The following chapter introduces the background, problem statement, purpose, selected research questions, significance, and the definition of the utilized variables and the delimitations of the study.
Background of the Study
Entrepreneurial Behavior has become a topic of highly interest among researchers since the concept encloses several engrossing factors, such as personality traits, attitudes, and cultural characteristics that determine and influence human behavior, and consequently, society. (Bacqa &
Alt, 2018; Galvão, Marques, & Peixeira, 2018; Naktiyok, Karabey, & Gulluce, 2009; Hansemark, 1998). The study and comprehension of entrepreneurship are crucial because it assists in a country's economic growth and development. According to Martinez, Garcia, and Duarte (2018), Entrepreneurial Behavior generates professional opportunities, therefore reduces unemployment.
Also, an Entrepreneurial activity can stimulate regional development, economic growth and it promotes innovation (Acs & Storey, 2004; Birch, 1981; Morris, 1998; Proter, 2000; Raynolds, 2001; Reynolds, Storey, & Westhead, 1994; Sutatia & Hicks, 2004). In other words, Entrepreneurial activities can solve social problems by implementing innovative and proactive solutions. Consequently, impulse a country's position in the global market (Pandit, Joshi, & Tiwari, 2018). Therefore, studying entrepreneurial actions and behaviors is beneficial not only for an organizational-level innovation and performance but also for social-level and individual-level well-being and development.
For what was previously mentioned, the selected target sample is the country of Honduras.
Honduras is located in Central America, and is a nation with a population of 9.1 million people were more than the 67% of the them lives below the national poverty line (Meyer, 2019). The purpose of selecting the mentioned country is to assist its economic growth and in the resolution of its current social issues.
As mentioned before, several elements lead to Entrepreneurship. Numerous authors have developed and adopted different theories to explain Entrepreneurship Behavior. For example, The Entrepreneurial Event Model (EEM), The Theory of Planned Behavior (TPB), and Davidsson's
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Model are commonly used in the literature. These theories suggested that Entrepreneurship can be influenced and predicted by different factors.
Shapero (1982) introduced the Theory of Entrepreneurial Event Model (EEM). This theory established that the decision to start a new business depends on the perception of desirability and feasibility, and the tendency to take action. On the other hand, Ajzen’s (1991) Theory of Planned Behavior was one of the most used theories that explain Entrepreneurial Intention and Behavior;
this theory suggested the people’s intention toward Entrepreneurial Behavior is the determinant of their actual Entrepreneurial Behavior. Moreover, Davidsson's Model (1995) indicated that Entrepreneurial Intentions could be influenced by a person’s prevailing attitudes and by the current experienced situations (Pandit et al., 2018). The Intention Models stated that Entrepreneurial Intention sources are individual motivational factors that are perceived by the social environment and personal abilities (Martinez et al., 2018).
In this research, it is considered the concept of Entrepreneurship as two elements:
Entrepreneurial Intention and Entrepreneurial Behavior but focused on studying only Entrepreneurial Intention. Galvão et al. (2018) stated that intentions: "Are indicators of how hard people are willing to try [and] of how much an effort they are planning to exert, in order to perform [...] [a] behavio[u]r" (p. 7). The engagement of any behavior will depend on the level of the individual’s intention to adopt that behavior (Mwiya et al., 2018). Therefore, studying an individual’s Entrepreneurial Intention is a practical and reliable approach to predict their Entrepreneurial Behaviors.
Recognizing the importance of Entrepreneurial activities for the firm’s success and performance aim a large number of researchers to identify important factors that foster/inhibit Entrepreneurial Intention and Behavior. Scholars have argued that personality and cultural characteristics such as Long-Term Orientation and Uncertainty Avoidance explain Entrepreneurial Intentions and consequently, Entrepreneurial Behavior. According to Boyd and Vozikis (1994), the relationship between intent and action depends on personal factors such as knowledge, environmental, cultural, and social factors. Some authors demonstrated that a country's social and cultural values have a significant impact on an entrepreneur's motivations (Huertas, Valantine, Crespo, Perez, & Calabuig, 2009). Mueller and Thomas (2001) noted that social norms and cultural values are forces that determine human behavior; since both are acquired very early in life, which results in behavior patterns being consistent to culture and time. Soares, Farhanmehr and Shoham
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(2007) stated that: “Culture provides a collectively held set of costumes and meanings, many of which are internalized by the person, becoming part of personality and influencing transactions with the social and Physical environment” (p. 282). Huertas et al. (2018) also pointed out that
“cultural values determine the degree to which society views entrepreneurship as an attractive or unattractive professional outlet” (p. 3).
With Hofstede's (1984) introduction of the different cultural dimensions, the relationship between Long-term Orientation and Uncertainty Avoidance with Entrepreneurial Intention has been highlighted. Among those cultural dimensions, two of them might be importantly associated with a person’s Entrepreneurial Intention, which is Long-Term Orientation and Uncertainty Avoidance.
According to Bearden, Money, and Nevins (2011), Long-Term Orientation refers to:
The cultural value of viewing time holistically, valuing both the past and the future rather than deeming actions important only for their effects in the here and now or the short term.
As such, individuals scoring high in LTO value planning, tradition, hard work for the future benefit, and perseverance. (p.457)
Whereas Uncertainty Avoidance is defined as the “extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations” (Hofstede & McCrae, 2004, p.62). In the literature, there are very few researches studying the associations between Cultural Values and Entrepreneurial Intention. In other words, there is slight research attention paid on investigating whether Long-Term Orientation and Uncertainty Avoidance are essential predictors of people’s Entrepreneurial Intention. Therefore, there is an urgent need to address this gap. It must be said that both variables are evaluated on an individual level.
On the other hand, Hofstede and McCrae (2004) concluded that individual personality traits are factors that characterize human beings and that those characteristics tend to transcend culture.
In line with logic, personality traits would describe how people think and behave, which implicitly suggests that the level of one’s intention to go Entrepreneurial might be determined by individual personality traits. Locus of Control refers to someone’s belief in their outcome’s origins; An individual who believes that outcomes are a result of their actions have an internal locus; if they believe that outcomes are the product of external situations, such as chance, they are considered to have an external locus (Rosique, Madrid, & Garcia, 2017). This personality trait might be critically associated with a person’s Entrepreneurial Intention.
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According to Hansemark (1998), Locus of Control: “Have shown a significant relation to entrepreneurship across several studies” (p. 29). Several studies have identified Locus of Control as one of the chief characteristics of Entrepreneurs; they highlighted that most business founders possess Internal Locus of Control compared to non-founders (Begley & Boyd, 1987; Brockhaus, 1980; Durand & Shea, 1974; Hansemark, 1998; Venkataphy, 1984). Although the influence of Locus of Control on entrepreneurship is not a new subject in the literature, most of the prior studies focused on the direct effect of Locus of Control while minimal research paid attention to the moderation effect of Locus of Control. Therefore, more research effort on the moderating role of this variable is necessary since Locus of control is a Personality Trait that according to its definition, can drive or influence individual behavior.
Problem Statement
To understand and promote Entrepreneurial Behavior, it is necessary to identify what motivates that behavior, which personality trait and what cultural dimensions are more related to the concept. As established before, Entrepreneurial Intention is the beginning stage of Entrepreneurial Behavior (Tuğba, 2016). Although, different studies prove that cultural characteristics and personality traits determine the intention and decision of becoming an entrepreneur, internalized values that are important for one person may not be relevant to another individual. Apart from that, perception and attitudes influence human behavior.
Additionally, to the author's knowledge, few studies in the literature have examined the effect of the selected cultural and personality variables at an individual level to explain its impact on Entrepreneurial Intention. The selected sample for this study were Hondurans to understand their cultural and personal characteristics that might influence their intentions to create a firm.
According to ECLAC (2017), Honduras has one of the highest poverty rates among some Latin-American countries; Honduras poverty rate is of 67.4%, meaning that more than half of the population does not earn the minimum wage which is equivalent to $371.49 (Ministry of Labor and Social Security, 2018). Likewise, The World Bank Group (2016) stated that one out of five Hondurans lives in extreme poverty with a daily earning of $1.90. Also, according to Trading Economics (2017), Honduras Unemployment Rate was of 6.70%. According to Ozaralli and Rivenburgh (2016), governments from underdeveloped countries can see entrepreneurship as a strategy to stimulate economic and political growth and decrease serious challenges. For the
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mentioned facts and statistics, it is crucial that Honduras place Entrepreneurial education at a higher level of importance since entrepreneurial behavior could assist in the eradication of current social and economic issues.
Purpose of the Study
The research was conducted to identify how the personality trait of Locus of Control and Cultural Values at an individual level such as Long-Term Orientation and Uncertainty Avoidance, relates with Entrepreneurial Intention.
Specifically, this study has four primary purposes: First, to examine the influence of Long-Term Orientation on Entrepreneurial Intention. Second, to examine the influence of Uncertainty Avoidance on Entrepreneurial Intention. Third, to examine the moderating effect of Locus of Control on the relationship between Long-Term Orientation and Entrepreneurial Intention. Fourth, to examine the moderating effect of Locus of Control on the relationship between Uncertainty Avoidance and Entrepreneurial Intention.
Research Questions
The present study was determined to answer the following questions:
Is Long-Term Orientation related to Entrepreneurial Intention?
Is Uncertainty Avoidance related to Entrepreneurial Intention?
Does the Internal Locus of Control strengthen or weaken the relationship between Long-Term Orientation and Entrepreneurial Intention?
Does the External Locus of Control strengthen or weaken the relationship between Uncertainty Avoidance and Entrepreneurial Intention?
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Study Significance
Various studies focused on only one sector that influences an individual's Entrepreneurial Intention: Attitude, Cultural Characteristics, or Personality Traits. For an excellent understanding of Entrepreneurial Intention, the author introduced variables from two different sectors: Cultural Characteristics and Personality Traits. The implementation of those sectors was aimed to contribute with advanced and authentic literature, which could have practical implications in the promotion of characteristics that influence Entrepreneurial Intention; hence, Entrepreneurial Behavior.
The comprehension of Entrepreneurial Intention can assist any country, especially undeveloped ones, in the promotion of Entrepreneurial characteristics to solve problems innovatively. The creation of new ventures can increase the development of economy and wealth;
employ the population with the creation of new job positions; hence, satisfaction and well-being of the community.
For Entrepreneurial Behavior promotion, it is necessary to identify and understand its sources, and then provide a positive connotation to society. Investigating the elements that drive Entrepreneurial Intention is crucial to promote Entrepreneurial Behavior. As mention before, Entrepreneurship is an essential role that assists a country's development. Following Mueller and Thomas (2001), "Entrepreneurial ventures are often seen as incubators for product and market innovation" (p. 52).
Since becoming an Entrepreneur is a conscious decision influenced by several elements, it is essential to understand which and how factors affect the mentioned process. The understanding of the process might assist in the creation of social and educational strategies to implement solutions:
provide employment, workforce and business development, wealth creation, the satisfaction of individual needs and innovation.
Apart from that, the investigation regarding the variables Long-Term Orientation, Uncertainty Avoidance, and Locus of Control aimed to fulfill the gap of knowledge between the mentioned variables and contribute in a crucial way to the literature regarding the explanation of Entrepreneurial Intentions and the promotion of Entrepreneurial Behavior.
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Definition of Terms Long-Term Orientation
According to different research discoveries, societies that are driven by LTO manifest values such as perseverance and determination. Short-Term Orientation is related to traditional cultural values and the fulfillment of social obligations (Hofstede & McCrae, 2004).
This study defined LTO as: "The fostering of virtues oriented towards future rewards, in particular perseverance and thrift" On the counterpart, Short-Term Orientation is defined as: "the fostering of virtues related to the past and the present, in particular, respect for tradition, preservation of face and fulfilling social obligations" (Arli & Tjiptono, 2013, p. 19). Hofstede and Minkov (2010) explained that: "long-term-oriented cultures, main work values are learning, honesty, adaptiveness, accountability, and self-discipline. In short-term-oriented cultures, main work values are freedom, rights, achievement, and thinking for oneself" (p. 497).
Entrepreneurial Intention
Bullough, Renko, and Myatt (2013) established that a person’s intention could predict their behaviors, and so the creation process of a new venture initiates with the intent to start a business.
They describe: "Entrepreneurial intent as a cognitive state: a self-acknowledged decision by a person that they aim to set up and own a business venture" (p.476). People with this characteristic are determined to gather the required resources to achieve their goal, which is creating their ventures (Tuğba, 2016). By the TPB and the authors Liñán and Chen (2009), Entrepreneurial Intentions are the first step to perform an Entrepreneurial Activity. As the traditional definition of the study, Entrepreneurial Intention represents: "the effort that the person will make to carry out that entrepreneurial behavior" (Liñán & Chen, 2009, p. 596).
Uncertainty Avoidance
The concept of Uncertainty Avoidance encompasses the tolerance for ambiguity, indicating if members of a specific society feel comfortable or uncomfortable in unfamiliar or disorganized situations. Members of communities with a high level of uncertainty avoidance try to live only in conditions with known and defined rules to feel secure. On the other hand, members of a society with a low level of uncertainty avoidance feel comfortable in a situation with few regulations and,
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they are tolerant of different opinions. Following Hofstede (2001) statements, the definition of Uncertainty Avoidance in this study was: "The extent to which the members of a culture feel threatened by uncertain or unknown situations" (Jung & Kellaris, 2004, p.743). In other words, Uncertainty Avoidance determines the importance that individuals assign to social norms and stability (Naktiyok et al., 2009).
Locus of Control
Mueller and Thomas (2001) explained that the concept of Locus of Control deals with how perceived control influences on human behavior. A person with Internal Locus of Control believes that personal efforts, skills, and practices influence the outcomes. On the opposite side, a person with External Locus of Control thinks that environmental forces determine the possible outcomes;
they perceive that results are out of their capabilities (Rotter, 1966).
This utilized definition of LOC in this study is the one stated by Rotter (1966), which described if a person perceives an outcome is the result of luck, fate or convincing others surrounding him more than results of actions of his own, this belief is label as external control. On the other hand, if a person perceives an event is the result of his behavior or his relative permanent characteristics, this is a belief label as an internal control (Lumpkin, 1985).
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Delimitations
As mentioned before, different components determine an individual's intention. However, it is unclear to date all the related components and their level of influence in that variable.
This study is delimited to only investigate a few elements that relate to Entrepreneurial Intention and consequently leads to adopting Entrepreneurial Behavior, such as the Cultural Values of Long-Term Orientation and Uncertainty Avoidance at an individual level and Locus of Control as a Personality Trait. The study is delimited to individuals with a Honduran Nationality, but not individuals with other nationalities. This study is also delimited to the utilization of survey method as well as close-ended questions, but not use other research instruments and question format to collect the data. In addition, using a survey with close-ended questions makes researchers unable to explore the full picture of participants’ experiences. These delimitations result in some limitations that are explained in Chapter V – Conclusions and Suggestions.
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