Entrepreneurial Intentions Among Business Students In Saudi Arabia Commerce Essay

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This proposed research will have its focus on explaining among business students in Saudi Arabia the integral factors affecting entrepreneurial intentions. The entrepreneurial intention model based on planned behavioral theory will used in this explanatory study. The study will particularly involve factors such as personal attraction, perceived social behavior, demographics and perceived social norms. The proposed study will target nascent entrepreneurs and business graduates through the employment of a sampling methodology, which is systematic. The explanatory study will generally provide attitudes of university students with regard to future employment options and their relative paths into the labor market after graduation. The entrepreneurial ambitions shall be explained relative to the possibility of graduates establishing own enterprises. The study will aim to provide useful implications for government policy makers on off course sectors and educational institutions offering management and business courses. Of great importance will be the significant influence the studied factors have on undergraduates' intentions to start their own enterprises after graduation.

Keywords: Entrepreneurship, Entrepreneurial intention, Entrepreneurial potential, Behavioral variables, University students, Business Studies.


As of today, the growth of any economy in any country has to incorporate entrepreneurship as one of the most critical sectors. It is evident that the growth entrepreneurial activities in a society subsequently create many other opportunities in an economy. For instance, numerous economic benefits and job opportunities may result from continual growth in entrepreneurial activities. Entrepreneurship activities frequently create employment opportunities especially the growth of micro and small enterprises. Such significant influence is essential in enhancing dynamics in regional, national and local economies with regard to innovation. Such entrepreneurial initiatives through an adaptive process help to restructure and re-model the contemporary business sector. The creation of wealth, innovation and job creation is as a result of entrepreneurship considered at macro-level (Jones & Dimitratos, 2004). On the other hand, at individual level, the widening of career avenues is primarily stimulated through the development of such entrepreneurial behavior. This case happens particularly for first time entrants in the labor market. In recent years, the new aspect of globalization has brought forth rapid changes as well as many other adverse effects of a deteriorating economy. Such situations have affected the economic conjuncture of Saudi Arabia and generally other international economies. The traditional forms of employment of the past that did absorb many university students after completion of studies have encountered alterations with regard to employment conditions. Such conditions in the labor market have significantly shrunk employment opportunities hence the absorption rate of university graduates is on a downward trend. Today, the option to establish enterprises by university students is highly likely. Such decision is also more likely to be considered as positive but not a residual career avenue.

However, there are factors likely to affect the students' propensity to establish enterprises and the opportunities to combine together the necessary competencies and attributes. Many studies (Teixeira, 2007; Franke and Luthje 2004, & Rodrigues, 2008) have been done to provide a better understanding of the variables significantly influencing business start-ups by graduates. Entrepreneurship is considered as crucial in attainment of innovations and new technologies hence the factors influencing such intentions/ambitions need to be clearly understood and established. The study will mainly focus on how entrepreneurial intentions of young graduates or business students are influenced by varied factors. Such target is on the path to enter the job/labor market and career options proves to be very critical. The research study will involve six outlined sections. Section one which is the introduction will be followed by literature review as section two. Data that describes the use of questionnaires and properties of the sample will be outlined in section three. The fourth section includes methodology and model to be used in undertaking the research. The analysis and discussion of obtained results will be catered for by the fifth section. Finally the research paper will end with the sixth section providing the conclusion as well as policy implications.

Problem description/ statement

Saudi Arabia's major economic operation is oil-based with the petroleum market approximately constituting 90% of export earnings, 45% of GDP and 75% of budget revenues. The private sector contributes at least 40% of GDP hence many policies from the government to encourage the growth of the private sector. Such actions are geared towards the creation of employment opportunities for a Saudi population that is ever-increasing and lessen the country's dependence on petroleum market. With such a trend in population and economy, the problem of unemployment is inherent and many university students are experiencing difficulties in their careers when entering the labor/job market. This brings forth the idea of entrepreneurship for both male and female students in their final years being taken seriously and not just as a residual career option. The development of the economy is hugely affected by entrepreneurial activities through the innovations and new technologies. Such entrepreneurial activities are therefore critical for any economy hence the need to establish the factors that may significantly affect their establishment. Saudi Arabia's cultural and business environment is considered as being highly conservative. The success of business enterprises may require astute readiness and fundamental knowledge with regard to the Saudi culture. Saudi businesswomen face more challenges in entrepreneurship particularly as a result of gender segregation. Entrepreneurial intentions/ ambitions of university students are therefore influence by certain factors. This study helps to measure the significance of such factors on entrepreneurial decisions of both male and female students in Saudi Arabia.

Literature Review

This issue has attracted much interest from varied sectors hence the availability of a lot of literature on the topic. Besides this, the study will be focused on few studies that are interesting, most relevant and important. According to (Bird, 1988), the entrepreneurial climate is characterized by variables such as risk taking willingness, difficulties with regard to growth and the initiation of a business start-up, the acceptance of failure possibilities and socialization amongst many others. However, such identifiable variables usually differ among individuals. In addition, entrepreneurial behavior in a society may be influenced by a large number of firms and the rate of success of other start-ups. Literature by (Jackson & Rodley, 1994) explained similar findings whereby the entrepreneurial environment is significantly determined by traits, behaviors and values.

According to (Linan, 2005), the entrepreneurial intention is negatively related to the preference for salaried jobs. In addition, socio-demographic factors predominantly gender, significantly influences the entrepreneurial intentions among males and females. The individuals are motivated to become entrepreneurs by the expected rewards that are either intrinsic or extrinsic. On the other hand, issues of compliant costs, financing, lack of confidence, capital and skills present significant barriers to such intentions/ambitions. Other studies such as (Rommi, 2005) analyzed women entrepreneurs in Islamic countries and found out that, women belonged to varied cultural backgrounds hence the inherent gender-related opportunities and challenges. Basu and Virick (2008) study highlighted that the entrepreneurial behavior is significantly and positively influenced by prior experience and education. The entrepreneurial tendencies have been frequently measured by three factors in particular (Delmar & Davidson, 2000) that include, contextual factors, personality traits and personal characteristics.

Methodology and related descriptive statistics

In studying the facts behind barriers and challenges in entrepreneurial activity, the information will be gathered from final year students undertaking business studies in King Abdulaziz University in Jeddah. The target sample is 476 students out of a population sample of about 1250 business students. In addition, the target sample includes serious business students who have prior knowledge in business. According to (Basu & Virk, 2008), those students with prior education in entrepreneurship have a positive ambition towards entrepreneurship career. Because of the positive relationship between business students and the exposure to education and entrepreneurial activities, the response rate of the selected data is hypothesized to be 85% out of the 476 surveyed students. In data collection, this study will use the Entrepreneurial Intention Questionnaire that was designed by Linen (2005) and previously used by other studies.

The entrepreneurial intention will be assessed by the use of this questionnaire with regard to eight properties. These variables include Entrepreneurial knowledge, Social valuation, Professional attraction, Education and experience, Entrepreneurial capacity, Entrepreneurial objectives, Entrepreneurial education and Entrepreneurial intention. Besides these variables, the analysis also includes demographic factors. These variables will be measured using the Likert-type scale. The sample will be obtained from a population of undergraduate business students in their final year at the King Abdulaziz University. The students will be required to answer the questions in the questionnaire relating to the included variables. Entrepreneurial potential will be directly assessed using the answers the students give with regard to their current interest on graduation in creating own firms/businesses. After data collection, the statistical software package SPSS will be used in the analysis of data and interpretation of results. The table below shows a summary of the main methodological characteristics this study will incorporate.

Time basis


Sampling unit

Undergraduate students


1250 individuals


476 individuals

Response rate


Research method

Entrepreneurial Intention Questionnaire

Time period

April 2011 - June 2011

Statistical analysis

Bivariate, multivariate-logistic regression

Model Formulation

This study will use a questionnaire with a number of factors significant in determining the entrepreneurial intention among students in their final year and have plans to establish their own enterprises, firms or companies.

Education and Experience

This variable is used to measure the respondents' education level, the degree course, their expected completion time and the factors that influenced them in the degree enrollment. Besides, work experience if any in related field is also measured by this variable.

Entrepreneurial Knowledge

The respondent's knowledge on entrepreneurship either from family, acquaintances or friends is measured by this variable. Moreover, certain particular aspects in relation to starting a firm and the relative knowledge of the respondent can be measured by this variable.

Professional Attraction

This captures carrier plans of the respondent and the profession preference with regard to external environment. This will also involve whether the respondent is interested in becoming an entrepreneur or not after graduation.

Social Valuation

This variable seeks to establish whether entrepreneurship is more or less valued compared to other careers and professions in the respondent's close social network. It also captures the society's degree of acceptance for people who become entrepreneurs.

Entrepreneurial Capacity

The respondent's ability to effectively monitor and manage a firm or project is captured through the analysis of the individual's characteristics. Such characteristics include networking, communication, creativity, opportunity recognition, innovation and problem solving.

Entrepreneurial Intention

This variable examines the extent to which the respondent is interested in entrepreneurship activities whether currently or at a later time in the future. This involves the gauging the determination level of the respondent in selecting a career in entrepreneurship.

Entrepreneurship Education

This variable evaluates the respondent's knowledge depth with regard to required abilities, entrepreneur's figure recognition, entrepreneurial environment and the intention to become an entrepreneur. Moreover, the awareness level developed by studying the relevant course is also examined by this variable.

The formulated model used in the evaluation of entrepreneurial intention assumes is written as follows:

Entrepreneurial Intention = f (Demographics, Experience, Entrepreneurial Knowledge, Professional Attraction, Social Valuation, Entrepreneurial Capacity, Entrepreneurial Intention, Entrepreneurship Education) whereby Demographics represent the respondent's Age and Gender

The model can also be of the following form:

EI = α + β1Gender + β2Age + β3Exp + β4EK + β5PA + β6SV + β7EC + β8EE + ε

Where: α is the intercept

Ε is the error term

EI is the Dependent Variable

Gender, Age, Exp, EK, PA, SV, EC and EE = the Independent Variables

In the study, the estimation of the above equation will be done using the Ordinary Least Square method. The study equation is hypothesized to fulfill all the assumptions of this ordinary least square method.


It is evident that entrepreneurial activities plays very crucial role with regard to the growth and development of any economy. Studies on the significant factors that affect such decisions among individuals are equally important in formulation of policies by the government and other institutions. It is therefore important to conduct this research on entrepreneurial intentions/ambitions among students in Saudi Arabia. Faced with challenges of unemployment, barriers in labor market and cultural backgrounds, university students in educational institutions need encouragement for entrepreneurial careers. Such policies will be formulated and implemented based on findings of many studies of this type.