Lifestyle entrepreneurship- A hype or an
affordable way to run a business?
The effects of growth intentions on startup performance and the
moderating role of type of entrepreneur:
Comparing lifestyle to growth-oriented entrepreneurs
Name Mascha Dieudonnée Barelds
Student number 10558985
Date 22th of June, 2018
Supervisor Vinig, dr. G.T.
Second reader Sol, dr. J.
Word count 13911
Statement of Originality
This document is written by Student M. D. Barelds who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Acknowledgement
I would like to express my sincere gratitude to all the people who helped me during my thesis. First of all, I would especially like to thank Dr. G. T. Vinig for all his support, effort and constructive feedback. His supervision gave me insights at moments I was struggling to focus on the red line of the thesis. Secondly, I am very thankful for all the entrepreneurs who cooperated with this study and for all the support from my family, friends, and fellow students who inspired me.
Also, many thanks to one major inspiration for selecting the topic of entrepreneurial growth intentions: my mom. With the establishment of her successful company, she showed me the complexity of owning a business. Even though she has amazing skills in financial insight, managing a great team and attracting new clients, her ambition does not lay in expanding a local and cozy employment agency. Growth is less important for her but the magic of running her own business, deciding when and with who to work together, and being able to take on creative local projects are aspects of being a business owner that she is very passionate about. Because of my mom, I realized that sometimes people own the competences to grow large but they have bigger goals than performance merely on firm level. She made me want to figure out the complexity of founders’ intentions and performance.
Mascha Barelds
Table of Contents
Abstract 4
1. Introduction 5
2. Research question and relevance 7
3. Literature review 9
3.1 Entrepreneurs and the importance of typology 9
3.1.1 Definition of the entrepreneur 9
3.1.2 Different entrepreneurs driven by different motives 10
3.2 Lifestyle entrepreneurship 11
3.2.1 Definition of the lifestyle entrepreneur 11
3.2.2 Characteristics of the lifestyle entrepreneur 13
3.3 Growth intentions 15
3.4 Startup performance 17
3.4.1 Defining performance 17
3.4.2 Measuring startup performance 18
3.5 Conceptual model and hypotheses 19
4. Methodology 21
4.1 Research design 21
4.2 Sample 21
4.3 Sample selection and data collection 22
4.4 Measurements of variables 22
4.5 Data analysis 24
4.5.1 Missing value 25
4.5.2 Recoding 26
4.5.3 Normality 26
4.5.4 Computing scale means 26
4.5.5 Reliability 27
4.5.6 Correlations 28
5. Results 29
5.1 Respondents characteristics 29
5.2 Hypotheses testing 30
5.2.1 Hypothesis testing (H1)- Independent samples T-test 30
5.2.2 Hypothesis testing (H2)- Hierarchical linear Regression 32 5.2.3 Hypothesis testing (H3)- Hierarchical linear Regression 33
5.2.4 Hypothesis testing (H4)- The moderating effects 34
5.2.5 Hypothesis testing (H5)- Independent samples T-test 36
6. Discussion 37
6.1 Contributions of the findings 37
6.2 Practical implications 39
6.3 Limitations and recommendations 40
7. Conclusion 42
References 43
Abstract
One key element that can explain the presence or absence of growth is the entrepreneur. Entrepreneurs create different types of ventures, ranging from lifestyle to rapid growth businesses. Although many fit in between, this study attempted to investigate how these two counterparts differ according to their growth intentions and actual success based on a quantitative survey filled in by 92 entrepreneurs located in Amsterdam. Lifestyle entrepreneurs start new companies profitable for personal or family income with the aim to optimize a desired lifestyle (Henderson, 2002). They are driven by non-economic goals such as job satisfaction and quality of life (Marcketti et al., 2006). Lifestyle entrepreneurship has received little more than scarce scientific attention compared to growth-oriented entrepreneurs. The results support theoretical assumptions that lifestyle entrepreneurs value personal satisfaction over money and are willing to sacrifice growth for a balanced workload (Ateljevic & Doorne, 2000; Henderson, 2002). No difference was found in growth objective between lifestyle vs. growth-oriented entrepreneurs, which may explain the findings suggesting that lifestyle entrepreneurs do not significantly differ in their growth intentions and performance. This contradicts with literature that argues that lifestyle entrepreneurs are less focused on expansion (Ateljevic & Doorne, 2000) . However, in line with theory, data shows that lifestyle entrepreneurs significantly hired less staff (Peters et al., 2009). Aside from the notion that this is just the first step towards building a conceptual framework, this study contributes with the finding proposing that lifestyle entrepreneurship does not necessarily mean lower growth and performance. Whether this can be explained with the non-significant effect of growth intentions on firm performance cannot yet be proven.
1. Introduction
Startup growth implies radical changes of the firm characteristics and therefore of the entrepreneur. Decisions need to be made about for example structuring the firm differently, recruitment and the delegation of responsibilities (Heneman, Tansky & Camp, 2000; Tan, Menkhoff & Chay, 2007). Yet, not all entrepreneurs want to move along the expansion path and rather stay in the entrepreneurial mode (Vesper, 1980).
To some scholars growth-orientation, in and of itself, would represent an entrepreneurial feature (Dunkelberg & Cooper, 1982). This perspective of the ‘entrepreneur’ is influenced by economic literature. It is assumed that the economic motive, which states that people act in ways to maximize profits, is the primary goal of starting a business. However, in reality entrepreneurs differ from each other (Baum, Locke & Smith, 2001; Smith, 1967). Today, entrepreneurs have the opportunity to choose what kind of business they want to create. The Information Age has opened doors for entrepreneurs to create a whole new way of doing business. The access to information and fragmented target groups has taken away many of the traditional gatekeepers (Fisch, 1998). The growing importance of social media networks, apps and online platforms offer entrepreneurs the opportunity and flexibility to start a lifestyle business centered on an idea they are passionate about.
This is a growing phenomenon in the media and entrepreneurship literature: entrepreneurship as a way of life, introduced by the so-called ‘lifestyle entrepreneur’ (Peters, Frehse & Buhalis, 2009). Lifestyle entrepreneurs tend to focus less on economic goals than growth-oriented entrepreneurs. Their main goal is to live a desired and flexible lifestyle with a work-life balance. Their business is created to provide a foundation from which to enjoy this particular lifestyle. According to literature, lifestyle entrepreneurs are willing to sacrifice business growth if necessary in order to achieve such a foundation (Marcketti et al., 2006). Morris, Schindehutte and Allen (2005, p. 7) researched different entrepreneurial business models and describe a lifestyle business as “a firm that is apt to have a more narrowly defined product and market focus, may be more dependent on customer relationships, and is likely to require an economic model that includes lower volumes”. Compared to high-growth firms, lifestyle ventures may not invest as much in the business model’s proprietary elements. This study will explore whether lifestyle entrepreneurs in fact have lower growth ambition
for their firm and what effect this has on their startup performance compared to the Schumpeterian growth-oriented entrepreneur. As we know, venture growth does not happen instantaneously. Research acknowledges that the founder has a central role in small businesses and makes the fundamental decisions whether to grow the firm or not (Davidsson, 1989a; Kolvereid, 1992; Wiklund & Shepherd, 2003). Therefore, a good predictor for new venture growth is the growth intentions of the entrepreneur. Growth intentions are seen as the forward-looking efforts of the entrepreneur to grow and expansion with its business. Such strategic intentions are focused on anticipating in change and initiating actions to take advantage of opportunities that are integrated in the strategy of the company (Birley & Westhead, 1990; Cliff, 1998; Gundry & Welsch, 2001).
The 92 entrepreneurs sampled in this study are entrepreneurs across a wide range of industrial sectors located in Amsterdam and registered on startupmap.iamsterdam.com. The capital of the Dutch market is seen as a hotbed for rapid growth entrepreneurship and innovation (Stam, 2014). As mentioned in a report by Startup Genome (2017), the main reason startup entrepreneurs report moving to the city of Amsterdam is for personal reasons rather than any particular business reason.With a well-connected startup ecosystem the capital scores high in the EDCI index for capital, culture and connectedness. Such aspects are highly valued by lifestyle entrepreneurs in their choice of localization of the business (Gomez-Velasco & Saleilles, 2007). Taking this into account together with the notion that the survival rates of new enterprises in the Netherlands are relatively high (Span et al., 2004), also implies an opportune place for the emergence of lifestyle entrepreneurship.
The study proceeds as follows. First, the research question and relevance of this study will be explained. Next, the conceptual framework based on theory and previous evidence are reviewed and discussed. Hypotheses are developed concerning how growth intentions influence startup performance and how this differs for the two types of entrepreneurs. The reported results are based on an analysis of quantitative data collected by an online questionnaire. The thesis concludes with a discussion and suggested implications.
2. Research question and relevance
Research on lifestyle entrepreneurship is limited. According to Hessels, Van Gelderen & Thurik (2008) hardly any scientific attention has been devoted to the diversity of entrepreneurs. A few qualitative research studies attempted to explore the concept of lifestyle entrepreneurship but each study limited its focus on a specific industry such as hospitality and tourism (Andersson Cederholm & Hultman, 2010; Ateljevic & Doorne, 2000; Di Domenico, 2005; Marcketti et al., 2006). This makes it hard to generalize the findings. Many different characteristics have been described based on interviews with founders of lifestyle businesses but consensus is lacking. This thesis will challenge theoretical assumptions. Hence, this quantitative study will first investigate lifestyle entrepreneurship based on characteristics derived from literature across different industry sectors.
After the characteristics have been tested, this study continues to research whether the relationship between growth intentions and startup performance differ between lifestyle vs. growth-oriented entrepreneurs. Growth intentions that guide the startup after it has been formed have rarely been investigated (Donna & Thornhill, 2008). Additionally, the question of how intentions to grow relate to these types of entrepreneurs remains rather fuzzy. Theory assumes that lifestyle entrepreneurs have lower intentions to grow their firm to its full growth potential but significant evidence is missing.
When it comes to entrepreneurial venture growth and performance, theory has linked these outcome measures to different micro variables (e.g. traits, motivations and psychological attributes of the entrepreneur) and macro variables (e.g. environment and industry) (Baum et al., 2001). However, few studies have examined the role of growth intentions and startup performance based on the type of entrepreneur. Although the sole purpose of making profits is not the main goal of lifestyle entrepreneurs, this does not mean that their particular business will not do well (Peters et al., 2009).
It is necessary to do more research to lifestyle entrepreneurs intentions to grow. First of all, because entrepreneurs are not only judged on their startup performance to get funding but investment requirements also focus on their growth orientation (Shepherd, 1999; Zopounidis, 1994). Furthermore, venture growth is perceived as the core element for continued
entrepreneurship (Davidsson, 1991; Shane & Venkataraman, 2000), partly because early and middle-stage startups are still vulnerable for failure. It is therefore valuable to investigate whether prioritizing lifestyle over firm growth has consequences for the continuity of the business.
The following research question is at the heart of this thesis:
“What is the influence of lifestyle entrepreneurship on the relationship between entrepreneurial growth intentions and startup performance?”.
The research objectives that are derived from this research question are as follows:
1. To identify and test characteristics of lifestyle entrepreneurship based on literature; 2. To investigate whether the relationship between growth intentions and startup
performance differs between lifestyle vs. growth-oriented entrepreneurs.
Besides adding to the academic literature of lifestyle entrepreneurs, this thesis may also be practically relevant. Having insights of different types of entrepreneurs and understanding the consequences of their growth intentions on the performance of their venture may help: - Investors- in a substantial decision-making process of their investments;
- (Potential) entrepreneurs- to have a better understanding of their own aspirations and intentions in relation to growth;
- Incubators/accelerators- to prepare startup entrepreneurs for the big wild world; - Career counselors- to give a well-argued advice to (potential) entrepreneurs, and; - Venture capitalists- to make the choice whether to keep the entrepreneur involved
3. Literature review
In this section, the concepts relating to the research question will be reviewed and defined. In order to introduce concepts related to entrepreneurship theory, first an understanding of what entrepreneurship is and how this is associated to growth is necessary. Next, literature on lifestyle entrepreneurship will be examined in order to find out what characterizes these type of entrepreneurs. Lastly, an elaboration of literature on entrepreneurial growth intentions and different measures for startup performance will be discussed in order to develop propositions to test in this study.
3.1 Entrepreneurs and the importance of typology
3.1.1 Definition of the entrepreneur
This section will start with the concept of entrepreneurship in general. What exactly is an entrepreneur? When defining an ‘entrepreneur’, it is important to acknowledge that even after years of development of the large body of entrepreneurship theories consensus on the definition is still missing. One of the most common questions used in research literature of entrepreneurship and small business management to define entrepreneurs is the question: ‘What factors differentiate entrepreneurs from non-entrepreneurs?’. Based on the distinction of these two counterparts, entrepreneurs can be recognized. First of all, literature defines entrepreneurs as self-employed business owners (Isenberg, 2011). Secondly, entrepreneurs in general are typically seen as ‘risk-taking and innovating individuals who reject the relative security of employment in large organizations to create wealth and accumulate capital’ (Goffee & Scase, 1987, p. 1). This definition fits with Schumpeter’s early theory of ‘the’ entrepreneur. Schumpeter (1934), one of the most influential economists of the 20th century, was one of the first who described the entrepreneur as an innovator. According to Schumpeter five categories of entrepreneurial behavior can be observed that are characteristic of an entrepreneurial venture (Vesper, 1980), in this study a startup:
1. Introduction of new goods
2. Introduction of new methods of production 3. Opening of new markets
4. Opening of new sources of supply 5. Industrial reorganization
Most scholars attempted to define the term entrepreneur solely
in terms of who the
entrepreneur is and what he or she does (Shane & Venkataraman, 2000). Surprisingly little
quantitative literature focuses on entrepreneurs intentions to grow (Liao, Welsch & Pistrui, 2001). What is interesting about the ‘Schumpeterian entrepreneur’ is the perspective of growth orientation. When previous studies talk about the entrepreneur they are describing the classical ‘Schumpeterian entrepreneur’, the entrepreneur that pursues full growth potential of his/her venture and is driven by economic rewards (Block, Fisch & Van Praag, 2016). This is why many researchers consider the entrepreneur as “the single most important player in a modern economy” (Lazear, 2005, p.649). Entrepreneurship is designated as a job creating phenomenon (Aldrich, 1999). However, the question that arises here is: are all types of entrepreneurs such important players in modern economy?
3.1.2 Different entrepreneurs driven by different motives
Although it is possible to extract typical entrepreneurial personality traits such as need for achievement, risk-taking and internal locus of control with respect to entrepreneurial success (Timmons, 1994), evidence shows that general personality traits and characteristics appear to be poor indicators to predict venture performance (Baum et al., 2001; Pistrui et al., 1999). More studies start to recognize that not all entrepreneurs are the same because they are driven by different motives. According to Pistrui et al. (1999) aspirations and intentions show far stronger influence on the performance and growth of the business. Morris et al. (2001, p. 40) suggest that “it may be more helpful to recognize that there are different types or categories of entrepreneurs”.
Different typology studies have build upon conceptual frameworks of types of entrepreneurs based on their entrepreneurial motives and desired outcomes (Woo et al., 1991). Typologies help to better comprehend and analyze the entrepreneurial growth process. This study recognizes that every entrepreneur’s first objective is to produce some independent source of income to replace income from previous employment in order for their venture to survive (Cressy, 1996), but also acknowledges that not all entrepreneurs are Schumpeterian
entrepreneurs based on economic vs. and non-economic goals (Cooper and Artz, 1995). Non-economic goal driven entrepreneurs have received less attention in entrepreneurial literature due to the assumption that the performance potential may not be fully pursued compared to the profit-maximizing entrepreneur. Non-economic goals can be diverse: one can have a desire for independence, passion for his/her job, or personal development. What these goals have in common are some lifestyle orientations: using one's job in such a way that the perception of quality of life increases. Indeed, many entrepreneurs start a firm primarily to generate lifestyle benefits while economic gain remains secondary.
Conforming to the previously mentioned typology, the distinction of high-growth and lifestyle entrepreneurs was introduced by the Kauffman Center for Entrepreneurial Leadership. This thesis builds upon this typology of lifestyle entrepreneurship. Lifestyle entrepreneurs will be compared here to the classical growth-oriented entrepreneur:
“High-growth entrepreneurs are typically motivated to start and develop larger, highly visible and more valuable firms. These entrepreneurs commonly focus on obtaining the
resources necessary to fuel growth” (cited in Henderson, 2002, p. 49).
3.2 Lifestyle entrepreneurship
3.2.1 Definition of the lifestyle entrepreneur
Although there is not a lot of evidence yet supporting the typology of the lifestyle entrepreneur compared to the growth-oriented entrepreneur, there is quite some literature available describing the term, which was first introduced by William Wetzel in 1987 (Henricks, 2002a). Unlike growth-oriented entrepreneurs, lifestyle entrepreneurscreate a new business profitable for personal or family income, not for the economic reward but primarily with the aim to optimize a desired lifestyle (Henricks, 2002a; Marcketti et al., 2006). Aspects that have been stated as personal drivers by lifestyle entrepreneurs are concentrated on the fulfilment of non-economic goals, such as developing own ideas and personal autonomy (Douglas & Shepherd, 2000). A desired lifestyle will mean something else for every entrepreneur. There is no one-size-fits-all definition. It is important to understand that the implication of these success measures may be difficult to capture by traditional measurements (Reijonen, 2008).
Previous studies have pointed out the importance of lifestyle components as motivating factors to run a business, for example spending time with family, leisure activities and the attractiveness of a location ( Gomez-Velasco & Saleilles, 2007). Compared to high-growth entrepreneurs who carefully consider different forms of economic attractivity of regions, for example market attraction and accessibility of inputs (e.g. technology, labour and finance), lifestyle entrepreneurs take non-common factors into serious account before the consideration of economic factors. According to literature lifestyle entrepreneurs are attracted by a new form of attractivity in economic literature with the choice of localization of their firm (Gomez-Velasco & Saleilles, 2007). This is described as ‘sociological’ attractivity and is driven by irrational factors such as social connectedness, rich cultural life and other amenities which improve their quality of life.
Many lifestyle entrepreneurs consciously reject practices commonly associated with a traditional market ethos and economic rationality, such as strategic activities towards achieving a competitive advantage and business growth (Ateljevic & Doorne, 2000; Di Domenico, 2005). More emphasis is placed on the ‘small is beautiful’ paradigm of economist Schumacher (1973). These predominantly owner-operated businesses tend to emphasize bottom-up management from interaction with both the customer as well as all employees on management-related decisions (Ateljevic & Doorne, 2000). The focus on collaboration and flat management are both direct rejections of hierarchical, competitive organizational structures controlled by a concentrated elite group. The rejection of notions of a traditional market ethos does not necessarily mean financial suicide or business stagnation, but rather an opportunity to attract specific types of customers, informed by values common to themselves within segmenting ‘niche’ markets (Ateljevic & Doorne, 2000). Limiting the scale and scope of ones operation can simultaneously stimulate the balance between economic gain and sustainability of sociocultural and environmental values (Andersson, Cederholm & Hultman, 2010).
study the definition from Kauffman Center for Entrepreneurial Leadership will be used, where the lifestyle entrepreneur is defined as:
“Lifestyle entrepreneurs start new firms to provide family income or support a desired lifestyle. These entrepreneurs typically seek independence and control over their own life schedule. In some cases, lifestyle entrepreneurs sacrifice growth for lifestyle choices. Because of their lifestyle focus, the benefits for these entrepreneurs relate primarily to the quality of life in local communities” (cited in Henderson, 2002, p. 49).
3.2.2 Characteristics of the lifestyle entrepreneur
This section will examine literature of the characteristics of lifestyle entrepreneurs concerning business growth. It is important to have a better understanding of what is known about the drives and attributes of these types of entrepreneurs in order to develop propositions for this study. According to qualitative studies lifestyle entrepreneurs have different measures of success than growth-oriented entrepreneurs. Due to lack of a conceptual framework of their lifestyle motives and success measurements, it becomes a challenge to fully understand what characteristics can divide lifestyle entrepreneurs from growth-oriented entrepreneurs. This study will be one of the first quantitative papers to build indirect measurements of lifestyle entrepreneurship. In order to do this this study needs to derive characteristics that scholars agree on. As these scholars have done in-depth interviews, the characteristics are based on a low amount of participants and can be rather perceived as assumptions of characteristics.
(1) Personal satisfaction
When diving into the literature of lifestyle entrepreneurship it becomes clear that the motives of lifestyle entrepreneurs are non-growth oriented (Marcketti et al., 2006). Their motives and measures of success are focused on making a reasonable living while at the same time improving quality of life and job satisfaction. Buttner & Moore (1997) found that this type of entrepreneur ranks self- fulfilment as the most important measure of success. “They are individuals who seek enjoyment in their life more than the pursuit of money” as Henricks (2002) describes. The satisfaction with one’s conditions brings us to the first characteristic of lifestyle entrepreneurship: the choice of personal satisfaction over money.
(2) Low growth objective
The second characteristics is based on the assumption of prioritization of lifestyle goals over growth (Ateljevic & Doorne, 2000; Buttner & Moore, 1997; Tregear, 2005). As stated in the definition of lifestyle entrepreneurship (Henderson, 2002) they sometimes “sacrifice their growth for lifestyle choices”. Their venture growth may be limited due to an underutilisation of resources and capital investment, irrational management and non return-on-investment based decision making (Peters et al., 2009). Sufficient empirical evidence for these statements is lacking. These assumptions leads to the second characteristic to distinct lifestyle from growth-oriented entrepreneurs: a lower growth objective.
(3) Low willingness to increase workload in order to grow
Davidsson (1989; 1991) argues that entrepreneurs base their willingness to grow on the evaluation of the consequences of the firm's growth.
For lifestyle entrepreneurs another
motive behind sacrificing growth for a quality lifestyle is the aim to create a balanced work-life, in which their business supports their way of living and allows flexibility in their schedule and location (Ateljevic & Doorne, 2000). Henderson (2002) emphasizes the importance for lifestyle entrepreneurs to share time with family and friends. The aim for a balanced workload is important to provide flexibility in managing demands associated with work, family, and community roles (Marcketti et al., 2006). According to Kolvereid (1992) there is a significant relationship between willingness to grow and expectations concerning workload. Therefore, the third characteristic is introduced: a lower willingness to increase workload in order to grow their firm.
(4) Low willingness to increase amount of employees in order to grow
Lastly, this study will look into the assumption that lifestyle entrepreneurs enjoy a certain level of autonomy. According to literature, lifestyle entrepreneurs generally hire few people than growth-oriented entrepreneurs (Peters et al., 2009), which leads us to the fourth characteristic to make a distinction: a lower willingness to increase amount of employees in order to grow their firm.
3.3 Growth intentions
In order for a startup to grow, the entrepreneur must make strategic choices to make growth possible. The growth intentions behind such strategic choices are defined as “the entrepreneur's goals or aspirations for the growth trajectory she or he would like the venture to follow” (Dutta & Thornhill, 2008). Kim and Mauborgne (1997) found that differences in growth trajectory of companies can be explained by specific growth choices. Studies show that the intentions of the entrepreneur are a good indicator of entrepreneurs’ actual actions and choices (Delmar & Davidsson, 2000; Krueger et al., 2000). Therefore, studying growth intentions will not only helps to understand whether different entrepreneurs intend different outcomes, but it also helps in predicting entrepreneurial actions.
One main theoretical model that has been used widely in the study of individual’s (strategic) intentions is the Theory of Planned Behavior (TPB) (Ajzen, 1991; Davidsson, 1991; Wiklund & Shepherd, 2003). The TPB model explains growth intentions based on three predictors, namely perceived desirability (outcomes), perceived feasibility (abilities), and opportunities associated with the intended behavior of the decision-maker. The entrepreneur’s perceived desirability refers here to the believed attractiveness of growing the business. This desirability reflects the willingness to perform the activity and is shaped by certain beliefs about growth. If the desirability to grow the firm is low, the entrepreneur will have less intention to fulfil expansion. Perceived feasibility, on the other hand, represents the perceived difficulty to do so. If the difficulty of the activity is perceived as high, combined with low perceived abilities, then the individual will have less intention to start it. The last aspect that helps to predict the entrepreneur’s strategic growth intention are the associated opportunities available.
This model explains why entrepreneurs vary considerably in their intentions to scale their businesses (Gundry & Welsch, 2001; Kolvereid, 1992). Gundry and Welsch (2001) identified specific growth intentions in order to compare high-growth with low-growth firms. This is inspired by research of Pistrui, Welsch, and Roberts (1997) who first introduced strategic activities, defined as “implementable attributes of planned growth” (IAPG).
Gundry and
Welsch derived five strategic activities based on the theory of Schumpeter (1954) about new entrepreneurial combinations. These new combinations include: industrial reorganization,
introduction of new methods of production, opening of new markets, opening of new sources of supply, and the introduction of new goods
(see Table 1) . Strategic growth intentions based
on these Schumpeterian combinations are closely related to innovative behavior, all with the focus on the growth trajectory of the firm. Liao et al. (2001) also used this scale and combined search for financing, operations planning and organizational development together as resource aggregation.
This resulted in the division of growth intentions with the
dimensions: resource aggregation, market expansion & technology improvement.
Table 1. Overview of growth and expansion intentions (Gundry & Welsch, 2001)
Dimension Growth intentions
Market expansion
Adding a new product or service
Selling to a new market
Expanding distribution channels Expanding advertising and promotion Researching new markets
Expanding scope of operating activities
Technological change
Acquiring new equipment
Computerizing current operations Upgrading computer systems Replacing present equipment
Search for financing
Seeking additional financing
Seeking professional advice Applying for a loan
Operations planning
Adding operating space
Expanding current facilities Redesigning layout
Adding specialized employees
Organizational development
Training of employees off-site
3.4 Startup performance
3.4.1 Defining performance
Above, different attributes on the level of the individual entrepreneur have been discussed. Now we will move on to firm level measures to be able to draw conclusions about the consequences of the chosen growth path. Microeconomic theories of growth argue that growth is a natural phenomenon and does not relate to the entrepreneur’s priorities (Mansfield, 1979). The assumption of these theories is that a business grows until it reaches its’ ‘optimal size’, at which the long-run marginal cost equals price. However, more recent studies start to question this assumption. According to these scholars growth can go beyond the ‘optimal size’ and can be a consequence of decisions and choices taken by the entrepreneur (Davidsson, 1989b; Sexton & Bowman-Upton, 1991). Such subsequent venture growth is seen as the starting point for valued economic and social gains, including job creation (Aldrich, 1999).
In order to research whether lifestyle entrepreneurship and their growth intentions have influences on their business, this study will use measurements of firm performance mainly because entrepreneurs are judged on the basis of their business performance ( Shepherd, 1999; Zopounidis, 1994). In addition, it appears that over half of new ventures fail within the first five years (Aldrich, 1999). Therefore, performance of the firm is important for both the investor(s) as well as the entrepreneur. Performance refers here to the entrepreneur’s ability to contribute to employment and wealth creation (Carter & Jones-Evans, 2006). Murphy et al. (1996) emphasize the importance of using accurate and appropriate measurements of firm performance in order to make any conclusions about the firm. They examined quantitative studies investigating entrepreneurial performance. Although different measurements exist in business and management literature and there is no consensus on what exactly the most accurate measurements are, commonly used objective measures are: profitability and growth. Chandler and Jansen (1992) also divide the founder’s performance in two dimensions:
(1) Profitability (indicators: sales and revenue), and;
Growth relates here to companies growing both nationally as well as internationally. Chandler and Jansen (1992) also acknowledge that not a lot of literature exists on startup performance. When measuring startup growth it is important to recognize the differences between growth of larger corporations and its smaller counterpart. New venture growth differs from growth of established firms in several ways. First of all, attaining growth has different implications for startups than for established enterprises. Startups have not yet achieved a level of viability and survival. Unlike large corporations, survival may be significantly reduced in the absence of growth ( Gilbert et al., 2006). Although not all entrepreneurs choose to grow large, it is generally agreed that some venture growth over time (i.e., growth in sales, employees, new products, or market share) is necessary for startups to survive and prosper, especially in fast changing market environments (Delmar, 1996; Marko, 2010). Secondly, new venture growth rates are less dependent on size and age than their established counterparts (Gilbert et al., 2006). These differences imply that the explanation of new venture growth takes on a special meaning in the given context of entrepreneurship.
3.4.2 Measuring startup performance
As described above, different perspectives can be used to assess firm performance. Since this study will compare lifestyle entrepreneurs to the commercial growth-oriented entrepreneur we can use indicators of what founders focusing on rapid growth are concerned with. Chandler and Hanks (1993) investigated new venture performance and found that founders focusing on rapid growth were concerned with both sales growth and growth in market share. Another indicator for rapid growth is employment created ( McCartan-Quinn & Carson, 2003). Taking these growth measures into account together with profitability, this study will focus on sales and revenue (together measuring the dimension of profitability) and change in market share, sales growth and change in employees (together measuring the dimension of growth).
3.5 Conceptual model and hypotheses development
Please find the conceptual model with the hypotheses for this study below (figure 1).
Figure 1. Conceptual model of lifestyle entrepreneurship, growth intentions and performance
The first two hypotheses are focused on exploring the concept of lifestyle entrepreneurship. First, it is necessary to test theoretical assumptions. In order to validate characteristics and find a way to distinct lifestyle from growth-oriented entrepreneurs, this study will use a direct measurement of lifestyle entrepreneurship (based on the definition) and an indirect measurement (derived from literature). This will also provide a better understanding of how these characteristics relate to their intentions to grow their venture for the second hypothesis.
Hypothesis 1. The direct measurement of lifestyle entrepreneurship correlates positively to the indirect measurements of lifestyle entrepreneurship.
Entrepreneurs who identify as lifestyle entrepreneur score;
H1a
: higher on the belief that personal satisfaction is more important than money,
H1b:
lower on the belief that growth is the most important objective of their startup,
H1c:
lower on the willingness to increase the amount of employees in order to grow,
H1d:
lower on the willingness to increase workload in order to grow;
Hypothesis 2. The higher the score on characteristics of lifestyle entrepreneurship the lower entrepreneurs score on growth intentions.
This study will proceed to test the relationship between growth intentions and their startup performance. Literature suggests that growth intentions of the owner positively influence performance of small ventures (Gundry & Welsch, 2001). This leads to the following hypothesis that will be tested in this study:
Hypothesis 3. The higher the growth intentions of the entrepreneur the more positive the influence on their startup performance.
Then, this relationship will be investigated regarding lifestyle entrepreneurship. Achieving planned, or strategic growth and performance requires sufficient concentrated effort (Lyles et al., 1993). Poutziouris (2003) proclaims that the motives of entrepreneurs shape their strategic goal setting and growth orientation of the firm. Considering theory of high-growth vs. lifestyle entrepreneurs that implies that growth-oriented entrepreneurs are more focused on achieving business growth the following proposition is developed:
Hypothesis 4. The indirect measurement of lifestyle entrepreneurship moderates the
relationship between growth intentions and startup performance in such a way that this relationship is stronger for entrepreneurs who score low on the characteristics of lifestyle entrepreneurship compared to entrepreneurs who score high on the characteristics.
For the last hypothesis regarding startup performance, this study will test whether lifestyle entrepreneurship by itself has consequences on firm performance. Based on the description of Kauffman Center that explains that lifestyle entrepreneurs start a business not primarily for economic gain but for satisfaction and quality of life, it is expected that entrepreneurs who identify with this concept have lower firm growth and profitability because they are less focused on maximizing the growth potential:
4. Methodology
4.1 Research Design
This thesis is aimed at cross-sectional analysis of the influence of lifestyle entrepreneurship on the relationship between growth intentions of entrepreneurs and their venture performance. Empirical data were collected from a quantitative survey.
4.2 Sample
The sample of this study represents entrepreneurs who own a startup in Amsterdam. This study focuses on entrepreneurs in the same environment because it allows elimination of environmental influences to some degree. According to Scott and Bruce (1987) a firm can be called a startup when it complies to the following requirements: Its management needs to be independent and usually holds ownership of the company, the company requires capital to facilitate its establishment, and an individual or small group holds ownership.
The sample consists of entrepreneurs currently operating young startups in the Dutch market and registered on startupmap.iamsterdam.com. These entrepreneurs are founders of the following startup ventures (see table 2).
Table 2. Representation of sample
N= 568 entrepreneurs N= 343 entrepreneurs Growth stage ‘Seed’ growth stage ‘Early growth’ stage
Amount of employees Less than 10 people 11-50 people
Amount of funding Less than EUR 1M EUR 1-10M
The sample is focused on entrepreneurs in their ‘seed’ and ‘early growth’ stage for a reason. According to Autio and Acs (2007) new (or early-stage) entrepreneurs are the most reliable type of entrepreneurs to measure growth aspirations. Nascent and established entrepreneurs will not be taken in the analysis. This was on the basis that nascent entrepreneurs’ growth aspirations may not be very realistic, given that they have yet to start their firms. Established entrepreneurs, on the other hand, are not likely to face acute career trade-offs. Early-stage entrepreneurs already faced reality, but still need to consider the decision of growth.
4.3 Sample selection and data collection
Purposive sampling, one of the most common sampling strategies, was used in this study to select startup entrepreneurs from the dataset. This type of sampling allows to select participants according to preselected criteria relevant to the research question (Tongco, 2007). The preselection of entrepreneurs registered on the database from startupmap.iamsterdam.com was based on the following criteria: (1) the startup needs to be established before 2015, and (2) public/unknown ownerships were excluded.The last criteria is important simply because profit startups are more focused on increasing financial performance than nonprofit startups (Baum, Calabrese, & Silverman, 2000). After filtering the dataset 433 startups qualified for the sample. A pilot survey has been performed in order to identify any misunderstanding. After alterations were made one entrepreneur per startup was approached by email or via LinkedIn. It was ensured that all results are granted confidentiality to overcome common-method bias. This was especially important to note because sensitive information such as sales growth and earnings are asked. Data collection started in April and was completed in May 2018.
4.4 Measurement of variables
The questionnaire started with the respondents demographics such as their gender, age, and tenure. The following measurements are captured on a 5-point Likert scale (completely disagree – completely agree), except when mentioned differently.
Independent variables
Lifestyle entrepreneurship
was measured as whether the entrepreneurs classified themselves
as a lifestyle entrepreneur based on a description of lifestyle entrepreneurship by Kauffman Center for Entrepreneurial Leadership (coded as 1) or not (coded as 0): “Lifestyle entrepreneurs start a business not primarily for economic rewards but for a different type of pay-off - namely the opportunity for a better lifestyle. This desired lifestyle is mainly focused on quality of life and a strong desire for independence. Do you define yourself as a lifestyle entrepreneur?”.
Growth Intentions were defined as “the degree to which entrepreneurs intend to actively engage in specific strategies to grow and expand their firms”, originally measured with 18 items (Liao et al., 2001) and a cronbach’s alpha of .899. This study did not use the items ‘redesigning technological layout’ and ‘upgrade computer systems’, because the startups registered on startupmap.iamsterdam are mostly technological startups and relatively young and up-to-date while these items are focused on replacement of firm equipment. In addition, the respondents in the pilot study argued these are expected to not be applicable as growth intentions for the near future.
Moderating variable
Characteristics of lifestyle entrepreneurship
were derived from literature. The four
characteristics were measured by using self-report statements.Personal satisfaction
describes
an “individual's experience of a sense of fulfillment of a need or want and the quality or state of being satisfied” and was measured with the statement: (1) “Enjoying the job is more important than making lots of money” (Getz & Petersen, 2005).
The second characteristic,
the belief towards importance of growth objective
, was measured as: (2) “Growth is the most
important objective of my company“ (Edelman, 2010). The third statement relates to
willingness to increasing the amount of employees
: (3) “A 100% increase in the number of
employees in five years time would be mainly positive" (Wiklund, Davidsson & Delmar, 2003). The last statement measured willingness to increase workload
: (4) “I do not mind an
increasing workload in order to achieve firm growth“.
Dependent variable
Startup performance was measured by four self-reported variables assessing performance
over the past three years: (1) Profitability (measured by two items: sales and revenue
); and
(2) Growth (measured by two items: change in market share and sales growth
) (Chandler &
Janssen, 1992).
Inter-rater reliability (alpha) of their measures are .80 and .83 respectively.
Change in employees
Control variables
Besides gender and age of the founder, the following control variables were taken into account based on prior research:
Type of industry: Kolvereid (1992) found that industry influences the entrepreneurs willingness to grow. The ten categories of Gundry and Welsch (2001) were used.
Firm age: Is defined as the number of years since founding and was used as a covariate because previous research indicates that younger firms have the highest growth rate (Storey, 1994).
Education: Kolvereid (1992) shows that the highest level of education attained plays a role in growth aspirations.
Perceived opportunities available: Wiklund and Shepherd (2003) explain that in order to achieve growth, the entrepreneur has to secure opportunities and sufficient resources for it. Research showing a positive relationship between growth intentions and firm growth suggest perceived opportunities as an influencing factor (Covin & Slevin, 1997).
Amount of companies owned: Entrepreneurs may have different growth aims per firms. Full/partial ownership: Decision-making regarding growth can be influenced by the other owners involved in the startup.
Intention to sell the business: If the entrepreneur has the intention to sell the business, this may influence their growth choices.
4.5 Data Analysis
4.5.1 Missing value
First, all variables included in this research were checked for missing data by running a frequency test. No errors were found. For all variables the amount of missing values was
4.5.2 Recoding
For the nominal variable lifestyle entrepreneurship
dummy variables were created (identifies
coded as 1 and does not identify coded as 0).
Three counter-indicative items of the
characteristics
were recoded into (LowGrObj, LowIncrEmpl and LowIncrWorkl) so that a
high score on these items will now mean a high score on lifestyle entrepreneurship characteristics. Zscores were developed for performance in order to standardize the items to build a performance measurement scale. A factor analysis on the five items with Zscores showed there were no underlying factors. Only one component had an eigenvalue above Kaiser’s criterion of 1, with 2.708 and explains 54.14% of the variance. Furthermore, the bivariate correlation matrix shows significant correlations between all items of performance (Appendix 1). Therefore, it is assumed there is no need to divide growth from profitability for performance of startups.
4.5.3 Normality
Descriptive statistics, skewness, kurtosis and normality tests were performed. The skewness (-.139) and kurtosis (-.932) ofperformance
are between the acceptable rule of thumb values
of -1 and +1. When checking the normality plots for performance by using Kolmogorov-Smirnov and Shapiro-Wilk test, both are not significant (p>.05) which indicates a normal distribution. Growth intentions
show a not normally distributed scale based on the
significant test of Kolmogorov-Smirnov (p<.05) (Appendix 2). However, looking at the skewness (-.468) and kurtosis (-.247) growth intentions still lay in between the boundaries, which means no problems are detected of extreme positive or negative values.
4.5.4 Computing scale means
Scale means have been computed for growth intentions
and performance and were coded as
GrIntTOT andZPerfTOT
measuring growth intentions, a principal axis factoring analysis (PAF) was conducted on the items. The Kaiser-Meyer-Olkin measure verified the sampling adequacy for the analysis, KMO= .789. Bartlett’s test of sphericity χ²
(120)= 549.449, p < .001, indicates that
correlations between items were sufficiently large for PAF. An initial analysis was run to obtain eigenvalues for each component in the data. Four components had eigenvalues over Kaiser’s criterion of > 1, examination of the scree plot revealed a levelling off after the fourth factor. Thus, four factors were retained and rotated with the Oblimin with Kaiser normalization rotation. Table 3 shows the factor loadings after rotation. The items that cluster on the same factors suggest the following factors: (1). Market expansion
, (2). Search for
financing
, (3). Operations planning and (4). Technological improvement.The third and last
item show a cross-loading on two factors, this could be due to to the content of the items. The loading on a second factor is below .50 for both, therefore the items were not deleted.
4.5.5 Reliability
To enable internal consistency of measurements, reliability checks were run for all items of
characteristics, growth intentions
& performance. The cronbach’s alphas for growth
intentions
and performance are above .7, which means the items are acceptable to use as a
scale for analysis (Growth Intentions α= .862; Performance α= .787). The corrected item-total correlations indicate that all the items have a good correlation with the total score of the scale (all > .30). Also, none of the items would substantially affect reliability if they were deleted (all differences < .10). For the characteristics
the cronbach’s alpha was low (α= .521),
however no items could improve the scale if they would have been deleted. Therefore, it is decided to run separated analysis to find moderating effects of the characteristics of lifestyle entrepreneurship.
4.5.6 Correlations
The mean, standard deviation and correlations of the variables for H3 and H4 are provided in table 4. This table shows thatGrIntTOT positively correlates to ZPerfTOT (+.26, p< .05).
As
expected from theory, the characteristics of lifestyle entrepreneurship show a negative correlation with growth intentions (p<.01 for LowGrObj, LowIncrEmpl and LowIncrWorkl
)
and startup performance (p<.01 for LowGrObj
). Furthermore, the four control variables (age,
gender, full ownership
and owns more firms) were all of significant influence on
performance. Company age
did not have any significant correlations, possibly because most
startups were ranged in the same startup phase (77.1% of the startups were operating less than 5 years). The control variables industry, education, perceived opportunities available
and
intention to sell business
were also non- significant. Therefore, these variables were not taken
into account for the analysis.
Table 4. Means, standard deviations and correlations
Variables M SD 1 2 3 4 5 6 7 8 9 10 1. Personal satisfaction 4.01 .93 -
2. Low growth objective 2.12 1.12 .25* - 3. Low will. increase empl. 2.34 1.28 -.02 .29** - 4. Low will. increase workl. 2.02 1.14 .18 .30** .28** -
5. Growth intentions 3.74 .68 -.05 -.33** -.39** -.27** (.86)
6. Startup performance .00 .73 -.13 -.32** -.06 -.19 .26* (.79) 7. Age 2.79 .69 -.12 -.10 -.06 -.01 .08 .36** - 8. Gender .79 .41 -.14 -.31** -.20 -.13 .34** .48** .04 -
9. Full ownership .29 .45 .02 .22* .31 .14 -.45**-.30** -.06 -.27** - 10. Owns more firms .40 .49 .04 -.19 .03 -.04 .02 .27** .08 .19 .09 - ** Correlation is significant at the 0.01 level (2-tailed)
5. Results
In the following section, the results from the analyzed data gathered from the survey will be presented. First, the descriptive statistics about the participants will be presented. Then, the results from the hypotheses testing will be shown.
5.1 Respondent characteristics
As mentioned above, the questionnaire was send to 433 startup founders. 97 entrepreneurs responded to the survey, of which 5 of them did not fill in the questions regarding performance. These respondents were deleted from the analysis. This leaves us with 92 valid responses obtained and a response rate of 21.2%. Of these 92 respondents, 58 entrepreneurs identified as lifestyle entrepreneur compared to 34 non-lifestyle entrepreneurs. Furthermore, 79.3% entrepreneurs are male respectively to 21.7% females. The age range is between 18 and 64 years old, the majority is aged between 30-49 making up for 47.8% of the respondents. 70.7% of the entrepreneurs had obtained a Bachelor’s degree or higher. Table 5 gives an overview of the different industries the entrepreneurs currently operate in.
Table 5. Descriptive statistics of industry sectors (N=92)
Industry sector Frequency Percentage
Service 24 26.1% Wholesale trade 2 2.2% Construction 2 2.2% Retail trade 9 9.8% Manufacturing 3 3.3% Professional service 14 15.2% Finance/insurance 12 13.0% Transportation 5 5.4% Other 21 22.8%
5.2 Hypotheses testing
5.2.1 Hypothesis testing (H1)- Independent samples T-test
H1 (a, b, c and d) were tested with an Independent samples t-test in SPSS. These hypotheses are focused on getting insight in whether founders who classify themselves as lifestyle entrepreneurs show the characteristics of lifestyle entrepreneurship theory (see table 6 for an overview). An independent samples t-test is used in order to compare the means of an interval dependent variable for two independent groups (Field, 2013).
H1a Personal satisfaction over money
First, a t-test was conducted to compare the importance of personal satisfaction between entrepreneurs. The model shows a significant mean difference (p<.05) in the scores for the ones who identify as lifestyle entrepreneur (M=4.16, SD=.85) and the ones who do not (M=3.74, SD=.99); t(90)=2.141, p=.035. In other words, the data suggests that lifestyle entrepreneurs value personal satisfaction more than economic gain compared to non-lifestyle entrepreneurs. Therefore, hypothesis 1a does not have to be rejected.
H1b Low growth objective
For the hypothesis stating that entrepreneurs who identify as lifestyle entrepreneur have a lower growth objective compared to non-lifestyle entrepreneurs, no significant difference (p>.05) was found in the scores for the ones who do identify (M= 2.19, SD=1.12) and the ones who do not (M=2.06, SD=1.18); t(90)=.532, p=.596. The findings imply that lifestyle vs. non-lifestyle entrepreneurs do not significantly differ in the perception of growth objective, thus hypothesis 1b cannot be supported.
H1c Low willingness to increase amount of employees to grow startup
Testing the third characteristic, a lower willingness to increase amount the of employees of the startup in order to grow compared to growth-oriented entrepreneurs, showed that no significant difference (p>.05) was found in the scores for the ones who identify as lifestyle entrepreneur (M=2.41, SD=1.30) and the ones who do not (M=2.29, SD=1.33); t(90)=-.422,
H1d Low willingness to increase workload to grow startup
A significant difference (p<.05) was found for hypothesis 1d in the scores measuring “low willingness to increase workload in order to achieve growth” for the ones who identify as lifestyle entrepreneur (M= 2.24, SD=1.17) and the ones who do not (M=1.65, SD=.95); t(90)=-2.507, p=.014. These findings suggest that lifestyle entrepreneurs show a lower willingness to increase their workload compared to non-lifestyle entrepreneurs.
Table 6.
Results of T-tests for the four characteristics by type of entrepreneur
Lifestyle entrepreneurship 95% CI for
Mean Difference
Identifies
(N= 58)
Does not identify (N=34) M SD M SD t df - Personal satisfaction - Low growth objective - Low will. increase empl. - Low will. increase workl. 4.16 2.19 2.41 2.24 .85 1.12 1.30 1.17 3.74 2.06 2.29 1.65 .99 1.18 1.33 .95 .30, .81 -.36, .62 -.44, .68 .12, 1.09 2.141* .532 .674 2.507* 90 90 90 90 * p < .05.
5.2.2 Hypothesis testing (H2)- Hierarchical linear Regression
Next, this study explored hypothesis 2 which expects that the characteristics of lifestyle entrepreneurship can predict the growth intentions of an entrepreneur. In order to test this, a hierarchical linear regression analysis was used. First, it was important to explore the significance of the covariates on growth intentions. Therefore, in the first step (Model 1) the control variables gender, age, and whether the entrepreneurs owns more firms or not were
entered in the regression. This model was statistically significant (F(3, 88)=5.141, p=<.01) and explains 12% of the variance. The only significant effect on growth intentions is found for the control variable gender
In Model 2 the independent variables were added (see table 7) .The total variance explained by the model as a whole was 25% (F(7, 84)=5.345; p=<.001). The introduction of the characteristics that divide lifestyle from growth oriented entrepreneurs explained an additional 13% variance in growth intentions, after controlling for the covariates. In the final model two out of four predictors were statistically significant. A linear regression was also calculated to predict growth intentions based on entrepreneurs willingness to increase number of employees (3)
. A significant effect was found for both gender (β = .25, p<.05) and the
willingness to increase amount of employees
(β = -.28, p<.01). When an entrepreneur does
not want to grow their amount of employees, the growth intentions for their firm also seem to be significantly lower. For entrepreneurs who value personal satisfaction over money (1) no significant effect on growth intentions was found (β = .74, p>.05). Also, for the level of importance of the firm’sgrowth objective (2)
(β = -.17, p>.05) and the willingness to increase
workload to grow ( β = -.11, p>.05), no significant regression equation were found to predict a score on growth intentions. On average, men (M= 3.85, SD= .63) seem to have higher growth intentions for their firm than women (M= 3.21, SD= .78). Based on the analysis, H2 can only partly be supported.
Table 7. Hierarchical regression model for growth intentions
Models Summary
R R² R² Change B SE β t Model (1) .15 .12**
Gender .65 .17 .38*** 3.75 Age .09 .10 .09 .89 Owns more firms .06 .15 -.04 -.39
Model (2) .31 .25*** .13**
Gender .43 .17 .25* 2.55 Age .06 .10 .06 .68 Owns more firms -.073 .14 -.05 -.52 Personal satisfaction .06 .07 .07 .77 Low growth objective -.11 .07 -.17 -1.63 Low will. to increase empl. -.15 .06 -.28** -2.76
5.2.3 Hypothesis testing (H3)- Hierarchical linear Regression
To examine the previous proposed hypothesis (H3) which expects an effect of growth intentions on performance, this relationship was tested with a hierarchical multiple regression analysis. As a first step, four predictors were entered: gender, age, full ownership
and owns
more firms
. By doing this a shared variability of these variables with the predictive variable
growth intentions can be controlled. This model was statistically significant F (4, 86)= 14.77; p<.05 and explained 38.0% of variance in startup performance. After GrIntTOT were included in the analysis at Model 2 the total variance explained by the model as a whole lowered to 37.3% F(1, 85)= 0.10; p>.05. The introduction of growth intentions did not explain additional variance. In the final model age
(β = .32, p<.001) and gender (β = .37,
p<.001)
are both significant and seem as very powerful predictors of startup performance.
Growth intentions (β = .03, p>.05) do not appear to have a significant effect on performance, therefore H3 must be rejected (see table 8).
Table 8. Hierarchical regression model of startup performance
R R² R² Change B SE β t Model (1) .64 .38**
Gender .69 .16 .38*** 4.30 Age .34 .09 .32*** 3.84 Full ownership .31 .14 -.19* -2.17 Owns more firms .28 .13 .19* 2.20
Model (2) .64 .37 -.01
Gender .67 .17 .37*** 4.08 Age .34 .09 .32*** 3.79 Full ownership -.29 .15 -.18 -1.87 Owns more firms .28 .13 .19* 2.18 Growth intentions .03 .10 .03 .31
5.2.4 Hypothesis testing (H4)- The moderating effects
Even though the effect of growth intentions is not significant, this study aimed to test the moderating effect of lifestyle entrepreneurship characteristics, as suggested by H4. In order to best interpreted the effects, all characteristics have been analyzed separately by computing different moderating variables as shown in figure 2. The same control variables were used.
Figure 2.
Measuring moderating effects of characteristics of lifestyle entrepreneurship
The analysis of adding Satis
as a moderator to the previous analysis of H3 shows a decrease
in variance explained (ΔR
2 = -.012). No significant moderating effect was found on the
relationship of growth intentions and startup performance between entrepreneurs that show a value of personal satisfaction over money compared to entrepreneurs who score low on this variable (b= .07, SEb= .07, β= .09, p>.05). The relationship between GrIntTOT
and
ZPerfTOT
was also not significant (p>.05) for addingGrObj as a moderator (ΔR2 = -.001), as
well as IncrWork (ΔR
2 = -.009). Only the willingness to increase amount of employees
(IncrEmpl
) was found to increase the variance of the effect of growth intentions on
performance (ΔR
2 = +.011). The influence of ‘X on Y’ and ‘M on Y’ were both not
significant (p>.05). The moderator effect IncrEmpl x GrIntTOT
was closest of all four
characteristics to significance level (b= -.12, SEb= .07, β= -.15, p=.099 >.05) (see table 9 for an overview). This may be explained due to the fact that the previous analysis showed a significant effect of willingness to increase of employees on growth intentions. Based on the interaction effects, hypothesis 4 cannot be proven.
