The entrepreneurial process: an integrated model Chang Hui-Chen

The entrepreneurial process: an integrated model

Chang Hui-Chen, Tsai Kuen-Hung & Peng Chen-Yi

International Entrepreneurship and Management Journal ISSN 1554-7191 Volume 10 Number 4 Int Entrep Manag J (2014) 10:727-745 DOI 10.1007/s11365-014-0305-8

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Author's personal copy Int Entrep Manag J (2014) 10:727–745 DOI 10.1007/s11365-014-0305-8

The entrepreneurial process: an integrated model Chang Hui-Chen & Tsai Kuen-Hung & Peng Chen-Yi

Published online: 1 March 2014 # Springer Science+Business Media New York 2014

Abstract In this study, a model for examining the process of how a person becomes an entrepreneur was developed by integrating planned behavior theory (PBT) with motivation-opportunity-ability (MOA) theory. The model posits that motivation, opportunity, and ability affect entrepreneurial intentions through personal attitude, subjective norms, and perceived behavioral control. A sample of 258 valid questionnaires was collected from entrepreneurial training-course participants in Taiwan. Based on this sample, a structural-equation analysis reveals several interesting results. First, personal attitude and perceived behavior control have a direct effect on entrepreneurial intentions. Second, subjective norms indirectly affect entrepreneurial intentions through personal attitude and perceived behavior control. Third, motivation affects entrepreneurial intentions through personal attitude and perceived behavioral control. Fourth, ability exhibits a directly positive association with entrepreneurial intentions, and indirectly affects entrepreneurial intentions through perceived behavioral control. Fifth, subjective norms affect entrepreneurial intentions through personal attitude and perceived behavioral control. These findings suggest that our model provides more information than those offered by PBT or MOA in understanding the process of becoming an entrepreneur. Keywords Entrepreneurship . Motivation . Opportunity . Ability . Entrepreneurial intentions . Planned behavior

C. Hui-Chen : T. Kuen-Hung : P. Chen-Yi (*) Department of Business Administration, National Taipei University, 151, University Rd., San Shia District, New Taipei City 23741, Taiwan e-mail: [email protected] C. Hui-Chen e-mail: [email protected] T. Kuen-Hung e-mail: [email protected]

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Int Entrep Manag J (2014) 10:727–745

Introduction Understanding the process of how a person becomes an entrepreneur is a key issue to encourage entrepreneurial activity, which is considered to be essential to economic growth (Schumpeter 1934; Baumol 1990; Murphy et al. 1991). Academic scholars have investigated the factors that affect decisions related to the entrepreneurial process by examining individual values and personal characteristics such as gender, experience, knowledge, and culture (e.g., Díaz-García and Jiménez-Moreno 2010; Liñán et al. 2011a, b; Díaz-Casero et al. 2012). Beyond this research stream, several studies have adopted Ajzen’s (1989, 1991) planned behavior theory (PBT) to examine how personal attitude, subjective norms, and perceived behavioral control affect the intentions to engage in entrepreneurial behavior (e.g., Krueger et al. 2000; Fayolle and Gailly 2005; Fayolle et al. 2006; Kolvereid and Isaksen 2006; Krueger 2007). Although constructively using PBT has been effective in entrepreneurial behavior research, it remains limited in the ability to consider environments and resources. According to PBT, human action is guided by three considerations: (a) beliefs about the likely outcomes of certain forms of behavior and the evaluations of these outcomes (behavioral beliefs), (b) beliefs about the normative expectations of others and motivation to comply with those expectations (normative beliefs), and (c) beliefs about the presence of factors that may facilitate or impede performance of certain behavior and the perceived power of these factors (control beliefs) (Ajzen 2002). From the perspective of learning theory (Kolb et al. 2001), a person’s resources and perception of the environment in which he or she functions may affect his or her beliefs. For example, people who possess sufficient resources are likely to believe that they have control over their entrepreneurial behavior and are likely to exhibit a favorable predisposition toward entrepreneurship. Following this logic, integrating motivation, opportunity, and ability (MOA), as well as the three components of PBT, is suggested to be a method for enhancing the understanding of the decisions involved in the entrepreneurial process. Thus, MOA may serve as the antecedents of personal attitude, subjective norms, and perceived behavioral control in the decision-making process of becoming an entrepreneur. In this study, the entrepreneurial process was examined by integrating PBT and MOA. Specifically, we investigate how motivation, opportunity, and ability affect entrepreneurial intentions through personal attitude, subjective norms, and perceived behavioral control. This study contributes to the entrepreneurship literature in two ways. First, this study provides a comprehensive framework to explain the process of becoming an entrepreneur. Whereas previous entrepreneurial research has focused on the perspectives of PBT (e.g., Krueger et al. 2000; Fayolle and Gailly 2005; Fayolle et al. 2006; Kolvereid and Isaksen 2006; Krueger 2007), we extended these perspectives by introducing the views of MOA. Second, this study sheds new light to the linkages between the MOA variables and entrepreneurial intentions. Previous studies have demonstrated the effects of opportunity and motivation on entrepreneurial intentions (e.g., Chen et al. 1998; Souitaris et al. 2007; Solesvik 2013). However, they have not described how these factors affect entrepreneurial intentions through personal attitude, subjective norms, and perceived behavioral control. The current study offers crucial insights into entrepreneurial training with regard to these factors. Therefore,

Author's personal copy Int Entrep Manag J (2014) 10:727–745

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appropriate designs of the entrepreneurship-training courses play an essential role in the entrepreneurial process. The following sections present the theoretical background and the research hypotheses. After describing the research methods used in this study, we present the research results based on a measurement model and a structural-equation analysis. We conclude with a discussion of the implications for research and managerial practices, and then discuss limitations and offer suggestions for future research.

Theoretical background and hypotheses Planned behavior theory PBT has been widely adopted in research of behavioral intentions. This theory argues that a person’s behavioral intentions are the result of three antecedents: (a) the attitude toward behavior (personal evaluation), (b) subjective norms (social pressures), and (c) perceived behavioral control (ability to perform the behavior) (Liñán 2004). In the entrepreneurial context, personal attitude toward a behavior refers to the attractiveness of the proposed behavior or degree to which the person positively or negatively evaluates the idea of becoming an entrepreneur (Ajzen 1991, 2002; Kolvereid 1996). Perceived behavioral control refers to the perceived ease or difficulty of becoming an entrepreneur (Ajzen 1991). Subjective norms involve measuring the perceived social pressure from family, friends, or other people that are considered important (Ajzen 1991) to become an entrepreneur. Many researchers have applied the theory to analyze new firm creation and have provided empirical support in the research stream of entrepreneurial intentions. Tkachev and Kolvereid (1999) tested a sample of 512 Russian students from three universities in St. Petersburg, Russia. Their results revealed that the theory of planned behavior, when not tracking models or demographics, determined employment-choice intentions. Krueger et al. (2000) investigated a sample of 97 senior university business students facing major career decisions. They argued that promoting entrepreneurial intentions by promoting public perceptions of feasibility and desirability is not just desirable; promoting entrepreneurial intentions is also thoroughly feasible. Liñán (2004) integrated the theories of Ajzen (1991) and Shapero and Sokol (1982) into entrepreneurial-intention model and tested a sample of 166 university students in Spain to conceptualize and define entrepreneurial education. Liñán (2008) also investigated a sample of 249 university students and found that values and skills play a major role in explaining entrepreneurial intentions. Díaz-García and JiménezMoreno (2010) analyzed a sample of 967 students pursuing degrees in economics (fourth- and fifth-year students) and business administration (third-, fourth-, and fifthyear students) in the 2006–2007 academic year at one university in Spain. They found that gender affects entrepreneurial intentions. Liñán et al. (2011a) empirically analyzed a sample of 354 final-year undergraduate students from the Department of Business and Economic Sciences at one university in Spain. Their results indicated that personal attitude and perceived behavioral control are the most factors that explain entrepreneurial intentions. Sánchez (2011) investigated 864 university students in Spain and found that students in the entrepreneurship education program group improved their competence in self-employment and intentions toward self-employment. Recently, Liñán et al.



(2013) tested the planned behavior theory by analyzing a sample of 1,005 students from business schools and universities across two countries, the United Kingdom and Spain. They found that enhancing the level of knowledge and awareness of entrepreneurship increases perceptions of self-efficacy and entrepreneurial intentions. However, ambiguity exists regarding the term “intentions”. For example, Ajzen (1991) defined intentions as a summary motivation that is a combination of a person’s motivation, willingness to exert effort, and willingness to overcome difficulties to enact a particular behavior. According to Merriam-Webster online dictionary (2012), intentions were defined as “the thing you plan to or achieve; an aim or purpose”, whereas the Cambridge Dictionaries Online (2012) defined intentions as “something that you want and plan to do”. Rhodes et al. (2006) argued that popular-intention measures may not involve motivation specifically, especially when attempting to separate motivation from intentions in measurement. As the items of intentions only partially entail implementation intentions and planning, the measurement of motivation may be compromised (Rhodes et al. 2006). Therefore, several researchers have measured intentions by using the measures documented in different models, such as Timmons’ opportunity-resourceteam model (Timmons 1999; Song et al. 2008), the MOA model (MacInnis and Jaworski 1989; MacInnis et al. 1991), and the motivation-driving model (Carsrud and Brännback 2011; Vroom 1964; Bhola et al. 2006) to measure intentions. Motivation-opportunity-ability The MOA model, proposed by MacInnis and Jaworski (1989) and MacInnis et al. (1991), who theorized the degree to which people process information by using various combinations of MOA when taking action. According to the MOA model, motivation incorporates readiness, willingness, interest, and the desire to engage in information processing. Opportunity has been conceptualized as the extent to which a situation is conducive to achieving a desired outcome. Ability refers to consumer skills or proficiencies in interpreting brand information from an advertisement (MacInnis et al. 1991). Particularly, opportunity represents the environmental or contextual factors that enable action (Rothschild 1999). Gruen et al. (2006) claimed that opportunities can lead to desired outcomes. Starting a new venture is a type of action that suggests a person can both take advantage of opportunities and welcomes uncertainties (McMullen and Shepherd 2006). The source of entrepreneurial opportunities can be affected by two major factors. The first factor is the change in the external environment, referring to the emergence of new opportunities caused by the change in external factors. For example, new entrepreneurial opportunities can be created by changes in the market, technology, politics, regulations, society, population structure, and industrial structure (Shane 2005). Second, individual factors such as personality, prior knowledge, and social networking enable a person to discover, evaluate, and take advantage of opportunities during the process of enterprising (Shane and Venkataraman 2000). The MOA model has been used in various management disciplines, such as general marketing and social marketing. (Binney et al. 2003). The key variables of MOA can also be found in entrepreneurial-intention research. For example, Chen et al. (1998) evaluated 315 samples from a university and a county Chamber of Commerce in the U.S., and Souitaris et al. (2007) examined 250 students from two universities in the U.K. and France. These studies suggested that opportunity and motivation have


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positive impacts on entrepreneurial intentions. Solesvik (2013) surveyed 321 three university students in Ukraine and revealed that personal attitude, subjective norms, and perceived behavioral control mediate the relationship between perceived entrepreneurial motivation and entrepreneurial intentions. Segal et al. (2005) examined a sample of 114 undergraduate business students at Florida Gulf Coast University. They found that ability and motivation positively influence entrepreneurial intentions. Furthermore, Liñán (2008) analyzed a sample of 249 university students and found that skills positively affect entrepreneurial intentions. Conceptual framework and hypotheses Figure 1 presents the conceptual framework of this study. We posit that motivation, ability, and opportunity directly and indirectly affect a person’s entrepreneurial intentions through his or her attitude toward entrepreneurship, subjective norms, and perceived behavioral control. We present the framework to guide the development of research hypotheses. Specific hypotheses concerning these relationships are detailed in the rest of this section together with their underlying rationale. Song et al. (2008) asserted that opportunity is positively associated with enterprise achievements, revealing that opportunity plays a considerable role in the process of entrepreneurship. Ardichvili et al. (2003) considered the knowledge of market opportunities as a catalyst for several entrepreneurial intentions in their model of entrepreneurial development. In addition, Eckhardt and Shane (2003) argued that opportunity may drive intentions to create a business. Logically, a relationship can exist between opportunity and intentions. If a person notices an opportunity, then the reaction may be to capitalize on the opportunity. Furthermore, personal attitude, perceived behavior control, and subjective norms (e.g., the belief that an opportunity exists and can be exploited) influence behavioral intentions (Ajzen 1991; Ajzen and Madden 1986). People who have opportunity-driven motivation choose to start their own business by Opportunity

Personal attitude

H1a H1b

H1e H4a

H2a

H1c

Motivation

H4c(b)

H1d

H2b H2c

Entrepreneurial intentions

H2d Subjective norms

H3e

H4c(a)

H3f H3a

H4c(c) H3b H3c

Ability

Fig. 1 Hypothetical framework

H3d

Perceived behavioral control

H4b



taking advantage of an entrepreneurial opportunity, whereas people who possess necessity-driven motivation choose to start a business because other employment options are either absent or unsatisfactory (Bhola et al. 2006). Therefore, we propose the following hypotheses: H1. Opportunity has a positive impact on (a) personal attitude, (b) entrepreneurial intentions, (c) subjective norms, (d) perceived behavioral control, and (e) motivation. In the MOA model, motivation is viewed as a force that directs people toward goals (Hoyer and MacInnis 1997). Roberston et al. (2003) explained that a business will neither succeed nor begin without motivation. Generally, the possible factors that influence entrepreneurial behavior are the motivation of people and social and environmental factors (Kavitha et al. 2008). Carsrud and Brännback (2011) suggested that motivation may be an antecedent of intentions, and from a psychological point of view, Vroom (1964) suggested that expectancy (i.e., expectations of gain) drives motivational force, which influences intentions. Solesvik (2013) argued that a person’s perceived entrepreneurial motivation refers to their beliefs related about how attractive the idea of selecting an entrepreneurial career path can be. Besides, the three antecedents of PBT are formed by beliefs (Ajzen 1991). If a person believes that the outcome of his/her entrepreneurship activity in a given environment will be desirable, they are likely to have a positive attitude towards entrepreneurship (Lent et al. 2000). As to subjective norms, refer to how reference persons would view one’s entrepreneurial career choice as well as one’s motivation to comply with these reference people. And people usually choose to perform behaviors that they think they will be able to control and master. Beliefs related to perceived high entrepreneurial motivation may promote individuals’ attitude, subjective norms, and perceived behavior control toward entrepreneurship (Solesvik 2013). Therefore, we hypothesize that: H2. Motivation has a positive impact on (a) personal attitude, (b) entrepreneurial intentions, (c) subjective norms, and (d) perceived behavioral control. In the MOA model, ability is the extent to which persons have the necessary resources (e.g., knowledge, intelligence, money) to produce a desirable outcome (Hoyer and MacInnis 1997). Rothschild (1999) revealed that ability represents a person’s skill or knowledgebase related to action. People who possess skills feel more confident in starting a firm (DeNoble et al. 1999). These specific abilities can be more easily exercised when a person is an entrepreneur (Liñán 2008). In addition, Sarasvathy et al. (2003) described three types of entrepreneurial possibility: opportunity recognition, opportunity discovery, and opportunity creation. Opportunity recognition refers to a person’s perception of the possibility of creating a business, of improving current relations of supply and demand, and of finding potentials for increasing profits (Christensen et al. 1994). Opportunity discovery involves discovering solutions to current problems (Hsieh et al. 2007). Opportunity creation suggests that entrepreneurs should demonstrate foresight to create valuable market opportunities. A person who possesses considerable work experience, a high level of education, knowledge of the market, and business practice is likely able to identify an opportunity to start a new


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business (De Wit and van Winden 1989). Thus, ability can be associated with positive personal attitude, subjective norms, entrepreneurial intentions (Scherer et al. 1991; Carsrud 1992; Boyd and Vozikis 1994), perceived behavioral control, and opportunity. Based on these arguments, this study proposes the following hypotheses: H3. Ability has a positive impact on (a) personal attitude, (b) subjective norms, (c) entrepreneurial intentions, (d) perceived behavioral control, (e) motivation, and (f) opportunity. According to PBT, personal attitude constitutes the perception of desirability, which affects entrepreneurial intentions, whereas perceived behavioral control reflects the perception that a person can control his or her entrepreneurial behavior (Ajzen 2002). Subjective norms refer to the perceptions that “reference people” will or will not approve of the decision to become an entrepreneur (Ajzen 2001). In entrepreneurship literature, several studies have revealed no major direct relationship between subjective norms and entrepreneurial intentions (Scherer et al. 1991; Cooper 1993; Matthews and Moser 1996; Kennedy et al. 2003; Liñán and Santos 2007). Nevertheless, interest remains in adopting a revised version of the entrepreneurial intention questionnaire (EIQ, Liñán and Santos 2007; Liñán and Chen 2009) to examine these cognitive constructs for reference. In summary, we present the following hypotheses: H4a. Personal attitude has a positive impact on entrepreneurial intentions. H4b. Perceived behavioral control has a positive impact on entrepreneurial intentions. H4c. Subjective norms have a positive impact on (a) entrepreneurial intentions, (b) personal attitude, and (c) perceived behavioral control.

Methodology Research design To ensure accurate translation, we applied a double translation process to translate the questionnaires between Chinese and English (Douglas and Craig 1983). To identify the subsets of measures that were unique, we submitted a list of constructs and corresponding measurement items to two panels of academic experts in various entrepreneurial fields. The panels critically evaluated each item for clarity, specificity, and representativeness. Based on the feedback from these two panels of experts, we prepared a questionnaire that included items that were determined to exhibit face validity and high consistency with the constructs. The final stage of measurement development consisted of one pretest of the questionnaire conducted with representative respondents to identify wording problems or ambiguities. Data sources and sample Entrepreneurial education and training represent the process of providing people with the ability to recognize commercial opportunities and the insight, self-esteem,



knowledge, and skills necessary to act on them. Entrepreneurial education and training include instruction in opportunity recognition, commercializing a concept, marshaling resources in the face of risk, and initiating a business venture (Jones and English 2004). Most of the subjects analyzed in previous entrepreneurial studies have been students and not potential real-world entrepreneurs. Although researchers have stated that such students are on the verge of choosing a profession and belong to the segment of the population that exhibits the highest entrepreneurial inclination (Krueger et al. 2000; Reynolds et al. 2002a; Liñán 2004), several researchers have acknowledged that samples involving students may not be representative of the total population. These studies have suggested that comprehensive research samples derived from diverse locations should be included, and that potential or nascent entrepreneurs should be analyzed (e.g., Liñán 2008; Díaz-García and Jiménez-Moreno 2010; Naktiyok et al. 2010). Consequently, we conducted empirical analysis by using a sample of 3-day basic entrepreneurial-training course participants in Taiwan. This type of basic course has been provided by the Taiwanese government for more than 10 years and is free of charge to the public, with no restrictions on participants except that they be 18 years of age or older. Information about these courses can be obtained from newspapers, television, radio, websites, and government institutions. These courses are designed for people who may have the motivation to start a new venture and for those who want to discover practical and useful knowledge related to become an effective entrepreneur. These courses are consistent with entrepreneurial awareness education (Liñán 2004), the purpose of which is to increase the number of people who possess sufficient knowledge of small enterprises, self-employment, and entrepreneurship, and subsequently allow these people to consider related careers as rational and viable alternatives to typical employment. In addition, this educational campaign does not directly advocate the creation of more entrepreneurs. According to intention models, entrepreneurial awareness education acts on one or more of the elements that determine intentions (entrepreneurial knowledge, desirability, or feasibility), but not directly on intentions. Instructors do not attempt to transform participants into entrepreneurs, but instead enhance their perspectives on choosing professions. Moreover, numerous start-up or self-employment courses, especially those that are short, function as awareness programs (Curran and Stanworth 1989). Furthermore, Krueger et al. (2000) stated that the PBT used in entrepreneurial intention models can be applied to participants of all ages and provide them with broad ranges of experience, intentions, and preferences (Liñán 2004). Including study samples who participate in entrepreneurial awareness training can reduce the risk of range restriction. Finally, analyzing samples who participate in this type of course enables the examination of entrepreneurial processes prior to the performance of actual entrepreneurial activity, and testing these theories and models on people who both possess and do not possess entrepreneurial intentions is necessary (Krueger et al. 2000). Data were collected using anonymous questionnaires that were completed by the participants during basic training courses from late August 2012 to early October 2012. A total of 258 valid responses were included in the hypothesis testing process after 60 unqualified and incomplete questionnaires were eliminated, thus yielding an effective response rate of 81 %. The study sample included respondents with diverse demographic backgrounds, 56.2 % were women, 43.8 % were men, and 74.8 % possessed


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undergraduate or advanced degrees. The main age group (26–45 years old) comprised 62.0 % of the participants, and the average age of the participants was approximately 35.3 years. Half of the participants had previously participated in entrepreneurship-training courses, and the other half were participating in these courses for the first time. A time-trend extrapolation test (Armstrong and Overton 1977) was performed to detect nonresponse bias. To examine possible nonresponse bias and the representativeness of the participating samples, we performed a MANOVA of 175 questionnaires obtained from the first week of the courses and the remaining 83 questionnaires obtained from the final week of the courses. We compared the two groups of questionnaires based on all of the antecedent variables. The results were not significant at the 95 % confidence level, suggesting no significant difference between the two groups. We also compared the possible differences in age, gender, and education between the first collection of response samples and the remaining response samples. The results were not significant at the 95 % confidence level, suggesting that non-response bias was not a concern in this study. Measures We applied the modified version of the EIQ used by Liñán and Chen (2009), who recognized possible problems with the EIQ, such as acquiescence bias. Therefore, Liñán et al. (2011c) used a modified version to test regional differences in entrepreneurial intentions in Spain. In the improved version, items measuring major constructs were randomly ordered and several reversed items were included. The relevant items are shown in the Appendix of this paper. Therefore, items A1 to A20 were used to measure the four central constructs of PBT: entrepreneurial intentions (A4, A6, A9reversed-, A13, A17, and A19-rev-), personal attitude (A2-rev-, A10, A12-rev-, A15, and A18), perceived behavioral control (A1, A5-rev-, A7, A14, A16-rev-, and A20), and subjective norms (A3, A8, and A11). Subsequently, motivation was measured using nine items (M1–M9) revised from the original items developed by Gruen et al. (2006, 2007) and Moorman (1990). Opportunity was measured by using five items (O1–O5) based on those used by Shane (2003) and Zahra and Bogner (2000). Finally, ability was measured using five items (AB1–AB6) based on those used by DeNoble et al. (1999) and Liñán (2008).

Analyses and results Measurement model A total of 258 valid responses were used in the empirical analysis and we employed confirmatory factor analysis (CFA) using LISREL 8.7 to examine the reliability and validity of the study’s major constructs. The results revealed a satisfactory model fit (χ2 =647.63, df=254, χ2/df