UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Thuy Phuong Thao FACTORS AFFECTING ENTREPRENEURIAL INTENT: A STUDY OF BUSINESS STUDENTS IN VIETNAM ID: 22120031 MASTER OF BUSINESS (Honors) SUPERVISOR: Prof. Nguyen Dong Phong Ho Chi Minh City – Year 2014 1 TIEU LUAN MOI download : skknchat@gmail.com 2 ACKOWLEDGEMENT This thesis could not be accomplished without the assistance, support, advice, guidance and encouragement from many accompanists. I wish to express my sincere gratitude to my co-advisers Prof. Nguyen Dong Phong and Dr.
Nguyen Phong Nguyen for their commitment and enthusiasm in supervising process, even with my minor and unwise questions. I wish to give a big thank you for my dear colleagues, friends and classmates for their invaluable support and encouragement when I encountered a lot of difficulties and stresses during the process of thesis writing. Last but not least, I would like to thank all students, lecturers and staff from International School of Business-UEH, ERC International, University of Economics HCMC, and Foreign Trade University for their time with facilitating and answering my questionnaires. TIEU LUAN MOI download : skknchat@gmail.com 3 ABSTRACT The research examines the ability of attitude, social norms, perceived behavioural control and proactive personality in predicting entrepreneurial intent, in which the model is operationalized as a combination between variables from Ajzen (1991) and Batteman and Crant (1993)’s theory.
Using a data set form a sample of 396 business students, the research adopts multiple regression analysis to test the proposed model and its hypotheses. The result shows that both theories can be applied in Vietnamese context, in which attitude and social norms toward entrepreneurship and proactive personality do affect the entrepreneurial intent of business students in Vietnam; whereas perceived behavioural intention toward entrepreneurship does not. These findings suggest that if business students in Vietnam are lack of confidence in their ability to starting new businesses, and they should be trained/ educated in a way of developing soft-skills rather than focusing only in textbook. Keywords – Entrepreneurial intention, Theory of Planned Behaviour (TPB), Proactive Personality TIEU LUAN MOI download : skknchat@gmail.com 4 ACKOWLEDGEMENT ABSTRACT TABLE OF CONTENTS LIST OF FIGURE TABLE OF CONTENTS CHAPTER 1 .1 History of entrepreneurship in Vietnam.2 Entrepreneurial activities in Vietnam .5 Contributions and implications .6 Structure of the research.
14 LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT .1 The application of Ajzen’s (1991) Theory Planned Behaviour (TPB) model in predicting entrepreneurial intent.2 Proactive Personality (Batteman and Crant, 1993) in predicting entrepreneurial intent. Review on “Entrepreneurial intent”. 28 TIEU LUAN MOI download : skknchat@gmail.5 Data collection methods .6 Data analysis method .4 Exploratory factor analysis (EFA) .5 Multiple regression analysis .2 Assessment and refinement of measurement scale .2 Exploratory Factor Analysis (EFA) .3 Multiple Linear Regression .1 Test of assumptions .1 Summary of research finding.1 The application of Ajzen’s planned behavior model on entrepreneurial intent in Vietnam’s context .50 TIEU LUAN MOI download : skknchat@gmail.2 The application of proactive personality construct (Crant, 1993) in Vietnam market.3 Summary of findings .1 General managerial implications .2 Implications for Educators .3 Implications for Practitioners .4 Implications for Public policy makers .5 Summary of Implications .3 Limitation and further research direction. 56 APENDICES Appendix A: Questionnaire (English and Vietnamese version) Appendix B: Multiple Liner Regression TIEU LUAN MOI download : skknchat@gmail.com 7 LIST OF FIGURES Figure 2.2: Ajzen’s theory of planned behavior (1991) .3: The proposed model .1: Cronbach’s Alpha of remaining variables .2: KMO and Bartlett’s Test of Dependent Factor (EI) and Total Variance Explained of Dependent Factor.4: KMO and Bartlett’s Test of Dependent Factor (EI) and Total Variance Explained of Independent Factor .5: Multiple linear regression .48 TIEU LUAN MOI download : skknchat@gmail.com 8 CHAPTER 1 INTRODUCTION 1.1 History of entrepreneurship in Vietnam During Vietnam’s Subsidy Period, everything was controlled by the government, so foods, goods, and services were purchased with coupons or food stamps.
The country’s economy was close to nepotism and controlling power manipulated by those with a position in government, i. they received more coupons and had access to special shops. In contrast, for those without special status, they spent almost a day waiting in line to buy rice and other basic commodities.d) states that in 1986, Vietnam’s government approved a strategy of gradual integration into the world economy by launching a political and economic renewal campaign “Doi Moi” - a balanced approach to develop both industry and agriculture with a mix of state, collective, and private ownership, which facilitated the transition from a centrally planned economy to form of a market socialism officially termed "Socialist-oriented market economy - Kinh te thi truong". Since then, the establishment and development of private business in the production of consumer goods and foreign investment has played a crucial role in the country’s economy growth.
According to Library of Congress Federal Research Division (2005), by the late 1990s, more than 30,000 private businesses had been created, and the economy was growing at an annual rate of more than 7%. However, according to report of Bertelsmann Stiftung’s Transformation Index (BTI) in 2014, due to the key structural issue in the banking sector and state-owned enterprises (SOEs), the economy expanded by just 5.03% in 2012, the fifth consecutive year growth had been below the 7% average of the 1990s and early 2000s. In contrast, the private sector has been proved its contribution to the wealth of country by accounting for roughly 60% of the country’s GDP (Per capita GDP at current U. prices reached $1,523 in 2012, up from $1,224 in 2010, the year Vietnam achieved middle- TIEU LUAN MOI download : skknchat@gmail.com 9 income status according to World Bank criteria), covering about 29% the country budget in the form of taxes in 2010 (compared to 18% in 2006), creating 3.2 million jobs during the 2006 - 2010 period (four times more than state-owned businesses).
The investment capital ratio of the private sector stood at 36. Thus, it is said that Vietnam has made impressive economic progress as demonstrated by the consecutively positive record of the growth of gross domestic product (GDP) during the past decade, and private enterprises have been contributing to the success and they should be received an appropriate concern for its sustainable growth. Company Law and Law on Private Enterprise first adopted in 1990, which was revised into New Enterprise Law in 1999 created a desiring environment for the development of entrepreneurial activities in Vietnam. The later law version not only revoked unnecessary business licenses restrictions in 145 industries, trades and services to ease private entry in the market, but also allowed private investment funds besides the unique source of public investment capital financed by the state budget.
For two years (2000 and 2001) after the New Enterprise Law’s implementation, the number of new enterprises grew to 35,447, more new enterprises than were generated by the former Company Law and Law on Private Enterprise in eight years. As a result, there had been the birth of a new class/ career called “entrepreneur” (“Doanh nhan khoi nghiep”). The entrepreneurship development in the form of Small and Medium Enterprises (SMEs) has emerged as a strong agent for socio‐economic diversification as it encouraged de‐collectivization. SMEs were defined formally in document 681/CP-KNT issued by the government in 1998.
Accordingly, SMEs are those independent business and production establishments that have registered their business under the current legislation. “Small Enterprises” are referred to those with registered capital less than VND1 billion and number of maximum 50 employees, while “Medium Enterprises” are referred to those that have capital ranging from VND1 to VND5 billion with the number of employees ranging from 51 to 200 (Ho, n. TIEU LUAN MOI download : skknchat@gmail.2 Entrepreneurial activities in Vietnam Pham Nhat Vuong - Vingroup, Đang Le Nguyen Vu - Trung Nguyen, Le Phuoc Vu - Ton Hoa Sen, Bau Đuc - Hoang Anh Gia Lai to name a few, these successful faces of the first entrepreneurial generation in Vietnam has been recently followed by many popular entrepreneurs. It is said that entrepreneurial activity has significantly increased and played an important role in Vietnam’s economic map; it also become a trend for the youth, especially university students.
Two typical key words of entrepreneurial activities in Vietnam like on searching engine like Google “Doanh nhan tai Viet Nam” shows 14,400,000 results in .34 seconds or “Khoi nghiep kinh doanh tai Viet Nam” shows 1,090,000 results in .51 seconds with hundreds of websites, associations, clubs, competitions, activities and communities for entrepreneurs in Vietnam. The result illustrates an eventful and dynamic of entrepreneurial activities, ranging from university students to adults, from local Vietnamese to Viet Kieu or foreigners; and startup is becoming a tendency and facing strong expectations for their role to be key players these days and in the upcoming time. There are many reasons leads to the trend of being self-employed in the country such as current high rate of unemployment, low opportunity cost of starting own businesses compared to being employed, unfavorable policy for office worker, family tradition, etc. Regarding this, Ngan (2013) figured out some figures from General Statistic of Vietnam as a good explanation for the high rate of startups in Vietnam.
In 2013, 76,955 enterprises were established (10.1% higher than 2012); however, 60,737 enterprises went bankrupt or stopped operating (12. The reasons of declaring bankruptcy included continuing losses (56.1%) and lack of capital and market (38. Meanwhile, Diep (2013) pointed out the number of unemployment graduates (21-29 age range) was up to 101,000, accounting for 9.89% the total unemployment number. TIEU LUAN MOI download : skknchat@gmail.2 Research gap According to Alfonso and Cuevas (2012), in recent decades, research field of entrepreneurship phenomenon has significantly increased in both quantity and sophistication.
They argued that the rising interest in entrepreneurship parallel with its “contribution in the economic growth, rejuvenation of productive structure, relaunch of certain regions, dynamization of the innovative process and generation of employment” (p. Krueger et al. (2000) argue that the need to predict behavioral intentions of individuals has increased together with the tendency of starting own businesses in society. According to Tung and Mui (2011), a numbers of researches on personal and environmental- based determinants of entrepreneurial intent such as personality traits, attitude, or social environment have been extensively discussed (Davison, 1995; Begley et al., 1997; Branstatter, 1997; Segal et el., 2005); yet, the results obtained are inconclusive or even contradictory.
Moreover, throughout history of literature review on entrepreneurial intention, previous studies have also demonstrated the insufficient explanation of external factor and the fundamental role of cognitive-based factors. In Vietnam, paradoxically, while creating new business venture has been becoming a tendency, the interest in studying entrepreneur seems not to be thoroughly investigated. There have been some researches about entrepreneurship in Vietnam (Do, 2009; Ho, n.), yet the cognitive-based factors influencing in entrepreneurial intent have not been identified. Therefore, to get the big picture of what leads to real venture creation, the need of studying the cognitive-based factors affecting entrepreneurial intention in Vietnam is in demand.
The primary objective of this study is to examine the degree to which the Ajzen model’s variables (attitude, social norms and perceived behavioral control) and personality scale (Batteman & Crant, 1993), as operationalized in this study, can be used to predict entrepreneurial intention of business students in Vietnam. Moreover, the research also proves that the combination between the four mentioned antecedents is the new point in the history of literature. TIEU LUAN MOI download : skknchat@gmail.3 Research objectives The objective of this research is to identify main contributions in the fields of entrepreneurial intention models and to ascertain if they are able to predict the startup initiative of business students in Vietnam. For this propose, the theory of planned behavior by Ajzen (1991) will be used as it gathers specifically all the factors largely taken into consideration in the literature throughout time regarding entrepreneurial intention.
In addition, this study also tests the effect of proactive personality (Batteman and Crant, 1993) on entrepreneurial intent.