Entrepreneur—A Jockey or a Horse Owner?

45 Pages Posted: 24 Aug 2019

See all articles by Elena Kulchina

Elena Kulchina

Duke University; North Carolina State University; Duke Innovation & Entrepreneurship Initiative

Pernille Gjerløv-Juel

Aalborg University - Department of Business and Management

Date Written: August 23, 2019


The business literature has long been concerned with understanding why people become entrepreneurs. This literature, however, has mixed together two important issues — founding a new business and being the right person to operate it. Up until recently, entrepreneurship scholars have largely believed that founders run their ventures personally. Yet it is not clear from either a theoretical or an empirical standpoint why this should be the case. Indeed, entrepreneurs are often criticized for having limited business expertise and placing personal motives ahead of financial returns. Whether founders are optimal managers for their firms strongly depends on their motives for operating the firm personally, i.e., whether their decision is driven by expected non-pecuniary benefits of management or by more strategic considerations. In our paper, we use fine-grained data on entrepreneurs in Denmark to examine what motivates them to operate their firms personally as opposed to hiring a manager. We find that while nonpecuniary motives play a role in the founders’ decision to operate their firms personally, opportunity cost of owner-management and relevant prior experience are equally important. Thus, entrepreneurs put significant emphasis on the characteristics that would improve firm performance and their overall wealth. Our findings are similar for entrepreneurs in high-technology and low-technology sectors as well as for founders who hire non-family and family managers. We also observe that when founders do not manage their firms personally, they typically work full-time at another firm or play a non-managing role in their own venture. In our subsequent analysis, we investigate how these two types of non-managing founders differ, providing further insights into their behavioral motives.

Keywords: top manager, founder-manager, entrepreneur, motivation, non-pecuniary benefits

Suggested Citation

Kulchina, Elena and Kulchina, Elena and Gjerløv-Juel, Pernille, Entrepreneur—A Jockey or a Horse Owner? (August 23, 2019). Available at SSRN: https://ssrn.com/abstract=3441997 or http://dx.doi.org/10.2139/ssrn.3441997

Elena Kulchina (Contact Author)

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

North Carolina State University ( email )

Hillsborough Street
Raleigh, NC 27695
United States

Duke Innovation & Entrepreneurship Initiative

215 Morris St., Suite 300
Durham, NC 27701
United States

Pernille Gjerløv-Juel

Aalborg University - Department of Business and Management ( email )


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