The influence of the institutional environment on entrepreneurial intentions of the youth living in urban and rural areas of Mpumalanga Province

Abstract

The youth has been identified as having great potential to contribute to the growth of the South African economy through entrepreneurship. Many research studies have been conducted to investigate the impact of the institutional environment on entrepreneurial intentions. However, not much has been explored to understand the cognitive and normative institutional factors that are present in urban and rural areas, that have an impact on entrepreneurial intentions of young people. A research study is performed to understand the level of influence that the institutional environment (cognitive and normative), has on entrepreneurial intentions of young people living in urban and rural areas in the Mpumalanga province. The study will further investigate the impact of the institutional environment on desirability and feasibility towards entrepreneurship of young people residing in urban and rural areas in the province. This study proposed to use mainly the theory of entrepreneurial event and Kostava’s institutional theory to investigate the impact of the external environment on entrepreneurial intentions. The study was quantitative and cross sectional in nature. Electronic surveys were distributed to young people in Mpumalanga, and a total of 376 usable responses was obtained. The data was analysed using linear and multiple regression. The key findings indicated that the normative environment in urban areas had a positive impact on entrepreneurial intent while the cognitive environment in urban areas had a negative impact. In relation to rural areas in Mpumalanga, both the normative and cognitive environment had a positive impact on entrepreneurial intent. The two antecedents of entrepreneurial intention being perceived as desirability and feasibility, were found to be unrelated to the instrument and hence hyphothesis relating to these were not tested. The implications of this research for policy makers is to focus on increasing momentum in entrepreneurship awareness in order to see an increased number of sustainable businesses that will have a greater impact and contribution the economy as a whole.