How entrepreneurs think: financial decisions for the long or short term

Jonas Debrulle, Johan Maes and Elliroma Gardiner

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Abstract: Purpose The purpose of this paper is to suggest that different start-up motivations make entrepreneurs pursue different kinds of new business performance, which in this study are expressed in financial terms (i.e. return on assets). The authors posit that so-called extrinsic motivation urges entrepreneurs to be more short-term oriented, while their intrinsic motivation encourages a longer-term business vision. Additionally, this paper explores how intrinsic and extrinsic entrepreneurship motivations combine and produce financial dilemmas for entrepreneurs. Design/methodology/approach The analyses are based on 300 entrepreneurs across diverse industries in Belgium. Data was collected for this study through structured interviews with entrepreneurs combined with a company questionnaire. Financial data was obtained through a government database. Findings Results confirm that extrinsic entrepreneurship motivation boosts new business short-term financial performance, whereas intrinsic motivation contributes to the firm's longer-term financial returns. This paper also shows that a mix of intrinsic and extrinsic motivations directs entrepreneurs toward different profitability levels during the organization's survival and early-establishment phase. Originality/value Research on entrepreneurship has not yet corroborated that motivations can be personally conflicting, thereby saddling the entrepreneur with dilemmas that may manifest into different levels of business performance.

Date: 2020-06-10
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Citations: View citations in EconPapers (1)

Published in Journal of Business Strategy, 2020, ⟨10.1108/JBS-04-2020-0068⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03141884

DOI: 10.1108/JBS-04-2020-0068

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