Journal of Managerial Psychology 11,3 12

Testing hypotheses of entrepreneurial characteristics

A study of Hong Kong MBA students
Hian Chye Koh
School of Accountancy and Business, Nanyang Technological University, Singapore
Introduction The last decade has seen a strong current of renewed interest in entrepreneurship research and practice. This entrepreneurial revolution is likely to be sustained into the next decade, helped by the opening up of China and Vietnam, the collapse of the communist bloc in Europe and Soviet Russia, and worldwide recession and high unemployment rates in the 1990s. These events, among others, have put entrepreneurship in the limelight. In fact, the entrepreneurial energy being devoted to entrepreneurship is a phenomenon in and of itself. Besides the very rapid growth of both the professional and academic entrepreneurship literature and entrepreneurial ventures worldwide, perhaps the most obvious evidence of this resurgent interest is the emergence of university courses on entrepreneurship. In 1993, over 400 colleges and universities in the USA offered courses in entrepreneurship education[1]. This is a significant increase from the late 1960s when only a handful of universities made formal entrepreneurship training available[2]. In addition, major international organizations, including the United Nations, are involved in entrepreneurship development and several countries have encouraged entrepreneurship among their people. For example, the Government of Singapore has identified entrepreneurship as one of the most significant factors (if not the most significant) in the process of growth and development of its national economy[3]. Entrepreneurial efforts in South Africa, India, Europe, Russia, Ireland, Australia and other countries have been documented in the literature (see, for example, [4-6]). Given the growing importance of entrepreneurship, there is practical value in being able to identify entrepreneurial characteristics. The objective of this study is to test hypotheses of entrepreneurial characteristics. In so doing, the study attempts to distinguish between those who are entrepreneurially inclined and those who are not on the basis of psychological characteristics. Knowledge of the factors associated with entrepreneurial inclination can have practical significance. For example, it can be used as a career guidance tool for students or as a device for screening entrants into an entrepreneurship programme. In addition, such knowledge can serve as inputs to entrepreneurship curriculum[1].

Journal of Managerial Psychology, Vol. 11 No. 3, 1996, pp. 12-25. MCB University Press, 0268-3946

This paper comprises four major sections. The first section reviews the literature and develops the research hypotheses for the study. The second section discusses the research methodology employed and the third section presents the results and implications. Finally, the fourth section summarizes the findings, discusses the limitations of the study and suggests directions for future research. Literature review and development of hypotheses Despite the substantial interest and research in entrepreneurship and entrepreneurs, defining and understanding entrepreneurship and entrepreneurs remain difficult and challenging[7]. Essentially, there is very little consensus on what entrepreneurship is and what an entrepreneur does. From a survey of the entrepreneurship literature, Cunningham and Lischeron[8] have identified six different major schools of thought. The great person school views an entrepreneur as a person who is born with intuition, vigour, energy, persistence and self-esteem, while the classical school identifies entrepreneurship with innovation, creativity and discovery. The management school describes an entrepreneur as one who organizes, owns, manages and assumes risk. In a similar manner, the leadership school views an entrepreneur as one who motivates, directs and leads. In contrast, the intrapreneurship school focuses on skilful managers within complex organizations. This study adopts the psychological characteristics school of entrepreneurship, which views entrepreneurs as individuals with unique values, attitudes and needs which drive them and differentiate them from non-entrepreneurs. Its premise is that ones needs, drives, attitudes, beliefs and values are primary determinants of behaviour. As such, this school of thought focuses on personality/psychological factors and characteristics. Lachman[9], for example, suggested that people who possess the same characteristics as entrepreneurs will have a higher tendency (or potential) to perform entrepreneurial acts than people who do not possess such characteristics. Also, Mitton[7] has described entrepreneurs as those who have certain psychological characteristics such as a total commitment to their cause, a need for total control, a utilitarian view of what is right and a liking for uncertainty and challenge. As noted by Churchill and Lewis[10], within the field of entrepreneurship research, more empirical studies involving characteristics of entrepreneurs have been conducted than have almost any other kind. Similarly, Herron and Robinson[11] reported that studies of various entrepreneurial characteristics have been conducted over the years with great frequency. This is not surprising and, in fact, should be expected, given that an understanding of psychological characteristics that are unique to entrepreneurs (vis--vis non-entrepreneurs) is a logical first step in studying entrepreneurship[12]. The main psychological characteristics associated with entrepreneurship in the literature (i.e. need for achievement, locus of control, propensity to take risk, tolerance of ambiguity, self-confidence and innovativeness) and the hypotheses relating to them are discussed next. These characteristics are included in the study because they are the most frequently enumerated as entrepreneurial characteristics. For example,

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Journal of Managerial Psychology 11,3 14

in analysing the entrepreneurial process, Bygrave[13] presented a model that includes need for achievement, internal locus of control, tolerance for ambiguity and risk-taking propensity as vital components. Similarly, Robinson et al.[14] have listed achievement, innovativeness, control and self-confidence as entrepreneurial attitudes. To date, need for achievement and locus of control have received the most attention in the entrepreneurship literature[15]. Need for achievement McClellands[16] theory that need for achievement is a strong psychological driving force behind human action has been long proposed as a factor influencing entrepreneurial behaviour. It is believed that individuals with a high need for achievement have a strong desire to be successful and are consequently more likely to behave entrepreneurially. Of all the psychological characteristics presumed to be associated with entrepreneurship, need for achievement has the longest history[15]. Further, evidence indicating significant association between need for achievement and entrepreneurship have been widely documented in the literature. For example, Johnson[17] reported that, despite variability among studies regarding samples and the operationalization of the need for achievement, a fairly consistent relationship between need for achievement and entrepreneurship can be found in 20 out of 23 major studies in the entrepreneurship literature. Recent studies have also reported that entrepreneurs have higher need for achievement as compared to nonentrepreneurs (see, for example, [14,18]). Based on the need for achievement theory and the previous research findings that entrepreneurs are high achievers, this study postulates the following null hypothesis: H1: Individuals who are entrepreneurially inclined and those who are not have the same level of the need for achievement. Locus of control Locus of control represents an individuals perceptions about the rewards and punishments in his/her life[19]. While individuals with an internal locus of control believe that they are able to control lifes events, individuals with an external locus of control believe that lifes events are the result of external factors, such as chance, luck or fate. Rotter[20] hypothesized that those with an internal locus of control would more likely strive for achievement compared with those with an external locus of control. Brockhaus and Horwitz[21] suggested further that locus of control could distinguish entrepreneurs who are successful from those who are unsuccessful. Generally, it is believed that entrepreneurs prefer to take and hold unmistakable command instead of leaving things to external factors[7]. Empirical findings that internal locus of control is an entrepreneurial characteristic has been reported in the literature (see, for example, [12,14]). Given the above, another null hypothesis tested in this study is as follows: H2: Individuals who are entrepreneurially inclined and those who are not have the same locus of control.

Propensity to take risk A persons risk-taking propensity can be defined as his/her orientation towards taking chances in uncertain decision-making contexts. Mill[22] suggested that risk bearing is the key factor in distinguishing entrepreneurs from managers, and others have suggested that the entrepreneurial function primarily involves risk measurement and risk taking (see, for example, [23-25]). It is believed that entrepreneurs prefer to take moderate risks in situations where they have some degree of control or skill in realizing a profit. Much of the entrepreneurship literature includes risk taking as a major entrepreneurial characteristic (e.g. [8,12]). Accordingly, the third null hypothesis tested in this study is: H3: Individuals who are entrepreneurially inclined and those who are not have the same level of risk-taking propensity. Tolerance of ambiguity When there is insufficient information to structure a situation, an ambiguous situation is said to exist. The manner in which a person perceives an ambiguous situation and organizes the available information to approach it reflects his/her tolerance of ambiguity. A person who has a high tolerance of ambiguity is one who finds ambiguous situations challenging and who strives to overcome unstable and unpredictable situations in order to perform well. Entrepreneurs do not only operate in an uncertain environment; according to Mitton[7], entrepreneurs eagerly undertake the unknown and willingly seek out and manage uncertainty. Thus, it is believed that tolerance of ambiguity is an entrepreneurial characteristic and those who are entrepreneurially inclined are expected to display more tolerance of ambiguity than others[26,27]. Hence, the following null hypothesis is also tested in the study: H4: Individuals who are entrepreneurially inclined and those who are not have the same level of ambiguity tolerance. Self-confidence Given the general notion of an entrepreneur as one who prefers to go into his/her own business, it can be expected that an entrepreneur must believe that he/she is able to achieve the goals that are set. In other words, an entrepreneur is expected to have a perceived sense of self-esteem and competence in conjunction with his/her business affairs[14]. Ho and Koh[12] have suggested that self-confidence is a necessary entrepreneurial characteristic and that it is related to other psychological characteristics, such as internal locus of control, propensity to take risk and tolerance of ambiguity. Empirical studies in the entrepreneurship literature have found entrepreneurs to have a higher degree of self-confidence relative to non-entrepreneurs (see, for example, [12-14]). Therefore, another null hypothesis tested in the study can be stated as follows: H5: Individuals who are entrepreneurially inclined and those who are not have the same level of self-confidence.

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Journal of Managerial Psychology 11,3 16

Innovativeness Innovativeness relates to perceiving and acting on business activities in new and unique ways[14]. It is one of the recurring themes in defining entrepreneurship (see, for example, [8,28,29]). As suggested by Schumpeter[30] and Mitton[7], innovativeness is the focal point of entrepreneurship and an essential entrepreneurial characteristic. Evidence reported in the entrepreneurship literature shows that entrepreneurs are significantly more innovative than nonentrepreneurs (see, for example, [12,14,18]). The close relationship between innovativeness and entrepreneurship has also been discussed in the professional literature, with examples of innovators-entrepreneurs, such as Edwin Land (founder of Polaroid Corporation) and An Wang (founder of Wang Laboratories). Given the above, the last null hypothesis tested in this study is: H6: Individuals who are entrepreneurially inclined and those who are not have the same level of innovativeness. Research methodology From the literature review, it can be seen that theoretical and empirical research in the academic and professional entrepreneurship literature has associated psychological characteristics with entrepreneurship. In particular, evidence shows that as compared to non-entrepreneurs, entrepreneurs have greater need for achievement, more internal locus of control, higher propensity to take risk, greater tolerance of ambiguity, more self-confidence and greater innovativeness. The objective of the study is to investigate if these psychological characteristics can adequately distinguish between those who are entrepreneurially inclined and those who are not (i.e. whether entrepreneurs and non-entrepreneurs have systematically different psychological characteristics). The following methodology is employed in the study. Research framework and variables selection The research framework used in the study is adapted from the entrepreneurship model proposed by Martin[31] and Gartner[32] (see also, [33]). The model suggests, among other things, that certain entrepreneurial characteristics predispose entrepreneurs towards entrepreneurial activities and these characteristics make them different from non-entrepreneurs. The research framework employed in the study is presented in Figure 1. The variables selected for investigation are reflected in the null hypotheses developed in the previous section (see also Figure 1). In particular, the independent variables included in the study are the need for achievement, locus of control, propensity to take risk, tolerance for ambiguity, self-confidence and innovativeness. The justification for selecting these variables has been discussed in the literature review section and hence is not repeated here. The dependent variable in the study is entrepreneurial inclination. (Operational definitions of the variables are discussed under questionnaire development.)

Psychological characteristics

Entrepreneurial inclination

Testing hypotheses

1. Need for achievement (H1 )

2. Locus of control (H2 )

17
1. Entrepreneurially inclined

3. Propensity to take risk (H3 )

4. Tolerance of ambiguity (H4 )

2. Non-entrepreneurially inclined

5. Self-confidence (H5 ) Figure 1. Research framework

6. Innovations (H6)

Population of interest and sample selection This study is conducted on a sample of MBA students in Hong Kong. Hong Kong is considered an interesting and appropriate place to conduct entrepreneurship studies because of its highly regarded and reputed entrepreneurial spirit and success. In this respect, Siu and Martin[34] concluded from an analysis of Hong Kong that economic factors (e.g. free open market and voluntary exchange), noneconomic factors (e.g. blocked upward mobility in political channels in the colonial environment) and psychological factors (e.g. the Chinese culture, values and perspectives) have contributed significantly to successful entrepreneurship in Hong Kong. In addition, MBA students comprise an interesting and appropriate population to study because of their unique characteristics. Generally, MBA students have completed their first degree successfully and they enrol in MBA programmes in order to acquire more managerial knowledge and skills. Also, they are mostly adults with working experience who are at a stage of their lives where their entrepreneurial inclinations and ambitions (if any) are clear and can be made operative. MBA students who are entrepreneurially inclined are likely to enrol in MBA programmes to prepare themselves for entrepreneurial activities while MBA students who are not entrepreneurially inclined are likely to enrol in MBA programmes to improve their career prospects as managers in organizations. For the study, the population of interest comprises MBA students in Hong Kong. The sample for the study is drawn randomly from MBA students in the Hong Kong University of Science and Technology. A research questionnaire was

Journal of Managerial Psychology 11,3 18

administered to 100 MBA students in mid-September 1993, and a total of 54 usable responses were received by the end of September 1993. This yields a usable response rate of 54 per cent. Questionnaire development The survey instrument used in the study is a self-administered, fixed-alternative questionnaire. Fixed-alternative questions are used to facilitate ease of scoring to ensure a high response rate. Such format also facilitates the coding and analysis of data. The questionnaire comprises two major sections. The first section measures the six psychological characteristics specified in the six hypotheses; namely, need for achievement (six items), locus of control (seven items), propensity to take risk (six items), tolerance of ambiguity (six items), selfconfidence (six items), and innovativeness (five items). This section consists of 36 statements taken primarily from the entrepreneurial self-assessment scale[35]. Respondents are asked to indicate their degree of agreement or disagreement with each statement on a five-point Likert scale, from strongly agree to strongly disagree. Some statements are reverse-scored and intermingled with other statements to minimize response-set bias and the halo effect. Previous researchers have reported high internal reliability for these measures (see, for example, [12]). For each of the six psychological characteristics, a higher score indicates a greater need for achievement, more internal locus of control, higher propensity to take risk, greater tolerance of ambiguity, more self-confidence or greater innovativeness. The second section measures entrepreneurial inclination as well as selected demographic and family variables. To measure entrepreneurial inclination, respondents are asked to indicate their probability of starting a business in the next three years or so. Respondents who have a high or very high probability of starting a business are classified as entrepreneurially inclined; the others (i.e. those with a low probability of starting a business over the next three years or so) are classified as non-entrepreneurially inclined. That is, entrepreneurial inclination is measured as a dichotomous variable. This measurement is consistent with the definition of an entrepreneur as one who favours selfemployment or going into a business of his/her own[12,36]. Demographic and family information are also collected in the second section to develop a profile of the sample and verify that the two subgroups of entrepreneurially and non-entrepreneurially inclined are homogeneous with respect to demographic or family characteristics. This helps ensure that the results are not confounded by extrageneous factors. For this purpose, questions on sex, age, marital status, number of siblings, birth order and entrepreneurial inclination of family members (i.e. whether the family owns a business) are asked in section two of the questionnaire. Incidentally, these demographic and family factors have also been associated with entrepreneurship in the literature (see, for example, [37,38]). Before administering, the questionnaire is pilot-tested on a small sample and minor revisions are made to improve its readability and format.

Statistical methods Descriptive statistics (e.g. means, standard deviations and frequency distributions) are computed to develop a profile of the sample. To verify that the entrepreneurially inclined and non-entrepreneurially inclined in the sample are homogeneous with respect to selected demographic and family characteristics, 2 tests of independence are conducted on entrepreneurial inclination and sex, age, marital status, number of siblings, birth order and entrepreneurial inclination of family members. To analyse the data and test the six null hypotheses specified in the study, both univariate and multivariate tests are conducted. At the univariate level, t-tests of significant differences are performed to investigate if respondents who are entrepreneurially inclined and those who are not differ significantly on the six psychological characteristics, one at a time. At the multivariate level, logit analysis is performed to test the association between the six psychological characteristics and entrepreneurial inclination simultaneously. Results and implications As mentioned earlier, 54 usable responses were returned from a random sample of 100 MBA students in the Hong Kong University of Science and Technology, yielding a response rate of 54 per cent. Of the 54 respondents, 22 (i.e. 40.74 per cent) were found to be entrepreneurially inclined and 32 (i.e. 59.26 per cent) nonentrepreneurially inclined. Descriptive statistics of the variables are presented in Table I for the total sample as well as the two subgroups of entrepreneurially and non-entrepreneurially inclined separately. As can be seen, among the respondents 40 (74.07 per cent) are males, 31 (57.41 per cent) are below 30 years of age, 41 (75.93 per cent) are single, 24 (44.44 per cent) have less than two siblings, 36 (66.67 per cent) are the eldest child, and 26 (48.15 per cent) come from entrepreneurially inclined families. As for the six psychological characteristics, the mean score ranges from 2.94 for tolerance of ambiguity to 3.67 for innovativeness. The mid-point of each of the six scales is three on a five-point Likert scale, which ranges from one to five. At a significance level of 0.05, all the psychological characteristics are significantly above the mid-point of three with p-values of 0.0001, except for tolerance of ambiguity (p-value = 0.4259). Results of univariate tests The objective of this study is to test hypotheses of entrepreneurial characteristics. To ensure that the results are not confounded by systematic differences of other extrageneous factors, 2 tests of independence are performed to investigate if significant differences with respect to demographic and family characteristics (i.e. sex, age, marital status, number of siblings, birth order and entrepreneurial inclination of family) exist between the two subgroups of respondents (i.e. those who are entrepreneurially inclined and those who are nonentrepreneurially inclined). The results are reported in Tables II and III. As shown, at a significance level of 0.05, none of the demographic and family factors

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Variable Means (standard deviations) Need for achievement (H1 ) Locus of control (H2) Propensity to take risk (H3) Tolerance of ambiguity (H4) Self-confidence (H5 ) Innovativeness (H6 ) Frequency distribution Sex Male Female Age Below 30 years 30 years and above Marital status Single Married Number of siblings Less than two Two or more Birth order First born Others Family Entrepreneur Non-entrepreneur

Total sample

Inclination Non-entrepreneur Entrepreneur

3.52 (0.49) 3.31 (0.46) 3.35 (0.44) 2.94 (0.51) 3.40 (0.41) 3.67 (0.50)

3.46 (0.52) 3.28 (0.42) 3.18 (0.46) 2.80 (0.46) 3.33 (0.45) 3.41 (0.41)

3.61 (0.44) 3.36 (0.53) 3.61 (0.23) 3.17 (0.50) 3.52 (0.32) 4.05 (0.33)

40 (74.07%) 14 (25.93%) 31 (57.41%) 23 (42.59%) 41 (75.93%) 13 (24.07%) 24 (44.44%) 30 (55.56%) 36 (66.67%) 18 (33.33%) 26 (48.15%) 28 (51.85%)

21 (65.63%) 11 (34.38%) 18 (56.25%) 14 (43.75%) 24 (75.00%) 8 (25.00%) 12 (37.50%) 20 (62.50%) 24 (75.00%) 8 (25.00%) 15 (46.88%) 17 (53.13%)

19 (86.36%) 3 (13.64%) 13 (59.09%) 9 (40.91%) 17 (77.27%) 5 (22.73%) 12 (54.55%) 10 (45.45%) 12 (54.55%) 10 (45.45%) 11 (50.00%) 11 (50.00%)

Table I. Descriptive statistics of samples and variables

Variable Sex Age Marital status Number of siblings Birth order Family entrepreneurial inclination

Df 1 1 1 1 1 1

2 value
2.920 0.043 0.037 1.534 2.455 0.051

p-value 0.088 0.836 0.848 0.215 0.117 0.821

Table II. Results of univariate tests 2 tests of independence

investigated is significantly different between the two subgroups. The most significant factor is sex, with a p-value of 0.088. Accordingly, the two subgroups of entrepreneurially inclined and non-entrepreneurially inclined respondents can

be considered homogeneous with respect to sex, age, marital status, the number of siblings, birth order and family entrepreneurial inclination. Given the results, it is possible to test if entrepreneurial inclination is significantly associated with the six psychological characteristics identified in the study without the confounding effects of demographic and family variables. The mean scores shown in Table I are consistent with expectations reflected in the hypotheses and indicate that those who are entrepreneurially inclined have greater need for achievement, more internal locus of control, higher propensity to take risk, greater tolerance of ambiguity, more self-confidence and greater innovativeness. To investigate the differences statistically at the univariate level, t-tests of significance differences are conducted. At a 0.05 significance level, the results in Tables II and III show that those who are entrepreneurially inclined have significantly higher propensity to take risk ( p = 0.0001), greater innovativeness ( p = 0.0001), and greater tolerance of ambiguity ( p = 0.0066). Self-confidence has a p-value of 0.0991. The remaining two psychological characteristics, need for achievement and locus of control, are not significant at a 0.10 significance level.
Variable Need for achievement (H1) Locus of control (H2) Propensity to take risk (H3) Tolerance of ambiguity (H4) Self-confidence (H5 ) Innovativeness (H6) N 52 52 52 52 52 52 t-value 1.0489 0.6717 4.4289 2.8317 1.6791 6.1337 p-value 0.2991 0.5047 0.0001 0.0066 0.0991 0.0001

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Table III. Results of univariate tests t-tests of significant differences

Results of multivariate analysis To investigate the entrepreneurial characteristics further in a multivariate setting, logit analysis is performed. The dependent variable is entrepreneurial inclination and the independent variables are the six psychological characteristics. The logit analysis results are summarized in Tables IV and V. As shown, the logit model has a p-value of 0.0001, indicating a good fit. The results of logit analysis are consistent with those of the t-tests in that at a 0.05 level of significance, innovativeness ( p = 0.0041), tolerance of ambiguity (p = 0.0157), and propensity to take risk ( p = 0.0195) are statistically significant. The negative coefficients indicate that those who are entrepreneurially inclined have greater innovativeness, more tolerance of ambiguity and higher propensity to take risk. The other psychological characteristics are not significant at a 0.05 or 0.10 level of significance. The holdout accuracy rates of the logit model (computed using a jack-knife approach) are also presented in Tables IV and V. As can be seen, the accuracy rate for entrepreneurially inclined is 86.36 per cent, while the accuracy rate for non-entrepreneurially inclined is 87.50 per cent. The overall accuracy rate of the

Journal of Managerial Psychology 11,3 22

Table IV. Results of multivariate analysis logit analysis results

Variable Intercept Need for achievement (H1) Locus of control (H2) Propensity to take risk (H3) Tolerance of ambiguity (H4) Self-confidence (H5) Innovativeness (H6) Model (2 Log L)

Df 1 1 1 1 1 1 1

Coefficient 39.2521 0.9427 1.7614 3.8920 3.9388 0.2045 6.4421

2
7.3652 1.2332 2.3458 5.4559 5.8387 0.0350 8.2208 49.2550

p-value 0.0066 0.2668 0.1256 0.0195 0.0157 0.8515 0.0041 0.0001

Actual inclination Entrepreneur Non-entrepreneur Total Overall accuracy rate

Entrepreneur 19 (86.36%) 4 (12.50%) 23

Predicted inclination Non-entrepreneur 3 (13.64%) 28 (87.50%) 31

Total 22 32 54 87.04%

Table V. Results of multivariate analysis holdout accuracy rates

model is 87.04 per cent. In other words, the six psychological characteristics can classify entrepreneurial inclination with an overall holdout accuracy rate of 87.04 per cent. These accuracy rates can be considered high. Using only need for achievement, self-confidence, locus of control and innovativeness, Robinson et al.[14] constructed a model that predicts entrepreneurial inclination with an overall in-sample accuracy rate of 77 per cent. (The overall in-sample accuracy rate of this study is 88.89 per cent.) Findings and implications The results show that the null hypotheses for propensity to take risk (H3), tolerance of ambiguity (H4) and innovativeness (H6 ) can be rejected at a 0.05 level of significance. As expected, those who are entrepreneurially inclined have a higher propensity to take risk, more tolerance of ambiguity and greater innovativeness. Collectively, the six psychological characteristics can distinguish between those who are entrepreneurially inclined and those who are not at an overall holdout accuracy rate of 87.04 per cent, which can be considered adequate. Thus, the findings support the psychological characteristics school of entrepreneurship (see [8]) and are consistent with the entrepreneurship model suggested by Martin[31] and Gartner[32]. The findings are also consistent with previous findings reported in the entrepreneurship literature. Given the growing importance of entrepreneurship, there is practical value in being able to identify entrepreneurial characteristics and to distinguish between

those who are entrepreneurially inclined and those who are not. In particular, with knowledge of the factors (i.e. psychological characteristics) associated with entrepreneurial inclination, programmes can be initiated (for example, by governments) to develop and enhance these factors in order to encourage entrepreneurship. This may be desirable, since entrepreneurship can contribute significantly to the economy of a country. Further, the findings can be used as a career guidance tool for students or as a device for screening entrants into an entrepreneurship programme. By knowing their entrepreneurial inclination, students can make better and more informed career choices. Further, by distinguishing between the entrepreneurially inclined and the nonentrepreneurially inclined, institutions offering entrepreneurship programmes can make better selection of entrants into their programmes. In addition, the findings can serve as inputs into entrepreneurship education. Previous research has suggested that psychological characteristics can be learnt or changed [39,40]. In Hood and Young[1], leading entrepreneurs and chief executive officers emphasized the importance of teaching psychological characteristics in entrepreneurship education to train successful entrepreneurs. Conclusion The objective of this study is to test hypotheses of entrepreneurial characteristics. In particular, the study investigates if entrepreneurial inclination is significantly associated with the psychological characteristics of need for achievement, locus of control, propensity to take risk, tolerance of ambiguity, self-confidence and innovativeness. T-test results and logit analysis at a 0.05 level of significance indicate that those who are entrepreneurially inclined have greater innovativeness, more tolerance of ambiguity and higher propensity to take risk, as compared to those who are not entrepreneurially inclined. The logit model has an overall holdout accuracy rate of 87.04 per cent. In interpreting the results of the study, a few limitations should be borne in mind. First, the study employs a self-report questionnaire. Thus, the possibility of response bias and non-response bias exists. The latter, however, is mitigated by the high response rate of 54 per cent. Second, the study focuses only on MBA students in Hong Kong (in particular, in the Hong Kong University of Science and Technology). Although the sample comes from a population that is considered interesting and appropriate for investigating entrepreneurial characteristics, the external validity of the findings may be limited. In other words, other populations (e.g. non-MBA students or MBA students in other countries) may yield findings that are different from those reported in the study. Third, no conclusion on the causal relationship between psychological characteristics and entrepreneurial inclination can be inferred; only associations are addressed in the study. The limitations highlighted above also suggest possible directions for future research. In particular, future research can investigate the relationship between psychological characteristics and entrepreneurial inclination in a more complete research framework that includes other factors, such as financial, family and

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environmental support, precipitating events, pull-and-push factors, demonstration effects etc. (see [32]). Further, casual analysis can be attempted in future research to investigate relationships leading to the entrepreneurial decision. In this respect, it is interesting also to study factors associated with or leading to entrepreneurial success in addition to entrepreneurial inclination. With its strong current of renewed interest, entrepreneurship is set to be an even more important area for academic and professional research in the future.
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Testing hypotheses

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