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RESEARCH
Farradinnaetal.
Journal of Innovation and Entrepreneurship (2023) 12:66
https://doi.org/10.1186/s13731-023-00314-y
Journal of Innovation and
Entrepreneurship
An exploratory factor analysis
ofentrepreneurship psychological readiness
(EPR) instrument
Syarifah Farradinna1* , Nesi Syafitri2, Icha Herawati1 and Wella Jayanti1
Abstract
The purpose of this study was to develop an instrument for assessing psychologi-
cal readiness for entrepreneurship. A well-designed measurement of entrepreneur-
ship psychological readiness can provide early warning to policymakers, in this case
the government, and provide education and funding to prospective entrepreneurs
who must not only be examined physically, but also psychologically. Using Exploratory
Factor Analysis (EFA) and reliability analysis, the validity and reliability of the Entrepre-
neurship Psychological Readiness (EPR) instrument were examined. An Exploratory
Factor Analysis (EFA) found that the Entrepreneurship Psychological Readiness (EPR)
instrument’s eight-factor model explained 57.44% of the variance among the items. To
develop a fit model, it was necessary to exclude 26 items from the questionnaire, leav-
ing 59 items left. The factors name identified by Personal Knowledge, Personal Adver-
sity, Committed Certain Action, Willingness to Learn, Personal Relationship to Others,
Personal Growth, Passion Achieved, and Related Person Support. All of the eight-factor
models have excellent reliability of 0.96.
Keywords: Entrepreneurship, Entrepreneurial measurement, Factor analysis,
Instrument development, Policy making, Psychological readiness
Introduction
e number of entrepreneurs in Indonesia has yet to exceed 4%. e Central Bureau of
Statistics (2020) career choices based on the primary category of work in 2020 indicate
that entrepreneurship remains at 38.84% compared to other types of work. According
to the Ministry of Cooperatives and MSMEs (2020), the proportion of entrepreneurs in
Indonesia’s population of approximately 270 million is still 3.47%. It is even relatively low
compared to other ASEAN nations, such as Singapore, where the percentage of MSMEs
is 8.76%, 4.26% in ailand, and 4.74% in Malaysia, based on the total population of
these nations.
e UN member nations, including Indonesia, have as one of their goals advancing
an agenda based on the Sustainable Development Goals (SDGs). e task of offering a
framework for shifting growth paths across sustainable development is central to the
objectives of the 2030 Agenda. is agenda’s implementation aims to support national
*Correspondence:
syarifah.farradinna@psy.uir.ac.id
1 Faculty of Psychology,
Universitas Islam Riau, Pekanbaru,
Indonesia
2 Faculty of Engineering,
Universitas Islam Riau, Pekanbaru,
Indonesia
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Page 2 of 13
Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
sustainable development initiatives, build on current planning tools, and emphasize
the value of creating policy frameworks. One of its goals is to encourage young entre-
preneurs and promote youths with relevant talents, such as technical and vocational
ones (Salazar-Xirinachs, 2012).
e quality of entrepreneurship and how ecosystems are utilized to promote these
activities are both covered by the Global Entrepreneurship Index (GEI). In their study,
they identified 14 critical factors that must be taken into account when determining
readiness for entrepreneurship. Of these 14 critical GEI factors, Indonesia is reported
to have witnessed a fall in GEI scores from 2017 by 21.1% to 21.0 in 2018. Accord-
ing to the GEI research, it is also known that Indonesia ranks quite poorly in terms
of preparation compared to the other ASEAN nations. In Indonesia, research on the
intention to start a business has so far been done from the social, cultural, and eco-
nomic perspectives of the locals. Student entrepreneurship tendency is significantly
impacted by psychological and social factors (Rokhman & Ahamed, 2015). Entrepre-
neurship is a concept that encompasses a variety of activities that are influenced by
various government policies. As a result, developing an entrepreneurship generally
necessitates stable economic growth, market adaptability, labor availability, and gov-
ernment policies that take sides (Kukoc & Regan, 2008). How do some people decide
to become entrepreneurs, while others choose not to even attempt it is one of the top-
ics that some researchers are trying to answer. An individual’s ability as an entrepre-
neur is to be able to see and understand the knowledge he has acquired as a learning
system (Coduras etal., 2016; Douglas, 2009).
Previous research has demonstrated that cognitive conditions may affect entrepre-
neurial attitudes and goals (Amofah, etal., 2020). To explain the psychological aspects
of entrepreneurship, the theory of psychological readiness is one of the most critical
determinants of self-fulfillment in selecting a vocation as a professional entrepreneur
(Uhryn, 2020). Our preliminary research indicates that entrepreneurial psychological
readiness predicts the formation of new entrepreneurs. Young graduates are encouraged
to become entrepreneurs as the current economic hope for the country, which, if ade-
quately supported, can result in robust economic development (Altinay, 2008).
For the following reasons, we decided to assess the psychological readiness for entre-
preneurship: (1) existing entrepreneurship measurement instruments do not predict the
role and psychological readiness of individuals considering an entrepreneurial career
and (2) the existence of previous instruments for measuring entrepreneurial readiness
on a global scale demands the development of specific tests to determine the level of
psychological readiness for each individual.
As a result, this study develops instruments within the context of Indonesian small and
medium-sized businesses to assess the psychological readiness for entrepreneurship. In
addition to the validity and reliability of the items being debated, because they have not
described the psychological side and because the evaluation of the instrument is not yet
appropriate in the context of Indonesian culture, researchers need to compile and evalu-
ate their application first through the exploratory factor analysis (EFA) process (Hoque
& Awang, 2016; Hoque etal., 2018). is study will characterize the validity and reli-
ability of the entrepreneurial psychological readiness (EPR) measuring scale items using
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Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
EFA, which can ultimately be used to measure the construct of entrepreneurial psycho-
logical readiness in the Indonesian context.
e specific objectives of this research are as follows: (1) to examine whether the
psychological readiness measurement instrument is able to explain the psychological
aspects of individual young entrepreneurs and (2) to determine which psychological
readiness factors are capable of predicting young entrepreneurs’ psychological role.
Literature review
The Characteristics ofMicro, Amall, andMedium Enterprises inIndonesia
Entrepreneurship requires not only financial resources and source of authority, but also
a high level of control, personal initiative, and the ability to overcome obstacles and
stressful circumstances (Frese & Fay, 2001; Suárez‐Álvarez & Pedrosa, 2016). Psychology
contributes to numerous scientific fields, such as entrepreneurship (Østergaard etal.,
2018). In psychological theory, entrepreneurship is viewed as a behaviour based on con-
scious individual actions (experience and expertise) and a cognitive framework (Costa
etal., 2016; Østergaard etal., 2018). Social scientists determine the most crucial aspects
of pursuing an entrepreneurial career (Rokhman & Ahamed, 2015). However, entrepre-
neurial psychologists attempt to identify personal factors, such as individual characteris-
tics and interests. Other psychological factors, such as social support, can contribute to
a person’s intention to start a business (Farradinna etal., 2021).
In Indonesia, entrepreneurship education places more of an emphasis on fostering
cognitive insight, managerial knowledge, business planning, marketing, finance, inno-
vation, and creativity. In actuality, psychological aspects of entrepreneurship education
are very crucial. Recently, academics have made an effort to psychologically analyse the
dynamics of entrepreneurship. An important direction of entrepreneurial psychology
study is thought to be capable of detecting and shaping psychological preparation for
student to begin entrepreneurship in schools, as well as determining counselling and the
most relevant themes, so that prospective young entrepreneurs might dare to choose
a career as a business person. However, none of the several research that have been
conducted have examined entrepreneurial intentions using the psychological readiness
scale. Several research, however, have not studied entrepreneurial goals by evaluating
the psychological readiness index.
Indonesia must be able to emphasize developing intentions and ways of innovation in
integrating education, local culture, availability of capital, and individual personal char-
acter, so that becoming an entrepreneur is not merely a coincidence or a result of a lack
of employment opportunities (Altinay, 2008). Not only do young Indonesians require
funding support or bureaucratic mechanisms that favour entrepreneurs, but the avail-
ability of psychological resources and psychological capital is also a major concern, as
they are faced with risk-taking and resiliency in the face of the challenges of running
their business (Farradinna & Fikri, 2020; Olugbola, 2017).
Entrepreneurial Psychological Readiness Factor
Individual psychological readiness index measurements are used to compare the inter-
personal traits of business people. is evaluation can be used to determine a person’s
professional readiness as well as his aptitude for assessing and spotting chances (Coduras
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Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
etal., 2016). e ability to direct and the depth of self-achievement are required, so that
the creative potential and productive fields are known. e current study details the cre-
ation and approval of an instrument for assessing psychological readiness. e instru-
ment includes a variety of parameters that are categorized based on the replies provided
by the study participants.
rough observation and research of the environment, psychological readiness is
described as a combination of personal traits that help individuals stand out from other
business people and maximize their creative potential (Ruiz etal., 2016). Another evalu-
ation describes psychological readiness in the index as one of the findings reached as
measuring the notion of information tools (Coduras etal., 2016). Due to the dynamic
character of the personality features of potential business players, developed nations
have examined the psychological readiness of entrepreneurship from a young age.
erefore, to create an excellent business, it is vital to examine the facts from within the
psychological traits (Semenov etal., 2018). Although this topic is sometimes overlooked,
research on entrepreneurial psychological preparation is socially significant. However, to
give a general overview of the psychological readiness measurement given to high school
students, one opinion is that psychological readiness is defined as a different combina-
tion of psychological qualities and orientation factors (Semenov etal., 2018).
Measurement of entrepreneurial psychological readiness is defined as a set of charac-
teristics people possess that set them apart from other entrepreneurs and enable them to
monitor and analyse situational trends and therefore to channel the creativity and pro-
ductivity of an entrepreneur (Coduras etal., 2016). Recently, scholars studying entrepre-
neurship have realized the necessity to develop a definition of entrepreneurial readiness
that takes into account the psychological aspects of starting a new business in addition to
capacity, knowledge, and skills (Ruiz etal., 2016). e development of the entrepreneur-
ial mindset measurement assessment focuses more on skills assessment and comprehen-
sive review (Purzer etal., 2016), whereas the assessment of attitudes and psychological
readiness characteristics is important for assessment (Kallas, 2019; Li etal., 2016).
As a result, it is critical to develop an appropriate readiness measurement for public
policy decision making. is study summarizes recent findings related to the need for
measuring psychological readiness derived from currently used entrepreneurial indica-
tors. e most important implication of a well-designed measurement of entrepreneur-
ial psychological readiness is that it can provide early warning to policymakers, in this
case the government, and provide education and capital for prospective entrepreneurs,
who must be evaluated not only physically but also psychologically.
Methods
Aim andResearch Questions
e importance of an information tool to measure the availability of entrepreneurs who
are ready to become entrepreneurs who first show interest and are ideal as prospective
entrepreneurs is our purpose in proposing this entrepreneurial psychological readi-
ness instrument; second, to measure the readiness of the facilitated economic policies;
and third, this instrument is also used to measure the readiness of social and economic
progress.
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Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
Research Design
e development model for measuring entrepreneurial psychological readiness was
studied in several stages. e first is a preliminary study that looked back at the need
for measuring readiness from a psychological and social standpoint. e process of
categorizing data based on theory and problem context will then involve reviewing
the literature and developing the best model possible.
Population andSample
is study’s participants were students from cities and regencies in the Indonesian
province of Riau. ey are final-year students chosen, because they must make job
choices after graduation. Appropriate selection of research participants is essential,
this study employed a simple stratified and randomized methodology, which was
determined with 5% precision using the Levy formula (2008) for each university in
the Bengkalis, Dumai, and the eastern region of Pekanbaru. e research participants
involved 604 students spread across the districts and cities of Riau province, Indone-
sia, from various study programs at several tertiary institutions. Two hundred ninety
female students (48.01%) and 314 male students (51.9%) represent the three coastal
and inland areas of Riau Province.
In terms of territory, respondents from Bengkalis were 32 (5.30%), 231 (38.25%)
from Dumai, and 341 (56.46%) from Pekanbaru. Academic education includes 101
Madrasah Aliyah graduates (16.72%), 308 High School graduates (50.99%), and 195
Vocational High School graduates (32.28%).
Instruments
After the extensive literature review, we compiled psychological entrepreneurship
readiness scales and items from the study of Coduras etal. (2016). e instrument
contains 85 items to assess the level of psychological readiness for entrepreneurship.
According to a five-point Likert scale, statements are rated as follows: Strongly Disa-
gree (1), Disagree (2), Disagree or Disagree (3), Agree (4), and Strongly Agree (5). e
instruments were translated from English to Indonesian by the language expert. e
instruments were also adjusted to reflect Indonesian culture and the characteristics
of young entrepreneurs. Furthermore, the content validity is determined by assign-
ing experts in their fields, i.e., entrepreneurial psychologists. e expert reviewed and
corrected some items to ensure the relevance of the language and the entrepreneur-
ship psychological readiness theoretical concept.
e instruments were translated from English to Indonesian by the language expert.
e instruments were also adjusted to reflect Indonesian culture and the charac-
teristics of young entrepreneurs. Furthermore, the content validity is determined
by assigning experts in their fields, i.e., entrepreneurial psychologists. e expert
reviewed and corrected some items to ensure the relevance of the language and the
entrepreneurship psychological readiness theoretical concept.
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Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
Data Analysis
Several analyses were carried out to confirm the psychometric properties of the
measurements. An Exploratory Factor Analysis (EFA) was conducted to examine the
factor structure of the Entrepreneurship Psychological Readiness (EPR) instrument.
Cronbach’s Alpha reliability test was then used to evaluate the instrument’s reliability.
Exploratory Factor Analysis (EFA) was carried out to obtain evidence about the meas-
ure’s construction. EFAis a method used in multivariate statistics to run a number of
hypothetical constructs (such as factors, dimensions, latent variables, synthetics, or
internal attributes) to parsimoniously describe covariations. e construction of the
hypothesis is concluded from the effect of manifest variables that cannot be meas-
ured directly, according to the interpretation of the results with EFA. As a result, the
named factors were chosen based on the most strong resemblance of the manifest
variables (Watkins, 2018).
We checked the fit of the data from the factor analysis assumptions before running
the EFA analysis. e first step in this analysis is to determine the sample size. e Kai-
ser–Meyer–Olkin (KMO) test was performed to determine whether the sample size for
the analysis was adequate (Kaiser, 1970). e predicted value is bigger than 0.07. Bart-
lett’s Test of Sphericity was used to check whether correlations between items were large
enough for EFA. To conduct an EFA, Bartlett’s test of sphericity must achieve a statis-
tical significance of less than 0.05 (Bartlett, 1954). In EFA, the following requirements
must be followed in order to create a fit model: (1) there must be no cross-loading (items
with high factor loading on two or more factors generated); (2) one factor must contain
at least three items; and (3) the good factor loading value is more than 0.40. Items that
do not fulfil the requirements are eliminated, and EFA is repeated until a fit model is
identified (Matsunaga, 2010; Yu & Richardson, 2015).
Reliability test conducted to determine the consistency, stability, and dependability of
the scores comprise the reliability of an instrument (McMillan, 2014). For this purpose,
Cronbach’s Alpha was used to examine the internal consistency of each factor extracted
from the EFA. If the Alpha value is greater than 0.90, the internal consistency is excel-
lent; if it is at least greater than 0.70, it is acceptable (Blunch, 2008).
Results
Exploratory Factor Analysis (EFA)
ere were 26 items that did not comply with the requirements. Twelve of these items
have factor loading values below 0.40, nine items have high cross-loading values on two
factors, and five items cannot be allocated to a single factor since there are fewer than
three items for each factor. In accordance with the results of the factor analysis, the fit
model consists of eight factors and 59 items. e eight-factor model obtained explains
57.44% of the variance in the pattern of item relationships. e total variance is shown in
Table1.
Items from the factors are then assessed for naming by represent terms and ease of
verbal communication (Kline, 2010; Yong & Pearce, 2013). e first factor is known as
Personal Knowledge, the second factor as Personal Adversity, the third factor as Com-
mitted Certain Action, the fourth factor as Willingness to Learn, the fifth factor as
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Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
Personal Relationship to Others, the sixth factor as Personal Growth, the seventh factor
as Passion Achieved, and the eighth factor as Related Person Support. Table2 shows the
final eight-factor model and the items factor loading.
ere were 59 items loaded in the EPR instruments ranging from 0.414 to 0.831, by (1)
Personal Knowledge—10 items with loading ranging from 0.467 to 0.796, (2) Personal
Adversity—13 items with loading ranging from 0.414 to 0.663, (3) Committed Certain
Action—8 items with loading ranging from 0.477 to 0.831, (4) Willingness to Learn—8
items with loading ranging from 0.435 to 0.716, (5) Personal Relationship to Others—8
items with loading ranging from 0.448 to 0.686, (6) Personal Growth—6 items with load-
ing ranging from 0.494 to 0.708, (7) Passion Achieved—3 items with loading ranging
from 0.692 to 0.756, and (8) Related Person Support—3 items with loading ranging from
0.578 to 0.753. is result revealed that high loading exhibits the good parsimony and
inter-correlation of the instrument (Field, 2013).
Previous research indicates that the availability of resources is essential for psycho-
logical readiness (Olugbola, 2017). A psychological framework is developed for novice
entrepreneurs to identify and mitigate potential psychological stress (Zakharova etal.,
2018). e results of this study predict the dimensions for measuring the psychologi-
cal readiness of inexperienced entrepreneurs, followed by potential managerial develop-
ment. ese findings support the findings of Coduras etal. (2016) and Coduras et al.
(2018), which indicate that measuring entrepreneurial readiness using a rigorous sci-
entific approach has implications for a helpful measurement instrument for predicting
entrepreneurial development frameworks.
Reliability Test
e reliability of each factor of the Entrepreneurship Psychological Readiness (EPR)
questionnaire was tested using an item analysis. (Blunch, 2008) defines adequate internal
consistency as a range of 0.07–0.09. Except for the eighth factor, which has a lower reli-
ability score, all factors received high scores for reliability. e total eight-factor model,
on the other hand, gets a high reliability score of 0.961. e result of reliability test is
shown in Table3.
e Entrepreneurship Psychological Readiness (EPR) instrument’s factors have excel-
lent reliability scores in general, with the exception of the Related Person Support factor,
Table 1 Total Variance on Items with Eight-factor Model
Extraction Method: Principal Component Analysis
Component Initial eigenvalues Extraction sums of
squared loadings Rotation sums of
squared loadings
Total % of Variance Cumulative % Total % of Variance Cumulative % Total
1 18.441 31.256 31.256 18.441 31.256 31.256 6.737
2 4.171 7.070 38.326 4.171 7.070 38.326 6.473
3 3.544 6.006 44.333 3.544 6.006 44.333 4.767
4 1.971 3.341 47.673 1.971 3.341 47.673 4.673
5 1.664 2.820 50.493 1.664 2.820 50.493 3.658
6 1.577 2.672 53.166 1.577 2.672 53.166 3.281
7 1.388 2.352 55.518 1.388 2.352 55.518 2.341
8 1.135 1.924 57.442 1.135 1.924 57.442 1.959
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Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
Table 2 Entrepreneurship Psychological Readiness (EPR) Instrument’s Final Items and Eight-factor
Structure Following the EFA procedure
Factor
12345678
Factor 1: Personal Knowledge
1. Getting the complete information before making
a decision to open a business 0.467
2. It is important for me to study the current market
potential 0.623
3. It is important for me to learn the potential of
self-competence 0.667
4. It is important for me to make a business plan 0.716
5. It is important for me to make a survival plan so
that it is properly implemented 0.791
6. It is important for me to create a good and accu-
rate financial plan for business continuity 0.796
7. For me, business allocation analysis is important 0.769
8. For me, suggestions and recommendations are
essential 0.739
9. A clear analysis of fund channels is required 0.754
10. It’s important to study the product/service inno-
vations offered in order to make the right decisions 0.684
Factor 2: Personal Adversity
11. I maintain close relationships with people I care
about 0.486
12. I prefer roles and responsibilities that are obvi-
ous 0.414
13. Stay positive even when facing challenges 0.580
14. When an problem arises, find a resolution
immediately 0.545
15. Gather all the pertinent information, before
doing any judgments 0.512
16. I enjoy any activity I engage in 0.630
17. Confident with my abilities 0.663
18. Performing the obligations I’ve taken on 0.650
19. Having self-control in every aspects of my life 0.642
20. I typically bounce back from setbacks fast and
effortlessly 0.581
21. Tend to have a great aspirations in my life 0.607
22. Taking difficult situations as challenges and
opportunities in demanding my capabilities 0.662
23. Consistent with my goals 0.644
Factor 3: Committed Certain Action
24. I have business creation, management, and/or
management-related talents 0.477
25. I have fundamental experience in business
management 0.531
26. I’ve started my own business/with other people 0.643
27. I have taken on the role of an impromptu
investor by lending money to others to launch their
businesses
0.831
28. The bureaucratic step in starting a business is
my challenge as a business actor/entrepreneur 0.722
29. I have performed as intrapreneur (business
within an organization, office, or school) 0.755
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Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
Table 2 (continued)
Factor
12345678
30. I perform as an investor who disburses funds to
others without taking part in its management 0.811
31. Improve management abilities to simplify my
business’s path 0.591
Factor 4: Willingness to Learn
32. In terms of finances, I rely on my skills 0.435
33. Become an entrepreneur/business actor as a
career 0.654
34. I am confident in my abilities as an business
actor and entrepreneur 0.669
35. The business idea that I develop comes from my
own knowledge and capacity 0.699
36. Activities and business ideas come from observ-
ing the environment around me 0.716
37. The business activity that I want to develop is
the result of observing market needs 0.647
38. Based on market observations, I predict prod-
ucts/services that can be improved by innovation 0.650
39. I intend to start a business initiative 0.573
Factor 5: Personal Relationship to Others
40. Opportunity to influence others 0.686
41. Be able to take actions that significantly affect
other persons 0.599
42. I stay in close contact with those I actually value 0.536
43. I take on a leadership role so that others can
accomplish their goals 0.559
44. I am aware of other people’s expectations of me 0.584
45. I seize the opportunity to influence how com-
munities make decisions 0.511
46. I took the opportunity to be part of the team 0.448
47. I’m sure that many people currently value me 0.520
Factor 6: Personal Growth
48. I appreciate having close, amicable, and coop-
erative relationships with people 0.555
49. I have the opportunity to develop myself 0.586
50. Enjoy the chance to assign more difficult and
demanding duties and goals 0.552
51. Enjoy the freedom and opportunity to talk and
socialize with others 0.708
52. Have goals and novelties that are sustainable,
highly motivated, and challenging 0.657
53. Opportunity to create something new 0.494
Factor 7: Passion Achieved
54. I decide to act in this way because I want to 0.756
55. I am happy with the choice I made and how
things have turned out thus far 0.796
56. I have realized myself regarding the current
situation 0.692
Factor 8: Related Person Support
57. In my close family there are entrepreneurs 0.709
58. Some of my close friends/colleagues are entre-
preneurs 0.753
59. I admire a well-known businessman 0.578
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Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
which has a relatively low reliability score. Nevertheless, because the instrument has
not been evaluated for utilization with other subjects, the items in this factor must be
included in the overall instrument.
Discussion
Data were acquired from 604 participants (290 females and 314 males) for the study.
e collected data were evaluated using Exploratory Factor Analysis (EFA). Based on the
EFA findings, 26 items were excluded from the instrument, because the factor loading
was less than the predefined value, overlapped, or lacked the number to create a single
factor. e final result is a 59-item instrument comprised of 8 factors.
According to the items in the factor, the first factor is called Personal Knowledge (PK),
and it has 10 items. e second factor is called Personal Adversity (PA), and it has 13
items. e third factor is called Committed Certain Action (CCA), and it has 8 items.
e fourth factor is called Willingness to Learn (WL), and it has 8 items. e fifth fac-
tor, Personal Relationship to Others (PRO), consists of 8 items that can be measured.
e sixth factor is called Personal Growth (PG), and it has 6 items, the seventh factor
is called Passion Achieved (PAch), and it has 3 items, the eighth factor is called Related
Person Support (RPS), and it has 3 items.
e psychological readiness of entrepreneurship has been carried out by developing 8
characteristic factors. ese eight factors reflect the psychological state of both prospec-
tive entrepreneurs and individuals who are running a business. All of these component
factors describe the psychological readiness of individuals in the following: the readiness
of individual knowledge related to the business and products developed; mental readi-
ness to face obstacles; commitment to running a business; self-readiness to continue
learning; individual readiness to develop relationships with others; interest in growing
and developing; developing self-potential; taking advantage of available resources. e
overall variance explained is 57.44%, with the first factor contributing the most (31.25%).
Other contribution rates are as follows: 7.07%, 6.06%, 3.34%, 2.82%, 2.67%, 2.35%, and
1.92%. Overall Entrepreneurship Psychological Readiness (EPR) instrument reliability is
0.96, indicating that the measurement is reliable.
e EPRinstrument, based on the results of the EFA in this study, can be used to
determine individual readiness in entrepreneurship by measuring knowledge, personal
abilities, actions, willingness to learn, relationships with others, self-development,
Table 3 Cronbach’s Alpha for Each Factors of the Entrepreneurship Psychological Readiness (EPR)
Instrument
Cronbach’s Alpha Cronbach’s Alpha based on
standardized items Number
of items
Personal Knowledge 0.928 0.928 10
Personal Adversity 0.908 0.908 13
Committed Certain Action 0.886 0.887 8
Willingness to Learn 0.899 0.899 8
Personal Relationship to Others 0.899 0.899 8
Personal Growth 0.815 0.817 6
Passion Achieved 0.815 0.817 3
Related Person Support 0.623 0.627 3
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Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
enthusiasm, and support from others. According to studies, the psychological readi-
ness for entrepreneurship is significantly influenced by socio-economic factors such as
the state of the labor market and policymaker support (Romanova, 2018). Psychological
roles can represent the suitability of an individual’s personality and goals in determining
a career as an entrepreneur (Zhao & Seibert, 2006), not only in the field of developing
entrepreneurial theory, but also when selecting an entrepreneurial career.
Individual readiness in entrepreneurship information can be utilized to improve indi-
vidual capability before engaging in entrepreneurial activities. Individuals who run a
business are constantly confronted with pain and happiness, love and regret, challenges
and obstacles. e effectuation theory, according to Matalamäki (2017) explains that
entrepreneurs confront every possibility, uncertainty, and flexibility and conduct numer-
ous experiments. Consequently, the contribution of this study is to demonstrate how
to determine an individual’s readiness to face a variety of challenges while innovating
and developing products. However, further research with Confirmatory Factor Analysis
(CFA) is required to evaluate the factorial validity of the model obtained from the EFA
results.
For the government to make an informed decision on whether to provide capital assis-
tance, it must consider the psychological readiness of each individual (Kallas, 2019). e
EPR model identifies the psychological readiness of entrepreneurship as a set of precon-
ditions for government decision-making at the outset.
Conclusion
e Entrepreneurship Psychological Readiness (EPR) instrument measures individual
expertise, attributes, deeds, passion for improving, connections, self-development,
excitement, and encouragement from others. Information gathered from the EPR instru-
ment can be used to enhance an individual’s psychological readiness before engaging in
entrepreneurial activities. e results of EFA state that the psychological role determines
the individual’s intensity in deciding on a career as an entrepreneur from the point of
psychological readiness. In addition, based on the distribution of data from regional
topography shows that suburban areas dominate the distribution of participant charac-
teristics. Based on the analysis, Passion Achieved is the factor that most predict psycho-
logical entrepreneurship readiness. e factor shows that individuals have the courage,
awareness, and ability as entrepreneurs.
Apart from explaining from an individual’s point of view, policymakers such as local
governments and investors can predict individuals’ psychological readiness in consid-
ering providing entrepreneurship training or business capital loans. Policymakers can
consider this EPR instrument to assess the feasibility of local young entrepreneurs, such
as being given entrepreneurial training, capital loans, facilitating businesses, andprovid-
ing annual awards. e EPR instrument contributes to the evaluation of a person’s psy-
chological readiness to confront various challenges, whether innovating, launching, or
engaging in many forms of entrepreneurship. is instrument can also be used to predict
individual psychological characteristics that dominate the readiness of entrepreneurship.
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
Page 12 of 13
Farradinnaetal. Journal of Innovation and Entrepreneurship (2023) 12:66
Limitations andRecommendations
is research is willing to accept new sources to be investigated in the future on top-
ics that align with entrepreneurship’s psychological readiness in the context of meas-
urement. ere is a need to consider examining causality relationships more explicitly
and conducting cross-country comparisons that can be utilized to validate existing
findings. Policymakers may need help understanding the interpretation of the indica-
tors described in predicting psychological readiness. Based on these limitations, further
research can be considered involving other factors beyond the role of psychology.
Abbreviations
EFA Exploratory Factor Analysis
CFA Confirmatory Factor Analysis
EPR Entrepreneurship Psychological Readiness
PK Personal Knowledge
PA Personal Adversity
CCA Committed Certain Action
WL Willingness to Learn
PRO Personal Relationship to Others
PG Personal Growth
PA Passion Achieved
RPS Related Person Support
Acknowledgements
We are thankful for Indonesia’s Ministry of Education, Culture, Research, and Technology and Universitas Islam Riau for
the funding of this research.
Author Contributions
The first author has been instrumental in the tool’s conceptualization, design, development, and analysis of the research
results. The second and third authors have contributed to the collected research data. The fourth author has contributed
to the data analysis. All authors read and approved the final manuscript.
Funding
The source of funds for this study was Indonesia’s Ministry of Education, Culture, Research, and Technology and Universi-
tas Islam Riau under grant number 162/E5/PG.02.00/PT/2022.
Availability of Data and Materials
The datasets analyzed during the current study are not publicly available due they are part of an ongoing research
project but are available from the corresponding author on reasonable request.
Declarations
Competing interests
To the best of our knowledge, no competing financial and non-financial interests are present concerning the
manuscript.
Received: 1 September 2022 Accepted: 10 August 2023
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