Entrepreneurship as an employment status of higher education graduates and implications for entrepreneurship education

This paper discusses entrepreneurship as an employment status of higher education graduates drawn on both secondary and primary data.

The main research findings show that the entrepreneurship rate of Vietnam is higher than many other countries and Vietnamese university graduates. The entrepreneurship rate of Ho Chi Minh City University of Education’s graduates is 12.3%, which is a moderate level.

A large proportion of the entrepreneurs come up to start a new business at university or after graduation. The findings imply that tailored entrepreneurship courses for students in different disciplines at university will increase the entrepreneurship rate and the entrepreneurial success of the graduates.

1. Introduction.

Entrepreneurship has received widespread attention in most countries because it is considered a key driver for economic growth and job creation. Between 1980 and 1997 in the United State, the 500 most profitable US industrial companies, i.e.

Fortune 500, lost more than 5 million jobs, but more than 34 million new jobs were created; and small companies that are with fewer than 500 employees accommodated 53% of the private workforce and accounted for 51% of the private sector Gross Domestic Product (Reynolds, Hay & Camp, 1999).

Since the mid-1990s, entrepreneurship has been central to the public policy arena of developed countries in North America and Europe, and after that expanded to other parts of the world.

The year 2016 has been declared as the “year of startups” in Vietnam, demonstrating the government’s ambitious plan to turn the country into a startup nation. In order to create a favorable environment to promote and support entrepreneurship and small and medium-sized enterprises (SMEs), the government has launched the national project 844 “Supporting the Innovative Startup Ecosystem to 2025” according to Decision No. 844/QD-TTg (Vietnamese Government, 2016).

Follow-up missions have been assigned to the education sector under the national project 1665 “Supporting Students’ Startups to 2025” according to Decision No.1665/QD-TTg (Vietnamese Government, 2017).

Most Vietnamese universities have provided students with entrepreneurial programs in either the form of extracurricular workshops, or elective courses, or undergraduate degree specializations. The students have been encouraged to develop entrepreneurial skills to improve their employability or to initiate ideas that could turn into business ventures.

The Ministry of Education and Training (MOET) has made it mandatory for universities to conduct surveys and publicize graduate employment data, in which self-employment is classified as a type of workplaces (MOET, 2018). MOET has not required a breakdown of self-employment into sub-items such as entrepreneurs, mixed entrepreneur, and own-account workers and left such a classification open.

This paper discusses entrepreneurship as employment status of higher education graduates by looking in detail at different types of employment, entrepreneurship, and characteristics of entrepreneurs who graduated from higher education institutions. Findings on the entrepreneurship of higher education graduates have several important implications for the design of entrepreneurship education.

2. Research design.

2.1. Literature review.

Entrepreneurship has become an engaging research field because it is considered a key driver for the development of an economy. In the context of the government eagerness to promote entrepreneurship, there is a constant interest in investigating factors that influence the intention of individuals, including higher education graduates, to start a new business instead of becoming wage employees (Krueger, 2000; Bui, Le, Dao & Nguyen, 2011).

The research on entrepreneurship among higher education graduates has attracted interest for two main reasons. Firstly, the interest of educators and researchers on the extent to which entrepreneurship education could influence the decision of graduates to start their own business. Secondly, the understanding of the entrepreneurial activity of graduates provides insights that could be helpful for the design of entrepreneurship education at higher education institutions.

Entrepreneurship is a complex phenomenon and the measurement of the entrepreneurship status is still in debate. A definition widely used in measuring the entrepreneurship status is the one proposed by the Global Entrepreneurship Monitor (GEM), the world’s largest and most extensive study of entrepreneurial activity.

GEM defines entrepreneurship as “any attempt at new venture or new business creation, such as self-employment, a new business organization or the expansion of an existing business, by an individual, a team of individuals, or an established business” (Reynolds et al., 1999: p. 3).

By this definition, entrepreneurship takes place in 3 forms that are self-employment without hiring employees or an own-account worker, establishing a new business, and expanding an existing business or intrapreneurship.

GEM measurement focuses on entrepreneurial activity which is seen as a process of a business life cycle including entrepreneurial intention, nascent, new, and established business activity (Bosma, Acs, Autio, Coduras, & Levie, 2009). The level of entrepreneurial activity is measured by the percentage of the adult population who are between 18 and 64 years old currently participating in new business creation.

GEM data of some selected countries are presented in Table 1. The first GEM report released in 1999 presents data about the overall entrepreneurship rate (OER) of 10 countries. Of which, the United States, Canada, Israel are classified as a high level of entrepreneurial activity, Italy and the United Kingdom fall in the medium level, and Denmark, Finland, France, Germany, Japan fall in the low level (Reynolds et al., 1999).

Table 1. The percentage of entrepreneurial activity in GEM reports of selected countries, 1999-2019. Sources: GEM reports: 1999, 2008, 2009, 2013, 2017/18, 2018/19.Note: OER: overall entrepreneurship rate; TEA: total early-stage entrepreneurial activity; EPR: established ownership rate; EEA: entrepreneurial employee activity.

GEM measurement of entrepreneurial activity has been elaborated over time. The 2008 executive report presents an operational definition of entrepreneurial activity considered from business life-cycle stages including potential entrepreneur, a nascent entrepreneur involved in setting up a business, owner-manager of a newly established business, owner-manager of an established business.

The overall entrepreneurship rate (OER) is equal to the percentage of the adult population who are either involved in total early-stage entrepreneurial activity (TEA) or an owner-manager of an established business. TEA is equal to the percentage of the adult population who are either nascent entrepreneurs or owner-managers of a new business for 3.5 years or less.

The established ownership rate (EPR) is the percentage of the adult population who are currently an owner-manager of an established business, i.e., owning and running a business that has paid salaries, wages, or any other payments to the owners for more than 3.5 years (Bosma et. al., 2009). There are cases where the sum of TEA and EPR is larger than OER. That is because an entrepreneur involves in more than a business.

GEM reports in 2018 and 2019 present the entrepreneurial employee activity (EEA) which is the rate of involvement of employees in entrepreneurial activities such as developing or launching new goods or services, or setting up a new business unit or a new subsidiary, in established businesses (Singer, Herrington & Menipaz, 2018; Bosma & Kelly, 2019).

Another term for EEA is intrapreneurship. Commonly, EEA rates are higher in high-income economies because there are more innovative firms than in lower-income economies. In addition, EEA is also more attractive because it is more expensive to start a business in a high-income economy.

GEM long-standing database with indicators of different types of entrepreneurial activity is a powerful instrument for exploring the entrepreneurship status in a country and for comparing the status among countries. Three measures of entrepreneurship which are TEA, EPR, EEA are widely used by many countries.

Recently, the interest in discovering entrepreneurship among higher education graduates has been increasing. Using the data of “Careers after Higher Education – A European Research Survey”, Martínez, Mora and Vila (2007) report that among employed graduates, 4% are entrepreneurs who are establishing a firm, 5% are otherwise self-employed, and 91% are employees.

Exploring entrepreneurship among university graduates in Sweden drawn on the “Firms and Establishment Dynamics” data for the period 1985-2008, Daghbashyan and Hårsman (2010) report a fact that 85% of employed graduates choose a wage job and 7.6% of them choose to start a business.

Additionally, there are approximately 7.4% of employed graduates having both wage and business income at the same time. The two authors indicate the drawback of using a binary model that classifies employment status into 2 categories of wage employment and self-employment for the reason that such a classification does not cover the phenomenon of a person involving in both types of employment.

The authors propose an entrepreneurship typology reflecting the possibility to be more or less involved in entrepreneurial activity, which are full employees, mixed employees, mixed entrepreneurs, entrepreneur-self-owners, and entrepreneur-co-owners. The classification of belonging to a certain group is based on the level of income that the wage or business activity brings.

Table 2. Percentage of Swedish higher education graduates by employment status and discipline. Source: adapted from Daghbashyan and Hårsman (2010), p.7.

The data in Table 2 show that among seven groups of disciplines, graduates in “Arts and Media” stand out as the most entrepreneurship oriented. For this discipline, the proportion of entrepreneurs-owners is 13%, the proportion of mixed entrepreneurs closes to 6%, 17.1% are mixed employees, and 64% are employees.

Graduates who received teacher education seem to be the least entrepreneurship oriented, with less than 3% being entrepreneurs or mixed entrepreneurs, 8% being mixed employees. The orientation to entrepreneurship is not much different between graduates in “Social Sciences” and those in “Natural Sciences”.

Kostoglou and Siakas (2012) use an institutional survey of employment of graduates after 5 to 7 years of graduation from a higher education institution in Greece to discover graduate entrepreneurship. The data show that 84.7% of the graduates are working, 8.4% are unemployed and 6.9% are not seeking a position in the labor market. 12.8% of the graduates are self-employed.

Among the self-employed graduates, 56.7% start a new firm from scratch, 37.1% are self-employed in family businesses and 6.2% are in other types of businesses. Further analysis of the self-employed graduates shows that 61.4% of them do not hire any employee, 26.4% employ 1 to 5 employees, 5.5% employ 6 to 20 employees, 3.5% 21 to 50 employees, and 2.5% employ over 50 employees.

The literature on employment and entrepreneurship of higher education graduates shows that there are a moderate proportion of the graduates choosing to start their own business instead of becoming wage employees.

The percentage of self-employed graduates ranges from around 10% to 20%, and mixed employment is an evident reality. Self-employment or entrepreneurship is an emerging status of employment among higher education graduates.

2.2. Methodology.

In this paper, entrepreneurship as employment status of university graduates is discussed by using both secondary and primary data. The secondary data are used to explore the place of Vietnam in the global entrepreneurship landscape, and the primary data are used to discover the entrepreneurship of graduates from a specific Vietnamese university.

The body of literature in the field is searched by entering keywords “entrepreneurship” “higher education” “graduates” “employment” in Google. The works selected for discussion are those that focus on discovering different types of employment and entrepreneurship, and on breaking down the category of graduates’ entrepreneurship into sub items.

GEM reports are one of the main sources of data used. GEM measurement of different types of entrepreneurial activity in terms of TEA, EPR, EEA is a powerful instrument for exploring the entrepreneurship status in Vietnam and for comparing with other countries. However, GEM methodology does not pay attention to the type of mixed employment status.

Data of entrepreneurship as an employment status of higher education graduates can be extracted from graduate employment databases. However, such data often use a binary model that classifies the employment status into wage employment and self-employment or entrepreneurship.

Available literature on graduate entrepreneurship shows that researchers often conduct a purposeful survey (Vasiliadis & Thomas, 2007; Kostoglou & Siakas, 2012) or use a typical dataset (Daghbashyan & Hårsman, 2010) to discover the diversity of entrepreneurial activity of graduates.

In a such survey it is often seen a breakdown of employment status into a detailed typology reflecting the possibility to be more or less involved in entrepreneurial activity. Empirical data about entrepreneurship of higher education graduates in Vietnam were collected at Hochiminh City University of Education (HCMUE).

A self-administered online questionnaire was sent to graduates from the bachelor’s degree programs in the period 1996-2020. Teacher training programs were not included in the survey because the future career supposed to the students of these programs are teachers rather than entrepreneurs.

A total of 159 graduates answered the questionnaire. Such a number of respondents were low but not surprising. The “Entrepreneurship of the Graduates of Bachelor’s Degree Programs” survey was conducted in April and May 2021, which is not long after the university’s “2020 Graduate Employment Survey”.

Therefore, it was highly likely that many of the 2020 graduates were no longer interested in responding to another survey about their employment status including entrepreneurship. In addition, a low response rate of the graduate employment survey is common and understandable.

This study combines Daghbashyan and Hårsman’s employment typology with GEM’s typology of entrepreneurial activity and the International Classification of Status in Employment (ILO, n.d.) in order to learn about the different types of entrepreneurship.

The questionnaire asks the graduates about their employment status with seven options for answering including “wage employment”, “contributing family worker”, “intrapreneurship”, “own-account worker – entrepreneur without employees”, “small business entrepreneur”, “firm-established entrepreneur”, and “working for a wage in combination with doing one’s own business”. The classification of employment and entrepreneurship used for analyzing the primary data is presented in Table 3.

Binary model of employment status: Wage employment.

Sub-divided typology of employment and entrepreneurship: Wage employment; Contributing family worker; Intrapreneurship.

Binary model of employment status: Entrepreneurship or self-employment.

Sub-divided typology of employment and entrepreneurship: Own-account worker – entrepreneur without employees; Small business entrepreneur; Enterprises-established entrepreneur.

Table 3. Typology of employment and entrepreneurship. Besides the primary data collected via the questionnaire, the study also uses data in HCMUE’s 2020 Graduate Employment Survey report. Working for a wage in combination with doing one’s own business.

3. Findings and discussions.

As shown in Table 1, Vietnam is included in GEM reports in 2013 and 2018. The country’s TEAs and EPRs in sequence in the respective years are 15.4%, 23.3% and 16.4%, 24.7%. These numbers are much higher than those in many other countries. Other developing countries in Asia such as China and Thailand are also in the same situation with a very high level of entrepreneurial activity.

A reason for this pattern is that developing countries often fall into the group of resource-driven and efficiency-driven economies which have higher TEA and EPR, while developed countries like the US, Canada, European countries fall into the group of innovation-driven economies with higher EEA.

Another reason explaining the phenomenon in Vietnam is that besides the form of establishing enterprises, a large part of the entrepreneurial activity is in the form of family businesses, individual entrepreneurs without employees, and farm businesses.

Statistics in 2015 show that there were 94,754 new-established enterprises, 83,487 new non-agricultural individual businesses, and 2,275 new farms (Le, Truong, Pham, & Nguyen, 2016).

In addition, there are a number of self-employed persons and family businesses that are not registered under any specific forms of national legislation; therefore, they are not included in official statistics. All these types of self-employment are counted into entrepreneurial activity in GEM data.

Entrepreneurship in the form of establishing enterprises, which is also called startups, creates favorable conditions for entrepreneurs to raise capital in many different ways, to employ more laborers, increase the business scale, apply and create innovation. Enterprises-established entrepreneurship is the goal of different startup support as well as entrepreneurship education programs such as Project 844 and Project 1665.

Several pieces of research show that the survival rate of companies founded by higher education graduates is higher than the average and the ones founded by non-graduates, enterprises established by graduates perform better than the average of the rest of enterprises of similar size; graduates often set up micro-private enterprises based on their knowledge and skills (Vasiliadis & Thomas, 2007).

In Vietnam, 84% of enterprises-established entrepreneurs have university degrees, a majority of them, about 70%, are 30 years old or over and have experience in the private sector, especially growing up from household business (Le et al., 2016).

The self-employed graduate count is an item included in the annual graduate employment survey by Vietnamese universities. The self-employed is counted from the employed one, and self-employment is classified as a type of workplaces.

The Training Support and Human Resource Development Center (TSC), MOET is responsible for receiving the annual graduate employment reports from universities, but it has not yet released an overall report for the Vietnamese higher education sector.

A source of data representative for the entire Vietnamese higher education sector can be found in the graduate employment report by Nguyen, Peiró, Le, González-Romá and Martínez-Tur (2020) within the framework of the Europe-Vietnam Collaborative on Graduates’ Employment (EVENT) project, funded and supported by the European Union.

EVENT project conducts a survey on employment graduates after one-year graduation from 5 Vietnamese universities. The data show that 82.7% of graduates are employed, 6.2% are self-employed, and 11.2% are unemployed.

At a specific university, the 2020 Graduate Employment Survey of HCMUE shows that 3.7% of employed graduates are self-employed, 25.1% work in the state sector, 54.2% work in the private sector, and 17.1% are working at establishments with foreign elements (HCMUE, 2021).

It should be noted here that the calculation of self-employment rate in the annual university graduate employment survey report is different from that in EVENT project. The self-employment rate in EVENT project is calculated from the denominator which is the number of graduates, while the one in the university graduate employment survey is calculated from the number of employed graduates.

This difference in the method of counting self-employed graduates of the two surveys indicates that there are various ways of presenting the entrepreneurship status among university graduates.

HCMUE’s graduate employment data divided into sub items are presented in Table 4. Among the employed graduates, 87.7% are working for wage, 4.9% are entrepreneurs, and 7.4% are mixed entrepreneurs, i.e. working for a wage and doing one’s own business at the same time.

The rate of self-employed graduates in this study is slightly higher than that in the university’s 2020 Graduate Employment Survey, and there are data about mixed entrepreneurs. That is because the focus of this study is to discover the status of entrepreneurship among the graduates.

With regard to all forms of entrepreneurship including both entrepreneurs and intrapreneurs, 12.3% of HCMUE’s employed graduates involved in entrepreneurial activity is a moderate level, which is not much lower than those of some selected countries in Table 1.

HCMUE’s graduate entrepreneurship rate of 12.3% is much lower than Vietnam’s TEAs and EPRs, while the intrapreneurship rate of 3.3% is higher than EEA of 0.6. HCMUE’s survey results are not surprised because these percentages are calculated from a sample of employed graduates while EEA is calculated from a sample of Vietnamese 18-64 years old.

A university education level increases the probability of being employed. HCMUE’s graduate intrapreneurship percentage of 3.3% is good news because intrapreneurship is a major contributor to business development and innovation. The higher intrapreneurship rate of HCMUE graduates certainly contributes to the development of innovative startups in Vietnam.

Table 4. The status of employment and entrepreneurship of HCMUE graduates. Types of employment: Working for wage; Wage employment; Contributing family worker; Intra-entrepreneurship; Entrepreneurship or self-employment; Self-employed – entrepreneur does not hire workers; Small business entrepreneur; Firm-established entrepreneur. Mixed employment: working for a wage in combination with doing one’s own business. Count: 122. Percent: 100.

The pattern of the employment status of HCMUE graduates is quite similar to that of Swedish higher education institutions. Excluding the data of teachers, a big majority, more than 80%, of graduates are working for wage, the percentage of graduates in mixed employment is higher than the percentage of entrepreneurs.

Financial constraints are one of the major difficulties for entrepreneurs. Many graduates in their early stage of starting a new business have to work as wage employees to earn money to nurture their new business. That is the reason for the pattern of a higher percentage of graduates in mixed employment than that in doing one’s own business.

Table 5. Characteristics of entrepreneurs graduated from HCMUE. Characteristics of graduate entrepreneur: Entrepreneurial objectives; Self-employed, not hire workers; Enterprise-established entrepreneur; Innovative startup, growing up into a big companies; Time when graduates intend to start a business; At high school; At university; After university graduation. Total: 100.

Characteristics of entrepreneurs graduated from HCMUE presented in Table 5 show that the entrepreneurs have ambitious goals which are establishing enterprises, being innovative startups, and becoming big companies. The graduate entrepreneurial objectives promise a contribution of entrepreneurship as a key driver for the economy.

Other characteristics of the entrepreneurs are that 73.3% of them come up to start a new business at university or after graduation, and only 13.3% are introduced or trained in entrepreneurship while studying at the university. These numbers suggest that entrepreneurship education courses at HCMUE will have potential impacts on the students’ intention to become an entrepreneur.

A large proportion, 66.7%, of the entrepreneurs are majored in foreign languages such as English, French, Chinese language and Vietnamese studies, while the proportion of the entrepreneurs majored in STEM disciplines such as physics, chemistry, information technology is low, accounting for 13.3%. Recently, there is an increasing advocate for STEM-based entrepreneurship.

The competencies required to succeed in STEM disciplines such as creativity, problem-solving, foresight, adaptability are also suited for success as an entrepreneur. Therefore, integrating entrepreneurship into undergraduate programs in STEM disciplines at HCMUE should be received more attention.

A majority, about 70%, of the entrepreneurs evaluate the three factors of “successful market competition”, “high achievement in income and profit”, and “continuous business growth” as important and very important levels. The proportions of evaluation of the factors of “social recognition” and “community problem solving” as important and very important are lower, but as moderately important are higher.

The three formers are related to the knowledge and skills in the area of business which is not the strengths of HCMUE, while the two laters can be developed through humanities and STEM disciplines which are traditional academic areas at HCMUE.

These findings suggest that entrepreneurship courses at HCMUE should include the knowledge of personal development and business, and enable students to apply and practice their knowledge and understanding. In addition, training programs in humanities and STEM areas should aim at student learning outcomes regarding value creation and problem-solving.

4. Conclusions.

Higher education graduates involved in entrepreneurship are an evident phenomenon. In the context of the governments creating a favorable environment to promote entrepreneurship, the number and proportion of graduates choosing entrepreneurship as a career path will continue increasing.

The pattern of graduate entrepreneurship at a specific Vietnamese university which is HCMUE indicates that along with full-time entrepreneurs, mixed entrepreneurs and intrapreneurs also account for a recognizable proportion. The full-time entrepreneurs with ambitious goals and intrapreneurs are valuable human resources that contribute to the growth of innovative startups.

The development of tailored entrepreneurship courses suited to students in different disciplines and the integration of entrepreneurial knowledge and skills into existing training programs at university will be the right way to promote business development and innovation in Vietnam.

References

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[19] Vietnamese Government (2017). Quyet dinh so 1665/QD-TTg ve viec phe duyet de an “Ho tro hoc sinh, sinh vien khoi nghiep den nam 2025 [Decision No.1665/QD-TTg on approval of the project “Supporting Students’ Startups to 2025”].

* Conflict of Interest: Author has no conflict of interest to declare.

* Cite this article as: Pham Thi Lan Phuong (2021). Entrepreneurship as an employment status of higher education graduates and implications for entrepreneurship education. Ho Chi Minh City University of Education Journal of Science, 18(11), 2023-2036.

Author: Pham Thi Lan Phuong
Ho Chi Minh City University of Education, Vietnam

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