Impact Of Family Background On Entrepreneurship Potential Business Essay

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The present study is conducted to investigate the entrepreneurship potential among students from various universities of Pakistan, and also to unveil the fact if educational qualification and family background have any significant impact upon such potential of students. The reason for conducting this study is that entrepreneurship is the key factor in making a country progressive and competitive in the present world's complex global business environment. An endeavor also have been made in this research to point out to the academicians and other stakeholders of educational sector of Pakistan whether or not the present educational system has any significant impact on grooming and developing entrepreneurship potential among the university graduates who are getting business and commerce related education.

KEY WORDS: entrepreneurship, business, commerce, education, motivation, potential.

INTRODUCTION

Entrepreneurship is the transformation of an innovation into a sustainable enterprise that generates value. Innovation is about partnerships which entail advancing new and innovative ideas which are relevant to various communities. Partnerships create and promote entrepreneurship, the development of technology and its commercialization. Human resource development and its capacity building are vital factors that enhance competitive innovation and thus lead to a successful and progressive entrepreneurial system. Keeping in mind the problems faced by Pakistani entrepreneurs it can be easily concluded that only about one-half of new business ventures survive five years, and 95 percent of all business organizations are small. We need to learn as much as possible to positively impact the success rate for new business ventures.

Government and strategic policymakers have a major role to play in creating a culture that accelerates and promotes entrepreneurship potential throughout society. Promoting entrepreneurship and enhancing the entrepreneurial dynamic of a country is an inevitable element of any government's commitment to boosting economic growth and public welfare of society as a whole. Entrepreneurialism demands enthusiasm, commitment, dedication and persistency backed by matching intellect without which serious impediments can have devastating impact on the business and industrial environment of the country.

Entrepreneurship is of vital importance throughout the world and globally vast area of research has been dedicated to this field. For developed countries, this new venture formation results in revitalizing and stimulating the economic growth, catalyst of technological innovation, major source of employment and incubator of market and new product development and diversification. For developing countries, it can be taken as a source of employment creation, engine for economic progress, wealth creation and reducing the social differences. Hence, small business enterprises and entrepreneurship is widely encouraged and persuaded by the governments who make such policies so as to ensure economic growth and entrepreneurship encouragement. Entrepreneurship-led development could potentially create a virtuous circle of growth and reform in Pakistan capable of overcoming the constraints of violence, bureaucratic inertia, and the country's many vested interests.(Looney 2012)

The present study aimed towards finding the impact of Family Background and Business related education qualification on the entrepreneurship potential and abilities of young graduates from the district of Jhang. Previously different researchers have been engaged in finding empirical evidence related to this important aspect of entrepreneurship and different findings have been provided by them. But in Jhang, a district located in the center of Punjab, this type of study has been undertaken for the very first time.

LITERATURE REVIEW

Nemati and Gulzar(2010) found that family background of an entrepreneur plays an important role in making a person an entrepreneur. The entrepreneur idolizes that person in the family who is an entrepreneur and gets motivated to start his own venture. The study of education showed that though education is not a pre-requisite to start a new venture but with the expansion of business functions education plays an important role. They further argued that capital is not the basic need to be an entrepreneur: it is just a mix of your innovativeness and capabilities to be successful in your business.(Nemati and Gulzar 2010)

Oosterbeeck(2010) analyzed the impact of a leading entrepreneurship education program on college students' entrepreneurship skills and motivation using an instrumental variables approach in a difference-in-differences framework. They showed the results that the program does not have the intended effects: the effect on students' self- assessed entrepreneurial skills is insignificant and the effect on the intention to become an entrepreneur is even negative.(Oosterbeek, Van Praag et al. 2010)

Sumra et al.(2011) undertook a research on factors which influence the inclination of taking entrepreneurship as a career choice among the business graduates in Pakistan. Entrepreneurship can be taken as means to overcome unemployment and improving social status. They found that the present youth of Pakistan is showing a very low inclination towards entrepreneurship and hence, the trend is declining rather than to augment. There are only a small proportion of current business students which are interested in doing their own business. A vast majority is still planning their career to become employees in organizations.(Sumra, Safarish et al. 2011)

National culture of a country influences the entrepreneur's intention to start new business. Perceived feasibility, perceived desirability and entrepreneurs experience has a direct impact on entrepreneur's intention. The study finds out the impact of culture on entrepreneur intention, different cultures have different ways to influence the entrepreneur intention and different ways to impact on intentions towards perceived feasibility and perceived desirability. Culture varies from country to country, within country different provinces, how different cultures, different traditions, norms and values. So in future, it helps to analyze entrepreneur's intention in different cultures (Sajjad, Shafi et al.).

Ali et al.(2010) found how external factors can influence the development of entrepreneurial intentions. They showed the effect of different governance variables on entrepreneurial intentions. Primary data was collected from a sample of 550 students belonging from different universities of Pakistan. Structural equation modeling technique was used to analyze the data. They found negative effects of individual governance variables on student's entrepreneurial intentions. Their study proposed a system of good governance to develop higher level entrepreneurial intentions.(Ali, Tajddini et al. 2010)

Junejo et al.(2008) found that only few entrepreneurs of small scale Industries of Sindh Pakistan in the perspectives of educational back ground have high educational base and possessed the managerial abilities. But contrary, the majority of entrepreneurs have low educational base, lack of managerial knowledge and conservation oriented attitude results in underutilization of capacity in low growth of units, sales and profit per year.(Junejo, Rohra et al. 2008)

Akber et al. discussed a comprehensive and detailed experience of some promising entrepreneurs and prove that, providing the entrepreneurs with the right environment is of vital importance. They play a crucial role in stimulating change in the market system and revolutionizing it. They signified the need for creation of enterprise and new business environment in Pakistan and how entrepreneurs can give competitive edge to a developing nation.(Akbar and Bashir)

OBJECTIVE

The main purpose of conducting this study is to find if Family Background and Business related Educational Qualification has any significant impact on the entrepreneurial skills of young graduates. In order to achieve this objective the following hypothesis were developed.

HYPOTHESIS

FAMILY BACKGROUND:

In order the test whether or not family background has any significant impact on the entrepreneurship abilities of students, following null and alternative hypothesis were made.

H0: Entrepreneurial Abilities of students belonging to business and non-business families are equal.

H1: Entrepreneurial Abilities of students belonging to business and non-business families are not equal.

EDUCATIONAL QUALIFICATIONS:

In order the test whether or not commerce or any business related educational background has any effect on the entrepreneurship abilities of students following null and alternative hypothesis were made.

H0: Entrepreneurial Abilities of business and non-business graduates are equal.

H2: Entrepreneurial Abilities of business and non-business graduates are not equal.

Research Methodology:

For the purpose of testing the validity of above stated hypothesis, a Sample of 75 male graduate and post graduate students from various colleges of Jhang was gathered by filling the questionnaire. Out of these 75 questionnaires, 12 had some missing values and so were excluded from the analysis. Among the remaining 63 students, 24 belonged to business families and 39 from non-business families. A student was considered as having a business family background if any of his Parents, brothers, or uncles was engaged in any type of business. Furthermore 40 of the students were Commerce or Business Administration graduates or post graduates while the other 23 were from other Academic fields. First of all the Cumulative Score of each student was calculated using SPSS 16 in order to check his Aggregate Entrepreneurial Abilities.

This total score is further divided into following four categories.

TABLE 1

ENTREPRENEURIAL POTENTIAL

CUMULATIVE SCORE

LOW POTENTIAL:

0 to 25

SOME POTENTIAL:

26 to 50

MODERATE POTENTIAL:

51 to 75

HIGH POTENTIAL:

76 Plus

QUESTIONNAIRE

A questionnaire consisting 32 items based on likert Scale where 1 represented strong agreement while 10 strong disagreement to the statement was delivered to the students and they were asked to fill the questionnaire carefully and honestly. First 12 questions were aimed to test the Motivation, next 9 to test the capacity and remaining 6 and 5 to check the Networking and Support respectively. Proper instructions were also provided to the students so that there should not be any ambiguity in their minds about the interpretation of the items of questionnaire.

ANALYSIS USED TO TEST THE HYPOTHESIS

In order to accept or reject our null hypothesis as stated above different statistical methods were considered. But most suitable method found was the Independent Sample T-Test. Difference between the Means of 2 separate groups of our data was tested for its significance using Independent Sample T-Test . Another reason for using Independent Sample T-Test is that the population Standard Deviation and Variance is unknown, so we can use this test and not the Z-Test where Sample is compared with a population whose Standard Deviation is known. Regression Model was not used because R2 of the Regression Model was too low.

ASSUMPTIONS FOR THE INDEPENDENT SAMPLE T-TEST

Independence: Observations within each sample must be independent (they don't influence each other)

Normal Distribution: The scores in each population must be normally distributed.

In our Data Set both features of the above stated assumptions are present. As our two groups of data(Business and Non-Business Family Background , Commerce and Non-Commerce Education) are independent from each other. And also the data of Cumulative Scores is approximately Balanced. APPLICATION OF SPSS

All the 34 items (including 2 questions relating to the family background and educational qualification) collected from each questionnaire filled by the students were then entered into SPSS 16. Then Cumulative entrepreneurship Score of each student was found in following manner.

The SPSS command "COMPUTE VARIABLE" was used for this purpose and each item was named V1 to V32. These items were multiplied with their respective weights and then added to compute the cumulative score of each individual. Thus a new variable naming CUMULATIVE ENTREPRENEURSHIP SCORE was added by SPSS. Then Motivation, Capacity, Networking, and Support of each student were also computed by similar manner.

Then this cumulative score was further recoded by using the command "RECODE INTO DIFFERENT VARIABLE" to assess the Potential Level of each individual. Value "1" was assigned to HIGH POTENTIAL, "2" MODERATE POTENTIAL, "3" SOME POTENTIAL, AND "4" LOW POTENTIAL.

Independent Sample T-Test was then applied in SPSS to analyze whether the difference between means of our 2 groups is significant or not in order to accept or reject our Null Hypothesis.

RESULTS AND DISCUSSION

1: IMPACT OF FAMILY BACKGROUND ON ENTREPRENEURSHIP POTENTIAL

First of all to test the impact of Family Background on entrepreneurship abilities of students, Independent Sample T-Test was applied and results showed that family background has a significant impact on the entrepreneurship abilities of students. Table2 clearly shows that there exists a difference between the means of business and non-business families' and this difference is significant as sig(2 tailed) value shown in Table 5 is less than α(0.001 is less than 0.05). So we would reject our Null hypothesis and conclude that family background do have a significant impact on the entrepreneurship abilities and potential of young students.

Similarly the Motivation and Capacity etc to start and operate business of those students who belonged to a business family were also higher than the other group. Table 8 &9 given in the end of article gives a comprehensive detail of all the separate abilities of the students and their significance values .And we can see from these tables that apart from Family Support all three variables show a significant different between the 2 groups.

TABLE 2(MEAN SCORES AND SIGNIFICANCE VALUE OF BUSINESS AND OTHER FAMILIES

FAMILY BACK GROUND

MOTIVATION

OPERATING CAPACITY

NETWORKING CAPACITY

SUPPORT FROM FAMILY

CUMULATIVE SCORE

SIG(2 TAILED)

BUSINESS

35.5345

17.3214

11.0893

9.6296

73.7292

0.001

OTHER

29.9261

14.5698

9.0476

7.7384

60.2051

Note: All the supporting tables are given at the end of the paper.

Above Results are significant at 1%, 5% and 10% significant level.

2: IMPACT OF COMMERCE AND BUSINESS EDUCATION ON

ENTREPRENEURSHIP POTENTIAL

Now in order to test our second hypothesis; entrepreneurship potential among business and commerce is equal, we would again use Independent Sample T-Test. The results of test are shown in following Tables3 which clearly show that difference between Mean Entrepreneurship Scores of 2 different educational groups is insignificant as the sig(2 tailed) value 0.767 is greater than 0.05. So we reject our null hypothesis and accept the alternative hypothesis. From these statistics we can conclude that Business and commerce education has no significant impact on the entrepreneurship skills and potential of students.

Similarly if we look at the table given below, we can find that Motivation and other capacities etc of the business and other graduates are also not significantly different. All the detail of these values is given in table 10 &11 in the end of article.

TABLE 3

ACADEMIC QUALIFICATION

MOTIVATION

OPERATING CAPACITY

NETWORKING CAPACITY

SUPPORT FROM FAMILY

CUMULATIVE SCORE

SIG(2 TAILED)

BUSINESS

32.7500

15.7826

9.9891

8.3864

65.8188

.767

OTHER

31.0100

15.4200

9.6250

8.6058

64.5543

Note: All the supporting tables are given at the end of the paper.

CONCLUSION

From the above discussion we can conclude that family back ground significantly affects the entrepreneurship skills and abilities of the students. Whereas business education has no significant impact on developing the entrepreneurship abilities of the students. These results are consistence with the previous findings by various scholars that our education system in Pakistan has this deficiency that even in the business related studies the entrepreneurship abilities of the students are not developed. Even in MBA programs very little part of the syllabus relates to entrepreneurship. On the other hand the descendants of those parents who are already engaged in any kind of business do have an explicit potential to start and operate their own business.

Further research can be done in this regard because entrepreneurship is a pillar towards the economic development and growth of every society. Government and academic stakeholders should give proper attention to this matter in order to make the country prosperous.

SUPPORTING TABLES DERIVED FROM SPSS

TABLE 4

Family Background

N

Mean

Std. Deviation

Std. Error Mean

CUMULATIVE ENTREPRENEURSHIP SKILLS SCORE

Business

24

73.7292

8.90680

1.81809

Other

39

60.2051

17.46245

2.79623

TABLE 5

Independent Samples Test

Levene's Test for Equality of Variances

t-test for Equality of Means

F

Sig.

T

Df

Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the Difference

Lower

Upper

CUMULATIVE ENTREPRENEURSHIP SKILLS SCORE

Equal variances assumed

7.034

.010

3.516

61

.001

13.52404

3.84696

5.83156

21.21651

Equal variances not assumed

4.055

59.385

.000

13.52404

3.33532

6.85098

20.19709

TABLE 6

Group Statistics

Academic Qualification

N

Mean

Std. Deviation

Std. Error Mean

CUMULATIVE ENTREPRENEURSHIP SKILLS SCORE

Business/Commerce Graduate

40

65.8188

15.01271

2.37372

Other Academic Fields

23

64.5543

18.23629

3.80253

TABLE 8

Independent Samples Test

Levene's Test for Equality of Variances

t-test for Equality of Means

F

Sig.

T

Df

Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the Difference

Lower

Upper

CUMULATIVE ENTREPRENEURSHIP SKILLS SCORE

Equal variances assumed

.693

.408

.297

61

.767

1.26440

4.25215

-7.23830

9.76710

Equal variances not assumed

.282

39.135

.779

1.26440

4.48261

-7.80153

10.33033

TABLE 7

Levene's Test for Equality of Variances

t-test for Equality of Means

F

Sig.

t

Df

Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the Difference

Lower

Upper

CUMULATIVE ENTREPRENEURSHIP SKILLS SCORE

Equal variances assumed

.693

.408

.297

61

.767

1.26440

4.25215

-7.23830

9.76710

Equal variances not assumed

.282

39.135

.779

1.26440

4.48261

-7.80153

10.33033

TABLE 8

Group Statistics

Family Background

N

Mean

Std. Deviation

Std. Error Mean

MOTIVATION to Start Own Business

Business

29

35.5345

5.27829

.98015

Other

44

29.9261

8.39480

1.26556

CAPACITY to Operate Business

Business

28

17.3214

2.45879

.46467

Other

43

14.5698

4.06909

.62053

NETWORKING and Partenering Capacity

Business

28

11.0893

2.52416

.47702

Other

42

9.0476

3.24518

.50074

SUPPORT From Family

Business

27

9.6296

2.26530

.43596

Other

43

7.7384

3.15000

.48037

TABLE 9

Independent Samples Test

Levene's Test for Equality of Variances

t-test for Equality of Means

F

Sig.

t

df

Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the Difference

Lower

Upper

MOTIVATION to Start Own Business

Equal variances assumed

3.844

.054

3.201

71

.002

5.60835

1.75224

2.11448

9.10221

Equal variances not assumed

3.504

70.888

.001

5.60835

1.60074

2.41648

8.80021

CAPACITY to Operate Business

Equal variances assumed

7.361

.008

3.212

69

.002

2.75166

.85664

1.04271

4.46061

Equal variances not assumed

3.549

68.704

.001

2.75166

.77523

1.20501

4.29831

NETWORKING and Partenering Capacity

Equal variances assumed

2.856

.096

2.808

68

.006

2.04167

.72701

.59094

3.49239

Equal variances not assumed

2.952

66.285

.004

2.04167

.69159

.66098

3.42235

SUPPORT From Family

Equal variances assumed

5.129

.027

2.708

68

.009

1.89126

.69843

.49755

3.28496

Equal variances not assumed

2.915

66.645

.005

1.89126

.64870

.59632

3.18620

TABLE 10

Group Statistics

Academic Qualification

N

Mean

Std. Deviation

Std. Error Mean

MOTIVATION to Start Own Business

Business/Commerce Graduate

48

32.7500

7.31419

1.05571

Other Academic Fields

25

31.0100

8.65077

1.73015

CAPACITY to Operate Business

Business/Commerce Graduate

46

15.7826

3.48951

.51450

Other Academic Fields

25

15.4200

4.26695

.85339

NETWORKING and Partenering Capacity

Business/Commerce Graduate

46

9.9891

3.19764

.47147

Other Academic Fields

24

9.6250

3.03333

.61918

SUPPORT From Family

Business/Commerce Graduate

44

8.3864

3.06492

.46205

Other Academic Fields

26

8.6058

2.86197

.56128

TABLE 11

Independent Samples Test

Levene's Test for Equality of Variances

t-test for Equality of Means

F

Sig.

t

df

Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the Difference

Lower

Upper

MOTIVATION to Start Own Business

Equal variances assumed

.427

.516

.905

71

.368

1.74000

1.92177

-2.09191

5.57191

Equal variances not assumed

.858

42.211

.395

1.74000

2.02681

-2.34966

5.82966

CAPACITY to Operate Business

Equal variances assumed

.261

.611

.386

69

.700

.36261

.93876

-1.51017

2.23539

Equal variances not assumed

.364

41.681

.718

.36261

.99649

-1.64884

2.37406

NETWORKING and Partenering Capacity

Equal variances assumed

.627

.431

.460

68

.647

.36413

.79143

-1.21514

1.94340

Equal variances not assumed

.468

48.986

.642

.36413

.77824

-1.19981

1.92808

SUPPORT From Family

Equal variances assumed

1.875

.175

-.296

68

.768

-.21941

.74009

-1.69623

1.25742

Equal variances not assumed

-.302

55.537

.764

-.21941

.72700

-1.67603

1.23722

Statisticsa

ENTREPRENEURSHIP POTENTIAL

N

Valid

39

Missing

6

Mean

2.13

Median

2.00

Std. Deviation

.767

Variance

.588

a. Family Background = Other

Statisticsa

ENTREPRENEURSHIP POTENTIAL

N

Valid

24

Missing

6

Mean

1.50

Median

1.50

Std. Deviation

.511

Variance

.261

a. Family Background = Business

ENTREPRENEURSHIP POTENTIAL = 1 HIGH POTENTIAL, 2 MODERATE POTENTIAL, 3 SOME POTENTIAL,

4 LOW POTENTIAL.

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