Entrepreneurship and Training Programs for Young Entrepreneurs in the New Era: An Empirical Study from Indonesia

Abstract

This study aims to determine the factors that influence training programs in increasing entrepreneurial success as a new model for developing entrepreneurship training in a new era. It intended to provide a suggestion for building an entrepreneurship training model for Beginner Young Entrepreneurs (BYE) organized by the Ministry of Youth and Sports of Indonesia. The study used a quantitative method by collecting data through a Google form questionnaire distributed via the WhatsApp group. This study employs samples from 358 BYE training participants for 2017-2020, and data was processed using Amos SEM software to analyze factors that influence the success of entrepreneurship. The results showed that entrepreneurial motivation is a partial mediator in increasing the effect of training on its success by BYE participants. Furthermore, the key factor for increasing entrepreneurial motivation is challenging young people to start businesses. This study recommends that BYE program policymakers build a training model by considering many practical case studies to increase motivation as an important mediator in influencing entrepreneurial success. Meanwhile, to boost the morale of training participants, it is necessary to add significant real challenges for participants to start entrepreneurship. Moreover, future studies should add other independent variables, such as personality.

1. Introduction

The prolonged COVID-19 pandemic and increasing global competition have caused many unemployment problems and declining economic conditions. Digitization has also caused increasingly fierce competition, especially in the last decade (Hutajulu et al., 2021). Therefore, entrepreneurship could solve employment problems and improve a nation’s economy, especially during the pandemic (Nguyen et al., 2022). Various countries endeavor to create an entrepreneurship climate that grows and develops consistently due to its importance in boosting the economy. People are motivated to become entrepreneurs in various ways. Furthermore, this requires a development climate that inspires people to venture into entrepreneurship. According to Shetty et al. (2021), the lack of a development climate is caused by the absence of serious and planned government support in priority programs. In line with this, Casanovas and De Castro (2022) stated that the government should be serious about supporting entrepreneurship to increase economic growth. Similarly, Putri and Moustakas (2022) found that Indonesia’s economy cannot develop due to the lack of an entrepreneurship climate.

Data from the Central Statistics Agency indicated that entrepreneurs in Indonesia are still far behind compared to Asia and other developed countries (Danil & Septina, 2019). In 2019, the entrepreneurship ratios in Indonesia, Thailand, Malaysia, Singapore, China, Japan, and the United States were 3.37%, 4.6%, 5.7%, 7%, 10%, 11%, and 12%, respectively (Sunoko et al., 2022). This shows that Indonesia has a lower entrepreneurship climate than these countries, despite having broad market potential.

Indonesia massively compiles programs to increase entrepreneurship in various ministries and government agencies. In line with this, the Ministry of Youth and Sports is developing the creative and innovative Beginner Young Entrepreneur (BYE) program. BYE comprises Indonesian youth with motivation, enthusiasm, and hard work to make new businesses independent and competitive (Kemenpora, 2021). The program is expected to create innovative young people capable of boosting Indonesia’s entrepreneurship. The Ministry of Youth and Sports initiated this program to train and shape competent, motivated, and successful entrepreneurs.

This study aimed to analyze the effect of training on competence, motivation, and entrepreneurship success. It is hoped to be a useful contribution to the Ministry of Youth and Sports, as well as science, in building a better BYE program and enriching entrepreneurship management.

The unique study developed a new model by analyzing four variables simultaneously, including Entrepreneurship Training, Competence, Motivation, and Success. It adopted the organizational integrative behavior model developed by Colquitt et al. (2018). Therefore, entrepreneurship competence and motivation were used as mediating variables. The independent and dependent variables were the effect of entrepreneurship training and entrepreneurship success, respectively.

2. Literature Review

2.1. Entrepreneurial Success

Schumpeter (2000) stated that innovation and entrepreneurship are the most important contributions to the economy. The study introduced the Theory of Economic Development, explaining the concept of innovation and highlighting the need for entrepreneurs to implement new combinations. Furthermore, there is a revolutionary change to break the economy out of its static mode and make it dynamic. In the Theory of Economic Development, Madaleno et al. (2022) stated that anyone seeking profit should innovate. This implies that innovation drives competitiveness and economic dynamics or change. Lindbergh et al. (2022) referred to this process as Creative Destruction, where a person conducts activities and dynamics to become a creative entrepreneur.

De Matteis et al. (2022) described the entrepreneurs’ activities in creating new opportunities for investment, growth, and employment, a process called entrepreneurship. Furthermore, studies on entrepreneurship encompass diverse branches of social science, such as economics, commerce, management, and sociology (Gódány & Mura, 2021). Achieving entrepreneurship success requires developing young people, also known as Beginner Young Entrepreneurs (BYE) (Cueto et al., 2022).

BYE are young people that show motivation, enthusiasm, and hard work in building independent and competitive businesses (Al-Jubari & Mosbah, 2021). Pattanayak and Kakati (2021) defined entrepreneurship success as the perception of the business built compared with the previous results. In the previous discussion, success is shown by the satisfaction that a business is growing and receiving recognition.

Kabwe et al. (2018) defined entrepreneurship success as an individual’s perception of success in carrying out risk-taking activities for high returns on investment, which requires training. According to Meshram and Rawani (2019), training is important before starting a new business. The study supports Dzingirai (2020) that entrepreneurship training affects competence and motivation in increasing its success.

Wang et al. (2018) stated that successful entrepreneurs have the enthusiasm and hard work to realize a better future by being morally, legally, and mentally responsible for their efforts. Therefore, it takes competence and strong motivation before starting a new business. Wilde and Leonard (2018) also stated that entrepreneurship success is affected by competence and motivation. Similarly, Al-Jubari and Mosbah (2021) showed that motivation mediates the effect of training on entrepreneurship success.

Fisher et al. (2014) found that entrepreneurship success measurement could be self-rated after surveying with indicators of perceived entrepreneurship success with the keyword “I will succeed if”. The study proposed ten statement items and found that only 7 were valid and reliable. These were (1) I am personally satisfied with my life and business, (2) I run my business and life according to my wishes, (3) my business continues growing, (4) I have found at least one business, (5) I receive recognition from others, (6) I achieve business goals that I set, and (7) I build a sustainable business outside of myself.

The expert’s opinions show that Entrepreneurship Success is an increase in business and life of an entrepreneur affected by training, motivation, and competence. It is measured by seven indicators, including 1) Satisfaction with life and business, 2) Running a business and living according to one’s desire, 3) The business continues to grow, 4) Has established at least one business, 5) Received recognition from others, 6) Achieved set business goals, 7) Built other sustainable businesses.

2.2. Entrepreneurship Training

Gielnik et al. (2020) stated that training changes people’s capabilities by increasing their knowledge and skills to shape behavior or attitude. According to Weers and Gielnik (2020), training differs from education, learning, and development. Training is special and short-term to get a certificate but not a degree. Education is comprehensive and long-term, intending to get a certificate and a degree. Meanwhile, learning is time-dependent and based on needs, with no goal of getting a certificate or a degree. Development then comes as needed and in the long term, with no certificate or degree obtained.

Mazzarol and Reboud (2020) stated that the effectiveness of training is measured by three indicators, including (1) The benefits of implementing the program, (2) The materials delivered, and (3) The right methods. According to Morselli (2019), the effectiveness of entrepreneurship training is measured by six indicators, including (1) Instructors and teachers providing training materials should have adequate qualifications from experienced business practitioners. (2) Participants in the training should have high enthusiasm for entrepreneurship. (3) The material in entrepreneurship training should be consistent with the objectives. These materials must have various case studies and be up-to-date for participants to understand current problems. (4) Methods, entrepreneurship training should guarantee compatibility with business practices and real conditions. Therefore, the methods used should be effective and consistent with the material and components of the participants. (5) Training Objectives. Entrepreneurship training should have appropriate objectives and be conducted by preparing plans and setting targets. The training should consider the expected results, and the objectives are socialized beforehand to help participants understand. (6) Targets, where entrepreneurship training should have objectives by specifying detailed and measurable criteria.

This study combined entrepreneurship training as a program to start a business by increasing attitude, knowledge, and skills in entrepreneurship. It used the indicators of instructor, participants, materials, methods, objectives, and training targets.

2.3. Entrepreneurial Competence

Entrepreneurship intention is a necessary condition for the creation of new businesses. Another important aspect is how prospective entrepreneurs view their ability to control their behavior. According to González-López et al. (2021), entrepreneurship competence is an important factor in starting a business. This is because it reduces doubts about conducting new business activities.

An entrepreneur should deal with uncertainty regarding business success. Therefore, this uncertainty is overcome using competence in controlling risk to achieve the expected goals. According to Sawatsky et al. (2020), competence is an inherent behavioral character and work performance that could be developed and measured. Podmetina et al. (2018) also stated that competence comprises knowledge, attitude, understanding, values, talents or abilities, and interests that show a person’s performance as good or bad. Therefore, competence is a behavioral character and work performance inherent in individuals as knowledge, attitudes, understanding, values, talents or abilities, and interests.

Ashrafi and Najafi Hezarjaribi (2020) stated that entrepreneurship competence is the ability to use knowledge, attitudes, and skills to generate profits in business management. In line with this, Satar and Natasha (2019) and Al-Jubari and Mosbah (2021) added that entrepreneurship competence is a person’s market-oriented ability to involve business creation, management, support, and development of ideas from entrepreneurs. This supports Bian and Lee (2020) that entrepreneurship competence is the ability, skills, knowledge, attitudes, motivation, values, and behavior needed to compete and create an edge in business.

Entrepreneurship competence is the ability possessed by an entrepreneur. In this study, entrepreneurship competence was measured using the indicators developed by Silveyra et al. (2021). The indicators include 1) Identifying opportunities, 2) Evaluating opportunities, 3) Exploiting opportunities, 4) Strategic competencies, 5) Management competencies, 6) Previous knowledge and experience, 7) Leadership and motivation, 8) Human resources management, and 9) Social competencies.

2.4. Entrepreneurial Motivation

Entrepreneurship experts state that opportunity-driven entrepreneurs are more likely to succeed than opportunitydriven people starting businesses out of necessity. In line with this, Marques et al. (2013) stated that entrepreneurship motivation is important for creating and growing new businesses. It determines entrepreneurs’ decisions to seek, evaluate, and utilize its opportunities. This indicates that entrepreneurship motivation is the willingness to successfully start and run a new business.

Schunk and DiBenedetto (2020) stated that motivation is a driving force that encourages someone to carry out an activity to achieve certain goals. According to Legault (2020), motivation encourages behavior to take action toward certain goals. Heckhausen et al. (2019) stated that motivation is a great drive, desire, or interest to achieve certain desires, ideals, and goals. It makes individuals try their hardest to achieve what they want. Therefore, motivation is the driving force that motivates individuals to achieve certain goals.

Mota et al. (2019) stated that entrepreneurship motivation is an encouragement to carry out entrepreneurship activities to achieve goals. This supports Wang et al. (2019) that entrepreneurship motivation is an entrepreneur’s driving force that produces and directs entrepreneurship activities to realize the desired goals. Moreover, Wartiovaara et al. (2019) stated that entrepreneurship motivation encourages and directs individual desires to carry out activities independently. The individuals believe in themselves, are future and profit-oriented, creative, take risks, and have a strong desire for innovation.

Entrepreneurship motivation is measured on a self-rated basis, where entrepreneurs measure their motivation to act based on their perceptions with established indicators (Alam et al., 2019). According to Venesaar et al. (2006) and Taormina and Kin-Mei Lao (2007), entrepreneurship motivation has three dimensions and is measured by the following indicators:

Ambition for freedom with indicators including the desire to develop hobbies in business, be more respected by others, be at the forefront of implementing new ideas, move more freely, and have their own business.

Pushing factors with indicators of desire to earn a better income and the encouragement of job dissatisfaction.

3. Research Method

3.1. Study Model

This study adopted the integrative organizational behavior model developed by Colquitt et al. (2018). It used entrepreneurship competence and motivation as mediating variables. The independent and dependent variables were entrepreneurship training and entrepreneurship success, respectively. Figure 1 shows the relationship between the variables:

Figure 1: Study Model

3.2. Study Method

The study population comprised 3,440 BYE participants at the Ministry of Youth and Sports that received training from 2017 to 2020. A questionnaire was distributed to participants via the Whatsapp group network. Responses were received from 358 people, or 10.4% of the respondents. The data collected using the google form platform was processed and analyzed using the Amos Structural Equation Model (SEM). The study used a 5-point Likert scale with statement items adopted from previous studies, shown in Table 1.

Table 1: Study Instruments

4. Results

4.1. Characteristics of Respondents

The processed data obtained the respondents’ characteristics shown in Table 2.

Table 2: Characteristics of Respondents

4.2. Model Fit and Hypothesis Testing

The process of modifying indices (MI) was conducted to achieve a fit value for the study model by gradually eliminating the 38 highest error values, leaving 20 valid statements. The fit model constructs obtained are shown in Table 3. Figure 2 shows the construct of Goodness of Fit in the unstandardized study model.

Table 3: Study Fit Model

Figure 2: Unstandardized Construct Goodness of Fit

Hypotheses were tested after the model achieved the Goodness of Fit calculated using the Amos SEM software. Table 4 shows the results of the direct effect hypothesis test.

Table 4: The Direct Effect Hypothesis Test Results

4.3. Factor Loading Analysis

The factor loading analysis aimed to determine the highest loading factor of statement items as the best reflection of the instrument in measuring each variable. It also showed the lowest loading factor of statement items recommended for improvement. The factor loading values for each variable are shown in Table 5:

Table 5: Factor Loading Instruments​​​​​​​

Table 5 shows that the entrepreneurship success variable has the lowest and highest factor loading values of 0.437 (KB2) and 0.501 (KB4), respectively. The entrepreneurship training variable has the lowest and highest factor loading values of 0.406 (PK10) and 0.453 (PK5), respectively. Furthermore, the entrepreneurship competency variable has the lowest and highest factor loading values of 0.415 (KK4) and 0.509 (KK1). The entrepreneurship motivation variable has the lowest and highest factor loading values of 0.401 (MK8) and 0.771 (MK5), respectively.

5. Discussion

The findings showed that entrepreneurship motivation partially increases the effect of entrepreneurship training on the success of young novice entrepreneur training programs. Therefore, successful young startup entrepreneurs could be built by increasing the challenge for young people to start businesses. An entrepreneurship training model with a strong effect on its success was developed by mediating motivation and competence as follows:

Entrepreneurship success is affected by training and motivation. This supports Kabwe et al. (2018) that entrepreneurship success is the perception of individuals successfully carrying out risk-taking activities for high returns on investment, which requires training. Also, the results are consistent with Meshram and Rawani (2019) that entrepreneurship training is important before starting a new business. These findings mean the WMP program’s success could be increased by improving training, competence, and motivation. Therefore, it is necessary to establish a business as the most important indicator in reflecting entrepreneurship success (KB4). Another necessity is to improve the business that has been run (KB2), which is the lowest indicator.

Entrepreneurship training positively affects entrepreneurship motivation, competence, and success, increasing its success. These results support Dzingirai (2020) that entrepreneurship training affects competence and motivation in increasing success. Similarly, Wang et al. (2018) stated that successful entrepreneurs have the enthusiasm and hard work to realize their desires by having strong competence and motivation before starting a new business. This is in line with Wilde and Leonard (2018) that entrepreneurship success is affected by competence and motivation. Therefore, training in case studies (PK5) is the most important indicator of entrepreneurship success. The suitability of the long-term goals of the training (PK10) is the lowest indicator.

Entrepreneurship competence does not significantly affect entrepreneurship success. It also does not mediate the effect of entrepreneurship training on its success. The results contradict the integrative organizational behavior model developed by Colquitt et al. (2018). According to the model, entrepreneurship competence and motivation mediate the effects of entrepreneurship training and success as independent and dependent variables. Therefore, the mediation role of entrepreneurship competence could be increased by improving the participants’ ability to select the right opportunity (KK4) as the lowest indicator. Another measure is to maintain participants’ understanding of consumer needs (KK1) as the highest indicator.

Entrepreneurship motivation partially and positively mediates the effect of entrepreneurship training toward success. This finding supports Al-Jubari and Mosbah (2021) that entrepreneurship motivation has a direct impact and mediates the effect of entrepreneurship training on its success. Similarly, the integrative organizational behavior model developed by Colquitt et al. (2018) states that entrepreneurship competence and motivation mediate the effects of entrepreneurship training and success independent and dependent variables. Therefore, the mediation role of motivation could be increased by maintaining the young beginner entrepreneurs’ desire to start businesses (MK5) as the highest indicator. Young entrepreneurs should get support from the Ministry of Youth and Sports. Furthermore, it is necessary to increase their willingness to face challenges (MK8) as the lowest indicator.

6. Conclusion and Suggestions

This study showed that entrepreneurship training is a strong predictor of its success, as indicated by the R square value of 0.695 or 69.5%. However, 30.5% of other factors were not analyzed as independent variables. This implies a need for future studies to add other independent variables, such as personality, as Colquitt et al. (2018) stated in the organizational integrative behavior model.

The results showed that entrepreneurship competency does not significantly mediate the effect of training on entrepreneurship success. Therefore, future studies could add other mediating, such as educational background.