Editor in Chief: Bong Jin Cho (Korea, E-mail:
[email protected] )
Editorial Board: Hermina Burnett (Australia, E-mail:
[email protected]) Check Teck Foo (Singapore, E-mail:
[email protected]) Rolf P. Friedrichsdorf (Germany, E-mail:
[email protected])
Ahmad Ibrahim (Malaysia, E-mail:
[email protected]) R.M.P. Jawahar (India, E-mail:
[email protected]) Lynn Kahle (U.S.A., E-mail:
[email protected]) Tomoyo Kazumi (Japan, E-mail:
[email protected]) Jin Soo Kim (Korea, E-mail:
[email protected]) Fredric Kropp (U.S.A, E-mail:
[email protected]) Zhan Li (China, E-mail:
[email protected]) Aviv Shoham (Israel, E-mail:
[email protected]) Zhen Wang (China, E-mail:
[email protected]) Richard White (New Zealand, E-mail:
[email protected]) Benjamin J.C. Yuan (Tawian, E-mail: benjamin@ faculty.nctu.edu.tw)
Proofreading: William Cartwright (U.S.A., Professor, Keimyung University)
Graphic Design: Seong Jae Song (Korea, Professor, Hoseo University)
ISSN 2071 - 1395
Asian Association of Business Incubation Copyrightⓒ2011 by AABI, All Rights Reserved
CONGRATULATORY MESSAGE The Volume 5 No.2, 2011 of Asia Pacific Journal of Innovation and Entrepreneurship (APJIE) is now published with five papers from different countries focusing on the critical issues of small and medium enterprises (SMEs) and entrepreneurship. It is also a pleasure to express my appreciation to Korean Business Incubation Association (KOBIA) for supporting the APJIE publication. In Asia, the SMEs constitute the stable environment of a nation‟s economy, especially in the developing countries. The owners of SMEs have enabled entrepreneurs to leverage all resources around them including capital, business relationships, networks, talents, to manage the business efficiently and create huge value for themselves. This journal covers the comparative analysis in incubators of two economic entities, entrepreneurial intentions, business networks, the interactive methods of internationally-experienced CEOs, and the performance of SMEs. The study can explain the economic activities in the society and show the importance of SMEs policy. While the major entities of incubatees are SMEs, business incubators struggle to integrate a platform with varied function in funding, marketing, and human resources. In order to make positive networks with other incubators to deal with all kinds of business opportunities, the concept of co-incubation emerged among different location. Under the structure of Asian Association of Business Incubation (AABI), it is the best way to realize the concept of coincubation for incubating companies without boundary. By networking value-added activities in investment, business matching, administrative service and educational training, the AABI will become the hub of incubation-resources to enhance the membership‟s value. With the coming activities of the 2011 AABI annual conference in Taiwan, I hope you can join and share the experience from diversified angles of incubation. Thank you.
Benjamin J.C. Yuan President Asian Association of Business Incubation
CONGRATULATORY COMMENTS My heartiest congratulations to all members. Especially, I would like to pay my respect and warm thanks to the editors and judges for their contributions and dedication to publishing APJIE Journal. The publication of APJIE represents the endeavors and efforts by academia and industry practitioners in the Asia Pacific region. It was evidenced by our international friends at the 16th AABI General Assembly held in Kota Kinabalu, Saba, Malaysia this year that more and more potential readers in this journal internationally. I hope that the APJIE will play its role as a case, model, sometimes theoretical background in the incubation and entrepreneurship field. While an upturn in the world economy is not yet certain, jobless economic growth and recovery is a global hot issue, and I hope and believe that countries with more creative, innovative entrepreneurial motives will recover sooner and begin a new era of the global economy. I would like to express my special thanks to those who financially aided this journal - the SMBA of the Korean government, KISED (Korea Institute of Startup & Entrepreneurship Development), NINA in Malaysia, and the AABI Secretariat. I hope that more international readers will subscribe in the near future. This will motivate writers, editors, and our friends who play major roles in spreading innovation and entrepreneurship in their own countries. I always find that new innovative ideas come from cases, models, and practices that can be found in this journal. I ask all the friends and readers to introduce this journal to other people in their own county. We look forward to this journal standing on its own in the near future. I once again would like to show my appreciation for the Editor-in-Chief, Professor Bong Jin Cho, and co-editors for their contributions. I also would like thank Dr. Benjamin Yuan, the President of AABI, STIC for their secretarial work at AABI, and NINA for their support. Thank you.
Yeung-shik Kim Chairman Korea Business Incubation Association
Dear Friends, I‟m writing to congratulate you on the occasion of your publishing Volume 5, No.2 of the "Asia Pacific Journal of Innovation and Entrepreneurship,” a publication of the Asian Association of Business Incubation (AABI). The National Business Incubation Association represents over 2,000 members in 59 nations, and like AABI we share a commitment to the business incubation industry and its practitioners. This journal serves the entrepreneurial support community throughout the region and raises the bar for the world‟s business incubation industry. The entire industry is well served by the scholarly reporting and opinion articles which appear in this publication. We need more publications such as the APJIE. It serves as an excellent example for other regional associations and their publications to emulate. It is heartening to see that most of the world now recognizes, particularly in these challenging times of economic contraction, the need to cultivate healthy new companies in order to provide jobs and commercialize new technologies. Our industry stands at the forefront of this effort to create the companies that will turn the world‟s economy around, and the “Asia Pacific Journal of Innovation and Entrepreneurship” provides a vital communication link to help make that happen. The National Business Incubation Association is proud to offer its congratulations to on the publication of such an excellent publication. We wish AABI and its flagship publication much success in the future. Sincerely,
David Monkman President and CEO National Business Incubation Association
CONGRATULATORY MESSAGE It is a great opportunity to congratulate on the publication of the Volume 5, No. 1, of Asia Pacific Journal of Innovation and Entrepreneurship (APJIE). I wish to congratulate the Editor-in-Chief, Professor Bong Jin Cho and the Editorial team for another successful publication of the Asia Pacific Journal of Innovation and Entrepreneurship (APJIE). The APJIE is into its fifth year now, and the National Incubator Network Association of Malaysia (NINA) is very pleased to be the first National Association to come forward to sponsor the 2012 APJIE Editions. I strongly believe that the Asia Pacific Journal of Innovation and Entrepreneurship is the only journal in the world that addresses the core concepts of entrepreneurship and incubation, which in my opinion, serve as an important catalyst in improving entrepreneurship via innovation and incubation. The National Incubator Network Association of Malaysia views the importance of this journal that will truly benefit incubators around the world as a tool for sharing views, experiences, theories and success stories. APJIE also serves as the face of the Asia Association of Business Incubators (AABI). The AABI sets the benchmark for other associations to follow, and we are probably the only incubator association in the world that produces a journal for incubators and entrepreneurs. Therefore, we should be proud as AABI members to be associated with the APJIE. It is indeed an honor for NINA to be asked to pen this congratulatory message. We will continue to support the APJIE with another round of sponsorship for the 2012 Edition and we strongly urge other Association members within the AABI membership to contribute towards the good cause of APJIE. I would like to see the APJIE to be the “journal-of-choice” on the topic of business incubation, innovation and entrepreneurship in the years to come. Until then, we as Association Members should contribute our resources to make this vision happen. As I will be finishing my term as President of NINA, this publication will certainly be my last opportunity to pen my congratulatory words and gratitude. May I take this opportunity to thank my friends in AABI and everyone who has supported AABI and business incubation in the Asia Pacific region. I hope our paths will cross again one day. Once again, my sincere
congratulations to the Editorial Team of the APJIE, and may you grow in terms of readership, support and be the “journal-of-choice” to all. Thank you.
Andrew TF Wong President National Incubator Network Association (Malaysia)
CONTENTS Introduction Editor in Chief
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Assessing Entrepreneurial Intentions of Microfinance Clients in South Asia 7 Arthi Gerald and R. Venkatapathy A Study on Constructing the Model of the Factors Affecting the Performance of Social Enterprises 39 Kyungsoo Lim and Jihyun Ryu Comparative Analysis of Conditions Made for Companies in Business Incubators and Technology Incubators in the Weimar Triangle and China and Prospects for Mutual Cooperation 57 Tomasz Copp Entrepreneurs’ Expected Returns Affected by Their Networks: A CrossNational Study Using Global Entrepreneurship Monitor Data Sung-sik Bahn, Simara Maria de Souza Silveira Greco, Jahangir Yadollahi Farsi, Olga Rastrigina, and Thomas Schøtt
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Adaptive Growth of Firms Led by Internationally-Experienced CEOs during the Structural Upgrading of Taiwan's Manufacturing Industries 97 Ryuichiro Tsuchiya
Call for Papers
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INTRODUCTION Bong Jin Cho, Ph. D., Editor in Chief Publishing a journal is not much different from the activity of manufacturing a product/service for global customers and clients in the sense that the product/service must meet the needs of the customers. The roles of editor and editorial board members are subject to coordinating the taste of the demand side of the readers and manuscripts submitters, the supply side. In this sense, the key success factors of publishing a journal is depending on the “marketability” and “accessibility” to the good readers and professional authors so that the editorial board could have more strong right of choice in selecting the better papers from the manuscripts submitted. This is only feasible when the Desk collects more qualified manuscripts for the readers.
Fishermen are happy when the fishing boats are full of fish but sometimes fishermen are not happy with the poor harvest when they return to the harbor. I would like to invite more editorial board members of ability who will catch more fish when we go out fishing next time. As well, we would like to add many more review board members to enhance the ability of scrutinizing better manuscripts for more qualified papers. This volume could invite only five papers for publication from India, Korea, Poland, Global and Japan respectively. This introduction is to give readers with condensed information for the people who need to understand the whole papers at glance. The first paper is “Assessing entrepreneurial intentions of microfinance clients in South Asia.” This paper explores the urban Microfinance (MF) landscape in four comparable countries – India, Sri Lanka, Bangladesh and Nepal--from the human capital and entrepreneurial behavioral perspective of MF clients. Through the reviews of literature on the models of entrepreneurial intention, the authors tried to identify the factors affecting entrepreneurial intention. In summary of the several scholars‟ models of intention, the authors come up with the two major factors –perceived desirability and perceived feasibility--as determinants of entrepreneurial intention. The perceived desirability reflects the personal attractiveness of starting a business while the perceived feasibility refers to the level of degree of personal competence to start a business as felt by the person. The purpose of this study is to explore the entrepreneurial intention of SHG (Self Help Group) leaders in four South Asian countries –-India, Sri Lanka, Bangladesh and Nepal--to test
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the differences among those countries. The authors used an Entrepreneurial Intention Scale (EIS) consisting of 7 sub-scales of that measured the respondents‟ entrepreneurial intention under the entrepreneurial intention dimension of Perceived Desirability (PD) and Perceived Feasibility (PF).
As a result of the research, the authors found that the mean value scores of SHG leaders of the other three countries were significantly higher than India on the desirability dimension of the entrepreneurial intention scale. It is also inferred that the SHG leaders of Sri Lanka, Bangladesh and Nepal are similar on the desirability dimension of the entrepreneurial intention scale. On the other hand, the mean value of scores of SHG leaders was not statistically significant between Sri Lanka and India and between Bangladesh and Nepal, respectively. The mean value scores of SHG leaders of Sri Lanka and India scored the lowest on the feasibility sub-scale of the entrepreneurial intention scale. The authors conclude that the desirability score is a sum total of the scores on the sub-dimensions of desirability – propensity to act, interest, attitude, social support and motivation. The authors suggest that SHG leaders of any country will be encouraged to pursue entrepreneurial activities through NGO initiatives and training programs to improve the key elements of desirability. The two major dimensions of knowledge & skills and risk taking ability are the key elements of perceived feasibility of entrepreneurship in the SHG leaders. The authors indicate that the perceived feasibility of SHG leaders of Sri Lanka is affected by the low level of risk taking ability and that of India is affected by the level of knowledge and skills. This paper also discusses suggestions for the results of the research. The second paper is “A study on constructing the model of the factors affecting the performance of social enterprises.” The purpose of this paper is to identify the factors affecting the performance level of social enterprises by testing some hypotheses. The authors tried to identify factors affecting the performance level through a literature review so that they could build a research model for the study. According to the literature review, they came up with the independent factors of “social entrepreneurship,” “relationship oriented organizational culture”, and “government support policy” while they identified the dependent variables of “economical performance” and “social performance.”
Based on the identified dependent and independent variables, the authors set the following hypotheses: H1: “Social entrepreneurship will have a positive effect on the economical performance of social enterprise”; H2: “Social entrepreneurship will have a positive effect on the social performance of social enterprises”; H3: “Relationship-oriented organizational culture will
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have a positive effect on the economic performance of social enterprise”; H4: “Relationshiporiented organizational culture will have a positive effect on the social performance of social enterprises”; H5: “The government support policy will have a positive effect on the social performance of social enterprises”. Among the six hypotheses set out above, the H6: “The government support policy will have a positive effect on the social performance of social enterprises” has been rejected. This research identified the key factors attributing to the performance level of social enterprises, such as social entrepreneurship, community-oriented organizational culture and government policy, where the authors surveyed 107 social enterprises authenticated by the Ministry of Employment and Labor. The third paper is “Comparative analysis of conditions made for companies in business incubators and technology incubators in the Weimar Triangle and China and prospects for mutual cooperation.” This paper discusses the similarities and differences of the business incubator‟s location, specialization, organization, and characteristics of the technology incubators in China and the Weimar Triangle, a loose grouping of Poland, Germany, and France. The author Tomasz Copp, the deputy consul in the General Consulate of the Republic of Poland in Shanghai, discusses the evolution of business incubators in Asia and Europe towards technology incubators especially in China and Weimar Triangle countries of France, Germany and Poland.
The discussion covers the criteria which distinguish business incubators in the Weimar Triangle and China, the branches of the companies located in the business incubators in the Weimar Triangle and the length of their stay within the business incubators. The paper also suggests some prospects for international cooperation in the area of entrepreneurship incubation between the Weimar Triangle and China. This paper is dedicated to discussing the various industry sectors‟ office space, event space, business centers, and numerous recreational facilities regarding Shanghai High-Tech Incubator Network from the French side and Shanghai Technology Business Incubation Association from the Chinese side established under the leadership of the Pilot Committee of Sino–French Corporation on Business Corporation. This paper also includes a discussion of the German Center Shanghai in the Zhanjiang High-Tech Park in the heart of Pudong. The fourth paper is “Entrepreneurs‟ expected returns affected by their networks: A crossnational study using Global Entrepreneurship Monitor data.” The purpose this paper is to examine the difference in the expected returns of early-stage starters by networking and the conditions of
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networking. The results are also different by nation, by demographics, and by ownership. The authors also tested whether entrepreneurial networking has positive effects on performance by country as well as by ownership. This research used the data provided by GEM (Global Entrepreneurship Monitor) sub-sample survey data collected in 2008 for at least 2,000 adults in each country.
From the results, starters who network with customers expect higher returns than starters who do not network with customers. Starters who network with collaborators expect lower returns than starters who do not network with collaborators. Starters who get advice from parents expect lower returns than starters who do not get advice from parents. Expectation has, however, no significant correlation with size of the network. The expectation level on return was the highest in Brazil and the lowest in Iran, whereas expectations are in between in Denmark, Korea and Latvia. The starters with higher education tend to have higher expectation on returns but the correlation was only marginally significant. The fifth paper is “Adaptive growth of firms led by internationally-experienced CEOs during the structural upgrading of Taiwan‟s manufacturing industries.” This research explores a process of interaction between organizations led by the managers of Taiwanese manufacturing companies who have international academic backgrounds and the industry environment over last ten years. For this research, the author analyzed a corporate database of more than 1,400 Taiwanese manufacturers to examine the causes of variation in firm growth rates during the 10-year period of structural upgrading of industry. The industry groups included in the sample are food, textile and apparel, chemical and petrochemical, metal, machinery and equipment, electronics, and automotive industry, where the author tabulated 1,431 observations through a rigorous data cleaning process.
The initial size and age of firms, industry fixed effects, a set of instrumental variables, CEO‟s ages and the squared values of the firm were estimated to get the effects of firm‟s industry. As a result of this research, the author found that the effects of the firm‟s industry were statistically not significant. Neither of the effects of industry groups on growth rates was statistically significant. On the other hand, the effect of initial size and age of firms were both negatively significant. The effects of firms with foreign educated CEO‟s were not statistically significant. There was a positive and significant interaction between the effect of firms with foreign educated CEOs and the effects of electronics industry. This result implies that the
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presence of internationally-oriented CEOs and nature of competition in electronics market interacted positively to enhance growth. On the other hand, the interaction effect between the effect of firms with foreign educated CEOs and the effect of conditions of the textile and apparel industry was negative, significant statistically.
Finally, the APJIE Desk is proud to publish these five papers from India, Korea, Poland, and Japan. We are very much grateful to the authors around the globe for their contribution and efforts to revise following the instructions and recommendations of the reviewers. The APJIE Desk is always grateful to the Review Board Members of the APJIE for their time and efforts to improve the quality of the paper for the benefits and reading enjoyment of the readers. With all my heart, as the Chief Editor of APJIE, I owe to the Editorial Board Members of the APJIE by asking their precious time and efforts for the publication. As always, the APJIE Desk would like to express our appreciation to the KOBIA (Korea Business Incubation Association, President, Yeung Shik Kim), AABI (President, Benjamin Yuan and Secretariat, Wang Zhen) and the SMBA, Korea (Administrator, Dong Sun Kim) for the financial support for the publication. Our special thanks go to NINA, Malaysia (President, Andrew Wong) again for their expression of willingness to continue their support for the 2nd year of the APJIE publication. I am, as the Editor in Chief, most grateful to their continued financial support and encouragement in publishing the APJIE for the global readers, who are heartily dedicated to devoting their activities for the development of local and national economies of the member countries.
Thank you!
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Assessing Entrepreneurial Intentions of Microfinance Clients in South Asia
Arthi Gerald and R. Venkatapathy
Abstract The urban Microfinance (MF) landscape in four comparable South Asian countries – India, Sri Lanka, Bangladesh and Nepal-have been studied here from the human capital and entrepreneurial behavioural perspective of MF clients. The world over, MF is a proven sustainability development tool to improve livelihoods and a measure to alleviate poverty by providing loans for setting up micro enterprises. And, in South Asia, MF is equated to rural credit provided to Self Help Groups (SHGs) formed by poor women. Focus on enabling micro enterprises for rural poor has been high and the urban poor have not given equal attention in the South Asian MF sector. Consequently, as critically viewed by MF practitioners, urban micro-credit does not help poverty through nurturing entrepreneurs; at best, it provides consumption based credit. Evidence of this observation can be found in urban SHGs in India. The reasons for this behavioural trend in SHG members (MF Clients) can be multiple. Analyzing these behavioural characteristics, especially entrepreneurial intentions of these urban MF clients will prove helpful in understanding the trend clearly and nurture microenterprises. It is also worthwhile to investigate whether a similar trend exists in other South Asian countries also. Hence this study analyses similarities and differences, among the entrepreneurial intentions of 360 urban SHG leaders in India and other comparable South Asian countries.
Research Scholar, Bharathiar School of Management and Entrepreneurship Development (BSMED), Bharathia University, Coimbatore, India, e-mail:
[email protected] Director, Bharathiar School of Management and Entrepreneurship Development (BSMED), Bharathiar University, Coimbatore, India, www.bsmed.net.in
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Entrepreneurial Intentions represent the belief that one will perform certain behavior. It indicates the effort that the person will make to carry out that entrepreneurial behavior. The study reiterates that: intentions direct attention, experience, and behaviour toward the accomplishment of the specific action; and that Entrepreneurial Intention is facilitated by presence of perceived feasibility and desirability of entrepreneurship in an individual. The results of the survey clearly indicate that urban SHG leaders in India (MF clients) possess a low level of entrepreneurial intention compared to urban SHG leaders in the other three countries – Bangladesh, Sri Lanka and Nepal. The study points towards rationale for this and assessing the intentions of MF Clients, to facilitate both MF policy makers and practitioners to draw new and result oriented policies to reach the right populace.
Key words: Entrepreneurship, Entrepreneurial Intentions, Microfinance (MF), Self Help Groups (SHG), South Asia, Urban Micro Finance Clients, Enterprise Development.
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1. Introduction Entrepreneurship has the incredible power to stimulate the development of a nation through employment generation and social empowerment. Fostering entrepreneurship is the crux of the growth of developing countries in the current economic scenario. Especially, encouraging entrepreneurs from every strata of the society is imperative in these countries. Microfinance (MF) has emerged as a solution to enable such inclusive growth. It is more than just a system of giving small loans for income-generation to existing small businesses or for new businesses. The world over, MF is a proven sustainability development tool to improve livelihoods and a measure to alleviate poverty through setting up of micro enterprises. And, in South Asia, MF is equated to rural credit provided to Self Help Groups (SHGs) formed by poor women; thus there is high focus on rural poor and the urban poor have not been considered equally in the MF sector. Consequently, as critically viewed by MF practitioners, urban micro-credit does not help poverty through nurturing entrepreneurs; and at the best it only provides credit for consumption (Karnani, 2007).
Evidence of this observation can be found in urban SHGs in India. Analyzing these behavioral characteristics, especially entrepreneurial intentions of these urban MF clients will prove helpful in understanding the trend clearly. It is also worthwhile to investigate whether a similar trend exists in other South Asian countries also. Hence, this study is being carried out in order to find similarities or differences if any among the entrepreneurial intentions of urban SHG Leaders (MF Clients) in India and other comparable South Asian countries.
The reasons for this behavioral trend of not pursuing entrepreneurship in SHG members can be multiple; first, to set up micro enterprises, it is important for urban SHG members to have the entrepreneurial intention. Entrepreneurial Intentions represent the belief that one will perform certain behavior. It indicates the effort that the person will make to carry out that entrepreneurial behavior (Liñán, 2004). Next, there are very limited resources available. So, a set of characteristics and capabilities in the SHG member is required along with resources for the survival and success of the micro enterprises. Evaluating Entrepreneurial Intention of SHG members can further help assess this potential for enterprise creation or income-generation activities. The efforts of NGO MFIs to enable economic development through enterprise promotion can be channelized towards the right beneficiaries. It is necessary to bring in the element of selectivity and eligibility, bearing in mind that not everybody has entrepreneurial
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potential and capabilities (Adolph, 2003).
Entrepreneurial intention is also an important phenomenon that has attracted substantial empirical research. An individual may have the potential but not transform into an entrepreneur because of lack of intention. Several studies viz., Ajzen (1985), Kruger and Carsrud (1993), Liñán et al. (2005), Segal et al. (2005), Appollini et al. (2005) have attempted to understand the antecedents as well as intention of entrepreneurs. A multitude of literature on impact assessment and success of microfinance interventions exist. But, majority of the research and impact assessment studies of the MF interventions focus on rural interventions and financial empowerment aspects. Specifically, so far, limited research has been initiated about the human resource aspect like the entrepreneurial behaviour of the urban microfinance clients. Microfinance theorists have proposed that the future of micro finance research lies in understanding the Human Capital of the beneficiaries of microfinance in order to maximize impact. Strengthening the human capital has become more pertinent than ever before for this sector. But, considering entrepreneurial tendency as prime factor is a nascent phenomenon among MF practitioners promoting entrepreneurial activities in SHGs, especially in the urban areas.
Studying the actual intention and occupational choice of the urban SHG members (MF Clients) may reveal their financial objectives; clarity on their objectives will help understand their needs in a better manner. Innovative and customized MF products can then be delivered for maximum benefit of the clients and the urban MF sector. The entrepreneurial intentions of the SHG members could be ascertained clearly and products designed specifically for those who want to pursue micro-enterprises. SHG members interested only in consumption or other form of credit can also be identified and catered to, based on this assessment.
Thus, studying their entrepreneurial disposition can reveal useful perspectives for financial inclusion and economic growth. It is proposed that a global and cross cultural perspective such as this is can be a panacea for major issues daunting the South Asian urban microfinance sector. This study aims to understand the intentions of SHG members (MF Clients), to facilitate both MF policy makers and practitioners to draw new and result oriented policies.
2. Models of Entrepreneurial Intention Several models of Entrepreneurial Intention have been developed by Researchers and
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subject experts. Intention models offer us a significant opportunity to increase our ability to understand and predict entrepreneurial activity (Krueger, Reilly and Carsrud, 2000). The versatility and robustness of intention models support the broader use of comprehensive, theorydriven, testable process models in entrepreneurship research (MacMillan and Katz, 1992). Among the several entrepreneurial intention models, Ajzen‟s (1991) theory of planned behavior (TPB) is widely recognized, well tested and validated (Brannback.et.al. 2007). The model assumes that the individual‟s experience and his/ her long term expectations determine the choice of entrepreneurship (Scholten et.al, 2004). Shapero and Sokol‟s (1982) model of entrepreneurial event (SEE) is another model that supports formation of entrepreneurial intention. They proposed a testable eight-item inventory of questions aimed at different aspects of perceived desirability and concluded that entrepreneurial intentions depend completely on perceptions of personal desirability, feasibility, and propensity to act. Shapero also defined perceived desirability “…as the degree to which one finds the prospect of starting a business to be attractive; in essence, it reflects one‟s affect towards entrepreneurship.” Shapero and Sokol (1982) saw desirability as a function of social and cultural influences. The comparison of models also reveal that, in order to encourage new venture formation, it is important to first increase perceptions of feasibility and desirability (Urban, 2006). It has also been established that it would be difficult to form intentions without a strong desire to act on them (Bagozzi and Yi, 1989). Therefore, the stronger the person‟s desire to take action, the stronger the intentions (Krueger et al, 1993). In other words, commitment to entrepreneurial behaviour influences entrepreneurial intention. The Krueger model draws on TPB with some modifications to adapt to an entrepreneurial environment. Accordingly, intentions toward pursuing an opportunity are best predicted by three critical perceptions: that the entrepreneurial activity is perceived as (a) personally desirable, (b) supported by social norms, and (c) feasible (feasibility presumably impacted by perceived selfefficacy). Liñán et al. (2005) combined the TPB and SEE to predict entrepreneurial intention. They also analyzed the effects of one more variable - Entrepreneurial Knowledge on entrepreneurial intention. In Liñán‟s model, Entrepreneurial knowledge is construed as a hypothesized exogenous influence on entrepreneurial activity, similar to Krueger and Casrud‟s (1993) theory. Liñán et al. (2005) also proposed that Entrepreneurial knowledge directly affects Desirability and Feasibility. Volume 5, No.2, 2011
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Further, they defined Desirability as a function of Attitude and Perceived Social Norms. Basically all intention models focus on Desirability, Feasibility and Social Norms. As described by Krueger et al. (1993) „other hypothesized exogenous influences precipitating, facilitating or inhibiting entrepreneurial behaviour‟ like Motivation (Segal et.al. 2005), Attractiveness of opportunity, Risk Taking Ability (Shane, 2003), Availability of Resources, Awareness, Self-efficacy and Experience (Bandura, 1986) Skills and Abilities (Chen, Greene, and Crick, 1998) can also influence entrepreneurial intentions.
2.1 Factors Affecting Entrepreneurial Intention The models discussed above imply that Perceived Desirability, Feasibility, Subjective (Social) Norms, Attitude, Perceived Self-efficacy and Perceived Behavioural control are key factors affecting Entrepreneurial Intention. Led by Liñán‟s model, this study relies on two major factors – Perceived Desirability and Feasibility as determinants of entrepreneurial intention.
2.1.1 Perceived Desirability Perceived desirability reflects the personal attractiveness of starting a business and very closely relates to Ajzen's (1991) attitude and subjective norm variables (Krueger et.al., 2000). This is impacted by attitude and social background, which is comprised of broader cultural influences, as well as family, friends, and personal exposure to entrepreneurship. Perceived desirability, in this study, is considered as the function of personal attitude and social norms as already discussed with evidence from propositions of Krueger( 1994, 2000) and Liñán (2004) in their intention models. With the support of extensive literature review, motivation to succeed, entrepreneurial interest and propensity to act are included as important other factors that attribute to perceived desirability towards entrepreneurship.
2.1.2 Perceived Feasibility Perceived feasibility reflects the level or degree of personal competence to start a business as felt by the person. This perception is viewed as related to Ajzen's (1991) behavioral control variable in that both of these focus on a person's assessment of his/her ability to manage the business start up process successfully. While previous experience and a general sense of selfconfidence in one's skills and abilities to successfully execute tasks have been found to relate to this belief, it is self-efficacy that has repeatedly been identified as the critical antecedent variable
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to subjects' feasibility perceptions (Krueger and Brazeal, 1994; Chen, Greene, and Crick, 1998; Krueger et.al., 2000). In addition, another variable closely related to Bandura's (1986) perceived self-efficacy, is a person's belief that one can execute a particular action (i.e, start a new venture). Such behavioural control will also stem from the risk taking ability along with the knowledge, skills and abilities in an individual. Quintessentially, Entrepreneurial Intention can be defined as “the commitment towards exhibiting entrepreneurial behaviour in the future and is reflected by a positive attitude towards creation of a new venture, the desire to become an entrepreneur and the perceived feasibility of creating the venture “. It is influenced by social norms (culture), Friends and family who favor starting a business, and characteristics such as risk taking ability, motivation to succeed, high achievement orientation and a strong propensity to become an entrepreneur. Awareness about available support to start a business (technical, financial) along with Knowledge & Skills for enterprise building also plays a role in forming the entrepreneurial intention. This study is based on the above definition and the entrepreneurial intention of (Self Help Group) SHG leaders in four South Asian Countries - India, Sri Lanka, Bangladesh and Nepal is being analyzed on these factors. For the purpose of the study, entrepreneurial intention of SHG leaders is defined and measured by the presence of major factors such as, desirability which is influenced by attitude, subjective norms, motivation, entrepreneurial interest and propensity to act; feasibility which is a function of risk taking ability & knowledge and skills. Enterprises employing 3 or more employees are considered micro enterprises for the purpose of this study. MF clients indicate SHG leaders as well as SHG members.
3. Research Design and Methodology The trends in urban MF reveal that SHGs play a limited role as a mechanism to promote micro enterprises. The basis for pursuance of urban MF is the propelling factor for this study. It is common for urban NGO MFIs to insist on loans given for enterprise activity but not restrict the loans for income-generation alone. The research questions that therefore emerge are: Could the trends then be attributed to the goals of NGO MFIs? What underlies the lack of interest in pursuing micro enterprises and what could be the motives of the urban SHG members? Is this detrimental to the objectives of MF? Is the situation similar in other South Asian Countries where SHG model has flourished?
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The formulation o null hypotheses of the research are introduced here. It also includes the selection of sample for the study and the methods adopted to analyze the data collected. The instruments used and the reliability and validity results of the instruments for the study are also presented. The sampling frame for the study is discussed herein. Limitations of the study are also mentioned in the end of this section.
3.1 Hypothesis 3.1.1 SHG leaders across countries remain homogeneous on their scores in the entrepreneurial intention scale 3.1.2 SHG leaders across the four countries remain homogeneous in their scores on desirability dimension of the entrepreneurial intention scale. 3.1.3 SHG leaders across the four countries would remain homogeneous in their scores on feasibility dimension of the entrepreneurial intention scale
3.2 Research Instrument Data for the study was collected using primary sources by the researcher through direct personal interview method since June 2009. The research instrument used for the study is described below.
At first, a few existing entrepreneurial intention scales such as Yorkshire and Humber Entrepreneurial (2007) Intentions Questionnaire (2007) and Francisco Liñán‟s (2004) entrepreneurial intention scale were reviewed for relevance to the present study. Both the scales targeted at a different population (students who underwent entrepreneurship programs). Hence, a similar new scale to suit the purpose of this study was constructed.
On the basis of extensive review of literature on entrepreneurial intention models, two main factors were identified as major contributors to entrepreneurial intention in individuals – Perceived Desirability and Perceived Feasibility. To begin with, a pool of 150 statements intending to measure the perceived attraction towards entrepreneurial behaviour (desirability) and perceived control over entrepreneurial behaviour (feasibility) was created. After further review, it was reduced to 125 items. The 125 item scale was then presented to a panel of 2 members (Two
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Senior faculty member teaching HRM for over 15 years with extensive research experience) evaluated the entire instrument. The instrument was revised once again with the changes indicated by the panel. After review, the panel suggested that the two major factors - Perceived Desirability and Perceived Feasibility (Self Efficacy), can be modularized clearly by constituent factors that enable them in individuals. They also suggested removal of 35 items from the scale. This brought down the number of items in the scale to 90 items. The Perceived Desirability factor was represented by five constituent factors - Attitude, Social Support (Subjective norms), Entrepreneurial Interest and Motivation, Propensity to Act. This was measured by 60 items. The perceived Feasibility factor was represented by two constituent factors – Risk Taking Ability and Knowledge and Skills. This was measured by the rest of the 30 items.
This revised scale was administered on 30 SHG members. Based on their responses, to eliminate redundancy in items, and ensure relevance to the factors being studied, the scale was further reduced to a total of 75 items i.e., Perceived Desirability – 54 items and Perceived Feasibility – 21 items.
The finalized instrument was an Entrepreneurial Intention Scale (EIS) consisting of 7 subscales of that measured the respondent‟s entrepreneurial intention under the entrepreneurial intention dimensions of Perceived Desirability and Perceived Feasibility. The final instrument contains all the 75 Likert type items (1 – Not at all 4 - Very much) under the various sub-scales to assess entrepreneurial intention. All the items used the same concept with anchors of “not at all/no” and “Yes/Very much”. The maximum score possible is 300 and minimum is 75. Cumulative score of the responses to the items yields the score on Entrepreneurial Intention of the respondent. 67 items are scored in the direct method and 8 items are scored in the reverse direction. Those who score high on the scale would be considered as to have high entrepreneurial intention level and those who score low would be considered to possess low level of entrepreneurial intention.
3.2.1 Reliability The reliability test was done on a sample of 30 SHG leaders from NGO led SHGs in Bangalore city, India. Reliability coefficients were calculated using the Cronbach‟s Alpha formula. The reliability coefficient of EIS was worked out exclusively for the purpose of the present study. The reliability co-efficient of the various sub-scales of the EIS are being reported as follows in [Table 3.1]. Volume 5, No.2, 2011
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[Table 3.1] Entrepreneurial Intention Scale (EIS) Name of Sub-Scale
Reliability Co-Efficient (Cronsbach's Alpha)
Desirability Dimension a) Attitude (11 statements)
0.746
b) Social support ( 10 statements)
0.938
c) Entrepreneurial interest (11 statements)
0.878
d) Motivation (12 statements)
0.923
e) Propensity to act (10 statements)
0.935
Feasibility Dimension g) Risk taking ability (10 statements)
0.966
h) Knowledge and skills (11 statements)
0.859
Total no. of Items = 75
3.2.2 Validity The scale has been found to have adequate face validity.
3.3 Sample and Sampling Characteristics The sample frame consisted of a large number of NGO led SHGs in these four South Asian countries – India, Bangladesh, Sri Lanka and Nepal. The most well known and reputed NGOs and NGO turned MFIs in all the four countries were researched upon and selected as targets for the sample. The basis for selection was the similarity in the SHG model (NGO led SHGs) being promoted and practiced. The selected NGO MFIs in each country were approached directly by the researcher to get their consent and cooperation to study the SHGs formed by them. The sample was formulated with the NGO MFIs who agreed to facilitate the interaction with their SHGs for the data collection. The main characteristics of the sample SHGs studied were that The SHGs were formed and led by NGO MFIs
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The SHGs were existing in the urban areas They were led by women and had only women members. They had 3-25 members and the group was at least 1 year old. They held group meetings and had voluntary savings. Internal on- lending within the group existed. The Snow Ball sampling method was used in the study wherein existing respondents (SHG leaders) recruited other respondents from among their acquaintances (Other SHG leaders). Considering the practical aspects (time, duration of the data collection interview, nature of subjects of the study) and cost associated in a four country sample, this was considered the most suitable method. A total of 360 SHG leaders were interviewed for the purpose of the study. [Table 3.2] gives the details of samples collected and included for the purpose of the study from each country – India, Bangladesh, Sri Lanka, and Nepal.
[Table 3.2] Sample Frame Country
Number of Persons Contacted
Number of Persons in the Final Sample
India
98
90
Bangladesh
95
90
Sri Lanka
100
90
Nepal
104
90
Total
397
360
The samples collected from each country were checked for completion and qualified for the analysis. Out of 98 samples in India, eight provided incomplete information; in the 95 samples from Bangladesh, 5 provided incomplete information; the 100 samples from Sri Lanka included details of 10 Government scheme SHGs. The 104 samples from Nepal had 6 incomplete samples and 8 samples from SHGs that were less than one year old. Hence all the incomplete samples and those not meeting the sample were eliminated to arrive at a matched sample of 90 samples from each country.
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3.4 Analysis of Data The data was subjected to statistical analysis appropriate to the type of data. The different statistical analysis tests for the present study include: Percentage analysis and ANOVA. Percentage analysis was worked out for the biographical details of the respondents. The mean and standard deviation were worked out for each of the sub scales of the Intention scale to infer which of the mean scores is differing for the four countries being studied. ANOVA was used for understanding the differences within and between the countries. Multiple mean comparison Post hoc test -Bonferroni was used for this purpose to discern the differing means country wise.
3. 5 Limitations of the Study 1. The extensive time necessary for conducting interviews prevented a larger, more robust, sample size, from India that might have allowed for the analysis of other cities. 2. There were no grants or funds from any organization for the study; the research was completely funded with personal money of the researcher. Limited availability of funds influenced the scale of the study. 3. Differences in entrepreneurial intention of women of different sub-cultures within each country could have been also included in the study but for constraints of time, money and other resources.
4. Analysis, Results, and Discussion The results corresponding to i) the biographic and demographic profiles of the SHG leaders SHG leaders and ii) testing of hypothesis on their entrepreneurial intention levels is presented herein country wise.
4.1 Biographic and Demographic Profiles The background characteristics of the sample SHG leaders were analyzed and reported below. The SHG leaders were categorized into four criterion groups i.e., SHG leaders in India, SHG leaders in Sri Lanka, SHG leaders in Bangladesh and SHG leaders in Nepal.
A large number of SHG leaders are in the age group of 26-30 years across the countries.
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This is followed by age groups 31-35 years and 36-40 years and almost all the SHG leaders are married. This pattern is seen in all the countries except Sri Lanka, wherein unmarried members also form part of the MF Clientele.
% of Respondents
Age Group of Respondents 100 90 80 70 60 50 40 30 20 10 0
India Bangladesh Sri Lanka Nepal
< 20 2125
2630
3135
3640
4145
4650
51- > 56 55
Age Group
[Figure 4.1]
Marital Status of Respondents
% of Respondents
120 100 Married
80
Unmarried
60
Seperated
40
Widow
20 0 India
Bangladesh
Sri Lanka
Nepal
Country
[Figure 4.2]
This could be attributed to two major reasons: i) MFIs target clients in this age group similar to regular banking practice ii) Married women subscribe to SHGs to fulfill the financial needs of their families
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The monthly family income level of SHG leaders in all the countries [Figure 4.3] ranges from 5000 – 20000 in respective currencies (India – Rupee (INR), Bangladesh- Taka (BDT), Nepal – Rupiah (NPR), Sri Lanka-Rupee (LKR)). Majority of SHG leaders in India are in the Monthly income level of Rs 5000 to 10000. India and Bangladesh has the maximum number of SHG leaders whose family income is less than Rs.5000. Whereas, Bangladesh and Sri Lanka has a higher percentage of SHG leaders in the greater than 20000 level. This throws light on the reach of the MF programs to the really poor segments of the society. MF stalwarts often criticize that MF seldom reaches the very poor or the poorest in the society. The inclusion of higher income group people in the MF programs in all the countries reiterates this. Disparities in income levels in the different countries are subject to economic factors such as inflation and cost of living as well.
% of Respondents
Income Level of Respondents 140 120 100 80 60 40 20 0
India Bangladesh upto 5000 per month
>5001 >10000 >15000 > 20000 to to to 10000 15000 20000
Sri Lanka Nepal
Income Level (Respective Currency)
[Figure 4.3]
Most of the SHG leaders are educated up to the high school level [Figure 4.4]. The literacy level plays a key role in seeking the SHG membership. The benefit of literacy generates understanding about the functioning of SHG and participation in the SHG activities.
It is also notable the majority of SHG leaders covered in this study do not have any entrepreneurial history [Figure 4.6]. Approximately 80% of the SHG leaders in India and Nepal have no entrepreneurial history. Around 60% and 50% of SHG leaders in Bangladesh and Sri Lanka respectively have no entrepreneurial history. This may emanate from the employment
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opportunities available for women and cultural perceptions in the respective countries. This reasoning can be further extended to the occupational status of the SHG leaders [Figure 4.5] – India has a high number of SHG leaders both who are either employed or are housewives and Bangladesh has the maximum number of SHG leaders engaged in income-generation activities. The proportion of SHG leaders engaged in Income generating activities in Sri Lanka and Nepal is also much higher than India. This may be a result of the employment opportunities available in India vs. other countries in urban areas.
% of Respondents
Educational Qualification of Respondents 100 80
India
60
Bangladesh
40
Sri Lanka
20
Nepal
0 Diploma
Degree
High school
Illiterate
Primary School
Educational Qualification [Figure 4.4]
% of Respondents
Occupational Status of Respondents 80 70 60 50 40 30 20 10 0
Housewife Employed Self Employed
India
Bangladesh
Sri Lanka
Nepal
Country
[Figure 4.5] Volume 5, No.2, 2011
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Entrepreneurial History of Respondents
Country
Nepal Sri Lanka
Yes No
Bangladesh India 0
20
40
60
80
100
120
% of Respondents
[Figure 4.6]
4.2 Entrepreneurial Intention [Table 4.1] F –ratio Based on the Scores of SHG Leaders of the Four Countries on the Entrepreneurial Intention Scale Entrepreneurial Intention Scale
Entrepreneurial Intention
Source
Sum of Squares
Degrees of Freedom
Mean Square
F
Sig.
Between Groups
28013.875
3
9338.00
13.975
.001
Within Groups
237869.9
356
668.172
Total
265882.9
359
[Table 4.1] shows the F-ratio on the scores of the SHG leaders on the entrepreneurial intention scale. The F- ratio between the scores of SHG leaders of the four countries on the entrepreneurial intention scale has achieved statistical significance at .001 level. The null hypothesis (3.1.1) that SHG leaders across the four countries remain homogeneous in their scores on entrepreneurial intention scale is rejected. Hence the alternate hypothesis that SHG leaders across the four countries significantly differ in their scores on the entrepreneurial intention scale is accepted. 22
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Multiple mean comparison tests on the scores of SHG leaders of the four countries on the entrepreneurial intention scale were performed. The mean scores were subjected to post hoc test (Bonferroni). The mean scores of the SHG leaders of India, Bangladesh, Sri Lanka and Nepal on entrepreneurial intention scale were compared pair wise.
[Table 4.2] Mean and Standard Deviation of Scores of SHG Leaders of the Four Countries on the Entrepreneurial Intention Scale Variable
Country
N
Mean
Standard Deviation
Entrepreneurial Intention
Sri Lanka
90
218.26
23.429
Bangladesh
90
229.46
22.057
India
90
205.01
35.017
Nepal
90
224.71
23.652
The [Table 4.2] shows the mean and SD on scores of SHG leaders of the four countries on the entrepreneurial intention scale. The mean values indicate that SHG leaders of Bangladesh scored the highest on the entrepreneurial intention scale and the SHG leaders of India scored the lowest. The SHG leaders of Nepal ranked second highest and the SHG leaders of Sri Lanka ranked third highest on their scores on the entrepreneurial intention scale.
[Table 4.3] Mean Difference of Scores of SHG Leaders of the Four Countries on the Entrepreneurial Intention Scale Mean Level of Variable (I) Country (J) Country Difference Significance (I-J) Entrepreneurial Sri Lanka Bangladesh -9.822 0.067 Intention
Bangladesh
India
India
13.244*
0.004
Nepal
-6.456
0.569
India
23.067*
0.000
Nepal
3.367
1.000
Nepal
-19.700*
0.000
* The mean difference is significant at .05 level
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The [Table 4.3] shows the mean difference scores and Bonferroni test results on scores of SHG leaders of the four countries on the entrepreneurial intention scale along with the level of significance achieved. When the mean scores of the SHG leaders in each country on the entrepreneurial intention scale were compared with one another, The mean difference value of the scores of SHG leaders of Sri Lanka and India on the entrepreneurial intention scale was statistically significant. The SHG leaders of Sri Lanka scored significantly higher than SHG leaders of India on the entrepreneurial intention scale. The mean difference of the scores of SHG leaders of Sri Lanka and other two countries, Bangladesh and Nepal was not statistically significant on the entrepreneurial intention scale. Hence, it can be inferred that the SHG leaders of Sri Lanka, Bangladesh and Nepal were homogeneous on the entrepreneurial intention scale. The mean difference of the scores of SHG leaders of Bangladesh and India on the entrepreneurial intention scale was statistically significant; the SHG leaders of Bangladesh scored significantly higher than SHG leaders of India on the entrepreneurial intention scale. The mean difference of the scores of SHG leaders of Bangladesh and Nepal was not statistically significant on the entrepreneurial intention scale. It is inferred that the SHG leaders of Bangladesh and Nepal were homogeneous on the entrepreneurial intention scale. The mean difference of the scores of SHG leaders of Nepal and India on the entrepreneurial intention scale was statistically significant; the SHG leaders of Nepal scored significantly higher than the SHG leaders of India on the entrepreneurial intention scale.
Hence, it can be inferred that the SHG leaders of Sri Lanka, Bangladesh and Nepal were homogeneous on the entrepreneurial intention scale; and the scores of SHG leaders of India were significantly different and lower than the SHG leaders of the other three countries.
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4.2.1 Desirability [Table 4.4] F –Ratio Based on the Scores of SHG Leaders of the Four Countries on the Desirability Dimension of the Entrepreneurial Intention Scale EIS
Desirability
Source Between Groups Within Groups Total
Sum of Squares
Degrees of Freedom
Mean Square
F
Sig.
14879.79
3
4959.9
14.680
.001
120278
356
337.86
135157.8
359
[Table 4.4] shows the F-ratio on the scores of the SHG leaders on the desirability dimension of the entrepreneurial intention scale. The F- ratio between the scores of SHG leaders of the four countries on the desirability dimension of entrepreneurial intention scale has achieved statistical significance at .001 level. Hence, the null hypothesis (3.1.2) that SHG leaders across the four countries remain homogeneous in their scores on Desirability is rejected. And, the alternate hypothesis that SHG leaders across the four countries significantly differ in their scores on Desirability dimension of the entrepreneurial intention scale is accepted. The desirability dimension of entrepreneurial intention is represented by five sub-scales of the entrepreneurial intention scale: i) Attitude ii) Social Support iii) Entrepreneurial Interest iv) Motivation v) Propensity to Act.
[Table 4.5] Mean and Standard Deviation of Scores of SHG leaders of the Four Countries on the Desirability Dimension of Entrepreneurial Intention Scale Variable
Country
N
Mean
Standard Deviation
Desirability
Sri Lanka
90
160.6
16.09
Bangladesh
90
164.8
12.791
India
90
148.3
23.114
Nepal
90
162.9
19.867
The [Table 4.5] shows the mean and standard deviation of scores of SHG leaders of the four countries on the Desirability dimension of the entrepreneurial intention scale. The mean values Volume 5, No.2, 2011
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indicate that the SHG leaders of Sri Lanka, Bangladesh and Nepal were homogeneous on the desirability dimension of the entrepreneurial intention scale. The mean value of scores of SHG leaders of India was the lowest on the desirability dimension of the entrepreneurial intention scale.
[Table 4.6] Mean Difference scores of SHG Leaders of the Four Countries on the Desirability Dimension of Entrepreneurial Intention Scale Variable
(I)Country
(J)Country
Mean Difference (I-J)
Level of Significance
Overall Desirability
Sri Lanka
Bangladesh
-4.222
0.745
India
12.278*
0.000
Nepal
-2.267
1.000
India
16.500*
0.000
Nepal
1.956
1.000
Nepal
-14.544*
0.000
Bangladesh
India
* The mean difference is significant at .05 level
The [Table 4.6] shows the mean difference values and Bonferroni test results on scores of SHG leaders of the four countries on the desirability dimension of entrepreneurial intention scale along with the level of significance achieved. When the mean scores of the SHG leaders in each country on the desirability dimension of entrepreneurial intention scale were compared with one another The mean difference value of the scores of SHG leaders of India and the other three countries Sri Lanka, Bangladesh and Nepal respectively, were statistically significant. The SHG leaders of all these countries scored significantly higher than SHG leaders of India on the desirability dimension of the entrepreneurial intention scale. The mean difference value of the scores of SHG leaders of Sri Lanka, Bangladesh and Nepal were not statistically significant against each other. It is inferred that the SHG leaders of Sri Lanka, Bangladesh and Nepal are homogenous on the desirability dimension of the entrepreneurial intention scale.
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4.2.2 Feasibility [Table 4.7] F –Ratio Based on the Scores of SHG Leaders on the Overall Feasibility Dimension of the Entrepreneurial Intention Scale Entrepreneurial Intention Scale (EIS)
Feasibility
Total
Source
Sum of Squares
Degrees of Freedom
Mean Square
F
Sig.
Between Groups
2734.5
3
911.5
9.611
.001
Within Groups
33763.62
356
94.842
36498.12
359
[Table 4.7] shows the F-ratio on the scores of the SHG leaders on the overall feasibility dimension of the entrepreneurial intention scale. The F- ratio between the scores of SHG leaders of the four countries on the feasibility dimension of the entrepreneurial intention scale has achieved statistical significance at .001 level. Hence, the null hypothesis (3.1.3) that SHG leaders across the four countries would remain homogeneous in their scores on feasibility dimension of the entrepreneurial intention scale is rejected. And the alternate hypothesis that SHG leaders across the four countries significantly differ in their scores on the feasibility dimension of the entrepreneurial intention scale is accepted.
The feasibility dimension comprises of two sub-scales on the entrepreneurial intention scale – Risk Taking Ability and Knowledge & skills. Multiple mean comparison tests on the scores of SHG leaders of the four countries on the motivation sub-scale of the entrepreneurial intention scale were performed. The mean scores were subjected to post hoc test (Bonferroni pair test). The mean scores of the SHG leaders of India, Bangladesh, Sri Lanka and Nepal on the Feasibility dimension of the entrepreneurial intention scale were compared.
The [Table 4.8] shows the mean and standard deviation on scores of SHG leaders of the four countries on the Feasibility dimension of the entrepreneurial intention scale.
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[Table 4.8] Mean and Standard Deviation of Scores of SHG Leaders of the Four Countries on the Feasibility Dimension of the Entrepreneurial Intention Scale Variable
Country
N
Mean
Standard Deviation
Feasibility
Sri Lanka
90
57.67
9.159
Bangladesh
90
63.27
9.292
India
90
56.7
12.875
Nepal
90
61.86
6.587
The mean values indicate that SHG leaders of Bangladesh scored highest on followed by the SHG leaders of Nepal on the feasibility dimension of the entrepreneurial intention scale. The SHG leaders of Sri Lanka and India were homogeneous on their scores in the feasibility sub-scale of the entrepreneurial intention scale; they scored the lowest on the feasibility sub-scale of the entrepreneurial intention scale.
[Table 4.9] Mean Difference Scores of SHG Leaders on the Feasibility Dimension of the Entrepreneurial Intention Scale Variable
(I)Country
(J)Country
Mean Difference (I-J)
Level of Significance
Feasibility
Sri Lanka
Bangladesh
-5.600*
0.001
India
.967
1.000
Nepal
-4.189*
0.025
India
6.567*
0.000
Nepal
1.411
1.000
Nepal
-5.156*
0.003
Bangladesh
India
* The mean difference is significant at .05 level
The [Table 4.9] shows the mean difference values and Bonferroni test results on scores of SHG leaders of the four countries on the feasibility dimension of entrepreneurial intention scale
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along with the level of significance achieved. When the mean scores of the SHG leaders in each country on the feasibility dimension of entrepreneurial intention scale were compared with one another: The mean difference scores of SHG leaders in Sri Lanka and SHG leaders in Bangladesh and Nepal were statistically significant on the feasibility dimension of the entrepreneurial intention scale. It is inferred that SHG leaders in Sri Lanka, Bangladesh and Nepal are not homogeneous in their scores on the feasibility dimension of the entrepreneurial intention scale. The mean difference scores of SHG leaders in Sri Lanka and India were not statistically significant on the feasibility dimension of the entrepreneurial intention scale. It is inferred that the SHG leaders in Sri Lanka and SHG leaders in India are homogeneous in their scores on the feasibility dimension of the entrepreneurial intention scale. The mean difference scores of SHG leaders in Bangladesh and India were statistically significant on the feasibility dimension of the entrepreneurial intention scale. It is inferred that the SHG leaders in Bangladesh and SHG leaders in India are not homogeneous in their scores on the feasibility dimension of the entrepreneurial intention scale. The mean difference scores of SHG leaders in Bangladesh and Nepal were not statistically significant on the feasibility dimension of the entrepreneurial intention scale. It is inferred that the SHG leaders in Bangladesh and SHG leaders in Nepal are homogeneous in their scores on the feasibility dimension of the entrepreneurial intention scale. The mean difference scores of SHG leaders in India and Nepal were statistically significant on the feasibility dimension of the entrepreneurial intention scale. It is inferred that the SHG leaders in India and SHG leaders in Nepal are not homogeneous in their scores on the feasibility dimension of the entrepreneurial intention scale. The mean difference scores of SHG leaders in Bangladesh and Nepal were not statistically significant on the feasibility dimension of the entrepreneurial intention scale. It is inferred that the SHG leaders in Bangladesh and SHG leaders in Nepal are homogeneous in their scores on the feasibility dimension of the entrepreneurial intention scale.
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5. Discussion: Measuring and Comparing Entrepreneurial Intention Levels Entrepreneurial intention is facilitated by entrepreneurial awareness as well as presence of perceived feasibility and desirability of entrepreneurship in an individual. In this study, an entrepreneurial intention scale (EIS) was used to measure these two major dimensions of intention: desirability and feasibility in SHG leaders. The desirability dimension was measured on the basis of five factors: attitude, social support, entrepreneurial interest, motivation, propensity to act. The feasibility dimension was measured on the basis of two factors: risk taking ability and knowledge & skills. A person who scored high on the EIS was considered to have high entrepreneurial intention. Those who scoreless were considered to have low level of entrepreneurial intention.
The SHG leaders of Sri Lanka were homogeneous on the entrepreneurial intention scale with the SHG leaders of Bangladesh and Nepal. The SHG leaders of Bangladesh and Nepal were also homogeneous on the entrepreneurial intention scale. However, the scores of SHG leaders of India were significantly different and lower than the SHG leaders of the other three countries. The reasons for this would emerge out of the discussion of results of the SHG leaders on the desirability and feasibility dimensions of the EIS.
5.1 Factors Influencing Perceived Desirability SHG leaders in all the other countries taken up for the study– Sri Lanka , Bangladesh and Nepal had a high score than SHG leaders in India on the desirability dimension of the entrepreneurial intention scale. The desirability score is a sum total of the scores on the subdimensions of desirability - propensity to act, interest, attitude, social support and motivation. A high score on all of these or most of these sub-scales contributes to the high score on desirability dimension. SHG leaders in all the other countries had a higher level of positive attitude, interest, motivation, propensity to act, compared to SHG leaders in India. However they were on par with SHG leaders of other three countries in their level of social support.
SHG leaders in India can be encouraged to pursue entrepreneurial activities by enhancing their desirability levels. This can be done through NGO initiatives and training programs focusing on improving the constituent elements of desirability in the SHG leaders and members.
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5.2
Factors Influencing Perceived Feasibility
Perceived Feasibility is a function of one‟s belief about one‟s capability to perform a task – in this case the role of an entrepreneur; this influences the development of both entrepreneurial intentions and actions or behaviors. The perception about the capability is determined by two major dimensions – knowledge & skills and risk taking ability. A sum total of these two dimensions represent the perceived feasibility of entrepreneurship in the SHG leaders of this study.
The SHG leaders India were not homogeneous on their scores in the feasibility sub-scale of the entrepreneurial intention scale with other countries except Sri Lanka; feasibility levels of SHG leaders from India and Sri Lanka were homogeneous and the lower than other two countries. However the reasons for low levels of perceived feasibility of entrepreneurial activity may be different in these two countries. SHG leaders of India had a similar level of risk taking ability as SHG leaders in all the other countries but the risk taking ability of SHG leaders in Sri Lanka is lower than the SHG leaders in Bangladesh and Nepal. Level of knowledge & skills of SHG leaders in India is significantly lower than SHG leaders in other three countries –Bangladesh, Sri Lanka and Nepal. Thus, the perceived feasibility of SHG leaders of Sri Lanka is affected by the low level of risk taking ability and the perceived feasibility of SHG leaders of India is affected by their level of knowledge and skills.
5.3 Implications of the Study 5.3.1 Entrepreneurial Intention in Urban MF Clients: Differences and Similarities The scores of SHG leaders of Sri Lanka and India on the entrepreneurial intention scale were significantly different; the SHG leaders of Sri Lanka scored significantly higher than SHG leaders of India on the entrepreneurial intention scale. The scores of SHG leaders of Sri Lanka and other two countries, Bangladesh and Nepal were not significantly different on the entrepreneurial intention scale. The scores of SHG leaders of Bangladesh and India on the entrepreneurial intention scale were significantly different; the SHG leaders of Bangladesh scored significantly higher than SHG leaders of India on the entrepreneurial intention scale. The difference of the scores of SHG leaders of Nepal and India on the entrepreneurial intention scale was also significant. The SHG leaders of Nepal scored significantly Volume 5, No.2, 2011
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higher than the SHG leaders of India on the entrepreneurial intention scale. The difference of the scores of SHG leaders of Bangladesh and Nepal was not significantly different on the entrepreneurial intention scale.
5.3.2
5.3.2.1
Deciphering Disparities in Detail
Desirability towards Entrepreneurship
The difference in the scores of SHG leaders of India and the other three countries Sri Lanka, Bangladesh and Nepal respectively, were significant on the desirability dimension of the entrepreneurial intention scale. The SHG leaders of all these countries scored significantly higher than SHG leaders of India on the desirability dimension of the entrepreneurial intention scale. The scores of SHG leaders of Sri Lanka, Bangladesh and Nepal were not significantly different from each other.
5.3.2.2
Feasibility of an Entrepreneurial Career
The scores of SHG leaders in Sri Lanka and SHG leaders in Bangladesh and Nepal were significantly different on the feasibility dimension of the entrepreneurial intention scale. The SHG leaders in Sri Lanka had lower levels of perceived feasibility compared to SHG leaders in Bangladesh and Nepal. The difference in scores of SHG leaders in Sri Lanka and India were not significant on the feasibility dimension of the entrepreneurial intention scale. The scores of SHG leaders in Bangladesh and India were significantly different on the feasibility dimension of the entrepreneurial intention scale. The SHG leaders of Bangladesh had higher levels of perceived feasibility compared to SHG leaders of India. The scores of SHG leaders in Bangladesh and Nepal were not significantly different on the feasibility dimension of the entrepreneurial intention scale. The scores of SHG leaders in Nepal and India were significantly different on the feasibility dimension of the entrepreneurial intention scale. The SHG leaders of Nepal had higher levels of perceived feasibility compared to SHG leaders of India. The scores of SHG leaders in Bangladesh and Nepal were not significantly different on the feasibility dimension of the entrepreneurial intention scale.
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6. Conclusion 6.1 Summary Significant differences and similarities in entrepreneurial intention levels of SHG leaders of the four countries existed; 1. SHG leaders of Sri Lanka, Bangladesh and Nepal are similar in their levels of entrepreneurial intention, and also had significantly higher level of entrepreneurial intention than SHG leaders of India. 2. The level of perceived desirability of entrepreneurship in SHG leaders of India was significantly different and lower than SHG leaders of Sri Lanka, Bangladesh and Nepal; SHG leaders of all other countries had similar levels of perceived desirability for entrepreneurship. 3. SHG leaders in Bangladesh and Nepal had similar levels of perceived feasibility and SHG leaders in Sri Lanka and India had similar levels of perceived feasibility. Also the SHG leaders in Bangladesh and Nepal had higher levels of perceived feasibility compared to SHG leaders in both Sri Lanka and India.
6.2 Low Levels of Entrepreneurial Intention in Urban MF Clients in India
The study reiterates that intentions direct attention, experience, and behaviour toward the accomplishment of the specific action. For an individual to be committed to entrepreneurship or behave entrepreneurially, one must have the intention. Entrepreneurial intention is facilitated by entrepreneurial awareness as well as presence of perceived feasibility and desirability of entrepreneurship in an individual. The results of the survey clearly indicate that urban SHG leaders in India (MF clients) possess a low level of entrepreneurial intention compared to urban SHG leaders (MF clients) in the other three countries – Bangladesh, Sri Lanka and Nepal.
6.3 Rationale for Low Level of Intention in MF Clients in India Urban MF clients in India seek to be employed rather than self-employed. Particularly in the domain of Bangalore, India, people of local origin are happy, content and satisfied with a throw away reward of a job because their social need is satisfied. This emerges from their responses and
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scores on the Social Support dimension of the EIS. The SHG members are satisfied with a shift in their lifestyle through consumption loans, become complacent and do not want to pursue any entrepreneurial activity. This is reflected in the low level of attitude, motivation, interest towards entrepreneurship and propensity to act. There are very few cases of micro enterprises or viable commercial activity taken up post the membership in a SHG. These limited numbers of SHG members who engage in income generation activities through self employment also face many challenges. This is not particularly inspiring for the other SHG members and thus they have very low levels of risk taking ability and thus, entrepreneurial intention. Their knowledge and skills is also limited compared to other countries and there are plenty of employment opportunities available which makes setting up a business an unattractive proposition. This is revealed in their responses to the feasibility dimension on the EIS.
6.4 Recommendations 6.4.1 Assessing and Improving Entrepreneurial Intention 1. Enterprise loans can be given to the SHG members after ascertaining their entrepreneurial intention. 2. NGOs in India can devise initiatives and training programs focusing on improving the constituent elements of desirability and feasibility in the SHG members 3. NGOs in India and Sri Lanka may assess the attitudes of the SHG members and improve on them to achieve enterprise development goals. 4. Social support provided by family is crucial and hence, NGO MFIs in all the countries should involve the family members especially husbands of SHG members in the awareness programs to the extent possible. 5. Focusing on specific and sustainable skill development programs will increase the feasibility of enterprise building in urban SHG members. 6. Existing knowledge & skills of SHG members can be identified and NGOs can help them set up enterprises that will utilize their knowledge & skills. This practice is not totally new in the MF sector but is scarce in the urban scenario.
6.4.2 Utilizing Non -Financial Benefits of SHG System Irrespective of the low side of financial outcomes discussed so far, there are some concrete evidences of benefits that SHG membership provides which were observed during the study. SHG
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members become confident, take control over their lives and gain respect from family members. They learn skills such as book keeping, basics of cash flow analysis, managing their savings, and utilizing formalized financial services of a bank. These skills prepare and equip the members to pursue entrepreneurial ventures and for those who decide against it, to perform better in their jobs. The women who choose not to pursue any career also find that the SHG experience reverberates in other aspects of their life. Social and financial empowerment of women accompanied by intellectual advancement is a clear positive outcome of the SHG system. All the women included in this study felt that their SHG experience can be utilized by them for enterprise creation. Through the development of entrepreneurial capability among these women, urban poor households will find a way out of poverty.
Findings of this study about the entrepreneurial intentions of urban MF clients (SHG members) will facilitate both MF policy makers and practitioners to draw new and result oriented policies. It points them towards discerning potential entrepreneurs and to channelize policy efforts towards the right populace to encourage micro enterprises.
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References
Adolph, B. (2003). The Role of Self-Help Groups in Rural Non-Farm Employment, Discussion Paper, DFID Project Ajzen, I. (1991). The Theory of Planned Behaviour, Organizational Behaviour and Human Decision Processes 50(2):1-63.
Appolloni, A. and Sagiri, S. (2009). Identifying the Effect of Psychological Variables on Entrepreneurial Intention, DSM Business Review, Vol. 1, No. 2 Bagozzi, R. P. and Yi, Y. (1989). The Degree of Intention Formation as a Moderator of the Attitude – Behaviour Relationship, Social Psychology Quarterly, Vol.52, No.4, 266-279 Bandura, A. (1986). The Social Foundations of Thought and Action, Englewood Cliffs, NJ, Prentice Hall Brännback, M., Kickul, J., Elfving, J., and Carsrud, A. (2007). Trying to be an Entrepreneur? A 'Goal-Specific' Challenge to the Intentions Model, Abo Akademi University Chen, C. C., Greene, P. G., and Crick, A. (1998). Does Self-Efficacy Distinguish Entrepreneurs from Managers?, Journal of Business Venturing 13: 295-316. Cooper, D. R. and Schindler, P. S. (2003). Business Research Methods, Tata Mc Graw Hill Edition, India Karnani, A. (2007). Microfinance Misses Its Mark , Stanford Social Innovation Review Articles June 2, 2007 Krueger, N. F. (1993). The impact of prior entrepreneurial exposure on perceptions, Entrepreneurship Theory and Practice, 18(1), 5-22. Krueger, N. F. (2000). The cognitive infrastructure of opportunity emergence. Entrepreneurship Theory and Practice, 24 (3): 5-23. Krueger, N. F. and Brazeal, D. V. (1994). Entrepreneurial potential and potential entrepreneurs. Entrepreneurship Theory and Practice, 18(3), 91-103. Krueger, N. F. Jr., Reilly, M. D., and Carsrud, A. L. (2000). Competing Models of Entrepreneurial Intentions, Journal of Business Venturing 15, 411–432 Kruger, N. F and Carsrud, A. L. (1993). Entrepreneurial intention – applying the theory of planned behavior Entrepreneurship and Regional Development, 315 -330 Liñán, F. and Cantuche, R.
(2005). Factors affecting entrepreneurial intention levels,
Development and validation of an Entrepreneurial Intention questionnaire (EIQ), IntEnt2005 Conference, Guildford (United Kingdom), 10-13 july
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Liñán, F. and Rodríguez, J. C. (2004). Entrepreneurial attitudes of Andalusian university students, 44th ERSA Conference, Porto (Portugal), 21-25 MacMillan, I. C. and Katz, J.A. (1992). Idiosyncratic milieus of entrepreneurial research: The need for comprehensive theories, Journal of Business Venturing Scholten, V., Kemp, R., and Onno, O. (2004). Entrepreneurship for life: The Entrepreneurial Intention among Academics in the Life Sciences, Paper prepared for European Summer University 2004 Segal, G., Borgia, D., and Schoenfeld, J. (2005). The Motivation to Become an Entrepreneur, International Journal of Entrepreneurial Behaviour and Research, Volume: 11, Number: 1, 42-57 Shane, S. A. (2003). A General Theory of Entrepreneurship: The Individual Opportunity nexus, Edward Elgar Publishing, Cheltanhaum, UK Shapero, A. and Sokol, L. (1982). The social dimensions of entrepreneurship. In Kent, C., Sexton, D., Vesper, K. (eds.), The Encyclopedia of Entrepreneurship, Englewood Cliffs, NJ Prentice-Hall, Inc. 72 – 90 Urban, B. (2006). Entrepreneurship in the Rainbow Nation: Effect of Cultural values and ESE on intentions, Journal of Developmental Entrepreneurship, Vol. 11, No. 3, 171–186, World Scientific Publishing Company
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A Study on Constructing the Model of the Factors Affecting the Performance of Social Enterprises
Kyung-soo Lim and Ji-hyun Ryu, 1
Abstract Social enterprise is increasingly recognized for its economic, social and environmental contribution to society and a wealth of social enterprise research is now emerging from practitioners and academics alike. Above all, there has been an upsurge of interest in social entrepreneurship. A review of the literature emerging from a number of domains reveals that it is fragmented and that there is no coherent theoretical framework. A consensus is emerging that understanding social entrepreneurship and social entrepreneurs is important. And the "A decision-making power not based on capital ownership" is a distinct characteristics of social enterprises that the EMES Network emphasizes and it is derived from the organizational culture based on democratic decision-making process. Especially in Korea, the initiative of social enterprise is led by the government and the policy has a powerful influence on the development of the social enterprises. This research is focused on the key elements attributing to the performance of social enterprises, specifically social entrepreneurship, relationship-oriented organizational culture and government support policy. One hundred and seven social enterprises, which are authenticated by the Ministry of Employment and Labor, have been surveyed. The results are as follows: First, social entrepreneurship influenced economic and social performance of social enterprises.
Professor, Department of Industrial and Management Engineering of Daegu University, Korea, e-mail:
[email protected] Corresponding Author, Lecturer, Daegu Polytechnic College University, Korea, e-mail:
[email protected] 1 This work was supported by the Daegu University Research Grant of 2011.
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Second, relationship-oriented organizational culture influenced economic and social performance of social enterprises. Third, government support policy influenced economic performance of social enterprises, but did not influence its social performance. This study has advanced research in social entrepreneurship and contributed to the development of an empirically derived model of social entrepreneurship identifying the core behavioral dimensions of innovativeness, proactiveness, risk management and the sense of balance between the public interest and private interest. And this finding also indicates that the community-oriented organizational culture and the government policy are important factors in achieving the successful management performance of social enterprises.
Key
words:
social
enterprise,
social
entrepreneurship,
relationship-oriented
organizational culture, government support policy, performance of social enterprise
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1. Introduction In the past ten years, Korea has had a period of rapid economic development due to the influence of world economic neo-liberalism. However, it has also led to a larger gap between socially vulnerable groups and the upper class. In other words, the gap between rich and poor is getting larger. In agreement, social enterprises have been widely considered as an alternative form of economy since the World Economic Forum held in Davos in 2006. Social enterprise is a business that realizes the value of charity as a corporate method. In other words, it is a form of enterprise that is driven by entrepreneurship and is pursuing social and economical purpose, but the legal form varies from country to country (OECD, 1999). Social enterprise spontaneously arose to respond to social changes especially around the private sector of the welfare state and social organizations. It presented innovative and dynamic solutions to the problems of unemployment and social exclusion. Also, it is characterized by contributing to the promotion of social integration as one aspect of sustainable development and to increase economic growth. The importance of Social enterprise is being increasingly recognized. Peter F. Drucker called the social enterprise "America's leading growth industry," and David Gergen, a professor of Harvard Kennedy School, described it as one of "the new engines of reform". Many countries including the United States, have given political support to social enterprises and the EU has instituted a strategic economic policy to promote its development. In fact, Europe and the United States confronted the period of “Growth without Employment” since the mid1980s, and have promoted policies on the creation of new jobs especially in the Third Sector (civil society areas). Although each country has a different welfare-state model, they implemented a policy of fostering social enterprise as a part of workfare or active employment policy. As a result of the promotion, there are approximately 62,000 social enterprises in the UK with small and medium social enterprises contributing ￡24 billion GVA (Gross Value Added) to the UK economy(SEC, 2009). In Korea, there are 555 social enterprises as of August, 2011. They are established by a certification program according to the Social Enterprise Promotion Act which entered into force in 2007. The analysis results of these certified businesses indicate that: among the businesses which were certified first in 2007, 52% of them have participated in the Job Creation Program in Social Services designed by the Ministry of Labor. We can assume that social enterprises are the extension of the government-led social work policy. Therefore, the purpose of this study is to answer the following question: What are the success factors which can be attributed to the successful performance of social enterprise,
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especially in the South Korean environment as compared to Europe or the United States? To answer this question, we set the criteria of success as to whether the social enterprises have achieved their original purpose, i.e. to create employment and serve the community. We also selected three contributing factors among many determinants of success for enterprise. They are social entrepreneurship, relationship-oriented organizational culture and government support policy. Finally, we attempted to construct a model of these factors and their effect on the performance of social enterprise.
This research is divided into two categories: theoretical and empirical research. First, the theoretical research was done by conducting literature review. We analyzed precedent theoretical and empirical researches that focus on the success factors of social enterprises such as entrepreneurship, organizational culture, and government support policy. Then the results were used to measure and analyze their affects. Second, the empirical research was based on the survey that was carried out during November, 2010. We extracted three affecting factors from the theoretical research and made out a structured questionnaire for verifying these effects on social enterprises. Then we surveyed 107 businesses among the 355 certified social enterprises in Korea until August, 2011.
2. The Theoretical Background of Social Enterprise
2.1. The Definition of Social Enterprise The original use of the term social enterprise was first developed by Freer Spreckley in 1978 and later included in a publication called “Social Audit – A Management Tool for Co-operative Working” published in 1981 by Beechwood College. In the original publication, the term “Social Enterprise” was developed to describe an organization that uses Social Audit. Although there is not a unified view about the definition of social enterprise, the most widely accepted definition of social enterprise is the notion that is presented by the EMES (L‟ Emergence des Entreprises Sociales en Europe) Networks. The EMES definition is as follows: Social enterprises are not-forprofit private organizations providing goods or services directly related to their explicit aim to benefit the community. They rely on a collective dynamics involving various types of stakeholders in their governing bodies, they place a high value on their autonomy and they bear economic risks linked to their activity.
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Social enterprise lies at the interception between pure business and traditional non-profit. Alter (2007) explains the domain of social enterprise as [Figure 1].
[Figure 1] The Domain of Social Enterprise Source: Alter Kim (2007), Social Enterprise Typology
Now then, why do social enterprises draw attention from many countries? In Europe, the Government usually provided relatively stable welfare services. However, due to the two oil shocks in the 1970s and the economic growth of developing countries in Asia, many European governments were faced with the economic recession and even felt the crisis of the welfare state in 1980s. Because of these factors, they turned their eyes to social enterprises. Like Europe, the United States also experienced economic stagnation and government failure. The impact led to proposal of a welfare reduction theory. Therefore, on the one hand, they reduced benefits and associated the deployment of resources as the core method to expand revenue. On the other hand, they gradually changed nonprofit organizations into social enterprises. In addition, the linkages and collaborations of the profit and non-profit sectors were used to achieve an increase in socially responsible activities. However, in South Korea, the labor market began to change from the early 1990s. After the foreign exchange crisis, the labor market had a rapid emergence of polarization. This caused a necessity for a fundamental improvement in the short term and low-wage workforce policy. The imitation of Europe‟s social service enterprise system was discussed, especially in 2000 which was a period of growth in unemployment.
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2.2 Leading Research The initial research about social enterprises can be found in “The Emergence of Social Enterprise” by the EMES Networks in the EU. It was the result of extensive investigation about the phenomena of social enterprises in 15 EU countries from 1996 to 1999 and published in 2001. In the traditional view, the entrepreneur, as the business operator, is the most important element that affects the growth of enterprise. The term entrepreneur comes from France in the 17th or 18th centuries. Jean-Baptiste Say, a French economist, defined the term in the 19th century, "The entrepreneur shifts economic resources out of lower and into higher productivity and greater yield." This was the most widely accepted definition at this time. Later, in the 20th century, Joseph Schumpeter (1934) defined entrepreneurs as innovators and using the term “creative destruction”, emphasized the role of entrepreneurs in changing business norms.
In the literature review, many researchers studied the relationship between entrepreneurship and the performance of businesses targeting the leading venture firms as well as general companies. The results of the research suggest that the individual factors, like founder (Lewis, 1983), prior experience (Tan and Tay, 1994), age (Hall, 1994), and personal characteristics of the entrepreneur (Bandura, 1986; Roure and Madique, 1986; Walsh, 1996; Chen et al., 1998; Baron, 2000) have a significant impact on the performance of businesses. In addition, entrepreneurship contributes not only to enhanced organizational performance, but also to the generation of new business which lead to increased profits (Peterson & Berger, 1971). Entrepreneurship also helps to obtain a competitive advantage (Schollhammer, 1982) and can be found to contribute to the resulting financial performance.
Recently, J. Gregory Dees, an associate professor at the Harvard Business School, began to conceptualize social entrepreneurship from the term "entrepreneur". Dees‟ definition is based on certain concepts which were presented by earlier scholars. He defines that “Social entrepreneurs play the role of change agents in the social sector, by: Adopting a mission to create and sustain social value (not just private value), Recognizing and relentlessly pursuing new opportunities to serve that mission, Engaging in a process of continuous innovation, adaptation, and learning, Acting boldly without being limited by resources currently in hand, and Exhibiting heightened accountability to the constituencies served and for the outcomes created.” (Dees, 1998) These include: Say‟s value creation, Schumpeter's innovation and change agents, Drucker‟s pursuit of opportunity, and Stevenson's resourcefulness. However, to distinguish social entrepreneurship
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from entrepreneurship, he focused on the market discipline assigned to social enterprises and the responsibility of the organization‟s mission. L. Hulgard, an EMES researcher, created the concept of researchers and authorities, then proposed the definition of social entrepreneurship as, "the creation of a social value that is produced in collaboration with people and organizations from the civil society who are engaged in social innovations that usually imply an economic activity "(Hulgard, 2010), which is based on four criteria --- social values, civil society, innovation, and economic activities. Research on the impact factors of social enterprise have been presented by some foreign researchers such as Wheeler (2003), Maurrice (2004), Sharir & Lerner (2006), and Nobutaka (2007). Meanwhile in Korea, Lee, In Jae (2006), Jeong, Seon Hee (2006), Lee, Kwang Woo (2008) and other scholars have also published research in this area, but they have not proposed a consistent result yet. This is because social enterprise is still in an early state and unlike an ordinary business, so it does not have a unified basis of accounting criteria and clear results. In these studies, Sharir & Lerner (2006) focused on the factors of social enterprise in a fundamental sense. They focused on identifying the factors affecting the success of social enterprises and demonstrate eight factors in the results. The eight variables as contributing to the success of the social ventures are: (1) the entrepreneur‟s social network; (2) total dedication to the venture‟s success; (3) the capital base at the establishment stage; (4) the acceptance of the venture idea in the public discourse; (5) the composition of the venturing team, including the ratio of volunteers to salaried employees; (6) forming cooperation in the public and nonprofit sectors in the long-term; (7) the ability of the service to stand the market test; and (8) the entrepreneurs‟ previous managerial experience. This study was based on the results of a study conducted from 1999 to 2001. The first study was in the 1990s, by institutions in Israel. Thirty-three social venture companies were studied. The second study was based on the theory of the first study; it also added five case studies. In this process, entrepreneurs' organizational and environmental variables were studied. For the first time in Korea, Lee, Kwang Woo (2008) used this study as a basis to integrate the successful factors to complete his own empirical analysis.
3. Empirical Research Design The purpose of the empirical research was to establish the elements that affect the success of social enterprise and demonstrate a model of the correlation of the elements. The elements are social entrepreneurship, relationship-oriented organizational culture, and government support policy which were mentioned in the former study.
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3.1. Research hyPothesis 3.1.1 Social Entrepreneurship Based on the theory according to Dees (1998), Schumpter (1934), Drucker (1985), and Stevenson (1985), the social entrepreneur can be defined as "change agents to create and maintain social value, not limited to specific resources." Social enterprise is pursing both economic and social purpose. However social enterprises are the same as other general enterprises in the beginning, so the elements that affect the success of venture businesses can apply to social enterprises. Covin & Slevin (1991) proposed venture entrepreneurs‟ risk-taking behavior is characterized by tendency, core attributes of the individual, and initiative. This feature is also in line with the behavior of social entrepreneurs. In addition, Weerawardena & Sullivan (2007) suggested the elements of the social entrepreneurship as innovativeness, proactiveness, and risk management. According to the many researches, entrepreneurship has a positive effect on the performance of venture businesses. With this, we can assume that social entrepreneurship will affect the success of social enterprise, and set a hypothesis in line with this. Hypothesis 1. Social entrepreneurship will have a positive effect on the economic performance of social enterprises. Hypothesis 2. Social entrepreneurship will have a positive effect on the social performance of social enterprises. 3.1.2 Relationship-Oriented Organizational Culture Social enterprise is an organization created for the purpose of solving social problems. Then, discussing venture business activities and vision sharing are the organization's main objectives. These are the most influential factors in achieving the organization‟s social goals. According to competing values framework of Quinn & Rohrbaugh (1983), an organization that is based on the good communication participation and democratic decision procedure can achieve higher organizational performance in the business. With this, the impact of relationship-oriented organizational culture onto social enterprise can be analyzed. According to the results generated by the organization's role, the following assumptions can be made. Hypothesis 3. Relationship-oriented organizational culture will have a positive effect on the economic performance of social enterprise. Hypothesis 4. Relationship-oriented organizational culture will have a positive effect on the social performance of social enterprises.
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3.1.3 Government support policy After the late 1990s currency crisis, Korea was facing a shrinking labor market and its income polarization problem was worsening. The government led a formal study and as a result, its policy on social enterprise began to take shape. The guidelines were set in 2006 and the Social Enterprise Promotion Act came into effect in 2007. It is based on social enterprise in Europe and the United States, taking into account Korea's economic and social conditions. They determined that it is very important to set effective policy guidance. Also, an inspection measure for the basis of social enterprise incubation method has been certified for social enterprise activities. In this study, in order to promote social enterprise development, the following policy was made: Hypothesis 5. The government support policy will have a positive effect on the economic performance of social enterprises. Hypothesis 6. The government support policy wil have a positive effect on the social performance of social enterprises.
3.2 Research Model In this study, the model is as follows [Figure 2]: The independent variables of the empirical study are: social entrepreneurship, relationshiporiented organizational culture, and government support policy. Economic and social performance act as the dependent variables, while size and age of the enterprises are the controlled variables.
[Figure 2] Research Model Volume 5, No.2, 2011
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3.3. Verification of Hypotheses 3.3.1. Reliability and Validity Assessments Reliability for each multi-item scale was assessed using Cronbach‟s alpha. Generally, reliability coefficients of 0.7 or more are considered good (Nunnally, 1967), strong reliability is demonstrated with coefficient alphas ranging from 0.735 to 0.900. Results of the reliability analysis are reported in [Table I] along with the Pearson‟s correlations and descriptive statistics for each variable.
[Table 1] The Result of Reliability and Validity Assessments Pearson Correlation Coefficient
Cronbach's Alpha
1
2
3
4
Social entrepreneurship
0.895
1
Relationship-oriented organizational culture
0.880
0.406***
1
Government support policy
0.735
0.413***
0.176*
1
Economical performance
0.900
0.401***
0.330***
0.375***
1
Social performance
0.789
0.636***
0.445***
0.354***
0.366***
5
1
Notes : * p