Entrepreneurship intentions and activities

of students in Hungary

Global University Entrepreneurial Spirit Student’s

Survey 2018

National Report

Andrea S. Gubik, Szilveszter Farkas

Miskolc - Budapest
2019
Table of contents

Summary ......................................................................................................................................................... 3
The GUESSS research ...................................................................................................................................... 5
Research Objectives.................................................................................................................................... 5
Surveys ........................................................................................................................................................ 5
Results ............................................................................................................................................................. 6
A brief presentation of 2018 database ....................................................................................................... 6
Aspects of career choice ............................................................................................................................. 9
Differences in responses by gender ...................................................................................................... 10
Differences in responses by fields of study ........................................................................................... 11
Differences in responses by family business background..................................................................... 13
Changes in career motives over the last years ......................................................................................... 14
Hungarian entrepreneurial intentions in an international comparison ................................................... 15
Youth entrepreneurship ........................................................................................................................... 16
References ................................................................................................................................................ 19

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Project promoters in Hungary

Szilveszter Farkas
Budapest Business School, College of Finance and Accountancy, H-1149 Budapest, Buzogány u. 11.,
e-mail: farkas.szilveszter@uni-bge.hu

Andrea S. Gubik
Faculty of Economics, University of Miskolc, H-3515 Miskolc-Egyetemváros, e-mail: getgubik@uni-
miskolc.hu

Acknowledgement

We are using this opportunity to thank every colleague and higher education representatives for
providing their assistance and support in organising the data collection. We are also extremely grateful to
all the students who participated in the survey and took their time to fill in the questionnaire.

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Summary

The entrepreneurial process plays a crucial role both in economic growth and job creation. As early
as 1980s small-sized enterprises started to play an outstanding role in lowering the rate of
unemployment, which had substantially increased as a result of downsizing and restructuring
activities in major companies at that time (Audretsch & Thurik, 2001). Decision-makers made
considerable efforts in seeking solutions for easing unemployment which further grew during the
financial crisis of 2008 and the economic recession that followed. Encouraging entrepreneurship
takes a central place in innovation policy (OECD, 2010). Also, the changing labour market resulting
from the latest technological trends requires entrepreneurial human capital.

Almost all international organizations deal with the issue of entrepreneurship and seek ways
how to increase entrepreneurial activities of young people. The Missing Entrepreneurs (OECD / EU
2015), jointly published by the OECD and the European Union, summarizes key economic policy
recommendations with the aim to encourage entrepreneurship among young people (as well as
among women and the elderly). The Entrepreneurship 2020 Action Plan identified three areas of
intervention. The first is the enhancement of education and training, with the emphasis on
developing an entrepreneurial environment and setting role models. Higher education institutions
are expected to go beyond mere knowledge transfer. According to the action plan, they must
become entrepreneurial in the future.

Young people's entrepreneurship differs from other age groups’. The research conducted by GEM
(Global Entrepreneurship Monitor) found that this young-age group is 1.6 times more likely to
become entrepreneurs than the older generation (Schot et al., 2015). Both the proportion of actual
start-ups among young entrepreneurs and the survival rate of their companies are lower than those
of older generations’ (OECD 2015). The surviving companies are more growth-oriented (Schrör,
2006). Higher education graduates establish their enterprises in higher value-added sectors (e.g.
high-tech industries) and invest a higher amount of initial capital (Richert-Schiller, 1994, citing Lüthje-
Franke, 2002).

This paper focuses only on students studying in higher education institutions despite the fact
that they make up only a special subset of the youth population. In 2018, the Hungarian
questionnaire was sent to all higher education institutions offering training to over 1000 students
and 9,667 valid responses from 19 institutions were received.

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Key findings:

1. The majority of young people currently studying in Hungarian higher education institutions
intended to work as employees after graduation (84.9%), and entrepreneurship was not really
attractive to them. Five years after graduation the attractiveness of the employee status
decreased and entrepreneurial intentions increased to 40.7% among students.

2. Women, irrespective of time, had lower entrepreneurial intensions and preferred working in the
public sector to finding employment in the corporate sector.

3. Economics and business students were most open to starting a business of their own. Whereas
students of social sciences were the least willing to becoming entrepreneurs. Entrepreneurship
education and the universities’ entrepreneurial environment in general had a stimulating effect
on students' start-up ideas.

4. Family entrepreneurial experiences had a positive impact on students' business start-up plans.
Students who grew up in an entrepreneurial environment were more likely to undertake risks
and additional responsibilities related to starting up a company.

5. A significant proportion of young entrepreneurs currently in business are self-employed and

many consider their business as a financial source for their studies and do not plan to pursue it
after graduation.

The intention to start a business is low among Hungarian students, which compares
unfavourably with other countries. Young people's career prospects lag behind the real labour
market situation. Also, future trends further erode the utopia of well-paid multinational jobs. Both
companies and employees have a growing demand for flexible labour market solutions. In addition,
the sharing economy and digital platforms are playing an increasingly important role in the economy
since they create new markets, produce new job opportunities and are forecast to have a major
societal impact. As a result, those who are now at school may no longer be able to influence their
labour market status.

Economic policy of governments influences young people's preparedness and successful

entrepreneurial processes since they shape the framework conditions for entrepreneurship. Also,
education can promote start-up processes by developing specially tailored curricula and
methodological innovations. Students, who do not intend to pursue entrepreneurial careers, are less
interested in entrepreneurship programmes and courses. Thus, it would be worthwhile to increase
the number of business and financial subjects among the students who do not go to school primarily
for this purpose. Additionally, secondary schools should also include in their curricular the
development of entrepreneurial attributes, knowledge and competencies that enable students to
explore business opportunities and are required for starting their own ventures.

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The GUESSS research

The GUESSS (Global University Entrepreneurial Spirit Students' Survey), which has been running since
2003, is organized and managed through a cooperation of the University of St.Gallen and the
University of Bern (both Switzerland). In Hungary, the tasks related to research (data collection,
analyses, dissemination) are coordinated by Dr. Szilveszter Farkas, college professor at the Budapest
University of Economics and Dr. Andrea S. Gubik, associate professor at the University of Miskolc.

Research Objectives
GUESSS investigates entrepreneurial intentions and activities of students by employing a
questionnaire survey. In order to gain a deeper understanding of the business start-up processes, the
survey targets students' career intentions after graduation and a few years after studies, the most
important characteristics of families’ and students’ own businesses, as well as the processes and
factors that may be decisive in starting a business. Thus, individual motives and personal
characteristics, as well as the impact of cultural and institutional factors, including the role the higher
education environment play in shaping students’ entrepreneurial intentions and activities are
fundamental to investigate.

Surveys
The research, which began in 2003 with the participation of two countries, has gradually become one
of the most significant data sources on the topic. In 2018, at the 8th data collection, responses of
208,000 students from 54 countries were collected. In 2018, 9667 valid questionnaires were received
in Hungary.

As a result of the repetitive surveys and continuous feedback, changes across time can also be
analysed. Since Hungary joined the research in 2006, the results of more than 10 years can be
compared. With the growing numbers of participating countries and universities, geographical
comparisons can also be possible.

In the course of the research all Hungarian higher education institutions where the number of
students exceeded 1,000 were contacted. They were asked to send the survey call to their students
via their Neptun systems. There were some institutions that addressed their students through other
channels (e.g. student facebook page).

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Results

A brief presentation of 2018 database

The database contains 9,667 students’ responses. Before presenting the results, the database based
on differences in higher education institutions, fields of study, gender, and age structure are briefly
presented. Table 1 shows the distribution of participants in Hungary by the respondents' higher
education institution.

Table 1: Distribution of GUESSS 2018 Survey Participants by Higher Education Institution

Name of the higher education institution Number of questionnaires Distribution Response

rate
Corvinus University of Budapest 100 1.0 0.8
Budapest Business School 975 10.1 6.4
Budapest University of Technology and Economics 1,763 18.2 8.0
University of Debrecen 764 7.9 2.9
University of Dunaújváros 75 0.8 4.8
Eötvös Loránd University 1,809 18.7 6.2
Eszterhazy Karoly University 135 1.4 1.8
Kaposvár University 23 0.2 0.8
University of Miskolc 764 7.9 8.3
John von Neumann University 42 0.4 1.1
University of Nyíregyháza 90 0.9 2.5
Óbuda University 456 4.7 4.0
University of Pannonia 72 0.7 1.2
Pázmány Péter Catholic University 189 2.0 2.3
University of Pécs 1,102 11.4 5.5
Semmelweis University 208 2.2 1.9
Széchenyi István University 832 8.6 6.8
University of Szeged 130 1.3 0.6
Milton Friedman University 105 1.1 8.1
Other 33 0.3
Total 9,667 100.0 4.3
Source: own elaboration

About 22.3% of respondents studied engineering, 22.2% of students studied business and
management and economics. Computer sciences/IT students represented 9.3% and Arts/Humanities
students accounted for 8.4%. The sample of students in medicine, health sciences and social sciences
amounted to 8.3%.

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 Table 2: Distribution of GUESSS 2018 Survey Participants by field of study

Frequency Percent Valid Percent Cumulative

Percent
Arts / Humanities (e.g., cultural studies,
811 8.4 8.4 8.4
history, linguistics, philosophy, religion)
Business / Management 1,019 10.5 10.6 19.0
Computer sciences / IT 901 9.3 9.3 28.3
Economics 1,130 11.7 11.7 40.0
Engineering (incl. architecture) 2,153 22.3 22.3 62.4
Human medicine / health sciences 798 8.3 8.3 70.6
Law 597 6.2 6.2 76.8
Mathematics 66 0.7 0.7 77.5
Natural sciences 623 6.4 6.5 84.0
Science of art (e.g., art, design, dramatics,
65 0.7 0.7 84.6
music)
Social sciences (e.g., psychology, politics,
801 8.3 8.3 92.9
education)
Other 680 7.0 7.1 100.0
Total 9,644 99.8 100.0
No answer 23 0.2
Total 9,667 100.0
Source: own elaboration

The vast majority of respondents (70%) attended BSc level studies. The proportion of MSc
students in the sample was much lower (16%). Regarding the respondents’ gender, the sample
contained a larger female ratio (58.2%). The male-female composition reflects the gender
composition of Hungarian higher education.

Source: own elaboration, N=9667.

Figure 1: Distribution by levels of education

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Source: own elaboration, N=9667

Figure 2: Distribution of Respondents by Gender

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Aspects of career choice

In Question 2 students were asked about their career aspirations after graduation. The responses to
this question and to its additional variable computed from the original question and containing four
attributes (Employee, Founder, Successor, Other) highlighted the differences in career aspirations
arising from three partially significant variables. They are as follows: gender, fields of study and
family business background.

Figure 3 clearly illustrates the distinctive differences in future intentions. A significant

proportion of students wanted to find a job with a large company or small and medium-sized
company immediately after graduation, and preferred to be employed by a large company. The
public sector was also an attractive. Overall, 84.9 percent of the students intended to become
employees after graduation.

Five years after graduation, the attractiveness of employee status diminished in favour of
entrepreneurial career (as founders or followers). The responses revealed that students wanted to
gain experience as employees first and start a business of their own afterwards.

Source: own elaboration, N=9667

Figure 3 Career aspirations right after graduation and five years after studies (Number of
students)

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Differences in responses by gender

The respondents’ gender had a significant effect on the development of career goals. Irrespective of
the time line, women showed lower entrepreneurial intentions than men. More women than men
indicated a different / do not know answer. Although there were no significant differences between
female’s and male’s responses in terms of being an employee, male respondents were more willing
to work in a large company (39.5%), compared to women (26.9%). The employment in the public
sector was also attractive among female respondents (20.2%). As for the five-years-after-graduation
figures, the attractiveness of the employee career decreased and the entrepreneurial carrier became
more attractive among all respondents regardless of gender.

Source: own elaboration, N=9667

Figure 4: Gender differences in career plans immediately after graduation

Source: own elaboration, N=9667

Figure 5: Gender differences in career plans 5 years after graduation

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Differences in responses by fields of study

The analysis of the career aspirations by fields of study revealed that the ratio of students who did
not choose professional careers or the ratio of students having no clear intentions was significantly
higher among majors in social sciences compared to those studying business and economics as well
as natural sciences irrespective of the time horizon. (See Figure 6 and Figure7).

The choice of being an employee after graduation is the highest among students majoring in
natural sciences (87.7%), followed by the economics/business students (86.5%).

As for entrepreneurship (as a founder), the proportion of students preferring working as

entrepreneurs was the highest (5.6%) among business and economics students. Social science
respondents amounted to 5.1%. At the same time, arts students (e.g. art, design, theatre, music) are
worth highlighting since their entrepreneurial intentions were extremely high (4.8% in average).

Five years after studies, the proportion of respondents who were planning to start their own
business increased in each of the study fields, with the highest rate in the economic/business field
(46.9%).

Source: own elaboration, N=9667

Figure 6. Career aspirations right after graduation by fields of study (%)

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Source: own elaboration, N=9667

Figure 7 Career aspirations five years after graduation by fields of study (%)

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Differences in responses by family business background

The family business background also shaped career aspirations and business start-ups. The survey
results showed that business experience of parents had the greatest impact on the respondents’
career aspirations. Figure 8 and Figure 9 illustrate career aspirations by parents’ business
background. The term ‘parents’ business background’ referred to a state in which one parent (or
both) was self-employed or had a majority stake in a business at the time when the survey was
conducted.

Regardless of the time line, family business experiences increased the chances of becoming an
entrepreneur, both as a founder and a follower. Lack of experience increased not only the likelihood
of employee preference but also the respondent's uncertainty about their future career ("Other /
Don't Know" response rate).

Source: own elaboration, N=9667

Figure 8: Career aspirations right after studies by family business background (%)

After five years, those without a family entrepreneurial background also have a greater
intention of starting their own business, but the entrepreneurial-non-entrepreneurial background
preserves the divergences in career ideas immediately after graduation.

Source: own elaboration, N=8766

Figure 9: Career aspirations five years after studies by family business background (%)

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Changes in career motives over the last years

Each of the five surveys conducted so far has included questions about career plans, in order to
investigate how student perceptions have changed over the last 12 years.

Figure 10 illustrates that students had different career plans immediately after completing their
tertiary education and a few years later. Five years after graduation, the proportion of those
considering an entrepreneurial career was significantly higher than the immediate aftermath. This
may indicate that students first wanted to gain professional experience and plan to start their own
business afterwards.

Another interesting phenomenon was how the attractiveness of an entrepreneurial career from
survey to survey changed. In 2006, 16% of the students surveyed planned to start their own business
after graduation. Five years later, nearly 36% wanted to become an entrepreneur. In 2008,
entrepreneurial willingness increased significantly. Subsequently, in 2011 and 2013, a serious decline
in entrepreneurial vision was observed most likely due to the crisis. In 2016, the proportion of people
planning a business after graduation was far below previous years (5.9%), while in 2018 the ratio
slightly improved. The proportion of respondents who were willing to establish a business 5 years
after graduation exceeded the one measured in 2006 and continued to grow further in 2018.

Source: own elaboration

Figure 10: Entrepreneurial Career Plans 2006-2018

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Hungarian entrepreneurial intentions in an international comparison

Hungarian students’ entrepreneurial intentions are low in an international comparison. Visegrad

countries (Czech Republic, Slovakia, Poland) and most EU Member States have a higher
entrepreneurial spirit.

Source: own elaboration

Figure 11: The proportion of respondents’entrepreneurial intentions

in an international comparison

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Youth entrepreneurship

In the sample 5.1% of the respondents (497 students) indicated that they ran a business of their own.
Over 25% of the respondents running their own businesses were nascent entrepreneurs and had
established their businesses in the year when the survey was conducted (2018) (Table 3). The rate of
enterprises that were 3 years old or younger amounted to almost 60%. Since a major part of
enterprises were new or established not long ago, the students did not have much experience.

Table 3: Student enterprises by year of establishment

N %
2009 or earlier 88 18.1
2010 12 2.5
2011 12 2.5
2012 19 3.9
2013 20 4.1
2014 21 4.3
2015 36 7.4
2016 55 11.3
2017 97 20.0
2018 125 25.8
Total 485 100.0
Source: own elaboration

More than half of the students running their own businesses were self-employed, 44.7% owned
micro enterprises and 2.5% had small-sized enterprises.

Table 4 shows the distribution of students’ enterprises by activity areas and company size. Self-
employed students most frequently mentioned other categories (16.4%), financial services (including
banking, insurance, investment, real estate) (15.%) and education and training (10.9%). Micro
enterprises are mainly active in other fields (14.7%), financial services (13.8%) and information
technology (IT)/communications (12%). Of the 12 small companies, 3 operated in trade and 3
operated in other services, and another 2 were in manufacturing and other services.

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 Table 4: Student enterprises by sector and size (%)

Self-employed Micro enterprise Small enterprise

N % N % N %
Advertising / Design / Marketing 25 9.8 7 3.2
0 0.0
Architecture and engineering activities 9 3.5 11 5.1 1 8.3
Construction industry 9 3.5 17 7.8
0 0.0
Consultancy (HR, law, management, 13 5.1 13 6.0
taxes)
0 0.0
Education, training 28 10,9 16 7.4
0 0.0
Financial services (including bank, 39 15.2 30 13.8
insurance, investment and real estate)
0 0.0
Human health care, social care 18 7,0 10 4,6
0 0.0
Informatics (IT) / communication 23 9.0 26 12.0 1 8.3
(including software and IT services)
Manufacturing industry 0 0.0 2 0.9 2 16.7
Tourism and recreation 19 7.4 8 3.7
0 0.0
Trade (wholesale and retail) 13 5.1 24 11.1 3 25.0
Other services (shipping) 17 6.6 20 9,2 3 25.0
Others 42 16.4 32 14.7 2 16.7
Left unanswered 1 0.4 1 0.5 0 0.0
Total 256 100.0 217 100.0 12 100.0
Source: own elaboration

The presence of self-employed students highlights the importance of this group of students.
However, self-employed students are less likely to become owners of companies with significant
growth potential. The analysis of the activity fields reveals that a part of these enterprises were
assumed to be set up for financing students’ studies. This assumption is based on the fact that only
33.1% of the surveyed student entrepreneurs planed to continue their entrepreneurial activities after
graduation.

However, entrepreneurship can also be useful for those who consider it only as a temporary
source of livelihood or as a supplement, as they are necessarily confronted with entrepreneurial
tasks, issues, decision-making situations and are generally familiar with entrepreneurship. There is a
higher proportion of those planning to start a business in the future and a lower level of uncertainty
about their future career among active entrepreneurs than among non-entrepreneurial students (see
Figure 12 and Figure 13).

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Source: own elaboration

Figure 12: Differences in career plans immediately after graduation by entrepreneurial activity

Source: own elaboration

Figure 13: Differences in career plans five years after studies by entrepreneurial activity

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Entrepreneurship. Working Paper http://www.indiana.edu/~idsspea/papers/ISSN%2005-
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GEM (2013), Global Entrepreneurship Monitor – 2012 Global Report
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vállalkozásindítási elképzeléseinek alakulására. Vezetéstudomány / Budapest Management
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Mazzarol, T. (2014): Growing and sustaining entrepreneurial ecosystems: What they are and the
role of government policy. White Paper, Small Enterprise Association of Australia and New
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OECD (2010): SMEs, Entrepreneurship And Innovation. OECD Studies on SMEs and
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OECD (2015): Policy Brief on Youth Entrepreneurship. Entrepreneurial Activities in Europe.
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