Malaysia Entrepreneurship Development

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In Malaysia, the entrepreneurship development is growing steadily. The research of Howell and Palmer (1995) shows the equity ratio for Bumiputeras in 1971 had changed from 4 per cent to 18 per cent, and the equity ratio for non Bumiputeras, is from 34 percent in 1971 changed to 55 per cent. The traditional entrepreneurs typically start their business in small capital, low value added, and it takes time to set up the business. In the modern day today, the technology was developed in advance; the internet and information communication technologies (ICTs) are very common to the public. The growing in technology makes the traditional entrepreneurs join into e-Entrepreneurship. This research is a study on the preferences of the undergraduates toward entrepreneurship and e-entrepreneurship. This study can let us to have a better understanding about the choices of undergraduate in choosing to involve in entrepreneurship or e-entrepreneurship. Undergraduate students will use traditionally entrepreneurship way or the modern e-entrepreneurship way to promote their products or services. Subsequently, this research objective is to investigate the determinant of the undergraduates toward entrepreneurship and e-entrepreneurship. The independent variables of the determinants are education, prior knowledge, experience, government regulations and incentives, social network, availability of resources and opportunity identification. Questionnaire will be distributed randomly to two hundred and fifty respondents and the data will be tested.

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This research study is the final project of my Bachelor of Degree in Multimedia University, Faculty of Business and Law. I spend much time and effort in completing this research, and it will be useful for the references of government and non-government institution as their references to view into the undergraduate entrepreneurial intention toward entrepreneurship and e-entrepreneurship. The topic of this research is the preferences of undergraduates toward entrepreneurship and e-entrepreneurship. In this research, the determinants of undergraduates to involve in entrepreneurship and e-entrepreneurship are also determined and investigated. The research consists of five chapters. The first chapter is for the introduction to the relevant topic and the objectives of the study. Chapter two is the literature review for the determinants of undergraduates on involvement in entrepreneurship and e-entrepreneurship. Follow by chapter three is the research methodology which included the theoretical framework and the sampling method. While in the chapter four is the data analysis for the results and discussion. The last chapter of this research is the conclusion and the summary for this whole study as well as the recommendation and the limitation to the research for further studies. I would like to express my sincere gratitude to my leading supervisor, Madam Rahayu binti Tasnim. Without her guidance and advises, I believe it is hard to complete this research study. I would also like to thank to my family and my friends who are supporting me all the ways. Their endless cares and loves do support me all the way in completing this research.

Chapter 1



In this chapter, it is an introduction part of the research. The introduction starts with the explanation of entrepreneurship and e-entrepreneurship among the undergraduates. Next, the problem statement and the research objectives will be discussed and the last part in this chapter is the significant of the study, scope of the study and the organization of the study.

Entrepreneurship among undergraduates

The individual or people who create and grow the business can define as entrepreneurs. The “entrepreneur” term is derived in French economics since 17th and 18th, and it has much significant meaning and rich history (Gregory, 2001). The word “entrepreneur” comes from the French word which means “to undertake”, and in the business perspective, “entrepreneur” means to start a business. According to Hebert and Link (1989), they say entrepreneur is someone who takes responsibility in making judgmental decision on the use of resources to create a venture. The process of the entrepreneurs created and developed to make the profit can define as entrepreneurship (Dabson, Brian and Marcoux, 2003).

Different researchers have the different point of view toward the definition of “entrepreneurship”. Ucbasaran (2001) said that the term of “entrepreneurship” has no general accepted definition. OECD (1998); Praag (1999); Lumpkin and Dess (1996); Bull and Wilard (1993) support the argument of the term of “entrepreneurship” that does not have the general accepted definition; they argued the definition of entrepreneurship is largely depending on the research focus on which area.

In the Austrian or Schumpeterian economics, they define entrepreneurship as to gain the expectation profit by utilize the resources (Schumpeter 1934, Hayek 1945, Kirzner 1973, Casson 1982, Shane 2003). Entrepreneur can use the resources like funding advisory, low interest loan or government support to run their business. Law and MacMillan (1998) define the entrepreneurship as “the creation of new enterprise” which means the entrepreneurial intention is the source of a person to start up their business. Entrepreneurship is also defined as the process of an individual who is innovative and able to take the risk to create value (Sexton & Kasarda, 1992).

In Malaysia, the entrepreneurship development is growing steadily. Malaysia involves in entrepreneurship since the fifteenth century when the kingdom of Malacca was the trade centre due to its strategic geographer place. Many traders from China, India, Portugal, and others are coming to Malacca and trade with other traders. There are many policies in Malaysia are supporting to the entrepreneurs, including funding, physical infrastructure and business advisory services. The government is playing an important role in entrepreneurship development. There are many institutions are helping to develop entrepreneurship, for instances, Majlis Amanah Rakyat (MARA), is focusing on entrepreneurship training, Ministry of Entrepreneur is coordinating all the matters regarding to the entrepreneurship, Bank Negara plays a role in financing, Small and Medium Industries Development Corporation (SMIDEC) responsible in coordinating the development of SMIs and others institutions.

In the years of 90s, Malaysia’s government turns the economic strategy to industrialization due to the shift in the government policies. The industrialization also names as privatization and Malaysia Incorporated, which cultivate the development in entrepreneurship. The research of Howell and Palmer (1995) shows the equity ratio for Bumiputeras in 1971 had changed from 4 per cent to 18 per cent, and the equity ratio for non Bumiputeras, is from 34 percent in 1971 changed to 55 per cent. The data of the equity ratio of entrepreneurs shows the number of entrepreneurship in Malaysia has been increasing dramatically due to the transition to high-technology and the New Development Policy (NDP) promoted by the government which was targeted to achieve fully development by the year 2020. The NDP was the beginning of the knowledge-intensive and high technologies’ era into the entrepreneurial activities (Syahida & Dr. Amran, 2005).

In the previous times, the researchers view entrepreneurship is one of the important aspects toward the economic society. The purpose of entrepreneurship is to encourage people to be successful after they had started up their own business (Praag et al., 2000). There are many factors that can determine the success of an entrepreneur.

In the table above, we will look at the summarized of the determinants of successful entrepreneurship, which arise from the literature, taken from van Praag (1999). The table shows the determinants that stem from the classical views and also propose in the literature.

In the recent times, entrepreneurial education becomes more popular and acceptable by the undergraduates in the tertiary education. Entrepreneurship education has to become an essential component to cultivate the potential entrepreneurs in the private and public higher learning institutions. Entrepreneurship education is the most effective way to promote the transition of graduates toward the self-employment (Ismail et al., 2009). Hart and Harrison (1992) have done an investigation to the tendency of undergraduates in involvement to run their business in Northern Ireland, the research showed 47% of students were expressed the intention to run their own business. The result of the high percentage of students would like to run their business is because those undergraduates are considering running own business or self-employment as a career (Karr, 1985).

Krugeger et al. (2000) said the entrepreneurial intent is very important because it is the primary predictor of future entrepreneurial behavior, so it is an essential issue in entrepreneurship research to investigate the factors to determine the entrepreneurial intent. Fishbein and Ajzen (1975) views planned behavior as the key for pre-start up process and the behavioral intent is the immediate determinant of planned behavior. Although many researchers say the entrepreneurial intention is the important issue to entrepreneurship, Wang and Wong (2004) said there is only a limited number on the studies about the influence factors for students’ entrepreneurial intention.


The traditional entrepreneurs typically start their business in small capital, low value added, and it takes time to set up the business. The traditional entrepreneurs need to raise capital, find a location, deal with suppliers, man power problems and others to complete their business set up. In the modern day today, the technology was developed in advance; the internet and information communication technologies (ICTs) are very common to the public. Technology helps an entrepreneur to save time and capital during pre-start up process in e-business, e-Entrepreneur do not need to find a location for their store, not need to hire many employees and others. The growing in technology makes the traditional entrepreneurs join into e-Entrepreneurship (Cheng & Chang, 2004).

Today, as we know that the e-entrepreneurship is more and more important and useful; the evidence of e-entrepreneurship development can be seen from the successful entrepreneurs at western countries like United States. The successful examples of e-entrepreneurship in United States are,,,, YouTube, Face book and etc. is one of the successful stories about young adults who have the information communication and technology (ICT) knowledge gets to involve in e-entrepreneurship (Eduardo, 2006).

The internet is a powerful tool which can help the firm to solve the limitation on financial resources. Doing business online is much easier and cost saving if compare to traditional brick and mortal kind of business. Online business does not need so much man power to run the business, unlike the traditional business need to employ people like a cashier, promoter, storekeeper, cleaner, and so on. During the recent years, the electronic information technologies have increasingly supported the internal and external information and communication process in every industry sector. The internet is one of the advantages of technologies, helping the business development become more efficiency and effectiveness (Kollmann, 2006).

According to Matlay (2004), he discussed the term ‘e-entrepreneurship’ is the new companies establish their business in the Net Economy. The Net Economy has a Direct influence in innovative business development which is based on the electronic information and communication network (e-ventures). The spread of information via the electronic data or the network is one of the factors to develop the growth of economic. If we compare 15th century and 20th century, the speed and usage of information via the network are relatively high in the later century. The information society nowadays is characterized by the rigorous use of the information technologies and the changing from industrial to a knowledge society (Evans and Wurster, 1997). Kollmann (2006) pointed out that, the information industry sector is shifting from the traditional economic sectors like production sector; service sector; and agriculture sector. The expansion of electronic data networks and the growth of IT formed a new business dimension which calls as network economy or Net Economy.

The figure 1 shows the information technologies can let the people to obtain information more accessibility. Entrepreneurs use the advantages of the information technologies to involve in e-commerce or commercial purposes. It is a competitive advantage to an entrepreneur if he/she can obtain more knowledge and information in technological development. Successful e-entrepreneurs shall posse better information to the market and their customers (Weiber and Kollmann, 1998).

Information technologies (IT) and networks are now becoming the important aspect upon every industry and service sectors (Scott, 1995). Knowledge is one of the most strategic resources in the new economy, affects the traditional business to review their traditional practices. Knowledge in IT takes advantage in dealing with new partnerships, innovation, social networks with customers, suppliers and help to detect the opportunities of new business in the future time (Malone and Laubacher, 1998). Bret and Champeaux (2000) said the cyber-entrepreneur mainly based on exploiting the networks by using the Internet technologies, intranets, and also the extranets.

In the previous study done by the researchers, we can identify the characteristics of technology based entrepreneurs or e-entrepreneurs. Personal characteristics such as age and experience can influence entrepreneurs to make a decision on creating and developing their businesses (Kisfalvi, 2003). Blais and Toulouse (1992) had done a research on the average age of e-entrepreneurs. They found out their age were rather young when they launch their business, which were around 30 years old. The young e-entrepreneurs are familiar with their skills and acquired extensive experience with the technology after they have graduated from a university, and they tend to launch their own business.

Roure and Keeley (1990) discussed the entrepreneur’s previous experience can become the advantages for them to success in new technology-based ventures. Compare with the traditional entrepreneurs, the e-entrepreneurs in internet base are younger and educated, especially in technical domains. The motivations of the entrepreneurs are potential for higher income, inherent desire to innovate, flexible working time and others (Colombo and Delmastro, 2001).

Problem Statement

In the past time, Malaysian graduates seldom considered taking entrepreneurship as their career choice, it is because entrepreneurship is still not so popular and the graduates do not have much interest on it. However, according to the Salleh (2002) research, he observed that in the recent time, the number of graduates who are associated with entrepreneurship has been increased, but the figure is still remaining low, which is lower than 0.4 %.

The Malaysian government is encouraging graduates to involve in either entrepreneurship or e-entrepreneurship under the “knowledge Economy Master Plan” in the year 2000. There are advantages for the graduates to take part in self-employment because entrepreneurship may promote creativity, innovation and create new job opportunities. There are also many successful examples of the involvement of young adults in entrepreneurship and e-entrepreneurship. One of the successful stories in e-entrepreneurship is the founder of Yahoo!, Jerry Yang and his partner creates Yahoo! after they were graduated from Stanford University. Pua-Khein-Seng, a Malaysian entrepreneur who is the founder of the USB flash memory pen drive also starts up his business when he was young.

Some undergraduates have their own ideas and want to start up their business after they finished their studies. They want to promote their products or services to the customers, but they can choose to promote in conventionally or in online business. Which type of business is easier and beneficial to the undergraduates to choose for set up their own business? What are their preferences toward entrepreneurship and e-entrepreneurship?

The government institutions are encouraging the undergraduate to be self-employed. They want to know what are the factors or determinants of undergraduates to join entrepreneurship and e-entrepreneurship. What are the determinants of the undergraduate to involve in entrepreneurship and e-entrepreneurship? In the research later, we will find out which determinants affect the undergraduates to involve in entrepreneurship and e-entrepreneurship.

Research Objectives

The General objective of this research is to identify the preferences among the undergraduates toward Entrepreneurship and e-Entrepreneurship. Next, the research will determine the correlation of the independent variables and dependent variables which are the determinants to the involvement of the undergraduates to entrepreneurship and e-entrepreneurship.

  • To identify the preferences of the undergraduates toward entrepreneurship and e-entrepreneurship;
  • To determine the determinants of undergraduates to the involvement in entrepreneurship and e-entrepreneurship.

Significant of study

Entrepreneurship and e-entrepreneurship play an important role in contributing to the nation economic growth and crate job opportunities to the country. E-entrepreneurship is also becoming more popular and acceptable by the people, especially young adult in Malaysia.

The Malaysian government has taken a great effort in developing the entrepreneurship. Malaysian government provides tax incentives, business advisory, funding resources, loan, and others to the entrepreneurs in every sector, especially in SMEs and Multimedia sectors. The purpose of the government to give incentives is to foster younger entrepreneurs.

The importance of this study is to explore the preferences of the undergraduates toward entrepreneurship and e-entrepreneurship. Many researches are focusing in either entrepreneurship or e-entrepreneurship in the separate way but in this research, we will focus to the preferences of the undergraduate towards on both entrepreneurship and e-entrepreneurship together.

Next, this research will study about the determinants’ impact on the involvement of undergraduates in entrepreneurship and e-entrepreneurship. The determinants will affect each undergraduate to participate in entrepreneurship and e-entrepreneurship. We want to identify the importance of the determinants because it can be the relatively important guidelines or references to the government. The government can develop the suitable strategies and approaches after they identify the determinant for the undergraduates to involve in the sectors..

Scope of study

This study is conducted in Peninsular Malaysia. The respondent in this research is restricted to the undergraduate students in Multimedia University, Malacca campus. Due to the time constraints, it is believed that the sample size of two hundred and fifty students is enough, the respondents are regardless to the age, gender, faculty, and major.

The questionnaires will be distributed randomly to the respondents to obtain the primary data. The secondary data will be derived from the journals which obtained from the online database such as Emerald, Google scholar, Springer link and others online sources. The questionnaires will be designed and tested before distribute to the respondents. The questionnaires will be collected from the respondent and able to obtain the information, alternatives, and opinions, which are related to the objectives in this study.

Organization of study

The organization of this study comprises five chapters. The first chapter is the introduction part which will explain the definition of the topic, entrepreneurship among the undergraduates and the e-entrepreneurship. Next, the problem statements, research objectives and the significant of the study will be discussed to give a brief explanation to the topic of this study. In the last part of this chapter will be included the scope of study and the organization of study.

Chapter two starts with the literature review on the young adult’s attitude to entrepreneurship and entrepreneurship education. Subsequently, the entrepreneurship in a modern network economy will also be reviewed. Then, follow by the literature review of the related variables to support this study. In this chapter, it includes all the related empirical studies, articles, journals, citation to strengthen on the topic.

In chapter three, the research methodology is discussed. The research framework is designed to show the relationship between independent and dependent variables. Subsequently, the Hypothesis development, sampling plan, data collection method, questionnaires development, and data analysis methods are also discussed in this chapter.

Chapter four is explaining the results of the data analysis by using the related chart, graph, bar and data. At the end of this chapter, this chapter will come out the discussion and interpretation of the data analysis regarding to the topic discussed.

Chapter five is the conclusion and recommendation to this study. This chapter will conclude to the topic of this study and the recommendation to the findings. The limitations of this research will also discuss in this chapter.

Chapter Two



In this literature review chapter, we will review to the previously done researches and journals. Young adult’s attitude to entrepreneurship and entrepreneurship education and the entrepreneurship in the modern network economy will be reviewed. Subsequently, is the literature review of all the variables, which are, knowledge and prior experience, government regulations and incentives, social network, availability of resources and the opportunity identification.

Young adults’ attitude to entrepreneurship and entrepreneurship education.

The changing nature of work suggests that young people may face the prospect of a “portfolio” career including periods of paid employment, non work and self-employment, of which the latter implies greater scope of entrepreneurial activity (Roger and Martyn, 2000). Nowadays, there are plenty of young adults or graduates would like to start up their own business. They are self-employment and do not want to work under other people

In particular, the entrepreneur is an innovator who introduces new products and technologies. The notion of entrepreneurship is associated with creativity and imagination, self-determination, and the abilities to make judgmental decisions and co-ordinate resources (Roger and Martyn, 2000). Young adults have their own creativity and innovation to promote their own products. They would like to earn money by start up a business to promote their ideas.

Starting and operating a new business involves considerable risk and effort to overcome obstacles. Education, (especially for tertiary education) and entrepreneurship are highly correlated (Frederick, 2007). Reynolds et al., (2001) and GEM reports showed the educational achievement accounted for 40 percent of the cross-national variation in the total rate of entrepreneurial activity. Entrepreneurship education has been driven especially by academics, business leaders, entrepreneurs themselves, and even the government officials are seeking the advantage in the globalised world (Achleitner, 2006).

The entrepreneurship education is very common and popular in the western countries such as United Kingdom and United States. Various UK governments have championed the concept of an enterprise culture (Roger and Martyn, 2000). The Kauffman Foundation research shows that 90 percent of master and doctoral degree-granting institutions in the United States now offer entrepreneurship subjects, and in most cases, many courses and degree options (Cone, 2007).

There is also a research of entrepreneurship education done by Assumption University (Thailand), NCGE Southeast Asian Partner (2006), a study for the entrepreneurship education in South-East Asia’s higher education institutions (HEIs): there are Malaysia, Singapore, Thailand and Vietnam. The following is one of the charts of the study:

The chart shows that Higher Education Institutions (HEI) in Malaysia still in the preliminary stage of the entrepreneurship development. According to Myrah & Currie (2006), the entrepreneurship curriculum is still underdeveloped and lacks standards. University of Arizona (2004) shows that entrepreneurship education enhances a graduate ability to create wealth.

A graduate who has entrepreneurship education has a greater chance to be a success entrepreneur compare to those who do not. Fayolle et al. (2006) showed that entrepreneurship education can have positive effects depending on the students’ background and the initial perspective. For example, Menzies & Paradi (2003) found that among the 15-years group of engineering graduates, taking one or more courses in entrepreneurship was a strong predictor, and they will be reached to top management status in the later time. According to Lee & Wong (2003), there is also a positive relationship exists between one’s attitude towards entrepreneurial education and business start-up with the Anecdotal evidence, alumni and media reports to validate the relationship.

There is research of ‘An Eclectic Theory of Entrepreneurship’ (Ingrid et al., 2001) showed that the decision of an individual to become a self-employed focus on the personal factors, for instances, the psychological traits, formal education and other skills, the financial assets, family background and previous working experience (Praag et al., 1989). There are also findings for the determinants of the entrepreneurship such as profit opportunities and opportunities for entry and exit (Bosma et al., 1996). Macro perspectives are focused on the economic factors, like technological, economic, and cultural variables and also the government regulations (OECD, 1998 & Noorderhave, et al., 2001).

Entrepreneurship in a modern network economy

According to Nijkamp and Poot (2008), the conventional comparative advantage perspective on regions is not sufficient anymore to explain the relative economic performance of regions in a global economy. The participation of ICT networks, education systems, and business culture are also important factors of comparative advantage on economic performance.

There is a new phenomenon in the modern economies where the emergence of interwoven global networks (Castells, 1996) allows the global interaction and communications. The global interaction and communication are a process through which market areas may obtain world-wide coverage, for instance, through the Internet.

Entrepreneurship vs. e-Entrepreneurship, entrepreneurship consist on the process of creating something new and assuming the risks and rewards, in contrast, e-Entrepreneurship will consist on creating owner business activity on the internet in some characterized in order to sell or able a service something only online, such as magazine subscription, cell phones, software, T-shirts, bags, shoes, and etc. (Eduardo, 2006).

Educations, knowledge and prior experience

In the recent decade, there is a growth in the educational programmes focusing in entrepreneurship. The growth of entrepreneurship education has increased the amount of entrepreneurs. Many entrepreneurship programs are helping students learn about how to start a business and how to run a business (Deborah et al., 2002). At the end of 20th century, entrepreneurship programs continued to growth and gain legitimacy within the world of academics, undergraduate students have had been increasing opportunities to study topics related to the entrepreneurial career track (Deborah, John & Hovis, 2002).

There is an investigation done to investigate the impact of education on the level of entrepreneurship of a country. The investigation is done in the different level of education in the country, for example, primary school, secondary school and tertiary school. Reynolds, Hay and Camp (1999) concluded that the larger a country invested in education programs in the tertiary education, the higher is the rate of the new business or firms to be formed..

Undergraduate students interested in entrepreneurship are regardless of their declared field of study. Students who study engineering and IT are also having the interested to start their own business, no matter they plan to practice a profession, become a leader in a corporation, return to a family business or work in government, students see the value in learning what is taught in entrepreneurship classes (Deborah, John & Hovis, 2002). The entrepreneurship education they learn while in their tertiary education will enable them to be flexible and agile in their future workplace.

Reynolds et al., (1999) said that there are several reasons why the education is important to the entrepreneurship. The first reason is the education provides individual with a sense of autonomy, independence and self’ confidence, the second is education makes self-awareness, the people are aware of their career choices and the third is education broadens the horizons of individuals. In summary, the education provides knowledge to the youngster to develop the entrepreneurial opportunities.

Larry Penley, Dean of the college Business at Arizona State University, noted the move toward entrepreneurship across the curriculum in his address to the USASB-SBIDA conference in spring 2000. He notified that University’s entrepreneurship programs will help to build a stronger small business sector compare to those small business owners who have little or no formal business education.

A rapid growth of the new companies and the highly publicized “” phenomenon marked an important change in the economic environment in the beginning in mid 90’s. The development of the technology such as internet has accelerated the internet-based business. The characters of internet-based business are quick start-up and low overhead; make self-employment appear more accessible to increasing the numbers of American, including those who were not specifically trained in business (Deborah, John & Hovis, 2002).

Undergraduates are become more and more interested in learning about aspects of business start-up due to the successful example in the real business environment. For example, the two founders of Yahoo!, Jerry Yang 26 years old and his friend, David Filo, 28 years were graduated from Stanford University of United State. They build or create Yahoo from their hobby of responding to the persistent challenge to breakthrough in simplifying the use of internet. Yahoo began as a student hobby and evolved into a global brand that has changed the way people communicate with each other, find and access information and purchase things. Today the Yahoo! Inc. is a leading global internet communication, commerce and Media Company, which also provides online business and enterprise services to the users (Yahoo, 2009).

Besides education is related to the intention to involve in entrepreneurship and E-entrepreneurship, the knowledge is also playing an important role in cultivating the Entrepreneurship and E-entrepreneurship. Braunerhjelm & Lundblad (2007) pointed that knowledge is an externally factors for entrepreneurship. In the past times, the economic variables of knowledge, entrepreneurship, and economic development had treated as different and separated entities. Until the recent 10 years that literature had come into view that the economic concepts of knowledge, entrepreneurship and economic development were integrated into a coherent framework.

In a 1998 article, Malone and Laubacher pointed out that knowledge is the most important strategic resources in a new economy. Knowledge in e-entrepreneurship is increasing the number of firms to review their traditional practices and the powerful information tools can make the firms to handle commercial transaction on a much broader scale, deal with new customers and suppliers through network and help to discover for new business opportunities and innovations.

According to Shane (2003) findings, the article said there are many evidence showing on the effects of various life experience on the decision to develop entrepreneurial opportunity. She finds that there are positive links between unemployment, marital status, education, income, social networks, and career experience. So she comes out a conclusion by showing the evidence of a positive relationship between prior experiences (especially in career experience and education) and venture success (growth, profitability and survival).

By viewing the journals of Cheng, Chan & Amir (2009), they pointed out that learning is needed in entrepreneurship. The learning includes integration of experience, skills and knowledge to be prepared for new venture. They emphasize skills and knowledge is needed by students to recognised business opportunities and understands the needs of the market. Other than that, students with skills and knowledge can easily to create ideas, develop a business plan, evaluate the environment and run a business.

Government Regulations and Incentives

Entrepreneurs are concerned about the government regulations and incentives toward the Entrepreneurship and e-Entrepreneurship sector. They will look into the regulations and the incentives before they choose to start up the business. Most governments encourage the growth in creating own business or local Small Medium Enterprise (SME) because it can help to create more jobs in the sector and also the growth in the economic (UNDP e-note 4, 2005)

According to Storey (1994, 1999) and EZ (1999), the government can influence entrepreneurship in direct and indirect ways. From the regulatory perspective, the government can directly influence entrepreneurship by develop supporting policies, and indirectly influence entrepreneurship by establish the restriction and legislation. The establishment of restriction and legislation can influence the level of involving to entrepreneurship (De Koning and Snijders, 1992).

In the journal of Ingrid et al. (2001), they discussed that government intervention is one of the factors to impact the entrepreneurial activity. The general role of the government can be implied into the entrepreneurship. The intervention of the government is important to small business sectors for economic growth and job creation. The newly start up firms or small businesses are weak, and they need the government support and protection to grow.

In a study in the United Kingdom Storey (1994) of the Small Medium Enterprise (SME), the government intervention in SME included the interest rate and taxation; deregulation and simplification; financial assistance and indirect assistance. Government policies can be directed into entrepreneurship either in the input side such as labor, finance and information, or into the output side such as opportunities for sales.

As discussed by the Mohammed and Syarisa (2003), Malaysia government has taken various steps in promoting entrepreneurship to the youngster, especially undergraduate. Malaysian government has set up the Ministry of Entrepreneurship since 1995; it serves as coordinating body of all matters pertaining to the entrepreneurship. The development of the entrepreneurship by the government includes in providing a conductive economic environment, funding schemes, tax incentives, and also the business advisory centers.

The Malaysian government has established all kinds of incentives to the company. There are incentives for SME, manufacturing sector, ICT firms, agriculture sector, tourism sector and others. There is also other financial assistance such as low interest loans for young entrepreneurs, guarantee scheme, tax incentives, advisory services and many other incentives (SMEINFO, 2009). One example of a tax incentive for entrepreneurship is there are 100% capital allowances given to the SME sector. The SME can fully deduct from the tax in capital allowances if they are buying any capital for business purpose (Inland Revenue Board of Malaysia, IRBM).

In the year 2000, Malaysian Government has announced the ‘knowledge Economy Master Plan’ to transform the traditional economic to the knowledge and information driven economic. The purpose of the K-Economy Plan is to encourage people to join in ICT sector. As the global economy becomes increasingly reliant on information communication technologies (ICTs) to receive, process, and send out information, SMEs in developing countries should not be left behind (UNDP, 2005). ICT is important for SME to growth in the knowledge economy by facilitating connectivity, ICT also helping to create and deliver products and services globally and providing access to new markets. E-Entrepreneurship is a new source of competitive advantage to boost income growth (UNDP, 2005).

APDIP e-note (2005) highlight the 3 benefits of ICT can do in SME, the first benefit is to increase productivity in the production process, the second benefit is to increase efficiency of internal business operations and the third is connecting SMEs more easily and cheaply to external contacts, whether locally or globally. The APDIP e-note (2005) also shows some examples of Asian government launched initiatives to encourage and enable SMEs to ICTs. Japan’s government provided tax rebates for SME using ICTs; Hong Kong provided training in at different sectors; and Singapore subsidized computer training for SMEs employees and provided the foundation for developing secure e-payment services.

In Malaysia, the role of government is also very important in fostering the young entrepreneurs. Mohamed and Syarisa (2003) said although there are many programs and financial support system for the entrepreneurs, but the programs and the systems have not been utilized. The most common problem is the entrepreneurs must contend, causing delays of several months just to get their approval for applications. Many young entrepreneurs are frustrated with the inefficiency system. Since the entrepreneurship and e-entrepreneurship have a great potential to drive economic growth, the government should remove the constraints and creating better policies, for instance, simplify registration and other legal processes, create incubators and science parks, provide business skill education, provide business consulting services and implement favorable tax and trade policies (UNDP 2005).

Government policies are one of the most important issues facing by entrepreneurs. The government policies included employment regulation, the tax structure, and the lack of a supportive environment for new business, the entire is the important barrier to entrepreneurial activity. In fostering more entrepreneurial activity, government should reduce the tax rate and the high level of tax evasion, legal and administration burden on start-ups (Paul et al., 2001). The GEM (2001), assessment clearly identified that the government regulatory burdens are the major difficulties to develop the entrepreneurial activities. From the GEM (2001) findings, the burdensome regulatory system may be the time and cost these regulations place on starting a new business, they also proposed that to solve the regulations problems are to simplify the government regulations to work in more efficiently.

Social networks

Social network plays an important role in facilitating resource mobilization when an individual identifies the opportunity. When they have a rich social network, the entrepreneurs are easy to attract financial capital, recruit skilled labor, access to tacit knowledge and greater success in overcoming the obstacles (Stuart and Sorenson, 2005)

Sociological investigation makes a simple observation on the network that influences to entrepreneurship, the Granovetter’s (1973) discussed that individual maintains close ties to friends and family but in the opposite, individual maintain weak ties with hundreds of others. In the further discussion by Granovetter’s (1973), he argued that it is important for individual to bridge ties lies to obtain new information and opportunities.

In the research of Erich et al. (2009) discussed that it is a complex process for students make a decision on their future occupational. There are many literatures on entrepreneurial intent concentrate on personal related perspective but less discussed for the external circumstances that might influence students’ career choice to start up a business. They suggest in the future research, besides the regional infrastructure and education for university students; students’ social networks (friends and family) should be included in the discussion. By including the students’ social network factors, the transition process from the entrepreneurial intent to factual entrepreneurship is worth to examine.


Family is “the oxygen that feeds the fire of entrepreneurship” (Ragoff and Heck, 2003). In the recent study, there are more researchers focused on how a new venture might spring from a family relationship, where people are part of the social networks of social relations and “do not decide to start a business in a vaccum”. Family effect on the new venture creation decision is potentially wide-ranging in both positive and negative ways. Fewer start up resources available from the family may be the negative influences and become the barrier to entry business (Aldrich and Cliff, 2003).

More specific implications of the family on the new venture creation decision are discussed. There are many complex and intertwining motivations for creating a new venture and family is one of the possible considerations. The findings of Kirkwood (2006) also show that parents are a source of stimulation for many entrepreneurs to make the start up business decision. The participants of the research said they were influenced by their parents within a family where entrepreneurship occurred. The family business background gave the participants an early view of involving in entrepreneurship (Kirkwood, 2006).

There are many studies stated that the entrepreneurial traits in new venture are centered in the influences of genes, family, education and career experience (Timmons, 1999 and Dollinger, 1995). Family businesses play an important role in all over the world. According to Gersick et al. (1997), he estimated that there are over two-thirds of the family businesses in all over the world. Flintoff (2002) also said there are more than 80 per cent of family businesses in Europe and United State. It is important that family business can innovate and pursue entrepreneurial activities aggressively to increase the distinctiveness of the products and therefore, to enhance the profitability and growth (Zahra, 2003).

Filion (1994) discussed that the university students will have a greater exposure to more entrepreneurial role models; students may have a positive view of the entrepreneurship in society and students may have been exposed to entrepreneurial practices through their own personal and family networks, also in the external environment. In the research of Wang and Wong (2004), the study discussed that education level; gender and family business experience is significant factors to explain the entrepreneurial interest. The self-employed parents would affect the entrepreneurial interest and the career choice of their children.

In the further study in Wang and Wong (2004) article, there are two models in explaining the family influence. The first model is the parental role model which is a person is more likely to start up own business due to the example or learning from their self-employed parents. The second model is the family support model which is the family is supporting their children in terms of financial or social support. De wit and Van Winden (1989) found that there is a significant relationship in the parental role model between self employments and self employed father, but a not significant relationship in the family support model.


In the previous literature review, family background is considered as a factor affected the entrepreneurial intention. Henderson and Roberson (2000) discussed that the personal experience is the first factor to influence the career choice, and the second is the family factor. Therefore, the support of family and friends is likely to influence one’s career selection. The related support here means the sentimental and monetary supports of family and friends.

In a 2003 journal, Davison and Honig discussed that the support and encouragement from family members, relatives and friends is very important to the development of entrepreneurs. The support and encouragement from friends and family are vital in shaping perceived desirability of a business venture and also in providing financial assistance.

In addition, Vasiliadis and Poulios (2007) discover that, in the collective country like Malaysia, which is emphasizing cohesiveness, the impact of support from family and friends on the entrepreneurship tendency is more obvious. The support from family and friends are important because graduates start up a business mostly depends on family resources and seldom uses banking loans.

Availability of resources

The resources used to develop entrepreneurship and e-entrepreneurship is financial capital and human resources. Enterprising people have certain personal traits and motivations. They have creativity and ideas as the opportunities for them to obtain resources needed to exploit in their business (Thompson, 1999). The resources are needed and utilized to create products and services, which can make the customers and the markets feel satisfaction. According to Gibb (1998), entrepreneurs should know “where” they can acquire the resources.

Under the 9th Malaysia plan (9MP), Malaysian government encourages entrepreneurship in the development of SMIs and SMEs. Government provides positives business environment, tax incentives and various financing schemes to the investors and entrepreneurs. Bank Negara can help in the development of SMEs indirectly by ensure they have adequate access to financing. There are many financial institutions now have committed SME unit and become the main source of funds for SMEs, for example, Bank Pertanian Malaysia and Bank Kerjasam Rakyat. In extra, Bank Negara has also provided advisory services on loan application processes, advice on solving problems and provide information on financing to SMEs (Zeti, 2007).

Erik & Deborah (2004) discussed that financing in the early stage of startup is very difficult. The pattern is not just for the particular place but is the national and even globally phenomenon. Markley (2004) interview for entrepreneurs in North California and find out that the knowledge and the ability to gain equity resources was very limited. Most interviewees did not know how to access to the local angel networks. It is a strong demand in acquiring the financing mechanisms to their business.

There are two types of capital, which are Finance capital and social capital. Finance is one of the important elements in entrepreneurship. Almost every firm needs a substantial financial input so it is necessary for entrepreneurs to have the knowledge in financing the business. There are several types of financing, which is own capital, contribution by business partners, received loan from family members and the wage income received by the spouse. Social capital is important for communication with relations. The example of social capital is the relationship with family, contact with entrepreneur in networks, emotional support from the spouse and boarding out activities to others (Bosma, Praag & Gerrit, 2000).

Rinalia (2009) discussed young adults become early adopters and adapters of the technologies, skills valued for innovation economic growth is because they are given early access to information and communication technologies (ICT). Youths are proficient with ICT and are motivated to link the use of the technologies to development goals including to involve in e-entrepreneurship.

Opportunity identification

The term of opportunity in entrepreneurship is defined as the chance to meet the market need or interest to deliver superior value through a creative combination of resources (Schumpeter et al., 1934). Alexander et al. (2003) discussed the elements of opportunities can be “recognized”, and emphasized that the opportunities are made, not found. The sensitivity to market needs and the ability to utilize the resources make entrepreneurs to develop an opportunity.

It is important for a successful entrepreneur to have the ability to identify and selecting the right opportunities for new business (Stevenson et al., 1985). One of the key parts of entrepreneurship research is explaining the discovery and development of opportunities (Venkataraman, 1997). There are many models of opportunity recognition and development had been presented by the researchers like Bhave (1994); Schwartz and Teach (1999); De Koning (1999); Sigrist (1999).

Opportunity development is a process for entrepreneurs begin with a simple concept and then become more elaborate to develop the plan. The process involves the proactive efforts like develop a product but the developmental process is for the entire business, not just for develop the product only (Pavia 1991). Kirzner (1973) also discussed in the opportunity development is a continuous and proactive process which is necessary to form a business.

Opportunity recognition can be embraced to three distinct processes, the first process is sensing or perceiving the market needs and unutilized resources; the second process is recognizing or discovering a ‘fit’ between the particular market needs and the specified resources; the third process is creating the new ‘fit’ in the form of business concept (Hills, 1995 & De Koning, 1999). There are many individuals are so sensitive to the market needs or problems and market trend in any environment, they can detect the opportunities by identify possibilities simply by observing to the environment (Endsley, 1995).

There is one variable, which can link to identify the opportunity is the entrepreneurial alertness. Tienne and Chandler (2004); Van Gelderen (2006) argued that the sensitivity to opportunities can be trained. A person can be sensitive to the opportunities by having the idea in generation exercises and also the knowledge acquires to the particular industry trends and practices.

Braunerhjelm (2007) discussed that there are factors that under the control of a society impact the opportunity space for entrepreneurs. The factors are the institutional framework within a society, the designed incentive structure, and etc. he also said there is a probably closet to making the connection between knowledge, opportunity and entrepreneurial activity. Hayek (1937, 1945) also supported to Braunerhjelm about the opportunities’ connection. He related the connection between acquisition and communication of knowledge with identification of opportunities.




Generally, the purpose of this chapter is to determine the five variables which will impact on the involvement of undergraduates in entrepreneurship and e-entrepreneurship. Firstly, the research framework of this research will be presented, then, the hypothesis will be developed in order to link the relationship between the independent variables and the dependent variable. The point will be enhanced by discussing some past related research. There will be the information relevant to the number of respondents and the target respondents. Following is the discussion about the data collection methods. After collected the data, there will be the disclosure of the data analysis methods.

Research Framework

The primary interest in this study is the involvement of undergraduates in the entrepreneurship and e-entrepreneurship, which is the dependent variable of the research. From the previous chapter, there are the discussions on the past research which indicated that there are some factors which have a significant impact on dependent variable. Among the factors, there are education, prior knowledge and previous experience. Other than that, government regulation and incentives also play an important role in affecting the participating in entrepreneurship and e-entrepreneurship. Other essential factors are the social network which will be divided into family and friend, availability of resources and also the opportunity identification by the individual.

Hypothesis Development

Hypothesis statements are developed primarily to provide a basis for statistical analysis (ASHP, 2009). A hypothesis is a form to link a relationship of independent variable to the dependent variable. Sekaran (2003) defined hypotheses as a rationally assumed relationship between independent variables and dependent variable.

In this research study, there will be six hypotheses developed according to the independent variables and dependent variable as mention above. This is to attain the objectives stated in Chapter One.

Education, Prior Knowledge, Experience

According to Deborah, et al. (2002), there is a growth in the entrepreneurship programs which teach a student on how to start up and run a business. Reynold, et al. al. (1999) has concluded that the investment of the country on their tertiary education is positively impact on the rate of new business is formed. Furthermore, knowledge is pointed by Malone, et al. al. (1998), is an important variable in determining the increment of new business. Shane (2003) concluded that there is a positive relationship between prior experience and venture success.

Government Regulations and Incentives

The government regulations and incentives are an essential fact for entrepreneurs to consider before they decide to venture into a business. According to Storey, et al. (1999), the government influence entrepreneurship directly by develop supporting policies and indirectly by build up the restriction and legislation. As concluded, government regulations and incentives are closely held with the involving into entrepreneurship.

Social Network

Social network plays a crucial role in facilitating resource mobilization when an individual identifies the opportunity. It is an advantage for an individual to attract financial capital, recruit skilled labor, access to tacit knowledge and greater success in overcoming the obstacles if he or she has a rich social network. According to Granovetter’s (1973), the social network is basically closely tied with the family and friends.


Family is “the oxygen that feeds the fire of entrepreneurship”. This is the phrase which developed by Ragoff, et al. (2003) which has shown the significant relationship between the family factors with the decision on venture into a business. Jodyanne (2006) found that an individual was influenced by the parents when making a decision to start up a business. A family with business background is providing an individual the early inspection on stepping into entrepreneurship. Wang and Wong (2004) discovered there are two models, which significantly influence the decision on startup a new business, the parental role model and family support model. As stated by De and Van (1989), there is a significant relationship in the parental role model between self-employment and self employed father but not the family support model.


Other than the family factors, the support and encouragement from friends are very important on developing entrepreneurship. The study conducted by Lorna, et al. al. (2004), concluded that family and friends are one of the crucial key influences to set up own business.

Availability of Resources

There are two types of resources, which are necessary for an individual to obtain when they build up their business either in entrepreneurship or e-entrepreneurship, the financial capital and human resources. The financial capital is essential for the start up cost while the human resource is vital in carrying out the business activities. While, from some past study, it is known that the knowledge and the ability in gaining equity resources was very limited.

Opportunity Identification

The chance to meet the market need or interest to deliver superior value through a creative combination of resources is being explained as the opportunity in entrepreneurship. Stevenson et al. (1985) said that it is important for a successful entrepreneur to have the ability to identify and selecting the right opportunities for a new business.

Sampling Plan

For this research project instead of a census, sample of the population will be used as the respondents. This is due to the time and resource constraints, including costs and information or data and difficulty in disseminating to the whole population due to the huge population size. Besides that, with the existing computer program, it is tough and quite impossible for researchers to analyze the huge amount of data generated by the census (Burns and Bush, 2003).

The respondents of this research paper are targeted to undergraduates of Multimedia University, Malacca. The population of Multimedia University has over 20,000 students combining with both Malacca and Cyberjaya campus. The target respondents will be restricted to undergraduate’s students in Multimedia University, Malacca branch. There are three main faculties in Malacca Multimedia University, which is Faculty of Engineering and Technology (FET), Faculty of Business and Law (FBL) and Faculty of Information Science and Technology (FIST). The sample size consists of two hundred fifty respondents regardless of the age, faculty and course; we will be able to get sufficient information for later data analysis purpose. Two hundred fifty are believed to provide more accurate information for this research study.

The sampling was drawn in the form of simple random sampling. The random sampling is the purest form of probability sampling where everyone would have an equal chance to be selected. The population of MMU Malacca is quite large in the number, and it is difficult and time constraints to identify everyone in the population. The type of sample that I choose for this research is the convenience method. Convenience sampling is the sampling procedure used to obtain those units or people whom most conveniently available.

Data Collection Methods

Data for this research study will be collected in the form of primary and secondary data. For the primary data, a questionnaire will be distributed to the target respondents which will randomly choose within MMU campus. The questionnaire is used to obtain the needed data for analysis, which will present in the later chapter. This is to achieve the interest of this study. Survey method is adopted because it allows the collection of a huge amount of data in an economical manner. As for the mode of data collection, self-administered surveys that allow the respondents to complete the survey on his or her oneself were adopted. It is attractive in terms of costs saving, gave respondents control the pace at which they fill survey and avoid interviewer evaluation apprehension (Burns and Bush 2003).

Other than the survey method, this study also will discuss the past research as the foundation of the study. The secondary data will be gathered from Internet, books, magazines, newspapers and also journals. Among all, journal was playing the most important role as it contributed much on completing the foundation of this study and also literature review, which was presented in previous chapter. Emerald and Science Direct have been fully utilized in obtaining the relevant journals. While, the online search engine like Google and Yahoo also have been widely used in locating the online articles which provided the significant information to this study.

Questionnaire Development

As stated in the previous section, survey will be selected as the primary data collection method. In order to conduct a survey, there must be a questionnaire established properly. This is for acquiring the correct information from the respondents. A questionnaire is a pre-formulated written set of questions to prepare for the respondents to record their answer.

Basically, there are few steps in developing a set of questionnaire. Firstly, the researcher has to be clear with the research interest. Then the validity and appropriateness for each question created have to be ensured. The questions have to be established in accordance with the objectives of the study. Other than that, the language and wording used in the questionnaire have to be carefully applied. This is for the convenience to the respondents for a better understanding. Other than that, it can also prevent the response from erroneous and biasness.

The questionnaire will generally start with a brief introduction about the purpose of this survey and then followed by instruction to the respondents in answering the questionnaire. Then the questionnaire will proceed with the asking about the background of the respondents like the age, gender, income level and some other demographic factors.

Next, the questionnaire will be followed by the questions related to the five independent variables which will link with the dependent variable as mentioned previously. Thus, the questions relevant to factors which impact on the involvement in entrepreneurship and e-entrepreneurship will be developed. The questions will be set based on the education, prior experience, knowledge, government regulations and incentives, social network, availability of resources and also the opportunity identification.

Pilot Testing

A pilot testing was commonly conducted in order to check out the relevance of the variables and test the efficiency of the questionnaire before it distributed to the respondents. The purposes to do the pilot test for the questionnaire are to check the validity and reliability of the questionnaire; check out the relevance of the reliability of the questionnaires and refine the questionnaire and develop a final draft to be used in this study (Stephanie Lim, 2009).

Data Analysis Methods

After the data have been collected from the respondents, the data will be further categorised and analyze by using some tests. This is tointerpret and analyze the result of the study. The data collected will bekey into the Statistical Package for the Social Sciences, which also known as SPSS system. Then the data will be further analyzed by using the multiple regressions, reliability test and also the descriptive analysis. Graphs, charts and scatter diagram will be widely used in order to carry out a clearer picture of the results. The following is the information of each type of tests used.

A. Reliability Test:

This is the indication of the stability and consistency with which the instrument measures the concept and helps to assess the “goodness” of a measure. Cronbach’s alpha will be use as an estimator of the internal consistency reliability of a psychometric test score for a sample of examinees. This test will be applied on the independent variables with the dependent variable in this study.

B. Descriptive Analysis:

As outcomes of the analysis we will get mean, frequency, standard deviation and percentage of frequency. The graph, chart, diagram and chart will be widely exercised in disclosing the frequency distribution for information interpretation. Table will be use to interpret the other information. This method of analysis will be used in the early stage of the analysis process because it will form the foundation for the subsequent analysis.

C. Multiple Regression:

It is generally used to explain the relationship between multiple independent or multiple predictor variables and a dependent or criterion variable. In multiple regressions, a dependent variable is modelled as a function of several independent variables with corresponding multiple regression, coefficients, along with the constant term. In this study, the multiple regression method will be applied in interpreting the data collected from the questionnaire which related to the factors influence the involving of undergraduates in entrepreneurship and e-entrepreneurship. By this test, the appropriate relationship among these factors can be established.

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Malaysia entrepreneurship development. (2017, Jun 26). Retrieved January 27, 2023 , from

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