Jimma University

College of Business and Economics

Economics Department

Determinants of graduate students’ willingness to

Job creation

By: Bethelhem Sisay-------- DU007/11

Advisors’ Name: Mr. Abdelkaf Elias

 Table of Contents

Abstract ………………………………………………………………………………………………….2

Introduction and Background….………………………………………………………..……3

Problem Statement………………………………………………………………………...………5

Objective………………………………………………………………………………………………....8

Methodology………………………………………………………………………………...............9

References………………………………………………………………………………………………13

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 Abstract

An entrepreneur has become an important thing to support the decrease of

unemployment. There are several factors, which determine the graduate student's
willingness to become an entrepreneur. The purpose of this paper is to find the
determinants of graduate students' willingness to participate in their own business
and the possible policy implication of the findings. The study will observe attitude,
sex, risk behavior, family business background, entrepreneurship training, and
expectation of government support, which determines graduate students'
willingness to become an entrepreneur. The primary data for this study will be
gathered through structured questionnaires distributed to university graduate
students. A stratified random sampling method will then be employed to select the
respondents out of graduate students. The data that will be collected will be
analyzed by descriptive statistics and descriptive analysis. The limitations and policy
recommendations will also be discussed.

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 Introduction

Now a day’s professional or office job employment is no longer a fashion as people

remain with less chance of getting salaried jobs. We have less chance of being
employed in an established Organization. Therefore, this forces many peoples to
seek opportunities for self-employment. This has brought the problem solver
characteristics among many people who behave entrepreneurially. So
entrepreneurship has increasingly evolved to such an extent not only as a career
choice but also as a desirable employment option for most people these days.

Today political and academic interest in support of entrepreneurship as a career

choice is on the rise probably because of the link between new venture creation
and economic development. As a result, there is more small business being
created. This has been evidenced by the growing number of people specializing in
the conduct of small businesses. Teixeira et al (2006) are quoted to show that the
continued economic uncertainty, corporate, government downsizing, and declining
number of corporate recruiters in the education system have been fostering the
appeal of self-employment. But it is also being noted as common for tertiary
education to prepare students not only as job seekers but mostly as job creators by
becoming self-employed (golden et al, 2008).

Agbim, oriarewo, and Owocheo (2015) studied factors affecting the entrepreneurial
intentions of Nigerian university graduating students from entrepreneurship
programs who are more inclined to start their own businesses. So Ethiopia has
taken many steps to strengthen its entrepreneurial sectors, including the notable
entrepreneurship development program (EDP). The Ministry of urban development
and construction (MUDCO) and the united nation development program (UNDP)
create this program to stimulate the economy by tapping into the creativity and
drive of existing and aspiring Ethiopian entrepreneurs. The EDP was designed to
fast-track the country’s economic growth, create, jobs and wealth, and alleviate
poverty. The EDP provides training and comprehensive business advisory services
to micro and small-scale enterprises.

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The consortium for entrepreneurship education (2005) found the majority of new
jobs in Ethiopia were created by small-scale businesses, which in turn started by
entrepreneurially minded individuals. Entrepreneurship creates new jobs and it
stimulates innovation in existing companies (haftendorn and salzano, 2003).
According to a recent study by smith and Beasley (2011), the entrepreneurial
constraints faced by graduating students are both internal (e.g. lack of family
entrepreneurial experience, lack of finance, lack of field-specific “mentors”) and
external (poor advisory assistance from the institution and slow growth of the
economy) with so many barriers to entering the entrepreneurial sector analysis of
students entrepreneurial intents become complex. The importance of economic
stimulation, however, demands comprehensive understanding by educators and
policymakers. Hence, there is a need for research that evaluates students’
perception of entrepreneurial opportunities and the factors affecting their
decisions to engage entrepreneurially.

According to Amzad, kamal, Asif, and Rana (2009), an entrepreneur is one who
brings resources i.e. labor, materials, and other assets into combinations that make
their value greater than before, and also one who introduces changes, innovations,
and a new order. As the dynamic process of vision, change, and creation (kuratko,
2005), entrepreneurship is required to be taught for the transfer of necessary skills
and knowledge from an expert to someone else. Although entrepreneurship is a
concept that involves mental activities like creativity, innovativeness and
pro-activeness Souitaris, Zerbinati, and Al-lahan (2006) revealed that
entrepreneurial education could raise attitudes and behavior capable of provoking
entrepreneurial intentions among youth who have an interest in the economic
development of their nation. This makes universities socially impactful and popular
in the diffusion of the entrepreneurial spirit within the university campuses
(Fayolle,2004). Such education programs are designed to prepare students for
engaging in a self-directed economic future such as seeking opportunities, taking
risks, and having the tenacity to push an idea through to reality (Adenipekun,2004).

With this in mind, the following study investigates the entrepreneurial intentions of
graduating students including their determinants and challenges, as well as policy

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implications. The primary focus of this project is entrepreneurial education for
graduating students. This study stresses the importance of public and government
policies that create an encouraging and enabling environment for start-up business
initiatives and risk-taking.

Problem Statement

According to Rasli, Rehman, Male Kifar, and Jabeen (2013), entrepreneurial activity
promotes economic development throughout the world. So we have to identify
what factors determine entrepreneurial willingness.

Since Osterbeek, et al (2010) in their journal titled “the impact of entrepreneurship

education on entrepreneurship skill and motivation” proved that entrepreneurship
education, which is given by the education institution, does not have an impact on
student’s skills, motivation, and intention to become an entrepreneur. Whereas
Kumar, et al (2013) in his paper titled “students willingness to become an
entrepreneurial” shows that entrepreneurship education influences the willingness
of a non-business student to become an entrepreneur. So the researcher, is now,
interested to have a compromising idea with regard to entrepreneurship education.

Moreover, Kumar, Agota, and Valerie (2013) show that students' individual desire,
education, and family background influences students’ willingness to become an
entrepreneur. So the researcher is interested in analyzing the role of
entrepreneurship education and family background on the entrepreneurship
willingness of graduate students.

Again Simone (2012) shows that men show greater interest in having their own
business than women, but Marvin and Flora (2014) said that gender and family
background have no influence on students’ attitudes toward entrepreneurship. So
the researcher wants to analyze the impacts of gender (now sex) on the
entrepreneurship willingness of graduate students. Marvin and Flora also say
(2014) training on entrepreneurship has influenced their perception of
entrepreneurship. The student’s attitude is an important element in determining

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entrepreneurial intentions. So the researcher wanted to study entrepreneurship
training and attitudes as the main determinant of entrepreneur willingness of
graduate students:

Yustkoru, Acar, and Tera in their paper titled “willingness to take a risk and
entrepreneurial intention of university students: (2014) showed that being a risk
lover has a positive, moderate effect on entrepreneurial intentions. Therefore, the
researcher takes a risk as a determinant of the entrepreneurial willingness of
graduate students.

In addition, Olufunso (2010) says that the obstacles to graduate entrepreneurial

intention include lack of access to capital, lack of competency, government support,
risk, and the macroeconomy. The researcher from this analyzes the expectation of
government support as the main determinant of the entrepreneurial willingness of
graduate students.

In order to strengthen economic conditions and combat poverty and

underemployment, Ethiopia needs to increase entrepreneurial activity. According to
CSA facts population of Ethiopia was over 97 million in 2014. The government of
Ethiopia recognizes the potential of entrepreneurs to support job growth and
eradicate poverty. Entrepreneurship is the major driving engine of many nations’
economic growth, innovation, and competitiveness (Scarborough and Zimmerer,
2003; Kuratko and Hodgetts, 2004). Data gathered by the central statistical agency
of Ethiopia revealed a paradox that recent university graduates face higher
unemployment than peers who have little or no formal education (CSA, 2011). In
light of this trend an educated populace and few formal sector job opportunities,
Ethiopia would seem to have a significant pool of potential entrepreneurs. This
study will examine the entrepreneurial intentions of graduating students. By
examining the entrepreneurial intent of Ethiopia’s educated young people, the
researcher can give recommendations for policies that may increase
entrepreneurial activity, and therefore strengthen the Ethiopian economy. Without
an understanding of the drivers and hindering factors associated with
entrepreneurial intent among young graduates, Ethiopia may be neglecting a large
pool of potential industrious individuals. Entrepreneurial activity will not only

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provide jobs for those who enter into business, but more business may provide
more formal sector opportunities for graduating students in the future. A nation
like Ethiopia, with a high rate of unemployment (around 25% nationally in 2012
according to IMF), must make use of available talent, energy, and brain power.

Prior to this research paper, two other studies had been conducted on the
entrepreneurial willingness of graduating students. Negsh and Amentie (2003)
conducted the study at Jimma University (2013) and Alkadhem Zerihun at Addis
Ababa University in 2014. While Negash and Amentie mentioned subjective norms,
perceived self-efficiency, university environment, perceived educational support,
and students' attitude as significant determinants for the entrepreneurial intention
of graduates. Zerihun also mentioned internal factors (gender, level of education,
family, family background, and attitude) and external factors (pressure from family,
friends, and role models). In addition to the above-mentioned factors,
entrepreneurial training, family income, and expectation of government support
might be significant factors, which affect the entrepreneurial intention of
graduates.

Moreover, both Negash and amentie, and Zerihun use the descriptive method of
analyzing variables but now the researcher will examine the effect of these
variables on graduate willingness toward entrepreneurship by employing an
econometric model of analysis. Because it is used to quantify to what extent the
problem aggravated and to what extent each variable is important.

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 Objective

The general objective of the study

➢ The general objective of the study is to analyze determinants of graduate

students’ willingness to participate in their own business.

The specific objectives of the study are:

➢ To identify students' positive and negative attitudes and their risk-taking
behavior towards entrepreneurship
➢ To examine the effect of demographic characteristics such as sex, family
background, and family income on a graduate’s intention to be an
entrepreneur.
➢ To assess the contribution of entrepreneurship education and
entrepreneurship training to graduates' willingness to participate in their
own business
➢ To analyze the students' future intention for entrepreneurship
➢ To assess whether the expectation of government support is a motive or not
for self-employment

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 Methodology

Background of the study area

There are many graduate students and stratified sampling helps to have samples
from each area. The study will try to access, graduate students' willingness to be an
entrepreneur and what determines their willingness such as sex, attitude,
risk-taking behavior, family income, family business background, entrepreneurship
education, entrepreneurship training, and expectation of government support.

Data type and source

For the effective accomplishment of the study, the researcher will use primary and
secondary data types. The researcher as well will also employ primary sources and
secondary sources of data.

Method of data collection

The researcher will use both questionnaires and internet websites of previous
studies and published materials as the main method of collecting data.
Questionnaires are used as the main term for collecting primary data and websites
on previous studies and published materials as a main technique for collecting
secondary data.

Sampling method

Since the researcher might be faced with heterogeneous population, the stratified
random sampling technique which is probability sampling will be used. This is
because it enables the researcher to represent particular data (groups) within the
population as well ensuring that these strata are not overrepresented. This helps to
compare strata as well as make more varied inferences from the sample to the
population. Further, it is useful in increasing a sample statistical and in providing
adequate data for analyzing the various sub-populations.

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Method of data analysis

Both descriptive and econometric methods of analysis will be employed to study

the effect of different variables. By applying descriptive statistics such as tables,
frequency, and percentages the researcher can compare and contrast different
categories of sample units with respect to desired characteristics. Under
econometric analysis since the study mainly deals with categorical variables,
therefore the researcher is forced to use the linear probability model (LPM), Probit
(normit), or logit model to estimate these categorical variables. As the linear
probability model is plagued by different problems, probit and logit are preferred
to be the best models for estimating categorical variables. Moreover, Logit and
Probit models are essentially the same.

Hypothesis

Sex: Simone (2012) shows that men show greater interest in having their own
business than Women so in this research males are expected to have a strong
motive to be entrepreneurs than females.

ATTITUDE: Marvin and Flora (2014) say that student attitude is an important
element in determining entrepreneurship intentions. A positive mindset toward
entrepreneurship will favor new Ventures while a negative attitude will discourage
their intentions. So those students who have a positive attitude toward
self-employment are more motivated to start their own business than those who
have a negative attitude.

Family business background: Krueger (1993) suggests that students with

self-employed fathers gain exposure to high knowledge of entrepreneurship from
an early age. So those students who come from a family business background is
expected to have better initiation to be self-employed than government employed.
This is because the business experience or entrepreneurial skills that have gained
from their family enable them to create for themselves.

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RISK: yurtkoru, Acar and tera (2014) suggest that being a risk lover has a positive,
moderate effect on entrepreneurial intentions. So graduates who have risk-taking
behavior have more probability to start their own business than those who have
risk averse.

ENTREPRENEURSHIP EDUCATION: Amisa and Vasilika (2013), show that the

entrepreneurial curriculum and content along with gender, working experience,
and mother’s occupation are statically significant. So those graduates who have
taken entrepreneurial education will have more entrepreneurial intention than
those who have not taken entrepreneurial education.

ENTREPRENEURSHIP TRAINING: Marvin and flora (2014) suggest attending

entrepreneurial training of course has favored students’ intention to become an
entrepreneur. Therefore, we expect the students who have participated in the
training program supposed to be intentional to enter their own business following
graduation.

FAMILY INCOME: Those students whose families have higher monthly incomes are
expected to encourage students to be an entrepreneur. Therefore, family income
has a positive contribution to the entrepreneurship willingness of graduates.

Expectation government support: Olufunso (2010) suggests that obstacles to the

graduate entrepreneurial intention of graduates include lack of access to capital,
lack of competency, government support, risk, and the macroeconomy. Therefore,
if graduates expect that the government will support then they will have the
intention to be entrepreneurs.

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 References

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Entrepreneurial Intentions among Graduates of Nigerian Tertiary
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