THE INTERACTION OF FOUNDER MOTIVATION AND ENVIRONMENTAL CONTEXT IN NEW VENTURE FORMATION
J. David Hunger, Peter F. Korsching, and Howard Van Auken, Iowa State University
Principal Topic
The entrepreneurship literature does not currently provide a generally accepted comprehensive model of new venture formation. In particular, there is disagreement regarding the sequence of the identification of the idea/opportunity and the decision to initiate a new venture. Which comes first? Does it matter? We propose that entrepreneurial ventures can be classified as either decision-driven or opportunity-driven, depending on which initiates the process. We further propose that decision-driven ventures can be either internally motivated, in which a person is “pulled” (desire to be own boss) toward starting a venture, or externally motivated, in which a person is “pushed” (lack of other alternatives) into starting a new venture. We further propose that opportunity-driven ventures should have a greater amount of entrepreneurial content (novelty) than decision-driven ventures. We also examine the role of environmental support in new venture initiation.
Method
Field research was conducted in two rural Iowa counties having similar demographic characteristics, but different levels of environmental resources. Entrepreneurs starting new ventures within the past 5 years completed questionnaires assessing their reasons for starting the new venture, the venture’s entrepreneurial content, plus their perceptions of the level of community resources and support. Eighty usable questionnaires were returned.
Results and Implications
52% of the surveyed entrepreneurs (regardless of county) reported that the idea for a new business opportunity was identified before the decision to start the new venture; whereas, 48% reported that the decision to start the venture came before the search for an opportunity. As hypothesized, the mean average measure of entrepreneurial content present in opportunity-driven new ventures was higher than that in decision-driven new ventures. There was no difference, however, in initial growth objectives between opportunity or decision-driven ventures. Nevertheless, during the time period from when the business was founded to when the survey was taken, opportunity-driven ventures added 27 new employees; whereas, decision-driven ventures dropped one employee. The number of new employees and the number of higher skilled employee jobs increased in the county containing more social support for entrepreneurial ventures. The results indicate that models of new venture initiation should include whether the venture is opportunity-driven or decision-driven.
CONTACT: J. David Hunger, College of Business, 300 Carver Hall, Iowa State University, Ames, IA 50011; (T) 515-294-8463; (F) 515-294-2534; jdhunger@iastate.edu
2002 Babson College. All Rights Reserved. Last Updated March 2003.