Effect of Chinese Value on Entrepreneur Attitude Orientation

PREFACE

Malaysian Chinese marketing activities are influenced by the growth and development of East Asian economies such as four Newly Industrialized countries (NICs) of East Asia, Hong Kong, Singapore, and Taiwan and even South Korea.

How do Chinese business owned-managers achieve economic success? Several studies have revealed that Chinese value has a significant and positive correlation with success of entrepreneur attitude orientation. These Chinese values have significantly influenced the Chinese way of life and personality.

In order to understand how the Chinese value will affect the entrepreneur attitude orientation in Malaysia, the questionnaires were widely distributed to many locations. The survey is important because it can provide insight and more accurate result so to have a better understanding of the topic in a detail research.

This research is conducted with the purpose to investigate how the Chinese value will affect entrepreneur attitude orientation. We have proven that Chinese value has affected the entrepreneur attitude orientation.

ABSTRACT

Research generally concludes that in Malaysia small firm’s particularly Chinese small firms have played a very important role for economic growth in this country. Chinese firms have managed to survive, grow and succeed either in Malaysia or anywhere else in the world. Most prior research found that the success factor was related to the Chinese value. Yet, researchers examined the relationship between Chinese values toward the entrepreneurial attitude orientation. Yet, it is said that Chinese management is more relationship-oriented “guanxi” than performance-oriented.

It was particularly on certain selected values related to integration, human heartedness, confusion work dynamism, moral discipline. This research proposed that Chinese values are the main factor that affect the way Chinese small firms market their operation. Thus, the current study thus proposed that how Chinese value have significant contribution to their success or their failures.

CHAPTER 1: INTRODUCTION

1.0 Introduction

Chapter 1 is the introductory chapter which provides an overview of the study content. This chapter covers eight parts of the study. The first section is research background which outlines the broad field of the chapter. In section one, we discussed the Malaysia Entrepreneurial History and why Chinese Value is important. Next, the second section is about problem statement. It explained the important issues behind the study. The third section is research objective (general objective and specific objective) which explained the aim of investigation. The forth section is research questions that can provide us an understanding about how the Chinese Value affect by the Entrepreneurial Attitudes Orientation. This chapter is continuing by chapter layout which briefly outlines each chapter of the research report. The final section is conclusion, providing a summary of the impact on Chinese Value towards Entrepreneurial Attitudes Orientation.

1.1 Research Background

In Malaysia, the small and medium-sized enterprises (SMEs) sectors play an important part of the developed and developing economies. The SMEs sector in Malaysia plays a significant role and part in the national economy. The sector’s contributions to the nation’s economy can be seen from various aspects such as associated primarily with their role in stimulating economic growth due to the employment opportunities offer by as well as lead to increase economic output. Apart from these contributions, the SMEs sector in Malaysia is also known to make other valuable contributions such as regional income generation, savings, training, stimulation of competition, aiding large firms, introduction of innovation, and as a seed-bed for growth. Thus, a country can reduce its vulnerability to financial crisis by strengthening its SMEs (Hashim, 1999). In Malaysia, the growth and development of the SMEs sector may be best observed in the National Economic Policy and the Malaysian Development Plans (the five-year plans).

From the research we know that small and medium firms have played a very important role for economic growth, particularly Chinese small firms. Chinese owner-manager have managed to survive, grow and succeed either in Malaysia or anyway else all over the world. In other word, Chinese-owned companies in Malaysia were more resilient to economic and financial turmoil than businesses of other ethnic groups. In fact, Malaysian Chinese marketing activities were influence by the growth and development of East Asian economies such as four Newly Industrialized Countries (NICs) of East Asia, Hong Kong, Singapore, and Taiwan and even South Korea’s whose culture was under the influence of Confucianism. Their successfulness is very significant and highly remarkable (Redding, 1990).

Majority of the SMEs are owned by Chinese, hence it is important to study Chinese values (Tan, 1990). For Chinese, culture counts specifically guanxi, “the ages-old practice of continuously cultivating and valuing relationships” which is also the culture that most emphasized by Chinese when doing the business. In order to for Malays to be equally successful as the Chinese such as Entrepreneurial development program for Malays must be spelt out in a master plan and definitely they need guidance and leadership in business especially in marketing from professionals. According to Forbes 5000, out of ten billionaires in Malaysia, eight of them are Chinese. For example: one of the 10 Great Malaysian Entrepreneurs is Lim Goh Tong who migrated from the China mainland in his youth.

1.2 Problem statement

Many countries have indicated successful entrepreneurship as a major component in a healthy market economy and important source of job creation (Hisrich & Peter, 1988; Jackson & Rodkey, 1994; Jennings, 1994; Kroon, 2002; North, 2002; Timmons, 1994; Van Aadrt & Van Aardt, 1997). The presence of entrepreneurial thinking in existing organizations can lead the competitive advantage (Covin and Miles, 1990) and improved financial performance (Goosen, De Coning & Smit, 2002)

According to the research of Brock and Evans (1986) conclude that small businesses are contributed to the economic development. In Malaysia and many countries, small firms had played an important role for economic development. There has been minimal research conducted to examine why most of the companies that survive, grow and succeed are mostly Chinese owner-managers compared to Malay and Indian owner-managers.

Several studies have revealed that Confucian culture has a significant and positive correlation with economic success. These cultural values have significantly influenced the Chinese way of life and personality (Wah, 2002). From the sociological point of view, the family is a basic unit of society for Chinese. In the Chinese Confucianism society, the family is the center of all relationships. Business ownership and management is normally retained within the circle of family members. It is common to find that the Chinese business is normally started by the first generation of the family with the intention to be passed down to the second generation or even third generation. Due to lack of research study on the reason in most of the companies that survive, grow and succeed are mostly Chinese owner-managers. This researches and studies give a way to have a depth understand about the Chinese Value towards Entrepreneurial Attitudes Orientation.

1.3 Research Objectives

The purpose of this study is to find out the impact on Chinese value towards entrepreneurial attitudes orientation. To address the above mentioned problem the following objectives are derived:

1.3.1 General objective

To identify how the four dimension of Chinese value (integration, human heartedness, Confucian work dynamism and moral discipline) determines the entrepreneurial attitudes orientation in Malaysia.

1.3.2 Specific objective

• To examine whether there is a significant relationship between integration and entrepreneurial attitude orientation.
• To examine whether there is a significant relationship between human heartedness and entrepreneurial attitude orientation.
• To examine whether there is a significant relationship between Confucian work dynamism and entrepreneurial attitude orientation.
• To examine whether there is a significant relationship between moral discipline and entrepreneurial attitude orientation.
• To examine whether the Integration, Human heartedness, Confucian work dynamism and Moral discipline is significant explain the variance in Entrepreneurial Attitudes Orientation.

1.4 Research questions

• Are there any relationship between integration and entrepreneurial attitudes orientation?
• Are there any relationship between human heartedness and entrepreneurial attitudes orientation?
• Are there any relationship between Confucian work dynamism and entrepreneurial attitudes orientation?
• Are there any relationship between moral discipline and entrepreneurial attitudes orientation?
• Are there Integration, Human heartedness, Confucian work dynamism and Moral discipline can be use to explain the variance in Entrepreneurial Attitudes Orientation.

1.5Hypothesis of the study

H1 : There is a significant relationship between Integration and Entrepreneurial Attitude Orientation.

H2 : There is a significant relationship between Confusion Work Dynamism and Entrepreneurial Attitude Orientation.

H3 : There is a significant relationship between Human-heartedness and Entrepreneurial Attitude Orientation.

H4 : There is a significant relationship between Moral Discipline and Entrepreneurial Attitude Orientation.

H5 : The independent variables will significantly explain the variance in Entrepreneurial attitudes orientation.

1.6 Significance of the study

Nowadays, the role of Chinese entrepreneurs in small and medium enterprises has been increasing. Chinese are present in everywhere, businessman in international trade will often find themselves dealing with the Chinese customers. So, a comprehensive understanding of the Chinese value is worthy to all businessman.

The importance of this study will explain the development and validation of the Entrepreneurial Attitude Orientation (EAO), based on Chinese Value Survey (CVS) and specifically designed to predict entrepreneurship. The (CVS) are used to access whether an impact towards the entrepreneurs attitude orientation.

Despite the importance of small firms in Malaysia’s economy, there has been minimal research conducted to examine why most of the companies that survive, grow and succeed are mostly Chinese owner-managers as compared to other owner-managers.

1.7 Chapter Layout

In this research report, chapter 1 is the introductions that provide an overview on the background of the phenomena that being study. In general, this chapter will provide a clear understanding of the research topic. It introduces the research background, research objectives and significant of study is to explain the importance of the study.

Chapter 2 will be the literature review that proposed the theoretical background of the research topic. This could help the researcher to better understanding of the important variables in this research report. It serves as a fundamental of the hypothesis to be tested. Literature review is the based on the empirical research which done by previously by researcher who has studied existing work and the field with insight.

Next, is the chapter 3 research methodology that describes the collection method that is suitable for this research report which included the research design, data collection method, sampling design, operational definition of construct measurement scale and the data analysis technique use. By implementing the appropriate sampling method could help to minimize the errors that associated with the research.

Following, chapter 4 will present the pattern of the result and the analyses of the result which obtain from the descriptive analyses, reliability test and inferential analyses to examine the reliability and the relationship of the variables. Furthermore, the research result that shows the result of the data analysis figures, chart, table and graph are used to present the findings.

The last chapter in this research report would be discussion and conclusion that provides discussion of major findings and recommendations for future research. It will provide a whole summary of the whole research project and limitations that researcher faced during the research process.

1.8 Conclusion

Proposed of chapter 1 is act as a foundation for this research project. It form a brief outlines in each chapter presented the chapter. In the following chapter, the variables will be further discussed in depth and the proposed conceptual framework will be illustrated.

CHAPTER 2: LITERATURE REVIEW

2.0 Introduction

In previous chapter, research problem, research objectives, research questions and hypotheses of the study have been identified. In this chapter 2, provide a literature review which convey the knowledge and ideas that have been established on this research topic and related with the research objectives. It contains the discussions and evaluation of the research topic in this section. Through reviewing the relevant journals, it provides the foundation to develop a good theoretical framework for the research. Besides that, it allows the research project lead to further identified relationship among the dependent variables and the independent variables and hypotheses testing in order to reach the research objectives.

2.1 Review of literature

We will adopt attitude theoretical approach (Robinson., P.B., Stimpson, D.V., Huefner, J.C., Hunt, H.K.. 1991a) explaining the development of Chinese entrepreneurs behavior. This is a method of investing entrepreneurial orientated individual. Five important entrepreneurial attitudes were identified from literature, achievement, self-esteem, personal control, innovation and opportunity recognition. This instrument is called Entrepreneurial Attitude Orientation Scale (EAOS).

Besides, we will obtain Chinese Value Survey (CVS) to measure and evaluate cultural values within the setting of a Chinese social value system that is derived from the Confucian ethos. In the CVS consideration is focussed on four dimensions such as Integration, human-heartedness, Confusion work dynamism and moral discipline.

2.2 Review of Relevant Theoretical Model

After read through the relevant journals, few theoretical models are being found related to the research regarding Chinese values (CV) and Entrepreneurial attitudes orientation (EAO).

2.2.1 Chinese Culture values and development

According to Williams (1968), Rokeach (1973), Rokeach, (1973) and Ball-Rokeach (1989), values provide potentially powerful explanations and influence on human behaviors because they serve as the standards or criteria of conduct tend to be limited in number and are remarkably stable over time (as cited in Fok, V. S. & Chong, V.K., 1996). Values establish and reflect expected behaviour and also used to enforce sanctions such as blame and praise as well as social inclusion and exclusion (Anderson, 2000).

Based upon psycho-sociological studies on the significance of cultural values as determinants of human behavior, the two things are related to each other (Hofstede, 1980). Hofstede (1991, p.5) describe culture as “the collective programming of the mind that differentiates one group from another group”. In early, Hofstede’s study suggests that his classic model view as a traditional quantitative design with four dimension of culture. There are power distance, individualism-collectivism, uncertainty avoidance and masculinity-femininity.

However, Hofstede added a fifth dimension named long term orientation in year 2001(as cited in Fontaine, R. & Richardson, S., 2005). Hofstede and Bond (1988) derived that Confucian dynamism as one of the values that contribute to the economic growth in 22 countries during the period 1965 to 1985. Confucian values towards entrepreneurial development in Singapore, Taiwan, South Korea, Hong Kong and Japan bring the name as four dragons at the same time they hold top five positions in economic growth. Mostly countries are within the Confucian influence circle and their economies have been driven to a large extent by entrepreneurship in the small and medium sized business sectors.

Another model act as an improvement on Hofstede classic model (1980) is Schwartz’s model (1994). Itworks out to replace Hofstede’s dimension of Individualism by two dimensions (Autonomy versus Conversation and Hierarchy and Mastery at the cultural level). Furthermore, this model used to eliminate validity and reliability limitation on Hofstede’s model as it has proved valid and reliable across cultures when research have taken Schwartz’s theory and developed a different instrument. Later, Schwartz’s SVS act as a measure instrument which comprises 57 values represent ten dimension at the individual level (power, achievement, hedonism, stimulating, self-direction, universalism, benevolence, tradition, conformity and security) and seven dimension at the cultural level (embeddedness, hierarchy, mastery, affective autonomy, intellectual autonomy, egalitarianism and harmony)(as cited in Fontaine, R. & Richardson, S., 2005).

Chinese cultural values are created from interpersonal relationships and social orientations. The works of Confucius is generally regarded as the pillars of Chinese cultural values Yang (1972). There are four major studies about Chinese value orientations and development of measuring scales. First study, Ways to Live Survey designed by Morris (1956) consisting of 13 alternative conceptions which included values advocated and defended in the several ethical and religious systems of human societies. Second study found that the younger generation showed a considerable change different from their parents who pursue on traditional practices, or be influence by friends and change across time. (Lin 1966).

Continue study was Chinese Value Survey (CVS) developed by the Chinese Culture Connection (1987). It is an idiographic design which is recognized as more appropriate in cross cultural research and not based on Western social science but used 40-scale items which is the fundamental and basic values for Chinese people. Michael Bond and his colleagues conducted this research aim to develop a new questionnaire with the input from several Chinese social scientists in Hong Kong. CVS consist of four dimensions which are integration, Confucian work dynamism, human-heartedness and moral discipline respectively. This instrument that tapped concerns fundamental to the Chinese world view and identify an additional value indigenous to the Chinese people, which they termed “Confucian work dynamism” as the principle attributes reflect the teachings of Confucius and the social continuity of an extant civilization of over 2,500 years(as cited in Steven Ward, 2002).

latest study on Chinese values orientation was the Chinese Cultural Values Scale (CCVS) by Yau (1994). It is the only one scale developed for exploring the relationship between Chinese cultural values and consumer attitudes and behaviors. It is nothing related with entrepreneurial attitudes orientation.

2.2.2 Chinese Value (CV)

Chinese Value is selected to be independent variables in this research. The Chinese Value Survey (referred to as the CVS) was developed by Bond and a group of research workers known collectively as the Chinese Culture Connection in response to their perceived need to measure and evaluate cultural values within the setting of a Chinese social value system that is derived from the Confucian ethos. The Confucian ethos has tended towards the formation of a dedicated and motivated as well as educated population which manifests a responsible and enhanced sense of commitment to its ideals and institutions as well as to the identity and moral fiber of its organization with the resultant establishment of desirable outcomes (Chang et al., 1997).

Values are enduring belief of desired end-state of existence or modes of behaviour (Kluckholn, 1951). In psychology, values are operationalized as the ‘guiding principles of a person’s behaviour’ (Schwarts & Bilsky, 1990). The values measured by Bond and his colleagues remain universal in nature, but they also include some values which are uniquely Confucian (Hofstede, 1991). Examples are respect for tradition, humility, filial piety, and protecting one’s face. This is not to say such values do not exist in Western culture, but rather their implied importance is not as great as in Eastern culture. The study used 40-scale items which were identical to those in the study so as to find out different culture dimensions in valuing (Ng, 1982).

There are four dimensions of (CVS) such as Integration, Human-heartedness, Confusion work dynamism and moral discipline. Integration dimension focuses upon social stability and can be characterized by having tolerance for others. Integration also places importance upon being trustworthy and enjoying a close friendship. It corresponds to Hofstede’s power distance dimension which identifies the degree of power distance that is seen as appropriate between a superior and a subordinate. In the organizational context, it can be an indicator of the degree of centralization that is deemed appropriate.

Secondly, human-heartedness dimension deals with an individual’s level of social consciousness or awareness. It is a measure of one’s compassion toward others. It is characterized by the need to be kind, forgiving and courteous. In the business setting, it may be viewed as presenting a contrast between the task-oriented and people-oriented styles of management. Human-heartedness also may be viewed as comparable to Hofstede’s (1980) masculinity dimension.

The third is the Confusion work dynamism, it reflects the teachings of Confucius that emphasize a social hierarchy or structure (Louie, 1980). It can be characterized by a respect for tradition with a strong desire to save “face.” It also implies a need to order relationships by status and to respect the order of that status. Confucian work dynamism fills a void in the content of Western instruments which, not too surprisingly, do not include Confucian values in their constructs (Hofstede & Bond, 1988).

lastly, is the moral discipline. The focus of this dimension is upon keeping oneself under control in relation to others. It is characterized by the need to be moderate, prudent and adaptable. Following the “high road” is a part of moral discipline when compared with Hofstede’s (1980) IBM research, three of the four CVS dimensions aligned closely with three of the four Hofstede dimensions (Hofstede & Bond 1988). The four Hofstede’s dimensions namely are 1), individualism 2), masculinity, 3) power distance, and 4) uncertainty avoidance. Although Hofstede did not specify the relationship between culture and entrepreneurial, his culture dimensions are useful in identifying the key elements of culture related to entrepreneurial orientation. All four indices were based on responses to questions framed by Western social scientists.

2.2.3 Entrepreneurial Attitude Orientation and Development

The previous research has found that various personality and attitudinal constructs in the field of entrepreneurship. Lumpkin and Dess (1996) have defined Entrepreneurial attitude orientation (EAO) as the processes, practices, decision-making activities that lead to new entry. Furthermore, Hornaday and Aboud (1971) has mentioned EAO is a set of personal psychological traits, values, attributes and attitudes strongly associated with a motivation to engage in entrepreneurial activities.

The six major schools of thought on entrepreneurship were discovered by Barton and Lischeron (1991). These are “Great Person School”, “The Psychological Characteristics School”, “Classical School”, “Management School”, “The Leadership School”, and “Intrapreneurship School”. Each of these schools of thought can be according to its interests in studying personal characteristics, opportunities, management or need for adapting an existing venture. The Psychological Characteristics School has focuses on personality factors and believes that entrepreneurs have unique values and attitudes toward work and life. Beside, Lachman (1980) has suggested that entrepreneurs can differentiate from non-entrepreneurs by personality characteristics such as the people who possess the characteristics entrepreneurs will have higher potential to perform entrepreneurial acts than those who do not possess such characteristics. Based on the three personalities characteristic to distinguish and recognize entrepreneurs from non-entrepreneurs. First, the personal values such as honesty, duty, responsibility, ethical behavior. Second, risk-taking propensity. Last, the need for achievement (as cited in Barton and Lischeron, 1991).

With further empirical supports personality traits contribute to entrepreneurial attitude orientation from McClelland (1961) and Collins, Hanges & Locke (2004) asserted that need for achievement is a strong entrepreneurial trait, and Gasse (1985) and Hansemark (2003) found that entrepreneurs often possess a greater internal locus of control than the general population. Brockhous (1982) identified three attributes consistently associated with entrepreneurial behavior are need for achievement, internal locus of control, and a risk-taking propensity. Krueger & Brazeal, 1994; Erickson, 2002; Frazier & Niehm, 2006 have suggested the higher self-efficacy is associated with entrepreneurship and business creation. (as cited in Harris, M. & Gibson, S., 2009). However, there are also background factors, which relate to individual personality such as gender (Buttner & Rosen, (1989) and education (Storey, 1982) which is also linked to the attitude to establish a business (as cited in Mohammad Shariff, M. N., & Basir Saud, M. 2009).

According to Ajzen & Fishbein (1977), they agreed that the personality theories frequently loss its effectiveness in measuring entrepreneurial attitudes. There are still founded some limitations with lacked predictive validity in groups of entrepreneurship and non- entrepreneurship (Sexton and Bowman 1986). It means certain characteristics have differed on variety of characteristics which are supposed to be stable across time and situation according to personality theory. The possible reasons to explain the limitation are the instruments lack adequate reliability and validity and people are change across time or situation.

In order to deal with the limitation on personality mode entrepreneur research works out attitude model to correct inadequacy of psychological models based on personality. Olson and Bosserman (1984), Gasse (1986), Sexton (1987) have found that attitude in conjunction with entrepreneurship. The concept of “attitude” is a dynamic interactive way of relating to the environment in conjunction with a specific person, place, thing, event, activity, idea or lifestyle. The dynamic nature of the concept implies that it changes across time and from situation to situation (as cited in Robinson., P.B., Stimpson, D.V., Huefner, J.C., Keith Hunt, H., 1991a). . Ajzen (1982), Rosenberg and Hovland (1960) & Shaver (1987) has stated that attitude is the predisposition to respond in a generally favorable or unfavorable manner with respect to the object of the attitude. In addition, Allport (1935), Breckler (1983 and 1984), Carlson (1985), Kothandapani (1970) and others categorized attitude as the tripartite model consisting of three types of reaction to everything: affect, cognition, and conation (as cited in Robinson., P.B., Stimpson, D.V., Huefner, J.C., Keith Hunt, H., 1991b).

The following research conducted by Robinson, P.B., Stimppson, D.V., Heufner, J.C. & Hunt, K.N. (1991), they has adopted this attitudinal theoretical approach explaining the behavioral tendencies of entrepreneurs. Entrepreneurial Attitude Orientation Scale (EAOS) is one method of investigating entrepreneurial orientated individuals provide valid measurement based on attitude theory. Hence, this scale is used to distinguish entrepreneurs from non-entrepreneurs with the four important entrepreneurial attitudes included Achievement, Self-Esteem, Personal Control and Innovation. The four sub-scales described as Achievement in creating a business, Perceived self esteem as indication of self-evaluated competence in business affairs, Perception of personal controland influence over business incentives, and Innovation by acting upon business incentives. Each of the sub-scales is reported to be the product of the three theoretical attitudinal behavioural components of cognition (belief and thoughts), affection (positive or negative conviction) and conative Behaviour (intentions and actions).

Furthermore, another model came out after the attitudinal approach called entrepreneurial opportunity recognition (EOR) by Covin & Slevin, (1989). Both of the researchers have gave more attention to incorporate specific situational factors related to the emotions, cognition, behaviourial action germane to a specific environmental stimulus instead of attitudinal measures. The literature has developed a study that an association of opportunity recognition with the concept of entrepreneurship (as cited in McCline, R.L., Bhat, S. & Baj, P., 2000).

2.2.4 Entrepreneurs Attitude Orientation (EAO)

Entrepreneurial attitude orientation (EAO) is the dependent variable in our research project. Bygrave and Hofer (1991, p.14) define an entrepreneur as “. . . someone who perceives an opportunity and creates an organization to pursue it”. In formulating national policy recommendations, entrepreneurship act as “the creation of new independent businesses” (Vesper, 1983, p.1). Founder of a new business and started the business before others also can applied as an entrepreneurs (Gartner, 1985). The term has been used to define a wide range of activities such as creation, founding, adapting, and managing a venture. Entrepreneurship is not only associated with the formation of new firms, but also with entrepreneurial action in the sense of starting something new (Wennekers and Thurik, 1999).

Attitude is known as a part of personality that is supported by belief and is able to arouse emotions that investigate specific behaviors (Oppenheim, 2000). There are some research revealed that attitude is an important factor of an individual success in entrepreneurship. This is because a successful entrepreneurs is said to be influenced and stimulated by the individual own attitude. In this research, the attitude approach is the best way to explain the success of an entrepreneur because it links the individual and the ever-changing attitudinal object (Kuratko and Hodgetts 2004; Robinson et al. 1991a).Attitudes can therefore also be changed purposely to be more favorable towards entrepreneurship.

Attitude does not appear as a single aspect, but is connected to other aspects of an individual (Oppenheim, 2000). According to Oppenheim, an individual has several extraordinary characteristics that portray his or her personality. Therefore, a person need a true and positive attitude to choose and participated to become successful entrepreneurship (Mohd Salleh et al. 2005). Entrepreneurial attitude orientation is the studies of entrepreneurial personality characteristics. The work of Robinson, Stimpson, Huefner, and Hunt (1991) was one of the first to integrate an attitude scale to predict entrepreneurial activity. (Robinson et al., 1991b) adopted this