ISSN 0798 1015

Vol. 41 (Issue 09) Year 2020. Page 4

Entrepreneurship education and it’s impact on student’s intention to entrepreneurship

Educación de emprendimiento y su impacto en la intención de los estudiantes para el emprendimiento

PURWATI, Astri Ayu 1; HAMZAH, Muhammad Luthfi 2; SUHERMIN, Suhermin 3

Received: 04/09/2019 • Approved: 03/03/2020 • Published: 19/03/2020

Contents

1. Introduction

2. Methodology

3. Results

4. Conclusions

Bibliographic references

1. Introduction

1.1. Research Background

According to the World Bank, the requirement for a country to have a good and advanced economy is that at least 4% of its citizens are entrepreneurs. However, to date Indonesia has only 3.3% of entrepreneurs, while Singapore and Malaysia can reach 7% and 5% respectively (World Bank, 2018). A problem called unemployment emerges as a result of the increasing number of Indonesian population and the limited employment. In fact, the government has made various efforts to deal with this problem, especially in the entrepreneurship. Comparing to other countries, the development of entrepreneurship in Indonesia is still very slow. Besides, the development of Human Resources which is relatively low makes it difficult for Indonesia to escape from the problem of unemployment.

The unemployment rate in Indonesia year 2013 to 2017 are in average 2.84%, this number has been fluctuative in every years which means Goverment still has more work to reduce and decrease the number of unemployment in Indonesia. The higher the unemployment rate, the more poverty will increase. Hence, by creating the entrepreneurial spirit, it will reduce that high unemployment rate. The number of graduates of higher knowledge which keeps on increasing and the inability of the labor market to absorb these graduates cause an imbalance in the number of jobs and job seekers. This becomes the main factor of the high rate of educated unemployment. Consequently, being an entrepreneur will be the right choice to reduce the unemployment due to limited jobs available.

Starting a business (being an entrepreneur) requires a strong commitment. To foster the awareness of entrepreneurship, people need to develop an intention in entrepreneurship, so that they will be motivated to learn the knowledge related to entrepreneurship. The number of entrepreneurs is one of the determinants of the country to become a developed country. Entrepreneurial intentions are thoughts that encourage individuals to create businesses.

Education is a major basis in improving the standard of living and the quality of a nation's civilization. It is because education creates not only educated and competent people in its science, but also the process of how to humanize people who are ready to compete nationally and internationally. This is partly due to the great dependence of high education graduates on the job availability in which its population growth is very small compared to the college graduates rate per year. College graduates prefer to work as employees in the company or become government employees. Only a few of them think of creating entrepreneurship or becoming entrepreneurs because of a lack of trust in skills and capital (Herdjiono et al., 2017). In Indonesia, entrepreneurship has long been introduced in Education environment with the hope that entrepreneurship education can support economic figures by producing young Indonesian entrepreneurs in their respective fields of knowledge. Indonesian government fully supports the development of entrepreneurship education both in student activities and through the improvement of the learning process. Entrepreneurship has been viewed as a way of life and something that helps in the thinking process when overcoming threats and taking challenges and opportunities (Gerba, 2012).

Several previous studies found the importance of entrepreneurship education in shaping entrepreneurial spirit for students (Farashah, 2013) However, research on the importance of developing student intentions on entrepreneurship in Riau, especially Pekanbaru, is still limited although many researchers agree on the positive relationship between Entrepreneurship Education and Entrepreneurial Intention (Herdjiono et al., 2017; Mohamed et al., 2012; Kalyoncuoğlu et al., 2017; Huber et al., 2012). Yet, several studies have found that Entrepreneurship Education has no relationship to Entrepreneurial Intention (Mahendra, Djatmika, & Hermawan, 2017). Other research also demonstrates that there are differences between business students and non-business students in their intentions to entrepreneurship. Entrepreneurship Education has a positive relationship to entrepreneurial orientation in business students but the negative relationship to non-business students (Maresch et al., 2016).

In addition to entrepreneurship education, self efficacy also plays an important role in fostering someone's entrepreneurial intention. A person's self-efficacy is the choice of the ability to take action. Self-efficacy is considered to be a reliable predictor of behavior that leads to a specific goal (Ganefri & Hidayat, 2015). Some previous studies found a gap in self efficacy in shaping entrepreneurial intentions. The research found that high self-efficacy which is supported by a person’s skills would develop an intention in entrepreneurship (Martinez, 2011; Pihie & Bagheri, 2013; Zhao et al., 2005).

1.2. Entrepreneurship and Entrepreneurial Intention

The term of Entrepreneurship has different views by many experts. Entrepreneurship is an intentional and planned behavior that can improve economic efficiency, bring innovation into market share, create new jobs, and increase employment rates. Most of the previous studies showed that entrepreneurship can be taught and that education can be considered as one of the key instruments to foster attitudes, intentions, and entrepreneurial competencies (Michelle & Tendai, 2016).

Entrepreneurship can be described as a process of combining creative and innovative ideas then combining them with management and organizational skills (Michelle and Tendai, 2016). Entrepreneurship can also be defined as an initiative action, an act of making, building and expanding a company or organization, building an entrepreneurial team and gathering other resources to take advantage of opportunities in the market place for long-term benefits. More job opportunities can be created through entrepreneurship that result in an increase in living standards and reduce poverty levels (Winkel, 2007) (Willison & Buisman-Pijlman, 2016).

A strong commitment is needed to start a business (entrepreneurship). One way to foster the awareness of entrepreneurship is to develop an intention in entrepreneurship and with existing intentions. Thus, the intention to learn knowledge related to entrepreneurship will be initiated. The number of entrepreneurs is one of the determinants to be a developed country. Entrepreneurial intentions are thoughts that encourage individuals to create businesses. Meanwhile, intention is a person's particular desire to do something or some actions as the result of a conscious mind that directs one's behavior (Parker, 2004). In the meantime, intention is an attitude that makes people happy with certain objects, situations or ideas. It is followed by the feelings of pleasure and the tendency to look for the preferred objects. The patterns of one's intention are one of the factors to determine the suitability of people with their jobs. People have different intention related to the type of jobs. Gartner et al., (1994) explained that entrepreneurial intention or intention becoming an entrepreneur can be interpreted as a process of finding information that can be used to achieve the goal of establishing a business. Entrepreneurial intention is a psychological phenomenon to focus attention and do something about entrepreneur with a feeling of pleasure because it brings benefits. The intention to become an entrepreneur is defined as the desire to be self-employed or to run our own business (Mahendra et al., 2017).

1.3. Entrepreneurship Education on Intention in Entrepreneurship

Entrepreneurship Education and teaching programs are some of the things affecting Students’ Intention in Entrepreneurship and behavior (Fayolle & Gailly, 2005). Through formal education in entrepreneurship, individuals are expected to acquire the knowledge and skills needed to take advantage of opportunities and challenges in managing their own business (Jahani et al. 2018; De Clercq & Arenius 2006). Understanding the importance of entrepreneurship for individuals and the economy, Entrepreneurship Education approach has been an important concern for a number of industries in recent years (Matlay, 2006). The industries believe that Entrepreneurial Education can produce professional and qualified entrepreneurs. Therefore, as stated by Raposo et al., (2008), integrating entrepreneurship into academic curricula can contribute to creating a suitable environment of learning and creativity; thus it can increase certain awareness and knowledge in the business field. Entrepreneurship education also promotes favorable psychological attitudes towards entrepreneurs. Several studies have found empirical evidence that Entrepreneurship Education has an impact on entrepreneurial intentions (Raposo et al., 2008; Oosterbeek et al., 2010).

Entrepreneurship Education is believed to play an important role in shaping individual behavior; for that reason, a study (Oosterbeek et al., 2010) found that Entrepreneurship Education can increase self-confidence and motivation, to be proactive, creative and to learn how to work in a team. The influence of Entrepreneurship Education has been considered as one of the important factors to foster entrepreneurial spirit and behavior among young generations. Entrepreneurship education can shape students’ mindset, attitudes, and behavior to become a true entrepreneur who leads them to choose entrepreneurship as a career choice (Kourilsky & Walstad, 1998). The students’ mindset, attitudes and behavior can shape the students’ intentions (entrepreneurial intention).

Raposo et al. (2008) found that the integration of entrepreneurship into the academic curriculum could contribute to creating an appropriate environment of learning and creativity, thereby, raising awareness and certain knowledge in the business field. Entrepreneurship education also promotes beneficial psychological attitudes towards entrepreneurs where several studies have found empirical evidence that Entrepreneurial Education has an impact on entrepreneurial intentions (Raposo et al. 2008; Oosterbeek et al. 2010).

H1 . Entrepreneurship Education influences Self Efficacy

H2. Entrepreneurship Education influences Motivation

H3. Entrepreneurship Education influences Entrepreneurial Intention

1.4. Self-efficacy towards the Intention of  Entrepreneurship

Self-efficacy is a belief that a person can handle a situation and produce a variety of positive results. Self-efficacy can help people in various unsatisfactory situations and encourage them to believe that they can achieve the intended results. Self-efficacy plays a role in decision making, thinking processes, and the courage in taking risks. An individual self-efficacy is attained gradually through the development of complex cognitive, social, linguistic, and / or physical skills obtained through experience (Kourilsky & Walstad, 1998). Every person who has a high entrepreneurial intention will be able to stand alone, dare to make decisions and implement the goals to be achieved in his own policy (Kourilsky & Walstad, 1998). The higher the self-efficacy, the higher the entrepreneurial intention (Bryant, 2006). Self-efficacy or belief in a particular domain is based on the individual's self-perception of their skills and abilities (Bhat, 2003). A person's self-efficacy is a choice of the ability to take action. Self-efficacy is believed to be a reliable predictor of behavior that leads to a specific goal (Ganefri & Hidayat, 2015).

H4. Self-Efficacy influences Entrepreneurial Intention

1.5. Motivation towards entrepreneurial intentions

Motivation is a crucial aspect in our daily lives. Motivation is a collaboration of biological, cognitive, and social regulation (Ryan & Deci, 2007). Motivation involves energy, direction, persistence and intention. A purpose and motive have a role in predicting human behavior. This shows a relationship between intention, motivation and behavior in which motivation encourages us to take an action. Krueger and Carsrud (1993) argue that in Entrepreneurial Intention studies, there is still unadequate basis for supporting intention-action relations although intentions have been centered as predictors of future actions.

Entrepreneurial motivation is a self encouragement through internal and external factors that make it possible to foster entrepreneurial intention. A study conducted by Guerrero et al. (2008) revealed that intrinsic motivation and normative environment have a positive impact on entrepreneurial intentions. Similarly, the external motivation has a positive impact on the wothiness of starting a new business. Venesaar et al. (2006) explained that a person’s motivation to become an entrepreneur is divided into three dimensions: Ambition for freedom (more free activities, owning a business, becoming more respected, leading in applying new ideas, developing hobbies in business), Self-realization (gaining a better position in society, feeling challenges, motivating and leading others, continuing family traditions, implementing ideas or innovating, following others), pushing factors (losing jobs, earning better income, not satisfied with work). According to Kim-Soon dan Rahman (2011), motivation consists of 3 modifying indicators, namely Behavioral control, Subjective norm, and Attitude. Behavior control is a perception of the strength of the factors that make it easy or difficult. Subjective norms is individual beliefs about norms, people around them and individual motivation to follow these norms. Meanwhile, attutude is the extent to which a person has a favorable or unfavorable evaluation of behavior. It depends on the person's assessment of the expected results of the behavior.

H5. Motivation has a positive effect on Entrepreneurial Intention

1.6. Conceptual framework

The conceptual framework developed in this study was to answer the relationship between entrepreneurship education, self efficacy, motivation and students’ entrepreneurial intention. It can be seen in the following figure:

2. Methodology

2.1 Population and Sample

The population of this study was all students registered at 2 universities in Pekanbaru: Universitas Riau (a State University) and Universitas Islam Riau (a Private University). 59481 students were invloved in this study. The sample was taken by using the sampling method by krisjie & morgan (1970), in which if the number of population is between 50,000 and 75,000, the samples were as many as 385. The questionnaire was distributed to 400 students as the respondents. The purposive sampling approach was applied to take the samples. The researchers distributed the questionnaire to students who had acquired the provision of entrepreneurship course.

2.2 Research Instruments

The research instruments applied in this study came from several previous studies. Constructs of Entrepreneurial Intention which consists of 3 measurement was adopted from the research from (Gelaidan & Abdullateef 2017; Gerba, 2012). The measurements are career, planning, and social status. After that, the self-efficacy consisted of 2 measurement and each consisted of 5 item statements (Saraih et al., 2017); they were self-confidence to manage business and leadership to start a business. Next, motivational measurements consisted of 3 modifying instrument (Kim-Soon & Rahman, 2011), namely Behavioral control, Subjective norm, Attitude. Finally, a measurement of Entrepreneurship Education proposed by (Kim-Soon & Rahman, 2011) consisted of 5 instruments, such as the opportunity to recognize mind, the designing mind, the risk managing mind, the resilient mind, the effectating mind.

All constructs, Entrepreneurship Education, self-efficacy, Entrepreneurial motivation and Intention, applied five point likert scale consisting of 1 = strongly disagree to 5 = strongly agree.

2.3 Data Analysis

The analytical tool operated in this study was structural equation modeling (SEM). SEM was utilized to test the influence of construct entrepreneurship education and self efficacy on entrepreneurial motivation and intentions.

3.1 Analysis of Demography

Table 1
Analysis of Demography

Source: Processed Data (2019)

The analysis of respondents’ profile was conducted to find out the variation of respondents in the study, which was observed based on sex, age and occupation. The education held in Indonesia consists of diploma education (D3), bachelor (S1), master (S2) and doctorate (S3). The average age of new students entering college is 18-19 years old. The diploma program (D3) can be finished within three years, while the bachelor program takes four years. Hence, students finish their studies at the bachelor program around the age of 24 years. Meanwhile, accomploshing the master program requires another two years. Students who take the master degree can come from fresh graduates or those who have worked, so that the age distribution is around 18-20 years for new students entering college, while the age of 21-24 years are for students who have almost completed the program diploma and bachelor program. Whereas the age of 25-30 years is used for students who are late in completing a bachelor program study or who have entered the master program. This study only analyzed students from diploma program, bachelor programs and master programs.

Some students had already worked, so they could study while working. However, the majority of respondents were students who were studying only (78%).

3.2 Validity and Reliability Test

The data of this research were analyzed using SEM and ANOVA. Before employing this analysis, it was necessary to test the feasibility of the survey instrument used. The survey instrument feasibility test could be performed by using validity and reliability tests. Validity testing was used to measure the accuracy of survey instruments in measuring respondents' perceptions. The validity of a survey instrument was measured by employing item total correlation. The results of the corrected item total correlation test of all indicators are more than 0.3 except for items Y1.1, Y1.1 and Y1.11, which scores less than 0.3. The limit of the validity test is 0.30 (Azwar, 2009). Thus, it was concluded that all indicators were valid and proficient for constructing entrepreneurial education, self efficacy, motivation and entrepreneurial intention. Then, confirmatory analysis was also employed to measure the convergent validity of the loading factor which is known as average variance extracted (AVE) of the construct. The AVE results of this analysis are all above 0.500; the limit allowed for testing AVE is 0.500 (Hair et al., 1988). Based on this analysis, it can be said that all indicators and constructs were worthy to be applied in this study.

Construct reliability was applied to measure the consistency and stability of indicators to contribute to the construct. The results of construct reliability are shown in Table 4. The results of all constructs obtained were more than 0.700, even though the limits were set at only 0.70 (Hair et al., 1988). The same results were also derived by using Cronbach's Alpha in which the values for all constructs were also more than 0.700. The limits allowed for reliability testing are 0.50 (Hair et al., 1988). In conclusion, all constructs were reliable. Based on the results of this test, it was derived that the survey instruments used were feasible to be used in this analysis.

3.3 Goodness of Fit Test

To be able to use the model from this study, it was necessary to conduct a feasibility test of the model used. The results of the model test can be seen in table 2.

Table 2
Goodness of Fit Test Results

Source: Processed Data (2019)

In this study, eight criteria were applied to test the model. Those criteria are chi-square, Goodness of Fit Index (GFI), Adjusted Goodness of Fit Index (AGFI), Tucker Lewis Index (TLI), Comparative Fit Index (CFI), Normed Fit Index (NFI), Incremental Fit Index (IFI) and Root Mean Square Error of Approximation (RMSEA). All of eight criteria were fit. In the other hand, the score obtained for chi-square was high (195.756) and probability of 0.000. It was due to the large number of samples (n = 200) so that the probability could be calculated (Hair et al., 1998). From the overall criteria applied to test the goodness of fit, it can be concluded that the SEM model used in this study was good and feasible to be used for further analysis.

3.4 Hypothesis Testing

The results of hypothesis testing for this study can be seen in table 3 and figure 2

Table 3
Final Estimation of Measurement Model Parameters

Source: Processed Data (2019)

Figure 2
Final Estimation of Measurement Model Parameters

3.5 Discussion

Based on the results of hypothesis testing, hypothesis 2 and 3 found that entrepreneurship education did not signnificantly inflluence both motivation entrepreneurial intention while other hypotheses found significant influence. That results testing revealed that entrepreneurship education did not affect motivation and entrepreneurial intention. This is because formal entrepreneurship education obtained by students through the process of learning and practice in higher education was not the only way to build student motivation to choice an entrepreneur as a career when they graduate. As stated by Bandura (2012), a person's motivation is built through several learning resources including experience of success and achievement, other people's experiences, verbal persuasion and physiological and psychological conditions. In this way, it is assumed that students gain self-confidence and motivation, be proactive, creative and learn how to work in a team (Oosterbeek et al., 2010). The results of the research frequency and description also demonstrated that the majority of students were attending full-time lectures and never had working experience. This situation underlied the rejection of this hypothesis in which the research was limited to entrepreneurship education conducted formally in universities.

Although it was found that entrepreneurship education had no direct effect on entrepreneurial intention, entrepreneurship education was still important in encouraging students to become intentioned in being entrepreneurs. The results of this study are not in line with a research conducted by Jahani et al. (2018) dan Gerba (2012). They found that students who participated in entrepreneurship education programs fostered their entrepreneurial intention. As a result, students who got entrepreneurship education tended to be able to start their business compared to students who did not receive entrepreneurship education. Therefore, as stated by Raposo et al., (2008), integrating entrepreneurship into the college's academic curriculum can contribute to creating an appropriate learning environment and creativity, so that it increases certain awareness and knowledge in the business field (Raposo et al., 2008; Oosterbeek et al., 2010). In other words, universities and other educational institutions are expected to be able to graduate students who are equipped with an entrepreneurial vision. The descriptive results of the study showed that students gave excellent responses to entrepreneurship education. The entrepreneurship education they obtained in higher education equipped them to prepare entrepreneurial strategies and making effective business planning.

Moreover, hypothesis 1 of this study found that entrepreneurship education has an influence on self efficacy therefore self efficacy in hypothesis 4 also positively influenced students’ intention in entrepreneurship. Self-efficacy as a person's belief in doing something based on his capacity built a person to be able to manage and create a new business. When a person possesed a strong belief in himself based on the experience and knowledge he got, it would make the person more confident to start new things. This is in line with the research conducted by Jagdale dan Bhola (2014); Mgeni (2015) which found that a person’s self efficacy was an important capital that had a positive effect on entrepreneurial intention.

Self-efficacy helps to encourage individuals to believe that they can achieve results. Self-efficacy plays a role in decision making, thinking processes, and courage in taking risks. An individual’s self-efficacy is gradually obtained through the development of complex cognitive, social, linguistic, and/ or physical skills which are derived through experience (Kourilsky & Walstad, 1998). The results of this study answered hypothesis 4 in which self efficacy significantly gave positive effect on entrepreneurial intention. The higher the self-efficacy, the higher entrepreneurial intention is (Bryant, 2006). Several previous studies supported this study (Pihie & Bagheri, 2013; Tumasjan & Braun 2012 dan Peng et al., 2015). Self-efficacy not only influenced a person’s decision to choose an entrepreneurial career but also directed their future performance in the process of managing and developing new businesses (Bandura, 2012).

Next, hypothesis 5 confirmed that motivation significantly influenced on entrepreneurial intention. In this case, motivation was predicted by three (3) factors: Behavioral control, Subjective norm, and Attitude. The descriptive results of research asserted that behavioral control was a very dominating indicator in shaping students’ entrepreneurial motivation, for example, students argued that entrepreneurship was one way to increase prestige, realize dreams, improve social status and hobbies. The results of this study are in line with a research conducted by Purwana dan Suhud (2018) and Guerrero et al., (2008). The better a person's motivation for entrepreneurship, the higher the intention will be generated. Moreover, this research is in line with McClelland's opinion explaining that an entrepreneur who runs business activities is encouraged by the need to achieve, connect with other people and to gain power both financially and socially.

From the findings of the hypotheses, this study also found a full mediation between self efficacy towards entrepreneurial intentions mediated by welf efficacy.

4.1. Conclusions

From the results of the study, it can be concluded that entrepreneurship education plays an important role in shaping students’ entrepreneurial motivation and intention although it does not happen to self efficacy. As a medium to achieve this goal, universities must certainly prepare qualified entrepreneurship education that is packaged with curriculum, teaching methods and the availability of supporting facilities for students to be able to support student entrepreneurship activities (Ustav & Venesaar, 2018). In addition, in order to realize entrepreneurship education that is able to build students’ self-efficacy, the entrepreneurship learning design of higher education must be formed. The purpose is not only to facilitate students with entrepreneurial skills but also to construct students’ entrepreneurship behavior because learning is an interaction that occurs when a person interacts with the environment that results learning experience to change the person’s behavior.

4.2. Suggestions

By combining the skills-based entrepreneurship learning curriculum and entrepreneurial behavior, an entrepreneurial learning will be established which can build students’ motivation, self-efficacy and also entrepreneurial intention.

For the next researchers, it is hoped that this research can be developed by focusing on indicators in Behavioral control, Subjective norms, and Attitude motivations and relating them to "occupation" demographic differences between students who have worked and have never worked on the grounds that the majority of higher institutions, especially private universities, in Pekanbaru have working students. This can answer more about the reasons why entrepreneurship education does not influence self efficacy due to the sources of experiences learning gained by students outside the campus. The development of other variables in subsequent research is also essential, for example the addition of variable technology mastery / competency. Given that millennial era is a competition era and it is responsive to technology. Nowadays, it is very easy to do a technology-based business.

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1. Management Department. School of Business Pelita Indonesia, Indonesia. astri.ayu@lecturer.pelitaindonesia.ac.id

2. Information System Department, Sultan Syarif Kasim Islamic State University, Indonesia. muhammad.luthfi@uin-suska.ac.id

3. Management Doctoral Department. Indonesia School of Economics Surabaya. Hermine_stiesia@yahoo.com