South African University Students’ Entrepreneurial Intention as a Correlate of Entrepreneurship Risk Perceptions and Aversion

Abstract

The study was conducted to investigate the relationship between entrepreneurial intention, entrepreneurship risk perceptions and entrepreneurship risk aversion with a sample of 366 male and female university students in South Africa, using survey research design, and a structured validated questionnaire. Hypotheses were tested using Pearson correlation analysis. The results revealed that there is a significant positive relationship between entrepreneurial intention and entrepreneurship risk aversion. There is a significant positive relationship between entrepreneurship risk perceptions and aversion. However, there is no significant relationship between entrepreneurial intention and entrepreneurship risk perceptions. The findings are valuable to policy makers and professionals in promoting the spirit of entrepreneurship among the youth. *Address forcorrespondence: Dr. John K. Aderibigbe INTRODUCTION The need to produce more university graduates that are self-reliant, business oriented, and driven by a high sense of responsibility to society and the nation at large, creates the necessity to incorporate entrepreneurship studies into the tertiary education’s curriculum (Zhang et al. 2014). Despite the fact that entrepreneurship studies are now offered in some South African universities as part of the curriculum, it is evident that the practice of entrepreneurship by the youth, especially among the university students in South-Africa, is still at the infant stage (Herrington and Kew 2016). Many previously conducted studies in the area of student entrepreneurship interest focused on the developed countries (Gnoth 2006; Guerrero et al. 2008; Sandhu et al. 2011). Specifically, only a few entrepreneurship investigations have recently been conducted in the Eastern Cape Province of South Africa (Ngorora and Mago 2018; Kanonuhwa and Chimucheka 2016). This study investigated the relationship between entrepreneurial intention, entrepreneurship risk perceptions and entrepreneurship risk aversion among some university students in South Africa. Entrepreneurship is a process by which a business opportunity can be perceived and evaluated (Sen et al. 2018). Entrepreneurial intention refers to the determination and eagerness of a person to undertake a new business (Amanamah et al. 2018). Entrepreneurship risk perception is defined as a decision making assessment of the risk inherent in a business venture (Boermans and Willebrands 2017), while entrepreneurial risk aversive persons is described as individuals who have the tendency to feel the pain of a business loss more intensively than the pleasure of an equal-sized business gain. Allah and Nakhaie (2011) described four types of entrepreneurship risks as follows: financial risk, job risk, social and family risks. Fedáková et al. (2018) conducted an investigation on the relationship between entrepreneurial risk perception and entrepreneurial intention using a sample of 413 employed and unemployed individuals. The findings of the study show that the two categories of respondents did not indicate serious intentions to undertake entrepreneurial activities, and they perceived quite a high level of risk related to entrepreneurship. The study’s findings further reveal that the association between entrepreneurial intention and risk J Hum Ecol, 67(1-3): 1-8 (2019) DOI: 10.31901/24566608.2019/67.1-3.3153 © Kamla-Raj 2019 PRINT: ISSN 0970-9274 ONLINE: ISSN 2456-6608 2 SIHLE MAHOLA, JOHN K. ADERIBIGBE AND TENDAI CHIMUCHEKA J Hum Ecol, 67(1-3): 1-8 (2019) perception by unemployed was significant and negative, which indicates that the lower level of entrepreneurial intention could be affected by quite intense perception of the risk. Contrarily the reports of the employed category indicates that the lower level of entrepreneurial intention is not related to the more intense perception of the risk. This finding could be explained by the employed being content with their work situation and feeling secure to such extent that they do not consider changing it. Similarly, Martínez et al. (2015) examined the influence of perceived risk on entrepreneurial desirability and feasibility in a sample of 376 new entrepreneurs in Mexico, and found that risk dimensions are associated with entrepreneurship perceived desirability and feasibility. In another study, Zurriaga-carda et al. (2016) explored the effects of risk attitude, entrepreneurship education and self-efficacy on entrepreneurial intentions in a sample of 264 respondents. The results of Structure Equation Model performed in the study show that entrepreneurship education and entrepreneurial self-efficacy have a positive effect on the intention to become an entrepreneur, while risk averseness has a strong negative effect on entrepreneurial intentions. Moreover, Cramera et al.’s (2002) study of low risk aversion and its effect on the choice for entrepreneurship using the secondary type of data show that there a negative effect of risk aversion on entrepreneurship selection. Further, Herdjiono et al. (2018) investigated risk aversion, loss aversion and entrepreneurial intention with a sample of 500 students using the quantitative approach to data collection and survey research design. The results of the study show that risk averse and loss averse significantly influenced entrepreneurial intention. Koudstaal et al. (2014) conducted a comparative study on risk, uncertainty and entrepreneurship in a sample of 2288 entrepreneurs and managers. The results of the study show that perceived risk attitude is not only correlated to risk aversion but also to loss aversion. In a related study, Saha (2018) explored identity and perception of risk for entrepreneurs with a primary survey using the snowball sampling technique. The study found that as the experience of entrepreneur increases, and she/he accesses more business associations, perception of risk is lowered. Alongside, the negative affect changes to positive affect with experience and exposure to business networks. In Sharma and Tarp’s (2018) study titled “Does managerial personality matter?”, which used the novel data from micro, small, and medium firms in Viet Nam to appraise the relationship between behavioural and personality traits of owners/managers-risk attitudes, locus of control, and innovativeness and firm-level decisions. The study’s findings reveal that innovativeness and locus of control are positively correlated with revenue while risk aversion predicts lower revenue. The findings further show that risk aversion is positively correlated with the adoption of safety measures.