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EntrepreneurshipÂ is the act of being anÂ entrepreneur, which means "one who undertakes an endeavour". With the economy growing at unprecedented speed, students in Indian business schools are moving from the traditional job options of consulting, banking and marketing to opening and running their own ventures.
As discussed in existing literature, "Despite the serious roadblocks, entrepreneurship is still identified as the business activity most likely to lead to the successful economic change in transitionary economies." (Fred Luthans). Of the many students who might be interested in starting their own companies, there will be some who will have the skills, abilities and capability to be an entrepreneur. Among these students, a subset of them will have the abilities and be interested in pursuing entrepreneurship as a career.
This paper tries to research on the inclination of Indian business school students towards entrepreneurship. A study will be performed among students of premier Indian management schools on the entrepreneurial orientation of students and if see how many of them wish to pursue this profession in this manner. We will then extrapolate our results to estimate the percentage of students truly inclined to this vocation.
Literature review in the area and the gap in the extant literature
Entrepreneurship is an area that has been widely researched. To begin with, the term "entrepreneurship" has been seen in different perspectives by the researchers. Hao Ma, Justin Tan (2006) describe entrepreneurship as individual virtue. They propose entrepreneurship to be seen from the 4-P framework -pioneer, perspective, practice, and performance. This they argue integrates entrepreneurial intentions, mindset, activities and performance. The most widely used definition of "Entrepreneurship Orientation" (EO) as a construct was defined by Lumpkin and Dess, 1996. The article defines EO from a firms perspective and identifies autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness as the five dimensions of the "entrepreneurial" process. It defines "entrepreneurship" as new entry. Thus, it implies that entrepreneurial orientation is the process by which a new entry (entrepreneurship) is pursued. Kwaku and Anthony, 2001 express the need of firms to develop entrepreneurial orientation in their managers. Naman and Slevin (1993) defined Entrepreneurship as 'Entrepreneurship can be viewed as a characteristic of organizations and can be measured by looking at managerial behavior as the firm engages in the entrepreneurial process' Again it is entrepreneurial management that makes a firm entrepreneurial.
This paper discusses entrepreneurial orientation as the extent to which an individual has characteristics to become an entrepreneur. Also, as cited by Taormina and Kin-Mei Lao 2005, entrepreneurial motivation is influenced by personality of the individual. Hao Zhao, Scott E. Seibert 2006 has discussed impact of one's personality on entrepreneurship. Similarly, Hao Ma, Justin Tan 2006 propose a framework which link personality traits with entrepreneurship. This article measures the impact of Big 5 personality traits on entrepreneurial orientation.
A key ingredient to become an entrepreneur is the willingness to take the initiative and start one's own enterprise. This we term as "Entrepreneurial Inclination". Lumpkin and Dess, 1996 refer the tendency toward independent and autonomous action as central to EO. Hian Chye Ko, 1996 mention that there is significant relationship between personal characteristics and Entrepreneurial Inclination. Here, we investigate the impact of Personality traits on Entrepreneurial Orientation via Entrepreneurship Inclination. Further, Vasantha Kumara and C Sahasranam have studied the impact of father's/guardian's occupation on entrepreneurial orientation of individuals. Here we study the impact of father's occupation (business or service) as a moderating variable between entrepreneurial orientation and personality traits.
All the above researches have been by different authors bringing in different perspectives. This research attempts to put together the above researches so as to have a single integrated model relating personality traits, entrepreneurial inclination, entrepreneurial orientation and family background.
Operationalization of variables for study
While making a study of the inclination of students in Indian Business School towards Entrepreneurship we must explore their personality characteristics and take these into account to research their entrepreneurship inclination. Thus, we have taken the basic 5 personality traits, namely Neuroticism, Extraversion, Openness to Experience, Agreeableness and Conscientiousness (Big 5 Personality test) to test for entrepreneurial orientation.
Neuroticism- Neuroticism represents individual differences in adjustment and emotional stability. Highly neurotic people tend to experience a number of negative emotions including anxiety, hostility, depression, self-consciousness, impulsiveness, and vulnerability
(Costa & McCrae, 1992). Less neurotic individuals are characterized with self-confidence, a calm temperament, an even temper, and relaxed attitude. Entrepreneurs typically experience high levels of physical and psychological stress dealing with the pressures of workload, work-family conflict, and financial risk of starting and running a new business. At the same time, entrepreneurs have been described as highly self-confident (Chen, Greene, & Cricke, 1998; Crant, 1996) with a strong belief in their ability to control outcomes in the environment (Simon, Houghton, & Aquino, 2000). Thus, remarkable levels of self confidence and resilience in the face of stress are required by entrepreneurs. These are traits that define low levels of Neuroticism.
Extraversion- Extraversion is the quality which describes what kind of people are assertive, dominant, energetic, active, talkative, and enthusiastic (Costa & McCrae, 1992). Extraversion is positively related to interest in enterprising occupations (Costa, McCrae, & Holland, 1984).
Entrepreneurs must interact with a diverse range of constituents, including venture capitalists, partners, employees, and customers. Also, during the initial phase, due to lack of a human resources function, they need to exercise a high degree of interpersonal interaction with their partners and employees. To serve these multitude of roles, extraversion to be positively associated with entrepreneurship. However, literature shows us that a high degree of extraversion does not significantly decide entrepreneurship and there is an equally high chance of a person succeeding as an entrepreneur with a low degree of extraversion.
Openness to Experience- Openness to Experience is a personality dimension that characterizes someone who is intellectually curious and tends to seek new experiences and explore novel ideas. Someone high on openness can be described as creative, innovative, imaginative, reflective, and untraditional. Founding a new venture is likely to require the entrepreneur to explore new or novel ideas, use his or her creativity to solve novel problems, and take an innovative approach to products, business methods, or strategies. Schumpeter (1942/1976) argued that the defining characteristic of the entrepreneur is his or her emphasis on innovation. More recent scholarship has also noted the strong desire of entrepreneurs to be creative and to create something larger than them (Engle, Mah, & Sadri, 1997). Thus, usually entrepreneurs will score higher than other managers on Openness to Experience.
Agreeableness- Agreeableness assesses one's interpersonal orientation. Typical characteristics of individuals high on Agreeableness are being trusting, forgiving, caring, altruistic, and/or gullible. The high end of Agreeableness represents someone who has cooperative values and a preference for positive interpersonal relationships. People with a low level of agreeableness can be characterized as manipulative, self-centered, suspicious, and ruthless (Costa & McCrae, 1992; Digman, 1990). A high degree of agreeableness can be detrimental to a career of a manager, significantly because it implies the manager's inability to make controversial decisions with respect to his subordinates or take an unpopular stand. (McClelland and Boyatzis's, 1982)
Entrepreneur often work in severe constraints with limited access to legal and financial resources. Thus, entrepreneurs are more likely than managers to suffer serious consequences from even having small bargaining powers, i.e. a high degree of agreeableness. Entrepreneurs work in smaller organizations and they are less likely to be constrained by dense and interlocking social relationships (Burt, 1992). Therefore, we expect lower levels of Agreeableness among entrepreneurs than other managers.
Conscientiousness- Conscientiousness is defined by an individual's ability to be organized, persistent, hard working, and motivated in the pursuit of his goal. Sometimes, researchers perceive this as an indicator of a person's ability to work hard (Barrick & Mount, 1991). Conscientiousness has been a consistent predictor of performance in work related matters across all types of jobs and occupations (Barrick, Mount, & Judge, 2001). Scholars have regarded conscientiousness as comprising of two angles- a high need for achievement motivation and the ability to be dependable (e.g., Mount & Barrick, 1995). McClelland (e.g., McClelland, 1961) initially propounded that entrepreneurship would be motivated by a high need for achievement (nAch) especially because of individuals preference to work and feel the tangible rewards of their own efforts. The dependability side of Conscientiousness reflects the extent to which one is organized, deliberate, and methodical and can be relied on to fulfil one's duties and responsibilities. Typically, entrepreneurs work in environments with a weak framework and depending on other stakeholders and being depended upon by them is mandatory making dependability becomes a necessity for all entrepreneurs. Thus, we can conclude that Entrepreneurs will score higher than managers on Conscientiousness, achievement motivation and dependability.
Even though someone has scored high on entrepreneurial personality, it does not mean that he will become an entrepreneur without a definite intention of becoming one. To check your entrepreneurial bent of mind, or personal desirability, we use a variable to ask if you are inclined towards entrepreneurship.
It is well-established that young people whose families have their own business are more likely to intend to start their own ventures (Krueger, 1993).
A scale to measure EO is given below. This scale helps us measure the propensity of a person towards Entrepreneurship.
1. I am a risk taker.
2. I have an idea for a new product or service.
3. I like to tinker with ideas for new products.
4. I like to dream about new services.
5. I have many ideas for possible new businesses/organizations.
6. I am on the alert for new venture ideas.
Some of the variables identified in this construct (EO) are listed below. These variables have been chosen keeping the EO scale in mind and by reviewing the existing literature to determine the variables affecting EO. The independent variables of this construct are
1. Global innovativeness
2. Need to achieve
3. Risk taking propensity
4. External locus of control
5. Need/Solution spotting
6. Trend follower or trend setter
The dependent variables of this construct are
7. Taking advantage of Random events
Innovation is the key to entrepreneurial success. (Drucker, 1994) Whether this be in the form of creating a new product or spotting a need for a service in the market and coming up with a model to fill that gap. Any innovation which helps fulfil a pre-existing need and creates value for both the customer and the innovator thereby leading to consumer satisfaction benefits society and can be deemed to be a critical aspect of entrepreneurial success (Goldenberg et al.,1999). Six factors were identified to classify where the ideas for the innovation came from, and how they determine the success or failure of the innovation.
Risk propensity is the ability or tendency of an individual to have an appetite for risk, how much risk an individual can digest. Entrepreneurs typically have been known to have a high degree of risk appetite and usually look for avenues where they can take calculated risks to generate high returns. They must have the ability to handle uncertain environments. Thus, 'Risk-taking' is an important parameters for determining personal growth and entrepreneurial orientation. (Wadhaw et al.,1998).
Other personality traits of importance to successful entrepreneurship include 'need to achieve (n-ach)' and 'external locus of control' (Robinson et al., 1991; Pennings Individual Entrepreneurial Characteristics and Entrepreneurial Success Potential 281 and Kimberly, 1997; Hisrich and Peters, 1995). Most entrepreneurs experience a high need for achievement and a low external locus of control. One of the driving forces for entrepreneurs has been their inherent need to be their own bosses and be able to manage their own affairs.
Entrepreneurs must be able to capitalise on opportunity. Thus individuals how have the foresight to perceive an opportunity before others, or understand the need for a new product or service innovation before the competition typically gain a competitive advantage over their peers and thus make a successful venture. Another interesting attribute of entrepreneurs is their ability to be trend setters rather than trend followers. They usually take an initiative or foresee an opportunity and grab the first mover's advantage. Thus the ability to understand new products or dream about new services becomes an important factor for entrepreneurial success.
Finally, a defining trend of entrepreneurs is their ability to take advantage of random events and see an opportunity where none exists. This intuition that they possess often equips them with covert knowledge of a situation or circumstance and enables them to become successful. This variable however, cannot be measured directly using a scale and thus, only the effect of independent variables can be checked.
Theoretical bases for the derivation of hypotheses
The basic aim of our research study is to ascertain significant characteristic personality traits in an individual that most positively correlate with the entrepreneurial orientation and potential. The research hypotheses of our study can be framed as follows:
H1: Big 5 personality traits of extraversion and openness to experience are most positively correlated to entrepreneurial orientation in individuals.
H2: Big 5 personality traits of neuroticism and agreeableness are most negatively correlated to entrepreneurial orientation in individuals.
H3: Big 5 personality trait of conscientiousness is most positively correlated to entrepreneurial orientation in individuals.
There are constructs of entrepreneurship inclination and family background which act as mediator and moderator respectively between Big 5 personality traits and entrepreneurship orientation in individuals. Hence the moderator and mediator hypotheses of our study can be framed as under:
H4: Entrepreneurship inclination will mediate the relationship between Big 5 personality traits and entrepreneurial orientation such that the relationship is stronger for individuals that score higher on entrepreneurial inclination.
H5: Family background will moderate the relationship between Big 5 personality traits and entrepreneurial orientation such that the relationship is not impacted by business background of family.
A descriptive research methodology will be used for the purpose of this project. In this method, data about the population is captured through surveys, observation etc. For our project, a survey will be conducted on a sample to capture the entrepreneurship orientation, entrepreneurship inclination and Big 5 personality traits. Cross sectional research method will be taken up in this survey. This is a research design where the respondents are measured for many variables at a single point in time in their lives.
Data Collection Procedure
Data will be collected with the help of a questionnaire which will get desired responses from the respondents. The data collected will be primary in nature i.e. information will be collected specifically for the purpose of the research at hand. The items will be measured on a 5-point Likert scale ranging from 'Highly Agree' to 'Highly Disagree'. It is a summated rating scale consisting of statements that express either a favourable or unfavourable attitude toward the object of interest. The participant will be asked to agree or disagree with each statement and the degrees of agreement or disagreement will be measured in a scale of 1-5.
The questions are "structured and undisguised". This implies that the questions are presented with the exact same wording and order to all respondents. Standardization ensures that all the respondents reply to the same questions.
The method of administering the questionnaire will be:
Choice of Respondents
The respondents are students from premier B-Schools namely XLRI, IIMC, IIMB, IIMB etc. in their first or second year of study. The questionnaire will be administered to 150 students. The students may be from different backgrounds and specializations such as Finance, Marketing, HR etc. The work experience may vary for 0-6 years.
The sampling technique we intend to use is non-probability and convenience sampling (Eduardo Saliby et al., 1993). It Involve personal judgment in selection process. Since the sample is not probabilistic, the sampling error cannot be assessed. A convenient sampling technique implies that the sample is unrestricted and chosen purely on the basis of convenience and availability of respondents. Due to this, there may be some sampling errors and the research results may vary from the actual population.
Data Analysis Methods
Once the necessary data are collected through the questionnaire, the data will be analyzed and summarized with the help of statistical methods. The Statistical Package for the Social Sciences (SPSS) will be used to summarize the data. We will try to identify patterns in the data to substantiate our hypothesis. All statistical manipulations of the data will follow commonly accepted research practices. We also intend to analyse the secondary data extensively. This mainly includes literature search. The source of secondary data is published documents prepared by authors who have researched in the related fields.
With the growing significance of entrepreneurship, there is high practical value in understanding the entrepreneurial characteristics (Entrepreneurial orientation) among Indian B School Students and to distinguish between those who are entrepreneurially inclined and those who are not. One major implication of the findings can be to understand the need of providing unique and specialized guidance to Students who are more entrepreneurially inclined. Also, with the study of impact of various factors on entrepreneurial inclination, initiatives can be taken by respective institutes to nurture these factors in order to encourage Entrepreneurship. This would be a positive development as Entrepreneurship is a major contributor to the progress of any country.
Also, the findings can help in screening candidates for entrance to Entrepreneurship Development Cells present within these institutes. These results may also help a candidate understand his limitations and work towards building the necessary traits of an entrepreneur.
Lastly, knowing the results of the research, a student can use the findings as a source of career decision making tool and make a well informed choice in terms of Entrepreneurial intentions.
Limitations and scope for future research
Since the sample corresponds to only the student population of XLRI and few other B-schools, the research results may vary from the perception of the actual population.
Limitations due to use of convenience sampling rather than probability sampling:
The difference between convenience andÂ probability samplingÂ is that convenience sampling does not involveÂ randomÂ selection and probability sampling does. With a probabilistic sample, the odds or probability that we have represented the population well, are known and hence we are also able to estimate confidence intervals for the statistic. But with convenience samples, we may or may not represent the population well
Since the questionnaire is in a self report format, the primary limitation is that it is subjective and not objective. On a scale of 1 to 10 what might be 2 for someone might be 6 for someone else. Also, possibilities of errors such as Response Bias and Extreme Ratings do exist ( Jeniffer McDonald, June 2008)
The Data obtained through the questionnaire is cross sectional in nature as the data at a given point in time was taken. This limitation also suggests possible directions for future research in the form of longitudinal study at a pre and post MBA stage to understand the effectiveness and impact of an MBA on Entrepreneurial orientation and inclination.
Although this study is restricted to B School students, the scope of this study can be expanded to cover a broader variety and sample such as Graduate Students in India, Working Professionals in different sectors, etc
Also, using this study we can extend our scope to understanding the implications of age and experience on Entrepreneurial orientation and inclination.
Further, causal analysis can be attempted in future research to investigate reasons leading to these Entrepreneurial inclinations.