The effect of practical entrepreneurship education in South Africa. Student entrepreneurship promotion through Enactus Entrepreneurial Projects

CONTENTS

ACKNOWLEDGEMENTS

ABSTRACT

CHAPTER 1 INTRODUCTION

CHAPTER 2 LITERATURE REVIEW

CHAPTER 3 RESEARCH METHODOLOGY

CHAPTER 4 DATA ANALYSIS

CHAPTER 5 RECOMMENDATIONS AND CONCLUSIONS

REFERENCES

APPENDIX

ACKNOWLEDGEMENTS

To the almighty God for gracing me with the strength not to quit at times where I felt it was too much. To my family, from my late father, who passed away at the beginning stages of my dissertation, Mr Azwindini Wilbert Tshikovhi, his forever belief in education as the key to success and the contribution he made to my academic being. Not forgetting the support from my brothers, Lufuno Mutele, Khathutshelo and Lufuno Tshikovhi, it would not have been possible without your support.

Special thanks to my supervisors Prof Mokubung Nkomo, Dr Richard Shambare and Mrs Althea Mvula for guidance, encouragement and indefatigable support. To my Tshwane University of Technology family as a whole from Dr Edgar Nesamvuni, Dr Yvonne Senne to Catherine Zwane, Elizabeth Mpshe, Raymond Matlala, Sonica Coetzee, Angelica Warchal and the library staff, friends and colleagues for their undying encouragement. Particular thanks to Letitia de Wet and the Enactus South Africa NPC team as a whole for their permission to conduct this study. Not forgetting every Enactus student who took their time to participate in my study, it was much appreciated.

Finally, I would also like to express my sincere gratitude and appreciation to the Tshwane University of Technology Postgraduate Scholarship’s financial assistance throughout this study period.

ABSTRACT

Despite government initiatives such as the National Youth Development Agency (NYDA) and Small Enterprise Development Agency (SEDA) aimed at improving entrepreneurship in South Africa (SA), two phenomena are characteristic: (1) the country is among the least entrepreneurial nations; (2) Unemployed graduates lack of interest in entrepreneurship exacerbates high unemployment rates. Consequently, universities are incorporating practical entrepreneurship education into their curricula. Enactus South Africa, as a typical example of university intervention into the problem, was studied with regard to its effect on student’s entrepreneurship intentions. The thinking is that, without access to jobs, entrepreneurship invariably becomes the alternative. Research into this phenomenon is still limited, and existing literature provides equivocal results. For this reason, this study attempts to address this gap by investigating the effect of practical entrepreneurship education through Enactus entrepreneurial projects.

The study took the form of quantitative research, to enable the researcher to collect data which would answer best the research question in hand. The findings of the study suggest that there is a positive relationship between Enactus entrepreneurial projects and students’ entrepreneurship intentions. The research design was supportive in constructing the entire framework of the study. The study was descriptive in nature as essentially it aimed to determine the effect of the phenomena on Enactus students.

The population drawn on was Enactus SA, but the sample was taken from the Enactus National Competition 2013, which meant that only students who were representative per Higher Education Institution were sampled. It cannot therefore be assumed that the findings are generalizable to all Enactus SA students.

Although the findings of the study suggest that student’s participation in Enactus does influence their entrepreneurship intentions, the findings also showed that female members of Enactus are influenced more positively than males. This is therefore an interesting finding for a study with respondents of n=355, of which 139 were females and 216 males. One would have assumed that males would react better than females based on their higher number of respondents; also the literature suggests that males have a better understanding of entrepreneurship activities than females generally.

This study has, as mentioned, found that Enactus does influence student’s entrepreneurship intentions. The variables that determined the intention do vary between male and female members of Enactus, as has been mentioned. The skills level gained by participating in Enactus SA does reflect the potential for Enactus to produce graduates that are likely to engage in entrepreneurial activities. Therefore a tentative conclusion of the study will be that entrepreneurship promotion through Enactus entrepreneurial projects do indeed influence students to think of entrepreneurship as a career path. Therefore, the study recommends that Enactus SA and Universities should become interdependent.

CHAPTER 1 INTRODUCTION

1.1 CHAPTER OVERVIEW

In this chapter, a general overview of the study is provided. The theoretical framework for the study is outlined, along with the development of the research problem. The chapter also provides a brief literature review together with strategies to be used in resolving the identified research problem. Following this, the chapter presents a synopsis of the structure of the dissertation, limitations, scope of the study and definitions of key concepts used throughout the study.

1.2 INTRODUCTION

Globally, students’ lack of interest to engage in entrepreneurial activity is a growing concern (Yaghoubi, 2010). This is particularly true in developing countries such as South Africa, where tough economic conditions continually erode job opportunities (Herrington, Kew, Simrie & Turton, 2011). Without access to jobs, it is reasonable to argue that entrepreneurship – i.e. starting and running small businesses – invariably becomes the next best livelihood option for university graduates. However, the literature reveals that students’ motivation to embark on entrepreneurship still remains depressed (Makgosa & Ongori, 2012; Rae, 2010). Although a review of the literature shows that this phenomenon is widespread (Kelser & Hout, 2010; Massad & Tucker, 2009), the Global Entrepreneurship Monitor (GEM, 2011) statistics indicate that in South Africa it is more severe.

Despite government initiatives such as the National Youth Development Agency (NYDA) and Small Enterprise Development Agency (SEDA), which aim to encourage business start-ups, the GEM (2011) observed that South African students, compared with their counterparts from other emerging economies such as Brazil, had the lowest Total Entrepreneurial Activity (TEA) index. TEA is a measure of individuals’ participation in early-stage entrepreneurial activity within a given country’s adult population (18 to 64 years). To illustrate this, South African youth aged between 24 and 35 were observed to have a TEA score of 10.2 percent: meaning that approximately 1 in 10 youth will start a business. This is about half the entrepreneurial levels in Brazil, where the TEA stands at about 17.8 percent for the same age group (Herrington, Kew, Simrie & Turton, 2011).

Universities in South Africa and worldwide are grappling with the challenge of how to encourage youth entrepreneurship, to the extent that many institutions are experimenting with various creative methods to encourage student entrepreneurship (Rae, 2010). Incorporating practical entrepreneurial training into the curricula is a strategy widely believed to stimulate students’ entrepreneurial intentions (Yaghoubi, 2010). As such, Higher Education Institutions (HEIs) are creatively combining practical entrepreneurship education and extra-curricular activities through student organisations such as Enactus, to encourage entrepreneurial activity among students. This thinking appears consistent with the Euro-barometer survey, whose findings show that students across European universities concur that it is important for HEIs to encourage innovation and entrepreneurship among their students (European Commission, 2009:2-4).

Borstadt (1999)asserts that entrepreneurial-based training involving students in Free Enterprise (Sife) (now re-branded as Enactus) has successfully mobilised students to start their own businesses in the United States (US). In South Africa, however, despite students having participated in similar programmes, such as Enactus, the efficacy of these programmes in stimulating entrepreneurship is largely unknown, as very little research has been done in the area. Accordingly, this study endeavours to address this gap in the literature by studying the effect of students’ participation in Enactus entrepreneurial-based projects on entrepreneurial promotion.

1.2.1 ENTREPRENEURSHIP EDUCATION

Despite divergent schools of thought on what constitutes entrepreneurship education (Rasmussen & Sorheim, 2006), several authors conceptualize entrepreneurship in terms of the tangible and assessable outcomes of entrepreneurship skills (Garavan & O'cinneide, 1994; Gorman, Hanlon & King, 1997; Pittaway & Cope, 2007).

Following this viewpoint, traditional (theoretical) entrepreneurship education is viewed as being inadequate (Gibb, 2002). Entrepreneurship involves the creation of new ventures, which is more practical than simply mastering theoretical concepts. As such, it requires action-based entrepreneurship education that is capable not only of stimulating students’ entrepreneurial intentions, but also providing skills to create new ventures (Johannisson, Landstrom & Rosenberg, 1998). In agreement, Peterman and Kennedy (2003)demonstrate that action-based entrepreneurship education significantly influences students’ entrepreneurial intentions.

1.2.2 ENACTUS: AN EXTENSION OF ENTREPRENEURIAL EDUCATION

Enactus, formerly known as Students in Free Enterprise (Sife), is a global organization that creates partnerships between business and higher education. In South Africa, Enactus has 27 teams in 27 HEIs (23 Universities and 4 Private colleges), with 162 entrepreneurial projects and 2 166 members (Enactus, 2013a). The focus of Enactus is to encourage students to identify entrepreneurial opportunities that engage in solving problems and challenges within their communities. These interventions are measured on the basis of the extent to which Enactus students improve both the quality of life and standard of living of the targeted recipients (Enactus, 2013b).

In this regard, Enactus is a practical entrepreneurial training structure that helps students to develop positive entrepreneurial attitudes and entrepreneurial self-efficacy (Zeng, Bu & Su, 2011). To illustrate, Borstadt (1999) found that Northern Arizona University’s SIFE team developed a unique structure of a micro-loan programme for the economic development needs of the Arizona community in the US. The SIFE team at the Northern University of Arizona founded the Northern Arizona Small Business Loan Fund in order to provide loan capital, business education and technical assistance to entrepreneurs in the local areas that are not eligible for conventional bank finance. Referring to examples like this, it is widely believed that Enactus promotes student entrepreneurship (Sife, 2011), however, these claims have received little scientific testing.

Thus, the purpose of this study is to investigate the impact that Enactus’ practical entrepreneurship training has on students’ entrepreneurial promotion. More specifically, the study investigates how students’ exposure to and participation in Enactus projects influences their entrepreneurial intentions.

1.3 THEORETICAL FRAMEWORK

To understand how individuals become entrepreneurs, the Entrepreneurship Intentions (EI) model is used. The EI model used in this study is based on the Theory of Planned Behaviour (TPB) and Shapero’s Entrepreneurial Event (SEE) model. This model has been used in similar studies such as Shapero (1982) and recently by Linan, F and Chen (2009), which looked at students’ intentions to engage in entrepreneurial activities. Given its widespread support in previous studies as explanatory of entrepreneurial behaviour (Krueger, Reilly & Carsrud, 2000; Linan, F., 2004; Nicolaides, 2011; Oosterbeek, Van Praag & Ijsselstein, 2010; Paco, Ferreira, Rasposo, Rodrigues & Dinis, 2010; Peterman & Kennedy, 2003), the EI model is applied in this study to test the influence of Enactus on the entrepreneurial intentions of students.

The EI model (see Figure 1.1 p.6) proposes a set of psychological antecedents as variables influencing entrepreneurial intention, which is considered the immediate antecedent to entrepreneurial behaviour. Entrepreneurial knowledge (EK), which has been described as “the concept, skills and mentality of entrepreneurs” (Jack & Anderson, 1999:118), influences entrepreneurial attitudes. Personal attitudes are understood to influence entrepreneurial intentions by indicating that a ‘high’ personal attitude towards entrepreneurship will indicate that the respondent is more in favour of self-employment than organisational employment (Kolvereid, 1996). Perceived social norms (PSN) are the behavioural expectations and cues within a society or group as perceived by the individual in relation to enacting a specific behaviour. For example, being an entrepreneur may result in one being perceived differently than if engaged in other professions. Self-efficacy (SE) is the key factor in determining human agency (Bandura, Barbaranelli, Caprara & Pastorelli, 2001), and it has been convincingly demonstrated that individuals with high self-efficacy for a certain task are more likely to pursue and then persist in that task. Perceived desirability (PD) is the degree to which one finds the prospect of starting a business to be attractive (Nasurdin, Ahmad & Lin, 2009).

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Figure 1.1: Entrepreneurship intentions model

Source: Linan, F. (2004:6)

1.3.1 ENACTUS AND ENTREPRENEURIAL KNOWLEDGE

Enactus provides a platform for students to gain action-based entrepreneurship education; students gain from identifying a social problem (in projects) in communities to finding an entrepreneurial solution through an entrepreneurial approach, as guided by Enactus (2013b). Through participation in Enactus projects, it is likely that students will better appreciate the entrepreneurship process. Linan, F. (2004), particularly, explains that exposure to the business environment makes students more confident about their own abilities to become entrepreneurs.

1.3.2 ENACTUS AND PERSONAL ATTITUDE

Enactus encourages students towards an entrepreneurial attitude that leads them to entrepreneurship desire. Enactus builds the individual to believe in starting and completing a task, which is a most desirable motivation to develop in the youth (Linan, F., 2004). This is to enable the youth to think of entrepreneurship as a career and as a result contribute to the local economic development of their communities. The entrepreneurial attitudes that Enactus instils in students to become entrepreneurs, for example, means that students are required to apply these in practice, otherwise the result is merely attitude without action. Bosma and Levie (2009) additionally argue that entrepreneurial attitudes and perceptions play an important role in creating an entrepreneurial intention.

1.3.3 ENACTUS AND PERCEIVED SOCIAL NORMS

Linan, F. (2004) states that social norms play an important role in constructing social order. Such norms are the behavioural expectations and cues within a society or group. The question then arises, does being an entrepreneur has the effect of one being perceived differently than if engaged in other professions? The effect of perceived social norms on entrepreneurship intention must necessarily be investigated in the study.

1.3.4 ENACTUS AND SELF-EFFICACY

Self-efficacy refers to individuals’ perceptions of their skills and abilities (Bandura et al., 2001). Entrepreneurship self-efficacy relates to individuals’ innermost thoughts on whether they perceive themselves as having the necessary abilities to start and run a business (Wilson, Marlino & Kickul, 2004). Bandura et al. (2001) included self-efficacy as one of a variety of socio-cognitive influences on the career aspirations of children, and found that academic self-efficacy had the strongest direct effect on the career aspirations of children. In this study SE is used to determine entrepreneurship intentions of Enactus students.

1.4 DEVELOPMENT OF THE RESEARCH PROBLEM

It is generally observed that in the face of increasing unemployment few graduates are engaged in entrepreneurship (Gregory, 2011). According to (Statistics South Africa, 2012), about 50.9 percent of the unemployed in South Africa are the youth. University graduates seem to lack experience; as a result, most of them do not get employment (Enactus, 2013b). Entrepreneurial projects such as Enactus seek to address this problem by providing students with practical entrepreneurship training. Considering that insubstantial numbers of students are involved in Enactus throughout the world, it therefore leaves a gap to investigate whether participation in Enactus does actually promote EI.

1.4.1 RESEARCH PROBLEM

According to Herrington et al. (2011), university graduates are most likely not to actively participate in entrepreneurship activities. Given the high unemployment rates among the South African youth, there are far too few students engaging in entrepreneurial activities. The research problem is formulated as:

Despite dwindling employment opportunities for South African students, their uptake of entrepreneurship, as measured by TEA, is very low.

1.4.2 RESEARCH QUESTION

To address the above-stated problem, the research question is formulated as follows:

To what extent does student participation in Enactus influence their entrepreneurial intentions?

1.4.3 HYPOTHESES

The following hypotheses are formulated:

H1 : Higher levels of entrepreneurial knowledge are positively associated with higher levels of entrepreneurial self-efficacy.

H2 : There is positive association between high levels of self-efficacy and high levels of entrepreneurial intentions.

H3 : Higher levels of entrepreneurial knowledge are positively related to higher levels of perceived social norms.

H4 : Higher levels of entrepreneurial knowledge are positively related to higher levels of personal attitudes .

H5 : Higher levels of entrepreneurial knowledge are positively related to higher levels of entrepreneurial intentions.

H6 : Higher levels of personal attitudes are associated with higher levels of perceived social norms.

H7 : Higher levels of perceived social norms are positively related to higher levels of perceived desirability.

H8 : Higher levels of perceived desirability of entrepreneurship are positively associated with higher levels of entrepreneurial intentions.

H9 : Higher levels of personal attitude are positively related to higher levels of entrepreneurial intentions.

1.5 PURPOSE OF THE STUDY

The purpose of this study is to:

a) Provide thorough insight on practical entrepreneurship education by Enactus; and
b) Identify the elements that play a major role in forming entrepreneurship intentions among students.

1.6 STUDY DESIGN AND METHODS

This study adopted the positivistic paradigm (Barbie & Mouton, 2006). Consequently, the study utilises quantitative techniques in the collection and analysis of data. Data was collected by means of self-completion questionnaires.

1.6.1 SAMPLING

The stratified sampling technique was used to collect data from students who are members of Enactus in their respective HEIs (Barbie & Mouton, 2006). A sample of at least 540 participants from Enactus South Africa was targeted to participate in the study, but only 355 were captured. Each HEI was to be considered a stratum, and Enactus members from the HEI are incorporated into a sample. The choice of including these strata in the sampling design was made because it is assumed that each Enactus team represents a collective of shared attributes or characteristics. From the 27 HEIs represented at the Annual Enactus National Competition 2013, an absolute minimum of 10 students from each HEI were targeted.

1.6.2 DATA COLLECTION

Data was collected using an Entrepreneurship Intention Questionnaire (EIQ) adapted from Linan, F. (2004); the questionnaire required self-completion. The questionnaire was used on a sample of Enactus members. Research assistants were used for data collection, as recommended by Tshwane University of Technology (Industrial Research Institute) Research Ethics Committee (REC); they distributed hard copies of the questionnaires to Enactus students at the Annual Enactus Competition 2013, which was held at the Sandton International Convention Centre on the 10th and 11th of July 2013.

1.6.3 DATA ANALYSIS

Collected data were analysed using the Statistical Package for Social Science (SPSS), version 21. Both descriptive and inferential statistical techniques were used to achieve:

a) Descriptive analysis of the sample;
b) An inferential statistical tool (Chi-square) was applied in the analysis of the relationships existing between variables of interest;
c) Factor analysis was employed to determine the validity of the questionnaire;
d) Regression analysis techniques were utilized to test the model.

1.6.4 VALIDITY AND RELIABILITY

The questionnaire adapted from Linan, F. (2004)was piloted to similar respondents (8 Enactus TUT students) beforehand; changes effected were revised for validity and further reliability purposes. The validity and reliability of the study were applied by:

a) Conducting an extensive literature review - both the primary and secondary data is analysed;
b) Using correct operational measures – developing conceptual propositions for the phenomena under review by collecting numerous sources utilising instruments tested for validity and reliability in past studies such as secondary data;
c) Conducting a pilot study - to test the construct and measuring instruments, a pilot study was undertaken.

1.6.5 ETHICS

This study complied with the ethical requirements as stipulated by the TUT Research Ethics Committee, which includes;

1. Respondents were advised about the nature, aim and importance of the study being conducted and their consent was sought before data collection.
2. It was explained that the study was anonymous and voluntary, and that all information obtained is confidential.
3. Respondents could withdraw from the study at any time. The dignity and character of all stakeholders were upheld and would not be subject to embarrassment or unbecoming behaviour.
4. All information gathered is treated as group data and no individual was reported on.
5. Clearance letter from Enactus South Africa NPC was obtained to ensure that they were informed about the nature of the study in their organisation.
6. Finally, findings of the study were reported honestly.

1.7 CHAPTER OUTLINES

Chapter 1: Introduction - In this chapter, a general overview of the study was provided, from the background of the study to development of the research problem as well as definitions of terms.

Chapter 2: Literature Review – A review of existing literature on entrepreneurship education in relation to entrepreneurship intentions was studied. This chapter gives insight into the topic and examines the constructs of the study, while attitudes towards entrepreneurship and the impact of supporting structures were also established.

Chapter 3: Research Methodology - Outlines the methodology used in this research, including details of participants, data gathering, data analysis, validity and reliability. It also discusses an evaluation of the research design and methodology, as they pertain to the research questions and ethical issues.

Chapter 4: Data Analysis - Data collected is analysed and findings are discussed. Discussion of findings is related to the established literature.

Chapter 5: Recommendations and Conclusions – This is the final chapter, the recommendations for policy makers, universities as well as Enactus South Africa are outlined. Finally, there are concluding remarks and discussion of a study review, its limitations and areas for further research.

1.8 DEFINITION OF TERMS

Entrepreneurship: Has been defined as "the creation of new enterprise" (Crant, 1996:43).

Entrepreneurial Intentions: Attempting to identify the social, cultural, political, and economic contextual factors that influence one to become an entrepreneur (Linan, F., 2004).

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