On the Interaction of Time and Money Invested in New Ventures

Moren Lévesque and Kenneth R. Maccrimmon

Entrepreneurship Theory and Practice, 1998, vol. 22, issue 2, 89-110

Abstract: The owners of America's fastest-growing private companies listed in Inc. 500 magazine in 1995 kept their wage jobs for an average of four months after the birth of their new ventures. Why didn't they immediately commit themselves full-time to the new venture? The answer is their need for money. The earned wages contribute to the survival of the individual by covering living expenses and to the survival of the business by allowing the Investment of some of the wage income into it. We address the question of when the best time is for an entrepreneur to leave a wage job and become a full-time entrepreneur. We show that the optimal time-allocation policy is driven by the entrepreneur's tolerance for work and by how the returns behave with respect to time allocation in the venture. By utilizing an analytical approach we suggest some productive new directions for entrepreneurship research.

Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:22:y:1998:i:2:p:89-110

DOI: 10.1177/104225879802200207

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