Halmstad University
School of Business and Engineering
Technical Project and Business Management
Suggestions for Improvements on Shanghai’s Entrepreneurial Environment
-A Comparative Study Based on the Different Perspectives of Experts and Undergraduates
Master’s Dissertation in Technical Project and Business Management, 15 credits Final Seminar Date: August 18th, 2009
Authors:
Jianchao Liu 841127-T136 Qiao Feng 860420-T106 Supervisor: Joakim Tell Examinator: Bernd Hofmaier
ABSTRACT
This study focuses on undergraduates in Shanghai and aims to generate some practical implications on how to improve the entrepreneurial environment by enhancing undergraduates’ entrepreneurial intentions. The authors initiated an analytical model with support from the GEM conceptual model and Krueger’s intention model (2000) to carry on an investigation among local undergraduates. The data reflects an actuality of undergraduates’ entrepreneurial intention. On the other hand, by the correlation analysis, undergraduates’ preferences upon different aspects of entrepreneurial environment are filtered out. Finally, practical implications are given through two aspects. One is divisions of respondents by their different grades of entrepreneurial intentions; the preferences from the higher intentioned group will firstly be suggested to improve. The other one is based on the comparison between undergraduates’
valuation and experts’ measurement on the entrepreneurial environment.
In conclusion, the study reflects that the analytical model is applicable to undergraduates in Shanghai. To enhance undergraduates’ entrepreneurial intention, it is highly recommended by the authors to improve entrepreneurial environment through more attention to the feasibility of technology transfer, sufficient government programs for new firms, the effectiveness of technological region, and government projects.
Key Words: Entrepreneurial Environment, Undergraduates, Shanghai, GEM, Entrepreneurial Intention, Entrepreneurial Desirability, Entrepreneurial Feasibility.
TABLE OF CONTENTS
1. INTRODUCTION ... 5
1.1 Background ... 5
1.2 Problem discussion ... 7
1.3 Problem statement ... 8
1.4 Purpose ... 8
1.5 Definitions ... 8
2. THEORETICAL FRAMEWORK ... 10
2.1 The Global Entrepreneurship Monitor (GEM) ... 10
2.1.1 Education and Training ... 10
2.1.2 Cultural and Social Norms ... 11
2.1.3 Financial Support ... 12
2.1.4 Government Policy ... 13
2.1.5 Government Program ... 13
2.1.6 Research and Development Transfer ... 14
2.1.7 Commercial, Legal Infrastructure ... 14
2.1.8 Market Openness/Barrier to Entry ... 15
2.2 Entrepreneurial Intention ... 16
2.3 Perceived Desirability and Perceived Feasibility ... 17
2.4 Analytical Model ... 19
3. METHODOLOGY... 20
3.1 Research Approach ... 20
3.2 Collection of Data ... 21
3.2.1 Primary Data ... 21
3.2.2 Secondary Data ... 23
3.3 Research Criteria ... 23
3.3.1 Validity ... 23
3.3.2 Reliability ... 24
4. EMPIRICAL DATA ... 26
4.1 Actuality of Potential Undergraduates Entrepreneur ... 26
4.1.1 Degree of Entrepreneurial Intention ... 27
4.1.2 Degree of Entrepreneurial Desirability ... 28
4.1.3 Degree of Entrepreneurial Feasibility ... 29
4.2 Undergraduates’ Valuation of Entrepreneurial Environment ... 29
4.2.1 Valuation of Entrepreneurial Desirability ... 31
4.2.2 Valuation of Entrepreneurial Feasibility ... 32
5. ANALYSIS ... 34
5.1 Overall Analysis... 34
5.2 Grouped Analysis ... 36
5.2.1 Positively Potential Entrepreneur ... 36
5.2.2 Probably Potential Entrepreneur ... 38
5.2.3 Possibly Potential Entrepreneur ... 40
5.2.4 Negatively Potential Entrepreneur... 42
5.3 Undergraduates’ Preferences ... 43
5.3.1 Culture, Social Norms ... 44
5.3.2 Education and Training ... 45
5.3.3 Financial Support... 46
5.3.4 Government Policy ... 47
5.3.5 Government Program ... 47
5.3.6 Research and Development Transfer... 48
5.3.7 Commercial and Professional/Legal Infrastructure ... 49
5.3.8 Market Openness/Barrier to Entry ... 50
5.4 Preferences of Undergraduates... 50
6. CONCLUSION AND DISCUSSION ... 52
6.1 Conclusion ... 52
6.2 Practical Implications ... 54
6.2 Discussion ... 54
6.3 Limitation ... 55
REFERENCE ... 56
Literature ... 56
Books ... 60
Internet resources ... 60
Chinese References ... 61
1. INTRODUCTION
1.1 Background
Entrepreneurship has received a great interest among scholars. It has emerged over the last two decades as arguably the most potent economic force the world has ever experienced (Kuratko, 2005). The degree of entrepreneurship has an important influence on the economic prosperity of a region or country (Wennekers & Thurik.
1999). A substantial part of national income and jobs are created by entrepreneurs, who contribute to R&D development and innovation as well (Van der Sluis, Van Praag & Vijverberg, 2004). Therefore, there is a great desire for successful entrepreneurs in the society.
According to Phillips (1993), the greater the percentage of small firms in growing sectors, the greater the share of jobs created by small firms in the industries operating in those sectors. Accompanying a great desire of the emerging enterprise, the entrepreneurial environment arouses a lot of concern among the society. The term
“entrepreneurial environment” refers to a combination of factors that play a role in the development of entrepreneurship (Gnyawali & Fogel, 1994). It consists of the overall economic, socio-cultural, and political factors which influence people's desirability and ability to initiate a business and, on the other hand, the availability of assistance and support services that facilitate the start-up process are all included (ibid).
Individuals are embedded in their local entrepreneurial environment which influences an individual especially at the beginning of the decision making process about whether to become self-employed (Muller, 2006). The decision to start a new venture may also be influenced by experience and prior knowledge (Davidsson & Honig, 2003; Minniti, 2004, 2005); availability of financial capital or individual wealth (Dunn & Hotz-Eakin, 2000; Evans & Jovanovich, 1989); as well as expected profit
and success (Muller, 2006).
Gnyawali and Fogel (1994) argue that there are five dimensions related to environmental conditions of entrepreneurial activities; government policies and procedures, socioeconomic conditions, entrepreneurial and business skills, financial support to businesses, and non-financial support to businesses. Previous studies in Central and Eastern Europe (CEE) counties shows that small business development has been influenced to a great extent by macroeconomic factors such as inflation rates, price stability, interest rates, credit conditions, capital inflows and outflows, as well as the availability of economic inputs (Fogel, 2001).
Gartner (1985) describes the framework of new venture creation through four dimensions as environment, individual, process, and organization. The entrepreneurial environment consists of venture capital ability, university proximity, governmental influences, attitudes towards venture creation, and so on. Therefore, the entrepreneurial environment refers to the external environmental influences which act on entrepreneurship.
Scholars recommend a variety of policy options for developing entrepreneurship, which may include providing venture capital funds, tax-based incentives, and government procurement programs; protecting proprietary ideas and innovation;
investing in education and research; rewarding entrepreneurship; and minimizing entry barriers (Goodman, Meany & Pate 1992; Zapalska & Fogel 1998).
Nowadays, in China, employment pressure gathers a lot of attention, especially accompanied with the depression of the global economy. The graduates, who could find a job easily ten years ago, suffer from employment pressure currently as well.
Perceiving the significant influence of entrepreneurship, and in order to release the employment pressure and stimulate the economy, the Chinese government expends great deals of efforts to encourage undergraduates’ entrepreneurial behaviors.
The Global Entrepreneurship Monitor (GEM) research program is an annual assessment of the national level of entrepreneurial activity. It plays as a significant indicator of a commitment to graduate entrepreneurship nationally and internationally (Ghulam & Rick, 2008). According to the GEM executive report (2004), whether to start a business is determined by several factors, which are referred to as entrepreneurial framework conditions. It is regarded that, if these factors are combined successfully, new start-ups will be instigated, which will increase innovation and competition in the market.
1.2 Problem discussion
Even though there are a lot of studies that contribute to the entrepreneurial environment by many researchers, these existing theories have not viewed entrepreneurial environment from undergraduates’ perspective. Among potential entrepreneurs, undergraduates can be categorized as a special group, because they are different to others in several aspects. They are young and energetic, have a comparably high professional education level and limited social experience. In the same entrepreneurial environment, these certain particularities may arouse different perspectives and preferences towards the external environment. Therefore, in the research of entrepreneurial environment, further studies are needed based on undergraduates’ perspectives.
Shanghai, as one of the municipalities of China, is also the biggest city in the country.
It is one of China’s most important centers of economy, business, information as well as technology, and plays a great role in the prosperity of eastern part of the country.
Every year, a large number of entrepreneurs and potential entrepreneurs concentrate there, including university graduates.
1.3 Problem statement
The problem posed in this research is: in Shanghai, how is the entrepreneurial environment; undergraduates versus experts’ evaluation. And, if starting a business, what are the related factors that they most desire?
1.4 Purpose
This study aims to investigate the attitudes of undergraduates towards Shanghai’s entrepreneurial environment through verifying the specified model from previous ones, which will be compared with the evaluation of local entrepreneurial environment of experts. Finally, Practical implications of improvement on local entrepreneurial environment will be generated based on undergraduates’ perspective.
1.5 Definitions
Entrepreneurial environment: The term “entrepreneurial environment” refers to the combined factors that affect the development of entrepreneurship (Gnyawali & Fogel, 1994). In this study, it is also regarded as a synthesis which is built up with a series of external factors which influence the venture creation process.
Entrepreneurial intention:Entrepreneurial intention is a state of mind in which people would like to initiate a new firm (Wu & Wu, 2008). In this research, we also regard entrepreneurial intention of undergraduates is determined by subjective desirability and objective situation.
Entrepreneurial desirability: This conveys a subjective attitude towards starting a business of the potential entrepreneur. It is an internal passion without any consideration of external condition.
Entrepreneurial feasibility: This concerns the overall estimated probability of a successful business. It is generally estimated by entrepreneurs or potential entrepreneurs without any specific criterion.
2. THEORETICAL FRAMEWORK
2.1 The Global Entrepreneurship Monitor (GEM)
The Global Entrepreneurship Monitor (GEM) was conceived in 1997 by Michael Hay and Bill Bygrave and a prototype study and was funded by the London Business School and Babson College (Bosma，Acs，Autio，Coduras & Levie, 2009). The GEM model maintains that established business activity at the national level varies with general national framework conditions, while entrepreneurial activity varies with entrepreneurial framework conditions (Bosma ， et al., 2009). GEM takes a comprehensive approach and considers the degree of involvement in entrepreneurial activity instead of traditional analyses of economic growth and competitiveness, which neglects the role played by new and small firms (Bosma，et al., 2009). The Global Entrepreneurship Monitor (GEM) is a concept framework which can be used as a link between entrepreneurial environment and entrepreneurship. The assumption is that the framework conditions make up the general context in which new venture creation is stimulated or constrained, and more favorable framework conditions encourage the blossoming of entrepreneurial activity within a country and region (Clercq, Manigart, Clarysse, Crijns, Verzele & Zegers, 2004).
Entrepreneurial environment will influence the trend of entrepreneurial intention, directly or indirectly. These dynamic transactions occur within a particular context, which is referred to the GEM conceptual model, in which nine dimensions of entrepreneurship are defined, and which mainly include the following (Deschoolmeester & Jun, 2006).
2.1.1 Education and Training
Charney and Libecap (2000) point out that education attracts substantial private sector
financial contributions, produces self-sufficient enterprising individuals, successful business and industry leaders, enhances a graduate’s ability to create wealth, and produces champions of innovation and leads to greater opportunities with advanced technologies. On the other hand, entrepreneurship skills can be successfully taught and trained, which will promote better business practices, increased revenues and profits (Karlan & Martin, 2006).
The demand for entrepreneurship education; educational access to the "Make-a-Job"
option and economic growth through job creation are three important major themes which drive entrepreneurship education (Kourilsky, 1995). In developing countries, the informal markets dominate the economic scene, yet rarely do entrepreneurs receive any formal training or education in how to run a business. (Karlan & Martin, 2006)
2.1.2 Cultural and Social Norms
Culture is a highly complex phenomenon, which will influence entrepreneur from many sides. Considered by Verheul, Wennekers, Audretsch and Thurik (2002), the cultural environment influence the supply side of entrepreneurship. They also claim entrepreneurship will be influenced by national culture, through both the supply and the demand side of entrepreneurship. On the supply side, individual preferences for self-employment are within the cultural domain; on the demand side, national culture influences entrepreneurial opportunities.
Cultures are also mentioned by Lipartito (1995); one of the contributions of culture is that it offers a new way of appreciating the relationship between the firm and its environment. In the article of Depillis’s (1998), “the need for achievement is presented that there is a positive relationship between entrepreneur activity and the need for achievement”; culture is the key to influencing the need for achievement.
Frederking (2004) highlights that the organization of culture dictates relevance for
entrepreneurs and their business activities.
Giannetti and Simonov (2004) highlight social norms which can be used to explain why some people join some entrepreneurial activity without any benefits. As such, social norms attributed to occupations can affect occupational choice. Actually, social norms are part of the cultural values of a community, which affect the individual decision to become an entrepreneur.
The acceptance of failure will determine whether or not an entrepreneur decides to start a firm. Norms of social behavior are reactions of society to compensate for market failures (Arrow, 1971). The failures would be the biggest threat for entrepreneurs to their freedom (Sobel, Clark & Lee, 2006).
2.1.3 Financial Support
Financial support is a basic requirement to start a business. Grilo & Thurik (2005) argue that financial constraints have a negative impact on the decision to become an entrepreneur, and lack of financial support is an obstacle to starting a new business, which has a direct effect on the fact of being self-employed.
According to the research of Florida and Acs (2004), higher income change will attract more new firms formed by providing additional financial support which is necessary to start a firm. On the other hand, “people with more financial resources and with more confidence in their own ability are more likely to be self-employed”
(Lee, Florida & Acs, 2004) refer (Evans & Leighton, 1989). Therefore, financial support will enhance the perception of feasibility and lead to the result of starting a business.
2.1.4 Government Policy
In order to develop economies, many policies are devised by government to support small businesses, which usually take the form of direct financial payments and free or subsidized advisory services. These policies will be the cause and opportunity of that new enterprise start up (Verheul, Wennekers, Audretsch & Thurik, 2002).Bruce and Mohsin (2003) argue that “tax policy has fundamentally ambiguous effects on entrepreneurial activity”. In many countries, tax rates are important factors, and high tax rates have a positive effect on attracting an entrepreneur to start a new business (Young & Welsch, 1993). In order to promote entrepreneurship and encourage entrepreneurial activity, actual financial constraints should be reduced. Steven and Russell (2005) maintain that government should pay more attention to reduce the financial constraints that entrepreneurs face, through preferential loans to new businesses and preferential tax treatment for new or small businesses, creating more resources and opportunity for entrepreneurs. On the other hand, entrepreneurship policy is heightened by research on how to renew entrepreneurial activity levels (Lois
& Anders, 2001).
2.1.5 Government Program
Government programs include not only financial support and policy supporting projects, but the organization of government with services, support and assistance for starting a business (Gao, Jiang, Li, & Chen, 2006). Levie and Autio (2007) argue that, through supporting programs such as support for new ventures, government facilitates the operation of firms, which may reduce transaction costs for the firm and contribute towards the human capital of entrepreneurs. Therefore, government program is a profitable process which can get the benefits for both sides.
2.1.6 Research and Development Transfer
It is recommended by Gao, Jiang, Li, and Chen (2006) that the measurement of research and development transfer could be based on two aspects. One is result oriented, judging by of commercialization of research achievement. Another is process oriented, which focuses on the effectiveness of risk-taking and whether the entrepreneur makes full use of technology and commercial opportunity. In another word, it is the smooth transfer of technology from the source of knowledge to commercial market (Gao et al., 2006). Wright, Birley and Mosey (2004 pp.235) argue that
“It is important to devote greater attention to the study of entrepreneurship in technology transfer in the light of greater government attention, changes in the cultures of universities and differences with technological entrepreneurship in general.”
2.1.7 Commercial, Legal Infrastructure
Defined by Neck, Cohen and Corbett (1999), “physical infrastructure is the tangible components of the county’s infrastructure such as roads, traffic, office space, house, and real estate”. It is important that form an entrepreneurial system, through relation and interaction with other components, for instance, networks and culture (Neck et al., 1999). Furthermore, “enabling the development of infrastructure of professional, legal, financial and other specialist services can bring a wide range of benefits to both business and the wider economy” (Hanne, 2008). According to the research of Ukaegbu (2003), entrepreneurial succession is the process by which commercial infrastructure accumulated by one generation of a nuclear or extended family is transferred to the next. Lee, Wong, Chen and Chua (2005) argue there is a positive
influence on starting a new business through government supporting physical infrastructure of telecommunications, utilities and transportation. On the other hand, McQuaid (2002) points out the lack of physical infrastructure can hinder entrepreneurs in a significantly high level.
As above mentioned, both infrastructure, and access to physical infrastructure, are important to build up the entrepreneurial environment. The negative perception of access to physical infrastructure for government will ultimately limit further growth of the entrepreneurial system. Although access to infrastructure is classified into a separate influence of entrepreneurial environment (Acs, Arenius, Hay & Maria, 2005), according to Chinese GEM research (Gao et al., 2006; Yang & Yu, 2007), this item is combined into Commercial and Professional/Legal Infrastructure.
2.1.8 Market Openness/Barrier to Entry
Both external and internal barriers reduce productive entrepreneurship in an economy (Sobel, Clark & Lee, 2006); they argue that these barriers, through their impact on reducing the number of new resource and goods combinations, result in reducing the rate of entrepreneurship. Economic freedom is essential to an environment conducive to business start-ups, in order to build a market discipline, keeping new ventures and established businesses responsive to the preferences of consumers is necessary (Sobel et al., 2006).
“Low barriers of entry into the regional labour market and diverse culture facilitate the influx of a particular kind of human capital that promotes innovation and accelerates information flow, leading to the higher rate of new firm formation” (Lee, Florida & Gates, 2002 pp.879 ).
This view is also agreed by Lundström, and Stevenson (2001), in order to create entrepreneurial vitality, low barriers to the entry and quit of businesses is necessary condition.
Actually, countries with more economic freedom have both more entrepreneurship and a higher rate of business failure (Sobel, Clark & Lee, 2006), but it is not a negative phenomenon, business failures are a sign that many new start-up businesses are being attempted and the market process is sorting out the good ones from the bad, resulting in overall economic progress and growth.
2.2 Entrepreneurial Intention
Entrepreneurial intention is a driving force of the entrepreneurial activity, which plays a central role in the growth and development of the world economy (Wu & Wu, 2008).
Ajzen (1991) contributed to the theory of planned behavior, one of the central factors of which is the individual’s intention to perform a given behavior. In this theory, intentions are considered to capture the motivational factors which influence people’s behavior, and people are more prone to performing if the intention is stronger. It exhibits to what extent people want to behave. Three independent conceptual items are formed in this model, including attitudes towards the behavior, subjective norm and perceived behavioral control. The perceived behavioral control refers to the availability of resources and opportunities for a person to attain an achievement. It is regarded as indicating past experience, anticipated impediments and obstacles and it variesacross situations and actions. As presented in Table 2.11, perceived behavioral control influences behavioral intention, which can be used directly to predict behavioral achievement. Attitude toward the behavior refers to the extent to which a person has a favorable or unfavorable evaluation or appraisal of the behavior in question. Subjective norm refers to the perceived social pressure to perform, or not to
perform, the behavior(Ajzen, 1991). These three factors influence intention directly or indirectly, which leads to the final behavior eventually.
Table 2.2.1 Ajzen’s Theory of Planned Behavior
2.3 Perceived Desirability and Perceived Feasibility
Based on the theory of planned behavior model, (Ajzen, 1991), Krueger (2000) takes perceived desirability and perceived feasibility as the determinants of entrepreneurial intention, and generates a modified intention model. Perceived desirability is defined as the personal attractiveness to start a business, and both intrapersonal and extra-personal impacts are included (Krueger, 2000). Perceived feasibility is related to availability of financial support and potential partners (Shapero & Sokol, 1982), and reflects the degree to which one feels personally capable of starting a business (Krueger, 2000). Regarded by Krueger (2000), intention directly relates to perceived feasibility and desirability, and prospective entrepreneurs’ perceive is very effectual to predict and enhance entrepreneurial intention. This opinion is supported by Kennedy, Drennan, Renfrow and Watson (2003)， that subjective norm is indirectly related
Attitude toward the
behavior
Subjective norm
Perceived Behavioral
Control
Intention Behavior
through perceived feasibility and perceived desirability. In the later research, Grundstén (2004) argues that attitudes towards entrepreneurship is represented by perceived desirability of entrepreneurship and perceived feasibility of entrepreneurship. A similarity is self-efficacy, which refers to antecedents of perceived desirability and feasibility has been linked theoretically and empirically with many entrepreneurial phenomena. What is more, it is associated with opportunity perceive and venture-taking (Krueger & Dickson, 1994) and career selection (Bandura, 1986).
Regarded by Krueger (2000), intention directly relates to perceived feasibility and desirability, and prospective entrepreneurs’ perceive is very effectual to predict and enhance entrepreneurial intention. This opinion is supported by Kennedy, Drennan, Renfrow and Watson (2003)， with subjective norm is indirectly related through perceived feasibility and perceived desirability. In the later research, Grundstén (2004) argues that attitudes towards entrepreneurship is represented by perceived desirability of entrepreneurship and perceived feasibility of entrepreneurship. A similarity is self-efficacy, which refers to antecedents of perceived desirability and feasibility has been linked theoretically and empirically with many entrepreneurial phenomena.
What is more, it is associated with opportunity perceive and venture-taking (Krueger
& Dickson, 1994) and career selection (Bandura, 1986).
Table 2.3.1 Modified Intention model by Krueger (2000)
2.4 Analytical Model
Although previous models describe different factors that influence processes of venture-taking intention, none of them are detailed enough to contribute to the measurement of undergraduates’ entrepreneurship influences. According to entrepreneurial framework conditions (Acs et al., 2005; Gao et al., 2006), authors develop previous models into new ones, which specify the entrepreneurial influences and simplify the measurement of entrepreneurial environment.
The new model is developed to investigate undergraduates’ entrepreneurial intentions and the related influences by testing three hypotheses. It is assumed that;
H1: Culture and social norms influence undergraduates’ perceived desirability of starting a business;
H2: Financial, government policies, government programs, education and training, R&D transfer, commercial and legal infrastructure and internal market openness
Exogenous factors (personal, situational)
Personal desirability Perceived social norms
Perceived self-efficacy Perceived collective efficacy
Attitudes
Perceived desirability
Perceived feasibility
Intentions
Precipitating factors
influence undergraduates’ assessment of the perceived feasibility of starting a business;
H3: The combination of perceived desirability and perceived feasibility influences undergraduates’ entrepreneurial intentions.
3. METHODOLOGY
3.1 Research Approach
There are two methodologies in scientific research: qualitative and quantitative. What kind of methodology will be chosen is determined by which kind of research will be
H2 Feasibility Influences
H1 Desirability Influences
Table 2.4.1 Analytical model modified by authors
H3
Culture, Social Norms
Education and Training
Financial
Government Policies
Government Programs
R&D Transfer
Commercial, Legal Infrastructure
Internal Market Openness
Perceived Desirability
Perceived Feasibility
Undergraduates’
Entrepreneurial Intentions
carried out and what the final intention of the study is.
Quantitative research emphasizes quantification in the collection and analysis of data, and entails a deductive approach to the relationship between theory and research which focuses on the testing of theories (Bryman & Bell, 2007, p. 28).
Qualitative research focuses more on words than quantification in the collection and analysis of data, and predominantly emphasizes an inductive approach to the relationship between theory and research, in which the accent is placed on the generation of theories (Bryman & Bell, 2007, p. 28).
The methodology of this research is a quantitative approach, with a combination of primary analysis and secondary analysis which concerns the analysis of data by researchers who will probably not have been involved in the collection of data (Bryman & Bell, 2007, p.326). The final result will be attained through the comparison of primary data and secondary data.
3.2 Collection of Data
In order to attain the aim of the research, both primary and secondary data will be used to collect essential information in this research. It is also possible to use secondary data, which represents experts’ evaluations, to combine it with the collection of primary data (Bryman & Bell, 2007, p. 326).
3.2.1 Primary Data
Primary data aims to verify different parts of the analytical model and is collected through structured a questionnaire on web. It begins with undergraduates’
entrepreneurial intentions, which is the final arrowed part of the analytical model.
Secondly, we use the form of questionnaire to elicit students’ perceived desirability
and perceived feasibility. Finally, the question area will turn to the source items of the model. Subjects continue probing undergraduates’ desirability and undergraduates’
feasibility towards the entrepreneurial environment. These subjects derive from the items of GEM conceptual framework (Acs et al., 2005). The questionnaire is derived from previous Chinese GEM research (Gao et al., 2006; Yang & Yu, 2007), and it aims at experts from different fields. One advantage of using existing questions is the feasibility of drawing a comparison with the previous study (Bryman & Bell, 2007, p.
274). As the original questionnaire focuses on expert group, some subjects are too complex for undergraduates to understand. According to the original meaning of those subjects, authors simplify some subjects, which enables them easy to be understood by undergraduates. Basically, each item will be measured by three questions from different aspects, while some issues which receive more concern from the authors will be measured by one or two more questions.
Primary data is collected both through web surveys and self-completion questionnaires on campus. Web survey has low costs, a faster response and attractive formats (Bryman & Bell, 2007, p. 676). It operates by inviting prospective respondents to visit a web site at which the questionnaire can be found and completed on line, and these potential respondents need to be directed to the web site (Bryman &
Bell, 2007, p. 677). Respondents’ answers can be automatically programmed to download into a database, thus the daunting coding of large number of questionnaires is eliminated which not only saves time, but also reduces the likelihood of errors in the processing of data (Bryman & Bell, 2007, pp. 676-677).
To simplify the processing of data for computer analysis (Bryman & Bell, 2007, p.
249), subjects are responded as Likert-type scales of five points. These points represent from (5) strongly agree to (1) strongly disagree (see questionnaire in appendix).
By gaining a list of email addresses of undergraduates’ in Shanghai, the questionnaire
address is emailed to students, as well as a good, covering introduction of this research to help improve the response rates (Bryman & Bell, 2007, p. 244). A professional Chinese surveying website, named “AskForm”, is chosen, which saves the process of producing the attractive text and all other features and data gathering.
3.2.2 Secondary Data
Secondary data is used for the analysis of data by researchers who were probably not involved in the collection of those data, for purpose that, in all likelihood, were not envisaged by those responsible for the data collection (Bryman & Bell, 2007, p. 326).
Secondary analysis is employed frequently for its extremely high quality (Bryman &
Bell, 2007, pp. 328-334). It need not necessarily be collected by other researchers;
instead, it may be collected by another type of organization for its own purpose (Bryman & Bell, 2007, p. 326).
The secondary data is collected from research which focuses on entrepreneurial environment in Shanghai. The research is held by Shanghai University of Finance and Economics. The questionnaires, derived from the nine dimensions of GEM framework, were answered by 160 experts who were from different fields. In this research, this valuation of entrepreneurial environment from experts’ points of view will be compared with undergraduates’ measurement in the analysis chapter.
3.3 Research Criteria 3.3.1 Validity
In general, validity concerns the issue of whether an indicator (or set of indicators) that is devised to gauge a concept really measures that concept (Bryman & Bell, 2007, p. 165).
Owing to the crucial importance of primary data in quantitative research, the questionnaire for the investigation has been given much attention in this study. To guarantee survey questions operate well, and to ensure that the research instrument as a whole functions well, a pilot is necessary before utilizing the whole questionnaire (Bryman & Bell, 2007, p. 273). In this research, a pilot was carried on before collecting data.
The majority of the questionnaires are handed out on campus of several universities in Shanghai by one of the authors, who is a local resident in Shanghai. To avoid similar questionnaires from polarized samples, the researcher does not choose the respondents by class or major. Instead, they are chosen from different universities by chance. The researcher began the investigation with a friendly communication, which covers a brief introduction of the research purpose, and which aims to earn their overall understanding of the questionnaire and full cooperation.
The original questionnaire focuses on a group of experts. However, respondents of this research are all undergraduates, and some questions may be too advanced for them to understand. Thus, authors try to understand them from undergraduates’ point of view and based on the original meaning of those subjects, then to simplify those complicated subjects, which guarantees an understanding among undergraduates.
In this research, as both authors and respondents are Chinese, the questionnaire will be generated in Chinese. However, the questionnaire in this thesis is translated into English. Therefore, in the process, minor errors cannot be avoided absolutely but only be reduced.
3.3.2 Reliability
Reliability means the consistency of a measure of a concept (Bryman & Bell, 2007, p.
163), which refers to the probability of obtaining the consistent results after the
repetition of the research with similar methods.
It is possible to combine secondary data with the collection of primary data (Bryman
& Bell, 2007, p. 326). Thus, in this research, the analysis of combined data is chosen.
As the final conclusion will be generated from the comparison between undergraduates’ preferences and experts’ standard valuation on entrepreneurial environment, the accurate evaluation from experts is highly important for this research. Therefore, secondary data is brought into the research for its extremely high quality (Bryman & Bell, 2007, p. 326).
In order to elicit trust from the respondents and enhance the response quality, a good covering letter of the explanation of the research purpose is included at the beginning of the email.
The orientation of this research is to generate practical implications to refine the entrepreneurial environment for the whole potential undergraduate entrepreneur group.
Although gender and major influences an entrepreneur’s intentions (Wu & Wu, 2008;
Wilson, Kickul, & Marlino, 2007), these factors are not examined in this research.
Therefore, the respondents are not classified into any kind of group in this study.
What is more, to avoid polarized data from any respondents, authors do not hand out questionnaires in a class or other places which could bring about the highly gathered respondents. Instead, respondents are chosen randomly, in some even-distributed locations on campus, and the dining hall became the main choice.
4. EMPIRICAL DATA
Between May 4th 2009 and July 21st 2009, 160 copies of questionnaires are collected, 159 of which are valid. All these copies were answered by undergraduates as self-completion questionnaires at universities in Shanghai.
4.1 Actuality of Potential Undergraduates Entrepreneur
Potential entrepreneurship of undergraduates will be analyzed from three aspects below; entrepreneurial intention, entrepreneurial desirability, and entrepreneurial feasibility.
According to Table 4.1, respondents show high passion of entrepreneurial desirability and positive confidence of entrepreneurial feasibility. Relatively, entrepreneurial intention appears low compared with the former two items.
Entrepreneurial Intention
Entrepreneurial Desirability
Entrepreneurial Feasibility
Means 3.2 3.45 3.31
Table 4.1
4.1.1 Degree of Entrepreneurial Intention
Figure 4.1.1 Degree of Entrepreneurial Intention
As is shown in figure 4.1.1, 60 respondents (37.7%) grade 4 or 5 on the entrepreneurial intention, which means they have an inclination of starting a business, and 33 of them (20.8%) show a full intention. The other 43 respondents (27%) showed negative intention by grading 1 or 2. What is more, the rest is the largest group, which includes 56 respondents of all (35.2%) appears neutral towards entrepreneurial intention.
To differentiate these respondents, they are classified into four types by their different entrepreneurial-intention degrees. The most respondents, who marked “three” in their Entrepreneurial Intention, are grouped as “Possibly Potential Entrepreneur”, those who graded “four” are named as “Probably Potential Entrepreneur”, and the respondents who show full Entrepreneurial Intention are classified into “Positively Potential Entrepreneur”. The remainders, who grade one or two, are regarded as
18
25
56
27
33
total 159
Entrepreneurial Intention
grade 1 grade 2 grade 3 grade 4 grade 5
“Negatively Potential Entrepreneur”.
4.1.2 Degree of Entrepreneurial Desirability
Figure 4.1.2 Degree of Entrepreneurial Desirability
As is illustrated in Figure 4.1.2, when it comes to entrepreneurial desirability, more than a half (50.9%) respondents showed positive attitude through grading 4 or 5, and other 47 respondents (29.6%) fail to demonstrate any propensity. The remaining 31 respondents, who account for 19.5%, have all clearly manifested negativity by grading 1 or 2.
13
18
47 46
35
total 159
Perceived Desirability
grade 1 grade 2 grade 3 grade 4 grade 5
4.1.3 Degree of Entrepreneurial Feasibility
Figure 4.1.3 Degree of Entrepreneurial Feasibility
According to Figure 4.1.3, in the self-estimation of a successful business, 64 respondents (40.2%) are confident about succeeding. On the other side, 27 of all (17%) express low confidence by grading 1 or 2. The remainder comprise the largest portion, which includes 68 respondents and takes up 42.8%, does not show any inclination.
4.2 Undergraduates’ Valuation of Entrepreneurial Environment
As shown in Figure 4.2, different aspects of entrepreneurial environment are in various grades. Significantly, internal market openness gets the highest score among all the items. Culture ranks the second highest score in the figure. On the contrary, financial is regarded as the weakest aspect, which is a litter bit lower than education.
The rest, such as government policy, government programs and R&D transfer stay in the middle level of all the factors.
8
19
68
43
21
total 159
Perceived Feasibility
grade 1 grade 2 grade 3 grade 4 grade 5
Figure4.2 Overall Entrepreneurial Environment
2.52 3.38
2.47
2.76 2.65
2.74 3.08
3.45
0 1 2 3 4 5 Education
Culture
Financial
Government Policies
Government Programs R&D Transfer
Infrastructure Internal Market
openness
Undergraduates' Valuation of Overall
Entrepreneurial Environment
4.2.1 Valuation of Entrepreneurial Desirability
Figure 4.2.1.1 Valuation of Education Figure 4.2.1.2 Valuation of Culture 0
1 2 3 4 5Item 1
Item 2
Item 3 Item 4
Education
0 1 2 3 4 5Item 1
Item 2
Item 3 Item 4
Item 5
Culture
4.2.2 Valuation of Entrepreneurial Feasibility
Figure 4.2.3.1 Valuation of Policy Figure 4.2.3.2 Valuation of Financial
Figure 4.2.3.3 Valuation of Government Program Figure 4.2.3.4 Valuation of R&D Transfer 0
1 2 3 4 5Item 1
Item 2 Item 3
Government Policy
0 1 2 3 4 5
Item 1
Item 2 Item
3
Financial
0 1 2 3 4 5Item 1
Item 2 Item 3
Government Program
0 1 2 3 4 5Item 1
Item 2 Item 3
R&D Transfer
Figure 4.2.3.5 Valuation of infrastructure Figure 4.2.3.6 Valuation of Internal Market Openness 0
1 2 3 4 5
Item 1
Item 2 Item
3
Infrastructure
0 1 2 3 4 5Item 1
Item 2 Item 3
Internal Market
Openness
5. ANALYSIS
This chapter is focused on the analysis of the collected data with the assistance of statistics software program SPSS 14.0.
5.1 Overall Analysis
To test the hypothesis in the analytical model, bivariate analysis is firstly used in this study.
Desirability Feasibility Intention Pearson Correlation
Sig. (2-tailed) N
0.527**
0.000 159
0.412**
0.000 159
Notes: **1percent or less.
Table 5.1.1
It is shown in Table 5.1.1 that both entrepreneurial desirability and entrepreneurial feasibility are significantly and positively correlated with entrepreneurial intention less than 0.001 levels, which supports H3 effectively. Ahead of feasibility, respondents’ entrepreneurial desirability exhibits a higher positive correlation than their entrepreneurial intention.
Desirability Feasibility Pearson Correlation
Sig. (2-tailed) N
0.433**
0.001 159
Notes: **1percent or less.
Table 5.1.2
According to Table 5.1.2, overall entrepreneurial desirability and entrepreneurial
feasibility correlate with each other significantly at a high positive level of 0.001.
Education Culture Desirability Pearson Correlation
Sig. (2-tailed) N
0.219**
0.000 159
0.354**
0.000 159
Notes: **1percent or less.
Table 5.1.3
Be supposed as determinates of entrepreneurial desirability, both education and culture show significantly positive correlation with it (P<0.01). Therefore, H1 is supported in the current study. Compared with education, culture displays s stronger determination as the desirability influence than education.
Financial Policy Program R&D Infrastr- ucture
Market Openness Feasibility Pearson Correlation
Sig. (2-tailed) N
0.326**
0.000 159
0.220**
0.005 159
0.313**
0.000 159
0.309**
0.000 159
0.297**
0.000 159
0.168*
0.036 159
Notes: **1percent or less;*5percent or less.
Table 5.1.4
As previously defined, the entrepreneurial feasibility is determined by six items in the study, including financial, policy, programs, R&D, infrastructure and market openness.
Except for market openness, which exhibits a positive correlation with entrepreneurial feasibility in 5% level, all other items strongly correlate with the feasibility influences (p<0.01). Thus, H2 is verified in this study.
Among all the feasibility influences, respondents manifest the highest concern on financial, and then on programs, R&D and Infrastructure. As to the respondents, financial is the most important factor to measure the feasibility of whether to carry on
a start-up, whereas policy is later-considered, which only effects stronger than market openness.
5.2 Grouped Analysis
Defined in Chapter 4, as respondents are classified into positively potential entrepreneur, possibly potential entrepreneur, probably potential entrepreneur, and negatively potential entrepreneur, separate analysis will be followed according to their different particularities.
5.2.1 Positively Potential Entrepreneur
This group exhibits full entrepreneurial intention in the questionnaire, so they are regarded to have the highest probability to begin a start-up.
Desirability Feasibility Pearson Correlation
Sig. (2-tailed) N
0.553**
0.001 33 Notes: **1percent or less.
Table 5.2.1.1
Intention Desirability Feasibility
Means 5 4.09 3.85
Table 5.2.1.2
According to the tables above, positively potential entrepreneurs have full entrepreneurial intention, which is supported by an average feasibility close to 4 and a high average desirability more than 4. In another words, this group of potential entrepreneurs is supported more by the entrepreneurial feasibility than the desirability.
Although the feasibility is higher, their desirability correlates with the feasibility
significantly positive at a 0.001 level in the bivariate analysis.
Education Culture Desirability Pearson Correlation
Sig. (2-tailed) N
0.232 0.194 33
0.370*
0.034 33 Notes: *5percent or less.
Table 5.2.1.3
When it comes to their desirability, it is influenced more by culture than education in this sample, and there is no obvious correlation appearing between education and desirability in the bivariate analysis.
Culture 3 Culture 5 Desirability Pearson Correlation
Sig. (2-tailed) N
0.344*
0.050 33
0.414*
0.017 33 Notes: *5percent or less.
Table 5.2.1.4
Among different aspects of education and culture, probable correlated aspects with desirability are indicated in Table 5.2.4, and culture 5 shows clear positive correlation with desirability, which is followed by culture 3. Specifically, in the local culture, the highlight of individual responsibility to manage one’s own career is the strongest motivation, and then comes the encouraging atmosphere upon undertaking a venture.
Finan cial
Polici es 1
Polici es 2
Progr am 1
Progr am 2
Progr am 3
R&D 1
Infras tructu re 3
Open ness 1
Feasibility Pearson Correlation Sig. (2-tailed) N
0.353
* 0.44 33
0.438
* 0.011 33
0.387
* 0.026 33
0.457
**
0.007 33
0.476
**
0.005 33
0.361
* 0.039 33
0.563
**
0.001 33
0.358
* 0.041 33
0.356
* 0.042 33 Notes: **1percent or less;*5percent or less.
Table 5.2.1.5
Table 5.2.5 indicates different correlated aspects with entrepreneurial feasibility in this group. These respondents pay high attention on program 1, program 2, and especially on R&D1, which refers to a variety of governmental programs for new firms, effective support from technological regions and incubators, and direct transfer of new technology to new firms respectively. On the bottom of the table, these five single asterisked items respectively refer to plenteous supply of debt funds to new firms, beneficial policies from government, moderate debts, effective support from government projects, rapid responses of communication services (telephone, internet, and so on), and changeable consuming and service markets. These aspects contribute a lot to their entrepreneurial feasibility as well.
5.2.2 Probably Potential Entrepreneur
Desirability Feasibility Pearson Correlation
Sig. (2-tailed) N
0.188 0.347 27
Table 5.2.2.1
Intention Desirability Feasibility
Means 4 3.85 3.59
Table 5.2.2.2
Probably potential entrepreneurs have secondary entrepreneurial intention. Similarly, as shown in the Table 5.2.2.2, high entrepreneurial desirability and followed entrepreneurial feasibility make up their entrepreneurial Intention, whereas their entrepreneurial desirability does not show any correlation with their entrepreneurial feasibility. As to authors, the lack of correlation indicates that their immature
entrepreneurial intention is based on their enthusiasm than the external probability of success.
Education Culture Desirability Pearson Correlation
Sig. (2-tailed) N
-0.049 0.808 27
0.392*
0.043 27 Notes: *5percent or less.
Table 5.2.2.3
In accordance with positively potential entrepreneur, the outcome of bivariate analysis shows that this group is influenced positively by culture, but no correlation indicates that there is any connection between desirability and education.
Culture 1 Desirability Pearson Correlation
Sig. (2-tailed) N
0.397*
0.041 27 Notes: *5percent or less.
Table 5.2.2.4
Further, culture 1 is the only correlated item among education and culture. That is, inspiring local culture towards success through personal efforts contributes to the desirability of probably potential entrepreneur.
Financial 1 R&D 1 Feasibility Pearson Correlation
Sig. (2-tailed) N
0.481*
0.011 27
0.541**
0.004 27 Notes: **1percent or less;*5percent or less.
Table 5.2.2.5
Other detailed feasibility influences do not show any correlated relation with their
entrepreneurial feasibility, except financial 1 and R&D 1. Therefore, direct transfer of new technology to new firms is established to be supportive once more, and a guarantee of enough capital resources becomes a crucial feasibility measurement considered by probably potential entrepreneur.
5.2.3 Possibly Potential Entrepreneur
Desirability Feasibility Pearson Correlation
Sig. (2-tailed) N
-0.206 0.129 56
Table 5.2.3.1
Intention Desirability Feasibility
Means 3 3.7 3.32
Table 5.2.3.2
The largest group in the respondents, possibly potential entrepreneur, does not show any positive, or negative, entrepreneurial intention. However, it is not hard to read from Table 5.2.3.2, that they hold a positive entrepreneurial desirability and entrepreneurial feasibility. On the other hand, the verified H3 by the whole sample do not appear to be convincing in the divided sample; the desirability does not correlate with feasibility in this group (shown in Table 5.2.3.1). According to authors, the immature consideration of undertaking a start-up for these respondents is manifested by the evidence of that the two determinates of entrepreneurial intention do not support each other. Therefore, even they have positive propone on one aspect, both of them are not strong enough to support a positive entrepreneurial intention.
Education Culture Desirability Pearson Correlation
Sig. (2-tailed) N
0.005 0.970 56
0.310*
0.020 56 Notes: *5percent or less.
Table 5.2.3.3
Likewise, when come down to their desirability, the absent correlation with education still exists, whereas evident correlation with culture continues (shown in Table 5.2.3.3).
Culture 1 Culture 2 Culture 5 Desirability Pearson Correlation
Sig. (2-tailed) N
0.343**
0.010 56
0.349**
0.008 56
0.270*
0.044 56 Notes: **1percent or less;*5percent or less.
Table 5.2.3.4
In parallel with probably potential entrepreneur, inspiring local culture towards success through personal efforts (culture 1) has obvious influence to this group.
Besides, highly honored independence, self-regulation, personal initiative (culture 2), and personal managed career (culture 5) all benefit the entrepreneurial desirability.
Financial 1 Financial 3 Program 2 Infrastr- ucture 3 Feasibility Pearson Correlation
Sig. (2-tailed) N
0.539**
0.000 56
0.382**
0.004 56
0.325*
0.015 56
0.294**
0.028 56 Notes: **1percent or less;*5percent or less.
Table 5.2.3.5
Financial is the most crucial condition for this group when they measure the entrepreneurial feasibility, especially when comes to a guarantee of enough capital
resources (financial 1) and plenteous supply of loans to new firms (financial 3). They also show a high reliance of rapid responses of communication services, such as telephone, internet, and so on (infrastructure 3). Besides, effective support from government projects (program 2) is verified to contribute to entrepreneurial feasibility in this group as well.
5.2.4 Negatively Potential Entrepreneur
The negatively potential entrepreneur who graded an average score of 1.58 on the entrepreneurial intention (Table 5.2.4.1) delivers negative mindset for undertaking a venture. However, they have higher average desirability and feasibility of 2.40 and 2.72 separately, and it is the only group which regards feasibility higher than desirability. Furthermore, the desirability is tested to be the only correlated item with intention by the bivariate analysis (Table 5.2.4.2). In another words, it signifies that when they consider a start-up, their internal willingness is the only controlling factor but not the external feasibility.
Intention Desirability Feasibility
Means 1.58 2.40 2.72
Table 5.2.4.1
Desirability Feasibility Intention Pearson Correlation
Sig. (2-tailed) N
0.323*
0.034 43
0.193 0.215 43
Table 5.2.4.2
When comes to the correlation between their desirability and feasibility, it appears to be positive on a 0.05 level according to Table 5.2.4.2.
Desirability Feasibility Pearson Correlation
Sig. (2-tailed) N
0.363*
0.017 43
Table 5.2.4.2
As to authors, it is owing to their dominated negative entrepreneurial desirability.
Although the feasibility is comparatively high, and correlates to desirability, the pushing effect is not strong enough to make up the negative desirability, nor convert a positive entrepreneurial intention.
5.3 Undergraduates’ Preferences
Although the entrepreneurial environment is built up with kinds of factors of different aspects, not all are valued in the same level by undergraduates. Differentiated with other potential entrepreneurs, undergraduates are influenced by certain factors especially, and have their own perspective towards the actual environment, thus they have their own preferences among specific aspects entrepreneurial environment.
Through the questionnaire, the undergraduates’ evaluation can be read directly. On the other hand, according to the bivariate analysis above, some items are tested to contribute to entrepreneurial desirability or entrepreneurial feasibility of different groups. And in this section, these items will be highlighted and compared with evaluation both by respondents and experts.
To make it easy on the eyes, positively potential entrepreneurs, probably potential entrepreneurs, possibly potential entrepreneurs, and negatively potential entrepreneurs are referred as group 1, group 2, group 3 and group 4 respectively, in tables below of this section.
