A Choice Modeling Approach to Predict Entrepreneurial Intentions from Attitudes and Perceived Abilities

We are interested in the antecedents to an individual’s decision to become an entrepreneur. Our approach is to consider an individual’s choice between self-employment and becoming an employee using multi-attribute utility discrete-choice modeling. The attributes in the model are based on the economic factors as previously identified in the entrepreneurship literature, with an individual’s utility function based on their preferences for income, risk exposure, work effort, independence and ownership (entrepreneurial attitudes). Our point of departure is to use market simulation techniques developed in marketing, to study an individual’s intention to become self employed by explicitly relating an individual’s beliefs concerning feasible employment options (their choice set) to their perceived abilities (self-efficacy). We test the model using a survey of 414 MBA students in Thailand, China, India and Australia. We find support for the theoretical approach to the discrete-choice modeling of entrepreneurial intentions. We find that the difference in perceptions of income and independence between self-employment and employment influence an individuals’ entrepreneurial intentions. Further, we find that individuals with low entrepreneurial self-efficacy expect income to be higher for employment, but expected income for self-employment relative to employment increases as self-efficacy increases. We find no support for perceptions of risk and work effort influencing intentions