Evaluating Business Performance of Young Entrepreneurs

Embed Size (px)

Citation preview

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    1/77

    1

    CHAPTER ONE

    1.0 INTRODUCTION

    This chapter entails the introduction to the research work. It consists of the background of the

    study, the statement of research problems, objectives of the study, research questions and

    research hypotheses. It also includes the significance and scope of the study, and the definition of

    some important terms used in the research work.

    1.1 BACKGROUND OF THE STUDY

    As at the end of 2011, the National Bureau of Statistics (NBS) stated the unemployment rate in

    Nigeria at 23.9%, in the year 2010 it was 21% while in 2009 it was placed at 19.6%. It can

    obviously be seen that the rate of unemployment in Nigeria is experiencing a steady increase. In

    2009 unemployment was highest among youths between the ages of 15 and 24, with an average

    unemployment rate of 35.9%. It is no surprise then, that entrepreneurship is being aggressively

    encouraged among youths in the country.

    The Nigerian Government is actively aimed at checking the increasing number of unemployed

    youths, as they increase every year with fresh university graduates being added to the labour

    market. The government is constantly implementing initiatives to support entrepreneurship. In

    October 2011, the "You WIN!" project was launched, a youth empowerment and

    entrepreneurship drive anchored by the Federal Ministry of Finance in conjunction with the

    Federal Ministry of Communication and Technology, the Federal Ministry of Youth

    Development, private sector companies and the World Bank. The main objective of the project

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    2/77

    2

    was to generate jobs by encouraging and supporting aspiring entrepreneurial youth in Nigeria to

    develop and execute business ideas that will lead to job creation.

    Research has theorized that the supply of entrepreneurs can be increased by developing a

    positive perception about the feasibility and desirability of entrepreneurship through educational

    preparation at an early age (Kourilsky, 1980). Institutions of higher learning are acknowledging

    the dire situation their graduates are destined to face and are inculcating entrepreneurial trainings

    into their curricula. Covenant University, which has been recognised by the National Universities

    Commission (NUC) as the leading University driving entrepreneurship, operates a compulsory

    entrepreneurship course for all undergraduates. The course known as Entrepreneurial

    Development Studies (EDS) has both theoretical and practical sections. The objective of the

    university in operating this program is to produce graduates that will create employment for

    others rather than be job seekers.

    According to J.A. Schumpter entrepreneurship is the central figure of the development process

    because the entrepreneur in the modern complex economic world, can create opportunities for

    production technology, by expanding or discovering new market, new product, new source of

    resources, etc. All these activities will embrace risk and uncertainties and at the same time will

    increase the demand for higher or increased investment in the economy. In other words, in

    totality, the net result of expansion in the volume of economic activities will lead to growth in

    national economy and if a proper and equitable distribution policy can be formulated by the state

    to suit the real development in the economy will take place (Saha, 1989).

    It is therefore disheartening that with all the efforts of both the government and educational

    bodies on entrepreneurship development, no real effect has been felt on the economy. This

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    3/77

    3

    situation shows that emphasis is majorly being laid on the creation of these entrepreneurial

    ventures and less on the survival and profitability of these ventures.

    According to the Manpower Board and the Federal Bureau of Statistics, Nigeria has a youth

    population of 80 million, representing 60% of the total population of the country. Also, 64

    million of them are unemployed. It is only logical to concluded that a significant amount of them

    are uneducated while some of those that are educated cannot access the various government

    incentives, such as the "You WIN!" project which at the end of the three-year period, has as its

    target to have 3, 600 entrepreneurs supported to start or expand their business concepts over

    three years; an additional 1,800-2,000 business started or expanded by youth trained by the

    programme; 40,000 to 50,000 sustainable new jobs for currently unemployed Nigerian youth

    over three years; at least 6,000 aspiring youth entrepreneurs trained in business planning and

    management and at least 3,600 entrepreneurs linked with mentors in the business community.

    This barely offsets the enormous figure of unemployed youths. Therefore there shall be youths

    that would venture into entrepreneurship by acquiring funds from various sources other than

    grants from the government.

    It is therefore obvious that young entrepreneurs either those supported by government or those

    venturing individually, face a number of challenges in the operation of their businesses. This

    study seeks to evaluate the business performance of young entrepreneurs, focusing on

    undergraduate entrepreneurs at Covenant University.

    1.2 STATEMENT OF RESEARCH PROBLEM

    There are four ways of generating funds for entrepreneurship, which include Personal Financing,

    Debt Financing and Equity Financing (Bruce, 2008). The various forms of generating funds have

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    4/77

    4

    different consequences. Private sources of funds are ideal for intending entrepreneurs, but they

    produce limited sources of funds, bank loans are disadvantageous to small scale businesses due

    to high interest rates charged by banks (Ausbeth, 2005). It is very important therefore to locate a

    source of finance that is favourable. This study seeks to identify the extent to which the

    appropriate method of generating fund affects the business performance.

    The UN considers individuals under the age group of 1524 as youths. In Uganda, for example,

    youth is from 12 to 30 years, while in Nigeria, it is between 18 and 28 years (ILO publication,

    2005). In the Nigerian business environment, level of expertise and experience are often

    measured by age of the individual (Salami, 2011). Young entrepreneurs are in constant

    interaction with this business environment, therefore, this study seeks to identify a relationship

    between ages of entrepreneurs and business performance.

    Lack of entrepreneurial education leads to low level of entrepreneurial intentions of students

    (Franke & Luthje, 2004).Tertiary institutions therefore are integrating entrepreneurship into

    students academics. When rooted in solid learning theory, entrepreneurial education develops

    entrepreneurs, by increasing business knowledge and promoting psychological attributes

    associated with entrepreneurs (Kruegar & Brazeal, 1994; Kourilsky & Walstad, 1998; Walstad &

    Kourilsky, 1999). However, undergraduate entrepreneurs are faced with the challenge of

    balancing their business with their academics. Students spend more time working than

    participating in their academics, mainly due to the fact that they needed their jobs to fund their

    education (Sarath et al, 2006). This study seeks to investigate the extent to which academic work

    of undergraduate entrepreneurs affects business performance.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    5/77

    5

    Majority of entrepreneurs are faced with the challenge of availability of funding and the

    possibility of having access to fund to finance businesses (Awogbenle & Iwuamadi, 2010). A

    shortage of funding almost always results in the halt of business activities (Andrew, 2000). This

    study seeks to determine what levels of funds are regarded as adequate for undergraduate

    entrepreneurs and its relationship with business performance.

    1.3 OBJECTIVES OF THE STUDY

    The overall aim of the study is to evaluate the business performance of young entrepreneurs at

    Covenant University.

    The main objectives of the study are

    1. To investigate the appropriate methods of generating adequate funds for undergraduate

    entrepreneurship and how it affects business performance.

    2. To determine the extent to which the ages of young entrepreneurs affects business

    performance.

    3. To ascertain the relationship between academic work of undergraduate entrepreneurs and

    business performance.

    4. To determine the relationship between availability of adequate funds and profitability.

    1.4 RESEARCH QUESTION

    These are the research question that we intend to answer during the course of this study

    1. Does the appropriate method of generating funds for undergraduate entrepreneurship

    affect business performance?

    2. Do the ages of young entrepreneurs affect business performance?

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    6/77

    6

    3. Is there a relationship between academic work of undergraduate entrepreneurs and

    business performance?

    4. Is there a relationship between availability of adequate funds and profitability?

    1.5 RESEARCH HYPOTHESIS

    Hypothesis is a tentative statement of truth put forward and used as a basis for further

    investigation by which they may be approved or disapproved. Hence for the purpose of this

    research to be achieved, the following hypothesis will help in verifying the research statement.

    HYPOTHESIS 1

    H0: Available sources of funds for undergraduate entrepreneurship do not affect business

    performance.

    H1: Available sources of funds for undergraduate entrepreneurship affect business performance.

    HYPOTHESIS 2

    H0: Age of young entrepreneurs does not affect business performance.

    H1: Age of young entrepreneurs affects business performance.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    7/77

    7

    HYPOTHESIS 3

    H0: There is no relationship between academic work of undergraduate entrepreneurs and

    business performance.

    H1: There is a relationship between academic work of undergraduate entrepreneurs and business

    performance.

    HYPOTHESIS 4

    H0: There is no relationship between availability of adequate funds and profitability.

    H1: There is a relationship between availability of adequate funds and profitability.

    1.6 SCOPE OF THE STUDY

    This study uses undergraduate entrepreneurs in Covenant University. Covenant University is

    considered as the foremost university in driving entrepreneurship, this makes it convenient for

    the pursuance of this study. The rationale behind the choice of Covenant University

    undergraduate entrepreneurs is to have a reasonable amount of respondent and to enable ease in

    administering the questionnaire.

    1.7 SIGNIFICANCE OF THE STUDY

    This study is relevant to intending entrepreneurs as it will inform them of the benefits and

    challenges of entrepreneurship, and assist their decision making to overcome these challenges. It

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    8/77

    8

    shall also be relevant to existing entrepreneurs, by showing them where they must of gone wrong

    and guiding their decisions to correct their mistakes or to improve their operations.

    The study shall also be relevant to management of universities, as it will inform them of ways to

    further assist their undergraduates who are entrepreneurs. The government can also benefit from

    this study as it will inform them that assisting in the start-up of businesses is not everything. It

    will show the government areas in which it can continue to assist entrepreneurs after start-up.

    This study will contribute to the expansion of existing knowledge on this area of study. It would

    also provide useful starting/reference points for future researchers and a sound basis for

    intellectual exercise and researches.

    1.8 OUTLINE OF CHAPTERS

    This study is divided into five chapters: Chapter one is centered on general introduction. Here,

    the research problems were discussed; the objectives of the study were stated, as well as the

    research questions, research hypothesis, and the significance of the study and operational

    definitions of terms used in the study. Chapter two is focused on review of relevant literature of

    the work. Chapter three shows the details of the research methodology. Chapter four of this study

    centers on the presentation and analysis of data. Chapter five is the conclusive chapter of the

    study. This research study concludes with recommendation of the study conducted.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    9/77

    9

    1.9 OPERATIONAL TERMS

    Entrepreneurship: A process in which individuals pursue opportunities, fulfilling needs and

    wants through innovation together with the attendant risks (Gumperts, 2002)

    Entrepreneur: One who chooses or assumes risks, identifies business opportunity, gathers

    resources, initiates actions and establishes an organization or enterprise to meet such demand or

    market opportunity (Anayakoha, 2006)

    Performance: The accomplishment of a given task measured against preset known standards of

    accuracy, completeness, cost, and speed.

    Profitability: The state or condition of yielding a financial profit or gain. It is often measured by

    price to earnings ratio.

    Social Entrepreneur: They run innovative not-for-profit ventures and look for the most effective

    methods of serving their social missions (Dees, 1998).

    Business Entrepreneur: They are driven solely by profit making, and are constantly looking for

    an immediate monetary return on investment. With business entrepreneurs, wealth creation is a

    way of measuring value creation (Dees, 1998).

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    10/77

    10

    CHAPTER TWO

    LITERATURE REVIEW

    2.0 INTRODUCTION

    This chapter reviews previous works of other researchers that is related to the area of the

    research being conducted. It consists of the conceptual framework which includes definitions,

    concepts and terminologies related to the research study, the theoretical framework which

    reviews the various theories related to the research study, and the empirical framework which

    includes the conclusions researchers in the area of interest have drawn concerning the research

    study.

    2.1 CONCEPTUAL FRAMEWORK.

    2.1.1. ENTREPRENEURSHIP DEFINED

    The definition of entrepreneurship has been debated among scholars and researchers since the

    concept was first established. Steinfioff and Burgers (1993) view entrepreneurship as the ability

    to develop a new venture or apply a new approach to an old business. Stevenson (2002) defines

    entrepreneurship as the pursuit of opportunity through innovative leverage of resources that for

    the most part are not controlled internally. Allawadi (2010) tied entrepreneurship to the creation

    of five basic new combinations, introduction of a new product, a new method of production,

    opening a new market, conquest of new source of supply and creating a new organization.

    Frequently, entrepreneurship is thought to apply only to the management of small businesses but

    businesses that started small can grow into conglomerates if given an enabling environment.

    Drucker (1998) proposes that entrepreneurship is a practice. What this means is that

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    11/77

    11

    entrepreneurship is not a state of being nor is it characterized by making plans that are not acted

    upon. Regardless of the outcomes, when an individual creates a new organization, he has entered

    the entrepreneurship paradigm. Others tend to confuse managing a small business with

    entrepreneurship, but Stevenson argued that not all small business managers are entrepreneurs

    because they dont innovate. Creativity and entrepreneurship promote the birth of new firms

    which is critical to economic development efforts. Stevenson and Gumperts (2002) defined it as

    a process in which individuals pursue opportunities, fulfilling needs and wants through

    innovation together with the attendant risks. Salami C.G.E, (2011) in his study concluded that

    entrepreneurship is the process of carefully determining and analyzing unmet needs through

    creatively satisfying those needs by bearing the related risks.

    2.1.2. ENTREPRENEURS DEFINED

    In the middle ages, the term entrepreneur was used to describe both an actor and a person who

    managed large production projects. The individual did not take risks, but barely managed the

    project using resources provided, usually by the government of the country (Robert et al, 2002).

    The term entrepreneur originated in French economics as early as the 17 thand 18thcenturies.

    In French, it means someone who undertakes, not an undertaker in the sense of a funeral director,

    but someone who undertakes a significant project or activity. More specifically, it came to be

    used to identify the venturesome individuals who stimulated economic progress by finding new

    and better ways of doing things. The French economist most commonly credited with giving the

    term this particular meaning is Jean Baptiste Say. He defined the entrepreneur as an individual

    who shifts economic resources out of an area of lower and into an area of higher productivity and

    greater yield. In the 20th century, the economist Joseph Schumpeter described entrepreneurs as

    the innovators who drive the creative-destructive process of capitalism. In his words, the

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    12/77

    12

    function of entrepreneurs is to reform or revolutionize the pattern of production. They can do this

    in many ways: by exploiting an invention or, more generally, an untried technological possibility

    for producing a new commodity or producing an old one in a new way, by opening up a new

    source of supply of materials or a new outlet for products, by reorganizing an industry and so

    on.Schumpeters entrepreneurs are the change agents in the economy. By serving new markets

    or creating new ways of doing things, they move the economy forward. The Say-Schumpeter

    tradition that identifies entrepreneurs as the catalysts and innovators behind economic progress

    has served as the foundation for the contemporary use of this concept.

    A modern synthesis of the entrepreneur is someone who specializes in taking judgmental

    decisions about the coordination of scarce resources (Lazear, 2005). In this definition, the term

    someone emphasizes that the entrepreneur is an individual. Anayakoha (2006) sees the

    entrepreneur as one who chooses or assumes risks, identifies business opportunity, gathers

    resources, initiates actions and establishes an organization or enterprise to meet such demand or

    market opportunity. Allawadi (2010) describes the carryout of new combinations as enterprise

    and the individual whose function it is to carry them out as entrepreneur.Stoner et.al. (2000)

    note that the function that is specific to entrepreneurs is the ability to take the factors of

    productionland, labour and capital and use them to produce new goods and services. However,

    they argue that entrepreneurs perceive opportunities that other business executives do not see or

    care about. By combining the above thoughts, it can be argued that entrepreneurs are risk

    bearers, coordinators, organizers, gap-fillers, leaders and innovators.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    13/77

    13

    2.1.3. CHARACTERISTICS OF ENTREPRENEURS

    The literature on entrepreneurial characteristics has included a number of variables that address

    psychological attributes, personality, attitudes, and behaviour. Prior research has debated

    whether entrepreneurial characteristics are innate, findings however support the idea that

    psychological attributes associated with entrepreneurship can be culturally and experientially

    acquired (Gorman et al., 1997). Individuals can be predisposed to entrepreneurial intentions

    based on a combination of personal and contextual factors (Boyd & Vozikis, 1994). Personal

    factors such as prior experience as an entrepreneur and contextual factors such as job

    displacement have limited applicability to entrepreneurial propensity among youth. Other

    personal and contextual factors attributable to entrepreneurs have generally been categorized as

    demographic characteristics and psychological attributes. According to Robinson, Stimpson,

    Huefner, & Hunt (1991) demographic circumstances do not enhance ability to predict

    entrepreneurial tendencies. Psychological attributes, on the other hand, have produced good

    results for predicting whether a person will pursue entrepreneurship (Stewart, Watson, Carland,

    & Carland, 1999). Kourilsky (1980) suggested the following psychological attributes as the most

    relevant: need for achievement; creativity and initiative; risk-taking; self-confidence and internal

    locus of control; need for independence and autonomy; motivation, energy and commitment; and

    persistence. According to Gorman et al. (1997) propensity toward entrepreneurship is associated

    with several personal characteristics: values and attitudes, personal goals, creativity, risk-taking

    propensity, and locus of control. According to McClelland (1961) concerning personal

    characteristics, he proposed achievement motivation, risk taking and locus of control as

    important characteristics. However, Robinson, Stimpson, Huefner, and Hunts (1991) argued that

    self esteem and innovation are more prominent in entrepreneurs than the need for achievement.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    14/77

    14

    Sexton and Bowman (1983) concurred with Brockhaus (1980) that risk-taking propensities are

    not good predictors of entrepreneurial behavior. In subsequent work Stewart, et al. (1999)

    disagreed, finding that entrepreneurs had higher achievement motivation, risk-taking propensity,

    and preference for innovation than corporate managers and small business owners. Risk-taking

    may not apply to youth who have not undertaken significant economic risk and opportunity cost

    due to the loss of wages, or wealth risk associated with business failure.

    2.1.4. ENTREPRENEURSHIP EDUCATION

    Entrepreneurship education is the process of providing individuals with the ability to recognize

    commercial opportunities and insight, self esteem, knowledge and skills to act on them. It

    includes instruction in opportunity recognition, commercializing a concept, marshalling

    resources in the face of risk and initiating a business venture. It also includes instruction in

    business disciplines such as management, marketing, information systems and finance (Jones

    and English, 2004).

    Prior research suggests that identifying and nurturing potential entrepreneurs throughout the

    education process could produce many long-term economic benefits (McClelland & Winter,

    1969; Hatten & Ruhland, 1995 & Hansemark, 1998). As a study carried out shows at least the

    growth of the economy is related to innovation and the creation of new products (Porter, Ketel

    Delago, 2007). Specifically, a venture support system based on entrepreneurship education

    designed to stimulate and facilitate entrepreneurial activities, could result in a lower

    unemployment rate, increased establishment of new companies, and fewer failures of existing

    businesses. Entrepreneurship education can also be an important component of economic

    strategies for fostering job creation (McMullan, Long, & Graham, 1986). More specifically,

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    15/77

    15

    effective youth entrepreneurship education prepares young people to be responsible, enterprising

    individuals who become entrepreneurs or entrepreneurial thinkers and contribute to economic

    development and sustainable communities (Rasheed H.S. 2002). Entrepreneurship education

    generally refers to programs that promote entrepreneurship awareness for career purposes and

    provide skill training for business creation and development (Vesper, 1990; Bechard &

    Toulouse, 1998). It is distinguishable from other forms of business education when its purpose is

    creating a new product or service that results in higher economic value (Hanesmark, 1998). An

    inherent assumption in entrepreneurial education is that entrepreneurship characteristics and

    skills can be developed. Research suggests that the propensity towards entrepreneurship has been

    associated with several personal characteristics that can be influenced by a formal program of

    education (Gorman, Hanlon, & King, 1997; Bechard & Toulouse, 1998). Education can prepare

    for new venture initiation by transferring knowledge and developing relevant skills that improve

    the self-efficacy and effectiveness of the potential entrepreneur (Gorman et al., 1997). Studies by

    Hanesmark (1998), Hatten & Ruhland (1995), and Ede, Panigrahi, & Calcich (1998) support the

    value of formal entrepreneurial education at the university level, but only in terms of affecting

    the attitude toward entrepreneurship as a career alternative. Gasse (1985) recommended that

    entrepreneurial potential should be identified and developed at the secondary school level, when

    the possibility of self-employment as a career option is still open. Kourilsky and Walstad (1998)

    suggested that stimulating entrepreneurial attitudes through education at the pre-collegiate level

    could encourage entrepreneurship as a career choice. Entrepreneurial education based on solid

    learning theory can develop entrepreneurs by increasing business knowledge, and promoting

    characteristics associated with entrepreneurs (Krueger & Brazeal, 1994; Kourilsky & Walstad,

    1998; Walstad & Kourilsky, 1998). Learning styles that include active experimentation, balanced

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    16/77

    16

    with concrete experience and abstract conceptualization, enhance entrepreneurial propensity

    (Gorman et al., 1997). Stumpf, Dunbar, and Mullen (1991) also argued for the benefits of

    behavioral simulations in teaching entrepreneurship. McMullan and Long (1986) proposed that

    entrepreneurship education should include skill-building components such as negotiation,

    leadership and creative thinking, exposure to technological innovation and new product

    development.

    McConnell (2003) explained that the training will be more effective if the training needs analysis

    was carried out comprehensively in advance. Study by Wertenbroch and Pietri (2005) on training

    needs analysis for the entrepreneur seeks to identify the profile, training and development needs,

    training methods and skills and competencies needed by entrepreneurs, especially in the face of

    challenges such as globalization, changing work envirotiment, dealing with risk and the

    importance of building teamwork.

    2.1.5. TYPES OF ENTREPRENEURS

    Various scholars have identified two major types of entrepreneurs based on their entrepreneurial

    motives. These are Social Entrepreneurs and Business Entrepreneurs also referred to as

    Economic or Commercial Entrepreneurs.

    SOCIAL ENTREPRENEURS:

    According to J. Gregory Dees (1998), in his article The Meaning of Social Entrepreneurship, it

    implies a blurring of sector boundaries. In addition to innovative not-for-profit ventures, social

    entrepreneurship can include social purpose business ventures, such as for-profit community

    development banks, and hybrid organizations mixing not-for-profit and for-profit elements, such

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    17/77

    17

    as homeless shelters that start businesses to train and employ their residents. Social entrepreneurs

    look for the most effective methods of serving their social missions.

    Social entrepreneurs play the role of change agents in the social sector, by:

    Adopting a mission to create and sustain social value (not just private value)

    Recognizing and relentlessly pursuing new opportunities that serve that mission,

    Engaging in a process of continuous innovation, adaptation, and learning,

    Acting boldly without being limited by resources currently in hand, and

    Exhibiting heightened accountability to the constituencies served and for the outcomes

    created (Dees 1998).

    Social enterprises require the application of management skills within the non-profit, for-profit,

    and public sectors and contribute to the creation of social value. Some examples are:

    An organization dedicated to social impact.

    An organization or venture that advances its social mission through entrepreneurial

    earned income strategies.

    A business with primarily social objectives whose surpluses are principally reinvested for

    that purpose in the business or in the community, rather than being driven by the need to

    maximize profit for shareholders and owners.

    BUSINESS ENTREPRENEURS:

    Business entrepreneurship is simply entrepreneurship practiced in business. Business

    entrepreneurs are driven solely by profit making. Business entrepreneurs look for a immediate

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    18/77

    18

    monetary return on investment. With business entrepreneurs, wealth creation is a way of

    measuring value creation.

    DIFFERENCES BETWEEN BUSINESS AND SOCIAL ENTREPRENEURS:

    According to J. Gregory Dees (1998), the ideas of Say, Schumpeter, Drucker, and Stevenson are

    attractive because they can be as easily applied in the social sector as the business sector. Social

    entrepreneurs are one species in the genus entrepreneur. They are entrepreneurs with a social

    mission. However, because of this mission, they face some distinctive challenges and any

    definition ought to reflect this. For social entrepreneurs, the social mission is explicit and central.

    This obviously affects how social entrepreneurs perceive and assess opportunities. Mission-

    related impact becomes the central criterion, not wealth creation. Wealth is just a means to an

    end for social entrepreneurs. With business entrepreneurs, wealth creation is a way of measuring

    value creation. This is because business entrepreneurs are subject to market discipline, which

    determines in large part whether they are creating value. If they do not shift resources to more

    economically productive uses, they tend to be driven out of business. Markets are not perfect, but

    over the long haul, they work reasonably well as a test of private value creation, specifically the

    creation of value for customers who are willing and able to pay. An entrepreneurs ability to

    attract resources (capital, labor, equipment, etc.) in a competitive marketplace is a reasonably

    good indication that the venture represents a more productive use of these resources than the

    alternatives it is competing against. The logic is simple. Entrepreneurs who can pay the most for

    resources are typically the ones who can put the resources to higher valued uses, as determined

    in the marketplace. Value is created in business when customers are willing to pay more than it

    costs to produce the good or service being sold. The profit (revenue minus costs) that a venture

    generates is a reasonably good indicator of the value it has created. If an entrepreneur cannot

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    19/77

    19

    convince a sufficient number of customers to pay an adequate price to generate a profit, this is a

    strong indication that insufficient value is being created to justify this use of resources. A re-

    deployment of the resources happens naturally because firms that fail to create value cannot

    purchase sufficient resources or raise capital. They go out of business. Firms that create the most

    economic value have the cash to attract the resources needed to grow.

    Markets do not work as well for social entrepreneurs. In particular, markets do not do a good job

    of valuing social improvements, public goods and harms, and benefits for people who cannot

    afford to pay. These elements are often essential to social entrepreneurship. That is what makes it

    social entrepreneurship. As a result, it is much harder to determine whether a social entrepreneur

    is creating sufficient social value to justify the resources used in creating that value. The survival

    or growth of a social enterprise is not proof of its efficiency or effectiveness in improving social

    conditions. It is only a weak indicator, at best. Social entrepreneurs operate in markets, but these

    markets often do not provide the right discipline. Many social-purpose organizations charge fees

    for some of their services. They also compete for donations, volunteers, and other kinds of

    support. But the discipline of these markets is frequently not closely aligned with the social

    entrepreneurs mission. It depends on who is paying the fees or providing the resources, what

    their motivations are, and how well they can assess the social value created by the venture. It is

    inherently difficult to measure social value creation. How much social value is created by

    reducing pollution in a given stream, by saving the spotted owl, or by providing companionship

    to the elderly? The calculations are not only hard but also contentious. Even when improvements

    can be measured, it is often difficult to attribute them to a specific intervention. Even when

    improvements can be measured and attributed to a given intervention, social entrepreneurs often

    cannot capture the value they have created in an economic form to pay for the resources they use.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    20/77

    20

    To offset this value-capture problem, social entrepreneurs rely on subsidies, donations, and

    volunteers, but this further muddies the waters of market discipline. The ability to attract these

    philanthropic resources may provide some indication of value creation in the eyes of the resource

    providers, but it is not a very reliable indicator. The psychic income people get from giving or

    volunteering is likely to be only loosely connected with actual social impact, if it is connected at

    all.

    2.1.6. SUCCESSFUL AND UNSUCCESSFUL ENTREPRENEURS

    According to Kayode O.F. (2006), the following factors determine the success or otherwise, of

    the entrepreneur:

    1. A good knowledge of the business venture and the environment.

    2. It is expected that the entrepreneur has a business plan on which research has been done.

    3. Availability of relevant managerial skills. In developing countries, the reason for failure

    of most business is not funds, but lack of managerial skills.

    4. Good human relations attitude to customers.

    5. Product marketing ability.

    6. Cordial relationship with employees. This is needed for proper planning, control,

    organising, staffing, motivation and public relation.

    7. Availability of raw materials inputs and manpower.

    8. Ability for the identification of sources of funds. Some may have to get from family and

    friends, but the fund to continue with the business is also needed. Therefore, the

    knowledge of where to get funds is essential for growth and expansion.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    21/77

    21

    9. Availability of infrastructures. For companies engaged in manufacturing, there should be

    solid power supply, water supply and other social amenities.

    10.Good location of the business and nearness to market is a salient factor. The marketing

    system should consider the accessibility of customers to the products.

    11.Compliance with legal requirement, for example: paying of taxes and obeying other legal

    issues, in order not to allow the risk to be a waste.

    12.Good leadership. Leaders are essential while managers are necessary.

    2.1.7. FACTORS WHICH HINDER ENTREPRENEURSHIP IN NIGERIA

    According to Salami C.G.E (2011), entrepreneurship has been hindered by three major factors:

    structural, cultural and the lack of political will by policy makers.

    STRUCTURAL FACTORS

    Structural inhibitors in the growth of entrepreneurship have its origin in the Nigerian education

    policies since independence in 1960. Between then and now Nigeria has introduced and

    implemented not less than three policies: the 7:5:2:3, 6:3:3:4 and now the 9:3:3:4 (elementary,

    secondary and university). There is now a clamour for a reintroduction of Higher school

    Certifictae (HSC) program which was a two-year postsecondary program that prepared students

    for university education. One of the major problems of past education policies stems from the

    fact that new policies are not allowed to run their full course before they are changed. What this

    means is that some of the past policies were not well thought out before introduction. Another

    related structural problem is the low budgetary allocation to the education sector, particularly the

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    22/77

    22

    vocational and technical education sub-sector. Poor leadership, corruption and mismanagement

    of resource have contributed to the gross under-finding of education.

    One possible explanation for low budgetary allocation is the perception by some policy makers

    that education does not provide immediate return on investment (ROI) compared to the real

    sectors like oil, telecommunication etc. Because of the low sectoral budgetary allocation,

    educational institutions are characterized by frequent strikes which those in government dont

    consider as priority in terms of resolving the issues that led to the strikes. As Salami (2010) has

    argued elsewhere, strike by workers in oil and gas (NUPENG) industry are usually resolved with

    three days of the strike action. Apart from the possible social and political implication of a

    delayed resolution any NUPENG strike, it is believed that the real motivation for the usual quick

    response by government may be the need to safeguard the economic interest of those in

    authority. In other countries, products of vocational and technical education constitute the middle

    class which no longer exist in Nigeria. Another related structural problem seem to be the general

    bias of educational curricula towards science and liberal arts education with little regard to

    vocational and technical education. This is attributed largely to the belief that the educated stand

    a better chance of occupying top positions in the economy. It is a known secret that top

    government officials have the hidden agenda to position their children for succession in

    government. This is achieved by clandestinely ensuring that their children attend the best schools

    abroad, and walk into lucratic jobs in Nigeria when they graduate, while their mates that

    schooled in Nigeria are yet to graduate due to incessant strikes university lecturers. In Nigeria,

    graduates of polytechnics with Higher National Diploma (HND) are discriminated against. Apart

    from pay disparity between a B.Sc./BA degree holder and HND, the latter cannot rise beyond

    Grade level 14, while their counterparts with B.Sc./BA can rise to the position of Permanent

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    23/77

    23

    Secretary in the Civil Service. Additionally, the Nigerian educational curricula appear to be

    designed as a factory forproducing graduates who are made to believe that the only employer

    of labour is government federal, state and local government. Consequently, many of the

    graduates of Nigerian tertiary institutions tend to limit their job search to government

    establishments

    CULTURAL FACTORS

    Culturally, it can be argued that entrepreneurship has been hindered by two major factors:

    societys perception about the socioeconomicstatus of artisanship and the value system which is

    fast being eroded. There is the general perception that artisans and technicians are never-do-

    wells,dropouts, societal rejects or even failures who should perpetually remain at the bottom of

    the socio-economic ladder. This is reflected in a lack of respect in the part of the public for

    manual labour (Asby, 1960) Another related factor is the general Nigerian value system which

    appear to have cultivated a new value system just like the larger society in their quest for making

    fast money as well as generally living on the fast lane. For example, the apprenticeship systems

    of the olden days are fast disappearing. Gone are the days when a master automechanic would

    have about three to five apprentices under his tutelage. One implication is that in a few years

    time Nigeria will begin to experience an acute shortage of artisans. Youths are not motivated to

    choose vocational and technical education.

    LACK OF POLITICAL WILL

    The neglect of vocational/technical education has been robbing the nation of the potential

    contributions of its graduates to national growth and economic development. The inability of

    policy makers to make both rational and educated decisions continue to affect the rate of

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    24/77

    24

    progress of the Nigerian nation. As Dike (2009) has noted, the under-development status of

    Nigeria could be linked to the neglect of its educational institutions. Although science and

    technology has been a part of Nigerias National Policyon Primary Education (NPE) since 1981

    (Moja, 2000), like every other public policy, implementation have always been the major

    problem.

    2.1.8. GENERATION OF FUNDS

    Ausbeth N.A. (2005) identified the following ways of financing a new venture:

    1. Private sources: Prospective entrepreneurs expectedly, would begin the gathering of

    funds for business from Personal funds. These include personal savings, funds from sale

    of land , shares e.t.c. Private sources of funds also include funds raised from relatives,

    friends and acquaintances, provided that the terms of the financial support are well spelt

    out to avoid future imbroglio.

    2. Terms loans and Overdrafts: These can be classified into short, medium and long terms.

    The commercial banks are veritable sources of short term overdrafts and loans. These

    loans, of course, may not be useful to the entrepreneur except for an urgent working

    capital need because of the high interests charged by the banks. Medium and long term

    loans can be sourced from the Bank of Industry and other financial institutions. To

    borrow from these institutions i.e. banks, the short, medium and long term, the

    entrepreneur must be able to satisfy the proverbial 5Cs of credit namely: Character,

    Capacity, Capital, Condition and Collateral. These summarise the purpose, amount

    demanded, period of facility, experience in the business, repayment plans, applicants

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    25/77

    25

    credit/ banking records, mandate, profitability of proposed or expanding business and

    what security the applicant is offering.

    3. Leasing and Hire Purchase: This is another means of financing available to the

    entrepreneur, especially when machines and solid assets for business need to be

    acquired. The equipment chosen is usually procured/financed by the leasing company for

    an interest spread over a period of 2 to 6 years depending on the agreement terms. This

    form of finance does not require collateral from the entrepreneur as the financed

    equipment serves as lean collateral.

    4. Equity: This involves investors being part owners of the enterprise, thus partaking in the

    success or failure of the business. Funds gotten from equity windows are usually interest

    free. The three most popular equity windows are: the Small and Medium Enterprise

    Equity Investment Scheme (SMEEIS), the capital market and other private equity fund

    managers.

    2.2 THEORETICAL FRAMEWORK

    2.2.1 NEED FOR ACHIEVEMENT THEORY

    David McClelland (1961) is a famous contributor to the theory of entrepreneurship. In his own

    contribution, he argued that entrepreneurial behaviour in business is motivated by the individual

    need for achievement. Although his position is psychological, which he demonstrated by using

    Maslows Hierarchy of needs referred toas n achievement, David McClelland (1961) in his

    studies opined that, apart from need for achievement, need for power and need for affiliation can

    spur an individual into entrepreneurship.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    26/77

    26

    David McClellands theory on need for achievement is the most important one of the various

    psychological theories on entrepreneurship. In his theory McClelland emphasized the

    relationship of achievement motivation or need for achievement (symbolically written as n Ach)

    to economic development via entrepreneurial activities. He wrote the presumed mechanism by

    which n Ach level translate itself into economic growth is the entrepreneurial class. If the n Ach

    level is high, there will presumable be more people who behave like entrepreneurs-----" (Islam,

    1989).

    In the early 1960s, McClelland postulated that a causal relationship exists between a strong

    desire for achievement and business activity. In plotting data for a 300-year time span in

    England, McClelland (1961) found two waves of economic growth, a small one around 1600 and

    a larger one around 1800. Each wave was preceded by a wave of concern for achievement as

    reflected in popular literature. McClelland (1965) concluded that the need for achievement was

    an essential ingredient for entrepreneurial success and that the need for achievement could be

    taught to stimulate economic growth.

    According to McClelland, one would expect a relatively greater amount of entrepreneurship in a

    society if the average level of need achievement in a society is relatively high. Because having a

    high n Ach encourages an individual to set challenging goals, work hard to achieve the goals and

    uses the skills and abilities needed to accomplish them (Islam 1989). Moreover, it is the inner

    drive of individuals that propels them to work more and to achieve something for their own

    interest by taking personal risk (Islam and Mamun, 2000). Need for achievement then, reflects a

    strong goal orientation, an obsession with job or task to be done. So, entrepreneurship becomes

    the link or intervening variable between need achievement and economic growth. Consequently,

    McClelland advocates increasing level of need-achievement in a society in order to stimulate

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    27/77

    27

    entrepreneurship and economic growth (Islam, 1989). Finally, according to McClelland,

    entrepreneurs are activated by the high extent of achievement motivation and he also stated a

    desire to do well, not so much for the sake of social recognition or prestige, but for an inner

    feeling of personal accomplishment, induce people to be an entrepreneur (Islam and Mamun,

    2000). He also suggests that the n Ach level can be increased in an individual through training

    and by creating appropriate culture.

    McClelland also believed that the need for achievement exist in every individual; that a

    particular training, emotional practices and value orientation cannot produce the disposition,

    which favours the rational pursuit of economic gains. It is pertinent to note that McClelland

    failed to prove the sense of frustration that drives men to become entrepreneurs (Chinonye,

    2002)

    2.2.2. DISCOVERY THEORY AND CREATION THEORY

    Both Discovery Theory and Creation Theory are examples of teleological theory and thus have

    much in common. For example, they both seek to explain the same dependent variable

    entrepreneurial action. In this context, entrepreneurial action is defined as any activity

    entrepreneurs might takefrom initially identifying opportunities (Gaglio & Katz, 2001;

    Kirzner, 1979; McMullen & Shepherd, 2006), to assembling resources to exploit opportunities

    (Schumpeter, 1939), to generating and appropriating the economic profits created by exploiting

    opportunities (Alvarez and Barney, 2005)to produce new products or services (Shane and

    Venkatraman, 2000: 211; Shane, 2003: 4) Moreover, as teleological theories, both Discovery and

    Creation seek to explain these entrepreneurial actions in terms of their impact on the ability of

    entrepreneurs to produce new products or services.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    28/77

    28

    DISCOVERY THEORY

    The three critical assumptions of Discovery Theory are examined in detail below.

    Discovery Objectives

    As suggested earlier, both Discovery Theory and Creation Theory assume that the goal of

    entrepreneurs is to produce new products or services (Shane and Venkatraman, 2000: 211;

    Shane, 2003: 4). These two theories also agree about the definition of what constitutes an

    opportunity to produce new products or servicesin both theories, an opportunity exists

    whenever competitive imperfections in an industry or market exist (Barney, 1986; Kirzner, 1997;

    Porter, 1980). However, these two theories differ in their analysis of where these competitive

    imperfections come from. In Discovery Theory, competitive imperfections are assumed to arise

    exogenously, from changes in technology, consumer preferences, or some other attributes of the

    context within which an industry or market exists (Kirzner, 1973: 10). Shane (2003: 23) cites

    technological changes, political and regulatory changes, and social and demographic changes as

    examples of the kinds of events that can disrupt the competitive equilibrium that exists in a

    market or industry, thereby creating opportunities to produce new products or services.

    This emphasis on exogenous shocks creating opportunities to produce new products or services

    has several important implications for Discovery Theory. For example, this theory assumes that

    opportunities to produce new products or services evolve out of pre-existing industries or

    markets (Kirzner, 1973). Even when shocks to a pre-existing industry or market alter its

    fundamental nature, creating what for all intents and purposes is a new competitive landscape

    (Levinthal, 1997) for that industry or market, that new landscape is still assumed to evolve out

    of an existing industry or market. Second, with respect to the creation of new opportunities,

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    29/77

    29

    Discovery Theory assumes that entrepreneurs play a passive and responsive role. Such

    opportunities are created by exogenous shocks to an industry or market and are not created by

    entrepreneurs themselves. In Discovery Theory, entrepreneurs only become proactive when they

    begin to exploit an opportunity by bringing agency to opportunity (Shane, 2003: 7). Third,

    opportunities, in Discovery Theory, are assumed to have an existence independent of the

    entrepreneurs seeking to exploit them. That is, they exist, whether or not particular individuals,

    inside or outside an industry or market, are aware of them. In this sense, opportunities in

    Discovery Theory are like lost luggage at a train station. This luggage exists, whether or not it is

    claimed. The task of the entrepreneur is to become aware that this luggage exists and then claim

    it. Finally, Discovery Theory suggests that entrepreneurship is predominantly about search

    systematically scanning the environment to discover opportunities to produce new products or

    services. In this search process, entrepreneurs must consider both its direction and duration, and

    must also guard against confusing local optimawhere modest opportunities to produce new

    products or services existwith more global optimawhere much more substantial

    opportunities exist (Levinthal, 1997).

    CREATION THEORY

    Creation Theory is a theoretical alternative to Discovery Theory for explaining the relationship

    between entrepreneurial action and the production of new products or services (Gartner, 1985;

    Venkataraman, 2003). Aspects of Creation Theory have been described by a variety of authors

    (Alvarez & Barney, 2005; Baker et al., 2005; Casson, 1982; Gartner, 1985; Langlois & Cosgel,

    1993; Loasby, 2002; Sarasvathy, 2001; Schumpeter, 1934).

    Creation Objectives

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    30/77

    30

    In Creation Theory, entrepreneurs are still assumed to be engaging in activities the purpose of

    which is to produce new products or services. However, in Creation Theory, opportunities are

    not assumed to be objective phenomena created by exogenous shocks to an industry or market.

    Rather, they are created, endogenously, by the actions of individuals exploring ways to produce

    new products or services (Baker et al., 2005; Gartner, 1985; Sarasvathy, 2001). This endogenous

    view of opportunities has a variety of implications for Creation Theory.

    First, in Creation Theory, opportunities do not necessarily evolve out of pre-existing industries or

    markets. While, after an opportunity has been exploited, it will always be possible to show how

    that opportunity evolved out of a prior industry or market, Creation Theory suggests that, before

    an opportunity is created, its links with prior industries or markets are unknown. That is,

    Creation Theory suggests that the seeds ofopportunities to produce new products or services

    do not necessarily lie in previously existing industries or markets.

    Second, rather than being passive with respect to the creation of new opportunities, Creation

    Theory assumes that entrepreneurs actionsare the essential source of these opportunities. In this

    model, entrepreneurs do not wait for exogenous shocks to create opportunities and then provide

    agency to those opportunities, they act (Bhide, 1999). And in acting, they create opportunities

    that could not have been known without the actions taken by these entrepreneurs. Of course, if

    entrepreneurs are unable to fully realize their goal of producing new products or services through

    the first actions they take, they may decide to engage in subsequent actions that modify and

    change their initial actions. This action/revision process may occur several times until

    entrepreneurs end up engaging in activities that create an opportunity. This inductive learning

    processwhere entrepreneurs learn after they actis different than the learning that Discovery

    Theory assumes occurs, learning that takes place before an entrepreneur acts (Gagne & Glaser,

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    31/77

    31

    1987). Third, in Creation Theory, bringing agency to opportunities is without meaning since

    opportunities do not exist independently of the actions taken by entrepreneurs to create them.

    Instead, opportunities only exist because of the actions of entrepreneurs to exploit them. In this

    sense, opportunities begin as beliefs in the minds of entrepreneurs. As entrepreneurs begin to

    take action to create opportunities, these beliefs can become social constructs that guide

    subsequent actions of entrepreneurs and others associated with an industry or marketincluding

    customers and suppliers (Berger & Luckmann, 1967; Weick, 1979). Using the landscape

    metaphor introduced earlier, Creation Theory suggests that entrepreneurship is not about

    climbing mountains of opportunities, but rather, about building mountains of opportunitiesthat are recognized, only after they have been exploited. Finally, in Creation Theory, the term

    search also has little or no meaning. Search implies entrepreneurs attempting to discover

    opportunities that already exist. In Creation Theory, entrepreneurs do not search; they act, and

    observe how consumers and markets respond to their actions.

    2.3 EMPIRICAL FRAMEWORK

    2.3.1 ENTREPRENEURSHIP EDUCATION AND ENTREPRENEURIAL

    INTENTIONS.

    Entrepreneurship Education and Entrepreneurial Intentions Basu and Virick (n.d.) found that

    education can affect students attitudes toward entrepreneurship and their entrepreneurial self-

    efficacy. Lack of entrepreneurial education leads to low level of entrepreneurial intentions of

    students (Franke & Luthje, 2004). Entrepreneur with entrepreneurial education and experience

    can create higher profits from entrepreneurial businesses (Jo & Lee, 1996). Dyer (1994) has

    suggested that entrepreneurship courses, or training regarding start of new business, contributes

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    32/77

    32

    towards starting a new business and it gives confidence and courage to them. Krueger and

    Brazeal (1994) recommended that education in entrepreneurship can improve the perceived

    feasibility for entrepreneurial business through increased knowledge base of students, confidence

    building and promoting self-efficacy. Shepherd & DeTienne (2005) identified a relationship

    between entrepreneurial knowledge and identification of entrepreneurial opportunities.

    Venkataraman (1997) related entrepreneurial opportunities to an individual's distinct information

    regarding a particular area of study, while Gimeno et al. (1997) suggested that it may be the

    result of work experience as well. Entrepreneurial education program are source of

    entrepreneurial attitude and overall intentions to become future entrepreneur (Souitaris et

    al.2007). Ishfaq A., Muhammad M.N., Zafar A., Muhammad Z.S., Ahmad U., Wasim-ul-

    Rehman & Naveed A. (2010) found that students with entrepreneurial experience, whether their

    self experience or their family experience, are more inclined towards entrepreneurial career that

    might be due to vigilance with the market and business and their knowledge regarding changing

    trends of market.

    Previous studies have linked entrepreneurship education to intentions of individuals to become

    entrepreneurs, but have failed to identify its impact on the performance of the business after

    commencement. This study seeks to determine the relationship between entrepreneurship

    education in the university and the business performance of undergraduate entrepreneurs.

    2.3.2. ENTREPRENEURSHIP AND YOUTH UNEMPLOYMENT

    According to Depo Oyedokun (2010) Chair of the House Committee on Youth and Social

    Development, of the over 40 million unemployed youths in the country, 23 million are

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    33/77

    33

    unemployable and therefore susceptible to crime, hence the need to articulate what could be done

    to salvage the situation. He therefore, suggests creating the enabling legislative framework that

    would ensure the total emancipation of the Nigerian youths.

    Eshiobo S.S. (2010) found that the increasing entrepreneurship activities since 2000, is partly

    caused by the increasing rate of unemployment. It is obvious that entrepreneurship is the number

    one avenue for both government and individuals to curb the rising number of unemployed

    youths.

    Salami C.G.E, (2011) suggested the following ways for government to assist youths; government

    should embrace external competition to promote innovation, state governments should develop

    its own innovative strategies to promote entrepreneurial activity in its area and government

    should recognize and reward innovation.

    In a study carried out by Oghojafor B. E. A., Aduloju S. A. and Olowokudejo F. F. (2011) it was

    ascertained that social entrepreneurial activities have helped significantly to reduce the level of

    unemployment among the teeming youths, and by that has contributed positively to the reduction

    of criminal activities of youths.

    Previous studies have shown that entrepreneurship is the solution to youth unemployment, this

    study however seeks to determine how these youths fair in their entrepreneurial endeavours.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    34/77

    34

    CHAPTER THREE

    RESEARCH METHODOLOGY

    3.0 INTRODUCTION

    The aim of this chapter is to discuss and explain the procedures followed in collecting and

    analyzing the data relevant to this study.

    Some other issues which are addressed in this chapter include the research instrument used, its

    structure and method of administration as well as the procedure for processing data collected, the

    determination and identification of methodology, the population, the sample frame, sample size,

    the validity and the reliability of the instrument used for the study.

    3.1 RESEARCH METHOD

    The survey method was used in the conducting of this research work. This is because

    questionnaires were used to collect responses from the population. This data collection method

    also collects the opinion, views and perspective of respondents regarding a particular issue of

    research interest.

    3.2. RESEARCH DESIGN

    Research designs are used by researchers as a scheme or blueprint for data collection prior to

    actual data. It is a useful guide in generating primary data.

    Research design is concerned with the structuring of an investigation for the purpose of

    identifying the relevant variables and their relationship to one another. It is a necessary step in a

    research process if research problems and hypothesis are to be adequately addressed. It is also a

    useful tool, which serves as a guide during the data collection and analysis process. (Ojo, 2003)

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    35/77

    35

    Research design means the structuring of investigation aimed at identifying variables and their

    relationships to one another (Asika 1991).

    3.3 POPULATION OF THE STUDY

    The population of a study is a census of all item or subject that possess the characteristics or that

    have knowledge of the phenomenon being studied. (Asika, 1999).

    The population identified for this study was 102 undergraduate entrepreneurs at Covenant

    University Ota, Ogun State.

    3.4 SAMPLE SIZE DETERMINATION

    Sample is a subset of a population observed or selected for the purpose of making scientific

    statement about the study population (Bisira et al, 2002).

    The sample size for this study would be 80 Undergraduate Entrepreneurs at Covenant University

    Ota, Ogun State. To determine the sample size for Undergraduate entrepreneurs in Covenant

    University the researcher identified the amount of students that participated in entrepreneurial

    activities organized in the university last year, which included the Redefinition Fashion Show

    and Trade fairs. An estimated population of 102 students was determined.

    In this research, yards formula was used to determine sample size. The formula is given as

    follows;

    n= N

    1+ 2N

    N= Population

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    36/77

    36

    n= Sample Size

    = Level of significant

    n= N Substituting from above.

    1+

    Therefore 102 102

    1+102 (0.05)2

    = 1+ 102 (0.0025)

    n= 102 102

    1+ 0.26 = 1.26 = 80 respondents

    3.5 SAMPLING TECHNIQUE AND PROCEDURE

    Simple Random Sampling Technique was adopted for the selection of the respondents. A simple

    random procedure was chosen so as to guarantee randomness and for the sample of this study to

    be adequate and representative of the study population.

    3.6 SAMPLE FRAME

    The sampling frame for this study constituted the undergraduates at Covenant University Ota,

    Ogun State, who are entrepreneurs.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    37/77

    37

    3.7 SOURCES OF DATA AND COLLECTION TECHNIQUES

    This research made use of both primary and secondary sources of data. The primary source of

    data was through questionnaire and the secondary source of data was the use of textbooks and

    journals.

    3.8 RESEARCH INSTRUMENTS

    The research instrument adopted was questionnaire; this was used to generate information from

    the respondents regarding the study. The questionnaire was divided into close ended and open

    ended which gave respondents the opportunity to express their views about the research work.

    3.9VALIDITY OF RESEARCH INSTRUMENT

    In testing for the validity of the research instrument, construct validity was employed. The

    questionnaire was designed in such a way that information from them was adequate to provide

    answers to the research questions and research hypotheses.

    3.10 RELIABILITY OF RESEARCH INSTRUMENT

    The reliability of the research instrument was tested using The Kruder Richardson or Cronbach

    alpha reliability test.

    TABLE 3.10.1 Reliability Statistics

    Reliability Statistics

    Cronbach'sAlpha N of Items

    .792 26

    Source: Field Survey, 2012

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    38/77

    38

    From the above table, Cronbach Alpha coefficient is .792 for the 26 items analyzed together.

    This shows that these items are highly reliable as it is more than the widely accepted score of 0.7

    which is an indication that the research instrument is reliable.

    3.11 METHODS OF DATA ANALYSIS

    The data generated through the questionnaires was analyzed through the aid of a computer

    system and the application SPSS( Statistical Packages For Social Sciences). In specific terms,

    frequency distribution simple percentage and the mean would be deployed in data analysis.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    39/77

    39

    CHAPTER FOUR

    DATA PRESENTATION, ANALYSIS AND INTERPRETATION

    4.0 INTRODUCTION

    The purpose of this study was to evaluate the business performance of young entrepreneurs,

    using undergraduates at Covenant University as a case. The data collected from the participants

    through questionnaire were classified, organized and analyzed. The purpose of the data analysis

    is that it arranges and interprets the data in such a way that they enable one to confirm or reject

    proposed relationships among variables.

    For the purpose of this study, data will however be analyzed under the following sub-themes:

    1. Socio-demographic characteristics of respondents

    2. Major questionnaire questions.

    3. Test of hypotheses.

    4.1 DATA PRESENTATION.

    The data gathered in this section covered the personal information of the respondents. This

    section of the questionnaire sought information on the respondents` bio data and questions from

    the questionnaire. A simple analysis of the data collected is presented.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    40/77

    40

    Number of respondents

    Table 4.1.1 Number of Respondents.

    Questionnaires Frequencies Percentage% Cumulative

    percentage

    Number returned 76 95 95

    Number not returned 4 5 100

    Total 80 100

    Source: Researchers field Summary Result (2012).

    In the table above, 76 (95%) of the respondent filled and returned the questionnaire administered,

    while 4 (5%) of the respondents did not return the questionnaire. This resulted to the analysis of

    76.

    SOCIO-DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS

    Table 4.1.2 Gender distribution of the respondents

    Sex of the respondent

    Frequency Percent Valid PercentCumulativePercent

    Valid Male 47 61.8 61.8 61.8

    Female 29 38.2 38.2 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The table above shows that 61.8% of the respondents were male, while 38.2% were female. The

    majority of the respondents were male.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    41/77

    41

    Table 4.1.3 Age distribution of the respondents

    Age group of the respondent

    Frequency Percent Valid Percent

    Cumulative

    PercentValid 15-18 6 7.9 7.9 7.9

    19-22 66 86.8 86.8 94.7

    23-26 4 5.3 5.3 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The table above reveals that 86.8% of the respondents were between the ages of 19 and 20, 7.9%

    of the respondents were within the age group 15-18 years and 5.3% were within the ages of 23-

    26 years. From this it can be deduced that majority of undergraduate entrepreneurs are youths.

    Table 4.1.4 Distribution by course of Study of the respondents

    Course of study of the respondent

    Frequency Percent Valid PercentCumulativePercent

    Valid CST 28 36.8 36.8 36.8

    CDS 48 63.2 63.2 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The table above reveals that 63.2% of the respondents study courses in the College of

    Developmental Studies, while 36.8% are from the College of Science and Technology. This

    shows that the majority of undergraduate entrepreneurs are from the college of developmental

    studies.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    42/77

    42

    Table 4.1.5 Distribution by level of respondents

    Level of the respondent

    Frequency Percent Valid Percent

    Cumulative

    PercentValid 100 2 2.6 2.6 2.6

    200 5 6.6 6.6 9.2

    300 17 22.4 22.4 31.6

    400 47 61.8 61.8 93.4

    500 5 6.6 6.6 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 61.8% of the respondents are in 400level, 22.4% are in 300level,

    6.6% are in 200level, 6.6% are also in 500level and 2.6% are in 100level. The majority of

    entrepreneurs are in 400 level.

    4.2 ANALYSIS OF MAJOR QUESTIONNAIRE QUESTIONS

    Table 4.2.1 Form of business respondent is engaged in.

    Form of business engaged in

    Frequency Percent Valid PercentCumulativePercent

    Valid Trading 12 15.8 15.8 15.8

    Service 21 27.6 27.6 43.4

    manufacturing 4 5.3 5.3 48.7

    Retailing 33 43.4 43.4 92.1

    Others 6 7.9 7.9 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The table above shows that 43.4% of the respondents are into retailing, 27.6% are into service

    providing, 15.8% are into trading, 7.9% are into other unspecified forms of business and 5.3%

    are into manufacturing. Majority of entrepreneurs are into retailing.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    43/77

    43

    Table 4.2.2 Type of entrepreneur

    What type of entrepreneur are you?

    Frequency Percent Valid Percent

    Cumulative

    PercentValid social entrepreneur (i.e.

    motivated by profit) 7 9.2 9.2 9.2

    business entrepreneur(i.e. motivated by profit) 69 90.8 90.8 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 90.8% of respondents are business entrepreneurs and 9.2% of them

    are social entrepreneurs. The majority of undergraduate entrepreneurs are business entrepreneurs.

    Table 4.2.3 Prior job experience.

    Before your business, did you have any job experience

    Frequency Percent Valid PercentCumulativePercent

    Valid Yes 11 14.5 14.5 14.5

    No 65 85.5 85.5 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 85.5% of the respondents had no prior job experience and 14.5% of

    them had prior job experience. This shows that majority of undergraduate entrepreneurs had no

    job experience before starting their businesses.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    44/77

    44

    Table 4.2.4 Motivation from family business

    Were you motivated by your family's business to start your own business

    Frequency Percent Valid Percent

    Cumulative

    PercentValid Yes 16 21.1 21.3 21.3

    No 59 77.6 78.7 100.0

    Total 75 98.7 100.0

    Missing System 1 1.3

    Total 76 100.0

    Source: Field Survey, 2012

    The above table shows that 77.6% of the respondents disagree to being motivated their familys

    business in starting up their own business, while 21.1% agree. 1 respondent failed to answer the

    question. This shows that majority of undergraduate entrepreneurs were not motivated by their

    familys business to start their own businesses.

    Table 4.2.5 Relating hobbies with business start-up

    Is that (hobby) the reason for starting your business?

    Frequency Percent Valid PercentCumulativePercent

    Valid Yes 14 18.4 18.4 18.4

    No 62 81.6 81.6 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The table above shows that 81.6% of the respondents do not agree that their hobbies are the

    reasons for starting-up their business, while 18.4% of the respondents agree. From this, it can be

    deduced that majority of undergraduate entrepreneurs do not place any relationship between their

    hobbies and their stating-up of a business.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    45/77

    45

    Table 4.2.6 Carrying out feasibility study and drawing up business plan.

    Did you carry out a feasibility study and draw up a business plan before starting your business?

    Frequency Percent Valid Percent

    Cumulative

    PercentValid Yes 18 23.7 23.7 23.7

    No 58 76.3 76.3 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The table above shows that 76.3% of the respondents did not carry out feasibility study or draw

    up business plan before starting their businesses, while 23.7% of the respondents did. This shows

    that majority of undergraduate entrepreneurs did not engage in feasibility study or business plan

    before starting up their businesses.

    Table 4.2.7 Appropriate method of generating funds

    In your opinion, which of the following is the appropriate method of generating fund for undergraduateentrepreneurship?

    Frequency Percent Valid PercentCumulativePercent

    Valid personal savings 43 56.6 56.6 56.6

    friends and relatives 29 38.2 38.2 94.7

    bank loan 1 1.3 1.3 96.1

    cooperative society 3 3.9 3.9 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 56.6% of respondents believe personal savings is the appropriate

    method of generating funds, 38.2% believe its friends and relatives, 3.9% believe its cooperative

    society and 1.3% believe its bank loans. It can be determined that majority of undergraduate

    entrepreneurs are of the opinion that personal savings is the appropriate method of generating

    funds.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    46/77

    46

    Table 4.2.8 Reason why method of fund generation is appropriate

    Why do you think the answer in the answer above is the most appropriate method?

    Frequency Percent Valid Percent

    Cumulative

    PercentValid easy for access 40 52.6 52.6 52.6

    the available fund isusually large 4 5.3 5.3 57.9

    low level of interest insourcing 5 6.6 6.6 64.5

    low level of risk involved 25 32.9 32.9 97.4

    high returns 2 2.6 2.6 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 52.6% of respondents believe their fund generation method is

    appropriate because it is easy for access, 32.9% believe it is appropriate because there is low

    level of risk involved, 6.6% believe it is appropriate because there is low level of interest in

    sourcing, 5.3% believe it is appropriate because the available funds are usually large and 2.6%

    believe its appropriate because there are high returns. This shows that majority of undergraduate

    entrepreneurs are of the opinion that whatever method of generating fund can be said to be

    appropriate as long as it is easy to access.

    Table 4.2.9 Method of generating funds affects business operations

    Method of generating funds affects business operations

    Frequency Percent Valid PercentCumulativePercent

    Valid Disagree 2 2.6 2.6 2.6

    Undecided 3 3.9 3.9 6.6

    Agree 50 65.8 65.8 72.4strongly agree 21 27.6 27.6 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 65.8% of respondents agree that the various methods of generating

    funds affects business operations, 27.6% of respondents strongly agree, 3.9% of respondents are

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    47/77

    47

    undecided and 2.6% of respondents disagree. This shows that majority of undergraduate

    entrepreneurs agree that the method of generating funds affects business operations.

    Table 4.2.10 Appropriate method of generating funds increases the level of sales

    The appropriate method of generating funds increases the level of sales

    Frequency Percent Valid PercentCumulativePercent

    Valid strongly disagree 1 1.3 1.3 1.3

    Disagree 2 2.6 2.6 3.9

    Undecided 7 9.2 9.2 13.2

    Agree 45 59.2 59.2 72.4

    strongly agree 21 27.6 27.6 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 59.2% of respondents agree that the appropriate method of

    generating funds increases the level of sales, 27.6% of respondents strongly agree, 9.2% of

    respondents are undecided, 2.6% of respondents disagree and 1.3% of respondents strongly

    disagree. This shows that majority of undergraduate entrepreneurs agree that the appropriate

    method of generating funds increases level of sales.

    Table 4.2.11 Appropriate method of generating funds for business growth is a mix.

    The appropriate method of generating fund for business growth and expansion is a mix of several methodsstated in the question above

    Frequency Percent Valid PercentCumulativePercent

    Valid strongly disagree 2 2.6 2.6 2.6

    Disagree 2 2.6 2.6 5.3

    Undecided 4 5.3 5.3 10.5Agree 14 18.4 18.4 28.9

    strongly agree 54 71.1 71.1 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    48/77

    48

    The above table shows that 71.1% of respondents strongly agree that the appropriate method of

    generating funds for business growth and expansion is a mix of several methods, 18.4% of

    respondents agree, 5.3% of respondents are undecided, 2.6% of respondents disagree and also

    2.6% of respondents strongly disagree. This shows that majority of undergraduate entrepreneurs

    agree that the appropriate method of generating funds for business growth and expansion is a

    mix of several methods.

    Table 4.2.12 Age at commencement of business activity

    At what age did you commence your business activity?

    Frequency Percent Valid PercentCumulativePercent

    Valid 15-18 22 28.9 29.3 29.3

    19-22 53 69.7 70.7 100.0

    Total 75 98.7 100.0

    Missing System 1 1.3

    Total 76 100.0

    Source: Field Survey, 2012

    The above table shows that 69.7% of respondents started their business within the ages of 19-22,

    28.9% of respondents were within the ages of 15-18 and 1.3% of respondents failed to answer

    the question. It can be seen that majority of undergraduate entrepreneurs started their businesses

    between the ages of 19 and 22 years.

    Table 4.2.13 Age limited funds at your disposal

    Age limited the amount of funds at your disposal when starting your business

    Frequency Percent Valid PercentCumulativePercent

    Valid strongly disagree 4 5.3 5.3 5.3

    Disagree 5 6.6 6.6 11.8

    undecided 1 1.3 1.3 13.2

    Agree 31 40.8 40.8 53.9

    strongly agree 35 46.1 46.1 100.0

    Total 76 100.0 100.0

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    49/77

    49

    Source: Field Survey, 2012

    The above table shows that 46.1% of respondents strongly agree that their ages limited the

    amount of funds at their disposal when they started their businesses, 40.8% of respondents

    agreed, 6.6% of respondents disagree, 5.3% of respondents strongly disagree and 1.3% of

    respondents are undecided. Majority of undergraduate entrepreneurs suffered from limited

    amount of funds for their business start-up because of their ages.

    Table 4.2.14 Age and inexperience

    Due to your age, you are often regarded as inexperienced

    Frequency Percent Valid PercentCumulativePercent

    Valid strongly disagree 4 5.3 5.3 5.3

    Disagree 14 18.4 18.4 23.7

    undecided 11 14.5 14.5 38.2

    Agree 27 35.5 35.5 73.7

    strongly agree 20 26.3 26.3 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 35.5% of respondents agree that they are regarded as inexperienced

    because of their ages, 26.6% of respondents strongly agree, 18.4% of respondents disagree,

    14.5% of respondents are undecided and 5.3% of respondents strongly disagree. This shows that

    majority of undergraduate entrepreneurs are regarded as inexperienced because of their ages.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    50/77

    50

    Table 4.2.15 Age has cost business expansion opportunities

    Your age has cost you business expansion opportunities

    Frequency Percent Valid Percent

    Cumulative

    PercentValid strongly disagree 5 6.6 6.6 6.6

    Disagree 9 11.8 11.8 18.4

    undecided 13 17.1 17.1 35.5

    Agree 30 39.5 39.5 75.0

    strongly agree 19 25.0 25.0 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 39.5% of respondents agree that their age has cost them business

    expansion opportunities, 25% of respondents strongly agree, 17.1% are undecided, 11.8%

    disagree and 6.6% strongly disagree. This shows that majority of undergraduate entrepreneurs

    agree to missing out on business expansion opportunities due to their ages.

    Table 4.2.16 Relation between EDS practical and businesses

    Do any of the EDS practical available, relate to business?

    Frequency Percent Valid Percent CumulativePercent

    Valid Yes 42 55.3 55.3 55.3

    No 34 44.7 44.7 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 55.3% of respondents admit that their businesses relate to the

    available EDS practicals and 44.7% of respondents businesses do not. This shows that a majority

    of undergraduate entrepreneurs are into businesses that are offered in the EDS practical program,

    giving them opportunities to benefit directly from these practicals.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    51/77

    51

    Table 4.2.17 Years of schooling before business start-up

    How many years into schooling did you start your business?

    Frequency Percent Valid Percent

    Cumulative

    PercentValid 1 11 14.5 14.5 14.5

    2 19 25.0 25.0 39.5

    3 33 43.4 43.4 82.9

    4 13 17.1 17.1 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 43.4% of respondents started their businesses in their 3rd year of

    schooling, 25% started in their 2nd year, 17.1% started in their 4th

    year and 14.5% started in their

    1styear. This shows that majority of undergraduates started their businesses at 2 to 3 years of

    schooling.

    Table 4.2.18 EDS is the reason for business start-up

    EDS is responsible for the starting of your business

    Frequency Percent Valid PercentCumulativePercent

    Valid strongly disagree 7 9.2 9.2 9.2

    Disagree 44 57.9 57.9 67.1

    undecided 15 19.7 19.7 86.8

    Agree 9 11.8 11.8 98.7

    strongly agree 1 1.3 1.3 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 57.9% of respondents disagree that EDS is responsible for the start-

    up of their businesses, 19.7% are undecided, 11.8% agree, 9.2% strongly disagree and 1.3%

    strongly agree. This shows that a minor amount of undergraduate entrepreneurs started their

    businesses from the influence of the EDS program but a majority of them did not start-up their

    businesses because of the EDS program.

  • 8/13/2019 Evaluating Business Performance of Young Entrepreneurs

    52/77

    52

    Table 4.2.19 EDS helps in the increase of business performance

    EDS has helped in the increase of business performance

    Frequency Percent Valid Percent

    Cumulative

    PercentValid strongly disagree 4 5.3 5.3 5.3

    Disagree 1 1.3 1.3 6.6

    undecided 7 9.2 9.2 15.8

    Agree 56 73.7 73.7 89.5

    strongly agree 8 10.5 10.5 100.0

    Total 76 100.0 100.0

    Source: Field Survey, 2012

    The above table shows that 73.7% of respondents agree that EDS increases business

    performance, 10.5% strongly agree, 9.2% are undecided, 5.3% strongly dis