneurship 5-point rating scale (1 ¼not at all accurate; 5 ¼very accurate); items: ‘I’d
rather be my own boss than have a secure job’; ‘You can only make big
money if you are self-employed’; ‘I’d rather found a new company than be
the manager of an existing one’.
Entrepreneurial intent ‘Do you plan to be self-employed in the foreseeable future after you leave
the MIT?’ 4-point rating scale (1 ¼very probable, 2 ¼quite probable,
3 ¼quite improbable; 4 ¼very improbable) and ‘Are you currently self-
employed’ (yes/no).
Testing a model entrepreneurial intent
r Blackwell Publishing Ltd 2003 R&D Management 33, 2, 2003 147
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