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

Jonas Debrulle ( IESEG School of Management , Lille, France and Faculty of Economics and Business, KU Leuven, Leuven, Belgium)
Johan Maes ( IESEG School of Management , Lille, France and Faculty of Economics and Business, KU Leuven, Leuven, Belgium)
Elliroma Gardiner (Department of Management, Queensland University of Technology , Brisbane, Australia and IESEG School of Management , Lille, France)

Journal of Business Strategy

ISSN: 0275-6668

Article publication date: 10 June 2020

Issue publication date: 7 July 2021

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415

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.

Keywords

Acknowledgements

The authors gratefully acknowledge the financial support of the Policy Research Centre for Entrepreneurship and International Entrepreneurship of the Flemish Government. Its support was limited to funding and did not imply any intervention in the study design, data collection and analyses.

Citation

Debrulle, J., Maes, J. and Gardiner, E. (2021), "How entrepreneurs think: financial decisions for the long or short term", Journal of Business Strategy, Vol. 42 No. 4, pp. 233-239. https://doi.org/10.1108/JBS-04-2020-0068

Publisher

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Emerald Publishing Limited

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