UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Nguyen Thuy Phuong Thao
FACTORS AFFECTING ENTREPRENEURIAL INTENT:
A STUDY OF BUSINESS STUDENTS IN VIETNAM
ID: 22120031

MASTER OF BUSINESS (Honors)

SUPERVISOR:
Prof. Nguyen Dong Phong

Ho Chi Minh City – Year 2014
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ACKOWLEDGEMENT
This thesis could not be accomplished without the assistance, support, advice,
guidance and encouragement from many accompanists.

I wish to express my sincere gratitude to my co-advisers Prof. Nguyen Dong
Phong and Dr. Nguyen Phong Nguyen for their commitment and enthusiasm
in supervising process, even with my minor and unwise questions.

I wish to give a big thank you for my dear colleagues, friends and classmates
for their invaluable support and encouragement when I encountered a lot of
difficulties and stresses during the process of thesis writing.

ABSTRACT
TABLE OF CONTENTS
LIST OF FIGURE
TABLE OF CONTENTS
CHAPTER 1 ........................................................................................................................................ 8
INTRODUCTION ............................................................................................................................. 8
1.1

Background ........................................................................................................................ 8

1.1.1

History of entrepreneurship in Vietnam......................................................8

1.1.2 Entrepreneurial activities in Vietnam ............................................................10
1.2 Research gap .......................................................................................................................... 11
1.3 Research objectives .............................................................................................................. 12
1.4 Research scope ...................................................................................................................... 12
1.5 Contributions and implications ......................................................................................... 12
1.6 Structure of the research ..................................................................................................... 13
CHAPTER 2 ...................................................................................................................................... 14
LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT ................................. 14
2.1 Theoretical background ....................................................................................................... 14
2.1.1 The application of Ajzen’s (1991) Theory Planned Behaviour
(TPB) model in predicting entrepreneurial intent...................................................14
2.1.2 Proactive Personality (Batteman and Crant, 1993) in predicting
entrepreneurial intent ..............................................................................................18
2.2. Review on “Entrepreneurial intent” ................................................................................ 19
2.3 Hypotheses development .................................................................................................... 22
CHAPTER 3 ...................................................................................................................................... 28

5.1.1 The application of Ajzen’s planned behavior model on
entrepreneurial intent in Vietnam’s context ...........................................................50


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5.1.2 The application of proactive personality construct (Crant, 1993) in
Vietnam market.......................................................................................................52
5.1.3 Summary of findings .....................................................................................52
5.2 Managerial implications ...................................................................................................... 53
5.2.1 General managerial implications ...................................................................53
5.2.2 Implications for Educators .............................................................................53
5.2.3 Implications for Practitioners ........................................................................54
5.2.4 Implications for Public policy makers ...........................................................55
5.2.5 Summary of Implications ..............................................................................55
5.3 Limitation and further research direction ....................................................................... 56
APENDICES
Appendix A: Questionnaire (English and Vietnamese version)
Appendix B: Multiple Liner Regression


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LIST OF FIGURES
Figure 2.1: Shapero’s (1982) model of the “Entrepreneur Event” (SEE) .....................14
Figure 2.2: Ajzen’s theory of planned behavior (1991) ................................................15
Figure 2.3: The proposed model ....................................................................................28
Figure 3.1: Measurement scales ....................................................................................32
Figure 4.1: Cronbach’s Alpha of remaining variables ..................................................39
Figure 4.2: KMO and Bartlett’s Test of Dependent Factor (EI) and Total

businesses had been created, and the economy was growing at an annual rate
of more than 7%. However, according to report of Bertelsmann Stiftung’s
Transformation Index (BTI) in 2014, due to the key structural issue in the
banking sector and state-owned enterprises (SOEs), the economy expanded by
just 5.03% in 2012, the fifth consecutive year growth had been below the 7%
average of the 1990s and early 2000s. In contrast, the private sector has been
proved its contribution to the wealth of country by accounting for roughly
60% of the country’s GDP (Per capita GDP at current U.S. prices reached
$1,523 in 2012, up from $1,224 in 2010, the year Vietnam achieved middle-


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income status according to World Bank criteria), covering about 29% the
country budget in the form of taxes in 2010 (compared to 18% in 2006),
creating 3.2 million jobs during the 2006 - 2010 period (four times more than
state-owned businesses). The investment capital ratio of the private sector
stood at 36.1% in 2010 and 35.2% in 2011. Thus, it is said that Vietnam has
made impressive economic progress as demonstrated by the consecutively
positive record of the growth of gross domestic product (GDP) during the past
decade, and private enterprises have been contributing to the success and they
should be received an appropriate concern for its sustainable growth.
Company Law and Law on Private Enterprise first adopted in 1990, which
was revised into New Enterprise Law in 1999 created a desiring environment
for the development of entrepreneurial activities in Vietnam. The later law
version not only revoked unnecessary business licenses restrictions in 145
industries, trades and services to ease private entry in the market, but also
allowed private investment funds besides the unique source of public
investment capital financed by the state budget. For two years (2000 and
2001) after the New Enterprise Law’s implementation, the number of new

entrepreneurs in Vietnam. The result illustrates an eventful and dynamic of
entrepreneurial activities, ranging from university students to adults, from
local Vietnamese to Viet Kieu or foreigners; and startup is becoming a
tendency and facing strong expectations for their role to be key players these
days and in the upcoming time. There are many reasons leads to the trend of
being self-employed in the country such as current high rate of
unemployment, low opportunity cost of starting own businesses compared to
being employed, unfavorable policy for office worker, family tradition, etc.
Regarding this, Ngan (2013) figured out some figures from General Statistic
of Vietnam as a good explanation for the high rate of startups in Vietnam. In
2013, 76,955 enterprises were established (10.1% higher than 2012); however,
60,737 enterprises went bankrupt or stopped operating (12.0% higher than
2012). The reasons of declaring bankruptcy included continuing losses
(56.4%), management ability (5.1%) and lack of capital and market (38.5%).
Meanwhile, Diep (2013) pointed out the number of unemployment graduates
(21-29 age range) was up to 101,000, accounting for 9.89% the total
unemployment number.


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1.2 Research gap
According to Alfonso and Cuevas (2012), in recent decades, research field of
entrepreneurship phenomenon has significantly increased in both quantity and
sophistication. They argued that the rising interest in entrepreneurship parallel
with its “contribution in the economic growth, rejuvenation of productive
structure, relaunch of certain regions, dynamization of the innovative process
and generation of employment” (p.722). Krueger et al. (2000) argue that the
need to predict behavioral intentions of individuals has increased together
with the tendency of starting own businesses in society. According to Tung

regarding entrepreneurial intention. In addition, this study also tests the effect
of proactive personality (Batteman and Crant, 1993) on entrepreneurial intent.
SPSS will be used to check whether determinant factors of entrepreneurial
intention actually influence over the entrepreneurial intention; additionally,
through the same method, the study will verify if entrepreneurial intention
really explained new venture creation behavior (i.e. starting up a business) of
business students in Vietnam.
1.4 Research scope
This study focuses on business students and alumni from undergraduate and
postgraduate programs of universities in Vietnam, both local universities and
foreign universities having campuses in Vietnam. Specifically, questionnaires
are collected from students of Advanced Diploma, Bachelor, MBA and
second-degree programs from University of Economics (UEH), International
Business School (ISB - UEH), ERC International Business School and
Foreign Trade University (FTU). The research time frames were July and
August of 2014.
1.5 Contributions and implications
This research contributes to the understanding of the cognitive processes
leading

to

entrepreneurial

activities,

their

measurement,


2.1.1 The application of Ajzen’s (1991) Theory Planned Behaviour (TPB)
model in predicting entrepreneurial intent
Many entrepreneurship studies have been done in an attempt to identify the
situational and environmental factors that predict entrepreneurial behavior.
However, Krueger et al. (2000) argue that “intentions are the single best
predictor of any planned behavior, including entrepreneurship” (p. 412) and
entrepreneurial activity is intentionally planned behavior. That is because
when behavior is difficult to observed, intentions offer crucial insights into
underlying process as exogenous factors only affect intentions and behavior
indirectly through attitude changes (Ajzen, 1991). In 2005, Segal et al. (2005)
in their study of motivation to become an entrepreneur reassures this
groundwork knowledge. They point out there is no relationship between these
external forces and entrepreneurial activity as external factors are just consider
as a “trigger” and provide a more conducive environment supporting
entrepreneurship. Later on, many of the recent entrepreneurship-related
models are developed based on cognitive process model, in which salient
beliefs in entrepreneurial performance are focal. Upon modest reflection,
Shapero’s (1982) model of the “Entrepreneur Event” (SEE) is an
entrepreneurial intention model which is also based on cognitive process
model, though not having be tested well. According Krueger et al. (2000), the
SEE (1982) figures out three factors that control the intention to become an
entrepreneur are perceived desirability (the degree to which an individual is
attracted by creating their own business), perceived feasibility (the perception
regarding his own capacity to become an entrepreneur) and propensity to act
upon opportunities (which depends on the desire to gain control by taking
action). Besides, the entrepreneurial intention can be increased when
“displacement” events occurs (i.e. social pressure) and influences the


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approach used by researchers in an attempt to explain an individual’s
particular action is the application of cognitive theory. They find that although


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“cognitive processes include the perceiving, storing, retrieving, responding to,
and evaluating of information”, the emphasis on the cognitive process still
keep “human animal lost in thought” which may “potentially result in little
insight into the reasons for a person’s ultimate actions” (p.37). According to
Segal et al. (2005), along the history of researches on predicting behavioral
intention, the theories of reasoned action (TRA) (Fishbein & Ajzen, 1975;
Ajzen & Fishbein, 1980) and the theory of planned behavior (TPB) (Ajzen,
1987, 1991) are the most widely applied theories. The TRA includes two
construct called attitude towards the behavior and subjective norm. The TPB
(Ajzen, 1991) is an extension of the TRA and filled the limitation in the TRA
where it adds another construct called perceived behavioral control (PBC).

Attitude

Social norm

Behavioral
intention

Actual Action

Perceived
behavioral control
Figure 2.2. Ajzen’s theory of planned behavior (1991)

possesses a positive attitude toward behavior and a supportive subjective
norm; the behavior could not be adopted due to the lack of opportunities and
resources. Based on previous model, Ajzen (1991) included other construct
so-called perceived behavioral control to deal with situation where the
individual is lack of complete volitional control over the behavior. Perceived
behavioral control can be accumulated from experience, information exchange
between individual and surrounding environment and factors influenced the
perceived difficulty of performing the behavior.
Entrepreneurship is a way of thinking emphasizes opportunities over threats,
which can be consider as an intentional process, and, therefore, intentions
consistently and robustly predict planned entrepreneurial activity. As proving
earlier in this study, while personal and situational variables typically have an


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indirect influence on entrepreneurial activity, intention-based models offer not
only insights into psychological aspect of targeted individuals but also
mechanisms to assess exogenous parties influencing creating new ventures
(Krueger et al., 2000). The Ajzen’s (1991) TPB model is probably the most
widely accepted approach in predicting the intention to create new venture,
even it not purely emphasizes on entrepreneurial behaviour but in all kind of
conducts (Alfonso & Cuevas, 2012). Empirically, the application of Ajzen’s
(1991) model has been proven through many research in entrepreneurial
intention along the literature history in both micro and macro scale (Krueger
and Brazeal, 1994; Kruegr et al., 2000; Engle et al., 2008) and the
overwhelming majority of these studies support the usefulness of Ajzen’s
theory and his view that behavioral intent is a powerful predictor of the
targeted behavior. Following on that, Christopher and Michael (2014) in their
findings of the meta-analyses about the application of Ajzen’s model (1991)

envision seeking out the desirable environment surrounding him/her to


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capitalize on individual strengths and needs. In contrast, people without
proactive personality show little initiative and fail to seize the opportunities,
they even passively endure circumstances and rely on others to be forced to
change. Regarding the relationship with entrepreneurial intention, Timmons
(1994, p.7, as cited in Becherer & Maurer, 1999) define an entrepreneur as
someone who “pursues an opportunity regardless of the resources they
control” which fits the proactive personality’s definition. Crant (1996) finds
that proactive personality is positively associated with entrepreneurial
intention and its measurement scale explain a significant amount of additional
variance in entrepreneurial intention even when other variables like gender,
education and having entrepreneurial parents are added in regression model.
2.2. Review on “Entrepreneurial intent”
Entrepreneurship. Entrepreneurship can be defined as the transformation of
innovation into a new product, service, or business in order to take advantage
of market opportunity (McGuire, 2003, as cited in Prabhu et al., 2011).
Entrepreneurship is a way of thinking that emphasizes opportunities over
threats. The opportunity identification process is “clearly an intentional
process, and, therefore, entrepreneurial intention clearly merit our attention”
(Krueger et al., 2000, p.411). Moreover, they also point out that “much of
human behavior is planned” and a nascent firm is not simply launched as a
conditioned response to a stimulus. In favor of this, Alfonso and Cuevas
(2012) state that intention to start a firm can precede any attempt in
entrepreneurial behavior and it is influenced by different factors; thus, “it is
assumed that we can manage these elements in order to affect the
entrepreneurial intent in a positive way, and, indirectly, over the venture


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“entrepreneurial intent”. “Nascent entrepreneurs” is often referred to
“individual whose conscious intention to set up a business has progressed
from an early stage of initial interest and formative plans onto a relative
advanced stage at which concrete actions are being undertaken to effect the
reasonably imminent possible birth of a new firm” (p. 674). He also cited
other studies which refer nascent entrepreneurs to those who show interest in
starting a firm but may not have yet reached a “relatively advanced stage at
which concrete action are being undertaken to affect the reasonably imminent
possible birth of a new firm” (p. 674). Specifically, when an individual
involves in a process of many stages, in which first stage is being conscious of
intending to become an entrepreneur and last stage is “a period of setting up
and operating a new firm, such as creating a legal structure, hiring personnel,
or renting space are undertaken” (p.675) – the individual can be termed as a
nascent entrepreneur. Thirdly, he stated that entrepreneurial intent
differentiates from entrepreneurial disposition or personality. Individuals with
entrepreneurial intent have given some degree of conscious consideration to
the possibility of starting a new business at some stage in the future and they
have not rejected such a possibility; meanwhile, those with just an


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entrepreneurial disposition may either possess any consciousness of a possible
startup or even reject such possibility when it comes. In light of the above
findings, this study supports the concept of individual with entrepreneurial
intent is the one who meets three criteria cited in Thompson (2009)’s study.
Definition of Individual Entrepreneurial Intent. Following on the above

Definition of “Individual entrepreneurial intent” applied in the study. In
this paper, individual with “entrepreneurial intent” is defined as who wishes to
start a business venture and consciously plan to do so at some point in the
future, they even not actually set up a new business due to unpredictable
circumstances - the new business should meet the three criteria stated above,
i.e. if one possesses a business with too small scale, too low-skilled
manufacturing level, or even does not supply any products or services in the
market, he or she should not be considered as an individual with
entrepreneurial intent.
2.3 Hypotheses development
Hypotheses development. In the words of Ajzen when explaining the
relationship between variables in his theory of planned behaviour (1991), he
stated that an individual possesses a stronger intent to perform the behaviour
when the three antecedents are more favourable, and, at the same time, “the
stronger the intention to engage a behavior, the more likely should be its
performance” (Ajzen, 1991, p. 188) . Specifically, Ajzen’s theory stated that
behavioral performance can be predicted from a person’s plan and intention
towards the behavior. Intentions are therefore:
[. . .] assumed to capture the motivational factors that influence
behavior; they are indications of how hard people are willing to try, of
how much effort they are planning to exert, in order to perform a
behavior. As a general rule, the stronger the intention to engage in a
behavior, the more likely should be its performance (Ajzen, 1991,
p.181, as cited in Engle et al., p.38).
Attitude toward entrepreneurship. In TRA, attitude is preferred as the
evaluation of an individual in performing a particular behavior; it can be either


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attitudes toward entrepreneurship will reveal vocational preferences at a time
when they face important career decisions. Generally, the paper supports the
hypothesis stating that the more an individual believes in the positive result of


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becoming an entrepreneur, the more he/she possesses a favorable attitude
toward entrepreneurship
H1:

There

is

a

positive

relationship

between

attitudes

toward

entrepreneurship and entrepreneurial intention.
Social norms toward entrepreneurship. The second construct named social
norms or subjective norms of model refers to the likelihood that important

European countries where the absence of a so-called “Entrepreneurial
Culture” weakens the intention of becoming an entrepreneur. This is because
in those countries, existing huge red tapes and excessive protection of workers
assumes a high cost of opportunity of self-employment in comparison with
alternative forms. This study is in favor of supporting the hypothesis in which
social norms are positively associated with entrepreneur intent.
H2: There is a positive relationship between social norms toward
entrepreneurship and entrepreneurial intent.
Perceived behavioral control toward entrepreneurship. Alfonso and Cuevas
(2012) notice some studies show that even if an individual has a good attitude
and favorable support from close people, the behavior cannot take place
necessarily due to some factors such as opportunities and resources (money,
time, skills, etc.). Ajzen (1991) also recognize the limitation of TRA model, so
he review it and add a new factor determining the intent called perceived
behavioral control which “reflects the individual’s perception concerning the
ability to achieve the specific result” (p.724). Thus, this new model fulfills the
gap of the previous one by setting as general rule that, in the words of Ajzen,
“the more favorable the attitude and subjective norm with respect to a
behavior, and the greater the perceived behavioral control, the stronger should
be an individual’s intention to perform the behavior under consideration”
(Ajzen, 1991, p. 181); and, at the same time, “the stronger the intention to
engage a behavior, the more likely should be its performance” (Ajzen, 1991,
p. 188). By other words, it is the degree to which one feels personally capable
of

starting

a

business