Aut Aut Research Journal ISSN NO: 0005-0601 · ENTREPRENEURIAL INTENTIONS IN INDIA” Ms. Keenika...

“A STUDY OF ANALYSIS ON FACTORS INFLUENCING STUDENTS’

ENTREPRENEURIAL INTENTIONS IN INDIA”

Ms. Keenika Arora, Asst. Prof.,

Tecnia Institute of Advanced Studies, GGSIPU, New Delhi

Abstract:

In today’s world, the formation of new firms is crucial for the vitality of national economies.

Initialization and support of new business ventures are important tasks for both policy makers

and academics It is believed that a career influenced by entrepreneurship has propensity to

offering the individuals ample opportunities for enjoying independence, reap greater financial

pay back and of an overall gain to the economy through a contribution to innovation, job

enhancement and economic development. The last few decades have witnessed a growing

interest and emphasis on the need to encourage entrepreneurship programmes in institutions of

learning in order to inculcate entrepreneurship culture in students. This paper attempts to review

the empirical studies undertaken in India, with a view to synthesizing common findings and

determine the trend in entrepreneurial intention research.

The paper revealed that entrepreneurial intentions studies in Indian supported the validity of

personality traits and other demographic factors in explaining students’ decisions to engage in

entrepreneurial activities. It also revealed that entrepreneurial intentions were mostly examine by

modeling personality and other situational factors. As result, the paper stressed the need for

future researchers to adopt more robust and theory-driven behavioral intentions models with

considerable proven predictive value for many behaviors such as the Shaper’s model of

entrepreneurial event and Ajzen’s theory of planned behaviour. Such models offer sound

theoretical frameworks that specifically map out the nature of processes underlying intentional

behavior such as entrepreneurship.

Keywords: Entrepreneurship, Entrepreneurial intentions, Student Behavior.

Aut Aut Research Journal

Volume XI, Issue VIII, August/2020

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Introduction

The last two decades has witnessed an increased acceptance and acknowledgement of

entrepreneurship as the instrument driving innovation, job creation, human potential

development, and new customer demands satisfaction (Van Praag&Versloot, 2007).

Entrepreneurship is an important part of the economic landscape, providing opportunities and

jobs for huge numbers of people, hundreds of thousands of new businesses are established each

year, thus creating millions of new jobs. Entrepreneurship has emerged as the most potent

economic force the world has ever experienced (Kuratko, 2005).There seem to be consensus in

the opinion of economic theorists around the world that the development of entrepreneurship

capital, which reflects a number of different legal, institutional and social factors and forces, and

involves also a social acceptance of entrepreneurial behaviour, individuals who are willing to

deal with the risk of creating new firms and favourable business environment (Audretsch 2001)

bring about economic growth and entrepreneurial society.

Entrepreneurship is an act of being an entrepreneur, or "the owner or manager of a business

enterprise who, by risk and initiative, attempts to make profits". Entrepreneurs act as managers

and oversee the launch and growth of an enterprise. Entrepreneurship is the process by which

either an individual or a team identifies a business opportunity and acquires and deploys the

necessary resources required for its exploitation. Early-19th-century French economist Jean-

Baptiste Say provided a broad definition of entrepreneurship, saying that it "shifts economic

resources out of an area of lower and into an area of higher productivity and greater yield".

Entrepreneurs create something new, something different—they change or transmute

values. Regardless of the firm size, big or small, they can partake in entrepreneurship

opportunities. The opportunity to become an entrepreneur requires four criteria. First, there must

be opportunities or situations to recombine resources to generate profit. Second, entrepreneurship

requires differences between people, such as preferential access to certain individuals or the

ability to recognize information about opportunities. Third, taking on risk is a necessity. Fourth,

the entrepreneurial process requires the organization of people and resources.



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However, until the liberalization of the Indian economy in 1991, several researchers have

suggested that in India a combination of factors - including the caste system (Dana, 2000; Handy

et al., 2002; Shankar, 2011; Shivani et al., 2006), British occupation (Dana, 2000; Shivani et al.,

2006), religious and cultural values (Dana, 2000; Handy et al., 2002; Shivani et al., 2006) and

governmental regulations (Dana, 2000; Shivani et al., 2006) ) have all worked against a spirit of

entrepreneurship in the past in addition to some institutional bottlenecks. For example, the time

required to start a business in India averages eighty-eight days; over 60 per cent greater than the

world average of fifty-four days (UNDP, 2007

McStay (2008) pointed out that previous studies about entrepreneurship can be categorized in to

three distinct approaches; Trait approaches, Behavioral approaches, and Cognitive approaches.

In the trait approaches, entrepreneurs are assumed to have certain personality traits which made

them unique such as need for achievement, need for power, need for affiliation, internal locus of

control etc. The proponents of behavioral approaches believed that entrepreneur is a creator of

an organization; therefore, the importance of networks, teams, financing and so on, were

emphasized. The entrepreneur has been held in high esteem as individual with the ability to

recognize, exploit and act on profit opportunities not seen by others. While in the cognitive

approaches emphasized on entrepreneurial perception, and how the entrepreneurs interpret and

make sense of the environment. Although the explanatory power and predictive validity of the

traits approach has been criticized (Krueger et al., 2000), recent studies on students’

entrepreneurial intentions across the world have mostly adopted the traits and cognitive models

to explain factors influencing entrepreneurial intentions.

It was contended, for example, that whereas Anglo culture tends to encourage the ‘drive to

achieve’, many Indians believe that passivity and contentment with the status quo is healthier for

the inner soul than striving to improve one’s situation. They believe that peace of mind can be

achieved from spiritual calm rather than from materialism (Dana, 2000; Shankar, 2011). These

and other factors such as worker displacement associated with the introduction of new

technologies, high population growth rate, growth rate in the labour force and the declining

mortality rate resulted into rising unemployment rates in India (Venkatachalam&Waqif, 2005).

In order to stem the rising unemployment rate and keep pace with developed countries, India

needs many real‖ entrepreneurs willing to make their ventures bigger. If the college students with

high entrepreneurial attitude and potentials get proper training, they will have the best prospects



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for becoming real‖ entrepreneurs; therefore, in recent years, there have been greater efforts to

shift national mindset regarding entrepreneurship and promote entrepreneurship development

through the education and nurturing of India’s youth, particularly students, in whom it is hoped

an entrepreneurial personality can be developed so that they can opt for entrepreneurship as their

future option (Manimala et al., 2002).

A number of studies revealed that students’ interest in entrepreneurship as a career choice is

growing (Fleming 1994, Kolvereid 1996); therefore, nurturing entrepreneurship among students

has become an important topic in governments and research. The key constituent that is required

to spur new venture creation is the entrepreneurial intention, which captures a state of mind that

directs individuals’ focus to achieve a goal or something (Bird, 1988). In the psychological

literature, intentions have proven the best predictor of planned behavior, particularly “where the

focal phenomenon is rare, hard to observe, or involves unpredictable time lags; a focal

phenomenon such as entrepreneurship” (MacMillan & Katz 1992) as cited in Krueger, Reilly,

and Carsrud, (2000). Starting a new businesses emerge over time and involve considerable

planning. Thus, entrepreneurship is exactly the type of planned behavior which can best be

predicted by intentions (Bird 1988; Katz & Gartner, 1988)

For example, in the United States (Autio, Keeley, Klofsten, Parker, & Hay, 2001; Krueger et al.,

2000); Germany (Jacob & Richter, 2005), Egypt (Hattab, 2014), Spain and Taiwan (Linan&

Chen, 2009); Russia (Tkachev&Kolvereid, 1999), the cognitive model was applied to understand

the antecedents of entrepreneurial intentions, particularly among students, while other studies

Nigeria, Potugal, Malaysia, China and Australia among others utilized traits and/or demographic

factors to explain entrepreneurial intentions (Akanbi, 2013; Gerry, Marques &Nogueria, 2008;

Jing & Sung, 2012; Lee & Tsang, 2001; McStay, 2008).

Since fostering entrepreneurship among India’s youth/students in whom it is hoped an

entrepreneurial personality can be developed (Manimala et al., 2002) has become an important

topic in governments and research in recent years, it is imperative to understand the research

approaches in predicting students’ entrepreneurial intentions in India. What is the trend and

extent of entrepreneurial intention research in India? What are the common factors influencing

students’ entrepreneurial intentions in India? This paper therefore attempt to provide answers to

these and other related questions by reviewing empirical studies undertaken in India and

syntheses of their various findings.



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According to Paul Reynolds, founder of the Global Entrepreneurship Monitor, "by the time they

reach their retirement years, half of all working men in the United States probably have a period

of self-employment of one or more years; one in four may have engaged in self-employment for

six or more years. Participating in a new business creation is a common activity among U.S.

workers over the course of their careers".[45] In recent years, entrepreneurship has been claimed

as a major driver of economic growth in both the United States and Western Europe.

Entrepreneurial activities differ substantially depending on the type of organization and

creativity involved. Entrepreneurship ranges in scale from solo, part-time projects to large-scale

undertakings that involve a team and which may create many jobs. Many "high value"

entrepreneurial ventures seek venture capital or angel funding (seed money) to raise capital for

building and expanding the business. Many organizations exist to support would-be

entrepreneurs, including specialized government agencies, business incubators (which may be

for-profit, non-profit, or operated by a college or university), science parks and non-

governmental organizations, which include a range of organizations including not-for-profits,

charities, foundations and business advocacy groups (e.g. Chambers of commerce). Beginning in

2008, an annual "Global Entrepreneurship Week" event aimed at "exposing people to the

benefits of entrepreneurship" and getting them to "participate in entrepreneurial-related

activities" was launched.

Review of Entrepreneurial Intention Studies among Indian Students

In a study of entrepreneurial intention among student in the Warangal district of Andhra Pradesh,

Lunavath (2015) aims to measure and identify determinants of entrepreneurial intention among

the professional course pursued by student in engineering and management in various institution

in the district. A total of 300 students were randomly sampled and data collected was analyzed

using descriptive statistics. According to the results, personal factors such as skills, motivation

and support were found to be the major influencing factors. Majority of the respondents felt that

there was no motivation to pursue career an entrepreneur while others showed but inhibited by

lack of support or because they felt their gender was a limiting factors. Finding of the study also

showed that students were more inclined to pursue public and private sector career; many



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respondents did not show any sign of creating their own venture in the future. Entrepreneurial

intentions therefore appear to be limited.

Krithika and Venkatachalam (2014) investigated the relationship between subjective norms and

its impact on entrepreneurial Intention among 100 business students in Bangalore. Respondents

were selected based on stratified random sampling. Result indicates that there is a strong

relationship between subjective norms and students’ entrepreneurial intentions; students in

Bangalore attach high value to the perception of their closest friends, family members and

significant others, as they play important role in their entrepreneurial decisions.

Ponmania, Pretheebab and Annapoorani (2014) examined entrepreneurial intention among male

and female students from different domains of specialty in Tamilnadu employing the theory of

planned behaviour (TPB). Data for the study were gathered through questionnaire survey from

188 post-graduate students of science and non-science courses. Analysis of variance ANOVA

was performed to examine the differences between male and female from science and non-

science in terms of entrepreneurial intention and the antecedents of intention. Result indicated

that there is a difference in the level entrepreneurial intention, attitude towards behaviour, and

perceived behaviour control between male and female.

Female students are less interested in entrepreneurship compared to their male counterpart due to

the influence of the traditional social role. Both male and female were found to have the same

perception regarding subjective norms or social pressure place by the society to perform certain

actions. The study reveals area of specialization does not have a significant effect on students’

entrepreneurial intention.

Ajit and Anisha (2014) studied the influence of parental factors on the entrepreneurial attitude of

students. The objective of the study was to determine the influence of parental factors on a B

school students’ intentions for becoming an entrepreneur, motivations and attitudes related to

starting a new business. Data were collected from a sample of 50 management graduates, who

were randomly selected from a leading management institute in Kerala. The major findings of

the study is that the interest in becoming an entrepreneur for B school students whose parents are

entrepreneurs is significantly greater than that of those students whose parents are not

entrepreneurs. The study concludes that B school students are influenced by the Parental factors

such as parental role modeling, access to Business network of parents, entrepreneurial family



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culture, educational qualification of parents and family standard of living. One other interesting

finding from this study is that children of entrepreneurs are significantly more likely to see the

value of a business plan for starting a business.

Sharma, L (2014) studied impact of family capital and social capital on youth entrepreneurship

in Uttarakhand state, India. The paper aims specifically interpret how the three forms of family

capital namely: family’s financial capital, family’s man power capital and family’s human

capital influence the career choice intention of students in Uttarakhand. Quantitative data were

collected from sample of students studying in various professional courses in Uttarakhand.

According to the results of the study, positive relationships exist between the family’s financial

capital and entrepreneurial intentions of higher education students.

Family’s financial capital (measured as father’s annual income), manpower capital (measured as

family size) and human capital (measured as father’s occupation) had no influence on career

intentions of students. The study confirmed that there is a significant impact of students’ social

capital network span on his career intentions, especially in taking up entrepreneurship as a career

choice.

Similarly, Venkatapathy and Pratheeba (2014) applied the theory of planned behaviour to

examine gender, family business background and entrepreneurial intentions in an emerging

economy. Data for the study were collected from a total sample of 176 university postgraduate

students from different domain of specialty in India, comprising of 92 males and 84 females.

Stratified random sampling technique was used. The results of the study revealed that there is a

low, but statistically significant, correlation between a family business background and the

intention to start a new business in India. Moreover, the attitude toward entrepreneurship,

subjective norms, and perceived behavioural control are positively and significantly correlated

with entrepreneurial intention. In addition, analysis of variance showed that domain of specialty

does not have significant effect on postgraduate students’ entrepreneurial intention despite the

fact that gender has significant effect on entrepreneurial intention.

Lone and Nazir (2013) carried out entrepreneurial intentions study in two regions, titled - Do

Regions Matter in Entrepreneurial Intentions? Applicability of the theory of planned behaviour

in the Indian context. Data were collected by means of questionnaire from postgraduate students

of two premier universities in Jammu and Kashmir regions and analyzed using factor analysis



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and multiple regressions. Results of the study showed that social valuation of entrepreneurship in

Jammu and Kashmir regions was not statistically significant.

The attributed the findings to the peculiar sub-continent condition where society’s preference for

governmental jobs is relatively overriding. The study also indicated that entrepreneurial

intentions among the respondents were more influenced by Perceived Behavioural Control

(PBC); however, regional variation was in the influence of subjective norms. Attitude towards

start-up was not found to have effects on the student’s entrepreneurial intentions. The study

concludes that entrepreneurial intentions are influenced by factors other than geographical

location.

Joseph, N. (2013) examined the motivational factors relating to the entrepreneurial intention of

postgraduate management students in India. The objective of this study was to examine the

relationship between entrepreneurial intention and the given variables like attitude towards self-

employment, subjective norms, perceived behavioral control, perceived educational support and

perceived structural support. The study provides answers to following two questions: what are

the factors which motivate university students to start a new business venture after completing

their studies? Are they related solely to the personality of the individual or are they related to

his/her support systems or is it a combination of both?

Data were collected by means of questionnaire from a total sample of 382 postgraduate

management students across seven management colleges in Kerala, India. The findings revealed

that all the five factors, namely attitude towards self-employment, subjective norms, perceived

behavioral control, perceived educational support and perceived structural support, have a

positive effect on the entrepreneurial intention of an individual. The study was based on Ajzen’s

theory of planned behaviour.

A comparative study on attitude and motivation towards entrepreneurship with respect to Indian,

and other foreign students including Nepali, Kenyan and Bhutanese revealed that significant

differences exist among students of different nationals. For instance, Indian students were found

to be low on such attitudinal factors as self confidence, focus, determination, and risk seeking.

The author attributes this result to the Indian cultural practices, for instance the caste system,

which makes most Indians subservient and lacking in self confidence in comparison with other

nationals.



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Factor analysis shows that self confidence and focus, loneliness and low morale, determination,

risk seeking, and Institutional building are the factors influencing students’ attitude towards

entrepreneurship. Analysis of variance (ANOVA) also revealed that these differences vary

between nationality, age and major of the students especially on such attitude factors like self

confidence, focus, and Institutional building (Shankar, 2011)

Mohammed and Aparna (2011) studied entrepreneurial intentions of students; data were

collected by means of structured questionnaire with a total of 258 students randomly selected

from tertiary institutions offering MBA, MCA, Engineering and Polytechnic as well in

Hyderabad area. The study specifically focused on entrepreneurship education, entrepreneurship

intensions among students, the entrepreneurial self‐efficacy of the students and the

perception/opinion of entrepreneurship among the students within an Indian setting. Descriptive

statistics analysis indicates that entrepreneurial intentions in India continue to face challenges in

terms of societal pressures and self‐efficacy constraints.

Agarwal and Upadhyay (2009) examined attitude of youth toward entrepreneurs and

entrepreneurship and found significant difference in terms of background and educational

qualification. Youth from agricultural background were more positive in their attitude towards

entrepreneurship as compared to others. Youth with professional qualifications showed positive

attitude than those with traditional and technical qualifications

Schwart and Levenburg (2008) studied entrepreneurial orientation among the youth of India: the

impact of culture, education and environment and draws comparison with students enrolled in

US. Result that despite a combination of social structures and cultural values within India that

historically constrained entrepreneurship, a number of efforts in recent years seem to have

significantly shifted the national mindset regarding entrepreneurship, particularly among India’s

youth who were found to demonstrate a significantly higher level of interest in starting new

ventures than their US counterparts.

Bhandari (2006) conducted a study to find out whether university students in India intended to

start their own business (become entrepreneurs) or work for someone else upon completion of

their university education. A 62-item questionnaire was administered to the first year students of

the Faculty of Commerce and Management Studies at Jai NarainVyas University, Jodhpur, India.

Of the 186 questionnaires returned, 100 were usable for this study. From the results of chi-square

tests, only two (luck and to lead other people) out of the eighteen independent variables, were



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found to have significant relationships with the dependent variable (to start your own business).

According to results of factor analysis, six variables (to lead other people, to be my own boss, to

put my innovative ideas into practice, determination, personal challenge and non-business

education) were found to relate to the dependent variable. Although, the logistic regression

analysis showed that these six factors have overwhelming (92.35%) predictive value, Luck and

the ability to lead other people have the most significant effect on entrepreneurial intentions

among Indian university students.

Fitzsimmons and Douglas (2005) examined entrepreneurial attitudes and entrepreneurial

intentions: A cross-cultural study of potential entrepreneurs in India, China, Thailand and

Australia. A total of 414 students were surveyed at the beginning of their first entrepreneurship

class in MBA programs in Australia, China, India and Thailand. Regression analysis for the

Indian sample indicates that ownership, income, independence and risk are significant in

explaining variance in career decisions. Work effort was not significant. Overall, the Indian

sample desired more ownership, more income, more independence and less risk.

The individuals total business experience was significant in explaining variance in risk tolerance.

Entrepreneurial self-efficacy and the human capital variables were not significant in explaining

variance in any of the entrepreneurial attitudes. A similar cross cultural approach to

understanding entrepreneurial intention involving Germany, India, Iran, Poland, Spain, and The

Netherlands base on the theory of planned behaviour was carried out by Moriano, Gorgievski,

and Laguna (2005) drawing on an overall sample of 1,074 students and their assessments of

entrepreneurial career intentions. Results supported the universal influence culture, attitudes and

perceived behavioral control on entrepreneurial career intentions; however, cultural variation in

the effects of subjective norm were observed as it is found to have significant influence on

entrepreneurial intentions among Indian sample.

Evan (2005) investigated the role of entrepreneurial attitudes and entrepreneurial self-efficacy on

an individual’s intention to engage in entrepreneurial behaviour. Data for their study were

collected from 414 students through a survey at the beginning of their first entrepreneurship class

in MBA programs in Australia (46), China (39), India (204) and Thailand (125) between 2003

and 2004. Entrepreneurial intentions of the students were measured using a 7 point scale ranging

from very unlikely (1) to very likely (7). Result the study indicates that individuals who prefer

more income, more independence and more ownership have high entrepreneurial intentions. The



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study found no relationship between risk propensity and entrepreneurial intention. Significantly

positive relationships were also found between entrepreneurial self efficacy and entrepreneurial

intention .

Factors affecting Entrepreneurship Development:

Entrepreneurship is influenced by four distinct factors: economic development, culture,

technological development and education. In areas where these factors are present, you can

expect to see strong and consistent entrepreneurial growth.

These conditions may have both positive and negative influences on the emergence of

entrepreneurship. Positive influences constitute facilitative and conducive conditions for the

emergence of entrepreneurship, whereas negative influences create inhibiting milieu to the

emergence of entrepreneurship.

Economic Factors

Economic environment exercises the most direct and immediate influence on entrepreneurship.

This is likely because people become entrepreneurs due to necessity when there are no other jobs

or because of opportunity.

The economic factors that affect the growth of entrepreneurship are the following:

1. Capital

Capital is one of the most important factors of production for the establishment of an enterprise.

Increase in capital investment in viable projects results in increase in profits which help in

accelerating the process of capital formation. Entrepreneurship activity too gets a boost with the

easy availability of funds for investment.

Availability of capital facilitates for the entrepreneur to bring together the land of one, machine

of another and raw material of yet another to combine them to produce goods. Capital is

therefore, regarded as lubricant to the process of production.

France and Russia exemplify how the lack of capital for industrial pursuits impeded the process

of entrepreneurship and an adequate supply of capital promoted it.



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2. Labor

Easy availability of right type of workers also effect entrepreneurship. The quality rather than

quantity of labor influences the emergence and growth of entrepreneurship. The problem of labor

immobility can be solved by providing infrastructural facilities including efficient transportation.

The quality rather quantity of labor is another factor which influences the emergence of

entrepreneurship. Most less developed countries are labor rich nations owing to a dense and even

increasing population. But entrepreneurship is encouraged if there is a mobile and flexible labor

force. And, the potential advantages of low-cost labor are regulated by the deleterious effects of

labor immobility. The considerations of economic and emotional security inhibit labor mobility.

Entrepreneurs, therefore, often find difficulty to secure sufficient labor.

3. Raw Materials

The necessity of raw materials hardly needs any emphasis for establishing any industrial activity

and its influence in the emergence of entrepreneurship. In the absence of raw materials, neither

any enterprise can be established nor can an entrepreneur be emerged

It is one of the basic ingredients required for production. Shortage of raw material can adversely

affect entrepreneurial environment. Without adequate supply of raw materials no industry can

function properly and emergence of entrepreneurship to is adversely affected.

In fact, the supply of raw materials is not influenced by themselves but becomes influential

depending upon other opportunity conditions. The more favorable these conditions are, the more

likely is the raw material to have its influence of entrepreneurial emergence.

4. Market

The role and importance of market and marketing is very important for the growth of

entrepreneurship. In modern competitive world no entrepreneur can think of surviving in the

absence of latest knowledge about market and various marketing techniques.

The fact remains that the potential of the market constitutes the major determinant of probable

rewards from entrepreneurial function. Frankly speaking, if the proof of pudding lies in eating,

the proof of all production lies in consumption, i.e., marketing.

The size and composition of market both influence entrepreneurship in their own ways.

Practically, monopoly in a particular product in a market becomes more influential for

entrepreneurship than a competitive market. However, the disadvantage of a competitive market



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can be cancelled to some extent by improvement in transportation system facilitating the

movement of raw material and finished goods, and increasing the demand for producer goods.

Social Factors

Social factors can go a long way in encouraging entrepreneurship. In fact it was the highly

helpful society that made the industrial revolution a glorious success in Europe. Strongly affect

the entrepreneurial behavior, which contribute to entrepreneurial growth. The social setting in

which the people grow, shapes their basic beliefs, values and norms.

The main components of social environment are as follows:

1. Caste Factor

There are certain cultural practices and values in every society which influence the’ actions of

individuals. These practices and value have evolved over hundred of years. For instance,

consider the caste system (the varna system) among the Hindus in India. It has divided the

population on the basis of caste into four division. The Brahmana (priest), the Kshatriya

(warrior), the Vaishya (trade) and the Shudra (artisan): It has also defined limits to the social

mobility of individuals.

By social mobility’ we mean the freedom to move from one caste to another. The caste system

does not permit an individual who is born a Shridra to move to a higher caste. Thus, commercial

activities were the monopoly of the Vaishyas. Members of the three other Hindu Varnas did not

become interested in trade and commence, even when India had extensive commercial inter-

relations with many foreign countries. Dominance of certain ethnical groups in entrepreneurship

is a global phenomenon.

2. Family Background

This factor includes size of family, type of family and economic status of family. In a study by

Hadimani, it has been revealed that Zamindar family helped to gain access to political power and

exhibit higher level of entrepreneurship.

Background of a family in manufacturing provided a source of industrial entrepreneurship.

Occupational and social status of the family influenced mobility. There are certain circumstances

where very few people would have to be venturesome. For example in a society where the joint

family system is in vogue, those members of joint family who gain wealth by their hard work



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denied the opportunity to enjoy the fruits of their labor because they have to share their wealth

with the other members of the family.

3. Education

Education enables one to understand the outside world and equips him with the basic knowledge

and skills to deal with day-to-day problems. In any society, the system of education has a

significant role to play in inculcating entrepreneurial values.

In India, the system of education prior to the 20th century was based on religion. In this rigid

system, critical and questioning attitudes towards society were discouraged. The caste system

and the resultant occupational structure were reinforced by such education. It promoted the idea

that business is not a respectable occupation. Later, when the British came to our country, they

introduced an education system, just to produce clerks and accountants for the East India

Company, The base of such a system, as you can well see, is very anti-entrepreneurial.

Our educational methods have not changed much even today. The emphasis is till on preparing

students for standard jobs, rather than marking them capable enough to stand on their feet.

4. Attitude of the Society

A related aspect to these is the attitude of the society towards entrepreneurship. Certain societies

encourage innovations and novelties, and thus approve entrepreneurs’ actions and rewards like

profits. Certain others do not tolerate changes and in such circumstances, entrepreneurship

cannot take root and grow. Similarly, some societies have an inherent dislike for any money-

making activity. It is said, that in Russia, in the nineteenth century, the upper classes did not like

entrepreneurs. For them, cultivating the land meant a good life. They believed that rand belongs

to God and the produce of the land was nothing but god’s blessing. Russian folk-tales, proverbs

and songs during this period carried the message that making wealth through business was not

right.

5. Cultural Value

Motives impel men to action. Entrepreneurial growth requires proper motives like profit-making,

acquisition of prestige and attainment of social status. Ambitious and talented men would take

risks and innovate if these motives are strong. The strength of these motives depends upon the

culture of the society. If the culture is economically or monetarily oriented, entrepreneurship

would be applauded and praised; wealth accumulation as a way of life would be appreciated. In

the less developed countries, people are not economically motivated. Monetary incentives have



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relatively less attraction. People have ample opportunities of attaining social distinction by non-

economic pursuits. Men with organizational abilities are, therefore, not dragged into business.

They use their talents for non-economic end.

Psychological Factors

Many entrepreneurial theorists have propounded theories of entrepreneurship that concentrate

especially upon psychological factors. These are as follows :

1. Need Achievement

The most important psychological theories of entrepreneurship was put forward in the early)

960s by David McClelland. According to McClelland ‘need achievement’ is social motive to

excel that tends to characterise successful entrepreneurs, especially when reinforced by cultural

factors. He found that certain kinds of people, especially those who became entrepreneurs, had

this characteristic. Moreover, some societies tend to reproduce a larger percentage of people with

high ‘need achievement’ than other societies. McClelland attributed this to sociological factors.

Differences among societies and individuals accounted for ‘need achievement’ being greater in

some societies and less in certain others.

The theory states that people with high need-achievement are distinctive in several ways. They

like to take risks and these risks stimulate them to greater effort. The theory identifies the factors

that produce such people. Initially McClelland attributed the role of parents, specially the

mother, in mustering her son or daughter to be masterful and self-reliant. Later he put less

emphasis on the parent-child relationship and gave more importance to social and cultural

factors. He concluded that the ‘need achievement’ is conditioned more by social and cultural

reinforcement rather than by parental influence and such related factors.

2. Withdrawal of Status Respect

There are several other researchers who have tried to understand the psychological roots of

entrepreneurship. One such individual is Everett Hagen who stresses the-psychological

consequences of social change. Hagen says, at some point many social groups experience a

radical loss of status. Hagen attributed the withdrawal of status respect of a group to the genesis

of entrepreneurship.

Hage believes that the initial condition leading to eventual entrepreneurial behavior is the loss of

status by a group. He postulates that four types of events can produce status withdrawal:



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1. The group may be displaced by force;

2. It may have its valued symbols denigrated;

3. It may drift into a situation of status inconsistency; and

4. It may not be accepted the expected status on migration in a new society.

3. Motives

Other psychological theories of entrepreneurship stress the motives or goals of the entrepreneur.

Cole is of the opinion that besides wealth, entrepreneurs seek power, prestige, security and

service to society. Stepanek points particularly to non-monetary aspects such as independence,

persons’ self-esteem, power and regard of the society.

On the same subject, Evans distinguishes motive by three kinds of entrepreneurs

1. Managing entrepreneurs whose chief motive is security.

2. Innovating entrepreneurs, who are interested only in excitement.

3. Controlling entrepreneurs, who above all otter motives, want power and authority.

Finally, Rostow has examined inter gradational changes in the families of entrepreneurs. He

believes that the first generation seeks wealth, the second prestige and the third art and beauty.

Discussion and Conclusion

Methodologies used in examining the decision to become an entrepreneur evolved over time.

Early researchers in this field according to McClelland (1961) have looked for certain features

that could be associated with entrepreneurial activity. And later, personal characteristics such as

age, gender, religion, educational qualification, background, experience, etc also called

demographic variables (Robinson, Stimpson, Huefner, & Hunt, 1991) and then the attitude or

cognitive factors (Krueger et al., 2000). Available literature in the field of entrepreneurial

intentions research in India indicates that personality-related approach was dominantly employed

to examine entrepreneurial intentions. Unlike Krueger et al (2000) who observed that personality

traits have small explanatory power and predictive capacity of entrepreneurial intentions, studies

India found personality traits and personal background to have positive influence on

entrepreneurial intentions. For instance, family background is found to have an overwhelming

influence on students’ decisions to become entrepreneur; those whose parent are self-employed



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and well to do indicate their willingness to engage in entrepreneurial activities. This is in line

Wang and Wong (2004) who found that self-employed parents are most likely to influence their

families to start-up their own business and Mueller (2006)who pointed out that children who

grew up with entrepreneurial parents are more likely to be self-employed. Indian students were

found to be low on self-confidence internal locus of control, a finding attributed to Indian cast

system and cultural practice (Shankar, 2011).Studies related to influence of situational factors

(Linan& Chen, 2006), such as exposure to entrepreneurship, availability of role models and or

informational cues (London, 1983) were not found.

Couple of studies adopted the attitudinal and cognitive approach, particularly the theory of

planned behaviour. All the components of the theory of planned behaviour were found to have

significant effect on entrepreneurial intentions in India in concurrence a number of studies in

different places (Ali, Topping, and Hariq, 2011; Byabashaija, 2011; Hattab, 2014). One

interesting finding in the literature is the overwhelming influence of subjective norm on

entrepreneurial intentions across Indian samples, which may be as a result of the fact that India is

a collectivistic country with a score 30 (Hofstede, 2001), where people tend to pursue group

rather than personal goals (Markus &Kitayama, 2003) as against the individualistic societies,

where people tend to rely mostly on themselves for judgments and decisions (House, Hanges,

Javidan, Dorfman, & Gupta, 2004) as such subjective norms do not have significant influence on

their entrepreneurial decisions (Krueger et al., 2000; Autio et al., 2001; Muller, 2011; Otuya et

al., 2013).

In conclusion, even though entrepreneurial intentions studies in Indian supported the validity of

personality traits and other demographic factors in explaining entrepreneurial intentions, there is

the need for future researchers to adopt more robust and theory-driven behavioral intentions

models with considerable proven predictive value for many behaviors such as the Shaper’s

model of entrepreneurial event and Ajzen’s theory of planned behaviour. Such models according

to Krueger et al. (2000) offer sound theoretical frameworks that specifically map out the nature

of processes underlying intentional behavior such as entrepreneurship.



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