Are Entrepreneurs Influenced by Risk Attitude, Regulatory Focus or Both? An Experiment on Entrepreneurs’ Time Allocation

45 Pages Posted: 15 Feb 2012

See all articles by Katrin Burmeister-Lamp

Katrin Burmeister-Lamp

Rotterdam School of Management

Moren Levesque

University of Waterloo

Christian Schade

Humboldt-Universitaet zu Berlin

Date Written: February 14, 2012

Abstract

“Hybrid entrepreneurs” ― those who maintain a wage job while starting a new enterprise ― outnumber pure entrepreneurs in many countries. Yet, how hybrid entrepreneurs allocate their working hours between these two activities is not well understood. To better understand the relationship between hybrid entrepreneurs’ division of time between their wage jobs and new enterprises we develop a model that captures hybrid entrepreneurs’ decisions on the tradeoffs between financial risk and return as it relates to time allocation. We test two hypotheses based on utility theory, and challenge them with two hypotheses based on regulatory focus theory in a controlled experiment with 25 early stage entrepreneurs and 29 undergraduate students. In the computer-based experiment, entrepreneurs’ and students’ time allocation decisions (tied to monetary incentives) are used to test what would motivate them to work more or less hours in their entrepreneurial startups. We find that the actual time allocation decisions of the student group are somewhat in tune with utility theory, but that the entrepreneurs’ time allocation decisions are better explained by regulatory focus theory.

Keywords: Time Allocation Decisions, Entrepreneurship, Experiments, Regulatory Focus Theory, Utility Theory

Suggested Citation

Burmeister-Lamp, Katrin and Levesque, Moren and Schade, Christian, Are Entrepreneurs Influenced by Risk Attitude, Regulatory Focus or Both? An Experiment on Entrepreneurs’ Time Allocation (February 14, 2012). Journal of Business Venturing, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2005210

Katrin Burmeister-Lamp (Contact Author)

Rotterdam School of Management ( email )

RSM Erasmus University
Rotterdam, 3000 DR
Netherlands
+31104082595 (Phone)

Moren Levesque

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

Christian Schade

Humboldt-Universitaet zu Berlin ( email )

School of Business and Economics
Unter den Linden 6
Berlin, Berlin 10099
Germany

HOME PAGE: http://enim.wiwi.hu-berlin.de/index-en.html

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