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

This paper suggests that different start-up motivations make entrepreneurs pursue different kinds of new business performance, which in this study is expressed in financial terms (i.e., Return on Assets - ROA). The authors posit that so-called extrinsic motivation urges entrepreneurs to be more shor...

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Veröffentlicht in:Journal of Business Strategy 2021-07, Vol.42 (4), p.233-239
Hauptverfasser: Debrulle, Jonas, Maes, Johan, Gardiner, Elliroma
Format: Artikel
Sprache:eng
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Zusammenfassung:This paper suggests that different start-up motivations make entrepreneurs pursue different kinds of new business performance, which in this study is expressed in financial terms (i.e., Return on Assets - ROA). 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, the paper explores how intrinsic and extrinsic entrepreneurship motivation combine and produce financial dilemmas for entrepreneurs. 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. 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. The paper also shows that a mix of intrinsic and extrinsic motivations directs entrepreneurs towards different profitability levels during the organization's survival and early-establishment phase. 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.
ISSN:0275-6668