Entrepreneurship and e-Entrepreneurship Preferences Research

ABSTRACT

In Malaysia, the entrepreneurship development is growing steadily. The research of Howell and Palmer (1995) shows the equity ratio for Bumiputeras in 1971 had changed from 4 per cent to 18 per cent, and the equity ratio for non Bumiputeras, is from 34 percent in 1971 changed to 55 per cent. The traditional entrepreneurs typically start their business in small capital, low value added, and it takes time to set up the business. In the modern day today, the technology was developed in advance; the internet and information communication technologies (ICTs) are very common to the public. The growing in technology makes the traditional entrepreneurs join into e-Entrepreneurship. This research is a study on the preferences of the undergraduates toward entrepreneurship and e-entrepreneurship. This study can let us to have a better understanding about the choices of undergraduate in choosing to involve in entrepreneurship or e-entrepreneurship. Undergraduate students will use traditionally entrepreneurship way or the modern e-entrepreneurship way to promote their products or services. Subsequently, this research objective is to investigate the determinant of the undergraduates toward entrepreneurship and e-entrepreneurship. The independent variables of the determinants are education, prior knowledge, experience, government regulations and incentives, social network, availability of resources and opportunity identification. Questionnaire will be distributed randomly to two hundred and fifty respondents and the data will be tested.

PREFACE

This research study is the final project of my Bachelor of Degree in Multimedia University, Faculty of Business and Law. I spend much time and effort in completing this research, and it will be useful for the references of government and non-government institution as their references to view into the undergraduate entrepreneurial intention toward entrepreneurship and e-entrepreneurship. The topic of this research is the preferences of undergraduates toward entrepreneurship and e-entrepreneurship. In this research, the determinants of undergraduates to involve in entrepreneurship and e-entrepreneurship are also determined and investigated. The research consists of five chapters. The first chapter is for the introduction to the relevant topic and the objectives of the study. Chapter two is the literature review for the determinants of undergraduates on involvement in entrepreneurship and e-entrepreneurship. Follow by chapter three is the research methodology which included the theoretical framework and the sampling method. While in the chapter four is the data analysis for the results and discussion. The last chapter of this research is the conclusion and the summary for this whole study as well as the recommendation and the limitation to the research for further studies. I would like to express my sincere gratitude to my leading supervisor, Madam Rahayu binti Tasnim. Without her guidance and advises, I believe it is hard to complete this research study. I would also like to thank to my family and my friends who are supporting me all the ways. Their endless cares and loves do support me all the way in completing this research.

Chapter 1

Introduction

Overview

In this chapter, it is an introduction part of the research. The introduction starts with the explanation of entrepreneurship and e-entrepreneurship among the undergraduates. Next, the problem statement and the research objectives will be discussed and the last part in this chapter is the significant of the study, scope of the study and the organization of the study.

Entrepreneurship among undergraduates

The individual or people who create and grow the business can define as entrepreneurs. The “entrepreneur” term is derived in French economics since 17th and 18th, and it has much significant meaning and rich history (Gregory, 2001). The word “entrepreneur” comes from the French word which means “to undertake”, and in the business perspective, “entrepreneur” means to start a business. According to Hebert and Link (1989), they say entrepreneur is someone who takes responsibility in making judgmental decision on the use of resources to create a venture. The process of the entrepreneurs created and developed to make the profit can define as entrepreneurship (Dabson, Brian and Marcoux, 2003).

Different researchers have the different point of view toward the definition of “entrepreneurship”. Ucbasaran (2001) said that the term of “entrepreneurship” has no general accepted definition. OECD (1998); Praag (1999); Lumpkin and Dess (1996); Bull and Wilard (1993) support the argument of the term of “entrepreneurship” that does not have the general accepted definition; they argued the definition of entrepreneurship is largely depending on the research focus on which area.

In the Austrian or Schumpeterian economics, they define entrepreneurship as to gain the expectation profit by utilize the resources (Schumpeter 1934, Hayek 1945, Kirzner 1973, Casson 1982, Shane 2003). Entrepreneur can use the resources like funding advisory, low interest loan or government support to run their business. Law and MacMillan (1998) define the entrepreneurship as “the creation of new enterprise” which means the entrepreneurial intention is the source of a person to start up their business. Entrepreneurship is also defined as the process of an individual who is innovative and able to take the risk to create value (Sexton & Kasarda, 1992).

In Malaysia, the entrepreneurship development is growing steadily. Malaysia involves in entrepreneurship since the fifteenth century when the kingdom of Malacca was the trade centre due to its strategic geographer place. Many traders from China, India, Portugal, and others are coming to Malacca and trade with other traders. There are many policies in Malaysia are supporting to the entrepreneurs, including funding, physical infrastructure and business advisory services. The government is playing an important role in entrepreneurship development. There are many institutions are helping to develop entrepreneurship, for instances, Majlis Amanah Rakyat (MARA), is focusing on entrepreneurship training, Ministry of Entrepreneur is coordinating all the matters regarding to the entrepreneurship, Bank Negara plays a role in financing, Small and Medium Industries Development Corporation (SMIDEC) responsible in coordinating the development of SMIs and others institutions.

In the years of 90s, Malaysia’s government turns the economic strategy to industrialization due to the shift in the government policies. The industrialization also names as privatization and Malaysia Incorporated, which cultivate the development in entrepreneurship. The research of Howell and Palmer (1995) shows the equity ratio for Bumiputeras in 1971 had changed from 4 per cent to 18 per cent, and the equity ratio for non Bumiputeras, is from 34 percent in 1971 changed to 55 per cent. The data of the equity ratio of entrepreneurs shows the number of entrepreneurship in Malaysia has been increasing dramatically due to the transition to high-technology and the New Development Policy (NDP) promoted by the government which was targeted to achieve fully development by the year 2020. The NDP was the beginning of the knowledge-intensive and high technologies’ era into the entrepreneurial activities (Syahida & Dr. Amran, 2005).

In the previous times, the researchers view entrepreneurship is one of the important aspects toward the economic society. The purpose of entrepreneurship is to encourage people to be successful after they had started up their own business (Praag et al., 2000). There are many factors that can determine the success of an entrepreneur.

In the table above, we will look at the summarized of the determinants of successful entrepreneurship, which arise from the literature, taken from van Praag (1999). The table shows the determinants that stem from the classical views and also propose in the literature.

In the recent times, entrepreneurial education becomes more popular and acceptable by the undergraduates in the tertiary education. Entrepreneurship education has to become an essential component to cultivate the potential entrepreneurs in the private and public higher learning institutions. Entrepreneurship education is the most effective way to promote the transition of graduates toward the self-employment (Ismail et al., 2009). Hart and Harrison (1992) have done an investigation to the tendency of undergraduates in involvement to run their business in Northern Ireland, the research showed 47% of students were expressed the intention to run their own business. The result of the high percentage of students would like to run their business is because those undergraduates are considering running own business or self-employment as a career (Karr, 1985).

Krugeger et al. (2000) said the entrepreneurial intent is very important because it is the primary predictor of future entrepreneurial behavior, so it is an essential issue in entrepreneurship research to investigate the factors to determine the entrepreneurial intent. Fishbein and Ajzen (1975) views planned behavior as the key for pre-start up process and the behavioral intent is the immediate determinant of planned behavior. Although many researchers say the entrepreneurial intention is the important issue to entrepreneurship, Wang and Wong (2004) said there is only a limited number on the studies about the influence factors for students’ entrepreneurial intention.

Entrepreneurship

The traditional entrepreneurs typically start their business in small capital, low value added, and it takes time to set up the business. The traditional entrepreneurs need to raise capital, find a location, deal with suppliers, man power problems and others to complete their business set up. In the modern day today, the technology was developed in advance; the internet and information communication technologies (ICTs) are very common to the public. Technology helps an entrepreneur to save time and capital during pre-start up process in e-business, e-Entrepreneur do not need to find a location for their store, not need to hire many employees and others. The growing in technology makes the traditional entrepreneurs join into e-Entrepreneurship (Cheng & Chang, 2004).

Today, as we know that the e-entrepreneurship is more and more important and useful; the evidence of e-entrepreneurship development can be seen from the successful entrepreneurs at western countries like United States. The successful examples of e-entrepreneurship in United States are Google.com, yahoo.com, amazon.com, eBay.com, YouTube, Face book and etc. Google.com is one of the successful stories about young adults who have the information communication and technology (ICT) knowledge gets to involve in e-entrepreneurship (Eduardo, 2006).

The internet is a powerful tool which can help the firm to solve the limitation on financial resources. Doing business online is much easier and cost saving if compare to traditional brick and mortal kind of business. Online business does not need so much man power to run the business, unlike the traditional business need to employ people like a cashier, promoter, storekeeper, cleaner, and so on. During the recent years, the electronic information technologies have increasingly supported the internal and external information and communication process in every industry sector. The internet is one of the advantages of technologies, helping the business development become more efficiency and effectiveness (Kollmann, 2006).

According to Matlay (2004), he discussed the term ‘e-entrepreneurship’ is the new companies establish their business in the Net Economy. The Net Economy has a Direct influence in innovative business development which is based on the electronic information and communication network (e-ventures). The spread of information via the electronic data or the network is one of the factors to develop the growth of economic. If we compare 15th century and 20th century, the speed and usage of information via the network are relatively high in the later century. The information society nowadays is characterized by the rigorous use of the information technologies and the changing from industrial to a knowledge society (Evans and Wurster, 1997). Kollmann (2006) pointed out that, the information industry sector is shifting from the traditional economic sectors like production sector; service sector; and agriculture sector. The expansion of electronic data networks and the growth of IT formed a new business dimension which calls as network economy or Net Economy.

The figure 1 shows the information technologies can let the people to obtain information more accessibility. Entrepreneurs use the advantages of the information technologies to involve in e-commerce or commercial purposes. It is a competitive advantage to an entrepreneur if he/she can obtain more knowledge and information in technological development. Successful e-entrepreneurs shall posse better information to the market and their customers (Weiber and Kollmann, 1998).

Information technologies (IT) and networks are now becoming the important aspect upon every industry and service sectors (Scott, 1995). Knowledge is one of the most strategic resources in the new economy, affects the traditional business to review their traditional practices. Knowledge in IT takes advantage in dealing with new partnerships, innovation, social networks with customers, suppliers and help to detect the opportunities of new business in the future time (Malone and Laubacher, 1998). Bret and Champeaux (2000) said the cyber-entrepreneur mainly based on exploiting the networks by using the Internet technologies, intranets, and also the extranets.

In the previous study done by the researchers, we can identify the characteristics of technology based entrepreneurs or e-entrepreneurs. Personal characteristics such as age and experience can influence entrepreneurs to make a decision on creating and developing their businesses (Kisfalvi, 2003). Blais and Toulouse (1992) had done a research on the average age of e-entrepreneurs. They found out their age were rather young when they launch their business, which were around 30 years old. The young e-entrepreneurs are familiar with their skills and acquired extensive experience with the technology after they have graduated from a university, and they tend to launch their own business.

Roure and Keeley (1990) discussed the entrepreneur’s previous experience can become the advantages for them to success in new technology-based ventures. Compare with the traditional entrepreneurs, the e-entrepreneurs in internet base are younger and educated, especially in technical domains. The motivations of the entrepreneurs are potential for higher income, inherent desire to innovate, flexible working time and others (Colombo and Delmastro, 2001).

Problem Statement

In the past time, Malaysian graduates seldom considered taking entrepreneurship as their career choice, it is because entrepreneurship is still not so popular and the graduates do not have much interest on it. However, according to the Salleh (2002) research, he observed that in the recent time, the number of graduates who are associated with entrepreneurship has been increased, but the figure is still remaining low, which is lower than 0.4 %.

The Malaysian government is encouraging graduates to involve in either entrepreneurship or e-entrepreneurship under the “knowledge Economy Master Plan” in the year 2000. There are advantages for the graduates to take part in self-employment because entrepreneurship may promote creativity, innovation and create new job opportunities. There are also many successful examples of the involvement of young adults in entrepreneurship and e-entrepreneurship. One of the successful stories in e-entrepreneurship is the founder of Yahoo!, Jerry Yang and his partner creates Yahoo! after they were graduated from Stanford University. Pua-Khein-Seng, a Malaysian entrepreneur who is the founder of the USB flash memory pen drive also starts up his business when he was young.

Some undergraduates have their own ideas and want to start up their business after they finished their studies. They want to promote their products or services to the customers, but they can choose to promote in conventionally or in online business. Which type of business is easier and beneficial to the undergraduates to choose for set up their own business? What are their preferences toward entrepreneurship and e-entrepreneurship?

The government institutions are encouraging the undergraduate to be self-employed. They want to know what are the factors or determinants of undergraduates to join entrepreneurship and e-entrepreneurship. What are the determinants of the undergraduate to involve in entrepreneurship and e-entrepreneurship? In the research later, we will find out which determinants affect the undergraduates to involve in entrepreneurship and e-entrepreneurship.

Research Objectives

The General objective of this research is to identify the preferences among the undergraduates toward Entrepreneurship and e-Entrepreneurship. Next, the research will determine the correlation of the independent variables and dependent variables which are the determinants to the involvement of the undergraduates to entrepreneurship and e-entrepreneurship.

• To identify the preferences of the undergraduates toward entrepreneurship and e-entrepreneurship;
• To determine the determinants of undergraduates to the involvement in entrepreneurship and e-entrepreneurship.

Significant of study

Entrepreneurship and e-entrepreneurship play an important role in contributing to the nation economic growth and crate job opportunities to the country. E-entrepreneurship is also becoming more popular and acceptable by the people, especially young adult in Malaysia.

The Malaysian government has taken a great effort in developing the entrepreneurship. Malaysian government provides tax incentives, business advisory, funding resources, loan, and others to the entrepreneurs in every sector, especially in SMEs and Multimedia sectors. The purpose of the government to give incentives is to foster younger entrepreneurs.

The importance of this study is to explore the preferences of the undergraduates toward entrepreneurship and e-entrepreneurship. Many researches are focusing in either entrepreneurship or e-entrepreneurship in the separate way but in this research, we will focus to the preferences of the undergraduate towards on both entrepreneurship and e-entrepreneurship together.

Next, this research will study about the determinants’ impact on the involvement of undergraduates in entrepreneurship and e-entrepreneurship. The determinants will affect each undergraduate to participate in entrepreneurship and e-entrepreneurship. We want to identify the importance of the determinants because it can be the relatively important guidelines or references to the government. The government can develop the suitable strategies and approaches after they identify the determinant for the undergraduates to involve in the sectors..

Scope of study

This study is conducted in Peninsular Malaysia. The respondent in this research is restricted to the undergraduate students in Multimedia University, Malacca campus. Due to the time constraints, it is believed that the sample size of two hundred and fifty students is enough, the respondents are regardless to the age, gender, faculty, and major.

The questionnaires will be distributed randomly to the respondents to obtain the primary data. The secondary data will be derived from the journals which obtained from the online database such as Emerald, Google scholar, Springer link and others online sources. The questionnaires will be designed and tested before distribute to the respondents. The questionnaires will be collected from the respondent and able to obtain the information, alternatives, and opinions, which are related to the objectives in this study.

Organization of study

The organization of this study comprises five chapters. The first chapter is the introduction part which will explain the definition of the topic, entrepreneurship among the undergraduates and the e-entrepreneurship. Next, the problem statements, research objectives and the significant of the study will be discussed to give a brief explanation to the topic of this study. In the last part of this chapter will be included the scope of study and the organization of study.

Chapter two starts with the literature review on the young adult’s attitude to entrepreneurship and entrepreneurship education. Subsequently, the entrepreneurship in a modern network economy will also be reviewed. Then, follow by the literature review of the related variables to support this study. In this chapter, it includes all the related empirical studies, articles, journals, citation to strengthen on the topic.

In chapter three, the research methodology is discussed. The research framework is designed to show the relationship between independent and dependent variables. Subsequently, the Hypothesis development, sampling plan, data collection method, questionnaires development, and data analysis methods are also discussed in this chapter.

Chapter four is explaining the results of the data analysis by using the related chart, graph, bar and data. At the end of this chapter, this chapter will come out the discussion and interpretation of the data analysis regarding to the topic discussed.

Chapter five is the conclusion and recommendation to this study. This chapter will conclude to the topic of this study and the recommendation to the findings. The limitations of this research will also discuss in this chapter.

Chapter Two

LITERATURE REVIEW

Introduction

In this literature review chapter, we will review to the previously done researches and journals. Young adult’s attitude to entrepreneurship and entrepreneurship education and the entrepreneurship in the modern network economy will be reviewed. Subsequently, is the literature review of all the variables, which are, knowledge and prior experience, government regulations and incentives, social network, availability of resources and the opportunity identification.

Young adults’ attitude to entrepreneurship and entrepreneurship education.

The changing nature of work suggests that young people may face the prospect of a “portfolio” career including periods of paid employment, non work and self-employment, of which the latter implies greater scope of entrepreneurial activity (Roger and Martyn, 2000). Nowadays, there are plenty of young adults or graduates would like to start up their own business. They are self-employment and do not want to work under other people

In particular, the entrepreneur is an innovator who introduces new products and technologies. The notion of entrepreneurship is associated with creativity and imagination, self-determination, and the abilities to make judgmental decisions and co-ordinate resources (Roger and Martyn, 2000). Young adults have their own creativity and innovation to promote their own products. They would like to earn money by start up a business to promote their ideas.

Starting and operating a new business involves considerable risk and effort to overcome obstacles. Education, (especially for tertiary education) and entrepreneurship are highly correlated (Frederick, 2007). Reynolds et al., (2001) and GEM reports showed the educational achievement accounted for 40 percent of the cross-national variation in the total rate of entrepreneurial activity. Entrepreneurship education has been driven especially by academics, business leaders, entrepreneurs themselves, and even the government officials are seeking the advantage in the globalised world (Achleitner, 2006).

The entrepreneurship education is very common and popular in the western countries such as United Kingdom and United States. Various UK governments have championed the concept of an enterprise culture (Roger and Martyn, 2000). The Kauffman Foundation research shows that 90 percent of master and doctoral degree-granting institutions in the United States now offer entrepreneurship subjects, and in most cases, many courses and degree options (Cone, 2007).

There is also a research of entrepreneurship education done by Assumption University (Thailand), NCGE Southeast Asian Partner (2006), a study for the entrepreneurship education in South-East Asia’s higher education institutions (HEIs): there are Malaysia, Singapore, Thailand and Vietnam. The following is one of the charts of the study:

The chart shows that Higher Education Institutions (HEI) in Malaysia still in the preliminary stage of the entrepreneurship development. According to Myrah & Currie (2006), the entrepreneurship curriculum is still underdeveloped and lacks standards. University of Arizona (2004) shows that entrepreneurship education enhances a graduate ability to create wealth.

A graduate who has entrepreneurship education has a greater chance to be a success entrepreneur compare to those who do not. Fayolle et al. (2006) showed that entrepreneurship education can have positive effects depending on the students’ background and the initial perspective. For example, Menzies & Paradi (2003) found that among the 15-years group of engineering graduates, taking one or more courses in entrepreneurship was a strong predictor, and they will be reached to top management status in the later time. According to Lee & Wong (2003), there is also a positive relationship exists between one’s attitude towards entrepreneurial education and business start-up with the Anecdotal evidence, alumni and media reports to validate the relationship.

There is research of ‘An Eclectic Theory of Entrepreneurship’ (Ingrid et al., 2001) showed that the decision of an individual to become a self-employed focus on the personal factors, for instances, the psychological traits, formal education and other skills, the financial assets, family background and previous working experience (Praag et al., 1989). There are also findings for the determinants of the entrepreneurship such as profit opportunities and opportunities for entry and exit (Bosma et al., 1996). Macro perspectives are focused on the economic factors, like technological, economic, and cultural variables and also the government regulations (OECD, 1998 & Noorderhave, et al., 2001).

Entrepreneurship in a modern network economy

According to Nijkamp and Poot (2008), the conventional comparative advantage perspective on regions is not sufficient anymore to explain the relative economic performance of regions in a global economy. The participation of ICT networks, education systems, and business culture are also important factors of comparative advantage on economic performance.

There is a new phenomenon in the modern economies where the emergence of interwoven global networks (Castells, 1996) allows the global interaction and communications. The global interaction and communication are a process through which market areas may obtain world-wide coverage, for instance, through the Internet.

Entrepreneurship vs. e-Entrepreneurship, entrepreneurship consist on the process of creating something new and assuming the risks and rewards, in contrast, e-Entrepreneurship will consist on creating owner business activity on the internet in some characterized in order to sell or able a service something only online, such as magazine subscription, cell phones, software, T-shirts, bags, shoes, and etc. (Eduardo, 2006).

Educations, knowledge and prior experience

In the recent decade, there is a growth in the educational programmes focusing in entrepreneurship. The growth of entrepreneurship education has increased the amount of entrepreneurs. Many entrepreneurship programs are helping students learn about how to start a business and how to run a business (Deborah et al., 2002). At the end of 20th century, entrepreneurship programs continued to growth and gain legitimacy within the world of academics, undergraduate students have had been increasing opportunities to study topics related to the entrepreneurial career track (Deborah, John & Hovis, 2002).

There is an investigation done to investigate the impact of education on the level of entrepreneurship of a country. The investigation is done in the different level of education in the country, for example, primary school, secondary school and tertiary school. Reynolds, Hay and Camp (1999) concluded that the larger a country invested in education programs in the tertiary education, the higher is the rate of the new business or firms to be formed..

Undergraduate students interested in entrepreneurship are regardless of their declared field of study. Students who study engineering and IT are also having the interested to start their own business, no matter they plan to practice a profession, become a leader in a corporation, return to a family business or work in government, students see the value in learning what is taught in entrepreneurship classes (Deborah, John & Hovis, 2002). The entrepreneurship education they learn while in their tertiary education will enable them to be flexible and agile in their future workplace.

Reynolds et al., (1999) said that there are several reasons why the education is important to the entrepreneurship. The first reason is the education provides individual with a sense of autonomy, independence and self’ confidence, the second is education makes self-awareness, the people are aware of their career choices and the third is education broadens the horizons of individuals. In summary, the education provides knowledge to the youngster to develop the entrepreneurial opportunities.

Larry Penley, Dean of the college Business at Arizona State University, noted the move toward entrepreneurship across the curriculum in his address to the USASB-SBIDA conference in spring 2000. He notified that University’s entrepreneurship programs will help to build a stronger small business sector compare to those small business owners who have little or no formal business education.

A rapid growth of the new companies and the highly publicized “dot.com” phenomenon marked an important change in the economic environment in the beginning in mid 90’s. The development of the technology such as internet has accelerated the internet-based business. The characters of internet-based business are quick start-up and low overhead; make self-employment appear more accessible to increasing the numbers of American, including those who were not specifically trained in business (Deborah, John & Hovis, 2002).

Undergraduates are become more and more interested in learning about aspects of business start-up due to the successful example in the real business environment. For example, the two founders of Yahoo!, Jerry Yang 26 years old and his friend, David Filo, 28 years were graduated from Stanford University of United State. They build or create Yahoo from their hobby of responding to the persistent challenge to breakthrough in simplifying the use of internet. Yahoo began as a student hobby and evolved into a global brand that has changed the way people communicate with each other, find and access information and purchase things. Today the Yahoo! Inc. is a leading global internet communication, commerce and Media Company, which also provides online business and enterprise services to the users (Yahoo, 2009).

Besides education is related to the intention to involve in entrepreneurship and E-entrepreneurship, the knowledge is also playing an important role in cultivating the Entrepreneurship and E-entrepreneurship. Braunerhjelm & Lundblad (2007) pointed that knowledge is an externally factors for entrepreneurship. In the past times, the economic variables of knowledge, entrepr