Self-Confidence Drives Youth Entrepreneurship in the Philippines, says a Harvard Study
Why college students?
- 1,100+ Filipino college students were surveyed.
- 78% were current college students, while 22% were recent graduates.
- Respondents came from 22 different universities in the Philippines.
- 19 years old was the average age of respondents.
The study focused on college students, because the main reason is an institutional one. Though entrepreneurship is better established in graduate programs and some undergraduate programs, exploratory interviews with college students suggested that many of them were dissatisfied with their learning experiences at the university level. Many found that entrepreneurship education in their schools remain inadequate and poorly designed. I wondered if that had any effect on the way they thought about entrepreneurship.The most important and surprising finding in this study is that one out of four students have started an entrepreneurial venture. Majority of these student companies were founded by non-business majors. “Ventures” in the study was defined broadly: these students either operate a for-profit activity that earns via a product or a service, or mission-driven activities in non-profit ventures. Given that these are students, they don’t have to be registered yet to qualify for this study. That’s a lot of students who have done something entrepreneurial. So what’s motivating them?As it turns out, what’s driving them to start their ventures is that they believe in themselves and in what they can do. In the study, 68% of those who started ventures mentioned “self-confidence” as the main reason. One student from UP told me that she started a venture because she believes she has “what it takes to build a company.”Second, they started their ventures, because they had the opportunity to learn entrepreneurship, whether through school, courses, or experience. Some schools have incubators and other entrepreneurship initiatives. Some students make use of those. Many students who have family businesses said that their experience there helped them start their own ventures. Third, they had a lower fear of failure. Starting a company is risky, but these students see failures as opportunities to learn, rather than as reasons to quit. One respondent told me: “I’ve failed many times. And it’s tough to fail. But hey, at least I’ll know what not to do next time!” But some of those who have started their ventures still face a number of challenges. Half of respondents said they still lack skills such as general management, marketing, operations, and customer development. They find it hard too to navigate government regulations. Some also said that managing one’s self and the team is challenging. This involves from managing stress to choosing the right partner, and from building the team to managing conflict. Put together, what these responses tell us is that preparing the young to take on entrepreneurship means focusing first on psychological factors that are associated with entrepreneurial intention: self-confidence, self-awareness, and managing fear. These drivers, combined with external drivers such as providing opportunities to learn and practice business, can be a power tool to build young entrepreneurs.Now, what about the other students who have not started ventures? What do they think?As it turns out, 60% of students who have not started entrepreneurial ventures actually want to start one, but are hesitant to.The first problem is access to funding. These students—76% of them—said that they either don’t have the money to start a company, or don’t know where or how to get funding.The second problem is the lack of quality business knowledge. These students, according to the survey, don’t know how to start a business. One respondent told me this: “We need more information on how to start a company. We don’t really know what to do, or how to make their ideas come to life.” Some schools offer business courses, but not every student can take them. An engineering student noted that in UP, “there are business courses in our school. But not everyone is given access… I think that they should give this chance to all students.” There’s a whole other set of students who said that teaching entrepreneurship in their schools is not that effective. A respondent from the Ateneo De Manila University said, “most professors just teach by the book… so we have a hard time learning.” The third problem is lower self-confidence. Some have lower self-confidence in their ability to succeed as a leader. Students told me that they probably won’t be able to survive the pressures of building a company, and that they would ultimately fail. The fourth problem has something to do with the third problem: fear of failure. About half of the respondents said that they didn’t start companies because they had a high fear of failure. A respondent from DLSU said, “I am sure I cannot do it on my own.” Another said, “I’ve always wanted to start my own company…but what happens if I fail?” Again, powerful psychological barriers come into play.Interestingly, I thought that pressures from family and friends would play a big role in one’s decision (or hesitation) to become a founder. And indeed family plays a role – although not as big as I thought it would be. For those who have not started ventures, only 8% said that they were hesitant to start one because their family wanted a different job or career from them. In general, pressures from family did not seem to override the bigger problems of funding, education, and self-confidence.
The Entrepreneurial Triad: Self-Confidence, Quality Education, and Access to Funding
So what can we learn from this study? There are a few points that we can take-away:First, psychology plays a huge role in entrepreneurship. Psychological constructs such as self-confidence, self-efficacy, fear tolerance, and resiliency are deciding factors to become an entrepreneur. More importantly, these will also play a significant role how young founders manage and cope with future entrepreneurial challenges. Thus, any initiative that wants to build young entrepreneurs must have a firm understanding of the psychology of entrepreneurs.Second, providing quality business education that is open for all types of students is key. Whether it is because teachers focus too much on theories, or because there is a lack of experiential learning in those classes, quality is a big issue. But it is also equally important to increase access for all types of students, especially those in non-business majors. As a whole, students in the physical sciences, social sciences, and arts do not have the same access to opportunities as business students do. Third, access to funding is definitely a concern that must be addressed. Low access to funding can be a result of two things. First, it could be a result of institutional barriers that hinder access to funding in the Philippines. This could be issues related to government, access to loans, or an underdeveloped funding ecosystem in the Philippines. Second, this issue could also be a result of a knowledge gap. Specifically, do young students know where and how they can secure funding? Are students knowledgeable of the different ways to fund a venture (think bootstrapping, private and angel investors, venture capitalists)? Do students know how to negotiate investments and equity splits? These are definitely points to consider if one wants to build young entrepreneurs.There’s a still a big opportunity to conduct more research on youth entrepreneurship in the Philippines. Though my study has brought about some insights, it too has its own limitations. Because most respondents came from urban schools in the Philippines, I’d be cautious to generalize this to all Filipino college students. There needs to be more studies on this such as those done on aspiring entrepreneurs in other regions of the Philippines.Reimagining entrepreneurship education is a fascinating challenge. If we were to start from scratch with new knowledge about entrepreneurial psychology and the latest pedagogical approaches, how would we design practical business education for young Filipinos? It’s an incredibly exciting time for entrepreneurship education because doing so allows us to start with a clean slate, and not face the barriers to innovation that hinder traditional colleges and universities.