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

William Dunkelberg (william.dunkelberg@temple.edu), Carmen Moore (carmen.moore@morgan.edu), Jonathan Scott (jonathan.scott@temple.edu) and William Stull (stull@temple.edu)
Additional contact information
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

No 1203, DETU Working Papers from Department of Economics, Temple University

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.

Keywords: Entrepreneurship; Small Business; New Firms; Owner Goals; Resource Allocation (search for similar items in EconPapers)
JEL-codes: L26 M12 M14 (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ent and nep-hme
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.cla.temple.edu/RePEc/documents/detu_2012_03.pdf First version, 2012 (application/pdf)

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