Implementing Student Managed Businesses to Sri Lankan Universities

1 MALKA SIRIWARDANA- A4032444

LONDON SCHOOL OF BUSINESS AND FINANCE

Start Talking Business:

Introducing Student Managed Businesses To

Sri Lankan Universities

Malka Siriwardana

A4032444

2011-2012

Submitted in Support of: MBA in Finance Management


Declaration

I, Malka Charuni Siriwardana, hereby declare that this research thesis is my own original work, that all

reference sources have been accurately reported and acknowledged, and that this document has not

previously, in its entirety or in part, been submitted to any University in order to obtain an academic

qualification.

Malka Siriwardana 12 March 2012


Abstract

Following the review of relevant literature, economies and case studies over time and across nations,

this thesis is an exploratory study providing a critical evaluation of the introduction of Student

Managed Businesses (SMB) to Sri Lankan Universities.

The introductory chapter provides an overview on Sri Lanka’s current position in terms of the

economy, relevance of University education to employability and future expectations as well as the

value addition expected to be created from SMBs. The literature review will begin with a discussion on

SMBs in terms of the general structure, the existence of different models and the extent to which they

have succeeded in reality. These models are individually evaluated to identify their characteristics,

benefits and drawbacks in order to support the assessment of the most suitable model to be

implemented in Sri Lanka. The review will then be focussed on the motivation of Sri Lankan students

to be entrepreneurs, which relates to sources of funds available, attitudes towards the standards of

University education as well as future prospects in the country to be exploited. The next chapter will

be the research methodology followed to achieve the purpose of the study. This would be a based on

a pragmatic paradigm and a mixed method approach containing both qualitative and quantitative

methods. The results have been justified using analysis, case studies and comparison of both primary

and secondary research on stakeholder opinions and expectations, trends and patterns as well as

case studies and examples in the real world.

It was evident from the research that stakeholders are in favour of introducing SMBs to Sri Lankan

Universities in order to create better prospects to students in the job market, to improve the

applicability of University education to employment and support the development of the economy. It

was also agreed that entrepreneurship is lacking in the country and stakeholders are not satisfied with

government’s contribution towards entrepreneurship and education. These arguments are in-line with

the conclusions derived from the literature review. Therefore, SMBs will succeed in Sri Lanka, if

necessary support is provided. The model preferred to be implemented is an Ad- hoc model, which is

more commonly used in the world. These results agree with the arguments arrived from the literature

review. The final section would be the conclusions and recommendations, which explains the

achievement of the purpose and objectives of the thesis. The recommendations proposed are aimed

to make the project a success during implementation and to sustain continuous improvement.

Key Words: Student Managed- Business (SMB), Sri Lanka, Universities, Entrepreneurship


Acknowledgements

I would like to take the opportunity to thank the following people for their contribution for the

successful completion of this study.

My mother and father for their invaluable support to make me proud of where I stand today.

My brother for always reminding me that I could do better.

Rythmal, my best friend, who has always been there for me providing motivation and

encouragement throughout.

Dr Kamal Vidanapathirana and Dr (Mrs.) Kumudu Perera for the immense support on

gathering data and improving my thesis.

Mr Richard Osborne, my lecturer in Research Methods and my supervisor for devoting his

valuable time and invaluable advises to make this thesis a success.

Mr Sarath Siriwardana and Mr Jinadasa for helping me to obtain valuable primary research

data from employers.

All my friends from Sri Lankan Universities who supported me to conduct surveys.


Table of Content

1. Abstract 3

2. Acknowledgements 4

3. Chapter 1- Introduction 6

4. Chapter 2- Literature Review 9

1. What are Student Managed Businesses? 9

2. Existence of the Concept in Reality 13

3. Evidence of Success 17

4. Supportive Organisations to Encourage Student Entrepreneurs 19

5. Evaluation of Sources of Finance Available for Sri Lankan Students 21

6. Future Prospects in Sri Lanka for Businesses 23

7. Current Situation of Sri Lanka’s University Education 25

Summary 26

5. Chapter 3- Research Methodology 28

6. Chapter 4-Discussion & Analysis of Findings 36

7. Chapter 5- Conclusions& Recommendations 48

References 52

Appendix 1- Interview Questionnaires for Primary Research 57

Appendix 2- Statistics Obtained from Secondary Research 60

Appendix 3- Presentation of Research Statistics 64


1. Introduction

Proposed Research Question

Will the introduction of Student Managed Businesses (SMB) succeed in Sri Lankan Universities?

Introduction to the Proposed Statement and Purpose of Study

This exploratory thesis will critically evaluate the extent to which introducing SMBs will succeed in Sri

Lankan Universities. As previous research has not been conducted on the specific subject matter, an

inductive method is selected to analyse and compare primary and secondary data as well as to

examine case studies relating to existing SMBs, in order to meet the desired research objectives.

Having a bottom up structure, Charmaz (2006, pp.188) defines this method as ‘a type of reasoning

that begins with a study of range of individual cases and extrapolates from them to form a conceptual

category’. The outcome of this research will enable to conclude whether an opportunity exists to

improve the applicability of current University education to employment, living standards and economy

as a whole in Sri Lanka by introducing SMBs, identify the need of entrepreneurship by stakeholders

and to recommend a suitable SMB model for implementation, which is selected from the six

entrepreneurial programme models proposed by Ball (2008).

Background

Sri Lanka’s Current Situation

Sri Lanka is a developing country in South Asia with a population of 20.65mn according to the latest

available figures (Central Bank of Sri Lanka (CBSL), 2010, pp.90). Given the economy boom in a post

war situation with political stability, the country has begun developing itself to meet the upcoming

demand, especially in the tourism and foreign investment sectors. As Aitken Spence PLC(2011, pp.

11) explains, ‘The right economic and business climate has now been created by His Excellency the

President, so that Sri Lanka realises its potential as a regional business hub’. However, it is visible

that many development projects are contracted to other countries on the basis of local

entrepreneurship, applicability of knowledge gained from education and technology being limited.

While 13,952 (CBSL 2010, pp.75) graduates pass out from national Universities each year, CBSL

(2010, pp. 93) states that ‘the continued youth unemployment, especially among educated youth,

remains a matter of concern’. As a result, 334,174 people in the labour force are currently

unemployed according to the Quarterly Report of the Sri Lanka Labour Force Survey (Department of

Census& Statistics, 2011, pp.09) as at second Quarter of 2011.


The government body, (CBSL 2010, pp.73) also agrees that ‘Entrepreneurial skill development is

another important area that the education system in Sri Lanka still lacks’. Thus the workforce seem to

remain unemployed till recruited rather than starting their own, irrespective of the opportunities

available to exploit and economic expectations being high. New listings increased by more than

double in the Colombo Stock Exchange (CSE) in 2011 (CSE, 2012) but the bourse is crashing every

day due to the overvalued market. As an example, one year’s change by 03rd February 2012 is -34%

(CSE, 2012). The trade gap in the country is widening and the number of graduate migration is

increasing to improve the quality of life. This is agreed by 92% employees. (Charted Institute of

Management Accountants 2011, pp.16).While the unemployed rate of population with General

Certificate of Education- Advanced Level (GCE A/L) or above was 15.4% in 1990, the same rate in

2011 by Quarter 2 is 36.8% (Department of Census & Statistics, 2011, pp.25).All these symptoms

indicate that a critical need for entrepreneurship exists in the country and relevance of University

education to employability needs to be improved.

Value Proposition by Student Managed Businesses

Damast (2010, pp.02) elaborates the opinion of the Director of Zell Lurie Institute, Michigan on SMBs

as, ‘It's a trend that will probably only get bigger and bigger. What is driving [student entrepreneurs] is

they see more opportunity in controlling their own fate’.

Although no formal definition exists, it can be determined through the extensive research of several

sources that SMBs can be identified as a part of a Business Management course or an option

provided for students to run their own business of choice while studying for their Undergraduate or

Post graduate courses in order to encourage entrepreneurship. Different models of SMBs are

illustrated in the literature review later in this thesis. This allows students to put their theory knowledge

into practise as well as to differentiate themselves among ordinary undergraduates because they will

also possess real life experience in the Corporate World as they graduate with a qualif ication. SMBs

are most famous in Europe and United States and Student Managed Investment Funds are more

wide spread than businesses.

Despite the fact that many Universities around the world have introduced SMBs as a part of an

academic course, it has not yet been implemented in South Asia. Therefore, Sri Lanka will be at a first

mover advantage if SMBs are introduced to the country. Success stories such as Flyer Enterprises,

successful job guaranteed students from University of Buckingham and even internationally expanded

enterprises such as Ras Photo Studio indicate that the projects have been viable and Universities will

no longer produce theoretical managers in the future but Business Leaders with practical knowledge


creating a lesser burden to the country’s economy. This is further visible from an economist’s point of

view as McKay et.al (2008) suggests that limited investment in human capital skills and

Entrepreneurship training is a constraint for inclusive growth. Therefore, importance of encouraging

SMBs is evident by the current trend of investing in youth Entrepreneurship by governments in

developed countries. The National Consortium of University Entrepreneurs in the UK (2012) published

that, ‘The Minister for Business and Enterprise Mark Prisk announced last November that the

government would commit £500,000 to student enterprises through NACUE’.

Research Objectives

The goal of the research is to critically evaluate the Macro Economic factors of Sri Lanka, opinions of

stakeholders, trends and patterns of current SMB operations to assess the viability of implementing

the concept in the country. The possible implications and recommendations while implementing the

project will be also discussed in the report.

The objectives of the research can be defined as follows.

1. To understand the value creation to Sri Lankan University education and economy by

implementing the concept.

2. To identify the opinions and interest of stakeholders on SMB introduction.

3. To critically evaluate entrepreneurial programme models and determine the most suitable

option for implementation.

Thesis Outline

The study is divided into five key chapters. Following this introductory chapter, a review of literature

will be discussed, relating to nature and different structures of SMBs, Universities currently practising

the concept, success stories of previous projects, criticisms on Sri Lanka’s macro-economic factors,

standards of University education in Sri Lanka and its adequacy to meet employer demands. This is

followed by a description of the research methodology undertaken in order to gather and analyse data

to support the conclusion. The chapters containing the end results, conclusions and recommendations

will be presented afterwards.


2. Literature Review

Charmaz (2006, pp.178) argues that ‘Insights gained from a literature review may also be referred to

in interpreting the results of the study’. For this purpose, this chapter of the thesis provides an outline

of SMBs, in terms of its the general structure, evaluation of specific models introduced by Ball (2008),

operation of SMBs in reality, contribution from developed countries for student entrepreneurs, different

sources of funding available as well as success stories in the recent past. This is followed by a

discussion on the need for entrepreneurship in Sri Lanka based on the future prospects available in a

post war era and criticisms relating to the lack of relevance of University education to employability.

1. What are Student Managed Businesses (SMBs)?

Sullivan et al (2003, pp.29) explain a business as an organization engaged in the trade of goods,

services, or both to consumers. Although there is no proper definition for SMBs, it is an enterprise fully

operated by students to develop personal and professional skills. This can be carried out as a team or

in an individual basis.

From the Harvard students who founded Facebook, to the MBA student who set up a swish ice-cream parlour in London; from the trio of Newcastle University students managing their own lingerie business, to the Oxford graduates who made £2.5m selling their internet company: the country might be in a recession, but student entrepreneurship is thriving, Qureshi(2009, pp.12).

They are sometimes a part of the course and sometimes an option undertaken to add value to the

course. Organisations such as National Association of College and University Entrepreneurs

‘stimulates enterprise by supporting, connecting and representing enterprise societies, enterprising

students and student entrepreneurs in Colleges and Universities across the UK ’ (NACUE, 2012).

While Rattlers Enterprises found by students of St. Mary’s University can be identified as a team

effort, individuals such as Tom Ellis from University of Exeter who successfully developed a

champagne importing firm (Qureshi, 2009, pp.12) can also be defined as a successful student

entrepreneur. The Universities provide the students with guidance and help to obtain finance for the

entity through venture capital, student loans etc.

Some universities, including the University of Colorado, Georgetown, University of Maryland, University of Massachusetts—Amherst, and Princeton, offer students regular opportunities for getting their feet wet when it comes to running a business. These enterprises have different histories and functions, but they share a common goal: to provide services to the campus and to give business experience to student workers and managers. De Meglio (2011, pp.03)

This provides an insight on how Universities of United States encourage entrepreneurship. It is

fascinating that not only Universities, but students are also interested in becoming entrepreneurs.


Damast (2010, pp.02) further states that ‘At business schools across the country, students are signing

up for entrepreneurship classes in droves, entering business school competitions, and dangling their

carefully crafted business plans before angel investors and venture capitalists’.

Ball (2008, pp.32) suggests six models of entrepreneurial learning programmes as follows. These

models are fully described and are compared and contrasted to evaluate the features as well as to

identify advantages and disadvantages of each model.

Integrated (Holistic)

The SMB is integrated to all units of the core curriculum that is equally weighted and all activities are

assessed for the final award of the programme. This allows students to progressively learn to address

on personal and professional matters throughout their studies and apply them into practise while

being supported regularly by peers and tutors. Ball (2008, pp.33) proposes that ‘Whole course team

approach with a cohesive and explicit set of educational values, embracing entrepreneurship,

employability and professional development as integral to creative practice’. All staff is involved in the

delivery of the course. However, this may be recognised as an implicit model where entrepreneurial

learning may be hidden and students may not recognise the essence of entrepreneurial skills and

attitudes.

Core Study

The SMB is in one or more mandatory modules of the programme and ideally a core activity in the

form of a year of a work placement or a project activity. It is fully accredited and assessed by teacher

practitioners providing industry related input and students are provided with a framework to continue

their business after graduation. While the best practise will include features of an integrated model,

the course is a compulsory programme where students are examined on career related learning.

Students experience different pedagogic models, which is valuable, but there may be more didactic learning, rather than experiential, which may affect student engagement and motivation , Ball (2008, pp.33)

Since the entrepreneurial programme is delivered by specialized staff with industry related knowledge

who may not be University lecturers delivering the core modules of the course, students may not

value the programme and may not attend. Therefore the delivery of the course may be marginalized

and the expected value of the outcome may not be produced.


Optional ( Separate Units or Modules)

The entrepreneurship programme will be an optional module to be undertaken and will depend purely

on the choice of the students. Therefore, students will be highly motivated to take up the course and

are able to enhance their subject discipline and create their own bespoke learning pathway. The

entrepreneurial programme usually takes the nature of one or more elective modules which are fully

accredited and contributes to the final assessment of the degree. These units will typically be based

on business start-up, industry collaboration, enterprise marketing and multi-disciplinary working with

other subject areas. Therefore, the programme structure helps students to develop opportunity

awareness and improve creativity. As opposed to the core study model, studies maybe neglected if

the students are not fully supported by the core study staff team. It is critical that the electives are

assessed as the exclusion may adversely affect student attitudes and motivation. This may lead to a

risk that students may not be able to effectively apply their learning into creative practise.

Ad hoc (bolt-on)

The SMB is unaccredited and a time table is given outside the normal hours of the course delivered

by University staff as a value addition for students to enrich their creative practise through additional

learning. The programme is typically delivered in the mode of a talk or a visit by a practitioner, an

alumni network meeting, a University short course or providing students a chance to take part in an

external exhibition. Depending on the flexibility of the core curriculum, credits will be awarded for the

ad hoc activity. This course will mostly be taken up by independent, highly motivated students who

are risk takers and keen to access new learning opportunities. The programme structure may highlight

important issues for students on their creative practise yet applied learning may not be practical with

tighten up schedules unless an experimental approach is taken. Also if the programme is outside the

course curriculum and is not assessed, it may affect the student attendance and motivation to

integrate or relate their experience into creative practise and to engage in the activity with full

commitment.

Extra-Curricular (Pre -Graduation)

This can be identified as a self-directed extra-curricular activity to complement the degree studies.

Sometimes it can be viewed as a self-initiated student activity during their studies in the form of a

group or an individual project for a business start-up. External agencies, local support and networks

are vital resources for success and may combine with part time employment in related or unrelated

fields. Accreditation maybe awarded for part time work, residencies and external initiatives such as


community based work. However, unlike models 2, 3 and 4, students tend to be highly motivated and

will actively seek opportunities to enhance their prospects due to more freedom available to them.

Continuing Professional Development (CPD)

Ball (2008, pp.34) describes this model as ‘Similar to extra-curricular, and occurs after graduation,

providing bridging opportunities and is on-going supporting professional practice.’ The institution shall

provide funding and support for the business start- up or the incubation scheme in the form of

additional skills training and short courses such as IT and enterprise training as well as post-graduate

placements and industry based internships. The students will also have access to seek assistance

from graduate bursaries and external agencies such as NESTA Pioneer Scheme and professional

development schemes. Therefore, the programme will be majorly based on self-initiated professional

development with a pool of paid and unpaid resources provided by the institution for training. Students

will be exposed to learn via networking, specialised workshops and also informally by on -the job –

learning activities. As opposed to the previous models, the CPD model is rather complex in creating a

smooth transition from studies to work.


2. Existence of the Concept in Reality

There are many Universities which have implemented Student Managed Businesses according to all

the models of Entrepreneurial Programmes discussed above. Some of the operations are as follows.

University of Buckingham- United Kingdom

Evidence from University of Buckingham (2012) suggested that the institution declares itself to

conduct the only undergraduate programme which enables its students to start and operate their own

business noting that other universities are ‘starting to offer similar programmes’.

All of the first cohorts of BSc Business Enterprise graduates have established their own businesses, been appointed to interesting jobs or have gone on to postgraduate study, using their enterprise education and entrepreneurial skills. University of Buckingham (2012)

The BSc Business Enterprise Programme students are required to run businesses and the

entrepreneurship programme is embedded in all units and is not an option. Thus, it can be classified

as an integrated model based on the classification in the above section of the thesis.

Team Academy, Jyväskylä University of Applied Sciences-Finland

This model involves undergraduates in a full‐time, three and a half year degree programme. The

students (known as team entrepreneurs) establish teams that set‐up, own and run businesses over the full duration of their university programme. Higher Education Enterprise Group (HEEG) (2011,

pp.21)

The entrepreneurship programme is conducted by means of a project, fully accredited and students

are assessed for the final degree award. The course team continuously guide, mentor and support all

teams to emphasis self and peer assessment, experiential learning and reflection. Therefore, the

entrepreneurial programme can be classified as a core study model under the different typologies.

University of Derby- United Kingdom

The University of Derby (2012) allows students on their own choice to start up their businesses with

the Centre for Enterprise support of advisors with practical experience, entrepreneurial learning

programmes provided outside the normal teaching hours, business development and improvement

projects and also by holding exhibitions to promote the student enterprise. This guidance is not limited

to a certain course and is available for any student with interest to start up a new business. The

programme is not accredited or included in the assessment for the degree award. Considering these


features, this model can therefore be identified as an ad hoc model where support is given outside the

normal teaching hours for students to improve their entrepreneurial skills.

St. Mary’s University- USA

The BSc Entrepreneurial Studies programme of St. Mary’s University (2012) allows students to follow

a Business Plan Development and new venture creation module as an elective for the course. It

requires a business plan to be developed which shall be unique to every student, which could then be

put into application. Pre requisites for this module are several modules that need to be undertaken

during the course. Visiting lecturers and analysis of case studies will be supporting resources for the

assessment. The module is accredited and is included in the evaluation of final grades. This structure

resembles an optional model where students are given the choice of following the specific course.

University of Dayton- USA

Being ranked among the top 10 programmes in the nation, the Entrepreneurship Major Programme in

Business Studies gives students the choice to start up a business while studying and will provide

venture capital up to $50,000 to start and run a micro business along with the support from the Crotty

Centre for Entrepreneurial Leadership. Running a business is not embedded in the units yet can be

identified as a complement to succeed in the degree programme, which majors in Entrepreneurship.

The University of Dayton (2012) says ‘you don’t have to wait until after graduation to be a CEO’. This

indicates that the start -up is a choice before graduation. Therefore this can be identified as an Extra-

Curricular (Pre- Graduation) model of SMBs.

Thames Valley University- United Kingdom

The Business Administration (Hons.) with internship is a course where students are required to follow

a Business Management course for two years and put theory into practise in a real business

environment during the final year. This could be done by means of a work placement at a large

organisation or starting up a venture of choice. The University will be providing guidance and support

for the continuous development of career aspirations, as mentioned in the course structure developed

by the Thames Valley University (2010). The structure is therefore similar to the business model,

continuing professional development where students are practising Entrepreneurship following the

completion of tutoring.


African Leadership Academy-Johannesburg, South Africa

The Institution (2012) declares ‘Student-Run Businesses (SRBs) are major components of our

Entrepreneurship Curriculum, which provides students with the creative approach and necessary

skills for innovation on the African continent’. It was understood that students are required to propose

business concepts to a panel of judges including the founders of the Academy and Chief Executive

Officers of companies from different industries, where at the point of selection the students are

supported with finance, venture grants and training to make their concept a viable business. This can

be explained as another example of an integrated model of entrepreneurship programmes.

Student Agencies Inc. (SA)- Cornell University, USA

SA is the nation’s oldest independent student-run corporation. Serving the Cornell University and Greater Ithaca community, SA provides diverse services ranging from summer storage to campus marketing to business plan development. Student Agencies Inc. (2012)

This is an elaborative example of the extra-curricular (Pre-Graduation) model of Entrepreneurial

Programmes as students start up a business as a self- initiated activity by forming groups or

individually during their studies. With regard to the specific structure of SA, it is formed by seven

different divisions where each division is managed by an undergraduate from the Cornell University.

These students take advantage of the local related or non-related networks to promote and obtain

support for their ventures, which are independent from the undergraduate courses they are taking.


A summary of the examples shown above is as follows.

Name of the

University Country Continent

Model of

Entrepreneurship

Programme

Status of the

programme

University of

Buckingham

United

Kingdom Europe Integrated Successful

Jyväskylä

University of

Applied Sciences

Finland Europe Core Study Successful

University of Derby United

Kingdom Europe Ad-hoc Successful

St. Mary’s

University United States

United

States Optional Successful

University of

Dayton United States

United

States Extra-Curricular Successful

Thames Valley

University

United

Kingdom Europe

Continuing Professional

Development Successful

African Leadership

Academy South Africa Africa Integrated Successful

Cornell University United States United

States Extra- Curricular Successful

The Higher Education Enterprise Group (2012) indicates that there are thirty eight universities in the

UK promoting Entrepreneurship and the literature review of this thesis indicates that SMBs are

promoted even in the relatively under developed African continent. It can be understood that SMBs

exist in different models around the world, more concentrated in Europe and USA. While the concept

is growing in Africa, Asia is currently not familiar with student enterprises.


3. Evidence of Success

A number of success stories relating to SMBs are known around the world. Three examples are

illustrated in this thesis.

Flyer Enterprises

Flyer Enterprises is a group of companies found and run by a group of students from the University of

Dayton (UD), USA. Beginning with a simple student run full-service grocery store named Rudy’s Flyby

in 1990, four students from UD formed Dayton Student Agencies to research on potential

opportunities. The first formal venture started was a coffee shop named ‘The Blend’, which later

developed into the Blend Express as it succeeded. Currently, Flyer Enterprises is the fastest growing

SMBs in the USA and has expanded with nine divisions, 170 employees as the only SMBs in the USA

with a philanthropic arm. The CEO suggests that 94% job placement is secured for the company’s

managers and executives (Flyer Enterprises, 2011).

Ras Studio

Born and raised in Addis Abba, Ethiopia, Abi Tsigie started up his business at the age of thirteen, with

the interest of experimenting vintage photography from his father’s old Zenith camera, bought back in

the 70’s. Still studying in Indiana to graduate in May 2012, Abi now has a large customer base in

Chicago, Indianapolis and even Ethiopia, despite his studio being located in the Michiana region. With

aspirations to internationally expand his venture, the young entrepreneur was awarded by the Goshen

College Business Department in 2011 for his success.

Rattler Enterprises

Rattler Enterprises (2012) is the first student SMB established in St. Mary’s University, USA in 2010.

Initially started up with $50,000 provided by a venture capital company, the team was able to generate

revenue of $3,000. It is a venture which students of the University are operating while carrying on their

higher studies. Being guided by the faculty adviser, Rattler Enterprises is run by an executive team

which also looks into financing the venture to expand in the future into a number of companies. The

first division is TLC Tees which designs and produce customized T shirts. The venture is expecting to

donate any profit exceeding $200,000 back to the University for Scholarships.


The Trep Café

As De Meglio (2011, pp.02) elaborates, Trep, with the meaning ‘entrepreneur’ was started in 2008 by

a group of graduates from the University of Colarado. Beginning as a coffee cart, this business is now

operating as full-service Café completely operated by University students. While majority of the

managers are business students, the areas handled by these young entrepreneurs include inventory,

marketing, accounting, and human resources. Nevertheless, every manager is a barista when serving

their customers. This type of a corporate culture signals strong businesses being born in the future by

innovative leaders with wide experience. Similar to Flyer Enterprises, these students have succeeded

as entrepreneurs as a self-initiative and not as a part of an integrated course of study.

The Businesses at University of Massachusetts

This is another interesting group of companies started up by graduates. According to De Meglio

(2011, pp.03), there are eight SMBs based in that University. They are namely the Sylvan Snack Bar,

Campus Design & Copy, Sweets & More, Tix Unlimited, People's Market, Bike Co-Op, Greeno, and

Earthfoods. The speciality of these ventures is that their history runs back to 1960s where students

were demanding on the procedures of how campuses are to be run. Thus symbolizing going concern,

students of the University itself are hired as consultants to provide advice on the business strategy of

these eight companies. A senior student hired as a consultant to handle financials claims that this

opportunity created him an awaiting job offer at KPMG even before his graduation. The Co-manager

of the group, being inspired by entrepreneurship has suggested that she will use this knowledge and

experience to start up her own animal clinic after graduation. This example solely provides evidence

on the benefits gained by students from SMBs.

First Step Records

This is a successful record label and music publishing company run by the students of Millikin

University in Georgia. This is one part of their group of enterprises which is also comprised of an art

gallery, publishing company and a theatre company. Based on the University premises, First Step

records is now in their ninth successful year of production. While they have developed their business

even to provide online sales, the mission of this venture is to promote and support the diverse music

of their Art School (First Step, 2012).


4. Supportive Organisations to Encourage Student Entrepreneurs

Despite Universities introducing SMBs through course work and study environment, there are several

other supportive organisations formed which encourage new and innovative ventures to succeed.

Such organisations have therefore been an indication of strength to build up a country’s national

competitive advantage. Relating the Diamond theory, Porter (1990, pp.142) states that ‘New entry into

an industry is also encouraged directly or indirectly by strong national positions in related or

supporting industries.’ Examples of some supportive organisation concepts which Sri Lanka is less

familiarized with are as follows.

Business Angels

Business Angels are private individuals who are willing to invest in high risk opportunities exploited by

start-up companies. Describing an example, The London Chamber of Commerce and Industry (LCCI)

(2010,pp.7) defines London Seed Capital as a ‘ run alongside London Business Angels as a

passive investor which will invest up to £100,000 in new companies which have at least one

business angel committed to the project and who will become a board member after investment ’. It

further indicates that 40% of investments by Business Angels make losses, despite profits from new

businesses gain high yields and only 2% of applications are successful. Larger investors who invest in

risky start-ups are defined as venture capital providers, which are mostly banks. The nature of venture

capital finance will be discussed in the next chapter.

Babson Asia Entrepreneurship Forum

This is an event conducted by students of Babson Graduate School of Business with the goal of

providing entrepreneurs seeking start-ups in Asia’s growing businesses to share knowledge discuss

and involve in operations. The forum is headed by entrepreneurs who have succeeded in Asian

markets every year, while the latest was held in October 2011.

TiE

This can be identified as the largest not-for-profit organisation for entrepreneurs by promoting

entrepreneurship through networking, mentoring and education. Although this is not a direct source of

financing, the relationships built up mostly results in funding opportunities for entrepreneurs.


The organisation has successfully mentored over 170 businesses in the past three years, with the involvement of such prominent entrepreneurs as Tom Singh of New Look, Lord Karan Bilimoria of Cobra Beer and George Coelho of Good Energies Business. LCCI (2010, pp.8)

Match Funding

This is the operation by which a private or a public organisation provides a contribution towards the

cost of the project. A possibility exists for the company receiving the funds to use public sector funding

to match fund from another source such as a government grant. Match funding could be in the form of

cash or even an in-kind, unpaid contribution such as staff time or land.


5. Evaluation of Sources of Finance Available for Sri Lankan Students

Irrespective of being students, the main demotivation for entrepreneurs to convert their creative

thoughts into application is funding.

Since innovative Small and Medium Enterprises tend to be newcomers to the market, or seeking financing for a new type of product or service, and usually have negative cash flows and untried business models, they represent a higher risk to banks and cannot be assessed in the same manner as traditional SMEs or large firms, Organisation for Economic and Co-Operative Development (OECD) (2006, pp.3).

Concepts such as business angles and match funding are not currently exercised in Sri Lanka. Therefore, the local students are not accessed to a variety of financing sources such as London Business Angels Ltd., which connects investors and companies in the UK (London Chamber of Commerce and Industry, 2010). The only not-for- profit Organisation in Sri Lanka dedicated for student entrepreneurs is the Young Entrepreneurs, Sri Lanka (YESL,2012) with the aim ‘to educate and inspire young children from primary school through high school’. This area therefore discusses the limited key sources of financing practically available to Sri Lankan students with benefits and drawbacks.

Private Equity

Funding a venture by private equity is less complex and easier as it does not need any collateral or

long term agreements to be made on finance. However, being students with no established carrier,

funding a risky venture with own finance may not be a motivational factor for students to start up

business as majority of Sri Lankans are middle or low level income earners. The mean household

income is LKR 35,495 per month was indicated by CBSL (2010, p.90).Therefore, this seems to be a

rather impractical source of funding for Sri Lankan students.

Venture Capital & Foreign Direct Investments

Having prospects and opportunities for ventures rising in the country, venture capitalists as well as

foreign direct investments (FDI) has been a popular source of funding in the country.

Mandala Capital, a South Asia private equity firm that invests in the agricultural sector, has entered into a joint venture with Australia’s Water Resources Group that will target the desalination opportunities in India, Pakistan, Sri Lanka and Bangladesh. Burroughs (2012).

The FDI opportunities are increasing in Sri Lanka with the government support as indicated by CBSL

(2010, pp.117) stating ‘Sri Lanka has already embarked on a programme to promote tourism in the


post conflict era; tourism related FDIs need to be strengthen further.’ Such encouragements will be

beneficial to local students in seeking venture capital financing when starting up businesses. This

would also provide the students with expertise knowledge. Also, venture capitalists will require to be

paid if only profits are made. Therefore, the risk of financing is low. Also, Aylward (1998, pp.14) claims

that the screening for investments ratio known as the ‘droppage rate’ is low for Sri Lanka, making

financing easier. However, venture capitalists would require business proposals of high standards, a

profit share for several years and an exit route to be proposed in long term.

Government Borrowings

As CBSL (2010, pp.104) indicates, LKR 100mn has been allocated by the Government of Sri Lanka to

fund the Self Employment Initiative Loan Scheme at a 10% interest rate, in order to provide financial

assistance to the youth to start up entities. This will relatively be an easier option for students rather

than seeking finance from a financial institution if they are planning to fund the venture through

borrowings. However, the competition to borrow from the above fund among students will be high.

University Endowment Funds

University Scholarships can be obtained by students in order to start-up businesses. Although

currently, such scholarships are specifically not created for venture start-ups, funds are provided for

students for further education on exceptional performance. Therefore, the access to this scheme will

be limited only to performers and not to every student with a creative and innovative idea with a desire

to be an entrepreneur.

Bank Loans

Currently the bank loans available at an affordable rate for students are only education loans,

available up to an average loan of LKR 3,500,000, payable at fixed or floating rates. The convenience

is that collateral is not needed when borrowing the loan, but this may mean that the interest rate will

be higher than venture capital finance. However, the student cannot directly request the loan. Instead,

it should be applied by a parent or the guardian.


6. Future Prospects in Sri Lanka for Businesses

As outlined in the introductory chapter, Sri Lanka is converting into a regional hub for businesses.

Prior to investing in a new concept such as SMBs, it is important to identify if necessary opportunities

are available in the country in order for the project to be worthwhile. This section provides few

examples of largely growing industry sectors in the country. The statistics analysed during the

research will further confirm the trends and patterns of the country’s economy.

Hotels and Travel

Sri Lanka is currently being the target of many foreign and local investors to start-up tourism related

ventures. This includes the example of the global hotel chain, Six Senses Resources& Spas forming a

joint venture with Aitken Spence Hotel Holdings PLC. and Auro Group for a project worth USD 45mn

(Aitken Spence PLC., 2010) in resorts. Especially following the access to the North Eastern Province

of the country in the post war era, the prospects have been the highest experienced. International

Organisations such as the British Pro Surf Association has chosen Arugam Bay to host the Champion

of Champions Surfing Contest. Trincomalee is considered to have one of the most beautiful natural

harbours in the world and therefore, investors consider Sri Lanka as a paradise with opportunities.

Bank, Finance and Insurance

Given the new opportunities in the Sri Lankan markets, the Finance sector has experienced a

substantial growth by providing support for investors. National Banks such as Sampath Bank and

Commercial Bank have been increasing in popularity beyond the nation. For an instance, Sampath

Bank with a ‘AA’ Fitch rating, was awarded as the Bank of the Year in 2010 by the international

magazine, The Banker (LMD, 2011, pp. 161). LMD (2011) also indicates that ICIC Bank’s online-

remittance tracking operation linking the UK, Canada and Sri Lanka is rapidly gaining popularity for

efficient banking and also Islamic banking is set to grow with its unique business model in the multi-

cultural nation. Although SMBs may not be starting up finance institutions, the growth in the finance

sector will be a significant strength for young entrepreneurs as investments in innovative concepts are

now given priority in the country and sources of funding are increasing.


Food and Beverages

With the modernisation of the country, innovative concepts of food and beverages are now being a

trend in populated areas. These include ventures such as Go Nuts with Doughnuts, which rapidly

expanded as the first branded doughnut baker in Sri Lanka. Further, Sri Lanka was accessed by

multinational food and beverage chains such as Mac Donald’s, KFC, Pizza Hut and coffee bean,

which realized the potential demand that could be created in the country. Seafood is also an area

where Sri Lanka is experiencing its Food and Beverage sector growth in. With access to untouched

beaches for three decades, restaurants are now being built up in the northern part of the country.


7. Current Situation of Sri Lanka’s University Education

Irrespective of the fact that Sri Lanka boasts about the high standards of the Advanced Level

Examination of the provided free education, the prospects for a high school completed student have

been rather limited. This is proven by the employability radically declining for the particular student

category as illustrated in the introductory chapter. Abeyratne (2012, pp.8) explains ‘The University

system did not expand enough to cater to the growing demand so that there is a serious supply

shortage’ as an opinion of a Professor in a local University. He further argues that in a comparative

perspective, the attributes of the Sri Lankan University students show that by age, they are 3 to 4

years older than their counterparts in Asia as the University structure has no fixed academic year

which compels students to remain and waste more time than expected.

The Sri Lankan Government has allocated only 8% of its expenditure budget for education, out of

which only 1.9% is for University education (CBSL, 2010, pp.137). CBSL (2010, pp.73) also agrees to

the fact that ‘Compared to many of Sri Lanka’s international counterparts, investment in education

particularly in higher education and vocational training, is comparatively low ’. This clearly indicates the

lack of contribution of the local government towards higher education. Further, the syllabuses

especially for Business Management Students are not structured adequately to cater for the global

competition in employability which is an additional drawback to the dragging academic years. This has

caused Sri Lankan graduates to migrate for employment to other countries, which has increased by

7.8% according to the latest statistics of CBSL (2010, pp.95) and as described in the introductory

chapter. This has a direct impact on Sri Lanka’s skilled workforce and thus on the economy as a

whole. Top Universities (2012) suggest that Sri Lanka is further below the top 200 Asian Universities

while Universities of countries with relatively weaker economies such as Philippines are ranked

among the top 100.

University education in Sri Lanka, which is mainly a public sector monopoly, suffers from both, the inability to meet demand and the failure to supply a quality education compatible with labour market requirements. CBSL (2010, pp.75)

Therefore, according to several sources, it is clear that the lack of government contribution towards

higher education has been the main cause and necessary improvements have to be carried out to

make University output suitable to cater to global demand and to create a skilled workforce to exploit

local opportunities.


Summary

Summarising the literature review, it is understood by referring to several concepts and sources of

information that SMBs are operating over the world in different forms, with Asia not being familiar with

the concept in the current context. While Universities are providing a solid foundation to the careers of

students, the interest of students to start businesses while studying has also become a trend. The

traditional way of waiting until graduation to develop a career now seems an ‘out-of-fashion’ style.

There are six types of entrepreneurial programmes identified so far and all models have advantages

and disadvantages. Looking at the examples of SMBs in the current context, it seems that majority of

these businesses have been a self-initialized activity where the business is not linked to the course. In

other terms, the most famous entrepreneurial programme can be concluded as the ad-hoc model

possibly due to the extent of freedom given to students to bring their creative concepts to reality,

irrespective of the nature of business relating to the studies. Further, the access to student

entrepreneurship will not limit to business management students. While many of these ventures

succeed, the employability of these entrepreneurs is more than normal graduates. It was evident from

the literature review on the job guarantee that these students have been employed even before

graduation. Students are able to handle executive level job roles while studying for their BSc’s.

Therefore, it can be justified why employers would prefer these students over the traditional

undergraduates.

There are many public and private organisations headed by governments which support

entrepreneurship directly or indirectly and a variety of funding sources are available for SMBs.

According to Damast (2010), the most popular sources of financing for SMBs are business angels and

venture capital. This can be deemed true due to the ease of finance seeking when compared to bank

loans, where collaterals and interest need to be paid, irrespective of the business making profits or

losses. Therefore, these two types of financing reflect the extent of risk that can be taken by an

average undergraduate. Sri Lanka is a country with prospects and industries are strengthening. The

relative and supportive industries in Sri Lanka to encourage Small and Medium Enterprises are

relatively low and sources of funding available for students are limited to a few. However, it is evident

that the finance sector has begun to strengthen following the post-war boom. Arguments exist on the

lack of relevance of higher education to employment, which creates a constraint for graduates to

exploit the opportunities in the prospective regional hub with required skills and knowledge. The CBSL

has also agreed on the lack of entrepreneurship in the country. It is visible from the literature review


that the contribution from the Sri Lankan government for higher education and entrepreneurship has

been limited irrespective of the prospects in industries, yet investing in those could lead to the creation

of a national competitive advantage.


3. Research Methodology

1. Research Objectives

In the introductory chapter, the goal of this study was described as to critically evaluate the Macro

Economic factors of Sri Lanka, opinions of stakeholders, trends and patters of currents SMB

operations to assess the viability of implementing the concept in the country. The primary rationale

behind this purpose was to identify the opportunity to implement the project and to highlight the value

addition created through implementation. It is also aimed to discuss the practical implications during

implementation and to provide suitable recommendations. In order to achieve this purpose, this study

was broken down into more detailed objectives that would allow the purpose to be fulfilled.

These objectives are as follows.

1. To understand the value creation to Sri Lankan Universities and the economy created by

implementing the concept.

2. To identify the opinions and interest of stakeholders on SMB introduction.

3. To critically evaluate entrepreneurial programme models and determine the most suitable

option for implementation.

After considering the relevant literature and case study information, it was noted that six

entrepreneurial programme models exists, where the commonly seen model is the ad-hoc model.

Success stories indicated that the employability is high for student business runners than ordinary

business undergraduates. There are related and supportive organisations to encourage SMBs and

the most popular sources of funding are business angels and venture capital. Majority of

entrepreneurial programmes have succeeded and have contributed towards the development of

national competitive advantage. This can be assumed as the reason why Universities are

encouraging the concept. It was further understood that Sri Lanka is in need of entrepreneurship as

prospects are high, relevance of University education is insufficient to meet global employer

standards, graduate immigration is increasing and the local government is providing minimal

contribution. The Sri Lankan entrepreneurs are limited to a fewer sources of financing compared to

developed countries but the trends and patterns indicate that the finance sector is strengthening in the

country, in order to provide sources of investments to exploit opportunities.


This chapter is concerned with the methodology utilized to support the conclusions gained from the

literature review and to achieve the objectives completely. In terms of confirming the viability of the

study, it is required to identify ways of gathering opinions and attitudes of stakeholders on SMB

implementation and to analyse statistical data. Firstly, the justification for using the research design

and the research philosophy will be considered. The limitations for the method used will also be

included in the specific section. Then, the selection of the population and sample size will be

discussed. There will be four samples for primary research and two for secondary research.

Justification of selection and limitations will be followed later in the section. A detailed account of both

data collection techniques and data analysis and interpretation will also be presented. Issues on the

validity and the reliability of the research will be detailed. Finally an outline of the research plan will be

presented, following the limitations and value considerations related to the research methodology.

The time schedule for the implementation plan will be provided at the end of the chapter summary.

2. Mixed Methods Design and Pragmatic Research Paradigm

Creswell (2003, pp.21) defines a mixed methods approach as ‘pragmatic knowledge claims, collection

of both quantitative and qualitative data sequentially’. The literature review was based mainly on a

qualitative approach as the weightage was more on concepts, examples and case studies, while the

analysis and comparison of statistical data obtained from primary and secondary data will be

quantitative. Tashakkori and Teddlie (2003, pp.189) explain a mixed method design to have a mixture

of qualitative and quantitative approaches in all stages of a study or across the stages of study. This

justifies the accuracy of applying this particular method in the stages of literature review, research

methodology and interpretation results as the data from all these stages are interlinked.

According to Tashakkori and Tedllie’s (2003, pp.705) argument on different mixed methods model

designs, the particular design used in this study can be identified as a concurrent mixed model design

by its definition as a multi-strand mixed design in which there are two relatively independent

strands/phases: one with qualitative questions, data collection and analysis techniques and the other

with those which are quantitative. From the structure of this thesis, it is evident that the research

objectives and arguments raised from the literature review were based on qualitative data. While the

analysis technique of primary data will be both qualitative (individual opinions from interviews) and

quantitative (number of respondents agreeing to the same key question), the analysis technique of

statistical samples from secondary research will be quantitative. Therefore, the usage of both strands

can be identified during this study.


Tashakkori and Tedllie (1998) indicates that Pragmatism is the best paradigm for justifying the use of

mixed methods research and it considers the research question more important than the research

method or the paradigm. Therefore, the use of pragmatism for the mixed method approach can be

justified.

It is noted that qualitative data provides an open ended result and that quantitative data provides a

closed ended result. A combination of both approaches will therefore result in a unique outcome and

will provide a more complete picture of the argument. Jick (1979) argues that mixed methods

research provides strengths that offset the weaknesses of both quantitative and qualitative research

and that has been the historical argument for mixed methods research for the last 25 years. The

implication of this design is that an understanding of rationales for combining both forms of data is

required to articulate in the proposal. It is also time consuming as two types of data needs to be

considered. However, with the dissertation being exploratory of nature, the research will require a

significant consideration on analysis, case studies and comparison of both primary and secondary

data using an inductive approach.

3. Population and Study Sample

The populations of the primary research will be of four types; Senior executives of Sri Lankan

companies, students in all Universities under the University Grants Commission of Sri Lanka,

graduates from those Universities as well as lecturers providing higher education at both public and

private institutions. The samples of senior executives and lecturers were chosen as a deliberate

sample while the samples of University students and graduates were simple random samples. With

regard to deliberate sampling, Henry (1990, pp.17) agrees that non-probability sampling can be used

to establish the existence of a problem and will be useful if a project has limited resources or if it is

unable to identify members of the population. He further states that it is also suitable for small in-depth

inquiries than large generalized surveys. This justifies the selection of a deliberate sample for two out

of three stakeholder groups. The Charted Financial Analyst (CFA) Institute (2011, pp.551) defines a

random sample as ‘a subset of a larger population created in such a way that each element in the

population has an equal probability of being selected to the subset.’ Since reaching students and

graduates was convenient, a wider sample was able to be used.

The population of senior executives will be from the registered companies of Sri Lanka in all

industries and the sample will be ten individuals from entities related to Banking and Finance,

Diversified Conglomerates, Consulting, Research, Professional Education, Accounting, Health,

Hospitality, Plantation and Food& Beverage.


These executives include managers, directors and chairmen of which, two directors are successful

entrepreneurs. The reason to obtain the opinion of senior executives is that majority of Sri Lankan

graduates are employed by them. The requirements of employers can be identified through this

segment which possesses a wide experience and specialized knowledge on the country’s economy.

The opinion of entrepreneurs will be more valid to assessing the success of SMBs and the potential

issues to be faced when implementing the concept. The results from the study of this sample will be

able to confirm the facts derived from the literature review that students who were involved in SMBs

have better chances of employment and that Sri Lanka is lacking entrepreneurship when prospects

are high. University students and graduates are the most important stakeholders to be used for the

primary research, as they are the users of the concept. The success of SMBs will depend on the

number of students who ultimately seek to be entrepreneurs and their motivation to differentiate

among the rest for better prospects. The populations considered will be all the students and graduates

from the fifteen national Universities under the University Grants Commission. The population of

students includes respondents from all faculties, in all academic years. The sample includes 350

students currently studying and is equally distributed among all faculties in all Universities. All

departments have been considered to support the argument if an ad-hoc model will succeed in

attracting non -business management student entrepreneurs. The graduate sample includes 300

graduates within the past two years out of which 275 are currently full time employed. The population

of lecturers will be from both Universities as well as private education institutions providing Business

Management courses in Sri Lanka. This segment also includes the professional qualification

providers. Twenty Five lecturers have been selected to the sample, covering all the aspects of the

population. The reason for surveying the given segment is to obtain their view on the structure of

current higher education and the suitable business model, knowing the attitudes of students.

Populations of the secondary research will be the ratios derived from economic indicators and opinion

polls conducted on Sri Lankans regarding the economy, burning issues and expectations. The sample

of economic indicators will be the unemployment rate, undergraduate output, tourist arrivals and

skilled migrations over the past ten years. The opinion poll samples will be The Nielsen Company’s

Business Company Index for February 2012 carried out on 100 senior executives in Colombo, and the

LMD’s voice of the people 2011 February Consumer Confidence Index based on a survey of random

sample of 100 Sri Lankan respondents. These statistics will also be provided with an analysis for the

past year.


4. Data Collection

For the purpose of this research, and in order to achieve the objectives, both primary and secondary

data were collected. Primary data were collected in three ways. Firstly, questionnaires were provided

to University students and graduates. This was a standard questionnaire (Appendix1.1) filled by

visiting University premises of 12 Universities and reaching the students for their opinions. The

students of other Universities were contacted over the phone to ensure receipt of data on time.

Graduates were randomly picked in public locations in all districts of the country. These questions

were based on a multiple choice format in order to make the surveying process less time consuming

and comfortable for the respondent. Secondly, the lecturers were provided with a questionnaire

(Appendix 1.2) in a comprehensive format. Finally, interviews (Appendix 1.3) will be carried out with

senior executives of companies. The questions at the interviews were comprehensive to avoid closed

ended questions in receiving in depth opinions. All the interviews for the focus group were conducted

at the office premises of the respondents after obtaining appointments. The surveys were able to

gather realistic opinions of stakeholders on the viability of SMBs to obtain a practical conclusion for

the study and to strengthen the arguments highlighted by the literature review. All respondents were

provided with a brief introduction to the different models of entrepreneurial programmes prior to

obtaining the opinion on the best model suitable to implement. It was ensured that the three different

questionnaires have enabled the opinions for the key questions to be comparable. The collection of

primary data was based on cross-sectional data. The CFA Institute (2011, pp.553) defines this type of

data will be ‘data on some characteristic of individuals, groups, geographical regions, or companies at

a single point of time’.

The secondary data will contribute towards the formation of background information, needed by both

the researcher in order to build constructively the project and the reader to comprehend more

thoroughly the survey outcome. This information will be documented data obtained from multiple

sources over a period of time. The statistics of the economic indicators were obtained from the CBSL

Annual reports and official publications of government authorities such as the Department of Census&

Statistics from 2001 to 2011. The published opinion polls were obtained by the LMD Magazines for

February 2012 (Appendix 2). The nature of data could therefore be identified as Time- Series data,

which is a sequence of data collected at a discrete and equally spaced intervals of time. (CFA

Institute, 2011). These data were collected to support the results obtained from the primary research

and to address the objectives. Majority of the secondary data which are concentrated in the literature

review are from text books, journals, official websites, magazines, research papers and newspaper

articles. The literature review was structured to provide an insight on nature of SMBs, its operational


success in reality and as well as Sri Lanka’s current economic and educational situation, creating a

background for SMB implementation.

Typically secondary data will be of the following types:

Examining Documentation – written materials or non-written (media-based) materials

Case Studies- Realistic examples relating to the subject matter.

Multiple Source – area based (e.g. journal, country) or time series based

Survey – censuses and opinion polls

5. Data Analysis and Interpretation

In this stage of the thesis, the raw data have been coded and tabulated in order to draw statistical

inferences. The data collected from the primary research have been descriptively analysed for each

stakeholder group. The opinion for each question has been presented in a comparable format with a

percentage of individuals of the specific sample who provided the same answer in appendix 3. The

polls conducted by The Nielsen Company and LMD will be presented in pie charts and line charts as

a supporting to the primary research conducted (Appendix 2). Derived data from the economic

indicators obtained will be presented in a graphical format (Appendix 3) over the past ten years in

order to analyse the past and expected trends. All graphical data will be interpreted during the data

analysis.

6. Validity and Reliability

Due to the importance of the reliability of the data gathered, especially due to the fact that the

researcher is a recent Business Management graduate interested in entrepreneurship, triangulation of

data should be taken into consideration. Throughout this thesis, it will be ensured that the evidence

provided are from more than a single source (ex: stakeholder opinions, documentary evidence and

surveys conducted), providing validity for triangulation. Hamersley (1987) defines validity as an

agreement between two efforts to measure the same thing with different methods. The approach

taken in the research to justify the arguments drawn from the literature review by comparing and

contrasting them with analysed data from primary and secondary research further supports the validity

of this study. Maxwell (1992) suggests that generalizability, the extent to which qualitative research

approaches can be distinguished from quantitative research approaches is a common test of validity.

The research design distinguishing the quantitative and qualitative methods of this study is an

indication of compatibility with the particular requirement.


Reliability was defined as the ‘Ability to measure consistently’ by Black and Champion (1976). The

collection of time-series data during the secondary research statistics and the capability of comparing

the results of key questions presented to four types of different stakeholder groups justify the ability to

measure results consistently in this study.

7. Limitations

The deliberate sample obtained from the senior executives may not be large enough to represent the

views of the entire population of the segment and the sample is judgemental bias. An argument

proposed for conducting personal interviews is as follows.

The skill of guiding the discussion back to the topic outlined when discussions are unfruitful while it has the disadvantages of being very costly time consuming and can introduce bias through desires of the respondent to please the interviewer. Aaker&Day (1990, pp.164)

In order to minimize this limitation of representativeness, the analysis of the Business Consumer

Index, developed from surveying 100 Senior Executives from Sri Lanka was considered during the

research. Most surveys were carried on during office/University hours in order to reach a higher

number of respondents. Therefore, a probability exists for respondents not to pay full attention to the

questions. Not all Universities have the same faculties. Eg: Engineering faculties are available only in

3 Universities. Although an equal number of respondents from faculties of each University were

approached, the samples were unable to be analysed faculty-wise. Further, the economic indicators

for 2011 and 2012 are not available at some instances which diminish the relevance of statistical

analysis. However, the statistics obtained from LMD (2012) are data for February 2012, which would

reduce the particular error. The researcher is Sri Lankan who studied business management and is

keen on being an entrepreneur. Therefore, impartiality of information and opinions were ensured by

cautiously documenting all data gathered from multiple sources.

8. Ethical, Environmental and Professional Value Considerations

The researcher has fully disclosed the identity and purpose to the respondents of the survey. The

anonymity and confidentiality of the questionnaires were ensured by structuring them in such a way

that personal information was not required during the survey and moral responsibility towards

participants was therefore secured. Professionalism and Integrity were exercised with due care during

the collection of data and the researcher was open to criticisms and new ideas from respondents

equally. All references were ensured of accuracy and respect for intellectual property was maintained

throughout by proper documentation of all data. The publication of the research intends to support

education of students and attempt to improve the professional competence of the researcher.


Consent of respondents was obtained prior to including individual opinions on the study and they were

be provided with the relevant part of the study prior to publication to verify accuracy and as a measure

of quality control. The final publication will be available to any individual on request.

Summary

The research design model chosen for this dissertation is a multi- stranded mixed model design

based on pragmatism, in order to collect and analyse the data obtained from both qualitative and

quantitative approaches to reach the purpose of the study. Although this provides a complete picture

of the research, the implication is that the analysis is complex and time consuming since two

approaches need to be undertaken and then consolidated. The primary research had four

populations, where the basis of sampling the senior executives and lecturers was deliberate sampling.

This method was chosen due to the constraint of accessing data. The student and graduate samples

were selected on a simple random sampling basis. While the primary research data was of a cross-

sectional nature, the statistics obtained from secondary research were time-series data. Primary data

were collected by conducting surveys and interviews, for which the questionnaires were provided in

Appendix 1. The statistical data obtained from several published sources has been included in

Appendix 2. The analysis of primary and secondary research statistics has been provided in Appendix

3 in a graphical format, for which the interpretation will be included in the results chapter of this

dissertation. While there are few limitations and ethical considerations to this research plans,

measures have been taken in order to marginalize the issues and validity and reliability of this

research have been justified.

Implementation time table for this study was as follows.

Activity Time Allocated Estimated Completion Date

Review of Literature 4 Weeks 30.01.2012

Questionnaire Design 3 Days 06.01.2012

Conduct Surveys and Interviews 2 Weeks 27.01.2012

Preparation of the Research Proposal 2 Weeks 10.02.2012

Data Analysis 1 Week 17.02.2012

Preparation of the Final Draft 2 Weeks 02.03.2012

Last Changes 10 Days 12.03.2012

Submission 1 Day 13.03.2012

Date Commenced: 01.01.2012 Total Duration: 11 Weeks


4. Discussion and Analysis of Findings

Overview

Following the analysis of data collected, the results of the study will be the summarization of all

tabulated data and a discussion of the possible reasons causing the arrived numerical figures as

described in this section. These justifications will be supported by the literature review and qualitative

information collected during primary and secondary data collection. The results were able to provide

justifications that the objectives of the thesis have been met and points were raised to highlight any

recommendations for areas requiring improvement. Further, the results were able to agree to the

conclusions drawn from the literature review, confirming the validity of arguments. Details of the

analysis are as follows.

Primary Research Interpretation

Students

By conducting a survey on University student opinions, the following results were derived.

90% of students said that they were not satisfied with the current quality of University course delivery.

The main reason for this was the unstructured academic years which make the course duration

lengthy and results in idle time. The highest number of students who agreed to this was from the

University of Sri Jayawardhanapura. Other reasons included the lack of applicability of knowledge to

employment, poor quality of staff knowledge on certain subject areas, unorganized exam schedules

and regular strikes of students and lecturers causing Universities to shut down. Out of the 15 students

interviewed from the University of Jaffna, 13 students provided the reason for dissatisfaction as poor

quality of staff knowledge. None of the students answered ‘may be’ for this question. While 319 out of

350 students agreed that they did not have better employment opportunities than their colleagues, the

minority answered ‘yes’ and ‘may be’ based on personal contacts built up with employers and

politicians. The number of respondents agreeing and disagreeing was the same for the question if the

current higher education standards cater to competitive job market requirements based on the

applicability of theory learnt.

342 students agreed that the country will experience better prospects within the next 10 years due to

political stability, foreign direct investments, significant improvements in the tourism industry, increase

in number of listed companies in the Colombo Stock Exchange and the post war economy boom.

Those who disagreed and answered maybe justified their answers with the increasing trade gap and


the possible market fluctuations as 10 years is a long term. Only 2% of students were aware of SMBs

operating in the world. These students were from Management and Engineering Faculties. However,

on explanation of the concept, 99% students believed that introducing SMBs will have a positive

impact on student employment, applicability of knowledge gained from University education to

employment and therefore the economy, as the experience will be a value addition when seeking

employment. It will also fill the entrepreneurship gap in the country and be a long term solution for

unemployment. Another reason was that SMBs will be a solution for the idle time in university

academic years since students can utilize more time in the business when course deliveries are

postponed. Two (2) out of the remaining students who disagreed were from the Faculty of Law while

the remaining respondent was from the Science Faculty. 326 students agreed to the adequacy of

government’s contribution towards higher education as education is free in the country. All the

students who pointed out poor staff knowledge agreed to the fact that University lecturers cannot be

mentors if the concept is implemented. The agreed respondents for the question totalled to 344. The

ones opposed were from Faculties of Law, Arts and Science.

The entrepreneurship programme models chosen by University students included only the ad-hoc,

optional and extra-curricular models. The numbers agreeing to this out of the 347 students in favour of

SMBs were 315, 20 and 15 respectively.

Graduates

All the graduates agreed that the competition for employability is high in Sri Lanka because of the

developing industries, increasing exposure to the global markets and the supply of individuals to the

workforce is increasing at a higher rate than the increasing number of job creations. 163 respondents

believed that the knowledge they gained from their degrees were not much helpful to begin a career

catering to increasing employer requirements after graduation because the course structure was too

theoretical. It was further understood that business management students prefer professional

qualifications such as ACCA and CIMA due to this reason. Most students out of the 137 who

answered yes were from Faculties of Science, Law, Engineering and Arts whose skills are specialized

and scope of jobs are more defined and relevant to the theory knowledge gained from their degree

programmes. None of the graduates agreed that the course time was effectively utilized during their

time at University. While only 13% of graduates were aware of SMBs, 99% were in favour of the

concept and believe that it will be beneficial to student employability and the economy as well as to

reduce the unemployment rate due to the same reasons listed for student surveys. 15 out of these


respondents were unemployed. All those who disagreed were Science graduates. 297 respondents

believed that Sri Lanka’s prospects will continue to increase within the next 10 years while 3 were

unsure because of the negative attitude towards Sri Lankan politics and the overvalued stock market.

199 graduates were appreciating the government’s contribution towards education but only 4%

agreed that the government contributes adequately towards entrepreneurship.

The models suggested by the graduates in favour of SMBs included core, optional, ad-hoc, extra-

curricular and continuing professional development. 151 respondents including 23 unemployed

graduates were in favour of continuing professional development module as they believe on the

University-Student relationships after graduation. 140 were in favour of the ad-hoc model, as it was

suggested that students would have adequate time to run a business and also to study with the

current University schedules. While 3 Management graduates were in favour of the extra-curricular

model as a support to the course of study, 2 were in favour of the optional model and 1 was in favour

of the core model.

Lecturers

Following the interviews conducted for University lecturers, these detailed results were derived.

18 out of the 25 lecturers were not in favour of the current University education system of the country.

7 out of them were lecturers from private education providing institutes. The main reason was that

they believed the courses were not properly structured to relate theory to employability as reasoned

by students and graduates. ‘The applicability of what Business Management courses teach is

insignificant in actual context’, answered one lecturer, during an interview on 20. 01.2012. The

continuous strikes by students and lecturers, causing universities to shut down for weeks have

resulted in Sri Lankan graduates being more aged compared to graduates from other countries.

Student rioting is also high in Sri Lanka. The idle time in courses has caused students to be more

susceptible to inappropriate activities. Further, 16 of these lecturers believe that the tutoring is not

delivered to the maximum potential because of the dissatisfaction of salaries paid. Also, they believe

the lecturer bargaining power is less over influencing restructuring of courses. All these reasons

provide a justification to the University rankings and standards of Sri Lankan higher education

discussed in the literature review. The lecturers opposing these arguments pointed out that the

students following courses such as Medicine, Engineering and Law are hardly being left unemployed

despite how poor the economy will turn out. 23 lecturers were satisfied with the government

contribution towards higher education as they appreciated the free education provided for students

from primary school to graduation. They further stated that it had increased the literacy level of Sri


Lankans and provided a chance for every child to be educated and succeed with their talents. The two

respondents who were not in favour were from private institutions, believing that the government

investment in higher education was less and also criticized the prohibition of allowing the

establishment of private medical colleges in Sri Lanka, causing a significant impact on the brain drain.

In contrast, all the 23 lecturers were not satisfied with the contribution of the government to encourage

entrepreneurship. Five of them suggested that the association, Young Entrepreneurs Sri Lanka,

should extend their scope to providing insights to University students and not limit it to high school

students. Three believed that the government loan scheme to encourage young entrepreneurs in Sri

Lanka was insufficient and did not cater to the demand. All of the lecturers believed that Sri Lanka will

be in a better position in terms of economic situation of the country in ten years’ time. However, they

also provided that this situation may not be true if a political unrest occurs. Further, with Sri Lanka

being more exposed to the eye of large international investors and million dollar investments for long

term projects, this may be an indication of the increase of living standards of the overall population.

With regard to SMBs, all lecturers were aware about that and were in favour of implementing SMBs in

Sri Lankan Universities. The main reasons for agreeing can be elaborated as follows. It will provide

students; especially studying management courses a platform to end up with a more realistic course

of study, helpful to begin a good career. This will also be a lab experiment for Science and

Engineering students to implement their creative ideas and improve their practical knowledge by

applying the theory learnt into reality. Further, it was suggested that this would be a solution for the

non-structured academic years and programmes where students would be provided a chance to

utilize their idle time, which is out of control of lecturers, to build up their future. Two of these lecturers

however highlighted that students must be provided with necessary encouragement and motivation by

Universities as well as their families if SMBs are to be explored by students. The financial sources and

marketing skills of students were also identified as constraints. All the lecturers believed that the

concept will support students to improve their knowledge and would also be a value addition to the

work force of the country. Suggestions included building up an independent course team to support

these student entrepreneurs while lecturers would also provide possible support. 19 lecturers

suggested an ad-hoc model with the main reason that it will not be limited only to Business

Management students but also to students learning non-management courses, interested in starting

their own businesses and possess the desire to succeed as entrepreneurs. Other opinions were in

favour of independence given to students in selecting SMBs as they believe no concept will succeed if

it is made a compulsory activity. Four suggested the extra-curricular model because it will support

students in their studies.


Senior Executives

By the interview sessions carried out with senior executives of leading companies, it was possible to

derive the following opinions on SMBs.

While every respondent agreed that future prospects were plenty for entrepreneurs in Sri Lanka,

particularly because of developing relations with global markets and strengthening industries, they

also believed that Sri Lanka was lacking entrepreneurs to exploit these opportunities. ‘An economy

will never run out of businesses, especially for Fast Moving Consumer Goods. You just have to have

the passion and the guts to come up and exploit them’, was the opinion of one entrepreneur from the

Food& Beverage sector provided on the prospects available in Sri Lanka. All the respondents agreed

the future prospects of Sri Lanka to improve for the next ten years, provided political stability remains.

Some respondents highlighted the importance of long term projects of international giants such as Six

Senses, Shangri-La and Millennium IT entering the market which would create opportunities in

relative and supported industries. However, it was a common argument that the contribution to

entrepreneurship from Sri Lankans was minimal, especially in a situation where the country was

exposed to a boom.

A respondent from the hospitality sector on 16.01.2012 reasoned that,

13,000 students pass out from Universities every year. Only 77,000 registered companies exist in the Registrar of Companies. Where have the entrepreneurs gone? The hotels are experiencing under capacity of 15,000 rooms just to cater to the expected tourism demand in 2016.

Another respondent from the Accounting and Finance Sector commented on the particular matter that

traditional culture of Sri Lankans was to have a list of qualifications and business cards mentioning

that they work for ‘big companies’. The respondent also stated that entrepreneurs were not

encouraged to experiment their creative thoughts. For being a founder of a small company is less

valued than being a ‘small fish in a big company’.

A respondent, who is also a successful entrepreneur representing the plantations industry,

commented on 10.01.2012 that access to finance is limited to Sri Lankans. He commented as follows.

We got the concepts. But the limited access to finance keeps down the entrepreneurs. Loans are hard to obtain unless they are from upper middle class or above. It is only now that sources like venture capital are being more available.


Regarding the ability of current University education to cater to employer requirements, all

respondents agreed that graduates lack experience when undertaking managerial roles and positions

relating to accounting and management trainee positions. The general comment was that the case is

irrelevant to doctors, engineers and lawyers where the job roles are specified and courses are

designed to deliver for specific requirements. Thus, only 8 out of 10 respondents were firm on

agreeing the fact. The respondents representing consulting and research sectors further highlighted

on the lack of practicality identified from new recruits starting their career and how they tend to believe

that theory is realistic, during the interviews on 10.01.2012 and 12.01.2012 respectively.

All the respondents agreed that Sri Lanka is experiencing a growth in the finance sector with the

improvements in the economy. Further suggestions indicated that investments are more encouraged

now compared to the past few years and sources of financing and technologies are growing with Sri

Lanka being exposed to a significant number of foreign investments.

Nine out of the 10 respondents were aware of SMBs in the world. Given the fact that the respondents

were not familiar with the subject matter, the following opinions were obtained following the

explanation of the concept. All the respondents were in favour of implementing SMBs in Sri Lanka. ‘It

would be interesting to hire a fresh graduate who has experimented the life of a CEO or a consultant’,

was the opinion of the CEO of a consulting firm on 10.01.2012. While one respondent commented

that SMBs would convert the output of theoretical managers from Business Management faculties in

local universities to practical, realistic managers with a desire to succeed, it was a common opinion

that SMBs would add value to the current courses delivered in Universities. ‘This may not come into

immediate effect. But with the necessary encouragement and financial support, SMBs will be a great

opportunity for students to shine among the rest’, commented a respondent.

A respondent from the professional education industry argued on 10.01.2012 that,

This would be a solution for the time wasted during lengthy and unstructured academic years in our Universities; it would allow students to catch up with the global trends of young entrepreneurs getting ready to make a change in the economy.

In further elaboration of the answers, it was understood that the respondents agreed that SMBs will

allow students to better compete in the global job market, as well as to provide a long term solution to

unemployment and brain drain in Sri Lanka. Therefore, all the respondents believe that the success in

the concept will be in favour of the development of the country and the government support is also a

Critical Success Factor.


While three of the respondents preferred an extra-curricular entrepreneurial programme to make the

businesses be more supportive to the specific course, one respondent suggested a core module in

order to highlight the importance of entrepreneurship needed in the country. Rest of the 10

respondents were in favour of the ad-hoc model, based on the facts that the independent choice

available for students would make SMBs more attractive as well as open to any student from any

faculty and majority of success stories are of ad-hoc models, which will encourage students further.

There were several recommendations suggested by these respondents with industry specialized

knowledge on implementing the concept. Five respondents suggested that the advisor team for SMBs

should be mentors from private institutions with industry specialized knowledge to provide financial

sponsorship and guidance. Successful entrepreneurs should pay a percentage of profits from the first

year and promote the mentoring institution as an appreciation. As opposed, another respondent

suggested for Universities to develop an agreement with venture capital companies and the

government banks to provide support to students who propose interesting business plans. Three of

the respondents were in favour of the government developing a loan scheme and a government

scholarship programme for students taking up SMBs so students would be signalled of the support

and recognition provided by the government. It would also be a recommendation for the government’s

lack of contribution towards entrepreneurship. Further opinions suggested students to be allowed to

promote their ventures in external exhibitions for potential employers to identify talent, which will be

preferred than the traditional undergraduates local universities currently produce.


Summary of Main Conclusions

The graphical interpretation of these details is presented in Appendix 4.

Quality of University Education

While 613 respondents were not satisfied with the current quality of higher education in Sri Lankan

Universities, 66 were opposing it and 6 did not provide a firm answer. Considering the answers

provided, it was visible that the poor quality of higher education was due to the following reasons.

- Unstructured and lengthy academic years and exam schedules resulting in idle time and

ageing of graduates

- Lack of updating of the course structure, minimizing the relevance of the course to

employability

- Poor quality of staff knowledge in some Universities

- Rioting and regular strikes by staff members and students causing Universities to shut

down with no re-open date disclosed. These make students non-productive and

demotivated

- Inability to cater to competitive employer needs due to of low applicability of theory learnt

to employment

These results would therefore further justify the fact in the literature review concluded as arguments

exist on the lack of relevance and applicability of University education to employment, which creates a

constraint for graduates to exploit the opportunities in the prospective regional hub with required skills

and knowledge.

Future Prospects in Sri Lanka

While 655 respondents agreed that Sri Lanka’s economy would continue to grow within the next 10

years, 30 were unsure of the answer as it depended on political stability for the specific long period of

time. The reasons for the prospects to grow were as follows.

- Post-war economy boom

- More exposure to global markets increasing technology and resources for businesses


- Increasing foreign investments, which include International giants such as Six-Senses,

Shangri-La and Millennium IT

- Significant improvements in the tourism industry creating opportunities in related and

supportive industries

- Strengthening Finance sector

- Increase in number of listed companies in the Colombo Stock Exchange indicating growth

The results can therefore justify the point from the literature review that Sri Lanka is a country with

prospects and industries are strengthening, including the finance sector, as a result of the post-war

boom.

Success of Student Managed Businesses

The primary research indicated that 99% of respondents from the main stakeholder groups believed

that SMBs would succeed in local Universities, improve the relevance and applicability of knowledge

gained from University education, improve employability opportunities and all 685 believed it would

support the economy. The remaining 1% argued that SMBs are not applicable to lawyers, doctors and

other professionals whose employability is not threatened and their course structures are focused and

structured to address the specific job roles. The reasons for SMBs to succeed in Sri Lankan

Universities can be listed as follows.

- The experience will be a value addition when seeking employment.

- It will fill the current entrepreneurship gap in the country and create a stronger and more

effective workforce.

- Long term solution for unemployment.

- Solution for the idle time in academic years as students can utilize their time in a value

adding activity.

- Provides students a platform to obtain a qualification which has a more realistic, relevant

and practical course of study.

- It would be an experimental course for Science and Engineering students to apply theory

learnt into reality and improve practical knowledge.

- Employers would prefer students who were involved in SMBs than traditional graduates

from local Universities as it would be a solution for the lack of practicality observed from

newly recruited graduates.

- Employers will value the experience gained as an entrepreneur, desire and commitment

put into the SMBs to be applied by the graduates to the career offered.


- Improving sources of finance such as venture capital and encouragements to invest, will

allow students to be exposed to more financial support.

- Sri Lankan students will be able to be in-line with the global trends of student

entrepreneurs developing their skills and providing a national competitive advantage.

These reasons justify the arguments drawn from the literature review that the employability of student

entrepreneurs is higher than for normal undergraduates and these individuals will lead to a national

competitive advantage.

The Entrepreneurship Programme Models

None of the respondents suggested an integrated model as it would be a demotivation for students to

start-up a creative activity as a compulsory part of their University education. This is also the main

reason for the low percentage of 0.01% to be in favour of the core model. Those who recommended

the core model argued that it would highlight the importance of entrepreneurship. Twenty two

respondents, who were all University students and graduates, favoured an optional model because it

would provide Business Management students a competitive advantage over the non-Management

students and those who learn for professional qualifications. The majority, which was 71% of the

sample, was in favour of an ad-hoc model because it provided students a wider choice to experiment

their ideas and fewer restrictions as opposed to SMBs being compulsory or being required to relate to

the course of study. The ad-hoc model will also provide wider access since non-Management

students can also undertake businesses they desire. Twenty two respondents believed that the extra-

curricular model will complement studies of students as well. The continuing professional

development model was able to attract 151 respondents, who are all graduates. The reason for the

preference was the belief that University-Student relationships should be continued after graduation

and to support graduates for their future career.


Secondary Research Interpretation

Opinion Polls (Appendix 2)

The Nielsen Business Confidence Index- February 2012

Fifty three per cent of respondents expect the economy to improve in the next 12 months while 52%

expect it in the next three months. This can be supported by the primary research results that Sri

Lanka’s prospects are growing due to the post-war boom, increasing investments and widening

exposure to the global markets. These percentages are significant improvements compared to the

prior month’s poll, indicating an improving confidence in the Sri Lankan economy. Sixty five per cent

of senior executives in Colombo expect an improvement in the company’s sales volume and it can be

supported by the improving expectations of Sri Lankans on the economy. Forty five per cent of

businesses have grown within the year, as a stable percentage compared to the previous year. The

number companies with decreased sales had also increased by 6% in February 2012, possibly due to

the threat of new entrants to the market and increasing competition.

The Consumer Confidence Index- February 2012

The expectations on job prospects have increased over the year up to January 2012 with ‘Good’

responses increasing by 38% and a decrease in ‘Not so good’ and ‘Bad’ responses. This can be a

cause of increasing economic prospects as discussed in detail in the Future Prospects section of

primary research results. With increasing living costs, majority of consumers remain to believe that the

personal finances are ‘Not so good’ throughout the year. However, this is in contrast with the results

derived from the literature review and the primary research that the finance sector is improving in Sri

Lanka. Considering all results therefore imply that finance is more available for investments that

personal finance. This can be provided as the same justification for consumer confidence on the

ability to purchase necessities.

Trends and Patterns of Sri Lanka’s Economic Indicators (Appendix 3)

Number of Unemployed Graduates

According to the latest available statistics, the number of unemployed graduates was minimum at

604,954 in 2010 while the peak was at 1,279,279. The main reason for the minimum figure can be

identified as the increased prospects in the country, creating jobs. According to the literature review,


some of the growing industry sectors are Hotels& Travel, Telecommunication and Finance. However,

the literature review and primary research indicated a lack of entrepreneurship. Therefore, the

reduction in unemployed graduates should be mainly due to the creation of jobs in the existing

companies due to the improving prospects and not due to the start-up of new businesses.

Unemployed graduate numbers were increasing until 2004 because of the period of civil war. The

time line provided in Appendix 3 provides an overview of the nation’s major changes. The 87,742

increase of unemployed graduates from 2008 to 2009 may be because Sri Lankans who migrated

were returning to the country permanently after the war. It may also be due to the country’s economy

just beginning to develop and the supply of workforce was higher than jobs available. It could be

highlighted that the situation of war had a significant impact on brain drain and unemployment.

Tourist Arrivals

The tourist arrivals have peaked in 2011 to 855,975 with the post-war situation, stabilising the

country’s safety and providing access to the North-Eastern beaches and natural bays of the country,

which were war zones for 3 decades. Although this is not a steeper increase compared to 2010, the

uptrend can be expected to increase with major hotel chains investing in the country. The importance

of this trend is the significant influence it makes on the creation of opportunities in related and

supporting industries such as travel, food& beverage, finance, hospitality, telecommunication as a

majority. This would be strength to the country and also it makes the country a regional hub for

entrepreneurs to make their creative ideas realistic. The steep decrease of tourist arrivals from 2008

to 2009 was due to the Tsunami, which affected tourism and people’s living conditions to a large

extent. The minor fluctuations from 2003 to 2006 were due to the period of which the country’s

security was at a minimum.

Brain Drain

Brain drain has increased less steeply up to 2004, due to the period of civil war. However, the drop

from 2004 to 2005 was probably due to the increase in expectations for the civil war to end. However,

with migrated citizens returning back to the country and the competition in the job market increasing

further, the brain drain has increased from 2006 to 2008. With jobs being created and foreign

investments being made, a downtrend has begun and this could be expected for the recent future,

according to the respondent expectations obtained on the country’s prospects related to the economy

and jobs.


5. Conclusion and Recommendations

The results from the primary research conducted on the key stakeholders of SMBs indicated that Sri

Lanka is a country with growing prospects, but entrepreneurs are lacking in the country due to the

lack of guidance, recognition for entrepreneurs and financial support. The applicability of University

education is inadequate to meet the increasing employer needs, mainly due to the lack of relevance of

course contents. Students, graduates, lecturers and employers are not satisfied with the outcome that

current Sri Lankan Universities are producing for a number of reasons. Majority of stakeholders were

not aware of SMBs in the world, possibly a proof of evidence that the concept is not familiar in South

Asia. A proportion of 99.9% of respondents were in favour of introducing SMBs to Sri Lanka to

improve the quality of higher education by increasing its applicability and relevance, as a source of

valuable experience to create a competitive advantage when seeking jobs, as a solution to the non-

productive time created by unstructured academic years, as a long term solution to unemployment

and by creating a stronger workforce in the country to build up the economy.

The results from the secondary research imply that major improvements are expected in the corporate

world of Sri Lanka compared to previous years as supported by the interview results from the primary

research. The confidence on job prospects is good and this can be a result of the reducing number of

unemployed graduates due to the job creations during an economy boom following the end of civil

war. However, when consolidating these results with the results arrived from the literature review and

primary research, it implies that unemployment is reducing as a result of creation of ‘jobs’ and not

‘businesses’. The Consumer Confidence Index suggests that consumers are expecting ‘Not so good’

personal finances and inflation. When compared to the results of literature review and primary

research stating the finance sector is experiencing growth, it can be derived that the businesses and

investors are more benefited from it than general citizens. The steep increase in tourist arrivals and

expected uptrend indicate that opportunities will continue to increase in the tourism, hospitality, travel,

food& beverage, telecommunication, finance and a large range of industries. This will be an

encouragement for student entrepreneurs as the probability to exploit a wide range of opportunities

and success rate would be high. The brain drain has reduced by an insignificant amount in 2011,


possibly due to the increase in prospects. This may be further reduced by a large number, if

entrepreneurship is encouraged in the country.

The most suitable entrepreneurial programme model was identified as the ad-hoc model by 71% of

stakeholders. This is in-line with the arguments brought by the literature review regarding the

popularity of the same. The primary research and the analysis of secondary research statistics were

able to confirm the validity of other arguments presented in the literature review as well. These

arguments were based on the fact that employers prefer students with businesses than normal

graduates; the applicability of University education is inadequate to cater to competitive employer

needs, sources of funding is a hindrance to entrepreneurship in Sri Lanka, investments are now being

encouraged due to the economy boom and entrepreneurship is lacking. However, the argument

proposed in the literature review that the government contribution is less towards higher education

was proven invalid during the primary research because stakeholders were satisfied with the

government providing free education from primary school to University.

Achievement of the Purpose and Objectives

Considering the insights drawn from the literature review, secondary research statistics and the

results from primary research, this thesis was able to conclude that SMBs will succeed in Sri Lanka if

necessary support and financial sponsorship is provided.

The concept will succeed in Sri Lanka for several reasons. The existing SMBs indicate that the

demand for SMBs is increasing; Universities no longer produce graduates deciding to seek jobs after

graduation; but either a CEO of a company or a graduate with a job offer before graduation. Looking

at the situation of Sri Lanka, long term future prospects are high in the country, but an

entrepreneurship gap exists due to lack of recognition for start-ups over small jobs in reputed

companies, lack of specialized guidance and financial support. However, primary research was able

to conclude that 99.9% of key stakeholders are in favour of SMBs (which majority was unaware of),

entrepreneurs are needed in the country and employers will prefer to recruit students with businesses,

rather than those with only the Degree. The fact of increased employability is proven from the success

stories provided in the literature review. It can also be concluded that SMBs will add value to the

current quality of higher education through improving practicality and job prospects of graduates. Also,

the success of the concept will provide a significant support to reduce unemployment in the long term

and thereby benefiting the country’s economy. This indicates that the first and the second objectives

of the research have been met by identifying the value addition created by SMBs to Sri Lankan


University education and economy as well as identifying the opinions and interest of stakeholders on

introducing SMBs.

The most suitable entrepreneurial model to be implemented can be concluded as the ad-hoc model,

by which students from any department are able to choose to start up a business of their interest,

independent from the course of study. This will attract highly motivated risk takers, who will be guided

and provided financial support by a team of mentors, formed from private companies of Sri Lanka who

wish to promote and improve their businesses. The model was chosen following the analysis of

entrepreneurial models in the literature review and comparison of key stakeholders opinions on the

same, during the primary research. Thus, the final objective of determining the most suitable

entrepreneurial programme model was therefore achieved.

Recommendations

Recommendations proposed by this study are as follows.

Implementation of the SMB concept in Universities

The University policies should be restructured in order for proper academic years to be defined as a

solution to the idle time problem. As the results of this thesis confirm the success of SMBs, the

recommended ad-hoc model should be introduced in the local Universities as an independent choice

not relating to studies. These businesses should be sufficiently promoted and the value addition

should be highlighted. However, students who perform may be rewarded for encouragement.

Exceptionally performing students should need to be rewarded with scholarships and appropriate

recognition, in order to encourage students further. A ‘Centre for Enterprise’ can be implemented in

each University which looks into SMB related matters and support continuous improvement, as

elaborated in the ‘Existence of the Concept in Reality’ section of the literature review.

Mentor Teams

A mentoring team for every University should be formed by a group of independent consultants from

private companies in order to share industry specialized knowledge, provide training and financial

sponsorship. If students succeed in the business, they should pay a certain percentage of first year

profit to the mentor company and promote the mentor. They should aim at particular private

companies seeking to expand and promote their businesses. After adequate promotion from the


government on SMBs, each University should ensure the relationships developed with mentors and

Venture Capital Companies.

Sources of Finance

Apart from the financial sponsorships provided by the mentoring teams and venture capital, the

government should create a loan scheme and provide grants, specifically for undergraduates with

SMBs. The Young Entrepreneurs Sri Lanka should revise their vision to include students undertaking

higher education to be provided with support to become business leaders. Finally, the performance of

SMBs should be continuously monitored and evaluated in order to maintain sustainability.

Further Research

The relevant authorities such as the University Grants Commission (UGC) should conduct an in-depth

survey on implementing the concept in the Universities. More employers, students, graduates and

other stakeholders should be interviewed and their opinions should be obtained. It is also

recommended for Sri Lankan University representatives to plan a field visit to successful Universities

such as University of Dayton and obtain their opinions and recommendations on the implementation.


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Appendices

Appendix 1

Interview Questionnaires for Primary Research

1. Questionnaire for students and undergraduates

Respondent: Undergraduate Student

Faculty:

Academic Year:

University:

Question Yes Maybe No Notes

Are you currently satisfied with the University’s course delivery structure?

Do you believe you have better employment opportunities than your batch mates or students with the same qualification?

Do you expect the employer recruiting standards to increase in the future?

Do you expect the country’s prospects to increase within the next 10 years for businesses?

Do you wish to be an entrepreneur if necessary support is provided?

Are you aware that there are successful student managed businesses in the world?

Do you believe that the introduction of student managed businesses to Business Management Degrees will have a positive impact on, -student employability? -Sri Lankan economy?

Which model would you recommend out of the 6 Entrepreneurship Programmes? Why?

Are you satisfied with the government’s contribution towards Higher Education and Entrepreneurship?

Do you believe that the current Business Management Lecturers have industry specialized knowledge to mentor student entrepreneurs if the concept is implemented?

Will following Student Managed Businesses during Higher studies improve the quality of the existing education you are gaining?

Do you believe the theory learnt in Universities is adequate to cater to competitive job market requirements?


Respondent: Graduate

University:

Employment status:

Question Yes Maybe No Notes

Do you believe that competition for employability for Management Undergraduates is high in Sri Lanka?

Do you think that the knowledge you gained from the university is helpful to begin a career after graduation?

Do you think that the full course duration was effectively utilized during your University Degree?

Are you aware of the fact that student managed businesses have been successful in the world?

Do you think implementing the concept will create better prospects –for students in terms of employability? -Sri Lankan economy?

Are you satisfied of the Government’s contribution towards higher education and entrepreneurship?

Do you think that student managed businesses will be a long term solution to unemployment?

Are you in favour of implementing the concept of student managed businesses in Universities if necessary advisory and financial support is provided? If yes, which model of entrepreneurial programme? And why?

Would you agree that Student Managed Businesses to be taken up while studying will improve the quality of Business Degrees currently provided?

Will Sri Lanka’s prospects increase within the next 10 years?


2. Lecturers

University/ Institution:

Question Opinion

Are you satisfied with the quality of higher education in Sri Lankan Universities?

Do you agree that course time is not effectively utilized during academic years?

Is the contribution of the Sri Lankan government towards higher education and the economy satisfactory?

Where would you position Sri Lanka in terms of economic development in 10 years’ time?

Would local university students following business management consider starting up businesses if necessary encouragement and financial support is provided?

Are you aware of student managed businesses currently operating with success over the world?

What is your opinion on introducing SMBs to local Universities?

Are SMBs capable of improving the quality of business education in Universities?

What extent do you think that SMBs will support the Sri Lankan economy?

Which model do you think is the most suitable for implementation? Why?

What are your recommendations to the concept on implementation?


3. Senior Executives

Company:

Position:

Question Opinion

What is your point of view on Sri Lanka’s future prospects available for entrepreneurs?

Is entrepreneurship lacking in the country? What evidence can be provided for it?

Can Sri Lanka’s current structure of University education cater effectively to the requirements of employers? What is lacking?

What is keeping back Sri Lanka’s entrepreneurs from starting new ventures when the prospects are high?

Do you believe that the finance sector is advancing and investments are encouraged?

What is your opinion on the contribution of the local government towards University education and entrepreneurship?

What is your opinion on the student managed businesses? Are you aware of the success stories around the world?

Will implementing the concept be a solution to unemployment and lack of quality in Business education in Universities?

Will SMBs succeed if necessary guidance and financial support is provided? Why?

What can the Sri Lankan government do to contribute towards it?

Would you prefer to employ a graduate with a SMB over an ordinary graduate with a Business Degree? Why?

Which model is the most suitable for implementation? Please provide any reasons.


Appendix 2

Statistics obtained from Secondary Research

Opinion Polls

The Nielsen Business Confidence Index- February 2012

Source: LMD- The Voice of Business (2012, p.24)


An Overview of Sri Lanka’s Current Affairs to January

2012



The Consumer Confidence Index- February 2012



Trends and Patterns of Sri Lanka’s Economic Indicators

Unemployment Rate (%) Graduate Output Tourist Arrivals Departures for foreign employment

2001 7.9 8,224 336,800 184,007

2002 8.8 9,027 393,171 203,773

2003 8.4 12,436 500,642 209,846

2004 8.3 15,413 566,202 214,709

2005 7.7 12,545 549,308 231,290

2006 6.5 16,812 559,603 201,948

2007 6.0 16,837 494,008 218,459

2008 5.4 12,438 438,435 252,021

2009 5.8 13,093 47,890 247,119

2010 4.9 12,346 654,476 n/a

2011 n/a n/a 855,975 n/a

Source: Department of Census& Statistics (2010, p.03)

University Grants Commission- Sri Lanka (2010, p.04); (2010, p.57)

Sri Lanka Tourism Development Authority (2012); (2010, p.14)

Sri Lanka Bureau of Foreign Employment (2010, p.01)


Appendix 3

Presentation of Research Statistics

Primary Research

Answers to key primary research questions

655

679

680

679

613

678

0 100 200 300 400 500 600 700

Satisfied with the quality of University education?

Is Sri Lanka growing with opportunities?

Will SMBs succeed in local universities?

Will SMBs increase employability of students?

Will SMBs support the economy?

Will SMBs improve the quality of University education?

Yes Maybe No

Choice of Entrepreneurial Programme

0.000.01

3%

71%

3%

22%

% in favour

Integrated Core Study Optional Ad-hoc Extra-Curricular CPD


Secondary Research (Using Statistics from Appendix 2)

1. Number of Unemployed Graduates

Method of calculation: Undergraduate Output* Unemployment rate

0

200

400

600

800

1000

1200

1400

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Unemployed Undergraduates

UnemployedUndergraduates


2. No. of Tourist Arrivals

3. Brain Drain

Implementing Student Managed Businesses to Sri Lankan Universities

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