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The impact of entrepreneurial motivation on venture performance

Dissertation
Author: Anne Berthelot
Abstract:
What are the direct and indirect effects of entrepreneurial motivation on venture performance? This question is critical given the role that motivation could be playing in entrepreneurship in general and entrepreneurial firm success in particular. Indeed, the extant literature has not clearly identified the role that entrepreneurial motivation level plays in venture performance. We attempt to address this gap by providing and testing a model of entrepreneurial motivation. Our approach diverges from previous research in that we quantify motivation, versus much of the current research which looks at the underlying motivation (goal) to start and maintain a venture. Our model is based on self-determination theory (SDT), which allows us to capture the relationship between entrepreneurs and their venture. SDT describes a process, called internalization, whereby individuals take an object and allow it to become part of self. We believe SDT is appropriate because of the strong connection between entrepreneurs and their venture, to the point that they sometimes face various personal problems associated with their status. Based on SDT, we propose that entrepreneurs internalize their venture to various degrees, resulting in varying levels of entrepreneurial motivation. This, we propose, has an influence on the performance of their venture. We test our model with hierarchical ordinary least square regressions on samples of 156 American founders and 131 French entrepreneurs. Our results show that venture internalization (motivation) has a positive effect on performance satisfaction in both samples. This dissertation demonstrates that the individual entrepreneur matters differently from what previous research has suggested. Given our results identifying venture internalization as one of the strongest positive predictor of performance satisfaction across countries, we believe that research focusing on personality characteristics needs to expand to include factors pertaining to the internal dynamics that lead entrepreneurs to be more committed to a venture. The implications, limitations of our study and suggestions for future research, are discussed at the end of this dissertation.

TABLE OF CONTENTS

Page ACKNOWLEDGEMENTS..........................................................................................................IV ABSTRACT .................................................................................................................................VI LIST OF FIGURES.......................................................................................................................X LIST OF TABLES........................................................................................................................XI CHAPTER 1 INTRODUCTION....................................................................................................1

LITERATURE REVIEW.........................................................................................3 PERFORMANCE .................................................................................................................................3 The entrepreneur.....................................................................................................................4 Resource availability...............................................................................................................7 The environment.....................................................................................................................9 Firm specific factors.............................................................................................................11 Summary of Current Research..............................................................................................11 Motivation.............................................................................................................................12 Summary...............................................................................................................................14 CHAPTER 2 THEORETICAL FRAMEWORK.........................................................................16 THEORY SELECTION.......................................................................................................................17 SELF-DETERMINATION THEORY....................................................................................................18 VENTURE INTERNALIZATION.........................................................................................................20 MANAGERIAL RENTS MODEL........................................................................................................22 THEORETICAL MODEL...................................................................................................................24 HYPOTHESIS DEVELOPMENT..........................................................................................................25 Personality traits....................................................................................................................26 Resource availability.............................................................................................................29 Motivation: Venture internalization......................................................................................31 CONCLUSION ...............................................................................................................................33 CHAPTER 3 METHODOLOGY................................................................................................35 AMERICAN SAMPLE.......................................................................................................................35 Respondents and Design.......................................................................................................35 Procedures.............................................................................................................................37 INTERNATIONAL VALIDATION.......................................................................................................39 FRENCH SAMPLE............................................................................................................................40 Respondents and Design.......................................................................................................40 Procedures.............................................................................................................................41 MEASURES ...............................................................................................................................42 Dependent variable...............................................................................................................42 Independent variables...........................................................................................................43 Control variables...................................................................................................................48

ix DATA CODING, EDITING, AND EVALUATING..................................................................................48 CONCLUSION ...............................................................................................................................49 CHAPTER 4 DATA ANALYSIS AND RESULTS....................................................................50 DESCRIPTIVE STATISTICS...............................................................................................................51 VALIDITY ISSUES...........................................................................................................................52 Confirmatory Factor Analysis...............................................................................................52 Convergent validity...............................................................................................................54 Discriminant validity............................................................................................................54 ANALYSIS ...............................................................................................................................55 Hypothesis Testing................................................................................................................56 Test of Hypotheses H 1 through H 2 ........................................................................................56 Test of Hypotheses H 3 , H 3a and H 3b ......................................................................................60 EVALUATION OF MODEL – GENERALIZABILITY: FRENCH ANALYSIS.............................................63 Descriptive Statistics.............................................................................................................63 Validity Issues.......................................................................................................................64 Analysis.................................................................................................................................65 CHAPTER CONCLUSION..................................................................................................................68 CHAPTER 5 DISCUSSION AND CONCLUSION....................................................................69 SUMMARY ...............................................................................................................................69 IMPLICATIONS ...............................................................................................................................71 CONCLUSION ...............................................................................................................................74 LIMITATIONS ...............................................................................................................................76 Sample limitations................................................................................................................76 Survey...................................................................................................................................77 Methodological limitations...................................................................................................77 Measures...............................................................................................................................78 FUTURE RESEARCH........................................................................................................................78 Generalizability.....................................................................................................................78 Institutions.............................................................................................................................79 Environment..........................................................................................................................79 Country development............................................................................................................80 Entrepreneurial teams...........................................................................................................80 Performance measures..........................................................................................................81 Entrepreneurial process / Longitudinal studies.....................................................................81 Qualitative research..............................................................................................................82 Scales/Measures development..............................................................................................82 REFERENCES.............................................................................................................................84 APPENDIX A.............................................................................................................................107 APPENDIX B – SURVEY INSTRUMENT..............................................................................109 VITA ...............................................................................................................................113

x LIST OF FIGURES

Page FIGURE 2-1 – MOTIVATION CONTINUUM...........................................................................20 FIGURE 2-2 – THEORETICAL FRAMEWORK.......................................................................25 FIGURE 2-3 – CONCEPTUAL FRAMEWORK........................................................................26 FIGURE 4-1 – INTERACTION OF VENTURE INTERNALIZATION AND SOCIAL CAPITAL............................................................................................................106

xi LIST OF TABLES

Page TABLE 3-1 – DESCRIPTION OF SURVEY MEASURES........................................................96 TABLE 4-1 – CORRELATION MATRIX – UNITED STATES................................................98 TABLE 4-2 – CONVERGENT VALIDITY................................................................................99 TABLE 4-3 – DISCRIMINANT VALIDITY............................................................................100 TABLE 4-4 – REGRESSION ON VENTURE PERFORMANCE (UNITED STATES).........101 TABLE 4-5 – CONVERGENT VALIDITY (FRENCH SAMPLE)..........................................102 TABLE 4-6 – DISCRIMINANT VALIDITY (FRENCH SAMPLE)........................................103 TABLE 4-7 – CORRELATION MATRIX (FRENCH SAMPLE)............................................104 TABLE 4-8 – REGRESSION ON VENTURE PERFORMANCE (FRENCH SAMPLE).......105

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CHAPTER 1 INTRODUCTION Entrepreneurship is the “scholarly examination of how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and consequently exploited.” (Shane & Venkataraman, 2000: 218). Scholars have demonstrated a strong interest in entrepreneurship for many years, with much of the literature focusing on the entrepreneur and different types of ventures (franchising, family businesses, etc.). Taking a strategic approach, researchers have studied the determinants of entrepreneurial firm performance. The interest in understanding entrepreneurial performance stems from the importance of new ventures’ performance for the economy, entrepreneurs, and academics (Murphy, 1996). Research on venture performance has focused mostly on entrepreneurial personality characteristics, the entrepreneur’s access to resources, the venture’s environment, and firm specific factors. One area that has not received the attention it deserves is motivation (Herron & Sapienza, 1992; Shane, Locke, & Collins, 2003). This is important because as scholars point out, models of venture performance that do not consider entrepreneurial motivation are incomplete (Herron & Sapienza, 1992). In short, motivation is considered by much of the academic community to be a central aspect of entrepreneurship and its potential outcomes. As Markman, Baron, and Balkin (2005) point out, perseverance has been argued to be crucial in order to succeed in entrepreneurial endeavors. However, there are only limited studies focusing on entrepreneurial motivation and its role in entrepreneurship; as a result, its relationship to venture performance is not well understood. Part of the problem is the lack of a generally accepted theoretical framework to study entrepreneurial motivation.

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The lack of a significant body of research on entrepreneurial motivation clearly identifying the relationship between motivation and venture performance, and the claims that motivation is a key variable in the entrepreneurial process lead us to ask: What are the direct and indirect effects of motivation on venture performance? This question is of paramount importance given the potential role that motivation could be playing in entrepreneurship in general (Herron & Sapienza, 1992; Markman & Baron, 2003; Shane et al., 2003) and in entrepreneurial firm success in particular (Markman & Baron, 2003; Markman, Baron, & Balkin, 2005). In this dissertation, we attempt to address this gap in the current literature (Herron & Sapienza, 1992; Shane, Locke, & Collins, 2003) by providing and testing a model of entrepreneurial motivation. Specifically, we use self-determination theory (SDT) to capture the relationship between an entrepreneur and his/her venture. Consistent with SDT, we evaluate the level of a particular entrepreneur’s motivation toward his/her firm via venture internalization. We then examine the direct and indirect effect of entrepreneurial motivation on venture performance, as measured by satisfaction with performance. This dissertation begins with a review of the extant literature on venture performance and its antecedents. Based on our literature review, entrepreneurial motivation appears to be an understudied research area (Herron & Sapienza, 1992; Shane et al., 2003). In Chapter 2, we develop a theoretical framework based on self-determination theory. In particular, we introduce the concept of venture internalization, which describes the process whereby the venture becomes part of the identity of the entrepreneur. This leads to higher levels of motivation, which is hypothesized to have a positive impact on venture performance. As part of our framework development process, we introduce testable hypotheses. Chapter 3 introduces the methodology that we utilized to test our model. We discuss our sample and data gathering methodology, as

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well as the operationalization of the variables in our model. We also discuss the methods that were used to test our hypotheses. In Chapter 4, the results of our analyses are identified and discussed. Finally, in Chapter 5, we discuss our findings and our study’s limitations, as well as avenues for future research.

LITERATURE REVIEW

Performance In 1996, Murphy wrote a dissertation about entrepreneurial performance. He hypothesized and found that entrepreneurial performance is a multidimensional construct, consisting of five dimensions: profitability, growth, survival, productivity, and satisfaction. Our more recent review of the literature identifies the most utilized measures of venture performance as those based on firm survival (e.g., He, 2007; Watson, 2007), financial performance, and growth. Some of these measures are collected objectively while others are reported by the entrepreneur or small business owner (e.g., Becherer & Maurer, 1997; Keh et al., 2007; Lumpkin & Dess, 2001; Wiklund, 1999; Zahra, Neubaum & El-Hagrassey, 2002). Common survival measures include a firm’s presence on the public market as well as its bankruptcy filing status or its listing status (He, 2007). Common financial performance measures include ratios such as ROA (He, 2007; Robinson, 1999), ROE (Robinson, 1999; Watson, 2007; Zahra, Neubaum & El- Hagrassey, 2002), ROI (Aragon-Sanchez et al., 2005; Robinson, 1999), ROS (Edelman et al., 2005; Robinson, 1999), and EBIT (Robinson, 1999); while growth measures include growth in total income (Watson, 2007), sales growth (Ensley et al., 2006; Gilbert, McDougall, & Audretsch, 2007; Hmieleski & Corbett, 2007; Robinson, 1999), and revenue growth (Thornhill,

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2006). Thus, many measures have been used to capture venture performance in the entrepreneurship literature to date, including both subjective and objective measures. Overall, the choice of measures has been very eclectic, making it difficult to compare and contrast results from different studies. In his dissertation, Murphy (1996) also reviewed the most typical antecedents to venture performance and explained that they could be classified as industry variables (including industry characteristics and environmental variables), firm-related variables (including firm age and size), and individual variables (concerning the entrepreneur’s personality and access to resources). Though twelve years later, our review of the literature has found the same variables are being utilized to predict venture performance. Specifically, our review of the literature found that individual variables commonly studied could be divided among personality characteristics and access to resources, and other commonly used variables could be classified as environment- and firm-specific variables. As a result, we classify key predictors of venture performance into four categories: the entrepreneur, resource availability, the environment, and firm specific factors. These factors have all been found to play a major role in venture performance and are discussed below.

The entrepreneur. Entrepreneurial traits represent one of the most empirically researched topics in the field of entrepreneurship (Vecchio, 2003). Recent research by Korunka, Franck, Lueger, and Mugler (2003) and Shook, Priem, and McGee (2003) suggests that the main entrepreneurial traits that affect venture performance are need for achievement, locus of control, and risk taking propensity.

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Need for achievement. McClelland (1961) was the first to introduce the construct of need for achievement. Individuals who have high achievement needs enjoy challenging tasks and have a strong desire to succeed. Hornaday and Adoub (1971) found that entrepreneurs tend to rate themselves above the general population average on need for achievement scales. Need for achievement has been extensively studied in entrepreneurship (Johnson, 1990; Shane, Locke & Collins, 2003) because it is a key characteristic of individuals who strive to excel, such as successful entrepreneurs. Research suggests that need for achievement is strongly related to firm founding (Collins, Locke, & Hanges, 2004) and entrepreneurial activity (Fineman, 1977; Johnson, 1990; Sagie & Elizur, 1999). Need for achievement, also known as achievement motivation, has also been found to significantly predict venture performance (Begley & Boyd, 1987; Carsrud & Olm, 1986; Lee & Tsang, 2001). Locus of control. Internal locus of control describes people who believe they have an influence over the outcomes of their actions. In contrast, individuals with an external locus of control believe that their future lies within the hands of fate and destiny. Entrepreneurs are individuals who discover an opportunity and exploit it to create a new venture (Shane & Venkataraman, 2000). This is clearly the pattern of a person who is oriented towards an internal locus of control. Although internal locus of control has been identified as a key entrepreneurial trait (Korunka et al., 2003; Shane et al., 2003; Vecchio, 2003), there is only limited evidence relating locus of control to being an entrepreneur, and to venture performance (Vecchio, 2003). Prior studies (Shane et al., 2003) have found entrepreneurs to have a stronger tendency towards internal locus of control than the general population, but these differences are less pronounced when entrepreneurs are compared with managers. However, an important question is, does locus of control impact venture performance? In a recent study, Lee and Tsang (2001) found internal

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locus of control to be related to venture growth. In particular, when separating their sample by firm size, they found internal locus of control to be significantly related to venture growth for medium firms only. Thus although research on locus of control has been plagued with mixed results, recent empirical evidence suggests that there may indeed be a positive relationship between internal locus of control and venture performance (Lee & Tsang, 2001). Risk taking propensity. Risk taking propensity refers to the “decision-making orientation toward accepting greater likelihood of loss in exchange for greater potential reward.” (Vecchio, 2003: 307). Vecchio (2003) explained that the evidence on risk taking propensity as an entrepreneurial trait is inconsistent. Shane et al. (2003) posit that these inconsistent findings could be a result of measurement errors when assessing risk-taking propensity. Indeed, Shane et al. (2003) explained that previous empirical studies that attempted to capture risk-taking propensity might have in fact been capturing an entrepreneur’s level of self-efficacy. In support of Shane’s et al. (2003) contention, previous research (Simon, Houghton, & Aquino, 2000) suggests that entrepreneurs might have a different perception of risk. For example, entrepreneurs might exploit opportunities that they see as safe while others would perceive these same opportunities as risky. Thus, although it appears that no consistent stream of empirical literature has supported the existence of a direct link between risk taking propensity and venture performance, this finding may be due to errors in measurement, or the entrepreneur’s perception of risk. However, because of differences in risk-taking propensities between different types of individuals (Broehl, 1978; Carland, Carland, Carland, & Pierce, 1995; Hull, Bosley, & Udell, 1980; Liles, 1974; Stewart et al., 1999), we decided to consider this variable in our model. Though current research suggests that entrepreneurial characteristics have an important impact on venture performance, it is important to note that there is a significant stream of

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literature that contradicts the existing research on entrepreneurial personality. One of the first authors to voice concerns about personality traits research in entrepreneurship was Gartner (1989) who argued that since personality research had failed to provide satisfactory results, a different approach may be needed to capture the entrepreneur’s impact on venture performance. In particular, he proposed taking a behavioral approach. He further concluded that start-ups are intertwined with the personality of the founder. In other words, he appears to support the notion that entrepreneurs tend to internalize their ventures. Overall, despite a contradictory research stream and a few inconclusive results that could be related back to methodological issues, need for achievement, internal locus of control, and risk-taking propensity have been established as key personality characteristics in entrepreneurship. These traits have been associated to varying levels with the entrepreneurial status as well as with venture performance. Similar to entrepreneurial characteristics, researchers have proposed and found that resources also play a major role in venture performance (Chandler & Hanks, 1998).

Resource availability. In their work on the interaction effect of entrepreneurial orientation, environment, and access to resources on venture performance, Wiklund and Shepherd (2005: 77) conclude that, “the pursuit of entrepreneurial strategies requires resources.” Based on our review of the literature, the resources most commonly accepted by entrepreneurship scholars are financial, human, and social capital. In addition to these three types of resources, other resources such as social competence (Baron & Markman, 2003) and new resource skills (Baum & Locke, 2004) are being considered in more recent studies, though these concepts have only received

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limited attention to date. For this reason, we decided to limit our review to financial, human, and social capital resources. Financial capital. Starting capital and the possibility of obtaining a small business loan are common forms of financial capital that have been identified by researchers (Honig, 1998). Financial capital is a critical resource for entrepreneurs (Verheul & Thurik, 2001) and is a key component of entrepreneurial ventures (Bygrave, Hay, Ng, & Reynolds, 2003). Honig (1998) found financial capital to be positively related to firm growth based on a sample of Jamaican entrepreneurs. Moreover, Wiklund (1999) found that access to financial capital has a positive influence on small firm performance while Cooper, Gimeno-Gascon, and Woo (1994) found initial financial capital to be related to new venture performance. Thus, much of the extant literature suggests that financial capital is a key resource in entrepreneurial ventures and will have a positive impact on venture performance. Human capital. Human capital refers to the abilities and the acquired skills of the entrepreneur (Markman & Baron, 2003; Shanahan & Tuma, 1994). Generally speaking, this construct captures the educational and professional background of the entrepreneur and is central to the ultimate success of firms (Markman & Baron, 2003). Davidsson and Honig (2003) supported that human capital is related to an entrepreneur’s ability to discover and exploit opportunities. Additionally, Honig (1998) found that human capital is related to firm profitability. Thus, human capital is another resource that has commonly been discussed and tested in the literature. There is only limited evidence that human capital leads to higher levels of venture performance, however its influence on the entrepreneurial process overall seems to be more generally accepted (Davidsson & Honig, 2003; Honig, 1998; Markman & Baron, 2003).

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Social capital. De Carolis and Saparito (2006:43) define social capital as the “goodwill and resources that emanate from an individual’s network of social relationships.” Social capital is a result of the “flow from the information, influence, and solidarity available to the entrepreneur.” (De Carolis & Saparito, 2006: 43; Adler & Kwon, 2002). Social capital is related to the ability of the entrepreneur to exploit opportunities (Davidsson & Honig, 2003). Davidsson and Honig (2003) looked at several dimensions of social capital and their impact on the creation and success of new business entities. They found that only one dimension of social capital, being a member of a business network, leads to new venture creation. Consistent with Davidsson and Honig (2003), Vecchio (2003) proposed that greater social capital leads to higher entrepreneurial success but also concluded that this relationship might not be specific to entrepreneurs and might apply equally to other professions. Prior research also suggests that social capital positively influences business profitability (Honig, 1998) and venture longevity (Boden & Nucci, 2000). Thus, initial evidence suggests that access to social capital leads to higher levels of venture performance and is associated with the process of venture creation. Overall, entrepreneurship researchers have found financial, human, and social capital to be positively related to venture performance. In addition to resources, another factor that is hypothesized to impact venture performance is the environment (Shane, Locke, & Collins, 2003), which will be discussed in the next section.

The environment. As Murphy (1996) and Shane et al. (2003) explained, the environment has an important impact on venture performance. Research on the environment’s impact on venture performance has looked at variables such as political and market forces, as well as availability of other resources such as labor and infrastructure (Shane et al., 2003). Luthans and Ibrayeva

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(2006) explained that difficult environmental conditions could be either a threat or an opportunity for entrepreneurs, suggesting that the influence of the environment is contingent on the entrepreneur’s response to that environment. Most of the research on the relationship between environment and venture performance has concentrated on environmental dynamism. Environmental dynamism. Ensley, Pearce, and Hmieleski (2006) described dynamic environments as environments plagued with unpredictable and rapid change, and high levels of uncertainty. Environmental dynamism is an important factor to consider in entrepreneurship studies (Shane, Locke, & Collins, 2003). Environmental dynamism has been utilized fairly inconsistently in the literature: as an antecedent (Wiklund, 1999), a moderating variable (Ensley, Pearce, and Hmieleski, 2006; Lumpkin & Dess, 2001; Wiklund & Shepherd, 2005), and a control variable (Wiklund, 1999). Environmental dynamism has been empirically shown to moderate the relationship between leadership style and venture performance (Ensley et al., 2006), and between the proactiveness of the firm and venture performance (Lumpkin & Dess, 2001). Interestingly, Luthans and Ibrayeva (2006) explained that difficult environmental conditions could be perceived as a threat and/or an opportunity. Additionally, Shane et al. (2003) suggested that models of entrepreneurial motivation should control for the potential effect of the environment on ventures. Also, Wiklund (1999) suggested that environmental dynamism would be best suited as a control variable. We thus decided to follow Shane et al. (2003) and Wiklund (1999), and use environmental dynamism as a control variable in our framework. This will also limit the scope of our study to characteristics that can be associated with the entrepreneur (personality, access to resources), while controlling for external factors that the entrepreneur has limited control over.

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Firm specific factors. In addition to the characteristics of the entrepreneur, his/her access to resources, and the environment, other factors have also been hypothesized and found to affect venture performance. In this review, we limit our discussion to firm characteristics (age, size, and industry). Firm age, size, and industry. Firm age, firm size, and industry have been primarily used as control variables when studying venture performance. Wiklund and Shepherd (2005) found a positive relationship between firm size and performance, and a negative relationship between age and performance. They also found a negative relationship between industry (manufacturing and service) and performance. Interestingly, Hmieleski and Corbett (2007) did not find any significant relationship between firm age and performance, while Chandler and Hanks (1994) found only a slightly significant negative relationship between firm age and growth in addition to a positive and significant relationship with business volume. Similarly, Thornhill (2006) found a negative relationship between firm age and revenue growth, but did not find a significant relationship between size and growth. Moreover, Ensley, Pearce, & Hmieleski (2006) found firm age and size (log employees) positively related to performance as measured by the log of sales. Thus, size has been consistently found to be positively related to performance, while industry has been found to negatively impact performance, and the results for firm age have been mixed. For this reason, we decided to include firm size and industry in our study as control variables. Moreover, we included firm age to address prior mixed results. Summary of Current Research. Much of the current literature on venture performance has focused on factors that relate to entrepreneurial personality traits, resource availability, the environment, and firm specific factors. Personality traits such as need for achievement, locus of

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control, and risk-taking propensity have been associated with venture performance, along with access to financial, human, and social capital resources. Environmental dynamism and specific factors such as firm size, age and industry have also been found to impact venture performance. Interestingly, though researchers have proposed that motivation is important (Herron & Sapienza, 1992; Shane et al., 2003), it has received surprisingly little attention in the current literature. As Herron and Sapienza (1992) and Shane et al. (2003) point out, entrepreneurial motivation is a key factor in the entrepreneurial process and, for this reason, should occupy a central role in entrepreneurship. Motivation. As Locke and Latham (2004: 388) explain, motivation “refers to internal factors that impel action and to external factors that can act as inducements to action.” Though it is one of the most researched topics in social sciences (Gatewood, Shaver, Powers, & Gartner, 2002), it has received only limited attention in the field of entrepreneurship. Indeed, there is no generally accepted model of entrepreneurial motivation to date. Recently, authors have attempted to tackle the concept via conceptual articles (e.g., Shane et al., 2003; Naffziger et al., 1994), but none of these models has emerged as an overarching tool bringing together various fields and approaches to entrepreneurial motivation. Other concepts associated with entrepreneurial motivation have also been discussed in the entrepreneurship literature. Shane et al. (2003) identified important motivational concepts emerging from qualitative research as independence, drive, and egoistic passion. He identifies drive as being composed of ambition, goals, energy and stamina, and persistence (Shane et al., 2003). Goldsby et al. (2005) further argued that commitment, perseverance, achievement, drive, and opportunity orientation were key concepts when discussing motivation.

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Motivation is a key factor in the entrepreneurial process due to the fact that entrepreneurs need to overcome many obstacles in order to be successful (Markman & Baron, 2003). Motivation has been a forgotten factor in entrepreneurship research, even though it is considered by many researchers to be a key aspect of the entrepreneurial process (Shane, Locke, & Collins, 2003). For instance, Herron and Sapienza (1992) explained that models of venture creation that do not address motivation are bound to be incomplete. Moreover, Markman, Baron, and Balkin (2005) suggest that perseverance may be crucial to succeed in entrepreneurial settings. In fact, Markman and Baron (2003) propose that perseverance could be more important than the opportunity identified by the entrepreneur. There have been a few attempts at testing the effect of motivation on venture performance. Baum, Locke, and Smith (2001) found a positive relationship between motivation and venture performance. Baum and Locke (2004) found similar results. More recently, Markman et al. (2005) found that higher perseverance (i.e., motivation) leads to higher annual earnings for a sample of patent inventors. Based on this research, we conclude that any model of entrepreneurial performance should include entrepreneurial motivation. Entrepreneurial motivation is important for venture success. This is because the entrepreneur plays a major role in building the organization and in the creation of organizational procedures, goals, and culture. As Johnson (1990: 48) explained, “individuals are, after all, the energizers of the entrepreneurial process.” Liao, Welsch, and Pistrui (2001) suggested that the “dream” of an entrepreneur is a strong predictor of entrepreneurial growth. Their perspective was based on micro behavior approaches that suggest that entrepreneurs who are highly extrinsically or intrinsically motivated will be more committed and persistent in their endeavor.

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Summary. Individual access to resources has a major impact on venture performance. Much of the current literature suggests that the experience and overall background of the entrepreneur has a paramount influence on venture success. Moreover, an entrepreneur’s social networks may assist him/her to get the venture started and to perform satisfactorily. Thus, overall the extant literature supports the notion that the entrepreneur matters, through his/her access to capital, personality, etc. Exactly how the entrepreneur matters has not been clearly identified to date. Also, the research stream on entrepreneurial personality has been plagued with mixed findings and countless criticisms. As a result, our understanding of the importance of the individual entrepreneur is limited. In order to identify the role of entrepreneurial motivation on venture performance, we utilize a self-determination theory (SDT) approach. Self-determination theory (SDT) is a motivational theory based on three basic needs (competence, autonomy, relatedness) that views motivation on a continuum (amotivation, extrinsic motivation, and intrinsic motivation). We feel that SDT is an appropriate theory to the study of entrepreneurship because SDT describes a process, called internalization, whereby individuals take an object and allow it to become part of self. In the case of an entrepreneur, the individual internalizes the venture which becomes an increasingly important part of who she/he is as it meets her/his innate needs for autonomy, competence, and relatedness. We believe SDT is appropriate because of the strong connection between entrepreneurs and their venture, to the point that they sometimes face various personal, financial, and social problems (Baron & Markman, 2000; Markman & Baron, 2003) associated with their status. Also, recent literature has claimed that entrepreneurs internalize their venture

Full document contains 125 pages
Abstract: What are the direct and indirect effects of entrepreneurial motivation on venture performance? This question is critical given the role that motivation could be playing in entrepreneurship in general and entrepreneurial firm success in particular. Indeed, the extant literature has not clearly identified the role that entrepreneurial motivation level plays in venture performance. We attempt to address this gap by providing and testing a model of entrepreneurial motivation. Our approach diverges from previous research in that we quantify motivation, versus much of the current research which looks at the underlying motivation (goal) to start and maintain a venture. Our model is based on self-determination theory (SDT), which allows us to capture the relationship between entrepreneurs and their venture. SDT describes a process, called internalization, whereby individuals take an object and allow it to become part of self. We believe SDT is appropriate because of the strong connection between entrepreneurs and their venture, to the point that they sometimes face various personal problems associated with their status. Based on SDT, we propose that entrepreneurs internalize their venture to various degrees, resulting in varying levels of entrepreneurial motivation. This, we propose, has an influence on the performance of their venture. We test our model with hierarchical ordinary least square regressions on samples of 156 American founders and 131 French entrepreneurs. Our results show that venture internalization (motivation) has a positive effect on performance satisfaction in both samples. This dissertation demonstrates that the individual entrepreneur matters differently from what previous research has suggested. Given our results identifying venture internalization as one of the strongest positive predictor of performance satisfaction across countries, we believe that research focusing on personality characteristics needs to expand to include factors pertaining to the internal dynamics that lead entrepreneurs to be more committed to a venture. The implications, limitations of our study and suggestions for future research, are discussed at the end of this dissertation.