Orientation of Youth towards Social Entrepreneurship: An Empirical Study from Pakistan

Abstract

The importance of Entrepreneurship has been widely acknowledged by researchers and practitioners worldwide, however, the idea of Social Entrepreneurship is still considered to be an emerging area. Entrepreneurship is vital not only because of its economic impacts but also because it helps to address issues of poverty and welfare, where it can act as a catalyst for change. The importance of social entrepreneurship is that it serves to turn a profit and find success while helping others throughout the world. They know the power of social enterprise and are eager to serve the societal and economic benefits. This study aims to identify the level of orientation of youth towards social entrepreneurship in Pakistan. The study identifies the role of various factors that affect Social Entrepreneurial Orientation and is conducted following a quantitative research strategy and survey research design where data is collected from 302 individuals. Structural Equation Modelling was used to analyze the data and to test the hypotheses. The main finding of this research is that there is an increasing trend in the orientation towards social entrepreneurship. The exogenous variables namely Perceived Educational Support, Perceived Structural Support, and Perceived Relational Support were found to have positive and significant effects on the endogenous construct of Social Entrepreneurial Orientation.

1. Introduction

The recovery of a country’s economy can be aided by encouraging young and other leaders to engage in entrepreneurial activities (Khan et al., 2021; Khan et al., 2020). The link between entrepreneurship and economic growth dates back to 1934 (Schumpter, 1934). It is observed that the entrepreneurship is an essential source of job creation, economic growth and wealth for any nation (Thurik & Wennekers, 2004; Azoulay et al., 2018). The term “entrepreneurship” is considered very important in the business field. Although there is no universally accepted definition of entrepreneurship but all definitions overlap in some dimensions (Howorth et al., 2005). As entrepreneurship is crucial for a country’s economic development, developed countries are constantly focusing their efforts on improving entrepreneurial opportunities to develop lean entrepreneurial ventures. “Entrepreneurial ventures” means the process of designing, launching, and running a new business often initially at a smaller scale, and the people who do this are known as entrepreneurs (Yetisen et al., 2015).

To enhance the attraction of entrepreneurship learning in students, universities are required to increase their focus to provide the programs that stimulate experiential entrepreneurship learning in youth (Noyes, 2016). It is important to determine that are the graduates enthusiastic to enter into the entrepreneurial ventures rather than being employed (Audretsch & Thurik, 2001). Bacq and Janssen (2011) and Diochon and Ghore (2016) argue that the national context has deep thoughtful influence on the area of social entrepreneurship.

Entrepreneurship not just in its economic effects is important, but it also helps to deal issues of poverty and welfare (Gupta et al., 2020), where it may also act as catalyst for change (Barberá-Tomás et al., 2019). Social entrepreneurship is gaining importance in developing countries for the great benefits of society (Akhter et al., 2020; Luc, 2018; 2020). Social entrepreneurship is important because the young business leaders unveil the bold business ideas designed to change the world. They know the power of social enterprise and are eager to serve the societal and economic benefits (Bates & Dunham, 1993; Oviatt & McDougall, 1997). That is the reason universities have started to embed their focus to provide entrepreneurial education for new ventures (Aslam & Hasnu, 2016). Number of universities offering entrepreneurial programs have also increased in a crescendo number and still increasing to train the youth talent of Pakistan (Donald & Kurtoko, 2005). The decision to become an entrepreneur opens the way for the talented individuals and maximize their career choices (Douglas & Shepherd, 2000). The decision to opt entrepreneurship is greatly dependent on the economic factor of the venture as an individual would be more focused on the entrepreneurship if the launching business would expect to yield more than the best option of employment. This would also be affected by their risk taking ability, work effort and benefits associated with it.

As per the literature, developing countries take a distinct approach to implement a specific entrepreneurial plan. The contexts of developing countries are distinct because they are frequently confronted with major difficulties such as widespread poverty, illiteracy, a lack of political will, and corruption. Unemployment and poverty are major problems in developing countries (Khalil et al., 2021). To mitigate these issues entrepreneurship could be the best approach (Haque, 2011) and for that matter educational support and governmental support are also necessary (Ghazali et al., 2021).

Shifting business paradigms and trends resulted in evolving direction of businesses by enhancing the sense of its social responsibility towards society rather than just focusing on its profit realization. Social entrepreneurship is a fundamental type of enterprise that helps to boosts the society along with economy of any nation (Asif et al., 2018). Social enterprise is typically led by the inspired young leaders called “social entrepreneurs”, who are being given attention and importance these days by societies (Bhushan, 2020). These social entrepreneurs have grasped a lot of attention around the globe (Mair & Schoen, 2007). The classic literature supports the fact that a sustainable social enterprise can only attain sustainable social gains in a cost-effective and more innovative ways to address the societal needs (Ghalwash et al., 2017).

Students have different choices of careers, which they select according to their innate nature of work preferences. Some students want to pursue entrepreneurship, while others explore the job market for the best opportunities. The available opportunities have a significant impact on students’ career awareness in Pakistan. Few people do not find opportunities to pursue entrepreneurship that are compatible with their interests. This is supported by the studies in the literature that explain the concept of selecting a career among youth (Bonnett & Adrian, 1991). These studies mainly concentrate on the personality traits that influence career choices. This research could back up the theory that there is a link between entrepreneurial intentions and personality traits. The willingness to take risks, self-confidence, pro-activeness, and the desire to succeed are the most important attributes. The entrepreneurial decisions are also affected by the surroundings and range of social, cultural, technological, and economic factors (Shapero & Sokol, 1982). These surroundings also include the structural support and relational support that affect entrepreneurship. Pakistan ranks among the lowest achievers in entrepreneurial initiatives, according to a World Bank Group report. It is also ranked 20th in the region for that, and last in the list for favorable conditions for high-potential female entrepreneurship development. In this context, following are the objectives of the study;

. To identify the level of orientation of youth towards social entrepreneurship in Pakistan.

. To determine the relationship among Perceived Educational Support, Perceived Structural Support, Perceived Relational Support and Social Entrepreneurial Orientation in the context of Pakistan.

This study helps in the identification of support factors that can contribute towards the strengthening of the practice of social entrepreneurship. This research is also important to inspire the individuals and give them a direction through which they can contribute to the betterment of the country economically as well as socially. Education and other factors are having an increasing impact on social entrepreneurship because society demands that businesses recognize its importance. Moreover, being relevant to an emerging discipline, this study will also encourage furthering the idea of social entrepreneurship in the context of Pakistan.

2. Literature Review

There is no universally accepted definition of entrepreneurship. Generally, entrepreneurship is an act of creating a business or businesses by generating and scaling it for the wealth maximization (Ensley et al., 2006). The modern definition of entrepreneurship is about transforming the world by solving and coping up with big problems. An individual willing to take the risk for launching new business in-order to pursue a risk for profits is an entrepreneur and any such venture is known as entrepreneurial venture (Bull & Gary, 1993).

Researchers have also emphasized on the innovation and risk taking ability in context of entrepreneurship. Innovation has many dimensions to be considered just as (i) collaborating the factors of production in a new way for increased profits (ii) “Creative destruction” is another way to bring the innovation in practice by purging the old methods with new well-developed methods. Leadership and entrepreneurship is considered to be alike unique set of characteristics, traits, behaviours and proficiencies in an individual (Engelen et al., 2015). Not all the leaders are entrepreneurs but all the entrepreneurs are leaders. These fields are interconnected in many modes and also had many similar development opportunities (Cogliser & Brigham, 2004; Ensley et al., 2006). The fundamental idea for entrepreneurship research is just to know exactly about that an entrepreneur (who is a leader at the same time) who creates the successful difference in the business, either do this through his / her ability of risk taking (Stewart & Roth, 2001) or by the ability to identify the gap that exist and not addressed in a society (Alvarez & Busenitz, 2001). The effectiveness in a new venture could by enhanced by the integration of entrepreneurship with the leadership to take leap of faith for success (Vecchio, 2003). According to the definition of Gupta et al. (2004), it is merely a paradigm about entrepreneurial leadership. The other protagonists such as Bass and Bass (2008) suggest that a good sustainable entrepreneurial outcome could be achieved by the integration of leadership and management in a business.

An entrepreneurial venture could make a difference in it by the process innovation (Kang et al., 2015; Norbom & Lopez, 2016), enhancing community entrepreneurs (Lyons et al., 2012) and by exploring the effects of entrepreneurial leadership in a society (Harrison et al., 2016; Leitch & Harrison, 2018; Leitch & Volery, 2017). According to Harrison et al. (2016), the focus should be enhanced to understand personality type of entrepreneurs, as they take bold actions to face uncertainty and risk related to their desired business and an entrepreneur must be equipped with the abilities like risk taking, leadership skills and his /her individual orientation towards the entrepreneurship (Harrison et al., 2016). In short, leadership skills greatly affect the outcomes and methods of succeeding in the entrepreneurship.

According to the studies of Bonnett and Adrian (1991), a person should pursue a career option that is aligned and parallel to the personality characteristics. That is the sole reason why people who seek entrepreneurship have entrepreneurial intentions in their innate nature and other personality traits, demonstrating that there is a strong link between career choice and personality type. It is extremely important that an individual must have personality characteristics to be an entrepreneur. With the inspiration and the entrepreneurial traits, a person could remain inspired to be a solver of societal problems (Cogliser & Brigham, 2004).

Entrepreneurship has a direct impact on the socioeconomic conditions of a country, because with entrepreneurship, the current social and economic needs could be addressed effectively. Desired socio-economic betterment in employ ment and educational outcomes could be achieved rapidly by entrepreneurial activities (Grey et al., 2004; Brown et al., 2018).

Entrepreneurial researchers have shifted their focus to entrepreneurship to address current economic issues (Bizri, 2017; Alrawadieh et al., 2018), as entrepreneurship is a quick and effective way to deal with unemployment by fostering an experimental learning culture among youth to make them self-employed and increase their income. As entrepreneurship is not limited to a specific industry, students could pursue different natures of ventures in different industries according to the personality types to experiment with their innovative ideas.

Innovative ideation could be range from the creative industries to mechanical industries according to the interests of students, however, in the country like Pakistan where resources are constrained and incubators are limited, industry-specific consultation could be difficult to achieve. Business incubators and accelerators are industry experts that facilitate the new entrants with entrepreneurial centres to develop a good diverse external network such as for creating a venture successful (Soetanto & Jack, 2013). These incubators that are currently serving the entrepreneurial ventures to facilitate the Pakistani youth to achieve their prospects regarding entrepreneurship.

They also arrange the different meaningful events and exhibitions for encouragement and enablement of the youth to attend to increase the probability for success for better economy and society. These incubators and accelerators create productive entrepreneurial ecosystem by “Clearing up the fog”. With the entrepreneurial ecosystem the reduction in poverty and improvement in the society occurred simultaneously through the increase in income, education and employment in a society. The proper entrepreneurial ecosystem could be enforced by the entrepreneurial center because these centers possess all the required elements and are brought together within it. These factors include the human capital, funders, mentors, governmental frameworks and other intermediaries (Pittz & Hertz, 2018).

According to Light (2006), this term got the attention in the 1990’s. Over the years, many ideas have evolved, but it is also burgeoning greatly (Omorede, 2014). Social Entrepreneurship is the exciting stage of immaturity of the project development. This social enterprise practice high level of enthusiasms and passion to work. There is no universal definition of social entrepreneurship just as that of the entrepreneurship (Germak & Robinson, 2014), due to the relative newness of this field, the term social entrepreneurship has the many definitions with nuances of changes in all of those definitions making them a topic of argument among the opponents and protagonists because of the varied nature of entrepreneurship.

These definitions cover the scope of term between comprehensive approaches to constricted approach. Many of the definitions of SE are all about social problem, creativity and innovation in tackling the social need to make societal improvements rather than desiring profits (Schumpeter, 1951; Drucker, 1985; Kong, 2010; Dees & Anderson, 2003). These all sources of definitions about social entrepreneurship, are common on some grounds that social entrepreneurship prioritizes the social goals over the profitability, and these sustainable change makers are known as “social entrepreneurs.”

Lastly, challenges are the part of every business. Challenges arise due to the ever changing nature of business world. The challenges are always considered as barriers but these barriers underlie the hidden growth opportunity in it. Although the literature is the evidence of how various resilient entrepreneurs overcome the institutional obstacles and limited resources restrictions to start a business in a new business venture (Heilbrunn et al., 2019).

2.1. Conceptual Framework

This framework aids in the creation of a meaningful visual presentation so that a connecting dots linkage can be established to explain why these gaps exist in entrepreneurial enterprises and their orientation among Pakistani youth (Figure 1).

Figure 1: Conceptual Framework

This framework clarifies what are the internal characteristics of a social entrepreneur’s personality type, as well as the external context variables that stimulate entrepreneurial efforts; in other words, the drivers of individual social entrepreneurial orientation as well as the drivers of the entrepreneurial ecosystem’s external setting. This framework helps to highlight the gap in the research of the existing theories and their practical application in the Pakistani economy.

2.2. Variables and Research Hypotheses

Different determinants of social entrepreneurial ventures are socialness, self-efficacy, innovativeness, proactiveness, and risk-taking which are included in the individual social entrepreneurial ventures (ISEO) aspect. Other external context variables are perceived educational support, perceived structural support, and perceived relational support. Thus, they make an assumption about the relationship of social entrepreneurship with the above factors. Following are the hypotheses which have been developed for the study;

H1: There is a positive relationship between Social Entrepreneurial Orientation and Perceived Educational Support.

H2: There is a positive relationship between Social Entrepreneurial Orientation and Perceived Structural Support.

H3: There is a positive relationship between Social Entrepreneurial Orientation and Perceived Relational Support.

3. Research Methodology

A quantitative research strategy is used in this study. In light of this strategy, simple random sampling is done to collect the data and a structured questionnaire is adapted from literature based on the Likert Scale, which is used in this study ranging from strongly disagree to strongly agree for knowing the orientation of youth towards social entrepreneurship. A quantitative sample was collected from the students of different universities in Lahore. As this study is assessing customers’ perceptions, the sample is selected based on Roscoe’s rule of thumb (Roscoe, 1975). Roscoe’s ‘rule of thumb’ states that a sample size larger than 30 and smaller than 500 is appropriate for most of the studies. Whereas, some statistical experts suggest a data range between 5 to 10 times the number of items used in the scale (Hair et al., 2011). Hence, a total of 302 responses were collected from the youth studying at undergraduate and graduate levels.

Here are all the variables that are being studied under this research are listed (Table 1).

Table 1: Measures

4. Data Analysis and Results

4.1. Sample Composition

The sample contains the response of the students of different demographic backgrounds. The data is collected from a total of 302 respondents, including 179 male and 123 female. This sample size was derived from the youth enrolled in undergraduate, graduate, and postgraduate courses in different fields. The attitude of young people toward starting their own businesses is positive, as 175 students strongly agreed to do so, while 78 students were undecided. The educational level of respondents was quantified, with graduate students accounting for 37% of responses and MS (post graduate) students accounting for 45% of the total responses (Table 2). Students have a high level of awareness of startup companies, with 209 out of 302 students reporting that they are familiar with the mentioned entities. This sample represents a small portion of the population, which is critical for reducing sampling error.

Table 2: Demographics

According to the data, respondents in the 23–24 age group have the strongest proclivity toward entrepreneurship, with 59 percent males and 41 percent females participating in this study on start-ups. Furthermore, 45 percent of postgraduate respondents and 37% of graduates are more interested in social entrepreneurship initiatives. Furthermore, 69 percent of respondents are aware of well-known startup incubators. Finally, 58 percent of respondents are interested in starting their own business, while 26% are undecided, indicating that youth have a favorable attitude toward entrepreneurship.

4.2. Confirmatory Factor Analysis

According to the measurement model (Figure 2), all factor loadings are more than 0.5 which is the minimum threshold, hence no removal of items from the model are required.

Figure 2: Measurement Model

As far as composite reliability is concerned, the minimum threshold value is 0.70 which in this case meets the minimum criteria (Table 3). As far as convergent validity is concerned, it should meet three conditions. One should be minimum SFLs of 0.50 which is present as discussed earlier. Secondly, CR of all latent constructs should be a minimum of 0.70 which again is the case as per Table 3 and lastly, AVE should be minimum of 0.50 which is the case as per Table 3. Hence, it is concluded that convergent validity exists in the model.

Table 3: Composite Reliability and Convergent Validity

Note: SFL: Standardized Factor Loading; CR: Composite Reliability; AVE: Average Variance Extracted.

The structural model is used to identify the model fitness indices (Figure 3). Model Fitness indices include Chi-square/ DF, GFI, TLI, NFI, and RMSEA. Threshold values of GFI, TLI, and NFI are minimum of 0.90 whereas Chisquare/DF should be up to 3 (Wheaton et al., 1977) and the RMSEA threshold value should be less than 0.080 (Browne & Cudeck, 1993). In this study, Chi-square /DF value is 2.81 which is well within the range. Moreover, values of GFI, TLI, and NFI are 0.934, 0.922, and 0.930 respectively which are also within the desired range. Lastly, the RMSEA value is 0.061 proving the fitness of the model to be used for hypothesis testing.

Figure 3: Path Analysis

Path analysis in Figure 3 shows the path coefficients of relationships between exogenous latent constructs and endogenous latent construct i.e. SEO. Perceived Educational Support relationship with SEO is positive as its path coefficient is 0.34. In addition, Perceived Relational Support is also positively related to SEO. Lastly, and Perceived Social Support is also positively related to SEO.

5. Discussion and Conclusion

Entrepreneurship is not just an idea that is linked to economics; rather it has this very important social dimension that should not be ignored (Ha et al., 2020). The analysis reveals that the first hypothesis stands accepted i.e. there is a positive significant relationship between the Social Entrepreneurial Orientation and Perceived Educational Support. This hypothesis is reinforced by Kuratko (2005), who demonstrated the importance of entrepreneurship education for start-ups to develop lean organizations. Students’ capabilities and development skills would benefit from this type of experiential learning. But as this is not the necessity of the entrepreneurial ecosystem, this hypothesis developed for evaluating the statistical significance is not backed by quantified data, there is insignificant relation exists between SEO and PES variables, so this hypothesis stands rejected.

Moving on to the 2^nd hypothesis, the results confirm a positive relationship between the Social Entrepreneurial Orientation and Perceived Structural Support. As the perceived structural support includes the Institutional framework and financial resources that affect the entrepreneurial orientation in any community, its significance in connection with SEO cannot be undermined.

Last, the results also support the third hypothesis which states that there is a positive relationship between Social Entrepreneurial Orientation and Perceived Relational Support. Cohen (2006) identified the seven factors necessary to form a support structure for the entrepreneurial ecosystem: the government, the university, the informal/relational networks, the formal network, professional support, capital, and the talent. Therefore, social entrepreneurial orientation is stimulated by perceived relational support.

5.1. Recommendations and Managerial Implications

Pakistani Youth should focus on their own start-ups so that the existing societal needs could be addressed adequately. Also, they will have a variety of choices to be pursued than be in the classic curriculum program. Entrepreneurship is not limited to a single field, students with different personality types could explore different types of ventures in different industries to test their creative ideas. It is critical for students to carry out these types of start-ups with innovative concepts to develop lean organizations with fewer risks of failure.

The increasing requirement for economic reformation in Pakistan to deal with unemployment requires the policymakers and researchers to focus on applying distinctive approaches of economic betterment to make lean entrepreneurial start-ups. As a result, policymakers and researchers at entrepreneurial centres must concentrate on entrepreneurship to address today’s economic problems. They can do this by providing student fellowships, which are the first step that policymakers should do for the youth to improve the potential of good entrepreneurial ideas relevant to current market concerns.

Entrepreneurship has a direct impact on the socioeconomic conditions of a country. So the government should motivate entrepreneurs to address the current social and economic needs. Desired socio-economic betterment in employment outcomes could be achieved rapidly by entrepreneurial activities. Grand challenges, such as events, could be an excellent way to confront various types of social and other issues. Ideas must be nurtured to be transformed into commercially or socially viable products and services.

5.2. Future Research Directions

To strengthen the idea of social entrepreneurship and to further the research on its prospects, the following issues should be addressed which include-studying the challenges that the entrepreneurs face the most in venturing their start-ups and how the Pakistani culture supports and inhibits the growth of the entrepreneurial activities? Also, the international opportunities for start-ups’ growth must be explored. These are some areas that should be covered in the research. Dimensions regarding women entrepreneurs such as gender equality and opportunities for young women entrepreneurs must also be explored in further research studies in this domain.