How entrepreneurs think: financial decisions for the long or short term. Issue 4 (10th June 2020)

• Record Type: Journal Article
• Authors: Debrulle, Jonas; Maes, Johan; Gardiner, Elliroma
• Is Part Of: Journal of business strategy. Volume 42:Issue 4(2021)
• Page Start: 233
• Page End: 239
• Publication Date: 2020-06-10
• Subjects: Intrinsic motivation -- Extrinsic motivation -- Return on assets -- Entrepreneurship motivation -- Financial dilemmas -- New business performance; Business planning -- Periodicals; 658.4005
• DOI: 10.1108/JBS-04-2020-0068
• Languages: English
• ISSNs: 0275-6668

Abstract

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.