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Do Entrepreneurial Goals Matter? Resource Allocation in New Owner-Managed Firms

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Author Info

  • William Dunkelberg

    ()
    (Department of Economics, Temple University)

  • Carmen Moore

    ()
    (Department of Business Administration, Morgan State University)

  • Jonathan Scott

    ()
    (Department of Finance, Temple University)

  • William Stull

    ()
    (Department of Economics, Temple University)

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    Abstract

    This paper focuses on how entrepreneurial goals affect the resource allocation of new firm owners. It connects research in psychology and management that examines the core motivations of entrepreneurs with research in economics that models the behavior of owner-managers as utility-maximizing rather than profit-maximizing. We hypothesize that new owners with nonmonetary goals allocate their resources differently than do owners with monetary goals and that the differences are meaningful in size. To test these hypotheses, we estimate firm level equations based on economic theories of factor demand that show how input quantities depend on owner goals. Data come from a national survey of new U.S. business owners. We find owner goals have both a statistically and substantively significant effect on resource allocation for new firms. Owners with nonmonetary goals put in more of their own and family hours rather than hiring outside employees. Implications for research and policy are discussed.

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    File URL: http://www.cla.temple.edu/RePEc/documents/detu_2012_03.pdf
    File Function: First version, 2012
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    Bibliographic Info

    Paper provided by Department of Economics, Temple University in its series DETU Working Papers with number 1203.

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    Date of creation: Sep 2012
    Date of revision:
    Handle: RePEc:tem:wpaper:1203

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    Related research

    Keywords: Entrepreneurship; Small Business; New Firms; Owner Goals; Resource Allocation;

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    References

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    1. Parker,Simon C., 2004. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521828130, December.
    2. Cassar, Gavin & Craig, Justin, 2009. "An investigation of hindsight bias in nascent venture activity," Journal of Business Venturing, Elsevier, vol. 24(2), pages 149-164, March.
    3. Carter, Nancy M. & Gartner, William B. & Shaver, Kelly G. & Gatewood, Elizabeth J., 2003. "The career reasons of nascent entrepreneurs," Journal of Business Venturing, Elsevier, vol. 18(1), pages 13-39, January.
    4. Donald Bruce & Mohammed Mohsin, 2006. "Tax Policy and Entrepreneurship: New Time Series Evidence," Small Business Economics, Springer, vol. 26(5), pages 409-425, 06.
    5. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
    6. Birley, Sue & Westhead, Paul, 1994. "A taxonomy of business start-up reasons and their impact on firm growth and size," Journal of Business Venturing, Elsevier, vol. 9(1), pages 7-31, January.
    7. Santarelli, Enrico & Vivarelli, Marco, 2006. "Entrepreneurship and the Process of Firms’ Entry, Survival and Growth," IZA Discussion Papers 2475, Institute for the Study of Labor (IZA).
    8. Scott Morton, Fiona M & Podolny, Joel M, 2002. "Love or Money? The Effects of Owner Motivation in the California Wine Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 50(4), pages 431-56, December.
    9. Minniti, Maria & Lévesque, Moren, 2008. "Recent developments in the economics of entrepreneurship," Journal of Business Venturing, Elsevier, vol. 23(6), pages 603-612, November.
    10. Gatewood, Elizabeth J. & Shaver, Kelly G. & Gartner, William B., 1995. "A longitudinal study of cognitive factors influencing start-up behaviors and success at venture creation," Journal of Business Venturing, Elsevier, vol. 10(5), pages 371-391, September.
    11. Shane, Scott & Kolvereid, Lars & Westhead, Paul, 1991. "An exploratory examination of the reasons leading to new firm formation across country and gender," Journal of Business Venturing, Elsevier, vol. 6(6), pages 431-446, November.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Entrepreneurs
      by UDADISI in UDADISI on 2012-10-27 13:02:00

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