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

Jonas Debrulle (1) , Johan Maes , Elliroma Gardiner

1 LEM - Lille économie management - UMR 9221

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.

Domaines: Sciences de l'Homme et Société; Gestion et management

Jonas Debrulle, Johan Maes, Elliroma Gardiner. How entrepreneurs think: financial decisions for the long or short term. Journal of Business Strategy, 2020, ⟨10.1108/JBS-04-2020-0068⟩. ⟨hal-03141884⟩