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Exploring the factors affecting entrepreneurial intention among business

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Start Up Saudi Arabia 2018 24-26 Nov 2018

Exploring the factors affecting entrepreneurial intention among business

students in Saudi Arabia
Najmul Hoda, Abdullah Kinsara, Afnan T. Mushtaq, Mohammad Hakeem and Mawfaq Al-Hakami

College of Business, Umm Al-Qura University, Makkah 21955, KSA

Abstract

Entrepreneurial Intention is a strong predictor of entrepreneurial behavior as proven widely based

on the theory of planned behavior (TPB). In a country like Saudi Arabia that is willing to diversify
its economy, there is a strong emphasis on facilitating start-ups and developing entrepreneurial
tendencies among its citizens and foreigners. Business schools are one of the best places to nurture
and hone entrepreneurial skills in individuals. Ranging from low to high degree, all business
schools have varying levels of entrepreneurial contents in their curriculum. This study basically
aims to test the entrepreneurial intention model adapted from the theory of planned behavior. A
survey of 270 business students studying at various levels of business programs in different
universities in Saudi Arabia was conducted using online questionnaire. The survey questionnaire
used was a standard pre-tested Entrepreneurial Intention Questionnaire (EIQ) developed by Linan
and Chen (2009). This paper presents the preliminary analysis of the survey and tests the
relationship between human capital (demographic and social factors) and entrepreneurial intention
(EI). The results indicate that the overall entrepreneurial intention (Mean = 5.39) is quite high
among business students. Further analysis reveals that gender does not affect the EI (α = 0.9)
whereas age and self employment experience do affect the EI. The subsequent version of the paper
would present the detailed analysis of the EI model. The current paper should be very useful for
policy makers in understanding the needs and means of promoting entrepreneurship through
education. Further, the results contribute to the existing works in the same area and may be used
to compare with other countries.

Key words: Entrepreneurial Intention (EI); Business students; Saudi Arabia; Theory of
Planned Behavior (TPB)

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Start Up Saudi Arabia 2018 24-26 Nov 2018

Exploring the factors affecting entrepreneurial intention among business students in Saudi
Arabia

1. Introduction

Start-ups and entrepreneurial ventures are indicators of growing economy. A conducive

environment and infrastructural support results in optimal utilization of resources by entrepreneurs
who contribute to the growth of economy and also helps it sustain the overall growth of the country.
The Saudi Vision 2030 has identified entrepreneurship (of all types – small and large) as one of
the pillars of growth and diversification. It focuses on promoting entrepreneurship through
education and also creating economic opportunities for the entrepreneurs (Saudi Vision 2030, pp
13). In order to achieve the country’s goals of sustainable growth, entrepreneurial mindset will
play an important role. There is a need to understand the prevailing tendencies among individuals
especially the youth so that necessary actions may be taken by the policy makers to motivate them
to initiate entrepreneurial activities. The various dimensions of intention and behavior have been
successfully captured in the Theory of Planned Behavior developed by Ajzen (). Later, many
researchers adopted partially or fully the TPB to understand the entrepreneurial behavior. There
are few or no studies so far that measures the entrepreneurial intention of individuals in Saudi
Arabia. This paper tries to address the gap by focusing on a very important population of university
students. Section 2 discusses the entrepreneurship environment in Saudi Arabia followed by
literature review in Section 3. The research methodology is presented in Section 4. Results and
findings are presented in Section 5 and the conclusion is presented in Section 6.

2. Entrepreneurship environment in KSA

The number of successful start-ups in the Kingdom has increased significantly over the past few
years. The country has established centers of excellence like the King Abdullah University of
Science and Technology (KAUST) that promotes innovations and start-ups. Almost all the
institutions of higher education in the country have dedicated centres or departments to promote
innovation, entrepreneurship, and new ventures. The business schools within the universities are
gradually increasing the focus on entrepreneurship and promoting small and medium businesses
too. In 2016, the Kingdom established Mohammad Bin Salman College of Business and
Entrepreneurship that promises a state of the art institution with focus on entrepreneurship. King
Khalid University introduced entrepreneurship seminar, courses like Small Business Management
and Feasibility Studies are taught at Umm Al-Qura University. Women too are being encouraged
to establish themselves as successful entrepreneurs. In 2014, the cash asset of women in
commercial banks reached as high as $100 billion1. The number of women entrepreneurs increased
from 7 to 39% between 2007 and 20172. The number of organizations that support entrepreneurs

1
https://www.forbesmiddleeast.com/en/entrepreneurship-in-saudi-arabia/
2
http://www.arabnews.com/node/1200291/saudi-arabia

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Start Up Saudi Arabia 2018 24-26 Nov 2018

in Saudi Arabia have grown by three times from 2006 to 2015, with the largest being present in
Riyadh, Jeddah, Dhahran and Makkah3.

SMEs are being given top level priority in the country because the contribution of SMEs to the
GDP is just about 20% compared to 70% in other developing countries4.

The Global Entrepreneurship Monitor is one of the biggest periodic studies on the entrepreneurial
behavior and attitudes in several countries. It ranks countries on the basis of several social and
psychological parameters. As per the 2017 report5, Saudi Arabia received very high ratings in
gender equity, impact and societal values. Self-perceptions and Activity received lower ratings.
On the entrepreneurial framework conditions, Saudi Arabia received above average ratings on
physical infrastructure and cultural and social norms. On other parameters like financing and
policies, the ratings were just average whereas entrepreneurial education was rated very low. This
represents a gap in the entrepreneurship education being imparted in the country.

3. Literature review

Studies on Entrepreneurial Behavior are present in the literature in various contexts and culture.
Researchers have studied the Entrepreneurial Intention and Behavior using ad hoc as well as
standardized instruments. These studies are reported from various countries and cultures.
Entrepreneurial Intention of business students has also been a focus of scholarship. More
specifically, the term “academic entrepreneurship” is a value associated with institutions that
promote entrepreneurial mindset among students. The universities have also been called
entrepreneurial university in the literature.

Theory of planned behavior was applied to study the entrepreneurial intention (Essa and Ibrahim,
2018). They studied 384 first year undergraduate students from different universities in Khartoum.
They found perceived behavioral control and subjective norms to be predicting EI but attitude
towards entrepreneurship was not found to be significant.

Ahmaruddin, et al (2016) examined the relationship between demographic factors and the EI. They
did not find any significant difference in the effect of experience but other factors like father’s
occupation (role model), gender and level of education to have significant effect.

Sandhu, et al. (2011) studied the barriers to entrepreneurship faced by students in Malaysian
universities. They reported experience to be positively related to EI. However, factors like barriers,
fear of failure or social networking were not found to be significant. James et al, (2016) examined

3
https://proven-sa.com/2018/05/new-wave-entrepreneurship-saudi-arabia/
4
http://saudigazette.com.sa/article/534136/BUSINESS/Supporting-entrepreneurs-key-pillar-of-Vision-2030-
strategy
5
https://www.gemconsortium.org/country-profile/141

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Start Up Saudi Arabia 2018 24-26 Nov 2018

the factors like students’ personality and university support to entrepreneurship affect the EI. This
study was also conducted in Malaysia.

Shamsudin, et al (2017) explored the factors that affect students’ EI. They conducted the study in
Malaysia and found a positive and significant effect of the university support but no significant
effect of risk taking, family and innovative nature. Scott and Twomey (1988) studied students from
USA, UK and Ireland. They found that the predisposing factors and the business idea form the EI.
Pihie et al. (2013) analyzed the regulatory factors, EI, entrepreneurial self-efficacy and skills
among students in Malaysia. They found that majority of the students intend to start their own
business.

AlMobaireek and Manolova (2012) used the TPB and social learning theory to understand the EI
of students in King Saud University, Saudi Arabia. They surveyed 950 students and explored the
youth and gender differences in these effects. They found that perceived desirability and perceived
feasibility are both positively associated with EI. They measured EI using a single dichotomous
question whereas the perceived desirability, perceived social norms and perceived behavioral
control were measured using different types of scales. Gender was found to have a strong
moderating effect on EI.

Ismail et al (2009) explored the relationship between the personality factors, contextual factors
and EI. The study was conducted through survey of 123 undergraduate students in Malaysia. They
did not find any difference in EI based on gender but self-employment experience and role model
were significantly relayed to EI. Muhammad et al (2015) used a modified version of TPB to study
the EI of students in a Nigerian University. They found the model to significantly fit the data.

Ambad and Damit (2015) also used TPB to determine EI of Malaysian students. They found that
personal attitude, perceived behavioural control, and perceived relational support are the predictors
to entrepreneurial intention.

Linan and Chen also used Ajzen’s theory of planned behavior to develop an entrepreneurial
intention questionnaire (EIQ) and analyzed its psychometric properties. They tested the scale using
individual samples from Spain and Taiwan.

Armitage and Conner (2001) specifically called their outcome as “academic entrepreneurial
intentions”. They suggested that a modified scale is required to measure the EI in academics. Clark
and Watson (1995) and Huyghe and Knockaert (2014) have dealt in detail with the development
of a scale for academic EI.

4. Theoretical Framework

Theory of Planned Behavior was developed to “model the relationship between an individual’s
attitude towards a certain behavior and the actual behavior” (Ajzen 1987, 1991). In this model the
intentions are supposed to be a function of “personal attitudes, social norms and perceived

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Start Up Saudi Arabia 2018 24-26 Nov 2018

behavioral control”. The intentions are supposed to form the behavior. Therefore, this model was
adapted to predict the entrepreneurial behavior (Liñán, 2004). Several scales to measure EI have
been developed namely: i. Chen et al.’s Entrepreneurial Decision Scale (1998), ii. Krueger et al.’s
Entrepreneurial Intentions Scale (2000), iii. Thompson’s Individual Entrepreneurial Intent Scale
(2009), and iv. Liñán & Chen” s Entrepreneurship Intentions Questionnaire (2009).

The theoretical framework presented in Fig. 1 describes the theoretical model to be tested for this
study. The model has been adapted from the earlier studies based on the similar model (Linan and
Chen, 2009).

Fig 1. Entrepreneurial Intention Model based on Theory of Planned Behavior (Adapted from
Linan and Chen 2009)

5. Research Methodology

The research was conducted using primary data collected mainly through google survey. The link
was shared using social media and also personal contacts of the students. The population included
only the students pursuing business program. The survey instrument used was Entrepreneurial
Intention Questionnaire (EIQ). It was first developed in Spain (Moriano, 2011). The EIQ measures
EI on four subscales: “attitudes toward entrepreneurship, subjective norms, perceived behavioral
control, and entrepreneurial intention”. A total of 270 valid responses were received from different
universities of Saudi Arabia. Statistical analysis was done using SPSS 20.0.

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Start Up Saudi Arabia 2018 24-26 Nov 2018

6. Results and Discussions

This section discusses the results of the analysis. Firstly, the descriptive statistics is presented. The
results of EI are presented in the next section and then a summary of the inferential statistics are
presented.

A. Descriptive Statistics

The descriptive statistics have been summarized in Table 1. The gender distribution of the sample
shows that 65.6% of the respondents were male students whereas 34.4% were female. The
maximum concentration of respondents is in the age groups of 19-21 and 22-24. Majority students
did not have previous self-employment experience, whereas about half of all the respondents knew
an entrepreneur to be their role model. Most of the students had received 2-3 years of business
education and almost all were pursuing undergraduate program.

Table 1: Descriptive statistics

Frequenc Percent
y (N =
270)
Gender Male 177 65.6
Female 93 34.4
19-21 182 67.4
22-24 72 26.7
AGE
25-30 13 4.8
30 and above 3 1.1
Self- Yes 72 26.7
employment No 198 73.3
Yes 148 54.8
Role model
No 122 45.2
Years of 1-2 77 28.5
Business 2-3 157 58.1
Education 4 & above 36 13.3
Undergraduate
(BBA/BCA/BCo 255 94.4
Level of m)
Business Postgraduate
Education (MBA/MCom/O 12 4.4
ther)
No response 03 1.2

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Start Up Saudi Arabia 2018 24-26 Nov 2018

B. Measurement of Entrepreneurial Intention

The overall EI was measured on 7 point Likert scale based on the items included in EIQ. The mean
score for all the items measuring EI is 5.39 which means an above average rating. In general, the
ratings on all items are above 5 indicating above average.

Table 2 - Entrepreneurial Intention

Mean S.D.
(N = 270)

I am ready to do anything to be an entrepreneur 5.37 1.57

My professional goal is to become an entrepreneur 5.41 1.71
I will make every effort to start and run my own 5.54 1.60
firm
I am determined to create a firm in the future 5.41 1.67
I have very seriously thought of starting a firm 5.03 1.93
I have the firm intention to start a firm some day 5.85 1.69
Overall 5.39

C. Inferential Statistics

Inferential analysis was done to test the relationships between demographic factors and EI. Gender
was found to be not significantly related to EI. Previous self-employment experience, role model
and age were all found to be significant. Since there were just two age groups where the
respondents were mostly clustered, there is likelihood that there is a significant difference between
these two groups. The number of years a students has spent in receiving business education did
not show any significant difference.

Table 3: Inferential Statistics

Relationship Test applied Sig. (α = Result

0.05)
1. Gender – EI t-test 0.834 No significant
difference
2. Self-employment – EI t-test 0.036 Significant
difference
3. Role Model – EI t-test 0.000 Significant
difference
4. Age – EI ANOVA 0.040 Significant
difference
5. Business Education completed – EI ANOVA 0.242 No significant
difference

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Start Up Saudi Arabia 2018 24-26 Nov 2018

Conclusion
The results of this study are quite significant for understanding the dimensions of EI in Saudi
Arabia. This will help in developing the curriculum and environment considering the factors that
significantly affect the EI. Earlier study conducted at King Saud University presented a different
finding regarding gender. They found that gender was a strong moderating factor that affected EI.
However, the result of the current study may not be considered final and the detailed testing of the
model may throw some light on variations based on gender. The results suggest that universities
may try to motivate students who are from business background or closely know a businessman to
take him as a role model. The business education curriculum may include more stories of ventures
and businessmen/businesswomen who may become a role model for the students. As per the
current results, number of years of business education was found to be not significantly related
with EI. So, the entrepreneurial curriculum may be included at any stage and depending upon the
requirement. The subsequent version of this paper will present the complete results of the test of
model. The current findings too must help the government institutions in framing appropriate
policies. This will also enrich the scholarship on entrepreneurial research, with special focus on
the Arab world.

Acknowledgements
We thank Umm Al-Qura University for its support in completing this research. We also express
our sincere gratitude to the BBA students of College of Business at Umm Al-Qura University
who actively supported in this research.

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