Abstract:
Entrepreneurship is a key strategy to solve the problem of unemployment, especially in developing
nations including Sri Lanka. Institutional environment has a great impact on entrepreneurship
efforts. Although many researches were conducted to assess the relationship between institutional
environment and entrepreneurship in the world, Sri Lanka is lack of such studies. To fill this research
gap, the present study was developed to discover the relationship between entrepreneurship
inclination and institutional environment of Agriculture diplomats in Sri Lanka Institute of Advanced
Technological Education (SLIATE). The data was collected from all the students (133) who followed
the Higher National Diploma Technology Agriculture program in Advanced Technological Institute Gampaha which is a sub-institute of SLIATE. The study focused on three dimensions of the
institutional environment: Regulatory, Normative and Cognitive and the students’ perception of
desirability and feasibility of being entrepreneurs were identified for all three dimensions. A Pre tested survey questionnaire was employed to gather primary data and reliability and validity of the
scales was assessed by Chronbachs’ alpha values and means of exploratory factor analysis. To
evaluate the influence of the institutional environment for entrepreneurial intention, a t test was
practiced. The results revealed that the regulatory environment influences both feasibility (t=2.677,
P=0.008) and desirability (t=2.616, P= 0.041), while Cognitive environment only influences the
feasibility (t=1.755, P=0.042). Normative environment also influences for both feasibility (t=1.268,
P=0.007) and desirability (t=2.361, P=0.028). The study concluded that all three dimensions of the
institutional environment are significantly impact on being entrepreneur. Therefore, to improve the
entrepreneurial efforts, regulatory factors such as industrial policy, appropriate trade-off between
market concentration and productivity performance should be considered by the government. It is
also a key to improve the normative and cognitive environments for entrepreneurship development.
