Social Support and Entrepreneurial Skills as Antecedents of

Entrepreneurial Behaviour

Muhammad Shoaib Farooq

Doctor of Philosophy

2016

UN

IVE

RS

IT

IMALAYSIA

SA

RA

WA

K

U N I M AS

Faculty of Economics and Business

ii

Social Support and Entrepreneurial Skills as Antecedents of

Entrepreneurial Behaviour

Muhammad Shoaib Farooq

A thesis submitted

In fulfillment of the requirements for the degree of Doctor of Philosophy (Entrepreneurship)

Faculty of Economics and Business

UNIVERSITI MALAYSIA SARAWAK

2016

i

DECLARATION

I certify that except where due acknowledgements had been made; the work is that of the

author alone. Contents of this thesis are result of work which is carried out during the official

commencement date of this doctoral program. This thesis has not been previously accepted

for any degree and is not concurrently submitted in candidature of any other degree.

Muhammad Shoaib Farooq

July, 2016

ii

ACKNOWLEDGEMENTS

I would like to acknowledge the valuable guidance and continuous support from my

supervisors Dr. Norizan Jaafar and Dr. Kartinah Ayupp. My humble and sincere gratitude

also goes Dr. Farooq Azam and Dr. Ali Sajid for being a continuous source of hope,

inspiration and motivation throughout the period of my studies. I am deeply grateful to them

for being so generous in sharing ideas and valuable insights.

I am also thankful to Ministry of Higher Education (MoHE) Malaysia for granting me with

full scholarship and for funding this study under Common-wealth Scholarship and

Fellowship plan (CSFP) Ref # KPT.B.600-18/3-JLD-7(53). Same acknowledgment goes to

my previous employer Institute of Business and Management (IB&M), University of

Engineering and Technology (UET), Lahore for granting me with study leave to enrol in this

doctoral program.

Further, I want to extend my gratitude to Center of Graduate Studies (CGS), UNIMAS and its

staff for being so nice and readily assisting graduate students. Moreover my humble thanks

goes to all well-wishers and my family members for their prayers and encouragement,

throughout this journey of life-long learning.

Thank you!

Muhammad Shoaib Farooq

July, 2016

iii

DEDICATION

Dedicated to my beloved family.

iv

ABSTRACT

This thesis introduces and tests a new theoretical framework to investigate the significance of

social support and entrepreneurial skills for determining entrepreneurial behaviour of

individuals. Theory of planned behaviour, which has remained often braced in the pitch of

entrepreneurship literature, is employed as underpinning theory for the proposed theoretical

model of this study. Framework of this study is built on the tenets of (1) Social Support (2)

Entrepreneurial Skills (3) Attitude towards Entrepreneurship (4) Subjective Norms (5)

Perceived Behavioural Control (6) Entrepreneurial Intention and (7) Entrepreneurial

Behaviour. This study serves as a first step towards exploring the significance of social

support and entrepreneurial skills with specific reference to entrepreneurial behaviour.

Findings of this study mark the importance of social support and entrepreneurial skills for

determining entrepreneurial behaviour. Moreover these findings reveal that social support,

entrepreneurial intention and entrepreneurial skills are the main factors which influence

entrepreneurial behaviour of individuals. By extending theory of planned behaviour this study

has made a sizeable theoretical contribution to the overall body of knowledge. Yet it is

pertinent to mention that along with theoretical and methodological contribution, further

implications of this study are also devised in a number of allied areas, such as contextual and

practical contributions. Findings of this study can serve as torch-bearer for policy makers,

academicians and researchers in the field of entrepreneurship. Hence this study covers a

considerable potential reap which is possible through social support and entrepreneurial skills

development for promoting entrepreneurial behaviour.

Keywords: Entrepreneurship, Social Support, Entrepreneurial Skills, Entrepreneurial

Behaviour, PLS-SEM, Theory of Planned Behavior

v

Sokongan Sosial Dan Kemahiran Keusahawanan Sebagai Pemangkin Gelagat Usahawan

ABSTRAK

Tesis ini adalah untuk menguji rangka kerja teori yang baru untuk menyiasat kepentingan

sokongan sosial dan kemahiran keusahawanan bagi menentukan perlakuan keusahawanan

individu. Teori tingkah laku yang dirancang, yang sering digunakan dalam bidang

keusahawanan telah digunakan sebagai asas bagi model teori yang dicadangkan dalam

kajian ini. Kerangka kajian ini dibina di atas prinsip-prinsip berikut; (1) Sokongan Sosial (2)

Kemahiran Keusahawanan (3) Sikap Terhadap Keusahawanan (4) Norma Subjektif (5)

Kawalan Persepsi Kelakuan (6) Niat Keusahawanan dan (7) Gelagat Keusahawanan. Kajian

ini berfungsi sebagai langkah awal ke arah meneroka kepentingan sokongan sosial dan

kemahiran keusahawanan dengan rujukan khusus kepada tingkah laku keusahawanan. Hasil

kajian ini menandakan kepentingan sokongan sosial dan kemahiran keusahawanan untuk

menentukan gelagat keusahawanan. Selain itu dapatan kajian ini juga menunjukkan bahawa

sokongan sosial, niat keusahawanan dan kemahiran keusahawanan adalah faktor-faktor

utama yang mempengaruhi tingkah laku keusahawanan individu. Dengan memperluaskan

teori gelagat terancang, kajian ini telah memberi sumbangan teori yang agak besar kepada

bidang ilmu keusahawanan. Sekaligus, dengan sumbangan teori dan metodologi, implikasi

lanjut kajian ini juga dikupas dalam bidang lain yang berkaitan, seperti sumbangan

kontekstual dan praktikal. Hasil kajian ini boleh berfungsi sebagai satu pencerahan bagi

para pembuat dasar, ahli akademik dan penyelidik dalam bidang keusahawanan. Oleh itu

kajian ini berpotensi untuk memberi manfaat untuk memahami kepentingan sokongan sosial

dan pembangunan kemahiran keusahawanan dalam menggalakkan sikap keusahawanan.

Kata Kunci: Keusahawanan, Sokongan Sosial, Kemahiran Keusahawanan, Gelagat

Keusahawanan, PLS-SEM, Teori Tingkah Laku Yang Dirancang

vi

TABLE OF CONTENTS

DECLARATION ................................................................................................................... i

ACKNOWLEDGEMENTS ................................................................................................. ii

DEDICATION .................................................................................................................... iii

ABSTRACT ......................................................................................................................... iv

ABSTRAK............................................................................................................................. v

TABLE OF CONTENTS .................................................................................................... vi

LIST OF TABLES ............................................................................................................ xiv

LIST OF FIGURES .......................................................................................................... xvi

ABBREVIATIONS .......................................................................................................... xvii

CHAPTER 1: INTRODUCTION ...................................................................................... 1

Background of Study ................................................................................................... 1 1.1

The Problem Statement ............................................................................................... 4 1.2

Research Question ....................................................................................................... 7 1.3

Objectives of Study ..................................................................................................... 8 1.4

Significance and Contribution of the Study .............................................................. 10 1.5

1.5.1 Expected Contributions of This Thesis .............................................................. 11

Theoretical Background ............................................................................................ 13 1.6

1.6.1 Theory of Planned Behaviour ............................................................................ 13

1.6.2 Entrepreneurial Event Model ............................................................................. 16

Organization of Thesis .............................................................................................. 18 1.7

CHAPTER 2: CONCEPT OF ENTREPRENEURSHIP DEVELOPMENT AND

ENTREPRENEURIAL BEHAVIOUR .................................................. 22

Introduction ............................................................................................................... 22 2.1

Definitions and Concepts of Entrepreneurship ......................................................... 25 2.2

2.2.1 What Differentiates Entrepreneur From Managers and Capitalists? ................. 28

2.2.2 Personality Traits of Entrepreneurs ................................................................... 29

2.2.2.1 Need for Achievement ................................................................................... 30

2.2.2.2 Locus of Control............................................................................................. 31

2.2.2.3 Over-Optimism............................................................................................... 32

2.2.2.4 Risk Taking Propensity .................................................................................. 32

2.2.2.5 Desire to Autonomy ....................................................................................... 33

2.2.3 Entrepreneurs are Born or Made? ...................................................................... 34

vii

2.2.4 Concept of Business Incubators ......................................................................... 35

2.2.5 How Business Incubators Help New Entrepreneurs? ........................................ 37

2.2.6 What Determines The Success of Entrepreneurs? ............................................. 39

Entrepreneurship Development Programs and Role of Education ............................ 40 2.3

2.3.1 Role of Entrepreneurship Education .................................................................. 41

2.3.2 Role of Entrepreneurial Training and Skill Development ................................. 46

Concept of Behaviour and Entrepreneurial Behaviour ............................................. 47 2.4

2.4.1 Concept of Entrepreneurial Behaviour .............................................................. 48

Concept of Entrepreneurial Intention ........................................................................ 52 2.5

Concept of Social Support......................................................................................... 54 2.6

2.6.1 Previous Research on Social Support ................................................................ 55

2.6.1.1 Mental Health ................................................................................................. 55

2.6.1.2 Physical Health ............................................................................................... 57

2.6.2 Dominant Models of Social Support.................................................................. 58

2.6.2.1 Buffering Hypothesis Model .......................................................................... 58

2.6.2.2 Direct Effect Hypothesis Model ..................................................................... 58

2.6.3 Theories of Social Support................................................................................. 59

2.6.3.1 Stress and Coping Social Theory ................................................................... 59

2.6.3.2 Relational Regulation Theory ........................................................................ 60

2.6.3.3 Life Span Theory ............................................................................................ 61

2.6.4 Gender Differences and Social Support ............................................................. 61

2.6.5 Cultural Differences and Social Support ........................................................... 62

Linking Social Support to Entrepreneurial Behaviour .............................................. 62 2.7

Concept of Entrepreneurial Skills ............................................................................. 63 2.8

Linking Entrepreneurial Skills to Entrepreneurial Behaviour .................................. 63 2.9

Entrepreneurship in The Context of Pakistan ........................................................... 64 2.10

Entrepreneurial Development Program in Pakistan .................................................. 66 2.11

2.11.1 Prime Minister’s Youth Programme .................................................................. 66

2.11.1.1 Small Business Loan Scheme ..................................................................... 66

2.11.1.2 Zero Mark-Up Loan Scheme (Qarz-e-Hasana) ......................................... 68

2.11.1.3 Youth Training Scheme .............................................................................. 68

2.11.1.4 Skill Development Scheme ........................................................................ 68

2.11.1.5 Youth Laptop Scheme ................................................................................ 69

viii

2.11.2 Initiatives by Government of Punjab ................................................................. 69

2.11.2.1 Self-Employment Program (Apna Rozgaar Scheme) ................................. 69

2.11.2.2 Young Entrepreneur Business Plan Competitions...................................... 70

2.11.2.3 Chief Minister’s e-Youth Initiative ............................................................ 70

2.11.2.4 Punjab Board of Technical Education ........................................................ 71

2.11.3 Ministry of Industries and Production ............................................................... 72

2.11.3.1 Aik Hunar Aik Nagar (One Village One Product) ..................................... 72

2.11.3.2 Small and Medium Enterprises Development Authority ........................... 72

2.11.3.3 National Productivity Organization (NPO) ................................................ 73

2.11.4 Technical Education and Vocational Training Authority .................................. 74

Summary ................................................................................................................... 76 2.12

CHAPTER 3: FACTORS DETERMINING ENTREPRENEURIAL BEHAVIOUR

AND HYPOTHESES DEVELOPMENT ............................................... 78

Introduction ............................................................................................................... 78 3.1

Factors Influencing Entrepreneurial Behaviour ........................................................ 82 3.2

Factors Influencing Entrepreneurial Intention .......................................................... 83 3.3

Dimensions of Attitude towards Entrepreneurship ................................................... 86 3.4

Dimensions of Social Support and Subjective Norms .............................................. 87 3.5

3.5.1 Dimensions of Social Support ........................................................................... 87

3.5.1.1 Introduction .................................................................................................... 87

3.5.1.2 Dimensions on the Base of Type of Support.................................................. 87

3.5.1.3 Perceived verses Received Social Support..................................................... 89

3.5.1.4 Structural Support .......................................................................................... 89

3.5.1.5 Functional Support ......................................................................................... 89

3.5.1.6 Dimensions on the Base of Type of Source of Support ................................. 90

3.5.1.7 Social Network and Entrepreneurial Success ................................................. 91

3.5.2 Dimensions of Subjective Norms ...................................................................... 92

Hypotheses Development .......................................................................................... 93 3.6

3.6.1 Social Support .................................................................................................... 95

3.6.2 Entrepreneurial Skills......................................................................................... 96

3.6.3 Attitude towards Entrepreneurship .................................................................... 97

3.6.4 Subjective Norms ............................................................................................... 98

3.6.5 Perceived Behavioural Control .......................................................................... 99

3.6.6 Entrepreneurial Intention ................................................................................. 100

ix

Conceptual Framework ........................................................................................... 100 3.7

3.7.1 Introduction ...................................................................................................... 100

3.7.2 Guidelines for Preparing Conceptual Framework ........................................... 103

3.7.3 Calculation of Total Effect Size ....................................................................... 105

Operationalization of Constructs ............................................................................. 107 3.8

3.8.1 Social Support .................................................................................................. 110

3.8.2 Attitude towards Entrepreneurship .................................................................. 111

3.8.3 Subjective Norms ............................................................................................. 111

3.8.4 Entrepreneurial Skills....................................................................................... 113

3.8.5 Perceived Behavioural Control ........................................................................ 114

3.8.6 Entrepreneurial Intention ................................................................................. 114

3.8.7 Entrepreneurial Behaviour ............................................................................... 114

3.8.8 Overview of all Constructs .............................................................................. 115

Summary ................................................................................................................. 117 3.9

CHAPTER 4: METHODOLOGY ................................................................................. 118

Introduction ............................................................................................................. 118 4.1

Discussion of Problem Statement and Research Background ................................ 122 4.2

Research Philosophy ............................................................................................... 123 4.3

Research Paradigm .................................................................................................. 126 4.4

4.4.1 Introduction ...................................................................................................... 126

4.4.2 Positivism Perspective ..................................................................................... 127

4.4.3 Critical Theory Perspective .............................................................................. 129

4.4.4 Constructivism Perspective .............................................................................. 130

4.4.5 Realism Perspective ......................................................................................... 132

4.4.6 Justification for Use of Positivism Paradigm................................................... 134

Philosophy of Qualitative and Quantitative Research............................................. 136 4.5

4.5.1 Justification for the Use of Quantitative Research Approach .......................... 140

Research Design and Sampling Method ................................................................. 141 4.6

4.6.1 Introduction ...................................................................................................... 141

4.6.2 Sampling Methods ........................................................................................... 142

4.6.2.1 Types of Probability Sampling ..................................................................... 143

4.6.2.2 Types of Non-Probability Sampling ............................................................ 145

4.6.2.3 Justification for the Use of Simple Random Sampling ................................ 146

x

4.6.3 Target Population ............................................................................................. 147

4.6.4 Sample Unit ..................................................................................................... 149

4.6.5 Research Setting............................................................................................... 149

4.6.5.1 Lahore as an Economic Hub of the country ................................................. 150

4.6.5.2 Industries of Lahore ..................................................................................... 150

4.6.5.3 Lahore as a Hub of Education ...................................................................... 151

4.6.5.4 Lahore Stock Exchange (LSE) ..................................................................... 152

4.6.5.5 Lahore Chamber of Commerce and Industry ............................................... 152

4.6.6 Sample Size ...................................................................................................... 153

4.6.7 Procedures for Data Collection ........................................................................ 155

Questionnaire Design and Layout ........................................................................... 158 4.7

4.7.1 Cover Page ....................................................................................................... 159

4.7.2 Synchronized Questions Layout ...................................................................... 159

4.7.3 Provision of Specific Sections ......................................................................... 160

4.7.4 Appropriate Timing for Questionnaire Completion ........................................ 161

4.7.5 Minimal Respondents Fatigue ......................................................................... 161

Measurement Scales ................................................................................................ 165 4.8

4.8.1 Reliability and Validity of Scales .................................................................... 168

Pre-Testing of the Questionnaire............................................................................. 172 4.9

Overview of Data Analysis ..................................................................................... 174 4.10

4.10.1 Introduction ...................................................................................................... 174

4.10.2 Justification for Use of PLS-SEM ................................................................... 177

4.10.2.1 Selection of Software for PLS-SEM Algorithm ....................................... 181

4.10.3 Characteristics of Data Required for PLS-SEM .............................................. 182

4.10.4 Steps Involved in PLS-SEM Analysis ............................................................. 183

4.10.4.1 Assessment of Measurement Model ......................................................... 184

4.10.4.2 Assessment of Structural Model ............................................................... 194

4.10.4.3 Heterogeneity Issues ................................................................................. 198

4.10.4.4 Goodness of Fit (GoF) and Absolute Model Fit Indices .......................... 199

4.10.4.5 Summarized Overview of PLS-SEM Analysis ........................................ 201

Research Ethics ....................................................................................................... 202 4.11

Summary ................................................................................................................. 203 4.12

CHAPTER 5: RESULTS AND DISCUSSION ............................................................. 206

xi

Introduction ............................................................................................................. 206 5.1

Data Collection ........................................................................................................ 209 5.2

5.2.1 Introduction ...................................................................................................... 209

5.2.2 Data Coding ..................................................................................................... 209

5.2.3 Response Rate .................................................................................................. 209

5.2.4 Common Method Bias Test ............................................................................. 210

5.2.5 Test for Non-Response Bias ............................................................................ 211

Data Screening and Pre-analysis ............................................................................. 212 5.3

5.3.1 Exploratory Factor Analysis ............................................................................ 212

5.3.2 Confirmatory Factor Analysis (CFA) .............................................................. 213

Descriptive Statistics ............................................................................................... 214 5.4

5.4.1 Introduction ...................................................................................................... 214

5.4.2 Demographic Characteristics ........................................................................... 214

5.4.3 Descriptive Statistics of Indicators / Constructs .............................................. 219

Assessment of Measurement Models ...................................................................... 219 5.5

5.5.1 Introduction ...................................................................................................... 219

5.5.2 Assessment of Reflective Measurement Models ............................................. 220

5.5.2.1 Assessment of Internal Consistency (Composite Reliability) ...................... 221

5.5.2.2 Assessment of Indicators’ Reliability .......................................................... 222

5.5.2.3 Assessment of Convergent Validity (Average Variance Extracted) ............ 223

5.5.2.4 Assessment of Discriminant Validity ........................................................... 224

5.5.3 Assessment of Formative Measurement Models ............................................. 227

5.5.3.1 Assessment of Convergent Validity ............................................................. 227

5.5.3.2 Assessment of Collinearity Issues ................................................................ 228

5.5.3.3 Assessment of Significance and Relevance of Formative Indicators .......... 229

Assessment of Structural Model ............................................................................. 231 5.6

5.6.1 Introduction ...................................................................................................... 231

5.6.2 Collinearity Assessment................................................................................... 232

5.6.3 Path Coefficients .............................................................................................. 232

5.6.4 Significance and Relevance of Path Coefficients (Bootstrapping) .................. 234

5.6.4.1 Significance of Path Coefficients (t value) .................................................. 234

5.6.4.2 Relevance of Path Coefficients (Total effect size) ....................................... 235

5.6.5 Coefficients of Determination (R2 Value) ....................................................... 237

xii

5.6.6 Analysis of Effect Size and Predictive Relevance ........................................... 238

5.6.6.1 Effect size f2 ................................................................................................. 238

5.6.6.2 Predictive Relevance (Using Blindfolding for Q2) ...................................... 239

5.6.6.3 Effect Size (q2) ............................................................................................. 240

Goodness of Fit (GoF) and Absolute Model Fit Indices ......................................... 242 5.7

Discussion of Hypotheses and Findings.................................................................. 243 5.8

5.8.1 Finding 1 .......................................................................................................... 245

5.8.2 Finding 2 .......................................................................................................... 248

5.8.3 Finding 3 .......................................................................................................... 250

5.8.4 Finding 4 .......................................................................................................... 252

5.8.5 Finding 5 .......................................................................................................... 254

5.8.6 Finding 6 .......................................................................................................... 256

Summary ................................................................................................................. 257 5.9

CHAPTER 6: CONCLUSIONS ..................................................................................... 259

Introduction ............................................................................................................. 259 6.1

Summary of Research Findings .............................................................................. 261 6.2

6.2.1 Introduction ...................................................................................................... 261

6.2.2 The Influence of Social Support ...................................................................... 262

6.2.3 The Influence of Entrepreneurial Skills ........................................................... 264

6.2.4 Relationship between Entrepreneurial Intention and Entrepreneurial

Behaviour ......................................................................................................... 265

Research Contributions ........................................................................................... 265 6.3

6.3.1 Introduction ...................................................................................................... 265

6.3.2 Theoretical Contribution .................................................................................. 267

6.3.2.1 Development of Social Support Concept ..................................................... 268

6.3.2.2 Development of Entrepreneurial Skills Concept .......................................... 269

6.3.2.3 Extending Theory of Planned Behaviour ..................................................... 269

6.3.2.4 Resolving Previous Discrepancies about Subjective Norms........................ 270

6.3.2.5 Advancement of Entrepreneurial Behaviour Studies ................................... 271

6.3.2.6 Advancement of Entrepreneurial Development Studies .............................. 272

6.3.3 Methodological Contribution ........................................................................... 273

6.3.3.1 Contribution in Research Design ................................................................. 273

6.3.3.2 Simple Random Sampling Method .............................................................. 274

6.3.3.3 Development of Revised Measurement Scale for Subjective Norms .......... 274

xiii

6.3.3.4 Applicability of Statistical Technique .......................................................... 275

6.3.4 Contextual Contribution................................................................................... 276

6.3.4.1 Contribution in the Context of Pakistan ....................................................... 277

6.3.4.2 Contribution in the Context of Developing Countries ................................. 278

Practical Implication ............................................................................................... 278 6.4

6.4.1 Introduction ...................................................................................................... 278

6.4.2 Formulation of Entrepreneurial Development Programs ................................. 279

6.4.3 Implication for Policy Makers ......................................................................... 280

6.4.4 Implication for Academicians .......................................................................... 280

Limitations of the Study .......................................................................................... 281 6.5

6.5.1 Sample Size ...................................................................................................... 282

6.5.2 Survey Administration ..................................................................................... 282

6.5.3 Longitudinal Study........................................................................................... 282

6.5.4 Research Setting............................................................................................... 283

Future Research Directions ..................................................................................... 284 6.6

6.6.1 Investigation of Moderating Effects ................................................................ 284

6.6.2 Segmentation of Respondents .......................................................................... 285

6.6.3 Investigating Dimensions of Social Support.................................................... 285

6.6.4 Longitudinal Study........................................................................................... 285

6.6.5 Analyzing Control Variables ........................................................................... 286

6.6.6 Investigation of More Diverse Factors ............................................................ 286

6.6.7 Investigation in Different Context ................................................................... 287

Summary ................................................................................................................. 287 6.7

REFERENCES ..................................................................................................................... 291

APPENDICES ...................................................................................................................... 338

xiv

LIST OF TABLES

Table 1.1: Expected Contributions of This Thesis .............................................................. 12

Table 2.1: Differentiation of Managers, Entrepreneurs and Capitalists.............................. 28

Table 2.2: Studies on Impact of Entrepreneurial Educations .............................................. 44

Table 3.1: Studies on Entrepreneurial Intention and Its Dimensions.................................. 84

Table 3.2: Studies on Effects of Social Network and Entrepreneurial Success .................. 91

Table 3.3: Calculation of the Total Effect Size ................................................................. 107

Table 4.1: Overview of Research Paradigms and Their Philosophical Assumptions ....... 134

Table 4.2: Distinguishing Features of Quantitative and Qualitative Methods .................. 138

Table 4.3: Difference between Qualitative and Quantitative Strategies ........................... 139

Table 4.4: Statistical Techniques for Multivariate Models ............................................... 176

Table 4.5: Comparison of PLS-SEM and CB-SEM ......................................................... 180

Table 4.6: Characteristics of Data Required for PLS-SEM .............................................. 182

Table 4.7: Systematic Process for Application of PLS-SEM Algorithm .......................... 183

Table 4.8: Guidelines for Choosing Reflective or Formative Measurement Model ......... 186

Table 4.9: Assessment Process for Reflective Measurement Models ............................... 188

Table 4.10: Criteria for Assessment of Reflective Measurement Models .......................... 189

Table 4.11: Assessment Process for Formative Measurement Models ............................... 190

Table 4.12: Criteria for Assessment of Formative Measurement Models .......................... 193

Table 4.13: Assessment Process for Structural Models ...................................................... 194

Table 4.14: Criteria for the Assessment of Structural Models ............................................ 197

Table 4.15: Overview of Systematic Evaluation for PLS-SEM Results ............................. 201

Table 5.1: Demographic Characteristics ........................................................................... 216

Table 5.2: Outer Weights of Items Involved in Formative Constructs ............................. 230

Table 5.3: Calculation of Total Effect Size ....................................................................... 236

xv

Table 5.4: Calculation of Effect Size (q2) ......................................................................... 241

Table 5.5: Hypotheses Testing .......................................................................................... 244

xvi

LIST OF FIGURES

Figure 1.1: Organizational Structure of Thesis .................................................................... 21

Figure 2.1: Organizational Structure of Chapter 2 ............................................................... 24

Figure 2.2: Map of Pakistan ................................................................................................. 65

Figure 2.3: Locations of TEVTA Institutes in Punjab ......................................................... 75

Figure 3.1: Organizational Structure of Chapter 3 ............................................................... 81

Figure 3.2: Conceptual Model of Entrepreneurial Behaviour ............................................ 104

Figure 3.3: Conceptual Model and Path Effects ................................................................. 106

Figure 3.4: Guidelines for Operationalization of Constructs ............................................. 109

Figure 3.5: Conceptual Model and Measurement Scales ................................................... 116

Figure 4.1: Organizational Structure of Chapter 4 ............................................................. 121

Figure 5.1: Organizational Structure of Chapter 5 ............................................................. 208

Figure 5.2: Findings of Structural Model ........................................................................... 233

Figure 6.1: Organizational Structure of Chapter 6 ............................................................. 261

xvii

ABBREVIATIONS

APO Asian Productivity Organization

ATB Attitude toward Behavior

ATE Attitude towards Entrepreneurship

AVE Average Variance Extracted

CBSEM Covariance Based Structural Equation Modeling

CFA Confirmatory Factor Analysis

EB Entrepreneurial Behaviour

EEM Entrepreneurial Event Model

EFA Exploratory Factor Analysis

EI Entrepreneurial Intention

ES Entrepreneurial Skills

ESE Entrepreneurial Self-Efficacy

FIMIX-PLS Finite Mixture Partial Least Squares

GoF Goodness of Fit

HTMT Heterotrait-Monotrait Ratio

LCCI Lahore Chamber of Commerce and Industry

MGA Multi Group Analysis

MoIP Ministry of Industries and Production

NPO National Productivity Organization

NS Non-Significant

PA Propensity to Act

PBC Perceived Behavioral Control

PBTE Punjab Board of Technical Education

PD Perceived Desirability

xviii

PF Perceived Feasibility

PIDC Pakistan Industrial Development Cooperation

PKR Pakistani Rupee

PLS Partial Least Square

PMO Prime Minister Office

SEM Structural Equation Modeling

SMEDA Small and Medium Enterprises Development Authority

SN Subjective Norms

SRMR Standardized Root Mean Square Residual

SS Social Support

TEVTA Technical Education and Vocational Training Authority

TPB Theory of Planned Behaviour

VIF Variance Inflation Factor

1

Chapter No. 1: CHAPTER 1

INTRODUCTION

Background of Study 1.1

Unemployed youth and underemployed workers can offer much more to our economy, as

they are a valuable asset of our society and can impart a meaningful contribution for the

betterment of economy (Hyman, 2007). Underutilization of human capital has negative

consequences for both the individual citizens and for whole economy in broader perspective.

In this regard, Mroz and Savage (2006) note that in current era of rapid advancements in

technology, labour market is becoming more competitive than ever before, and required skills

are rapidly changing. Moreover computerization at work-place is replacing workers with high

performance machines, which is dramatically reducing the jobs of blue collar workers and

unskilled labour. Although this advancement in technology and mechanization is increasing

the productivity of labour and manufacturing process, but on the other hand, same is causing

escalation in the volume of unemployed people. Further, globalization, inflation, energy

crises and increasing population are also adding up to the rising unemployment rate (Hyman,

2007).

It is evident from the statistics published by government bodies that volume of unemployed

people have increased from 3.40 million in 2010-11 to 3.70 million in 2012-13 (Pakistan

Bureau of Statistics, 2014). In order to cater with this high unemployment rate more and

more emphasis is being given to self-employment programs. In these circumstances when

rate of unemployment is increasing, and new jobs are not available in the society.

Entrepreneurship development programs can be used to uplift the living standards and

economic condition of unemployed individuals. Recognizing these facts and realising the

importance of entrepreneurship, government policies over the past few years have made

2

entrepreneurial training and support available for unemployed youth. Therefore a variety of

self-employment schemes and entrepreneurial development programs (e.g. skill based

training and initial support in terms of finance or business feasibility etc.) are available for

promoting entrepreneurial behaviour in unemployed youth. Yet, it is very unfortunate that,

literature review provides very limited information about the significance and outcomes of

these initiatives taken by government. Moreover it must be noted that, an entrepreneurial

development program which is very good in one country might be dysfunctional and totally

useless in other culture, because of subjective norms and different cultural values, which have

a critical role in fostering entrepreneurship (Zhao, 2012). Entrepreneurial development policy

should be in line with the social, economic and cultural differences of the country (Schoof,

2006). In this regard, it is very important to gauge the significance of factors influencing

entrepreneurial behaviour of individuals (Weaver et al., 2006).

Entrepreneurial behaviour is a result of cognitive process, several studies have frequently

applied Ajzen’s (1991) theory of planned behaviour to explain the decision making process,

which leads to the creation of a new business ventures. Particularly, authors such as Krueger

(2007; 2000), Kolvereid (2014; 2011; 1996), Fayolle (2006; 2008) and Liñán (2004, 2008;

2007) used theory of planned behaviour for analyzing the entrepreneurial intentions and

entrepreneurial decision making. Somewhat these studies agree that intention to choose self-

employment depends on characters’ personal attitude, perceived behavioural control towards

entrepreneurship, and the effect of perceived subjective norms towards entrepreneurship.

Despite this, there is still much to be explored regarding the way in which entrepreneurial

intention is formed. Authors such as Liñán and Santos (2007) and Davidson and Honig

(2003) argue that personal beliefs and social values effect the motivational drive towards

becoming an entrepreneur. Hence if the social environment is more supportive towards

3

entrepreneurial activity, it is plausible that an individual will be more inclined towards

choosing self-employment as a career option. Similar to the external environment, personal

attributes of an individual may also effect entrepreneurial intention (Burger-Helmchen,

2012).

This thesis argues, that entrepreneurship is different from other human behaviours (such as,

eating, sleeping, smoking and traveling behaviour); there is a strong reason to believe that

entrepreneurial behaviour requires special skills (entrepreneurial skills). Whereas any special

skills are definitely not required for smoking behaviour; further entrepreneurial behaviour

requires social support, because business being an economic activity cannot be performed in

isolation, unlike sleeping or eating behaviour. Further in the same context, this thesis argues

that entrepreneurial activity requires way more resources (such as financial resources, human

resources, information resources etc.) than any other behavioural aspect. Unfortunately,

previous studies have been treating entrepreneurial behaviour similar to other human

behaviours (e.g. sleeping, eating, smoking and traveling etc.) which do not require much

social support and skills. Moreover this thesis argues that entrepreneurial skills and some sort

of social support can influence entrepreneurial behaviour of individuals.

There is a high probability of strong connection between entrepreneurial skills and perceived

behavioural control towards entrepreneurship. Moreover it is argued that, individuals having

a strong grip on specific entrepreneurial skills will probably feel more confident to start their

own business, instead of working for any other organization. Other than this, it can also be

argued that a strong grip on entrepreneurial skills would also be associated to a higher

attitude towards entrepreneurship. Yet, it is unfortunate that, literature on entrepreneurship is

generally under developed and there is little research on this topic to inform us about the

4

significance of entrepreneurial skills and other initiatives of social support (Martin et al.,

2013; Weaver et al., 2006; Zhao, 2012). In this aspect, this thesis argues that social support

and entrepreneurial skills are essential for strong entrepreneurial behaviour. This research is a

contribution to literature of entrepreneurship through theory building in relatively less

developed area of entrepreneurship literature. In addition to this, it is an effort to answer call

by researchers in the field of entrepreneurship (e.g. Gorman et al., 1997; Martin et al., 2013;

Weaver et al., 2006; Zhao, 2012) for more methodological, empirical and rigorous studies, to

address a broad research question, of whether and up to what extent entrepreneurial skills and

social support are significant in creating new entrepreneurs.

The Problem Statement 1.2

Review of previous studies and above discussion indicates the gap in literature with specific

reference to determinants of entrepreneurial behaviour. To the best of researcher’s

knowledge, no studies have investigated the phenomenon of social support and

entrepreneurial skills as antecedents of entrepreneurial behaviour. It is unfortunate, that there

is no adequate research on this important issue. Moreover, studies that link social support and

entrepreneurial success (e.g. Ebbers, 2014; Elfring and Hulsink, 2003; Evald and Bager,

2008) are failed to describe the details of its effect on entrepreneurial behaviour, which is

relevant to entrepreneurial development (Baron et al., 2016). Furthermore, most of the

available empirical studies focus on attitude towards entrepreneurship (e.g. André, 2013;

Bagheri et al., 2011; Bergevoet et al., 2004) or intention towards entrepreneurship (e.g. Ayob

et al., 2013; Bae et al., 2014; Liñán, 2008). Similarly, available studies on social support or

social network are mostly focused on the aspects of size of network (e.g. Aidis et al., 2012;

Semrau and Werner, 2014) and strength of social ties (e.g. Elfring and Hulsink, 2007; Jack,

2005; Miller et al., 2007).