Factors influencing polytechnic students’ decision to graduate as entrepreneurs
© Wongnaa and Seyram; licensee Springer. 2014
Received: 17 July 2013
Accepted: 22 October 2013
Published: 17 February 2014
The existence of supply–demand gaps in graduate output not only contributes to the problem of graduate unemployment but also undermines the efficiency of public investment in tertiary education, and therefore the issue needs to be addressed. Because of this, it is critical to focus on graduates and understand which factors affect their intentions to start-up a business in the future. This paper examines the factors that influence polytechnic students’ decision to graduate as entrepreneurs. The study used primary data which was collected from 250 students randomly selected from the Kumasi polytechnic. It employed descriptive statistics and the probit model to analyse the factors influencing the decisions by polytechnic students to graduate as entrepreneurs. The results of this study show that personality factors (extraversion, neuroticism, agreeableness), support from family members and friends, occupation of parents, entrepreneurship education, gender and access to finance have significant positive effect on polytechnic students’ decision to graduate as entrepreneurs while students care about public remarks on their decisions has a significant negative effect.
Choo and Wong (2009) defined entrepreneurial intention as the search for information that can be used to help fulfill the goal of venture creation. They added that intention is the single best predictor of entrepreneurial behaviour. Intentionality is defined by Vasaleinen and Pihkala (2009) as a conscious state of mind that directs attention towards a specific objective. It is seen that behavioural intention results from attitudes and becomes an immediate determinant of behaviour (Pihie,2009). Mazzarol et al. (1999) noted that starting a business is not an event, but a process which may take many years to evolve and come to fruition.
According to Gree and Thurnik (2003), entrepreneurship has been recognized as one of the tools that drive the economy of a country. Turker and Selcuk (2009) pointed out that entrepreneurial activities are not only the incubator of technological innovation, but they also provide employment opportunities and increase competitiveness. According to Maas and Herrington (2006), entrepreneurship is a significant component of the solution to a nation’s development issues. Herrington et al. (2009) noted that given the failure of the formal and public sector to absorb the growing number of job seekers in a nation, increasing attention had focused on entrepreneurship and new firm creation and its potential for contributing to economic growth and job creation.
According to Dhliwayo (2008), there are too many graduates for few graduate jobs. With a rapidly growing economy desperately in need of skilled labour, unemployment, ideally, among graduates is supposed to fall. However, this is not the case as unemployment has risen among young and better-educated people. Increased enrolment at tertiary institutions has put more graduates into the labour market. However, there has not been an increase in the rate at which graduates are employed. Unemployment has increased as the deepening economic recession has led to massive corporate downsizing. This is not good news for an average university or polytechnic graduate who finds it difficult to get a job. One of the ways to solve graduate unemployment is graduate entrepreneurship. Graduate entrepreneurship is a process taken by a graduate to start a business in terms of an individual career orientation (Rwigema and Venter,2004). Studies on the entrepreneurial intention of graduates such as Turker and Selcuk (2009) and Ismail et al. (2009) have focused mainly on developed countries. Barbosa and Moraes (2004) argue that studies carried out in developing countries are also very important and may reach different conclusions from those carried out in developed countries. The existence of supply–demand gaps in graduate output not only contributes to the problem of graduate unemployment but also undermines the efficiency of public investment in tertiary education, and therefore the issue needs to be addressed (Boateng and Ofori,2002). Though most tertiary institutions in Ghana now have modules in entrepreneurship as part of their course structure, the negative attitude of graduates towards self employment appears not to have changed and graduate self employment continues to decline while graduate unemployment keeps rising. Meanwhile the introduction of entrepreneurship courses in especially polytechnics in Ghana stems from efforts at reducing graduate unemployment in the country through making graduates see self employment as an alternative to wage employment. Factors other than entrepreneurship education may or may not promote graduate self employment. This paper therefore aims at quantifying the effects of the factors (entrepreneurship education inclusive) that influence polytechnic students’ decision to graduate as entrepreneurs using Kumasi Polytechnic in Ghana as a case study.
Study area and data collection
The study was carried out in the Kumasi Polytechnic in Ghana. Kumasi Polytechnic was established in 1954 to provide high calibre skilled tertiary and middle level manpower with reference to manufacturing, commerce, science and technology and to act as a catalyst for technological development. It is a spectacularly beautiful institution which is located at the heart of the Garden City of West Africa, the capital city of the Ashanti Region of Ghana (Kumasi). It has within the period of its existence become an important centre for the training of people not only for Ghana but also for other African countries. The polytechnic is currently organised into the following faculties, schools and institutes: Faculty of Engineering, Faculty of Built and Natural Environment, Faculty of Medicine and Health Sciences, Faculty of Applied Sciences, Faculty of Creative Arts and Technology, Faculty of Business and Management Studies, Institute of Entrepreneurship and Enterprise Development, Institute of Distance and Continuing Education and School of Graduate Studies, Research and Innovation.
Both primary and secondary data were used. Primary data was mainly cross-sectional. It was collected from 250 Higher National Diploma (HND) students of the Polytechnic using well structured questionnaires. Students in the 2011/2012 academic year were considered. Stratified sampling and simple random sampling techniques were employed in the selection of respondents from the faculties with students. The polytechnic has a total student population of 8,445 with approximately 12% in the Faculty of Engineering, 7% in the Faculty of Built and Natural Resources, 6% in the Faculty of Applied Sciences, 61% in the Faculty of Business and Management Studies, 4% in the Faculty of Medicine and Health Sciences, 4% in the Faculty of Creative Arts and Technology and 6% in the Institute of Entrepreneurship and Enterprise Development (Rector’s Report,2013). These percentages constituted the proportions of the total sample size that were selected from the respective faculties. The names of students were collected from the various faculties. The questionnaires were completed by the students themselves. Finally, secondary data was obtained from the internet, academic journals and the libraries. Data was analysed using version 3.1 of the computer based Econometric Views software (E-Views).
Where is the threshold value for y i and is assumed to be normally distributed. Common models for estimating such parameters include probit (standard normal), logit (logistic) and tobit (extreme value) (Madala,2005; Asante et al.2011).
DTGE= Decision to graduate as an entrepreneur, measured as a dummy (1 for decision to graduate as an entrepreneur and 0 otherwise). This is the dependent variable.
SEX= Sex of student, measured as a dummy (1 for male and 0 for female).
PEEA= Prior experience in entrepreneurial activities, measured as a dummy (1 for prior experience in entrepreneurial activities and 0 for otherwise).
WSEC= Whether or not students have entrepreneurship education, measured as a dummy (1 for students who have already taken an entrepreneurship course and 0 for those who are yet to take the course).
COVI= A student’s conviction that starting and running one’s own firm is a suitable employment alternative for him/her, measured as a dummy (1 for student’s conviction that starting and running one’s own firm is a suitable alternative for him/her and 0 otherwise).
AGE: Age of student, measured in years.
SUFRF= Support from family members and friends, measured as a dummy (1 for support from family and friends and 0 otherwise).
ACTF= Access to finance, measured as a dummy (1 for having access to finance and 0 otherwise).
OCCUP: Occupation of parent, measured as a dummy (1 for students whose parents are entrepreneurs and 0 otherwise).
SCFPR= Students care for public remarks, measured as a dummy (1 for students who care about the reaction of the public when they decide to go into business after school and 0 otherwise).
NEURO: Neuroticism, measured as a dummy (1 for emotionally stable individuals and 0 otherwise).
EXTRA= Extraversion, measured as a dummy (1 for an extrovert student and 0 otherwise).
OPEN= Openness, measured as a dummy (1 for an opened individual and 0 otherwise).
AGREA= Agreeableness, measured as a dummy (1 for agreeing with others and 0 otherwise).
CONSC= Conscientiousness, measured as a dummy (1 for individuals who are always highly motivated to accomplish a goal and 0 otherwise).
Results and discussion
Socioeconomic characteristics of Kumasi polytechnic students
Decision to graduate as an entrepreneur
Prior Experience in Entrepreneurial activities
Taken an entrepreneurship Course
21 – 30
Occupation of parents
Family and friends support
Access to finance
Students care for public remarks
Motivated to accomplish
Table 1 further presents the results of personality traits of the respondents likely to affect their intention to graduate as entrepreneurs. The results show that 52% of the respondents are emotionally stable (low neuroticism) while 48% are emotionally unstable (high neuroticism). 58% of the students who were interviewed are extroverts while 42% are introverts. Extraversion (extrovert or introvert) illustrates the extent to which people are assertive, dominant, energetic, active, positive emotions and enthusiastic (Costa and McCrae,1992).
Also 54% of the respondents are open while 46% are not. Openness is the tendency to be creative, curios, adventurous and receptive to new experience (Singh and De Noble,2003). The study also found that 57.2% of Kumasi Polytechnic students easily agree on issues with the people around them while 42.8% are controversial. Agreeableness assesses one’s tendency to be compassionate and cooperative rather than suspicious towards others. Finally an individual’s degree of organization, persistence, hard work and motivation in the pursuit of goal accomplishment is called conscientiousness. The study revealed that 41.2% of the respondents are always strongly motivated to accomplish tasks while 58.8% of them are always weakly motivated.
Factors affecting polytechnic student’s decision to graduate as entrepreneurs
Probit regression coefficients of factors influencing Polytechnic students’ decision to graduate as entrepreneurs
LR statistic (15 df)
Obs with Dep = 0
Obs with Dep = 1
Marginal effects of factors influencing students’ decision to graduate as entrepreneurs
Students whose family members and friends will be happy to see them graduating as entrepreneurs will 0.11% more likely graduate as entrepreneurs than those whose family members and friends will be unhappy to see them going into business after school and this is statistically significant at 1% level (Tables 2 and3). Such students might have been encouraged by their parents and friends that graduating as an entrepreneur is a perfect alternative to wage employment which some parents seek for their wards. Parents, siblings, spouses all have something to say when an individual starts a venture. Sometimes they can be supportive, and sometimes they can be negative. Support from family and friends are critical particularly in shaping the perceived desirability of a particular business venture as well as providing financial assistance. It is very important for parents to welcome the idea of their wards wanting to graduate as self employed independent men and women since this will boost their morale to work harder towards it. Venture creation activities should not be seen to be for only school drop-outs but for everyone, so when a child shows interest in taking venture creation as a profession after his/her Higher National Diploma (HND) programme, he/she should be mentored and supported by his/her parents. Students whose parents are entrepreneurs will 4.89% more likely graduate as entrepreneurs than those whose parents are into wage employment and this is statistically significant at 1% level (Tables 2 and3). This is in line with the results of Carr and Sequeira (2007) who found that exposure to family business serves as an important intergenerational influence on intentions to become an entrepreneur. Family characteristics have implication on emergence of new business, recognition of opportunity, start up decisions and resource mobilizations (Aldrich and Cliff,2003). Students with entrepreneurship education will 19.7% more likely graduate as entrepreneurs than those without entrepreneurship education and this is statistically significant at 5% level (Tables 2 and3). The results corroborate those of Franke and Luthje (2004) who concluded that lack of entrepreneurial education leads to low level of entrepreneurial intentions of students. The work of Shepherd and DeTienne (2005) also proves the positive relationship between entrepreneurial knowledge and identification of entrepreneurial opportunities (Shepherd and DeTienne,2005). Table 3 also shows that male polytechnic students will 5.24% more likely graduate as entrepreneurs than female polytechnic students and is significant at 5% level of probability. The results confirm the findings of previous studies: Mazzarol et al. (1999) stated that females are less likely to be founders of businesses than males. Brush et al. (2006) also discovered that the success rate for women entrepreneurs is very less and they face slower growth rate, low profits, and low sales. The findings of the current study also support the generally held perception that to be an entrepreneur is a purely masculine characteristic of the members of society (Ahl,2006). Students with access to finance will 0.52% more likely graduate as entrepreneurs than those with no or little access to finance and this is statistically significant at 5% level of probability (Tables 2 and3). The result is consistent with those of Chandler and Hanks (1994) who found that an individual with higher levels and varieties of resources tend to become more enthusiastic and ambitious and tend to do business compared to those with limited resources. Raijman (2001) also found that financial resources in the family have direct bearing on entrepreneurial intentions. From the foregoing, it is clear that availability of resources is very important for young graduates to start their businesses. Even though a graduate may have the zeal to start his/her own business after school, he/she may be crippled because of inadequate resources, especially capital. Students who care about public remarks on their intention to go into business after school will 0.36% less likely graduate as entrepreneurs than those who do not listen to what people around them say and this is statistically significant at 1% level (Tables 2 and3). The negative significant effect of students care about public remarks on their decisions implies that if a student cares about what the general public will say in establishing his/her business, it will decrease the chances of him/her graduating as an entrepreneur. Students should therefore be encouraged not to listen to the public but should do what they want to do ones they think it is good. The general public should also be educated about the fact that it is not only school drop-outs who should go into business but even graduates. This is because some people are of the opinion that people should not go into business after graduating from a university or polytechnic. They erroneously see such graduates as those who were not academically good when they were in school.
The results of the study showed that personality factors (extraversion, neuroticism, agreeableness), support from family members and friends, occupation of parents, entrepreneurship education, gender and access to finance have significant positive effect on Kumasi Polytechnic students’ decision to graduate as entrepreneurs while students’ care about public remarks on their decisions had a significant negative effect. Extraverted students will likely graduate as entrepreneurs implies that there is the need to design polytechnic education curricula to include measures aimed at transforming introvert students into extroverts. High neuroticism, which was found to have a negative effect on decision by polytechnic students to graduate as entrepreneurs calls for a concerted effort by school authorities in stabilizing the emotions of students so that they will be able to keep their composure under stressful situations and show high levels of self-esteem, relaxation and self-confidence. The study also found agreeableness to be positively related to new venture creation by polytechnic graduates. The implication is that students should be nurtured to learn to agree on pertinent issues when interacting with their peers and only disagree with reference to facts.
This study has also revealed that supports from family members and friends are crucial for tuning the minds of polytechnic students towards graduating as entrepreneurs. We further infer from this study that students from a business oriented family are more likely to graduate as entrepreneurs as compared to those of wage employment origin. This calls for the need for the formation of family businesses by all families irrespective of the occupation of the head of the family. The current research clearly states that lack of entrepreneurship education leads to low level of entrepreneurial intentions of polytechnic students and therefore government policy on polytechnic education curricula development should emphasize the need for the inclusion of entrepreneurship modules in programmes’ syllabi. The study also establishes that male polytechnic students are more likely to graduate as entrepreneurs than female polytechnic students. This calls for efforts by stakeholders in polytechnic education in setting biased policy interventions to stimulate entrepreneurship among female students. In addition, students with higher levels of financial resources tend to become more enthusiastic and ambitious and wish to do business compared to those with limited resources. Government and other stakeholders in the venture creation regime are encouraged to mobilize and make business funds available for would-be entrepreneurs in the form of loans, support services and grants to polytechnic graduates who want to go into business to access. The negative effect of students care for public remarks about their decision to graduate as entrepreneurs calls for the need to encourage students not to worry about negative remarks from the people around them should they decide to graduate as entrepreneurs. The general public should also be educated on the fact that it is not only school drop-outs who should go into business but businesses are for all.
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