||Impact of Human Capital and Social Capital on Entrepreneurial Intentions
||Impact of Human Capital and Social Capital on Entrepreneurial Intentions
||Institute of International Management
Illusion of control
The most significant and underlying question that forms the basis of most researched focused on entrepreneurship is: “Why do some individuals become entrepreneurs and others don’t?” This study expands on previous research and theory by taking into consideration an individual’s stock of skills, abilities, competencies, and resources, along with the influence of illusion of control, evaluates the overall impact on entrepreneurial intention. A very diverse sample set of over 280 respondents were collected. Structural Equation Modeling was used to test the relationships amongst the modeled variables, and Hierarchical Regression was used to test the moderating effect of illusion of control. It was found that an individual’s human capital had significantly positive implications toward both perceived desirability and feasibility. Social capital was found to have a positive and significant impact on perceived feasibility, but not desirability. Perceptions of feasibility and desirability were evaluated and reconfirmed as significant indicators of entrepreneurial intention. Also, illusion of control was a significantly positive moderator for perceived feasibility, but negatively significant for desirability. Individuals, policy makers, non-government institutions, and businesses should consider promoting and acquiring skills, competencies, and other external resources easier for individuals to drive entrepreneurial intention. Illusion of control should also be mitigated to avoid making an unjustified entrepreneurial intention.
TABLE OF CONTENTS
TABLE OF CONTENTS IV
LIST OF TABLES VII
LIST OF FIGURES VIII
CHAPTER ONE INTRODUCTION 1
1.1 Research Background and Motivation. 1
1.2 Research Contributions and Objectives. 4
1.3 Research Procedures. 8
CHAPTER TWO LITERATURE REVIEW 10
2.1 Entrepreneurial Intention. 10
2.2 Human Capital. 12
2.3 Social Capital. 14
2.4 Perceived Desirability. 17
2.5 Perceived Feasibility. 18
2.6 Illusion of Control. 19
2.6 Hypothesis Formation. 21
2.6.1 Human Capital’s Impact on Perceived Desirability and Perceived Feasibility. 21
2.6.2 Social Capital’s Impact on Perceived Desirability and Perceived Feasibility. 22
2.6.3 Perceived Desirability and Entrepreneurial Intention. 24
2.6.4 Perceived Feasibility and Entrepreneurial Intention. 25
2.6.5 Moderating Effect of Illusion of Control. 26
2.7 Summary of Hypotheses. 29
CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY 30
3.1 Conceptual Model. 30
3.2 Description of Sample. 31
3.3 Construct Measurement. 32
3.3.1 Human Capital. 32
3.3.2 Social Capital. 33
3.3.3 Perceived Feasibility. 34
3.3.4 Perceived Desirability. 35
3.3.5 Illusion of Control. 36
3.3.6 Entrepreneurial Intention. 37
3.4 Control Variables. 38
3.5 Methodology. 38
3.5.1 Descriptive Statistical Analysis. 38
3.5.2 Confirmatory Factor Analysis and Reliability Test. 39
3.5.3 Pearson Correlation. 39
3.5.4 Common Method Bias. 40
3.5.5 Structural Equation Modeling. 40
3.5.6 Hierarchical Multiple Regression. 41
CHAPTER FOUR RESEARCH RESULTS 42
4.1 Data Collection. 42
4.2 Descriptive Analysis. 42
4.2.1 Characteristics of Respondents. 42
4.2.2 Mean and Variance of Measurement Items. 45
4.3 Confirmatory Factor Analysis. 49
4.4 Pearson Correlation. 58
4.5 Common Method Variance Test. 60
4.6 Structural Equation Modeling. 60
4.7 Hierarchical Regression Analysis. 64
CHAPTER FIVE CONCLUSION AND SUGGESTIONS 66
5.1 Research Conclusions. 66
5.1.1 Discussion. 66
5.2 Research Implications and Contributions. 73
5.2.1 Academic Implications. 73
5.2.2 Managerial Implications. 73
5.3 Research Limitations. 74
5.3.1 Sampling. 75
5.3.2 Questionnaire Development. 75
5.3.3 Bias 76
5.4 Future Research Suggestions. 76
Appendix A: Survey 85
Appendix B: SEM results with control variables 92
Adler, P. S., & Kwon, S. (2002). Social capital: Prospects for a new concept. Academy of Management Review, 27(1), 17-40.
Ajzen, I. (1987). Attitudes, traits, and actions: Dispositional prediction of behavior in personality and social psychology. In L. Berkowitz (Ed.), Advances in experimental social psychology (Vol. 20, pp. 1-63). San Diego, CA: Academic Press, Inc.
Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(0), 179-211.
Aldrich, H., & Zimmer, C. (1986). Entrepreneurship through social networks. In D. Sexton & R. Smilor (Eds.), The art and science of entrepreneurship (pp. 3-23). Cambridge, MA: Ballinger.
Audretsch, D. B. (2003). Entrepreneurship: A survey of the literature. Luxembourg: European Communitieso. Document Number)
Bagozzi, R. P., Baumgartner, J., & Yi, Y. (1989). An investigation into therole of intentions as mediators of the attitude-behavior relationship. Journal of Economic Psychology, 10(1989), 35- 62.
Bandura, A. (1982). Self-efficacy mechanism in human agency. American Psychologist, 37(2), 122-147.
Bandura, A. (1986). The Social Foundations of Thought and Action. Englewood Cliffs: Prentice-Hall.
Bandura, A. (1997). Self-effiacy: The exercise of control. New York: W. H. Freeman & Co.
Baron, R. A. (2004). The cognitive perspective: a valuable tool for answering entrepreneurship's basic “why” questions. Journal of Business Venturing, 19(2), 221-239.
Bates, T. (1995). Self-employment entry across industry groups. Journal of Business Venturing, 10(2), 143-156.
Baum, J. R., & Locke, E. A. (2004). The relationship of entrepreneurial traits, skills, and motivation to subsequent venture growth. Journal of Applied Psychology, 89(4), 587 - 598.
Becker, G. S. (1962). Investment in human capital: A theoretical analysis. The Journal of Political Economy, 70(5), 9-49.
Becker, G. S. (1994). Human capital: A theoretical and empirical analysis, with special reference to education (3 ed.). Chicago, IL: University of Chicago Press.
Begley, T. M., & Boyd, D. P. (1987). Psychological characteristics associated with performence in entrepreneurial firms and smaller businesses. Journal of Business Venturing, 2(1), 79-93.
Bird, B. (1988). Implementing entrepreneurial ideas: The case for intention. academy of Management Review, 13(3), 442 - 453.
Boyd, N. G., & Vozikis, G. S. (1994). The influence of self-efficacy on the development of entrepreneurial intentions and actions. Entrepreneurship Theory and Practice, 18, 63-63.
Brännback, M., Heinonen, J., Hudd, I., & Paasio, K. (2005). A comparative study on entrepreneurial opportunity recognition and the role of education among Finnish Business school students. Paper presented at the 50th ICSB, Washington DC.
Brockhaus, R. H., & Horwitz, P. S. (1986). The psychology of the entrepreneur. In D. Sexton & R. Smilor (Eds.), The art and science of entrepreneurship (pp. 25 - 48). Cambridge, MA: Ballinger.
Burt, R. S. (1997). The contingent value of social capital. Administrative Science Quarterly, 42(2), 339-365.
Busenitz, L. W., & Barney, J. B. (1997). Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making. Journal of Business Venturing, 12(1), 9-30.
Cable, D. M., & Judge, T. A. (1996). Person-organization fit, job choice decisions, and organization entry. Organizational Behavior and Human Decision Processes, 67(3), 294 - 311.
Carlsson, B. (1993). The rise of small business: Causes and consequences. In W. J. Adams (Ed.), Singular Europe: Economy and polity of the European community after 1992 (pp. 145-169). Michigan: University of Michigan Press.
Carr, J. C., & Blettner, D. P. (2010). Cognitive control bias and decision-making in context: Implications for entrepreneurial founders of small firms. Frontiers of Entrepreneurship Research, 30(6), 1-15.
Carree, M. A., & Klomp, L. (1996). Small business and job creation: A comment. Small Business Economics, 8(4), 317 - 322.
Chang, S. J., Witteloostuijn, A., & Eden, L. (2010). From the Editors: Common method variance in international business research. Journal of International Business Studies, 41(2), 178-184.
Chen, C. C., Greene, P. G., & Crick, A. (1998). Does entrepreneurial self-efficacy distinguish entrepreneurs from managers? Journal of Business Venturing, 13(4), 295-316.
Cohen, S., & Wills, T. A. (1985). Stress, social support, and the buffering hypothesis. Psychological Bulletin, 98(2), 310-357.
Coleman, J. S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94(0), 95-120.
Cooper, A. C., & Artz, K. W. (1995). Determinants of satisfaction for entrepreneurs. Journal of Business Venturing, 10(6), 439-457.
Cooper, A. C., Folta, T. B., & Woo, C. (1995). Entrepreneurial decision search. Journal of Business Venturing, 10(2), 107 -120.
Cooper, A. C., Gimeno-Gascon, F. J., & Woo, C. Y. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing, 9(5), 371-395.
Cooper, A. C., Woo, C., & Dunkelberg, W. C. (1988). Entrepreneurs' perceived chances for success. Journal of Business Venturing, 3(2), 97-108.
Cooper, D. R., & Schindler, P. (2001). Business research methods (7 ed.). New York: McGraw-Hill.
Cooper, D. R., & Schindler, P. (2003). Business research methods (8 ed.). New York: McGraw-Hill.
Cox, L. (1996). The goals and impact of educational interventions in the early stages of entrepreneur career development. Paper presented at the Proceedings of Internationalising Entrepreneurship Education and Training, Arnhem.
Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3), 301-331.
De Carolis, D. M., Litzky, B. E., & Eddleston, K. A. (2009). Why networks enhance the progress of new venture creation: The influence of social capital and cognition. Entrepreneurship Theory and Practice, 33(2), 527-545.
De Carolis, D. M., & Saparito, P. (2006). Social capital, cognition, and entrepreneurial opportunities: A theoretical framework. Entrepreneurship Theory and Practice, 30(1), 41-56.
Duhaime, I. M., & Schwenk, C. R. (1985). Conjectures on cognitive simplification in acquisition and divestment decision making. Academy of Management Review, 10(2), 287-295.
Dutton, J. (1993). The making of organizational opportunities: An interpretive pathway to organizational change. Research in Organizational Behavior, 15(1), 195-226.
Evans, D. S., & Leighton, L. S. (1989). Some empirical aspects of entrepreneurship. The American Economic Review, 79(3), 519-535.
Fiet, J. O. (1995). Risk avoidance strategies in venture capital markets. Journal of Management Studies, 32(4), 551-574.
Fishbein, M., & Ajzen, I. (1975). Belief, attitude, intention andbehavior: An introduction to theory and research. Boston, MA: Addison-Wesley.
Fisher, C. D. (1985). Social support and adjustment to work: A longitudinal study. Journal of Management, 11(3), 39-53.
Gelderen, M., Brand, M., Praag, M., Bodewes, W., Poutsma, E., & Gils, A. (2008). Explaining entrepreneurial intentions by means of the theory of planned behaviour. Career Development International, 13(6), 538-559.
Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91(3), 481-510.
Greve, A., & Salaff, J. W. (2003). Social networks and entrepreneurship. Entrepreneurship Theory and Practice, 28(1), 1-22.
Hair, J. F. J., Anderson, R. E., Tatham, R. L., & Black, W. C. (2006). Multivariate data analysis (5 ed.). New Jersey: Prentice-Hall.
Harman, H. H. (1976). Modern factor analysis (3rd ed.). Chicago: The University of Chicago Press.
Haveman, H. A., & Cohen, L. E. (1994). The ecological dynamics of careers: The impact of organizational founding, dissolution, and merger on job mobility. American Journal of Sociology, 100(1), 104-152.
Hisrich, R. D., & Brush, C. (1984). The woman entrepreneur: Management skills and business problems. Journal of Small Business Management, 22(1), 30-37.
Hisrich, R. D., & Peters, M. P. (1998). Entrepreneurship (4 ed.). Boston, MA: Irwin McGraw-Hill.
Hood, J. N., & Young, J. E. (1993). Entrepreneurship's requisite areas of development: A survey of top executives in successful entrepreneurial firms. Journal of Business Venturing, 8(2), 115-135.
Katz, J. A., & Gartner, W. B. (1988). Properties of emerging organizations. The Academy of Management Review, 13(3), 429 - 441.
Krueger, N. F. (1993a). Growing up entrepreneurial? Some developmental consequences of early exposure to entrepreneurship. Paper presented at the Academy of Management, Briarcliff Manor, New York.
Krueger, N. F. (1993b). The impact of prior entrepreneurial exposure on perceptions of new venture feasibility and desirability. Entrepreneurship Theory and Practice, 18(1), 5-21.
Krueger, N. F. (1998). Encouraging the identification of environmental opportunities. Journal of Organizational Change Mangement, 11(2), 174 - 183.
Krueger, N. F. (2005). The cognitive psychology of entrepreneurship. In Z. J. Ács & D. B. Audretsch (Eds.), Handbook of entrepreneurship research: An interdisciplinary survey and introduction (Vol. 1, pp. 105-140). New York, NY: Springer.
Krueger, N. F., & Brazeal, D. V. (1994). Entrepreneurial potential and potential entrepreneurs. Entrepreneurship Theory and Practice, 19(3), 91-104.
Krueger, N. F., & Carsrud, A. (1993). Entrepreneurial intentions: Applying the theory of planned behaviour. Entrepreneurship & Regional Development, 5(1993), 315-330.
Krueger, N. F., Reilly, M. D., & Carsrud, A. L. (2000). Competing models of entrepreneurial intentions. Journal of Business Venturing, 15(5), 411-432.
Langer, E. J. (1975). The illusion of control. Journal of Personality and Social Psychology, 32(2), 311-328.
Lent, R. (1994). Toward a unifying social cognitive theory of career and academic interest, choice, and performance. Journal of Vocational Behavior, 45(1), 79 - 122.
Lewin, K. (1952). Field theory in social science: Selected theoretical papers. London: Tavistock.
Liao, J., & Welsch, H. (2003). Social capital and entrepreneurial growth aspiration: A comparison of technology- and non-technology-based nascent entrepreneurs. The Journal of High Technology Management Research, 14(1), 149-170.
Libby, R., & Rennekamp, K. (2012). Self-servicing attribution bias, overconfidence, and the issuance of management forecasts. Journal of Accounting Research, 50(1), 197-231.
Lichtenstein, S., & Fischhoff, B. (1977). Do those who know more also know more about how much they know? Organizational Behavior and Human Performance, 20(2), 159-183.
Loveman, G., & Sengenberger, W. (1991). The re-emergence of small-scale production: An international comparison. Small Business Economics, 3(1), 1 - 37.
Markman, G. D., & Baron, R. A. (2003). Person–entrepreneurship fit: why some people are more successful as entrepreneurs than others. Human Resource Management Review, 13(2), 281-301.
Mischel, W. (1968). Personality and assessment. New York: Wiley.
Moriano, J. A., Gorgievski, M., M., L., Stephen, U., & Zarafshani, K. (2012). A cross-cultural approach to understanding entrepreneurial intention. Journal of Career Development, 39(2), 162 - 185.
Moscovici, S., & Duveen, G. (2000). The phenomenon of social representations. In Social Representations: Explorations in Social Psychology (pp. 18-77). Cambridge, United Kingdom: Polity Press.
Nahapiet, J., & Ghoshal, S. (1997). Social capital, intellectual capital and the creation of value in firms. Paper presented at the Academy of Management, Briarcliff Manor, NY.
Peterson, M. F., & Roquebert, J. (1993). Success patterns of Cuban-American enterprises: Implications for entrepreneurial communities. Human Relations, 46(8), 921-937.
Podsakoff, P. M., & Organ, D. W. (1986). Self-reports in organizational research: Problems and prospects. Journal of Management, 12(4), 531-544.
Polyani, M. (2009). The tacit dimension (Reissue ed.). Chicago, IL: The University of Chicago Press.
Porter, M. (1990). The competitive advantage of nations. New York: The Free Press.
Portes, A., & Sensenbrenner, J. (1993). Embeddedness and immigration: Notes on the social determinants of economic action. American Journal of Sociology, 98(6), 1320-1350.
Ryan, R. M., & Deci, E. L. (2006). Self-regulation and the problem of human autonomy: Does psychology need choice, self-determination, and will? Journal of Personality, 76(6), 1558 - 1586.
Schenkel, M. T., D'Souza, R. R., & Matthews, C. H. (2012). Entrepreneurial capital: Examining linkages in human and social capital of new ventures. Journal of Developmental Entrepreneurship, 17(2), 1-25.
Schultz, T. W. (1961). Investment in human capital. The American Economic Review, 51(1), 1-17.
Segal, G., Borgia, D., & Schoenfeld, J. (2005). The motivatiom to become an entrepreneur. International Journal of Entrepreneurial Behavior and Research, 11(1), 42-57.
Sequeira, J. M., & Rasheed, A. A. (2006). Start-up and growth of immigrant small businesses: The impact of social and human capital. Journal of Developmental Entrepreneurship, 11(4), 357-375.
Shane, S. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4), 448-469.
Shane, S. (2003). A General Theory of Entrepreneurship: The Individual-opportunity Nexus. Massachusetts: Edward Elgar Publishing, Inc.
Shane, S., & Khurana, R. (2003). Bringing individuals back in: The effects of career experience on new firm founding. Industrial and Corporate Change, 12(3), 519-543.
Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217-226.
Shapero, A. (1975). The displaced, uncomfortable entrepreneur. Psychology Today, 9(6), 83-88.
Shapero, A., & Sokol, L. (1982). The social dimensions of entrepreneurship. In C. Kent, D. Sexton & K. Vesper (Eds.), Encyclopedia of Entrepreneurship (pp. 72-90). Englewood Cliffs, NJ: Prentice Hall.
Shaver, K. G. (2005). The social psychology of entrepreneurial behavior. In Z. J. Ács & D. B. Audretsch (Eds.), Handbook of entrepreneurship research: An interdisciplinary survey and introduction (Vol. 1, pp. 331-357). New York, NY: Springer.
Shaver, K. G., & Scott, L. R. (1991). Person, process, choice: The psychology of new venture creation. Entrepreneurship Theory and Practice, 16(2), 23-45.
Shepherd, D. A., & Krueger, N. F. (2002). An intentions-based model of entrepreneurial teams’ social cognition. Entrepreneurship Theory and Practice, 27(2), 167-185.
Shook, C. L., Priem, R. L., & McGee, J. E. (2003). Venture creation and the enterprising individual: A review and synthesis. Journal of Management, 29(3), 379-399.
Simon, M., Houghton, S. M., & Aquino, K. (2000). Cognitive biases, risk perception, and venture formation: How individuals decide to start companies. Journal of Business Venturing, 15(2), 113-134.
Smith, E. A. (2001). The role of tacit and explicit knowledge in the workplace. Journal of Knowledge Management, 5(4), 311-321.
Stinchcombe, A. L. (2000). Social structure and organizations. Advances in Strategic Management, 17(0), 229-259.
Tsai, W., & Ghoshal, S. (1998). Social capital and value creation: The role of intrafirm networks. The Academy of Management Journal, 41(4), 464-476.
Ucbasaran, D., Westhead, P., & Wright, M. (2008). Opportunity identification and pursuit: Does an entrepreneur’s human capital matter? Small Business Economics, 30(2), 153-173.
Wennekers, S., & Thurik, R. (1999). Linking entrepreneurship and economic growth. Small Business Economics, 13(1), 27-56.
Wood, R., & Bandura, A. (1989). Social cognitive theory of organizational management. Academy of Management Review, 14(3), 361-384.