Advances In Management. Vol. 2 (11) November (2009) What makes people want to become self-employed? Applying the Theory of Planned Behavior Oghazi Pejvak*, Jung Marie-Louise, Peighambari Kaveh and Tretten Phillip Luleâ University of Technology, University campus, Porsön, SE-971 87 Luleâ, SWEDEN *pej vak@itu.se Abstract The world economy currently seems to be failing and the effects are being felt around the globe. There are many upcoming news about rising unemploy- ment, major corporations cutting jobs and workers who can't seem to find work. The current economic climate makes many people wary of spending money, which ean be bad news for those who make a living through the buying of others. Many things, however, are not simply going to go away because the economy is rough. Some buyers and employers may feel reticent when it comes to hiring and this could create trouble for those who survive by self employment. But in every economic cri.sis, some markets remain successful - and those who live through self employment are generally pretty good about applying their skills where needed. Increasing self-employment is an objective frequently seen on government agenda as small businesses are often seen as a remedy for unemployment and pivotal for economies to grow^. This paper contributes by specifying and testing the impact of internal factors that determine an individual's decision on whether to become self employed. Understanding the internal drivers of individuals' intentions will help to further trace the impact of external initiatives on individual behavior. Theory of Planned Behavior (TPB) has been applied on the most well established models explaining social behavior, to test the impact of attitude, social pressures and perceived control among Swedish men and women. Data are collected from over 400 Swedish university students with various backgrounds. The results provide that the strongest determinant of individuals' intention to become self-employed is their attitude towards being self employed. Along with the attitude, men are mainly influenced by their perceptions of control, whereas women are affected by their perceived pressures in their social surrounding. Keywords: Self Employment, Theory of Planned Behavior, World Economy, Recession. Introduction In 2008, a global economic predicament is occurring *Author for Correspondence by several important indicators of economic downturn worldwide. These are influenced by fluctuating oil prices which lead to both high food prices (due to a dependence of food production on petroleum, as well as using food as an alternative to petroleum) and global inflation; a considerable credit disaster leading to the bankruptcy of large and well established investment and commercial banks in various nations around the world; increased unemployment; and the possibility of a global recession. The world economy currently seems to be failing and the effects are being felt around the globe. When Wall Street plummets, that also naturally affects other financial markets. More and more people are worrying about their jobs, the future and the price they might have to pay to get to the other side of this economic untidiness. But many people have yet one more fear to face: namely, how the economic crisis affects self employment. It is often argued that the key to economic growth and productivity enhancement is entrepreneurial capacity. Delmai" and colleagues previously observed that heartening entrepreneurial activities is an essential issue in market economies'^. In view of the fact that the literature on the consequences of entrepreneurship has been in general restricted to three units of observation: that of the region^ that of the industry and that of the establishment or firm'^ Only recently research linking entrepreneurship and determinant of an individual's intention has started to develop'^. It is also now generally accepted that entrepreneurship contributes to achieving higher levels of economic development^ Self-employment offers many advantages to the individual as well as to the economy as a whole. Yet, in the Nordic countries self-employment is not as common as one would expect and the full potential of it is far from being tapped. It is thus imperative to understand the drivers of entrepreneurial spirit and individuals' wish to become self- employment in order to be able to initiate specifically targeted programs and campaigns. Probably one of the biggest advantages self- employment relates to is the belief that small businesses are needed for capitalist economy to grow^. Small businesses are regarded as a major provider of labor demand". Thus, self- employment is often named as a potential remedy to unemployment and governments run programs aiming at providing transfer payments to individuals who want to become self-employed^ For the individual, self-employed brings various advantages such as the ability to mange one's (9)