Applying Structural Equation Modeling (SEM) to Analyze Factors Affecting the Entrepreneurial Intention of the Students of Vietnam National University, Hanoi45264

Applying Structural Equation Modeling (SEM) to Analyze Factors Affecting the Entrepreneurial Intention of the Students of Vietnam National University, Hanoi Nguyen Cam Ngoc1, Nguyen The Kien2(*) (1) VNU University of Social Sciences and Humanities, Hanoi, Vietnam VNU University of Economics and Business, Hanoi, Vietnam * Correspondence: thekien.edu@gmail.com (2) Abstract: The study aims at identifying factors affecting Vietnam National University Hanoi students' entrepreneurial intention The samples are 300 students from the VNU University of Social Sciences and Humanities, VNU University of Economics and Business, and VNU University of Technology, Hanoi Based on the application of SEM model, the results show six factors affecting students' entrepreneurial intention including confidence, entrepreurship, education, capital, technological skills, and work skills The higher the factors, the higher the entrepreneurial intention Keywords: Structural Equation Modeling (SEM); entrepreneurial intention; students; Vietnam National University Hanoi Introduction Small and Medium Enterprises (SMEs) have long been a contributing factor to the improvement of the country's economy and the nation’s well-being (Hoelscher and Elango 2012; Hatten 2006) Developing countries face poverty, unbalanced development, and unemployment, and among these problems, unemployment is the most blazing problem (Dev and Mahajan 2003) Entrepreneurship plays an important role in developing the economy and creating many job opportunities for workers (Moica et al 2012) According to the statistics of Vietnam Chamber of Commerce and Industry in 2016, new businesses, especially small and medium enterprises, contribute to nearly 50% of GDP and attract more than 90% of new labor Therefore, the development of start-up activities will be a driving force to help solve employment problems and reduce unemployment and turn Vietnamese economy to be more dynamic at the same time VNU Hanoi also has conducted many activities in recent years to provide advice on starting a business for students According to a study of iPrice group and 500 Startups Vietnam, in 2017, VNU was one of the national leading training units in the number of student startups In March 2017, the President of VNU Hanoi signed a decision to establish the Center for Enabling Startups and Knowledge Transfer with the mission of promoting the commercialization of science and technology products of VNU and other research institution as a bridge to create value from scientific research products and promote entrepreneurship development in VNU and Hanoi The start-up movement among students have been quite dynamic; one of the successful startups is the case of a student of the VNU University of Economics and Business, Nguyen Ngoc Quan, when starting a business called Wine Co., Ltd Vietnam in 2016 Starting from being a CEO of a media company when he was very young, just after years of graduation, Quan's company has now grown into a medium-sized one with about 100 employees The company operates in marketing and consulting brand strategy & provides communication solutions for many major partners such as: Dairy cow by BOO, Lincup by Lintimate, Vincom Ice Rink, The Elephant Company, Hailecao Studio, etc Another example is a startup search project of the University of Technology - VNU in 2018 when the student group created WORKSVN in two forms: website and mobile application with the goal of connecting businesses with students According to statistics from the Google Play app, up to now, the WORKSVN app has had more than 10,000 downloads and an average of about 2,000 visits per day with user appreciation However, a large part of students still have poor initiative in finding jobs as well as starting a business The question is what factors affect the VNU students’ entrepreneurial intention? In Vietnam, SEM model is currently applied in many fields, but the number of studies into students’ entrepreneurial intentions using SEM model is quite limited Therefore, this study applies SEM model to analyze factors affecting VNU students’ entrepreneurial intention, thereby making policy suggestions to further promote the startup movement among VNU students in particular, and students from the whole country in general Methodology 2.1 Literature review Intention is a thinking situation that engages personal experience and behavior for a specific purpose or behavior (Gerbing and Anderson, 1988) The theory of Planned Behavior suggests that entrepreneurial intention is the result of the intent and actions of brave individuals described as modern-day heroes (Ajzen, 1987) Based on the analytical framework of GEM, Micozzi and Lucarelli (2016) analyzed data from 37 economies and concluded that gender and confidence in one's skills affect personal mood and strengthen the individual's entrepreneurial intention Gelderen et al (2008) showed two important factors that influence an individual's entrepreneurial intentions based on market awareness and self-improvement Ooi and Nasiru (2015) studied the impact of business education on Malaysian community college students with 235 final-year students as samples drawn from four schools located in northern Malaysia show the important role of universities and community colleges in promoting and nurturing entrepreneurship among graduates Sahinidis et al (2014) indicated that, there is a strong link between the Personal Attraction and Entrepreneurial Intention (EI), similar to the literature findings with other types of samples and also a strong relationship between Perceived Behavioral Control or Self – Efficacy and (EI) Finally, again as previously found in several studies Social Norms and Valuations are expected to affect both directly and indirectly EI Patrick et al (2019) reviewed the entrepreneurship intention literature within the context of business start-up among university students This study also proposes a conceptual model to increase the understanding of the factors hindering undergraduate students from starting a business while studying This model, which enhances knowledge of entrepreneurship intention among undergraduate students, enriches the theory of Psychological School of Thought and Social Networking Theory in entrepreneurship intention research In Vietnam, Le (2007) studied the startup decision process of young Vietnamese entrepreneurs The study was conducted with a sample of 159 entrepreneurs who established businesses under the age of 30 during 2000-2006 The research results indicate that young people tend to make the decision on starting a business when meeting all three groups of factors, namely personal qualities, accessibility to resources and business opportunities In addition, the research also shows that entrepreneurial thinking is strongly formed and develops over time, and is influenced by many environmental factors Do (2016) had the study "Factors affecting entrepreneurial intention of Business Administration students at the University of Labor and Social Affairs (Ho Chi Minh City campus)" The study used the entrepreneurial potential model of Krueger and Brazeal (1994) and the theory of planned behavior of Ajzen (1991) The study gathered 315 students at the University The research results indicate five factors influencing students' entrepreneurial intention, namely higher education and training, experience and experiences, family and friends, personality, and capital Do et al (2017), in the study "Analysis of factors affecting the start-up intention of students of Binh Duong University", conducted a survey of 250 samples and applied the linear structural equation model (SEM) for analysis The results show that the student's intention to start a business is influenced by seven factors, of which thre are directly affected by self-awareness, education and training, family and social environment Nguyen and Nguyen (2016), in the study "Factors affecting students’ start-up intention in Tra Vinh University", conducted a survey of 405 students in different disciplines; the results show that factors affecting entrepreneurial intention through the factor of confidence in entrepreneurial feasibility, reflected in teaching activities, extracurricular activities, people’s opinions and business interests which directly affect confidence The higher the confidence about the feasibility of starting a business, the higher the student's intention to start the business 2.2 Analysis methods In this study, the authors applied the method of structural equation model (SEM), which used SPSS 22.0 software and AMOS version 20 software, via six steps: Cronbach's Alpha reliability analysis, Exploratory Factor Analysis (EFA); Confirmatory Factor Analysis (CFA), Structural Equation Modelling (SEM) analysis, Model estimation test by Bootstrap, Multi-group structure analysis, specifically as follows: Step 1: Scale reliability test Cronbach's Alpha coefficient (CA) is used to evaluate the reliability of the scale for each observed variable belonging to the factor groups Peterson (1994) suggested that any factor with CA less than 0.6 should be excluded from the research model (Peterson 1994) According to Bernstein and Nunnally (1994), observed variables with a total correlation coefficient less than 0.3 are considered as irrelevant variables and should be excluded from the model (Bernstein et al., 1994) Step 2: Exploratory Factor Analysis (EFA) The EFA allows describing the correlation between the impact variables, called "factors" EFA is used in cases where the relationship between observed and latent variables is unclear or uncertain The EFA analysis is conducted in a discoverable manner to determine the extent and degree of relationship between observed variables and the latent factors, which underlie a set of measurements to reduce the number of observed variables loading base factors Meyers et al (2016) reported that in the EFA, the Principal Component Analysis extraction method with Varimax rotation is the most commonly used method A condition for EFA analysis is the following requirements: factor loading > 0.3; 0.5 ≤ KMO ≤ 1; Bartlett test having statistical significance (Sig 50% Step 3: Confirmatory Factor Analysis (CFA) CFA can be used when the researcher has some knowledge of the latent variable structure CFA may be the next step of EFA to test whether there is a theoretical model that underlies a set of observations Indicators for measuring the relevance of the model with data include Chi squared (CMIN); Chi square adjusted according to degrees of freedom (CMIN / df); Comparative Fit Index (CFI); Tucker & Lewis index (TLI); Root Mean Square Error of Approximation (RMSEA) According to Hair Jr et al., if 0.4 and practically significant when > 0.5 (Hair et al 1998) (Source: Analyses of collected data) 3.2.3 Confirmatory Factor Analysis (CFA) After the EFA analysis, the scales continued to be tested again, using CFA confirmatory factor analysis The aim was to ensure greater reliability and validity of the scale based on a defined number of known factors in order to limit errors in identifying factors The CFA results showed the indicators evaluating the relevance of the theoretical model were GFI = 0.930; TLI = 0.931; CFI = 0.942; RMSEA = 0.047 Therefore, this model was relevant to actual data It can be concluded that components measuring "Student's entrepreneurial intention" and independent factors achieved discriminant validity Therefore, this model was relevant to actual data 3.2.4 Structural Equation Modelling In this study, SEM model was applied to determine the influencing factors and the degree of influence of each factor on "Student's entrepreneurial intention" The original SEM model was adjusted to be more relevant to the study The model of satisfaction factors is described in the Figure Figure 1: Model to identify factors affecting VNU students’ entrepreneurial intention (Source: Analyses of collected data) The research results showed that the degree of impact of factors affecting VNU student’s startup intentions were: confidence as 0.082; entrepreneurial thinking as 0.106; education as 0.192; capital as 0.89; technological skills as 0.147; and work skill as 0.156 These factors have a positive relation with students' intention to start a business, which means that the factors above will strengthen the student's intention to start a business, thereby promoting students to start a business Conclusion This study aims to study factors affecting VNU students’ entrepreneurial intention With the structural equation model, the study found a positive relation between the factors of confidence, entrepreneurship, education, technology skills, capital, and working skills and the formation of entrepreneurial intention The most important affecting factor was education, which reflects the reality because when the university focused on training, organizing seminars, startup idea competitions (such as the Business Challenges 2019 Contest organised by the University of Economics and Business, VNU), the university provided students with necessary knowledge for starting a business, and created a positive environment for the development of startup ideas The factor was followed by factors of work skills, technological skills, entrepreneurship, capital, and confidence The findings from this study are useful references in developing strategies to promote entrepreneurship However, the study also reveals some limitations; 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This study aims to study factors affecting VNU students? ?? entrepreneurial intention With the structural equation model, the study found a positive relation between the factors of confidence, entrepreneurship,