- Acrobat Pro Dc File Edit View E Sign Window Help Assignment 2 Pdf 0024zg Contents Q 1 29 Should I Quit My Day Job 1 (577.66 KiB) Viewed 64 times
Acrobat Pro DC File Edit View E-Sign Window Help Assignment-2.pdf 0024zG-Contents... (Q) 5 / 29 Academy of Mu Home Tools H✩ ✪ 9 ↑ Thus, extending insights from real options theore to incorporate risk peeferences would suggest that, in axardance with traditional equilibrium models of risk aversion and self-employment (Kihlstrom & Lakot, 1979), risk-averse individuals should be lass willing to make the large commitments associ ated with entry into full-time self-employment. In other words, risk aversion effectively increases the valued with deferring full-time entry ( gonnier & Moellec, 2007). However, as uncertainty rises, so too does the value of holding a real option (McGrath, 1997). Thus, while nail options theory suggests individuals with high risk aversion should be less likely to make the large commitment - ciated with direct entry into fall-time self-employ ment, they should be more willing to make smaller commitments asociated with entry into hybeiden- trepreneurship Indond, by entering hybrid antre peeneurship, risk averse individuals can start at business and redus what is at risk the amount of risk-bearing Thus, we suggest the following Hypothesis 1. Individuals with higher risk version are more likely to enter kyland entrepreneurship in comparison to full-time self employment In addition to risk aversion, a number of other individual characteristics have been argued to in fantrapreneurial entry. For instance, lill- ing on the notion that entrepreneurs are highly confident (Knight, 1821), nechers have shown that internal locus of control (Evans & Leighton, 1989), self-efficacy [Zhao, Seibert, & Hills, 2005), and emotional stability (Zhao, Seibert, & Lumpkin, 2010) relate positively to entrepreneurial entry. However, various elements of personality are often treated as entirely separate constructs, with little (if any) discussion regarding the interrelationships among traits or acknowledgement that related ele ments of personality may all be tapping the me higher order construct Judge, Eres, Bono, & Thore- 2000: Judge, Locke, & Durham, 1950). To that and rear stude focus on can self-evaluation (CSE a becad dispositional trait manifested by four elements of personality: self-esteem, general- ized self-efficacy, locus of control and emotional stability Cadge et al, 1997) Independent of contest and time, CSE is the rized to reflect the fundamental appraisals individ wals make about themselves, their capabilities, and their competence (judge et al., 1997). For example, Chang, Ferris, Johnson, Roson, and Tan write that CSE is "proposed to be the most fundamental eval JpAJBM-ContentServer.asp.pdf EXTO 59.2% hypothestr 2. Individuals with low core self- evaluation are more likely to enter bybeid entrepreneurship in comparison to full-time self-employment. Staged Entry into Full-Time Self-Employment and Survival ely The previous section uses insights from real op tions theory and the individual differences ters- tare to product hybrid entry. However, for many individuals, entry into hybeid sateeship represents just the first step on the path to fall-time self-employment. The example, Palts et al. (2010) argue that entry into full-time timelemployment in endogenous to hybrid entrepreneurship, conclud ing that hybrid entrepreneurs are thirty-eight times more than wage cernens to enter self employment. A peediction from real options theory is that hybrid entrepreneurs will enter full- time self-employment only when they posceive the option to do so to be "in the money [Trigeorgis 1996) Indeed, a key benefit of real options is the ability to postpone decision making until the un certainty surrounding the investment has been re- alved (Dixit & Pindyck, 1994). In the context of entrepreneurship, the uncertainty resolved during the option period le, hyteld onirepreneurship) is typically endogenous-maing the it can be re- duced by actions of the entrepreneur (see Folta, 1996, for a detailed discussion). In other words, by antering hybrid antrepreneurship, individuals are able to leam about their venture, thereby reducing the uncertainty surrounding its prospects, prior to deciding if they want to increase commitment (Roberts & Weitzman, 1981). As such, because in dividuals entre self-employment after considering the relative costs and benefits (Muller & Arum 2004), absent positive information, bybeid entre peeners should no mason to forego the benefits associated with their job in paid employment (Becker, 1960). The underlying logic is driven by the fact that real options entail less sunk cost. As a result, options that do not yield favorable informa tion can be quickly abandoned while those that appear promising can be exercised (O'Brien & Folla, 2009), Spifically, we focus on information hybrid entrepreneurs accrue that reduces the un certainty surrounding to components of a sustain able business: (1) the quality of the business idea JpAJBM-Content... x uations people hold, reflecting a baseline appraisal that is implicit in all other beliefs and evaluations (Chang et al., 2012: 83, emphasis addo). Thus, CSE represents an individual's overarching general evaluations, not spacific evaluations reeding any particular context (eg, organizational, entrepre neurial, etc.). Accordingly, research has demon strated CSE to have predictive validity regarding a wide variety of wock and like-related outcomes. Chang et al., 2012), Anchored in a real options framework, we add to this literature by developing theory to explain how CSE influences real options reasoning and the process of entrepreneurial entry. Given that individuals high in CSE are confident in their ability to successfully complete tasks and control their environment (Judget al., 2000), th of individuals should be less deterred by the risk and uncertainty associated with starting a business. Stated differently, because individuals high in CSE are confident in their cogebilities, they should per ceive entering self-employment as less risky and uncertain (L, perosive les variance in outcomes). In contrast, individuals with low CSE toad to be unaire of themselves and their capabilities, making them more likely to peceivo catering self-employ ment as a high-risk endeavor (ie, perceive more variance in outcomes). Accordingly, a predisposi tion to perceive entry into self-employment as more risky and uncertain would, in effect, raise the value associated with using an option approach. Thus, consistent with Caves (1998), who argued that less confident entrepreneurs will tend to start their besin on a smaller side, our logic suggests that individuals with low CSE who enter self-em- ployment will be more likely to do so incremos tally via hybrid entrepreneurship. wala, The upper echelons Ierature provides some support for our reasoning For example, Hiller and Hambrick (2006) argue that CIXS high in CSE are more likely to launch large scale, quaitum strategic Initiatives, while CEOs low in CS favor a smaller, incremental approach. Chatterjee and Hamleick [2007] found support for a positive relationship. between the CSE of a firm's CEO and the likelihood that the firm purses entrepreneurial opportuni tes. Simsek, Heavey, and Velga (2010) conclude that CBO CSE is positively related to a firm's entrepreneurial orientation. As we detailed above. we expect a similar relationship regarding entre preneurial entry. Aceedingly, we suggest the following: Du Q and (2) the entrepreneur's skills, capabilities, and fit within the entrepreneurial context. First, hybrid entreprs benefit from the ability to learn about the quality, potential, and feasibility of their business ides. Indeed, prior to the introduction of a new product for vion, it is difficult to know with certainty if one will be able to physically pro duce the product or if the product will meet the chance of market demand (Auto, Dar, & Frederiksen, 2013). Over time, however, the uncer tainty surrounding the value and feasibility of the ventilens, making the prospects of the feasiness more salient (conson & Stuart, 20011 In other cases. besinesid may be difficult to fully understand without actually "arting the commcdiation pro cess" (George & Bock, 2012: 68). As such, the only way to determine the value and Senibility of them ideas is to go forth and attempt to explot them. Second, hybrid entrepreneurs benefit from the alclity to be about their entrepeneurial skills, ca pabilities, and it within the entrepreneurial context Folta et al., 2010. Indeed, a lack of fit between founder and company is a major reason for b now ness fallures (Holmes & Schmitz, 1985). Much like determining the prospects of a business idea, caly by starting the restare individuals able to fully a uate if they have the necessary skills required to run the buxin (Jovanovic, 1982). However, even if the hybrid enter does not pass theme skills en ante, hybrid entrepreneurship provides a low-cisk setting where the mossey opabilities can be leamed price to committing to the venture full time For Mynd entrepreneurship provides a re alistic preview of life as an entrepreneur, illuminating that many of the glamorous portrayals of entrepre neurship are largely myths (Shane, 2006) and that being self-employed in a time-consuming and chal lenging process Given that bybeid entrepreneurs have no obliga tion to enter fall-time self-employment (McGrath, 1997), that the cost of abandoning the venture has less sunk cost O'Brien & Folla, 2009), and that hybrid entrepeners learn about the merits of their venture idea, skills, and entrepreneurial fit prior to Henrik best is id to note that the luning benefits associated with hybrid entreprenounhip apply to all hybrid entrepreneurs, including them with me a ante intention to enter full-time self-employment (Folta et al., 20101 Fornple, when Oxidyer founded Bay he had no istation of over quiting his day job However, afera positive market action, be felt he had no choice but to fason Bay full time (Caben, 2002). Q8 Fri Jun 3 4:34 PM o Day Job - Academ...agement I
Acrobat Pro DC File Edit View E-Sign Window Help Assignment-2.pdf 0024zG-Contents... 7 / 29 Home Tools H✩ ✪ 9 Ⓒ (Q) Academy of M committing to the business full time (Robes & Weitzman, 1951), real options theory suggests that hybrid entrepreneurs who "excise the option and enter full-time self-employment have reason to believe their business is sustainable and holds peomie (ie, the option is in the monery]. Accord- ingly, we suggest the following Hypothesis 3. Individuals who transition inte full-time self-employment in a staged antry process via hybrid entrepreneurship will sur vive longer than individuals who trition into full-time relf-employment directly from paid employment. Moderators of the Staged Entry-Survival Relationship In the previous section, we use logic from real options theory to aegse that hybrid entrepreneurs ex ercise the option to enter full-time self-employment when they believe the option to be in the money. However, unlike financial options where proper es theboks are intuitive, determining if real options are in the money is subjective, less straight forward, and heavily reliant on decision-maker in xight (eg, Barnett, 2138). As such, we expect that the survival benefit associated with staged entry into fall. time self-employment will vary with the hybeid on pur's shility to make effective assessments regarding the venture's potential. Specifically, we focus on two characteristics that influence this ability: (1) cognitive ability Ba, general in- telligence (Schmidt & Hunter, 2004) and (2) spa- cific knowledge accumulated through prior (n trepreneurial) experience (Cohen & Levinthal, 1990: Zahra & Griege, 2002) Cognitive Ability Cognitive ability is conceptualized as the general ability to think abstractly, fearn from experiences, competend surroundings, and "figure things out" (Lalinski, 2004). Indend, not all individuale able to learn, process, and apply now knowledge equally (Hunter, 1988). Empirical research has demonstrated that individuals with high general in telligence are better able to assimilate information to apply it in now situations (Jenn, 1996) and acquire new skills (Gottfredson, 1990). As a wall, Schmidt and Hunter (2004) argue that general mental ability is the primary factor naparsible for turning experince into knowledge and the single most important attri bute explaining variance in job performance JpAJBM-ContentServer.asp.pdf EXTO 59.2% 2014 Wethod,& Schl, 1901). For instance, Tol-Kehler, Wennberg, and Kim (2014) argue that experienced. entrepreneurs are able to use their knowledge re garding past entrepreneurial veatures to make more effective connections and deduce inferences re garding the prospects of a new venture. Similarly, the literature on entrepreneurial cognition suggests experienced entrepreneurs develop expert scripts and knowledge ructures allowing them to use information more effectively than inexperienced entrepreneurs (Mitchell et al., 2007). Indeed, re- asech suggests that experienced entrepreneurs think differently than novice entrepreneurs when evaluating and assing opportunities (Baron & Easley, 2006, Ucharan. Westbad. & Wright, 20090 For example, Baron and Easley (2006) find that experienced intrapets emphasize more mundane characteristics indicating venture fast- bility and the likelihood of positive financial re- turn, while novice entreposrs focus on charac teristics reflecting a greafce degree of novelty and Despite this evidence, empirical studies linking entrepreneurial experience and venture survival have generally reported mixed findings Delmar & Shane, 200 Gimeno, Polts, Cooper, & W, 1997 Jargensen, 2006). One explanation is that the rela tionship is more complex than a simple mais ef fect. In other words, ex ante, the outcomes of the founding process remain highly uncertain even for repeat intrapenars (Aldrich, 1). However, given the chance to amass information about their venture through hybeid entrepreneurship, repeat entrepreneun on uilize their knowledge ragand ing what worked and what did not when assessing the new venture's prospects (Tod Kehler et al. 2014) Munr, the opportunity characteristica experienced entrepreneurs look for when assessing the quality of business ideas, such as positive cash flow, high margins, and the ability to quickly gen- erate revenue (Baron & Ensley, 2006], are more salient and quantifiable once the business has ac tally been started. Accordingly, by drawing on pelor business experiences and focusing on quanti fiable metrics that indicate business fibility, we expect asperienced entrepreneurs to make more effective exercise decisions, exercising the option to commit fall time to the business when the option. is in the monary and abandoning the option when it is not. Accordingly, we suggest the following Hypothesis & Entrepreneurial experience moderates the positive relationship between JpAJBM-Content... x Surprisingly, however, studies regarding the rela tionship between intelligence and entrepreneurial ac tivity rare Baum & Bird, 2010, Vinogradov & Kolvereid, 20100 Nevertheless, scholars have long histed that cognitive ability plays an important role in neurial pross For example, Knight [1921) argued that intellectual ability would lead to the identification of more valuable opportunities. Similarly, Vinogradow and Kolvid (2010153) g gest that, since intelligence represents a "broader and desper capability for composending surroundings," it should be pertlarly weful when evaluating new opportunities. Along these lines, while scholars have argand that ctivity is important for generating besi wid, analytical intellectual ability is most im portant when assessing an idea's morts and potential [Hamm & Bind, 20100 Pre mp, antrepreneurial researchers have noted that intelligence increases the ability to see value embedded within new informa tion (Shan, 2000), and that analytical ability is par busty help when interpreting and making sense of complex information in an entrepreneurial setting (Baum & Bird, 2010). As a result, the benefit of cog nitive ability should be particularly salient during bybeid entrepreneurship, where hybrid entrepre alth of information about their b ness that can be used to determine if the business is wth pursuing full time (in, if they should carci the option). Stated differently, because intelligence increases a hybrid entrepreneur's ability to "analyse and evaluate multiple and complex cerns of ac & Bird, 2010: 101, we expect intelligent hybrid entrepreneurs to make better concise deci sion, being more likely to counce the option when it is in the money and abandon it when it is not. Thus, we suggest the following Hypothesis Gognitive ability made the positive relationship between staged entry and fail-time self-employment survival such that the relationship is stronger for individuals with high cognitive ability. Entrepreneurial Experience The ability to assess, assimilate, and make sense of new information is also a function of an organi zation of individual's price experience and stock of knowledge (Cohen & Lavinthal, 100 Zalm & Garg, 2002). Given that reps entrepreneun and able to draw on their prior experiences founding venture, scholars have posited that eningnmeur lal experience should be particularly useful when evaluating the prospects of a new business (Wright, 4-0 A Du Q 14) staged extry and full-time effeplyment survival such that the relationship is stronger for experienced extra METHODS Data We use data from the National Longitudinal Sur- vry of Youth, 1979 cohort (NLSY79). The NLSY79 wynten en dit be the ITS B survey is sponsored and directed by the U.S. Bu- of Labor Statistics and conducted by the Con ter for Human Resource Research at The Ohio State University. Interviews are conducted by the Na tinnal Opinion Research Center at the University of Chicago. The data has been used by management scholars to study issues such as self-employment (Schiller & Crewson, 1997), employee turnover (Lee, Gerhart, Weller, & Trevor, 2008), and career outcomes (adge & Hurst, 2007, 2000 The NLSY29 sists of a nationally repentative sample of 12 men and women aged between 14 and 22 yours when first surveyed in 1979. The cohort was interviewed annually until 1994, and biennially thereafter. Several features of the NLSY79 make it particu larly attractive to test mar hypoth, Pist, it c tains rich information on individual proferences. attitudes, and socioeconomic status. Second, the data contain comprehensive employment histories for each participant. During each survey, partici pants are allowed to report up to five jobs. For each job, the date (math/day/year) when the job began as well as the date when the job ended is re creded. Hence, by comparing job start and stop dates, we can determine if any participant held two jobs simultaneously [Le. If a new job begins before an existing job anda). This allows us to ov major challenge when studying hybeid entrepre neurship the ability to identify true hybrids [Folta et al., 2010). The NLSY79 codes jobs into the fol In y des used to study solf employment, labor fastatas or income is reported on an aural baris Thefore, in a given your, if the data indicate that a pers was played in both paid and self-employment, it is clear if the person ered bybrid entglip if they traditioned from paid employme to self-employ met antally. To ove this in, Folte al 120101 Hestial individuals as hybrids only if they re- ported the same paid job and some sell-ployed job fe two consecutive years. Although conservative, a licitation of this app is that individuals with short stins in hybrid stopship are pettially excluded Q8 Fri Jun 3 4:34 PM o Day Job - Academ...agement I
Acrobat Pro DC File Edit View E-Sign Window Help Assignment-2.pdf 0024zG-Contents... Ⓒ (3) 11 / 29 946 Academy of Me Journal NISY79 to measure CSE Since the NLSY79 does not include a measure of CSE, these questions were alected bac they reflect the 12 mon the CSE scale developed by Judge et al. (2003). The messure demonstrates high construct validity.com- bent validity, discriminant validity, and reliability (see Jodge & Hurst, 2007, 2008, for extensive scale validation procedures]. CSE is time invariant. We measured staged entry two ways. Find, we used a dummy variable to indicate whether a par ticipant transitioned into full-time self-employ ment from hybrid entrepreneurship ("1"-trail- tion occured). We call this measure the staged entry dummy. Second, for those who entered full- time employment from hybrid antrepreneur ship (ie, staged entry "1"), we calculated the amount of time, mared in yours, each partici- pont spent in hybrid entrepreneurship immediately peise to transitioning lato full-time self-employ ment. Participants who trassitioned to full-time self-employment directly from paid work (ie, di- rect entry) were coded as ""We call this measure call this measure the staged entry duration We measured cognitive ability with the Armed Forces Qualifications Test (AFQT), which mea uns quantitative and verbal skills. Prior studies have demonstrated the APQT to be a reliable mea sure (0) (Bock & Moore, 1986), correlating highly (95 or higher) with the g factor, an allema- tive measure of cognitive ability (Stauffer, R. & Carta, 1996), and stable over time (Gottfredson, 1986) Cognitive ability is time invariant For entrepreneurial experience, we followed re centoch (ng. Endry & Roberts, 2012; Gregoire & Shepherd, 2012: Hmieleski & Baron, 2000, Toft Kehler et al., 2014) and measured it as the cumu lative number of busines started. In addition, we followed Folta et al. (2010) and differentiated be tween full-time self-employment experience and experience as a hybrid entrepeener. We call these variables no full SE experience and no hybrid SE experience. Additionally, we used the duration of the participant's most nont prior antrenorial spell: duration full SE experience and duration hy beid SE experience. Castrol Guided by asisting noasech, we in- cluded a series of control variables theorized to influence entrepreneurial entry and survival. To account for economic and demographic fac tors (Kim, Aldrich. & Keister, 2006), we included controls te gender (male","male"0" measured in years; education, measured as the total years of schooling family set income, measured as Home Tools H✩ ✪ 9 JpAJBM-ContentServer.asp.pdf EXTO 59.2% JpAJBM-Content... x the logged value of total family income and region (urban","rural"). We also included logged hourly rate of pay, logged number of years of in dustry experience, and a count of the total no. of previous jobs to account for opportunity costs, abil ity, and labor market experience (Shane, 2000). Firm size was included as the logged number of employees to control for the small firm effect. which may influence entry decisions (lfenbein al., 2010), and for the fact that larger ventures may have better chanons of survival (Geroski et al., 2010). Industry and accupation differences were controlled for with fixed effects based on the U.S. Census Bureau's three-digit indestry codes and the one-digit occupational code, respectively. Year fixed effects were included to account for macro- economic conditione RESULTS Table & dive statistics and cormla tions for all variables. Models 1 to 4 (M1-M4) in Table 2 display the unstandardized regression coefficients from the competing-risks Cox proportional heads model. Models 5 and 6 (MS, MG) display the unstandard- ized regression coefficients from a single risk Cox model e, pouled model) where we treat hybrid entry as synonymous with entry into full-time self- employment Column 7 (M7) shows Wald chi square tests of coeficient quality (using boot- strapped standard amon) betwiss Models 2 and 4 Hypothesis 1 predicts that individuals with higher risk aversion are more likely to enter hybrid ye entrepreneurship relative to full-time self-employ ment. Results from Models 2 and 4 support this hypothesis. The collicient for risk version pro dicting full-time self-employment entry was neg tive and statistically significant (8-178 p<.001). In terms of percentage change, a one-unit increase in risk aversion is associated with a 16.3% decrease in the hard of entering full-time self- employment. In contrast, the coefficient for risk aversion predicting hybrid entry was not sig cant (5--005; ns.). Column 7 of Table 2 con firms the statistical difference between coefficients (p<06), providing further support for Hypothe sis 1. Hypothesis 2 predicts individuals with low CSE are more likely to enter hybrid entrepreneurship. relative to fall-time self-employment. Results from Models 2 and 4 provide support for this hypothesis. he coefficient for CSB predicting entry into fall 4-0 A 1 @ e E B Q # Q8 Fri Jun 3 4:34 PM o Day Job - Academ...agement I
Acrobat Pro DC File Edit View E-Sign Window Help Assignment-2.pdf 0024zG-Contents... Ⓒ (3) 13 / 29 948 fu Academy of Mεταγκαστική Journal TABLE 2 Results of Competing and Sinde-Risk Con Regression Analysis: Self-Employment Entry C Full-Time Stay M M₂ MI Ma Main Barkad Mobite V (MM pood Effects Rakan -X8+ pag [ com) ww CXK -300 m (158 Salads Copy + -.14 ( -.150 CIMI CIN Age J con Family nam s Pay -300 Lan s EMIL LO ( -263 -008 L LO Co TE No. of fall SE experience Lara COST (067) -201 No.of bybrid experience [AN] LIS IM Cha Con Mad P 106 y 7:58.41 0-13 p 7719572 -3211 1816 137 -41323 145454 962 1456714 SISLER M Ma 307 30 15:40 - 106 00-APR Wilation -200 ak 31,10. Alle 3-digit isday, 1-digt occupation, agian, and your fixed effects CSR cam salf evolution. 88-fly dades das by paip sagde bylontry is tcted on syymous with full time sellele ontry posled Walds for collint opality, Besin peng maks mods, it is possible that woonoring in may not be independent, we compuse the standard emors wing the bootmmpplag mothed (Prischer & Hayos, 2000), a simulation approache ang 200 from the original data. "Tico Nadu and in Namedrentius and S(1) Trgon for all e x 85 ***pc.om. ence between coefficients (p<.01), providing fur ther support for Hypothesis 2. time self-employment is positive and statically significant (3-398: p<.05). In terms of percent. age change, a one-unit increase in CSE incr the heard of entering full-time self-employment by roughly 32.6%. In contrast, the cooffice for C predicting entry into hybrid entropeenship is negative and statistically significant (- -47% p<.05). Column 7 of Table 2 confirms the differ Next, we compared the competing-eisks model with a single-risk (in, pooled) model in terms of variance explained. To do so, we computed the parado- in a mure of variance explained used in Cox modeling similar to rin maple Iinear regression (Maddala, 1983). Comparing the Home Tools H✩ ✪ 9 [384] IM [148] 813 4*** [ 14 MA Pel [5] - L -542 MI [PM] -190 M LIMI 100 M www 14 TUM [ -300 [T EMAIL LI - 51*** v [T ats - 45 1412) -200 [20] 20 [141] 360 [4] LOKA L 441 Lam S 814 LIDO [T -Ja [ -473 1210 14 215 12040 312 jan 1040 -aus (63) (air) as Lan S (012) aus LOUS) (050 (062) JpAJBM-Content... x ( Ca LOR - A 104 am** JpAJBM-ContentServer.asp.pdf EXTO 59.2% 2014 pseudo- from the competing-risks model with the pseudo-Rm from the single-risk model shows that the competing risks model esplains almost two and a half the variance e. 250.106) as the pooled model, providing additional support that the determinants of hybrid entrepreneurship and fall-time self-employment entry are distinct. Tables Sa and 3 display the sastandardized gression coefficients from single-risk Cox models estimating full-time self-employment survival. Hy pothesis predicts individuals who enter full-time alf-employment in a staged aniry peocus via hy brid entrepreneurship will survive longer than in dividuals who are full-time self-employment di- rectly from paid employment. Kesults from Model 2 (Table Sa) and Model 2 (Table 3b) provide support for this hypothesis. The condicion for tagad entry dummy in Model 2 (M2) Tabli negative and statistically significant (8-405) p001), implying that the heard of axitis 20.3% lower for individuals who enter full-time self-en- ployment in a staged process relative to those who enter directly from paid work. Likewise, the coef- ficient for staged entry duration in Model 2 (M2) In Table 3b is negative and statistically significant (--025; p < .01), maning that a one-nit change in staged entry duration is associated with a 2.5% reduction in the hazard of exit Hypothesis 4 peodicts that the positive effect of staged entry on full-time self-employment survival is stranger for individuals with high cognitive abil ity. Model 7 (M7) in Table 3a shows that the inter- action between staged entry dummy and cognitive ability is not statistically significat (8-15) in In Model 7 (M7) of Table 8h, the interaction be tween staged entry duration and cognitive ability is positive and statistically significat (3-053; p 01), which is the opposite of Hypothesis & As demonstrated by a comparison of the slopes in Figure 2, the decrease in haed of exit (ie, sur vival benet) associated with longer stays in hybrid entrepreneurship is stronger for individuals with low cognitive ability. Thes, we do not find support for Hypothesis 4. Hypothesis 5 predicts that the positive effect of atagad entry on full-time self-employment survival is stronger for individuals with entrepreneurial ex- perience. Model 3 to 6 (M3-Ms) in Table 3a pro- vide the coefficients for the interactions between our measures of entrepreneurial experience and staged entry dummy. Models 3 to 6 (M3-M) in Table 3b display the coefficients for the interac tions between entrepreneurial experience and COO COM (en -000 Co 4-0 A Du Q 54 staged entry duration. All interactions are negative, and, in the majority of models, reach statistical significanos. Thus, as demonstrated by the slopes in Figure 3, the decrease in hazard of exit lie. survival benefit associated with staged entry is stranger for experienced entrepreneurs. Thus, over- all, we find support for Hypothesis 5. Robustness Checks and Supplementary Analysis We conducted several hutnes chacks. To be gin, we took shape to domine if our results ar robust when using measures of entrepreneurship other than self-employment (Carter, 2011). Thus, we re-tested our hypotheses using two namowe measures of entrepreneurship. First, we focussd our analysis on participants who started a business and reported having em ployees (ie, multi-person firms). By doing so, we treated antrepreneurship as the creation of organi- zations, classically defined as the "coordinated ac tivities of two or more people" (Barnard, 1938: 731. Specifically, we treated participants as entrepre neurs only if they reported being self-employed in their own business and a firm size greater than two To tot Hypotheses 1 and 2, we treated participants who entered self-employment but reported a firm size less than two ax right censored. Since the sam ple used to test Hypotheses 3 to 5 is comprised of participants already in fall-time self-employment, individuals who reported being full-time self-em- played but did not report their mill-employed firm size to be greater than two were excluded from analysis. Second, we categorized participants as entrepre neurs only if they reported being self-employed and that their business was incorporated. Incorpo rating a business results in a distinct legal entity separate from the founder, requires the founder to pay various legal fees, comply with government pay various legal fees, comply with government mandates, and often signifies entry into the formal exxomy (Kim & Li, 2014). Consequently, focusing on incorporated business is simile to other com mon measures of entrepreneurship, such as identi fying new firms through the Dun & Bradstre (D) databes (ng. Baljargil, Hit, Ti, Aml Webb, & Miller, 2013; Hmieleski & Baron, 20001. which rely on signals that the business intends to engage in commercial activity. For Hypoth 1 and 2. participants who entered unincorporated self-employment were treated as right osteed. To 3 to 5, with uninoon porated businesses were excluded from analysis Q8 Fri Jun 3 4:34 PM o Day Job - Academ...agement I
Acrobat Pro DC File Edit View E-Sign Window Help Assignment-2.pdf 0024zG-Contents... Ⓒ Ⓒ 15 / 29 Home Tools H✩ ✪ JpAJBM-ContentServer.asp.pdf 59.2% 4-0 A JpAJBM-Content... x @ I & D Q szczas pospana umąrg vamaloydza solfevaluation. 520 Wald te in presidiopatos, agon, muß your fined affeta. (32 Fri Jun 3 4:34 PM o Day Job- Academ...agement
Acrobat Pro DC File Edit View E-Sign Window Help Assignment-2.pdf 0024zG-Contents... 17 / 29 952 Home Tools H✩ ✪ 9 JpAJBM-ContentServer.asp.pdf EXTO 59.2% JpAJBM-Content... x Ⓒ (Q) Ady of M FIGURE 2 Interaction between Staged Entry Duration and Cognitive Ability 100 200 Results from both robustness chocks we consis tent with the findings of our main analysis. In both tests, Hypotheses 1 to 3 were felly supported. The moderation effects hypothesized in Hypotheses 4 and a displayed the same directional signs, but typically exhibited less statistical significance Given the large reduction in sample size (in, from -2.196 to 877 and n-1,028, pectively) the decrease in significance is expected. Next, we checked the rohotness of our t using different sample exclusion criteria and statis tical specifications. First, although we controlled for gende, we checked the robustness of our l using gender-specific samples (Folla et al. 20100 Second we Included individuals who worked Sewer than 20 hours per work as this may represent a strategic decision in anticipation of reallocating time between paid and self-employment. Third, we employed a number of alternative event his- we tory models and hazard specifications (Allison, 1984), including a fixed effects Cox model in which we specified a unique bandine hased for each participant, thereby allowing us to remove any unobserved sources of variation constant within individuals (Allison, 2000). We also used the "stareg" command in STATA 12.1 to test pothears 1 and 2 vis the competing risks method of Fine and Gray (1999), which focuses on the cumulative incidence function as opposed to cause-specific hacards. No material differences mated from these tests; our results remained robust and unchanged. 75 percele in C Aby 0 25 prontis in City Finally, to demonstrate how our study builds upon and extends prior hybrid entrepreneurship research, we conducted scientific replications of two studies that explore the differences between hybrid and full-time entrepramene Polts et al. 120101 and Petrova (2012). Using the NLSY?, we replicated each study by using similar exclusion/ inclusion criteria for sample construction, left-/ right-hand side variables, and statistical methods. Dispite the innate differenons between data sources, the broad nature of the NLSY79 allowed us to reconstruct or use a similar proxy for the vast majority of variabused in each study. Table 4 reports the results of our replications. We, first, replicated each study using only the vari able in the original studia (Models 1a, 1b, a, bl. We then added our hypothesized variables and ad ditional controls (Modols 2a, 2b, 4a. tbl. For the sake of leevity, Table 4 is abbreviated and reports only the regression coefficients for a subset of var ables used in Folla et al. (2010) and Petrov (2012) Be, some region coefficients and omitted). Given the inherent differences in data, mesures/ proxies, and sample size, our results deviate some from the finding of Pula ot al. (2010) and Petrova [2012]. Likewise, given the additional controls. changes in sample size/sample window, and statis tical estimation, sous ulls in Table 4 differ from the results reported in Table 2. Nevertheless, in both replications, Hypothes 1 and 2 receive an eral support (Models 2a, 2b, 4a, 4bl: risk-averse and low CSE Individuals peefer hyteid entry over entry 2014 4-0 A ************************** bss D @ Du Q Bedr FIGURE Entrepreneurial Experience and Staged Entry Interactions (1) Staged only dummy x No. of hyleid SE asperienc Staged entry dummyx Dacation fell SE experience (3) Staged entry duration x Duration full SE experience You Staty NO 3001 300 pin # of Hebeld SE exprimce [High] of Hybrid SE experie ow +25ple in wwks of Pull SE 1] 75ks of Pel 8 experience 25 perle in works of Pull 5 perio $53 Q8 Fri Jun 3 4:34 PM o Day Job - Academ...agement
Acrobat Pro DC File Edit View E-Sign Window Help Assignment-2.pdf 0024zG-Contents... ↑ (Q) 19 / 29 Y Y Home Tools H✩ ✪ 9 Regan of Prike Hybel Entrep JpAJBM-ContentServer.asp.pdf EXTO 59.2% @ into full-time self-employment. Moreover, a com- parison of the pseudo-demonstrates that the ad- dition of our hypothesioad and control variables significantly increases the variance explained in each replicatione, from 01 to 36 and 34 to 35) DISCUSSION In this study, we examined the implications of hybrid entrepreneurship for theories of entrepre zarial entry and survival. Drawing from real op- tions theory and the individual differenceslibera- tare, we hypothesized and found that risk-averse and less confident individuals are more likely to enter hybrid entrepreneurship (as it entails downside risk) relative to full-time self-employ ment. In tum, we argued and found evidence that individuals who enter full-time self-employment in a staged entry process by means of hybrid entrepre rship survive significantly longer than those who enter all-time self-employment directly from a paying job. Adding support to our theory that the survival advantage is driven by a leaming effect that takes place during hybrid entrepreneurship, our findings suggest that factors that influence an individual's capacity to prosss newe information. modesate this relationship. Hybrid Entrepreneurship and Entry This study makes several contributions. First, wen add to the entropestrarship literature by providing a more meanced understanding of the entrepreneur ial entry pross. Indeed, the findings from our study suggest that the classical assumption that entrepreneurs are confortable with risk leg. Kihl- atro & lalk, 1979) comes with an important cavest. On the one hand, individuals who jump directly into full-time self-employment are less risk averse than non-entrepreneurs, just as extant the ery predicts. In fact, a one standard deviation In crease in risk avion is associated with a 20.21% decase in the hazard of entry into full-time self- employment. On the other hand, individuals who enter hybrid entrepreneurship appear to have risk peefence that are indistinguishable from these who remain in paid employment. Thus, our find ings suggest that risk aversion influences the pro cess of how an individual decides to start a busi ness (ie, full-time versus hybrid), not necessarily whether the individual dels to start a busin er not. A similar pattern of results was detected with regards to CSE Supporting traditional logic JpAJBM-Content... x E I mpaka kulazioaky, 111, : 4-0 A Du Q $55 that entrepreneurs are highly confident (ng. Knight, 1921; Moore et al., 2007), we find that low CSE decreases the likelihood of direct entry into full-time self-employmont. Specifically, a one stan dard deviation decrson in CSE is bed with an 11.2% reduction in the hand of full-time self employment entry. However, low CS does not decron the likelihood of entry into hybrid entro- preneurship. Thus, consistent with our finding re garding risk aversion, our results suggest that CSE influences Aow rather than if catrepeeneurial entry accers Taken together, the implications of these find ings extend to a number of research streams within the entrepreneurship literature. For example, our finding that trails-based or may be better served by socking to understand how an individual's predispositius influence the form of entrepreneurial rather than broadly categoriz inz all entrepreneurs as individuals who system- Irally athibit certain traits. Similarly, theories of entrepreneurial cognition, which were developed in part to address the inconsistent findings from the trait-based approaches (Mitchell et al., 2007), have the potential to become more anced by incorpo rating hybrid entropeeneurship into their concep tual models. To illustrate, cognition research has shown that entrepreneurs are willing to make gen eralizations from limited information (Busenitz & Barr, 1907), However, it s psible that hy leide leid entrepreneurs, who, by the very nature of an tering hyteid entrepreneurship, collect additional information about their venture price to commit ting to it fall time, may be los comfortable with doing so (hence their choice of hybrid entry). Like wise, theories of entrepreneurship that empl the importance of contest in shaping entrepreneur tal decisions (ng, Seen & Fasil, 2011) may benefit from thecestically accounting for the differ ences between hybrid entrepreneurship and full- time self-employment. For example, consistent with prior research (eg, Elfenbein et al., 2010; Sarensen, 2007), in the current study, we find em Amand ployer size to decrease the likelihood of entry into full-time self-employment lie., small firm effect). However, in and with the findings of Folta et al. (2010), we find no such relationship with regards to hybrid entry. Indeed, inconsistencies such as these highlight how the integration of hybrid entrepre neurship into existing entrepreneurship theory opens up multiple new lines of scholarly Inquiry. Q8 Fri Jun 3 4:34 PM o Day Job - Academ...agement I