[Abstract]
Entrepreneurial activities have a critically important influence on economic development and entrepreneurs contribute greatly to the revitalization of a community¡¯s economy, as well as economic development, through job creation (Macaulay, 2003). Moreover, as job creation comes into the spotlight as one of the core national challenges in the real world, many researchers suggest that studies on entrepreneurs are urgently required for a reinvigoration of entrepreneurial activities.
Unfortunately, however, entrepreneurship researches using intention approaches based on the Theory of Planned Behavior developed by Ajzen (1991) have been predominant among studies on entrepreneurs in South Korea. These researches, which are only focused on exploring any determinants of entrepreneurial intentions just on the assumption of entrepreneurial activities before entrepreneurial behaviors, have some limitations in explaining the revitalization of entrepreneurial firms. Some research shows a significant difference between entrepreneurial intentions and actual behaviors, and also the attitude towards entrepreneurial occupations. This is supported by the report of Brenner et al. (1991) where 55% of respondents who were the students of graduating class at the college of business administration preferred managing their own business among the given options, but only 5% of the entire students actually ed and ticked off managing their own business as the most probable employment position.
Accordingly, approaches to field-oriented, empirical behavior theories intended to induce participating voluntarily in entrepreneurial behaviors, in addition to entrepreneurial intentions, are necessary for the revitalization of entrepreneurial firms. Combining conventional entrepreneurship researches with the Expectancy theory (Vroom, 1964), representative of the theories of cognitive behavior, may be an alternative for that. In this context, an advanced study (Edelman et al., 2010) combining Expectancy theory with entrepreneurial startups (Edelman et al., 2010) was recently published, and the combined approach as an alternative attracted public attention.
Aimed at examining closely the processes of entrepreneurial motivation, this study is exploratory research based upon the results of the studies performed by Gatewood (1993) and Edelman et al. (2010) who attempted to apply the viewpoint of Vroom's (1964) Expectancy model of ¡®effort ¡æ performance ¡æ outcome¡¯ on entrepreneurship research. Especially, focused on the process of ¡®performance ¡æ outcome' as one of the Expectancy theory constructs, in-depth empirical analyses of the instrumentality and valence of Expectancy theory were made in this study using the expanded Expectancy model in which growth intention is added to the parameters in the light of reflecting the argument of Gatewood (1993) that the addition of specific endogenous/exogenous variables leads to a reinforced construction of the Expectancy theory.
This study aims to determine whether Expectancy theory is an appropriate model for field-oriented behavioral approaches to guiding emerging venture and small/medium businesses to revitalization and sustainable growth, and to make suggestions for what roles are given to entrepreneur, managers, policy makers and the like by motivation factors themselves and their interactions and the resulting products. For this purpose, the following hypotheses were set up :
Entrepreneurial activities have a direct effect on entrepreneurial outcome satisfaction. (Hypothesis 1); Entrepreneurial activities have an effect on growth intentions. (Hypothesis 2); Growth intentions have an effect on entrepreneurial outcome satisfaction. (Hypothesis 3); and, Growth intentions act as a mediator between entrepreneurial activities and entrepreneurial outcome satisfaction (Hypothesis 4).
To test the hypotheses listed above, the questionnaires were collected from 237 managers at venture and small/medium businesses in South Korea from Seoul and the surrounding metropolitan area, were used in this study.
In this study, all the variables involved in research analyses were operationally defined on the basis of preceding studies. First, entrepreneurial activity is defined as a sort of instrumental means required to achieve a personal goal in life which is the desired outcome of an entrepreneurial activity completed by an entrepreneur through specific behaviors, and refers to the entrepreneur's trust in subjective probability (Gatewood, 2004). Second, based upon the study by Park and Gu (2007), the definition of growth intention was subdivided into subjective measurements : resource accumulation intention, technical improvement intention and market expansion intention, instead of quantitative and objective indexes. Third, it was assumed that for entrepreneurial outcome satisfaction, the outcome desired by an entrepreneur would motivate him/her to initiate his/her own venture or small/medium business. In this connection, the respective six elements identified as either reasons or motivations for business initiation by Carter et al. (2003) that is, self-realization, financial success, independence, role, innovation, and recognition were employed as subfactors of entrepreneurial outcome satisfaction.
To determine the reliability (Cronbach¡¯s ¥á) and validity of the assessment instruments employed in this study, SPSS 17 and AMOS 7.0 were used for statistical analyses. Chronbach¡¯s ¥á values of all the variables exceeded 0.8, suggesting that they are reliable. In addition to that, in order to validate the measurement instruments for entire latent variables, confirmatory factor analyses were conducted to determine their convergent validity and discriminant validity. These analyses show that the research model fits are equivalent to ¥ö©÷ =160.510, df = 108, P = 0.001, RMR = 0.026, GFI = 0.931, AGFI = 0.892, NFI = 0.948, TLI = 0.975, CFI = 0.982, RMSEA = 0.045, and CMIN/df = 1.486. Besides, all of the factor loadings (0.50), C.R. (lC.R.l > 1.96) and P values (P < 0.01), average variance extracted (AVE, ¡Ã 0.5), and latent variable reliability (¡Ã 0.7) of respective variables exceeded their criteria, indicating that they all have convergent validity (Bagozzi and Yi, 1988). Next, the results of comparing the squares of inter-variable correlations to AVE values indicate that the said squares are lower than AVE values, suggesting that they have discriminant validity (Lee and Lim, 2011). Thus, it was demonstrated that the measurement instruments all have adequate reliability and validity, which means that it is feasible to make a structural equation modeling analysis for hypothesis testing.
Structural equation modeling analyses for hypothesis testing show that the fit indexes are ¥ö©÷= 313.360, df = 129, P = 0.000, RMR = 0.058, GFI = 0.872, AGFI = 0.830, NFI = 0.899, TLI = 0.926, CFI = 0.938, RMSEA = 0.078, and CMIN/DF = 2.429. The results of hypothesis testing are summarized as follows : first, entrepreneurial activities did not have a significant positive (+) direct effect on entrepreneurial outcome satisfaction (H1); second, entrepreneurial activities had a significant positive (+) effect on growth intentions (H2); third, growth intentions also had a significant positive (+) effect on entrepreneurial outcome satisfaction (H3); and finally, growth intentions acted as a complete mediator between entrepreneurial activities and entrepreneurial outcome satisfaction without any direct effects (H4).
Lastly, the results of this study suggest the followings in the academic and practical aspects. Regarding academic suggestions, first, while there is almost no attempt to apply Expectancy theory to entrepreneurship research in the country, this study empirically demonstrates that the theory is an appropriate frame for researches on entrepreneurial behaviors. Second, growth intentions have the significance of an important variable which strengthens the frame of Expectancy theory by playing a role as a mediator between entrepreneurial activities and entrepreneurial outcome satisfaction, which implies that post-initiation growth can contribute greatly to achieving several important desired outcomes in life among Korean entrepreneurs. Fourth, the entrepreneurial outcome satisfaction characterized by giving priority to high-level desires primarily featuring advanced economic structures was observed. Specifically, in terms of the standardized coefficients that growth intentions affect entrepreneurial outcome satisfaction, self-realization (0.890) ranked first, followed by innovation (0.889), financial success (0.778), role (0.720), recognition (0.601), and independence (0.582), which supports the above-mentioned finding.
Meanwhile, practical suggestions are summarized as follows. First, personal factors (e.g., abilities, effort, experience, etc.) and contextual factors (e.g., market, finance, culture, etc.) have significant influence upon expectancy judgment, valence, and instrumentality (Nadler and Lawler, 1983; Klein, 1989). Therefore, with reference to the interactions (instrumentality) and their products (valence) in the relationship among entrepreneurial activities, growth intentions and entrepreneurial outcome satisfaction as shown in this study, entrepreneurs and managers can strive to acquire their own skills, techniques, ability and experiences, while policy makers can indirectly support entrepreneurs and have a positive impact on entrepreneurial activities in the manner of making efforts to improve entrepreneurs' competency and problem-solving strategies. Furthermore, it also suggests that creating a positive social atmosphere about entrepreneurial activities and business administration activities plus giving institutional (supportive organizations') support for business initiation will lead to the higher possibility to achieve both successful business initiation and growth. The above-mentioned results are consistent with, and supported by, the previous suggestions that venture supporting agencies improve the personal competency and problem-solving strategies of individual entrepreneurs who initiate their own venture businesses (Mario and Schatz, 1980), and the resulting venture businesses initiated seem far more successful (Krentzman and Samaras, 1960).
Second, adding growth intentions resulted in laying more emphasis on the statistical significance of growth motivation instead of statistical valence of entrepreneurial motivation, and thus, growth motivation was stronger than entrepreneurial motivation in the terms of motivational force. This means that more proactive governmental and institutional (supportive organizations') politic considerations are required to induce business growth, beyond the current supporting policies for business initiation.
At the same time, this study has some limitations and requires further studies as listed below. First, the subject population surveyed in this study was limited to venture and small/medium business entrepreneurs in the South Korean metropolitan areas of Seoul, Incheon and Gyeonggi-do, and it is somewhat unreasonable to generalize the results because the recall rating scale based sample consisting of existing entrepreneurs was used. Second, due to some difference in conception between Expectancy theory attaching importance to the process of motivation and the Theory of Planned Behavior putting stress on behavioral intentions, the sequence of the hypotheses related to entrepreneurial activities and growth intentions as presented in this study may cause different interpretations. Finally, the reliability and/or validity of single-parameter measurements for entrepreneurial activities may be lower than that of multiple-parameter measurements.
In the spite of the limitations mentioned above, however, this study is considered greatly meaningful as the first paper published in Korea which attempted to approach to entrepreneurial behaviors through the reinforced Expectancy theory model with added growth intentions.