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ORIGINAL PAPER Self-Efficacy and Entrepreneurial Intention: The Mediation Effect of Self-Regulation Zaidatol Akmaliah Lope Pihie & Afsaneh Bagheri Received: 16 August 2012 /Accepted: 20 March 2013 / Published online: 6 April 2013 # Springer Science+Business Media Dordrecht 2013 Abstract Specifying the mechanism through which perceived self-efficacy affects one’s behavior has been one of the main concerns of researchers and educators particularly in entrepreneurship domain due to the critical role that entrepreneurial self-efficacy plays in motivating and enabling individuals to establish a new venture. This study examines the relationship between entrepreneurial self-efficacy, self- regulation and entrepreneurial intention using Bandura’s structural path model for the constructs. The sample was composed of 722 public and private Malaysian university students. The results revealed that students’ entrepreneurial self-efficacy has the most significant and positive impact on their intention to become an entre- preneur. More specifically, entrepreneurial self-efficacy highly affects students’ en- trepreneurial intention both directly and indirectly. Furthermore, self-regulation partially mediates the relationship between entrepreneurial self-efficacy and students’ entrepreneurial intention. Implications of these findings for entrepreneurship research and education are discussed. Keywords Entrepreneurial self-efficacy . Self-regulation . Entrepreneurial intention . University students Introduction The decision to pursue entrepreneurship as the career path has received increasing attention by researchers and educators due to the dramatically critical role that entrepreneurship phenomenon plays in fostering socioeconomic development of both developed and developing countries (BarNir et al. 2011; Murali et al. 2009; Mastura Vocations and Learning (2013) 6:385–401 DOI 10.1007/s12186-013-9101-9 Z. A. L. Pihie :A. Bagheri (*) Faculty of Educational Studies, University Putra Malaysia, Serdang, Selangor 43400, Malaysia e-mail: bagheri20052010@hotmail.com Z. A. L. Pihie e-mail: zalp@educ.upm.edu.my and Abdul Rashid 2008; Matlay 2006, 2005; Busenitz et al. 2003; Mueller and Thomas 2000). Consequently, a robust body of studies conducted to identify the personal and environmental factors that motivate and prepare individuals and specif- ically university students to enter the challenging process of creating a new venture (e.g. Carsrud and Brännback 2011; McMullen et al. 2008; Liñán 2008; Barbosa et al. 2007; Segal et al. 2005; Baum and Locke 2004). Researchers have mostly applied the theory of planned behavior (Ajzen 1991) to explain individuals’ vocational choice and behavior (Berger and D’Ascoli 2012; Gegenfurtner 2012; Kyndt et al. 2011) as well as students’ entrepreneurial career selection based on the assumption that this choice is a complex and deliberate behavior that requires various cognitive processes and can most accurately be predicted by intention (Guerrero et al. 2008; Schjoedt and Shaver 2007; Segal et al. 2005; Ajzen 2002; Krueger et al. 2000; Boyd and Vozikis 1994). Scholars emphasise that students’ entrepreneurial intention can determine their actual career choice as an entrepreneur (BarNir et al. 2011; Kickul et al. 2009). The theory explains human decision to adopt a specific behavior, such as students’ intention to create their own businesses, as a function of the interactions among three motivational and enabling factors. The first factor is control over behavior that reflects students’ perceptions of their abilities and skills to perform entrepreneurial tasks. Entrepreneurial skills highly affect students’ sense of ability to execute the tasks needed for establishing their own businesses (BarNir et al. 2011; Liñán 2008). The second factor is attitude towards entrepreneurship that indicates students’ aware- ness of the importance and value of entrepreneurship and their expectations from the results and consequences of starting their own venture. Students’ attitudes toward entrepreneurship take shape by various personal and environmental factors such as entrepreneurial skills and the value and support of entrepreneurship in their close environment (Liñán 2008). Finally, the third factor is subjective and social norms that represent students’ perceptions of how significant others such as their family and friends value and support the establishment of a new business and their tendency to comply with them. The higher students receive support from the significant others, the stronger is their intention to choose entrepreneurship as their future career path (Chen and He 2011). These factors shape students’ intention to pursue entrepreneur- ship and enhance their motivation and desire to establish their own businesses. However, there is little understanding about the factors that influence students’ entrepreneurial intention (Fayolle and Gailly 2008; Fayolle et al. 2006). Prior research has shown that students’ entrepreneurial intention can be influenced and guided by both personal and environmental factors (Souitaris et al. 2007; Fayolle et al. 2006). Specifying these factors and the nature of their interactions is of critical importance for university students as potential entrepreneurs in order to enhance their intention to choose entrepreneurship as their future career and enable them to change their intention to a real new business (De Clercq et al. 2012; Culbertson et al. 2011; Fitzsimmons and Douglas 2011). Empirical research has highlighted self-efficacy as the strongest personal factor that influences students’ entrepreneurial intention (Carr and Sequeira 2007; Zhao et al. 2005). Entrepreneurial self-efficacy has been defined as the beliefs in individuals’ capac- ities to successfully perform the tasks required for starting and managing a new business and their expectations toward the outcomes of creating a new venture (McGee et al. 2009; Kickul et al. 2008; Cox et al. 2002; DeNoble et al. 1999; Chen 386 Z.A.L. Pihie, A. Bagheri et al. 1998). Yet, little is known about the mechanism through which perceived self- efficacy affects behavior in general (Bandura 1997) and students’ entrepreneurial career intentions in particular. Recently, Bandura (2012) proposed a model that highlights self-regulation, the motivation and ability to set personal goals and strive to accomplish the goals, as one of the structural paths through which self-efficacy affects behavior. Only few researchers investigated the relationship between self- regulation and entrepreneurial intention among students (McMullen and Shepherd 2002). Using the model as the research theoretical framework, this study aims to answer three research questions. First, what is the nature of the relationships among Malaysian university students’ entrepreneurial self-efficacy, self-regulation and their entrepreneurial intention? Second, what is the relationship between students’ entre- preneurial self-efficacy and self-regulation? Finally, does self-regulation have a mediating effect on the relationship between students’ entrepreneurial self-efficacy and intention? The findings provide one of the first empirical studies that explore the linkages between students’ self-efficacy in performing required roles and tasks for launching a new business, ability to guide their behavior toward creating a new venture, and intention to choose an entrepreneurial career. The remaining of this paper is organized in six sections. First, we describe the theoretical background of self-efficacy and self-regulation in relation to entrepreneurial intention. Then, we present our research method and findings. Finally, we conclude with a discussion of the findings in light of their implications for entrepreneurship research, theory development and education. Self-Efficacy and Entrepreneurial Intention Self-efficacy is grounded in social cognitive theory (Bandura 1997). The theory explains human behavior as “a product of the interplay of intrapersonal influences, the behavior individuals engage in, and the environmental forces that impinge upon them” (Bandura 2012:11). The interactions among these factors shape one’s beliefs in having the ability to successfully perform a specific behavior in a certain situation and his/her expectations towards the outcomes of the behavior (Bandura 1999). Self- efficacy beliefs highly influence individuals’ selection of an action despite the presence of alternatives, amount of efforts they expend to execute the action, their perseverance in the face of difficulties and challenges and their success in performing the action (Dwyer and Cummings 2001; Bandura 1997). Self-efficacy is both the antecedent and the consequence of an action choice and affects the way in which individuals perform their current task and direct their future task accomplishments (Bandura 2000). Bandura (2012) argues that self-efficacy is the most influential factor affecting behavior because it influences behavior both directly and indirectly through its impact on other processes and factors such as goal setting, outcome expectations and perceptions toward facilitators and impediments in the environment. The funda- mental impact of self-efficacy on human behavior led scholars to apply the concept in various fields such as entrepreneurship. Scholars argue that vocational choice is a complex process requiring a high sense of self-efficacy (Bryant 2007; Schjoedt and Shaver 2007; Betz and Hackett 2006). On the importance of self-efficacy for career selection, Bandura (2012:13) emphasizes Self-Efficacy and Entrepreneurial Intention: The Mediation Effect 387 that “In the process of career decision making, self-efficacy affects the slate of options given serious consideration”. Entrepreneurship researchers highlighted the critical influence of self-efficacy on different aspects of a new venture creation process. Entrepreneurial self-efficacy is one’s perceived capacities to successfully perform the tasks and roles of an entrepreneur and his/her expectations toward the consequences of creating a new venture (BarNir et al. 2011; McGee et al. 2009; Kickul et al. 2008; Chen et al. 1998). Previous research has shown that entrepreneurial self-efficacy highly affects individuals’ intention and competence to become an entrepreneur, the amount of effort they devote to create a new business, their persistence in facing the changes and challenges of a new venture creation process, and their success in performing entrepreneurial roles and tasks (Trevelyan 2011; Chen et al. 1998; Boyd and Vozikis 1994). Entrepreneurial self-efficacy is also the key personal capability that motivates entrepreneurial behaviors (Tyszka et al. 2011; McGee et al. 2009; DePillis and Reardon 2007; Chen et al. 1998) and enables entrepreneurs to overcome difficulties during the entrepreneurship process such as opportunity recognition, marshalling resources and improving performance of the new business (Tumasjan and Braun 2012; McGee et al. 2009; Barbosa et al. 2007; Bryant 2006; Markman and Baron 2003). Entrepreneurial self-efficacy, therefore, not only influences individuals’ decision to choose an entrepreneurial career but also directs their future performance in the process of managing and developing a new venture (McGee et al. 2009; Bandura 2000). Specifically for students, entrepreneurial self-efficacy affects their motivation and competence to enter the challenging process of starting their own businesses and indicates the extent of their academic preparation for their future career path as an entrepreneur (Bandura 2012). Chen et al. (1998) emphasise that students with a strong sense of efficacy in successfully performing entrepreneurial tasks such as marketing, financial control, management and risk taking have higher intentions to become entrepreneurs than those with low beliefs in their entrepreneurial abilities and skills. A robust body of research has shown the significant positive impact of entrepreneurial self-efficacy on students’ entrepreneurial career choice (e.g. BarNir et al. 2011; Kickul et al. 2009; Carr and Sequeira 2007; Zhao et al. 2005). Re- searchers argue that entrepreneurial self-efficacy improves students’ entrepreneurial career intention by influencing their capacity to manage the process, their attitudes toward entrepreneurship and subjective norms. More specifically, several studies have shown that students’ beliefs in their abilities and skills to perform the tasks as an entrepreneur affect their entrepreneurial intention through enhancing their sense of control over the process of entrepreneurship (Liñán 2008; Carr and Sequeira 2007; Zhao et al. 2005; Boyd and Vozikis 1994) and improving their abilities to face the challenges and overcome the impediments in the process (Zhao et al. 2005). Liñán (2008) provided empirical evidence for the significant impact of students’ perceived entrepreneurial skills on their entrepreneurial intention through influencing their attitude toward starting their own businesses, perceived behavioral control and subjective norms. Liñán concluded that improving students’ entrepreneurial self- efficacy can highly enhance their intention to pursue an entrepreneurial career because of its significant impact on all of the factors that shape entrepreneurial intention. Therefore, entrepreneurial self-efficacy has the most significant effect on students’ entrepreneurial career intention both directly and indirectly through 388 Z.A.L. Pihie, A. Bagheri strengthening the relationship between other factors that affect their intention to become entrepreneurs (Bandura 2012; BarNir et al. 2011; Culbertson et al. 2011). The influential impact of students’ entrepreneurial self-efficacy on their entrepre- neurial career intention has led educators to provide them with a wide variety of opportunities such as business plan writing, running a small business and working with an entrepreneur to enhance their skills and confidence in different tasks and roles as an entrepreneur (Baum and Locke 2004; Rae and Carswell 2000). Students’ involvement in these learning activities shapes their beliefs in their capabilities to perform entrepreneurial tasks and helps them decide on whether to pursue an entrepreneurial career path (Wilson et al. 2007; Souitaris et al. 2007; Fayolle et al. 2006; Zhao et al. 2005; Erikson 2003). However, there is little knowledge about how the acquired self-efficacy in performing entrepreneurial tasks improves students’ intention to become an entrepreneur. Moreover, few researchers have examined the association between students’ entrepreneurial self-efficacy, entrepreneurial intention and other personal attributes such as self-regulation (McMullen and Shepherd 2002). This study aims to address this gap by measuring university students’ entrepreneurial self-efficacy, self-regulation and entrepreneurial intention; the personal capabilities that can be developed by education and training (Tumasjan and Braun 2012; Bryant 2006, 2007; Wilson et al. 2007; Fayolle et al. 2006; Ajzen 2002). Self-Regulation and Entrepreneurial Intention While self-efficacy has traditionally been used to explain entrepreneurs’ motivation and performance as well as students’ intention to pursue entrepreneurship as their future career (Tyszka et al. 2011; Culbertson et al. 2011; DePillis and Reardon 2007; Segal et al. 2005; DeNoble et al. 1999; Chen et al. 1998), self-regulation has recently emerged as a theoretical framework in entrepreneurship research and education (Tumasjan and Braun 2012; Bryant 2006, 2007; Brockner et al. 2004; McMullen and Shepherd 2002). The theory of self-regulation (Higgins 1998) explains how people direct their own motivation, thought and behavior in pursue of joy and comfort and prevention of distress and conflict. However, this tendency can also be changed by one’s self-regulation; which is the ability to choose and pursue goals despite the presence of personal and environmental impediments (Higgins et al. 2001). In fact, self-regulation is individuals’ motivation and ability to envision desired future events based on their past knowledge and experience and monitor and guide their behavior to realize the vision (Bandura 1997). While self-efficacy is the ability to successfully perform a specific task in a specific situation, self- regulation is the capability to regularly direct one’s thoughts and behavior to accom- plish the task despite the presence of different obstacles (Bandura 2012). Promotion and prevention focuses are the main components of the self-regulation theory that create the required motivation and ability towards the accomplishment of personal goals. If people consider the pleasant and lucrative outcomes of achieving a goal, they are promotion-focused and if they emphasize their security and avoid potential failures and losses, they are prevention-focused (Bryant 2007; Brockner et al. 2004; McMullen and Shepherd 2002). Individuals construct their sense of self-regulation based on their past successes and failures as well as their present situational factors Self-Efficacy and Entrepreneurial Intention: The Mediation Effect 389 (Higgins et al. 2001). Since people’s experiences and situations are unique, their regulatory focus differs in terms of their motivation and ability to anticipate future, develop expectations and goals, determine the outcomes of the goals and choose strategies to achieve them (Bryant 2009, 2007; Brockner et al. 2004; Bandura 1997). The theory of self-regulation has recently been applied in entrepreneurship re- search to explain entrepreneurial motivation and behavior (Brockner et al. 2004). When faced with highly complex and uncertain situations, such as those found in the process of selection to become an entrepreneur, self-regulation helps define the manner by which individuals approach the decision, evaluate their abilities to enact the intention and direct themselves to fulfil the required tasks (Bryant 2007, 2006; Brockner et al. 2004). Self-regulatory focus also influences the amount of effort entrepreneurs put into establishing new ventures as well as their success in managing their business (Brockner et al. 2004). Promotion focus enables entrepreneurs to recognize various creative and innovative entrepreneurial opportunities (Tumasjan and Braun 2012; Trevelyan 2011; Brockner et al. 2004), decide which entrepreneurial opportunities to exploit (Bryant 2007) and enhance the performance of their new venture (Hmieleski and Baron 2008). Prevention focus, in turn, guides entrepreneurs away from risky and ambiguous tasks such as entering a new industry or market (Trevelyan 2011). Using a sample of 142 graduating business students, McMullen and Shepherd (2002) examine the relationship between self-regulation and students’ entrepreneurial intention. The authors conclude that promotion-focused students have higher intention to establish their own businesses. While, students who are prevention-focused have lower intentions to choose entrepreneurship as their career. Scholars strongly believe that systematic and purposeful interventions, such as education and training, can improve self-regulation and thereby students’ intention and competence to become an entrepreneur (Tumasjan and Braun 2012; Bryant 2006, 2007; Brockner et al. 2004). However, there is little empirical research published related to students’ self-regulation focus and their intention to become an entrepre- neur (McMullen and Shepherd 2002). Furthermore, research on the interaction between self-regulation and other personal characteristics such as self-efficacy and its effect on students’ entrepreneurial choice is scarce. This study attempts to narrow the gap by examining the impact of university students’ self-regulation and entrepre- neurial self-efficacy on their entrepreneurial career intention. Entrepreneurial Self-Efficacy and