Factors Affecting on Entrepreneurial Intention of

University Students (Case Study on Wollo

University)
Abdu Kamil (  [email protected] )
Samara University

Research

Keywords: Entrepreneurial Intention, Demographic Factor, Personal Factors, Environmental Factors,

Family Background

Posted Date: July 22nd, 2021

DOI: https://doi.org/10.21203/rs.3.rs-736445/v1

License:   This work is licensed under a Creative Commons Attribution 4.0 International License.
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Abstract
Background: Entrepreneurship is essential in creating, fulfilling and forming a healthy economy. This
study is conducted to investigate Factor Affecting on Entrepreneurial Intention: The case study on Wollo
University Students. Some studies have been done in this area but only a few were conducted in Ethiopia.
This research aims to address the gap that exists due to the weakness of previous studies to verify the
factors that affect entrepreneurial intention and provide more clarification on the topic.

Methods: For the purpose of this study explanatory research design was employed. The researcher used
stratified random sampling to classify all participants into seven colleges and one school of law. From
each stratum proportionally by using purposive sampling to select 226 respondents with graduate
students from college of business and economics for the desire of the study. Both primary and secondary
data were collected. Primary data were collected through structured questionnaire from 210 students.
Secondary data were collected from previous studies and used as reference.

Results: The correlation and regression analysis has been applied to see the relationship and how
independent variables influence entrepreneurial intention. From the analyses it is confirmed that
demographic factors have statistically insignificant effect on entrepreneurial intention, while personal
factors, environmental factors and family background have a statistically significant effect on
entrepreneurial intention.

Conclusions: Based on the findings it is concluded that demographic factor does not affect
entrepreneurial intention while personal factors, environmental factors and family background affect
entrepreneurial intention.

Introduction
Entrepreneurship is the process of launching, designing and running a new venture. It has been described
as the ability and willingness to develop, organize and manage business enterprise along with any of its
risks in order to make a profit (Wickham, 2006). Entrepreneurship is the process of doing something new
and something different for the purpose of creating wealth for individuals and adding value to society by
taking calculated risk (Hisrich and Peter, 2002).

According to Ajzen, (1991) Intention refers to the indication of how hard people are willing to try and how
much an effort they are planning to apply, in order to perform the behavior. This means that, without
intention there is no action.

Entrepreneurial intention is a decision to create a new business enterprise that is planned rather than
conditioned, It is also the result of the individual’s attitude and values, it is the state of mind of an
individual to encourage creativity in a business enterprise (Rasli, 2013).

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Entrepreneurship is one of the important issues today around the world. Many underdeveloped and
developing countries encourage entrepreneurial activities that contribute to sustainable economic, social
and environmental growth for the countries (Hisrich & Peters, 2002).

Previous studies found that entrepreneurship education, gender, family background, internal locus of
control and access to capital has a significant effect on entrepreneurial intention of graduating students
in Jimma University, and students choosing entrepreneurship as a career choice (Sultan Jemal, 2017).

According to Boissin, Branchet, Emin and Herbert (2009), on entrepreneurial intention to French and
American students found that the level of entrepreneurial intention was higher in the USA due to
entrepreneurial cultural settings in which there was positive attitude in the creation of enterprise and this
made students to be in favor of creating their own business.

According to Plant and Ren (2010), came up with another study on entrepreneurial intention to Chinese
and American students. The study found that male University students in China exhibited a significantly
higher intentionality toward entrepreneurship than University female students.

According to Counsell (1996) found that the main influences on career decisions were information and
advice from parents and close family followed by friends.

According to Ertunaand Gurel (2011) the university students with self-employed family have significantly
greater entrepreneurial intention to become an entrepreneur.

According to Wang and Wong (2004) study on university students in Singapore, found that students from
entrepreneurship family background have greater interest in entrepreneurship that other students.

According to Tervoand Haapenen (2007) highlight that there is a clear connection with entrepreneurial
intentions and having role models inside family.

According to Matthews and Moser (1996), study on university students found that gender and
entrepreneurship family background influenced entrepreneurial intention among the students.

According to Crant (1996), the gender, educational level and entrepreneurship, family background
contribute towards influencing entrepreneurial intention. This study indicated that male students show
significantly greater entrepreneurial intention compared to female students.

According to Chen and Sung (2011) found that male university students have higher entrepreneurial
intentions than female university students.

According to Suraju (2016) in Nigeria showed that entrepreneurship education and personality traits
could significantly impact entrepreneurship intention among university students.

A study done in Eritrea by Petros Woldu and Dawit Teclemariam (2016), revealed that students‟
entrepreneurial education background and family background has no effect on the students‟
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entrepreneurial intention. But risk taking has a positive and significant impact on Eritrean students‟
entrepreneurial intention.

According to Sileshi and Waktole (2017), found that internal locus of control and access to capital had a
significant impact on students choosing entrepreneurship as a career choice. A study done by Sultan
Jemal (2017), found that willingness to take risk is the factor that affects entrepreneurial intention of
graduating students in Jimma University.

According to Siraw Megibaru (2014), found that taking entrepreneurship education, gender and family
Background has a significant effect on entrepreneurial intention of graduating students in Gondar
University.

Since the number of undergraduate students graduating from Public and Private Higher Education
institutions in Ethiopia is increasing from time to time; unless they seriously consider self-employment as
their career option this would result in unemployment problem among students. In order to bring a lot of
changes in the economy the youth can be a main source of fresh ideas (Ahmed, 2010).

Even if several studies were conducted relating to entrepreneurial intention and its determinants, their
weaknesses were that they failed to adequately address the main factors that affect entrepreneurial
intention of the students and didn’t do an in-depth study on the various factors at the same time but
instead took a particular variable and studied the relation with entrepreneurial intention and didn’t
consider the other factors in the meantime, which results in the study having a major flaw by not taking
into consideration the other main factors that determine entrepreneurial intention. Since entrepreneurial
intentions of the students are affected by a lot of variables the conclusion from the study of a single
variable is not adequate. In order to fill this gap, this research took several variables and factors and
studied the relation with entrepreneurial intention, which helps to give a more in-depth insight and a better
understanding of where the problem lies in this area; with this comprehension we will know how to
increase entrepreneurial intention of the students.

General Objective

The general objective of this study is to investigate the factors affecting on entrepreneurial intention: the
case study on Wollo University business students.

Specific objectives

From the general objectives of the study, the researcher was identified the following specific objectives:

1. To examine whether demographic factors determine the entrepreneurial intention of Wollo business
students.
2. To examine whether personal factors determine the entrepreneurial intention of Wollo University
business students.
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 3. To examine whether environmental factors determine the entrepreneurial intention of Wollo
University business students.
4. To examine the family background relationship with entrepreneurial intention of Wollo University
business students.

Significance of the Study

The result of study will create better awareness about the factors affecting entrepreneurial intention of
university business students specifically in the study area. It will provide information for other future
researcher who to conduct board and in-depth study used as secondary source.

Methods
The aim of this study is to investigate factors affecting student’s entrepreneurial intention, to meet the
objectives and hypothesizes of the research explanatory research designs is suitable for developing
causal relationships among variables and their relationships between variables. The necessary data were
gathered from primary and secondary source of data. The primary data were collected through structured
questionnaires, which is in line with the research objectives. Secondary data’s have also been included in
the study from various previous studies. The target population of this study is final year from college of
business and economics because for the purpose of they are ready to enter into the labor market or ready
to decide their career path and different business courses including entrepreneurship which might
promote entrepreneurial intention among students. In this study a stratified sampling technique was
employed; the research population for this study is final year undergraduate students of business from
Wollo University, business and economics campus. Respondents were reached through simple random
sampling techniques in order to give equal chance to all the respondents (Table 1).

By taking the error term of 5%

n = N/1 + N (e) 2 Where n = sample size, N = total population

e = error of sample which is 5%

n=\raisebox1ex$520$/\raisebox− 1ex$1 + 520(0.05)$ 2 = 520/1 + 0.0025(520) =226.08 ≈ 226

Therefore, 226 students were selected as respondent.

The quantitative data were gathered through structured questionnaire were analyzed using SPSS and
presented in the form of diagrams and tables.

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 Table 1
Population and sample size
Departments Target population Sample Size

Accounting and Finance 148 64

Cooperative accounting and audit 11 5

Cooperative business management 18 9

Economics 87 37

Management 209 91

Marketing Management 47 20

Total 520 226

Research Hypotheses

Hypothesis is a logically speculated relationship between two or more variables expressed in the form of
a testable statement, and it’s a tentative assumption in which the researcher going to formulate based on
the previous studies finding. Thus, for this study four hypotheses were formulated based on empirical
and theoretical literature reviews.

1. H1: There is significant relationship between demographic factors and entrepreneurial intention.
2. H2: There is significant relationship between personal factors and entrepreneurial intention.
3. H3: There is significant relationship between Environmental factors and entrepreneurial intention.
4. H4: There is significant relationship between family background and entrepreneurial intention.

Results And Discussions

From the questionnaires distributed to the total respondents 210 of them were filled and returned with
appropriate response However, 16 questionnaires were not collected due to the fact that the
questionnaires were distributed to the respondents and not filled by themselves.

Demographic Characteristics Of The Respondents

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 Table 2
Demographic Characteristics of the Respondents
NO Description Respondents

Frequency Percentage

1. Gender

Male 112 53.3

Female 98 46.7

Total 210 100

2. Age - -

18–21 85 40.5

22–25 112 53.3

26 and above 13 6.2

Total 210 100

3. Department - -

Accounting and finance 62 29.5

Cooperative’s accounting and audit 3 1.5

Cooperative’s business management 7 3.4

Economics 35 16.7

Management 86 40.9

Marketing management 17 8

Total 210 100

4. Taking any Entrepreneurship Course - -

Yes 210 100

No 0 0

Total 210 100

5. Business Background - -

Yes 32 15.2

No 178 84.8

Total 210 100

Source: Own survey, 2021

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 NO Description Respondents

Frequency Percentage

6. Future career choice of respondents - -

Employee 112 53.3

Self-employed 88 41.9

Successor/to help out a family business 5 2.4

No plan 5 2.4

Total 210 100

Source: Own survey, 2021

Regarding the gender composition, according to the table above, the distribution is balanced with slight
inclination to male (53.3%) and the rest (46.7%) are female, this shows that in this study the number of
respondents from both genders have fairly participated evenly (Table 2).

When we see the age composition of the respondents’ most of the sampled respondents’ age group falls
between the ages of 22 up to 25 which accounts for 53.3 % of the total number of sampled respondents,
and the rest 18–21, and 26 and above are 40.5% and 6.2 % respectively, this shows that the higher
number of respondents are from the age group of 18–25 this implies most participants are in the youth
category (Table 2).

According to the table from the total sample of 210 respondents the majority of the respondents (40.9%)
were in the department of management followed by department of accounting and finance (29.5%) and
(1.5%) of them were in the department of Cooperatives accounting and audit, and the other (3.4%) in
Department of Cooperatives management, (16.7%) is in Department of economics and the remaining
(8%) are in Department of marketing management. This shows that adequate number of respondents
have been taken from all the departments (Table 2).

According to the table (100 %) take entrepreneurship course and no one respond as didn’t take any
entrepreneurship courses.

According to the table above, (15.2%) responded saying that their families engaged in entrepreneurship
while the rest (84.8%) say their families not engaged in entrepreneurship.

Right after graduation (53.3%) of the student’s career choice is to be to be an employee in a company or
organization, (41.9%) of the respondent choose a career as an entrepreneur / self-employed, (2.4%) of the
students plan to be in the family business, and the remaining (2.4%) don’t have any plans (Table 2).

We can conclude that all departments in Wollo university faculty of business are included and almost all
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entrepreneurship in general.

Correlation Analysis

A Pearson Correlation Analysis was performed in SPSS to check if there is a linear relationship between
the independent and dependent variables. Correlation analysis shows the degree of association and
relation between variables and it indicates the direction in which the variables relate and associate
positively or negatively (Saunders, Lewis, & Thornhill, 2009).

Table 3
Correlation Analysis
Correlations

INT GN SN EE AC PT FB

1 INT 1.

2 GN .384* 1.

3 SN .741* .534* 1.

4 EE .653* .546* .574* 1.

5 AC .681* .547* .597* .512* 1.

6 PT .694* .587* .454* .482* .485* 1.

7 FB .548* .529* .518* .534* .478* .543* 1.

**. Correlation is significant at the 0.01 level (2-tailed).

Source: own survey, 2021

The values of correlation ranges from − 1 to 1, Correlation coefficient able to measure the strength and
the association of the linear relationship between two variables (Cohen and Holliday, 1983).

As cited by Bryman and Cramer (1999) proposed the range of correlation coefficient as 0.19 and below =
very low; 0.20 to 0.39 = low; 0.40 to 0.69 = modest; 0.70 to 0.89 = high, and 0.90 to 1 = very high.

In this study, in order to easily classify the strength and association between variables the researcher has
been used correlation coefficient range of Cohen and Hollidays (1982).

As we can see from the above correlation table, the dependent variable; entrepreneurial intention has a
strong and positive correlation with social norm (r = .741, P < 0.01) and access to capital (r = .724, P <
0.01). As we see the dependent variable entrepreneurial intention it also has a modest correlation with
Gender (r = .384, P < 0.01), entrepreneurial education (r = 653, P < 0.01), personality trait (r = .694, P < 0.01),
family background (r = .548, P < 0.01) these independent variables have a positive and significant relation
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with the dependent variable entrepreneurial intention. Also, most of the variables have modest
relationship each other (Table 3).

Regression Analyses And Hypotheses Testing

Regression Analyses is a reliable method that allows to examine the relationship between two or more
variables and to identify which variables have impact on the other variable. This study has one
independent variable, six independent variables and the researcher use hierarchical regression analysis.
Hierarchical regression analysis permits for a comparison between alternative models with and without
interaction terms, where an interaction effect only exists if the interaction term contributes significantly to
the variance explained in the dependent variable over the main effects of the independent variables
(Jaccard &Turrisi, 2003).

Table 4
Model Summary
Model Summary

Model R R Adjusted Std. Error of the Change Statistics

Square R Estimate
R Square F Sig.
Square Change Change

1 .762a .581 .562 .39342 .581 .543 .000

Source: own survey, SPSS, 2021

As shown the coefficient R in this model 1 summary indicates the square root of R and is the correlation
between variables. From the table below, R = .762 indicates that there is a very strong positive correlation
between the dependent variable and the other variables. R Square is a statistical measure that shows
how close the data are to the fitted regression line. It is also known as the coefficient of determination or
the coefficient of determination for regression, 0% indicates that the model explains none of the
variability of the response data around its mean. The model 1 statistics of dependent variable
entrepreneurial intention revealed that the R square value of .581. It means that all independent variables
included in the model explained 58.1% of variance (.58x 100%). R square change is added when other
predictors are added in dependent variable (Table 4).

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 Table 5
Direct Effect Statistics
Coefficientsa

Model Unstandardized Coefficients Standardized t Sig.

Coefficients

B Std. Error Beta

1 (Constant) − .850 .379 -2.240 .027

GN .009 .120 .005 .076 .940

PT .182 .121 .112 1.500 .013

AC .288 .083 .165 2.267 .000

SN .121 .082 .481 6.351 .025

EE .104 .068 .101 6.524 .043

FB .134 .081 .116 7.542 .036

Source own survey, SPSS 2021

H1: There is positive and significant relationship between demographic factors and entrepreneurial
intention of university students.

This study assumed that there is positive and significant relationship between demographic factors and
entrepreneurial intention. From several demographic factors this study tries to investigate the effect of
Gender on the entrepreneurial intention of the university students. Based on the table above, gender was
found to be statistically insignificance at a = .05 level (β = .009, p = .940), this shows that gender won’t
affect entrepreneurial intention (Table 5).

H2. There is positive and significant relationship between personal factors and entrepreneurial intention
of university students.

This study assumed that there is positive and significant relationship between personal factors
(individual factors) and entrepreneurial intention. From several personal factors (individual factors) this
study tries to investigate the impact of personality trait and access to capital on the entrepreneurial
intention of the university students.

Based on the students reply, the results show that personality trait has a positive significant effect on
entrepreneurial intention at a = .05 level, (β = .182 p = .013) this shows personality trait determines
entrepreneurial intention. Therefore, there is a significant and positive relationship between personality
traits and entrepreneurial intention (Table 5).

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Based on the above coefficient table, access to capital was found to be positive and significance
relationship at a = .05 level, (β = .288, p = .000) this shows access to capital has an effect on
entrepreneurial intention (Table 5).

It can be observed in the table above, there is significant and positive relationship between both
personality traits and access to capital which indicates that the proposed hypothesis ‘H2: There is
positive and significant relationship between personal factors and entrepreneurial intention of university
students’ is accepted.

H3: There is positive and significant relationship between Environmental factors and entrepreneurial
intention.

Based on table above, social norm was found to be statistically significance at a = .05 level, (β = .121, p
= .025), this shows in Wollo university student social norm determines entrepreneurial intention. And the
other environmental factor is entrepreneurial education (Table 5).

Based on table above, entrepreneurial education was found to be statistically significance at a = .05 level,
(β = .104, p = .043), this shows that entrepreneurial education determines entrepreneurial intention
(Table 5).

The above result indicates that the proposed hypothesis’H3: There is positive and significant relationship
between environmental factors and entrepreneurial intention of university students’ is accepted.

H4: There is positive and significant relationship between family background and entrepreneurial
intention.

Based on the students reply, the results show that family background has a positive and significance
effect at a = .05 level, (β = . 134, p = .036). This shows that e family background determines
entrepreneurial intention (Table 5).

The above result indicates that the proposed ‘H4: There is positive and significant relationship between
family background and entrepreneurial intention’ is accepted. Generally, in this research finding
demographic factors does not determine entrepreneur intention while personal factors, environmental
factors and family background determine entrepreneurial intention.

Conclusions And Recommendations

Based on the findings summarized the following major conclusions are drawn. From the demographic
related profiles, first it was observed that the majority of the students were in the same age group 18–25,
and also it is concluded that the gender participation is reasonably balanced, in the number of females to
male among the students the researcher has tried to make the available number of women to participate
in the survey. Thirdly most of the student’s belonged to Management and Accounting and Finance
department. It is also understood that most of the student take entrepreneurial education and has an idea
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of the subject, it can be concluded that the students have enough idea and know how about
entrepreneurship considering frequent exposure on theoretical aspects of the business world. The
majority of the students’ parents were not on entrepreneurial activity. And the majority of the student’s
responded saying that career choice right after study is to be an employee even if majority of them
respond having entrepreneur intention, this shows there is something that holds the student back to
become self-employed but all the respondents said that they do want to be engaged in entrepreneurship if
opportunity rises. Based on the findings it is concluded that demographic factors do not determine
entrepreneur intention while personal factors, environmental factors and entrepreneurial family factors
determine entrepreneur intention.

This study examined the determinant of entrepreneur intention, On the basis of the findings of this
research study and conclusions mentioned, the following recommendations were forwarded:

This study shows that access to capital has determined entrepreneurial intention. Access to capital for
starting a new business is difficult which may be due to the difficulty to get finance from formal financial
institutions. Therefore, the government should create a better environment for entrepreneurs to easily get
finance by making the financial intuitions to minimize their requirement for getting loans. Private
institutions such as banks and other micro finance institutions should introduce young entrepreneurship
and small startup enterprises funding as a part of their services.

Based on finding Personality trait also determines entrepreneur intention Therefore, the government and
society should motivate students to become entrepreneurs by providing different training and awareness
in order to help them develop a strong entrepreneurial culture starting from their young ages and early on
in their education. These may include business advice, counseling, mentoring and training. The
curriculum must be improved and primary and secondary schools should teach entrepreneurial skills so
that children can realize their potential and become motivated in entrepreneurship early in life.

An environment where youths could come together with more experienced entrepreneurs to share
experiences and build a realistic picture of what the entrepreneurship journey looks like and overall
improving the business know-how is strongly recommended.

This study shows that entrepreneur education determines entrepreneur intention. It is recommended that
entrepreneurship course should be practical. In addition to teaching educators should work on advising
students to choose entrepreneurship as career choice.

Further Research Recommendations: - The results of this research, even though valuable, cannot be
considered as valid for every higher education institution. Further research can be performed to other
higher education institutions in different locations to generalize the research results. Therefore, it would
be necessary to include other variables which affect the entrepreneurial intention.

Abbreviations
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- INT- Entrepreneurial intention, GN- Gender, PT- Personality Trait, AC- Access of Capitals, EE-
Entrepreneurship Education, SN- Social Norm and FB- Family Background.

Declarations
Availability of data and material: - The datasets used and analyzed during the current study are available
from the author and you can get any time on your request.

Competing interests: - The author has declared no competing interest.

Funding: - The author is not needed payment for processing charge.

Authors’ contribution: - The author contributes his efforts for all research processes of the study.

Acknowledgements: - My deepest thanks and appreciation will be going to students of Wollo university
who filled questionnaire and providing genuine and relevant information. Additionally, I would like to
thank very gratefully both anonymous editors and reviewers. And my gratitude goes to everybody who
deserve efforts for the success of this study.

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