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Are entrepreneurs influenced by risk attitude, regulatory focus or both? An experiment on entrepreneurs' time allocation

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  • Burmeister-Lamp, Katrin
  • Lévesque, Moren
  • Schade, Christian
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    Abstract

    “Hybrid entrepreneurs” — those who maintain a wage job while starting a new enterprise — outnumber pure entrepreneurs in many countries. Yet, how hybrid entrepreneurs allocate their working hours between these two activities is not well understood. To better understand the relationship between hybrid entrepreneurs' division of time between their wage jobs and new enterprises we develop a model that captures hybrid entrepreneurs' decisions on the tradeoffs between financial risk and return as it relates to time allocation. We test two hypotheses based on utility theory, and challenge them with two hypotheses based on regulatory focus theory in a controlled experiment with 25 early stage entrepreneurs and 29 undergraduate students. In the computer-based experiment, entrepreneurs' and students' time allocation decisions (tied to monetary incentives) are used to test what would motivate them to work more or less hours in their entrepreneurial startups. We find that the actual time allocation decisions of the student group are somewhat in tune with utility theory, but that the entrepreneurs' time allocation decisions are better explained by regulatory focus theory.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Venturing.

    Volume (Year): 27 (2012)
    Issue (Month): 4 ()
    Pages: 456-476

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    Handle: RePEc:eee:jbvent:v:27:y:2012:i:4:p:456-476

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    Web page: http://www.elsevier.com/locate/jbusvent

    Related research

    Keywords: Time allocation decisions; Entrepreneurship; Experiments; Regulatory focus theory; Utility theory;

    References

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