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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

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.

Suggested Citation

  • Burmeister-Lamp, Katrin & Lévesque, Moren & Schade, Christian, 2012. "Are entrepreneurs influenced by risk attitude, regulatory focus or both? An experiment on entrepreneurs' time allocation," Journal of Business Venturing, Elsevier, vol. 27(4), pages 456-476.
  • Handle: RePEc:eee:jbvent:v:27:y:2012:i:4:p:456-476
    DOI: 10.1016/j.jbusvent.2011.12.001
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    1. repec:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9908-0 is not listed on IDEAS
    2. Xi, Guoqian & Block, Jörn & Lasch, Frank & Robert, Frank & Thurik, Roy, 2017. "Mode of Entry into Hybrid Entrepreneurship: New Venture Start-Up versus Business Takeover," IZA Discussion Papers 11104, Institute for the Study of Labor (IZA).
    3. repec:taf:ijecbs:v:24:y:2017:i:1:p:27-51 is not listed on IDEAS
    4. Martin Koudstaal & Randolph Sloof & Mirjam van Praag, 2016. "Risk, Uncertainty, and Entrepreneurship: Evidence from a Lab-in-the-Field Experiment," Management Science, INFORMS, vol. 62(10), pages 2897-2915, October.
    5. Wood Matthew & McKinley William & Engstrom Craig L., 2013. "Endings and Visions of New Beginnings: The Effects of Source of Unemployment and Duration of Unemployment on Entrepreneurial Intent," Entrepreneurship Research Journal, De Gruyter, vol. 3(2), pages 171-206, January.
    6. Oleksandr Talavera & Charlie Weir & Lin Xiong, 2017. "Time Allocation and Performance: The Case of Chinese Entrepreneurs," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 24(1), pages 27-51, January.
    7. repec:eee:intman:v:23:y:2017:i:3:p:268-278 is not listed on IDEAS
    8. repec:uje:journl:y:2017:i:7:p:7-11 is not listed on IDEAS
    9. Kammerlander, Nadine & Burger, Dominik & Fust, Alexander & Fueglistaller, Urs, 2015. "Exploration and exploitation in established small and medium-sized enterprises: The effect of CEOs' regulatory focus," Journal of Business Venturing, Elsevier, vol. 30(4), pages 582-602.

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