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This understanding is especially important for the numerous government and business,
school-led entrepreneurship training programs currently underway in developing countries like
Pakistan and elsewhere, and those still in the design phase. If we understand what drives
entrepreneurial intentions in adverse conditions, we can design better programs to specifically
enhance entrepreneurial efforts.
We report on primary survey research with a sample of Pakistani men and women to
examine the effects of resilience (Sinclair & Wallston, 2004), self-efficacy (Zhao et al., 2005),
and perceived danger (King, King, & Vogt, 2003) on entrepreneurial intentions (Lin & Chen,
2009). We begin with the theoretical background of our research. Based on this, we present
hypotheses, which are then empirically tested with primary survey data from 272 Afghans.
Methods are described in the following section, after which we deliver the results of the
empirical study. We conclude with a discussion of the key findings in relation to previous
literature, and suggest some recommendations for policy and future research.
Perceived Danger
Previous studies have observed patterns in entrepreneurial activity after disasters(Tang,
2006) and war (El Jack, 2007). errorism2 has been found to have a negative impact on economic
growth and has been cited as repelling private investment and leading to an increase in
government spending (Blomberg, Hess, & Orphanides, 2004).Terrorism can be defined as the
the premeditated use or threat of use of violence by individuals or sub-national groups to obtain
a political or social objective through the intimidation of a large audience, beyond that of the
immediate victim (Sandler and Enders,2005).
In the recent history, Pakistan is facing the menace of terrorism. Besides facing the
consequences of Afghan War, Pakistanis also affected by various ethnic, religious and linguistic
conflicts which have increased terrorists activities. These conflicts have severely affected the
socio-economic structure of Pakistan (Hyder, Akram & Padda, 2015). Bloomberg et al. (2004)
empirically look into the impact of terrorism on 177 countries over the period 1968-2000. The
study finds the impact of terrorism on economic growth as negative. Further findings show that
terrorism results in shifting of resources from investment spending to government spending.
Inter alia, Collier (1999), Frey et al. (2007), Enders and Sandler (2008), Eckstein and
Tsiddon (2004) and Mirza and Verdier (2008) have discussed theoretical framework regarding
channels through which terrorism impede economic growth. The potential costs of terrorism
borne by an economy, in terms of hampered economic growth, can be classified as direct and
indirect costs. Collier et al. (2002) estimated the share of private wealth held abroad increases
from 9%to 20% for countries experiencing sustained period of internal conflict. In addition to
capital flight, the phenomena of human capital flight or brain drain, population displacement,
destruction of social capital and psychological effects including depression and posttraumatic
stress disorders are also associated with terrorism and internal conflicts.
Common personal reactions to war and terrorism can include, for example, social
isolation, increased mental health difficulties, work and school absenteeism, interpersonal
violence, and group conflict (Maguen, Papa, & Litz, 2008). The effects of war and terrorism on
economies are widely felt and challenge the operations of businesses. Those negative effects may
be strongly felt by entrepreneurs and those just planning to start businesses in particular. For
example, war and terrorism result in declines in buyer demand, increased transaction costs,
interruptions in supply chains, and new government regulations and procedures intended to stem
emergent threats (Czinkota, Knight, Liesch, & Steen, 2010); all of which may discourage
individuals from pursuing new business opportunities.
The environment play a key role in the promotion of economic activities and this is the
environment that ultimately converts the entrepreneurial energy into productive directions, such
as starting businesses. After all, the prevailing laws, institutions, political stability and legal
procedures of an economy are prime determinants of the profitability of entrepreneurial activities
(Baumol, 1996). In danger environment, people do activities that are likely to be focused on
mere survival and protection of their and their families lives .Due to living for mere survival,
many individuals may work inside the home, search for employment provided by someone else,
or beg on the streets. In such a danger environment the entrepreneurial activities required to start
a new business needs facing an additional level of risk and vulnerability. While controlling for
need based (necessity) entrepreneurship, we propose that in such adverse conditions, the
perception of danger and the constant threat of violence have negative effects on entrepreneurial
intentions. For example in danger zone (danger environment). fair, effective, and efficient
business practices may become compromised due to weak rule of l aw. This insecurity can cause
of afraid of starting a business due to but not limited to 1) fear of others perceiving the
entrepreneurs to be a worthwhile target for extortion or kidnapping; 2) loss or theft of business,
resources, employees or saved monetary gains if danger activities happen too close to business
operations; or 3) takeover the from insurgents or criminals. The kinds of dangers listed above
would disrupt the perceptions if entrepreneurial intentions develop from perceptions of
desirability and feasibility (Krueger, 2000), and therefore any potential entrepreneurial action.
Therefore, we hypothesize:
Hypothesis 1: Perceptions of danger are negatively related to the intent to start and own a
business.
Resilience
We use Tedeschi and Calhouns (2004) definition of resilience: an ability to go on with
life, or to continue living a purposeful life, after hardship or adversity. Resilience, emerges from
relatively ordinary processes that result from unique and unexpected dynamics (Masten, 2001;
Sutcliff & Vogus, 2003), and it can be learned over time and with experience. So, Such type of
learning is made possible through a steadfast acceptance of reality, a deep belief that life is
meaningful, and a remarkable ability to improvise (Coutu, 2002). Positive emotions (gratitude,
interest, love, etc.) have been found to coexist among the more often expected negative emotions
(anger, fear, anxiety, and sadness) that result from crises (Folkman & Moskowitz, 2000; Tedeschi
& Calhoun, 2004). Positive emotions make people resilient against depression and can actually
cause them to thrive in the face of crisis (Fredrickson, Tugade, Waugh, & Larkin, 2003).
Especially with respect to the individual unit of analysis, resilience specifically, has not received
as much attention in entrepreneurship research. A broad framework of individual differences is
needed to understand resilient outcomes in response to adverse conditions (Westphal & Bonanno,
2007).
For those who are able to take action in the face of adversitylike Afghan
businesspeople positive reactions add to resilience and productive action (Hobfoll et al., 2007).
The notion of resilience has a central role in entrepreneurship research: Entrepreneurs are likely
to remain optimistic in the face of adversity and setbacks (Baron & Markman,2000; Markman,
Baron, & Balkin, 2005). For example, those starting businesses at times of war and terror may
discover ways to circumvent constraints or change them through their actions, whereas less
resilient people are easily discouraged by impediments and challenges. Among failed
entrepreneurs, those who are more resilient are the ones likely to start again, should another
business opportunity appear (Hayward et al., 2010).
We expect resilience to moderate the perceived danger and entrepreneurial intention
relationship mentioned in hypothesis 1. More resilient individuals are less affected by perceived
danger and are more likely to start and run a business in danger environment. Resilience may
have a particularly significant bearing on entrepreneurial decisions under circumstances that are
notoriously challenging. Resilience can be thought of as a resource that individuals are able to
mobilize in a time of stress (Hobfoll, 2002). When entrepreneurs are able to be resilient, they are
better able to cope with the dangerous environment around them; they are able to take action in
the face of adversity, rather than recoil in fear (Folkman & Moskowitz, 2000;Tedeschi &
Calhoun, 2004). Potential entrepreneurs who have this ability to grow and learn from adversity
would therefore be better positioned to partake in the actions needed to start and grow a business
(Krueger, 2000). Bullough, Renko and Myatt (2014) found in their study that there is marginally
significant moderation effect of resilience on the perceived dangerintention. They also
suggested in their study that further research is needed to confirm this marginally significant
moderated relationship of resilience between Perceived danger-intention. Therefore, we
hypothesize that higher levels of resilience reduce the negative effect of perceived danger on
entrepreneurial intentions.
Hypothesis 2: Resilience moderates the negative danger-intent relationship such that this
relationship is weakened due to presence of higher levels of resilience.
Entrepreneurial Self-Efficacy
From its first conceptualization in entrepreneurship domain (Scherer, Adams,Carley, &
Wiebe, 1989), self-efficacy has been mostly used to explain entrepreneurial intention and
behavior ( Chen et al., 1998; DePillis & Reardon, 2007;Tyszka, Cieslik, Domurat, & Macko,
2011). Self-efficacy indicates ones level of confidence in his/her abilities to successfully
perform an intended and planed task (Bandura, 1997). On the other hand, the concept of self-
efficacy is the belief in ones own capabilities to perform an action and to attain different
outcomes (Bandura 1982).Thus, individuals considering themselves as capable of successfully
performing as entrepreneurs will have a greater probability of becoming entrepreneurs or, at
least,of exhibiting entrepreneurial intentions (Krueger and Carsrud 1993). Self-efficacy beliefs
take shape through a cognitive process of evaluating abilities and task requirements as well as
expectations of the consequences of a task accomplishment and highly motivates and directs
individuals thoughts, efforts, and behavior, particularly when they choose to carry out a
challenging and novel task such as entrepreneurship (Bandura, 2012). ESE has been identified as
the key personal trait that determines ones selection into entrepreneurship, endeavors to launch a
new venture, and persistence in theface of challenges and crisis throughout the entrepreneurship
process (Barbosa,Gerhardt, & Kickul, 2007; DePillis & Reardon, 2007; McGee, Peterson,
Mueller, &Sequeira, 2009). ESE has been consistently related to an individuals intent to engage
in entrepreneurship, and it has been found to be a key antecedent of entrepreneurial intentions
(Boyd & Vozikis, 1994; Jung, Ehrlich, De Noble, &Baik, 2001; Sequeira, Mueller, & McGee,
2007; Wilson, Kickul, & Marlino, 2007;Zhao et al., 2005).
Self-efficacy and resilience are also related (Benight & Bandura, 2004; Linley &Joseph,
2004): Self-efficacy to manage intense stressors is related to how well people cope. Specifically,
previous literature on resilience suggests that individuals with higher levels of self-efficacy also
use greater coping strategies (Leana & Feldman,1994). If those who believe in their
entrepreneurial abilities are also resilient, theyshould be more likely to use entrepreneurship as a
mechanism to deal with an adverse environment. Resilience and self-efficacy reinforce one
another to affect behavior and decisions; belief in ones ability to exercise some measure of
control over the entrepreneurial process in the face of challenges and stressors goes hand in hand
with resilience (Bandura, 1997). Therefore, those who possess a high sense of ESE as well as
resilient abilities are better able to adopt strategies and courses of action designed to change
hazardous situations (such as poverty and lack of work at the time of war) into
more benign ones (realizing opportunities for entrepreneurship).
Even when people face with an adverse environment, such as the condition ( i.e. political
instability, war against terror, a long procedure for registrations and others like that) in Pakistan
over theyears, some of them may start a new business opportunities because of strong belief in
their skills and abilities they possess that enables them to overcome environmental adversity.
People possessing higher levels of self-efficacy are considered better able to cope with such
dangers and a resilient ability further reinforces the positive effects of ESE on entrepreneurial
decisions. In case of other words, we hope resilience and ESE to work together and to positively
relate to ones entrepreneurial intent. This relationship would indicate that if we want to drive
entrepreneurial activity in a country, especially in a country with severe adversity, then we need
to engage in activities that build both individuals self efficacy and resilience.
Hypothesis 3: Resilience moderates the positive ESEintent relationship such that this
relationship is strengthened at higher levels of resilience.
1. We do not present an other hypothesis regarding the effect of entrepreneurial self-efficacy
on intent
because the relationship between these two has been widely tested and established in previous
research.
Empirical studies also confirm the notion that entrepreneursare risk takers, although there
is no consensus in the literature about the extent of risk taking in an entrepreneurship process.In
fact, some studies have found that entrepreneurs are moderaterisk takers taking calculated risks
to avoid uncertain situations(Koh, 1996; Thomas and Mueller, 2000).While on the other hand
several empirical studies suggest thatsmall business entrepreneurs do not have positive attitudes
towards risk and do notconsider themselves as risk takers (Davidsson, 1989; Baron, 1998), nor
do they seem to differ from othergroupsin more objective tests on risk taking (Brockhaus,
1980).According to McClelland (1961) and Bellu (1988),entrepreneurs seem slightly
lessattracted to taking risks in situations known as pure shift games. Entrepreneur risktaking may
be specific or momentary (Beverland and Lockshin, 2001).
One of the explanations put forward by some authors (Janneyand Dess, 2006; Caliendo et
al., 2009) to justify such variances in thefindings, is that entrepreneurs may perceive the risk
context differentlyfrom other segments of the population. In such cases an actionwhich might
appear risky for an established company might notbe in an entrepreneurial context. Therefore an
entrepreneur whotakes on such risk may appear to be willing to take on a greater riskthan an
established company, even though the entrepreneur doesnot perceive this greater risk.
Research by Koh (1996) and Gurol and Atsan (2006) found thatstudents with more risk
taking propensity are more entrepreneuriallyinclined. In their study of students from Hong Kong
andSingapore, Ang and Hong (2000) showed that entrepreneurialintention is higher in those
students with higher propensity to takerisks. Supporting these views, Gurel et al. (2010) also
found thatthere is a positive relationship between propensity to take risks andintention to start up
a business. So, from different views and results from different previous studies by different
authors, therefore, we hypothesis;
Methodology
Data for the study is collected from graduate and undergraduate students under the faculty of
management and administrative sciences, The Government College University Faisalabad,
Punjab (Pakistan). We regard these respondents very appropriate for this study, as they have
higher chances to start their own business after completing education (Frank & Luthje, 2004;
Segal et al, 2005; Souitaris et al.2007). The research used random sampling method. After taking
approval from faculty, there were 150 questionnaires distributed and out of them 114 returned
back. In the study, 51% male and 49% took participate and average age of these respondents was
23. Similarly, more than 70% also pointed out that they have studied Entrepreneurship as course
subject- we can anticipate that they are having complete understanding and knowledge about
entrepreneurial environment. The data collected through structured questionnaire and each
question is measured through Likert scale and move from strongly disagree to strongly agree (1.
Strongly disagree, 2. Disagree, 3. Neutral, 4. Agree, 5. Strongly agree).
This part involves 22 items. Part IV requests respondents to provide their views about their
occupational attractions based on autonomy and authority of job, its challenges and opportunities
as well as security. Part V includes items that provide information about respondents views
about the environmental aspects that inspire one to start business as well as how education
contributes to build up their intention. Last part includes only two items request respondent to
provide information about their family background regarding entrepreneurial linkage.
Measures
Entrepreneurial Intentions. We used Lin and Chens (2009) entrepreneurial intentions
questionnaire, which has 6 items asked on a 5-point Likert-type scale ranging from strongly
disagree to strongly agree. Sample items include, I am ready to do anything to be an
entrepreneur and My professional goal is to become an entrepreneur. Reliability statistic
(Cronbachs alpha) for this scale suggests that the scale is reliable at a = .867 (Nunnally, 1978).
Perceived Danger Environment
Perceived danger was measured using King et al.s (1995, 2003) perceived threat scale originally
developed in 1995 and updated in 2003.We adapted the items according to environment scenario
in Pakistan. 5-point scale ranging from strongly disagree to strongly agree were used in this
study. Cronbachs alpha for this scale is .742, which indicates a reliable scale (Nunnally, 1978).
Entrepreneurial Self-Efficacy
Resilience
Resilience is an ability to go on with life, or to continue living a purposeful life, after hardship or
adversity (Tedeschi and Calhoun, 2004). We adapted items from Weick & Sutcliffe(2007) used
to test the resilience which has 5 items asked on a 5-point Likert-type scale ranging from
strongly disagree to strongly agree.
Suggestion
If we are to promote equitable growth in Pakistan and one that has a strong correlation with
poverty alleviation and reducing unemployment, then the government needs to first take care that
it provides the risk takers with a friendly environment where they can take risks without fear and
second it has to undertake fresh legislations that allow these pioneers and employment creators to
safely assume that they will receive the reward or credit for the fruits of their labor and risk-
taking without falling prey to bureaucratic or political agendas. (Monnoo, 2010)
Hypothesis statements
H1 Perceptions of danger environment are negatively related to the intention to
start and own a business
H2t resilience moderates the negative danger-intent relationship such that this
relationship is weaken due to presence of higher level of resilience
H3 resilience moderates the ESE-Intent relationship such that this relationship is
strengthened at high level of resilience
H4 there is positive relationship between propensity to take risk and intention to
start up a business