SELF-EMPLOYMENT INTENTION AMONG UNIVERSITY STUDENTS IN SRI LANKA (WITH SPECIAL REFERENCE TO UNIVERSITY OF KELANIYA) Thrikawala S. S.

Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka sujani@kln.ac.lk Perera R. A. A. S. Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka aheshaajayasinghe@yahoo.com

ABSTRACT Self-employment is one of the best solutions to conquer the unemployment problem in Sri Lanka. To promote self-employment, it is important to ascertain whether the people are committed to start their own business than employing in large-scale or government organizations. The objective of this study is to determine the undergraduates self-employment intention and the demographic factors that influenced for their decision. The findings revealed that the self-employment is perceived to provide the employee with more authority, responsibility and involvement in decision making but with poor compensation, benefits, working condition, marketability and job security than the organizational employment. Further, this study reveals that gender, family business experience and student attitude towards risk are significantly affect the intention in starting ones own business while the financial ability of the undergraduates family is not related to their business interest. Therefore it is recommended to promote entrepreneurship and awareness of self-employment opportunities among university undergraduates to increase their intention of starting their own business. Key words: Unemployment, Self-employment intention, perceived factors, Undergraduates and Organizational employment

1. INTRODUCTION Poverty, development unemployment are the basic and lopsided on

Sri Lanka. The female unemployability was higher than the male, but both unemployment levels were increased between the periods of 2008 to 2009 (Table 01). The higher percentage of unemployment was indicated in 15-19 age groups. However, the 20-29 age group people unemployability was increased drastically than the other age groups (Table 01). The

problems

developing countries. However, among them, unemployment is the most blazing problems for any country (Dev and Mahajan 2003). In recent, this was versed due to the financial crisis triggered by the subprime mortgage lending in the United States of America (USA). This resulted in the global financial turmoil that gradually spread to all sectors which affected to the developing countries too. Table 01 demonstrates the unemployment rates as a percentage of labour force in Sri Lanka from 2006 to 2009. According to the table, there is no significant change in the unemployement rates in

unemployment among the higher education level was increased considerably from 2008 to 2009 (Table 01).

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Table 01: Unemployment rate (as a % of labour force) 2006 All By Gender Male Female By Age Group 15 - 19 20 - 29 30 - 39 40 above and 23.1 15.9 3.3 1.4 21.6 15.0 3.3 1.3 20.6 13.2 3.1 1.2 20.9 15.4 3.7 1.4 4.7 9.7 4.3 9.0 3.6 8.0 4.3 8.6 6.5 2007 6.0 2008 5.2 2009 5.8

For the period of five years (2004-2009), the employment in public sector was increased only by 2.2% and in opposition the private sector was decreased by 4.3% (Table 02). Nevertheless, this was lead to increase the unemployment problem in Sri Lanka as well as this is severe among educated youths. Therefore it is important to promote self employment to conquer the unemployment problem. Table 02: Status of employment
Year Public Sector Private Sector Empl oyers SelfEmpl oyed Unpaid Family Workers

2004 2005 2006

13.0 13.3 13.4 13.8 14.9 15.2

46.4 46.1 42.1 42.7 41.1 42.1

2.9 3.1 3.1 2.8 3.0 2.7

28.3 29.7 30.8 30.4 30.3 29.0

9.4 7.9 10.5 10.3 10.8 11.0

By Education Level 2007 Grade 4/Year 5 and below Grade 5-9/ Year 6-10 GCE(O/L)/ NCGE GCE(A/L)/ HNCE and above 1.3 1.1 2008 2009 5.8 5.2 4.5 5.0

Source: Department of Census and Statistics 2. RESEARCH PROBLEM Entrepreneurship is seen as a solution to the ever

9.9

8.2

7.4

8.5

11.6

11.8

9.9

11.2

growing problem of unemployment among graduates. Conversely, it has been found that this career choice is not favoured by younger people, especially graduates, who see entrepreneurship

Source: Department of Census and Statistics In many countries, public and private sector endeavor to solve the unemployment problem of their countries by giving job opportunities in their organizations. Unfortunately, the number of job opportunities in Sri Lankan private and public sector is not escalating to fulfill the demand of our labour force. Table 02 shows the number of employments available in each sector.

as only a second or even last choice (Teo and Poon 1994, Thandi and Sharma 2004). According to the Stansworth and Gray (1991), Universities and Vocational Training Institutes are the most important organizations that supply skilled and highly educated workforce to the industry. In their research, they have found that the lack of management expertise in small

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organizations is the reason for their failure. In order to grow, these people should have management experience and business training. They said that one possibility to inquest of this regard is to study the potential employees such as students and their perceptions. In student perception of self-employment, Scott and

Alwis (2010, May) reported in Daily News newspaper, the survey findings of Prof. Siri Hettige, a Senior Professor of Sociology at the University of Colombo presented at the

Conference on National Youth Survey and its implementation for a National Youth Policy in Sri Lanka. According to that, 70% of the youth were prefer to do jobs in the state sector and 18% were preferred private sector jobs while 50% youth wanted to migrate. Therefore, it is necessary to address this issue in national level. Accordingly, it is necessary to encourage selfemployment in order to overcome the

Twomey (1988) pointed out that it has a freedom from supervision and opportunity to be creative and to take responsibilities and decisions. On the other hand, self-employment perceived to offer little job security, training, benefits or scenario for promotions as well as low salary. The respondents of their study were the

unemployment problem in Sri Lanka. Prior to that, it is essential to identify the people within a society who will eventually go on to start their own businesses. 5. LITERATURE REVIEW Previous relevant research has focused on university student career aspirations. Scott and Twomey (1988) reported in their study of US

undergraduates from United Kingdom (UK), USA and Ireland. Therefore it is important to see the Sir Lankan students perception of selfemployment, because to encourage

entrepreneurship, it is import to see what will shape career aspiration toward self employment. 3. RESEARCH OBJECTIVE The objective of this study is to determine the undergraduates self-employment intention and the factors that influenced for their decision 4. SIGNIFICANCE OF THE STUDY Many journal articles, publications and programs recently paid their attention to self-employment and entrepreneurship. This growing interest in self-employment and entrepreneurship especially in governments are encouraged entrepreneurs by assuming that most of new jobs, innovations and diversifications come from them. Many

students that only 24.6% of students desired to self employment in the early 1980s. Due to the perceived successes of Internet based business since 1980s, the self employment rate increased from 7.4% to 9.7% in 1990 (Devine, 1994). As said by Timmons (1994) on his study, 1/3 of Harvard Business School (HBS) graduates ended up with self employment and 90% of HBS students have the dream of self employment. According to the Brenner et al (1991), their study of business school senior undergraduates, 55% preferred operating their own business, but only 5% of the respondents indicated they would probably choose to operate their own business after considering their actual situation and

Institutions, Universities launched programmes to increase the interest of young people to start their own business.

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constraints. Kolvereid (1996) reported 37.6% of Norwegian business graduates preferred selfemployment. Ghazali et al. (1995) have

in many researches. Also they have scrutinized that male students have stronger self-

employment aspiration than females (Scott and Twomey 1988, Teo and Poon, 1994, Ghazali et al. 1995, Alwis D. 2010). Ghazali et al. (1995), in their study, they have found gender difference in the self-employment among non professional is higher than the professionals such as engineers, doctors and lawyers. The second factor is the family background and it divided in to two parts, family income and the family business experiences. According to the literature the family background affect the entrepreneurial interest and career choice of their children. Researchers have identified them as the parental role model and the family support model. The persons with self-employed parent are more towards to start their own business (Devine, 1994, Timmons 1994, Scott and Twomey 1988, Teo and Poon, 1994, Ghazali et al. 1995). Scott and Twomey (1988) scrutinized those students whose parents owned a small business had highest preference for self-employment and the lowest for employment in a large. The family support model used to explain the financial or social support of their families (Devine, 1994, Timmons 1994, Scott and Twomey 1988, Teo and Poon, 1994, Ghazali et al. 1995). Wang & Wong (2004) found that the parents financial and social status were not significantly influence on the self employment.

conducted a survey on 2486 graduates in Singapore (with a response rate of 34.1%) who graduated after 18 yr, and found 8.6% of them to be self-employed. In a study of first year accountancy and business undergraduates at the Nanyang Technological University in Singapore, 45.1% undergraduates chose Multinational Companies as their most preferred source of employment against only 11% select SMEs as their most preferred employment source (Teo and Poon, 1994). Thus, the desire to start a business far outweighed the actual growth of self-employment in a number of industrialized countries. Although a wide gap exists between student aspiration and actual selfemployment, there is an increasing trend in moving towards an attitude of entrepreneurship among the students. According to the Othman and Ishak (2009), an attitude based on an internal locus of control, monetary value, and autonomy had a significant impact on choosing entrepreneurship as a career choice. It was found that attitude can predict career choice in this field through aspiration level among graduates. It is clear that attitude plays an important role in motivating an individuals career choice behaviour in

entrepreneurship. 6. In MEASURMENT DEVELOPMENT the previous literature, the level of

The third factor is the risk taking attitude. Researchers believe that innovation, risk taking and internal locus of control are important for the success of stating their own business (Wang &

entrepreneurial propensity has been analyzed by using various factors. Among them, the gender factor has been identified as a significant factor

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Wong 2004, Thandi and Sharma 2004, Devine, 1994). They mentioned that there is a strong relationship between this risk-averse attitude and the entrepreneurial intention. Starting ones own business is a high risk and high return career and the attitude of the high interest group have less risk-averse. 7. CONCEPTUAL FRAMEWORK

9. METHODOLOGY This research signifies the outcome of a study that carried out among 200 third year Commerce and Arts undergraduates learning in the

University of Kelaniya, which is the one of the foremost University in producing graduates in Sri Lanka. A structured questionnaire was used to collect data from the undergraduates. In order to obtain high response rate the author was present during the data collection. A questionnaire which has been developed by scholars for previous studies was used for this study to build the independent and dependent

Based on the measurements, the following factors were developed to determine the factors influencing for the Sri Lankan undergraduates self-employment intention (Figure 01). - Gender - Family Income - Family business experience - Attitude towards risk Figure 01: Conceptual framework 8. HYPOTHESES Selfemployment intention

variables, with minor modifications (Thandi and Sharma 2004, Teo and Poon 1994, Scott and Twomey 1988, Wang & Wong 2004). This was increased the validity of this study. Also the test retest method was use to measure reliability and the correlation was 0.83. By considering these, the validity and reliability of the questionnaire used in this study is in acceptable level. The ten job factors were used to collect the information of the undergraduates perception on self-employment. These factors reflect the foremost concerns of employees as their assessment of the self-employment. Those

With regard to the conceptual framework, the study tested four hypotheses by using t-test and ANOVA. The hypotheses are; H1: There is a significant relationship between gender and self-employment intention H2: There is a significant relationship between family income and self-employment intention H3: There is a significant relationship between family business experience and self-employment intention H4: There is a significant relationship between student attitudes towards risk and self-

factors are payment, fringe benefits, working condition, managerial quality and relationships, long-term career prospects, responsibility given, authority, involvement in decision making, marketability and job security. Five point Likertscale from 5 = Excellent to 1 = Poor method was used because it assist respondents choice for each item.

employment intention.

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10. DATA ANALYSIS A total of 52% of the respondents were female and among them 61% of them were Arts undergraduates. Most of the male undergraduates were doing commerce degree and the percentage is 59. According to the sample, 67% of the responded were live in rural area and among them Arts undergraduates proportion is more (58% of the total rural respondents) than the commerce undergraduates. Of the participants, 59% were doing professional exams, namely ICASL, CIMA, CIM, SLIM, CMA and AAT, among them majority were commerce undergraduates (93%). Out of the total, 11% of undergraduates were doing different certificate and diploma courses, but rest of the undergraduates were totally depend on their Bachelors degree. Among the respondents 41% have family business experience. According to the sample, 35% of the respondents were in the family income level of 25001-50000 and 25.5% income level is 10001-20000. The third highest income level is the 50001-100000 and the percentage is 21% (Figure 02).
5.00 % 6.00% 7.50%

Commerce undergraduates were preferred to work on the SMEs (57%) than the Arts undergraduates, but considering to other areas both gave low level preference. On the other hand, both undergraduates rated high preference to work in (MNC). Among the respondents, Arts undergraduates were more prefer to work in government sector than the any other sector. Commerce undergraduates rated self-

employment was their second best area to work but not the most preferred one (Figure 03).

Source: survey findings Figure 03: Type of organization prefer to work: commerce verses Arts Undergraduates

This study revealed that of the ten job factors, the Arts undergraduates as less rated the than selfthe

employment

favorable

organizational employment due to the factors of payment, fringe benefit, working condition,
25.50%

long-term career prospects, marketability and job

0 - 10000 10001 - 20000 25001 - 50000 50001 - 75000 75001 - 100000 100001 above

21.00%

security (Figure 04). In contrast to this, they have rates that self-employment as more favourable than the organizational employment, because of the managerial quality and relationships,

35.00%

responsibility given, authority and involvement in decision making (Figure 04). Source: survey findings Figure 02: Family income On the other hand, the Commerce

undergraduates concerns on this ten job factors

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were similar except the managerial quality and relationships and long term career prospect (Figure 04). According to the figure 04, they have rated that the managerial quality and relationships were less favourable in selfemployment than organizational employment and long term career prospect was more favourable for self-employment than the

Table 04: Level of knowledge of doing a business Cumulative Percent No 19.5 19.5 Little 22.5 42.0 Somewhat 21.5 63.5 Average 23.5 87.0 Above average 11.0 98.0 Very High 2.0 100.0 Source: survey findings %

Valid

organizational employment.

The table 05 shows that there is a strong negative relationship with gender and the self-

employment intention. Therefore, H1 on gender is accepted from the correlation analysis. The gender factor is the significant factor among the four background factors. Table 05: Paired samples correlations between gender & self-employment intention N Correlation Sig. Gender & Level 200 -.743 .000 of interest in starting their own new business Source: survey findings H3 on family business experience is accepted form the correlation analysis and it was the next most significant factor after the gender (Table 06). Table 06: Paired samples correlations between family business experience and selfemployment intention N Correlation Sig. Parents owned a 200 .604 .000 Business & Level of interest in starting their own new business Source: survey findings According to the table 07, there is no significant relationship between family income and self employment intention. Hence, the H2 on family income level has not accepted due to income

Source: survey findings Figure 04: Mean value of ten job factors: commerce verses Arts Undergraduates Before considering the results of the analysis, the table 03 and 04 despite the overall level of interest and knowledge in self-employment among respondents. The interest of

undergraduates to start their own new business is below the average as well as their knowledge of doing business is poor Table 03: Level of interest in starting their own new business % Cumulative Percent Valid No 5.5 5.5 Little 9.0 14.5 Somewhat 13.5 28.0 Average 18.5 46.5 Above average 34.5 81.0 Very High 19.0 100.0 Source: survey findings

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factor has no effect on the self-employment intention.

business experience and student attitude towards risk are significantly affect the intention in starting ones own business while the financial

Table 07: Relationship between family income and self-employment intention ANOVA(b) Model Regression F .074 Sig. .786(a)

ability of the undergraduates family is not related to their business interest. The enhanced interest in entrepreneurship is also apparent in a significant growth in self-employment. 12. RECOMMENDATION Therefore it is recommended to promote entrepreneurship and awareness of self-

a Predictors: (Constant), Family Income b Dependent Variable: Level of interest in starting their own new business

Source: survey findings H4 on student attitude on risk is accepted and emphasis that the undergraduates who are having low interest on self-employment are more risk avers than those who are having high interest (Table 08). Table 08: Relationship between students attitude towards risk and self-employment intention ANOVA(b) Model Regression F 78.524 Sig. .000(a)

employment opportunities among university students by conducting conferences, workshops and seminars. They can select role models from the society to teach undergraduates about their experiences. Universities should organize some career fairs to achieve greater awareness and should build a closer relationship between them. It is important that curriculums of the

universities should also offer students exposure to small business such as discussing more real world cases at the class. Then it will increase the intention of undergraduates to start their own business. REFERENCES Alwis D. (2010, May 24). Youth Prefer State Sector Jobs. Daily News, p.1. Brenner, O. C., Pringle, C. D. & Greenhaus, J.

a Predictors: (Constant), Risk of failure is a major concern b Dependent Variable: Level of interest in starting their own new business

Source: survey findings

11. CONCLUSION Based on the findings it can be concludes that the self-employment is perceived to provide the employee with more authority, responsibility and involvement in decision making but with poor compensation, marketability benefits, and job working security condition, than the

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