Master Thesis
Entrepreneurial exit
The development of exit intentions by
entrepreneurs in the Dutch IT sector
University of Amsterdam
Student: Evianne van de Zande
Student number: 10349235
Email: eviannevandezande@gmail.com
Supervisor: Drs. A.C.C. Gruijters
Second reader: Dr. G.T. Vinig
Faculty of Economics and Business
Master of Science in Business Administration
Statement of Originality
This document is written by Student Evianne van de Zande 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.
ABSTRACT
Entrepreneurial exit is a complex phenomenon and theory based models of this topic are absent. This is partly due to the fact that exit is a multi-level concept that can be explored from various theoretical perspectives. This study puts forward the argument that there is a need for in-depth qualitative research from the perspective of the individual entrepreneur. The methodology that fits this type of research is the
grounded theory approach. The data are central in reaching a theoretical description of entrepreneurial exit intentions. In order to obtain insights into the entrepreneurs’ thoughts and behaviours, this research has been carried out through a multiple-case study in the IT sector of the Netherlands. The results show a strong link between entrepreneurial intentions and exit intentions. Furthermore, both individual-level factors (attitudes, motivation, networks, intentions) and firm-level factors (growth, planning, decision-making) are expected to play a role in the development of exit intentions.
TABLE OF CONTENTS Statement of originality
Preface and acknowledgements Abstract
Table of Contents
I. Introduction 5
Background to the study 5
The problem 5
Research question and purpose 6
Overview study 6
II. Literature review 7
2.1Overview exit literature 7
2.2 Theoretical perspectives 12
2.3 Individual-level concepts 14
2.4 Firm-level concepts 21
III. Research design 24
3.1 Grounded theory approach 24
3.1.2 Theoretical sampling 24 3.1.3 Semi-structured interviews 26 3.2 Data analysis 27 3.2.1 Quality procedures 27 IV. Results 28 4.1 Within-case analysis 28 4.2 Cross-case analysis 31 4.3 Findings 40 V. Discussion 40
Answering the research question 40
Reflection methodology and limitations 44
Theoretical and practical implications 44
VI. Conclusion 46
References 48
Figures and Appendices 56
I. INTRODUCTION
Entrepreneurship is complex economic behavior that is major factor in the national economy. New venture creation is regarded as being at the heart of the research field of entrepreneurship (Gartner, 1985, 1990; Low and McMillan, 1988 cited by Carree, 2010). As a consequence, most of the entrepreneurship literature has focused on the entry and growth phases of a business (DeTienne, 2010). However, every entrepreneur in a certain point of time will have to deal with exiting his or her firm. Alberti (2013) states that only half of start-ups survive more than five years after entry and less and less than a third survive ten years after entry. Therefore, exit is central part of the entrepreneurial process (Ucbusaran, 2001; DeTienne, 2010) and inevitable for any firm owner (van Teeffelen & Uhlaner, 2013).
Ucbasaran (2001) identifies exit issues as an important outcome of the entrepreneurial process. An important distinction in exit research is made by Van Teeffelen & Uhlaner (2013); they distinguish between “exit choice” and “exit
outcome.” Exit choice is ‘the behavioral intention or decision of the entrepreneur to
leave the organization’ and the “exit outcome” is the eventual consequence of that decision (van Teeffelen & Uhlaner, 2013, p. 85). Following Wennberg & DeTienne (2014) exit can be examined from the individual-level and the firm-level. There are many firm drivers of exit, e.g. age of the firm, size of the firm, location of the firm and performance. Individual drivers are motives of the entrepreneur, entrepreneurial experience, entrepreneurs age, level of education and industry experience. Findings from prior research cannot be brought together to a theory of entrepreneurial exit, this is not a surprise considering the: 1) differences in analysis, 2) to many drivers that are taken into account (both individual and firm-level), 3) differences in theoretical perspectives, 4) contexts and 5) choices of dependent and independent variables (Alberti, 2013, p. 136). Following DeTienne (2010), the author states that there is need for a qualitative study exploring, challenging and building theory on entrepreneurial exit as an individual-level choice of the entrepreneur. This view is supported by the definition of DeTienne (2010, p. 204): entrepreneurial exit is ‘the process by which the founders of privately held firms leave the firm they helped to create; thereby removing themselves in varying degree, from the primary ownership and decision-making structure of the firm.’
Theoretically grounded models of exit intentions are absent, however this is does not mean that there are no theoretical concepts or theories to guide this study. It is expected that entrepreneurial exit is a multi-level phenomenon. The objective of this study is to identify what factors lead entrepreneurs to the development of exit intentions and at what stage of the entrepreneurial process exit intentions are developed. The previous statement has led to the following research question:
How and at what stage of the entrepreneurial process are exit intentions developed by the individual entrepreneur and which factors play a role in this development?
In order to take a step towards the development of theory on exit intentions, this study takes a one level approach in which the individual entrepreneur is used as unit of analysis. Therefore, it is guided by existing theoretical perspectives and concepts, which focus on the entrepreneur as unit of analysis. This study proceeds according to the following structure. Chapter 2 presents a review of existing literature and suggests several theoretical views as a starting point for in-depth research of entrepreneurial exit intentions. Chapter 3 describes the research design according to the grounded theory method. Chapter 4 presents the analysis of the cases and results of the study. Chapter 5, the final part of this research, consists of a discussion of the findings and the answer to the research question. Furthermore, in the final stage of this study the reflection of the methodology, practical and theoretical implications, limitations and suggestions for further research are presented.
II. LITERATURE REVIEW
This literature review consists of three elements. First, a general overview of the exit literature is presented. Second, a review of theoretical perspectives is presented. The entrepreneurship literature is multidimensional in nature and conceptual approaches have built on variety of disciplines such as economics, sociology, and psychology (Wennekers et al, 2002). DeTienne (2010) suggests that exit is a multi-dimensional phenomenon and due to the lack of grounded theory in this field of study, past research builds on theories from other disciplines. According to Bird (1998), intention is a psychological process. Therefore, this study presents an overview of several theoretical lenses and perspectives like the behavioural/psychological perspective, theory of planned behaviour and entrepreneurial intentions. Third, even though this research presents exit intention on in the individual-level of the entrepreneur, the concept of entrepreneurial exit is multi-level in nature. Therefore, both individual-level factors that are expected to play a role in the development of exit intentions and firm-level factors that are expected to play a role in the development of individual exit intentions are presented.
2.1 Overview of exit literature
Previous literature is demonstrating two contrasting perspectives on entrepreneurial exit. First, in practice exit is often viewed as the ultimate goal of building a profitable venture (Wennberg & DeTienne, 2014). Second, in academic literature exit is often viewed as a dichotomous outcome; which means a negative outcome for the individual and a failure for the new venture (van Teeffelen & Uhlaner, 2013). Stam et al (2010, p. 1109 cited by van der Zwan, 2011) state that: ‘entrepreneurs exit their businesses due to selection pressures they experience in the marketplace.’ However, an emerging stream of research is acknowledging entrepreneurial exit as an individual choice of the entrepreneur. Exit can be both a successful outcome for the business as well as for the entrepreneur (Battisti & Okamuro, 2010). Alberti (2013) emphasize the difficulty to bring findings from prior research together to a theory of entrepreneurial exit. This is due to the multifaceted nature and differences in levels and/or units of analysis, theoretical perspectives, contexts and choice of dependent and independent variables. Wennberg & DeTienne (2014) point to the fact that there has been little qualitative work to explore, challenge and build theory on exit. However, in the last
couple of years data generated by previous research indicates that ‘there are unique factors that affect a founder’s exit strategy, reasons for exit, and the varying exit options (DeTienne, 2010, p. 212).’ In particular, individual factors are often linked to exit intention or exit choice. There appears to be a relationship between founders’ characteristics such as goals, intentions, motivation, entrepreneurial experience and industry experience in relation to exit intention or exit choice (Battisti & Okamuro, 2010; DeTienne & Cardon, 2012; van Teeffelen & Uhlaner, 2013). Table 1 shows overview of the exit literature that was built trough quantitative research and provides a starting point for in-depth qualitative research of the phenomenon of entrepreneurial exit.
Table 1: Part I: Overview of the exit literature. Authors and subject Dependent variable Independent variables Main outcomes 1. Amaral and Baptista (2007) Exit taxonomy and looking at drivers of different kinds of exits
Exit outcome Firm resources Owner
characteristics and human capital Macroeconomic context
Data support four kinds of exits Human capital land firm resources determine liquidation or sale 2. Balcaen and Ooghe (2007) Comparing voluntary and forced liquidations
Exit outcome Firm resources Human capital Main driver of voluntary liquidation is a strong financial position 3. DeTienne and Cardon (2012) Impact of human capital on exit intentions
Exit choice Firm resources (post-hoc) Human capital Human capital, such as age, education, and experience, relates to different exit choices Firm resources (size, growth) moderate or mediate the exit choice
4. Leroy, Manigart and Meuleman (2010) Predicting liquidations and ownership transfer
Exit outcome Firm resources and industrial context Owner characteristics and human capital Intentions and theory of planned behaviour (TPB) variables Firm resources (firm performance) significantly improve the TPB predictions 5. Van Teeffelen (2008) Comparing liquidations and ownership transfer
Exit outcome Firm resources Owner
characteristics and human capital Exit choice
Human capital and firm resources differ significantly between
liquidations and ownership transfers 6. Ryan and Power
(2009) Preferred future exit choice
Exit choice Firm resources Exit choice Market specific characteristics Firm resources, market and intentions influence the preferred exit choice
7. Wennberg et al. (2010)
Exit taxonomy and looking for drivers for different exits
Exit outcome Firm resources Human capital
Data support four kinds of exits Human capital land firm resources differ across the four exit types 8. Winter et al.
(2004) Tracking family owners over time
Exit outcome Human capital Firm resources
Human capital land firm resources are related to
liquidation or sale/ succession
9. Van Teeffelen & Uhlaner (2013) Firm resource characteristics and human capital as predictors of exit choice
Exit choice Firm resources Human capital
Firm resources together with one aspect of the owner’s specific human capital predict exit choice Source: van Teeffelen & Uhlaner (2013, p. 88 – 89).
Exit versus failure
The entrepreneurial process may lead to numerous outcomes. A final outcome of the process is a mode of exit selected by the entrepreneur (Ucbusaran, 2001). Worth mentioning is that in most literature exit is viewed as a negative outcome of the entrepreneurial process. Wennberg & DeTienne (2014) point to a large contrast between visions from current entrepreneurs and scientific research perspectives. Traditionally, exit is often viewed as ‘failure’ of the firm. Although early research by Ronstadt (1986) showed that the entrepreneurs’ decision to exit the business may not strictly be the result of ‘failure’ or poor economic performance (Ucbasaran, 2001, p. 16). This view is supported by Amaral et al (2007) viewing exit as a voluntary decision of the entrepreneur, driven by lack of willingness to continue business. Accordingly, DeTienne (2010, p. 212) proposes that ‘as the firm grows, there are more options available for exit.’ Therefore, exit and failure are two distinct concepts (Wennberg & DeTienne, 2014).
Exit choice versus exit outcome
The research by van Teeffelen & Uhlaner (2013) distinguishes between “exit choice” and “exit outcome”. Exit choice is ‘the behavioural intention or decision of the entrepreneur to leave the organization, the exit outcome is ‘the eventual consequence of that decision (van Teeffelen & Uhlaner, 2013, p. 85).’ As shown in table 1, many studies focus on exit outcome; only few studies looked at intentions or preferred future exit choice. Following Alberti (2013), we can state that it is very difficult to bring findings from prior research together to a theory of entrepreneurial exit. This is due to 1) differences in analysis, 2) to many drivers that are taken into account (both individual and firm-level), 3) differences in theoretical perspectives, 4) contexts and 5) choices of dependent and independent variables (Alberti, 2013, p. 136).’ Previous research on exit choice includes firm resources, human capital and market specific characteristics. The next paragraph discusses the most significant findings from previous research.
Ryan and Power (2009) find evidence that the age of the firm, the size of the firm, the pool of potential buyers, location of the firm, the motives of the entrepreneur, whether the entrepreneur has an exit plan, the level of family involvement and the type of the business influence the entrepreneurs exit
expectations. DeTienne & Cardon (2012) look more specifically at the exit intention and identified six possible exit paths, while taking the entrepreneurial experience, entrepreneur’s age, level of education and industry experience into account. The results indicate previous entrepreneurial experience as a main factor contributing to exit choice. In line with this finding is the result of research by van Teeffelen and Uhlaner (2013) who find that firm resources together with the entrepreneur’s acquisition experience predict exit choice.
DeTienne & Cardon (2012) identified six possible exit paths. This range of exit paths distinguishes their research from other research. For example, the research by van Teeffelen and Uhlaner (2013) only present two options through which an entrepreneur can exit the firm: liquidation or sale. DeTienne (2012, p. 367) found entrepreneurs make various choices to exit their business; many of which focus on positive harvest outcomes. Harvesting is a term that appears in the literature and is described as ‘an activity trough, which an investor draws a return on capital from a specific investment or exit from an investment (Petty et al, 1994).’ Harvesting can occur in different forms. Based on the research by DeTienne (2012) we describe the following forms of exit choice.
Table 2: Exit choice. Exit choice
IPO Initial public offering implies that a significant portion of a firm’s equity is sold in the public market. IPOs are often shown to be most suitable for rapidly growing firms or firms with fast growth in the past
MBO Management buyout in which existing managers are buyers.
EBO Employee buyouts as a form of harvesting Acquisition Company is purchased by another company Independent sale Company is purchased by an individual
Liquidation As occurrence of business failure that leads to liquidation, firms’ assets are sold. A firm may find itself in these circumstances due to the intention of the owners, but more often not.
Family succession Inheritance of an existing organization Source: DeTienne (2012).
First, various theoretical perspectives are used in the research on entrepreneurial exit. Ranging from mainstream economic views such as the asymmetric information perspective (Dehlen et al, 2012), threshold theory (DeTienne, 2012) to socio-economic views like human capital theory and theory of planned behaviour as presented in table 1. Second, a management view, for example the resource-based view is applicable to studies using the firm and entrepreneur as unit of analysis. A theoretical perspective solely focusing on the entrepreneur as unit of analysis is the behavioural/ psychological theory, which will be elaborated on further in the next paragraph.
2.2 Theoretical perspectives
The behavioural/psychological perspective
According to Delmar (2000 cited by Fayolle et al, 2005) personality is often perceived by practitioners as one of the most fascinating topics in the field of entrepreneurship. Fayolle et al (2005) suggest that personality is a set of characteristics or traits that are stable across situation and time. However, the study of personality in entrepreneurship research has been widely criticized, the main problem with this type of research is that there is no consensus on the relevance of individual characteristics (Fayolle et al, 2005). For this reason, Fayolle et al (2005) argue that both psychological characteristics of the entrepreneur and personal background variable should be taken into consideration when studying the entrepreneur’s perception, intention and characteristics of the situation. In fact, some personal characteristics of entrepreneurs, for example, self-efficacy is expected to play a role in entrepreneurship. According to Boyd & Vozikis (1994, p. 73) ‘self-efficacy determines of motivation and effort that people will exert.’ Fayolle et al (2005) defined two groups of models: ‘attitude’ based models,
which explain how attitudes on entrepreneurship shape peoples behaviour and ‘motivation’ based models, which offer the ability to explain both highly complex behaviour and differences in choices and performance. An example of an attitude-based model is the theory of planned behaviour (TPB). This theoretical model and its applicability to entrepreneurial research will be discussed in the next paragraph. Motivations are argued to be ‘the most important psychological characteristic, which help us to understand why individuals act as they do. According to Fayolle et al (2005) cognitive motivation models offer a sophisticated theoretical frame of reference that can be applied to get a better understanding of the complexity of entrepreneurial behaviour. Therefore, motivation will be discussed further in in the section on individual-level concepts.
Theory of planned behavior
The TPB suggests that entrepreneurship involves primarily intentionally planned behavior (DeTienne, 2010). Ajzen (1991; cited by Kautonen et al, 2013, p. 699) proposes that ‘human behaviour is under control of the actor and behaviour’s can be accurately predicted by understanding an individual’s intentions to perform the behaviour.’ In figure 1 the TPB framework shows that intention is a function of three antecedents: a favourable or unfavourable evaluation of the behaviour (attitude), perceived social pressure to perform or not perform the behaviour (subjective norm), and the perceived ease or difficulty of performing the behaviour (Perceived Behavioural Control, PBC) (Azjen, 1991; cited by Kautonen et al, 2013).
In combination, attitude toward the behaviour, subjective norm, and perception of behavioural control lead to the formation of a behavioural intention (Ajzen, 2002). Ajzen (2002) assumes that intention is the immediate antecedent of behaviour, Therefore, ‘people are expected to carry out their intentions when the opportunity arises (Ajzen, 2002, p. 665).’
The study by Kautonen et al (2013) found empirical support showing that attitude, subjective norms and PBC are significant predictors of entrepreneurial intentions. The final conclusion of the research was that there was found support for the predictive validity of the TPB in the context of business start-up behaviour. Another study by Lin et al (2013) applied the TPB to entrepreneurship and describes entrepreneurial intent as a function of feasibility (attitudes about entrepreneurship), self-efficacy (perceived behavioral control) and social norms. Assuming that the TPB
is applicable to entrepreneurial intentions, exit intentions can be explored from a TPB perspective. The next paragraph discusses entrepreneurial intentions further.
Figure 1: Theory of planned behavior
Source: Ajzen (1991).
2.3 Individual-level concepts
Entrepreneurial intentions
‘Intentions are conceptualized as a function of beliefs that provide a link between beliefs and subsequent behaviour (Fishbein & Ajzen, 1975 cited by Boyd & Vozikis, 1994, p. 64).’ This relationship can be illustrated as follows: beliefs lead to attitudes, attitudes lead to intentions and intentions lead to the performance of a behaviour. It is assumed that factors playing a role in het start-up phase of a company also play a role in the exit phase. A study that adheres to this view is the research by DeTienne et al (2012) who argue that the desired exit choice is tied to the entrepreneurs’ motivation to start a firm. Boeker (1989 cited by DeTienne (2010) also states that intentions are often developed during the start-up phase of the firm and therefore expect that these intentions influence future decisions and behaviours. Empirical research showed a link between intention and outcome (Kautonen et al, 2013; Wennberg & DeTienne, 2014). Empirically supported by the TPB, the intention to start a firm is a rational decision and there is a link between the intention and actual
behaviour. Ajzen (1991) expects the previous relationship to be fairly strong. The previous paragraph shows the theory of planned behaviour perspective on entrepreneurial intentions (Ajzen, 1991). A second model that attempts to explain entrepreneurial behaviour is Bird’s (1988, p. 442) model of entrepreneurial intentionality, which explains the process of attention, experience and action towards a business concept. A third model is Shapero’s (1982) model of entrepreneurial event which argues that entrepreneurial intentions depend on 1) perceptions of personal desirability, 2) feasibility, and 3) propensity to act (Krueger et al, 2000 p. 412). Krueger et al (2000) compare the theory of planned behaviour to Shapero’s model of entrepreneurial event. The goal of the study by Krueger et al (2000) was to analyze the applicability of these models to predict entrepreneurial intentions. The outcome of the study is that intentions are the single best predictor of any planned behaviour, including entrepreneurship. ‘Personal and situational variables typically have an indirect influence on entrepreneurship through influencing key attitudes and general motivation to act (Krueger et al, 2000, p. 426).’ A concept that drives intentions is self-efficacy in combination with attitudes (Krueger et al, 2000; Carsrud & Brännback, 2011). Furthermore, self-efficacy determines the level of motivation and effort that people will exert. The concept of self-efficacy will be discussed further in the paragraph on individual-level concepts.
A fourth model that claims to have found the determinants of entrepreneurial intentions, is developed by Davidsson (1995). Davidssons study (1995) summarizes earlier research, resulting in an economic psychological model that shows various determinants of entrepreneurial intentions (figure 2).
Figure 2: An economic-psychological model of determinants of entrepreneurial intentions
Source: Davidsson (1995).
The Davidsson (1995) model will be further explained according to the following order. First, the next paragraph touches upon attitudes and specifies the distinction between general and domain attitudes. Second, the motivation concept will be elaborated on further followed by a review of the closely linked concept of self-efficacy. Third, previous research found a small number of personal background factors to have an effect on entrepreneurial intentions. Therefore, the following personal background factors are further explained; family background, education and age. To conclude this chapter on individual-level factors, the role of networks in the entrepreneurial process is discussed.
Attitudes
In Davidssons (1995) model attitudes are believed to act as mediators for influences of personal background factors. Davidsson (1995) distinguishes between ‘general attitudes and domain attitudes, general attitudes are more general psychological dispositions. Domain attitudes specifically concern entrepreneurship.’ Attitudes have been used to predict entrepreneurial activity. According to Harris & Gibson (2008, p. 569) ‘attitudes change across time and situations through an interactive process with the environment.’ Furthermore, they add that attitudes can predict person’s future actions. Linking attitudes to intentions, Douglas and Shepherd (2002, p. 88) found
that ‘the intention to be an entrepreneur is stronger for those with more positive attitudes to risk and independence.’ Interesting to note is that various studies found that income is not a significant determinant of entrepreneurial intention. Harris and Gibson (2008) argue that people do not appear to start their own businesses to get rich, or to get any richer than they expect to get as employees. This view was confirmed by (Bamberger, 1986; Cromrie, 1988; Hamilton, 1998 cited by Davidsson, 1995) who state that the prospect of making money typically ranks low in entrepreneurs’ stated motivations for founding their own firm. Another attitude often found in entrepreneurship research is the need for autonomy or independence. This desire for independence and autonomy often plays a role in motivating people to become an entrepreneur (Kirkwood & Walton, 2010). Also it plays a role in the decision to leave other jobs in order to pursue their own course of action (Lee & Tsang, 2001). Other factors that play a role in the motivation to become an entrepreneur are positive attitudes to risk. In the next paragraph, the motivation concept will be discussed further.
Motivation
Amabile (1996) distinguishes between two other forms of motivation: intrinsic motivation and extrinsic motivation. ‘Intrinsic motivation is driven by deep interest and involvement in the work, by curiosity, enjoyment, or a personal sense of challenge (Amabile, 1996, p. 7).’ Additional elements of intrinsic motivation include enthusiastic task involvement, desire to experience adventure and novelty, striving for excellence in one’s work, trying to understand something and wishing to improve, and goal direction (Lee et al, 2010). Extrinsic motivation ‘is driven by the desire to attain some goal that is apart from the work itself – such as achieving a promised reward or meeting a deadline or winning a competition (Amabile, 1996, p. 7).’ Additional elements of extrinsic motivation ‘include concern for rewards, sanctions, praise, feedback, and grades (Lee et al, 2010).’ According to Baum and Locke (2004) entrepreneurial motivation involves motivation that is directed toward entrepreneurial goals. Involved with these goals is the recognition and exploitation of business opportunities.
Shane et al (2003) researched entrepreneurial motivations and emphasize the importance of considering the motivations of people making entrepreneurial
decisions. Shane et al (2003, p. 258) state that ‘variances in motivations across people will influence who pursues entrepreneurial opportunities, who assembles resources, and how people undertake entrepreneurial opportunities.’ Shane et al (2003) distinguish between general and task-specific motivation. General forms of entrepreneurial motivation are: need for achievement, locus of control, vision, and desire for independence, passion and drive. Task-specific forms of motivation are goal setting and self-efficacy.
DeTienne & Chandlers (2010) examined entrepreneurs’ personal motivations in the context of exit strategies. DeTienne & Chandler (2010, p. 2) argue that ‘exit strategies will be influenced by the motivation of the owner and the processes that were used to initially develop the business.’ A distinction was made between extrinsic and intrinsic motivation, the results indicated that extrinsically motivated entrepreneurs are more likely to consider an IPO exit strategy and less likely to consider an independent sale, intrinsically motivated entrepreneurs are more likely to consider an IPO or liquidation and more likely to exit through an independent sale (DeTienne & Chandlers, 2010, p. 1). Therefore, the motivations of the entrepreneur during the start-up process are crucial when researching exit intentions. This view is supported by Carsrud & Brännback (2011) who claim that entrepreneurial motivations are an important aspect of the entrepreneurial process. However, the available literature on this topic seems to suggest that entrepreneurial motivations have only been explored at the margins (Carsrud & Brännback, 2011).
Need for achievement
Entrepreneurs generally have a higher need for achievement than non-entrepreneurs (Lee & Tsang, 2001). When relating the need for achievement to motivation, this results in another form of motivation; achievement motivation. Achievement motivation is about a goal that drives the person toward it (Carsrud & Brännback, 2011). According to Perwin, (2003) cited by Carsrud & Brännback (2011, p. 12) goals are ‘mental representations of what the future could be, enabling individuals, such as entrepreneurs, not to give up.’ Carsrud & Brännback (2011) argue that achievement motivation can predict entrepreneurial behaviours.
Self-efficacy
someone has in the ability to successfully perform a task (Baum & Bird, 2010, p. 401).’ Boyd & Vozikis (1994) suggest that individual self-efficacy influences the development of entrepreneurial intention and actions or behaviours. Wood & Bandura (1989) add to this that people who have strong beliefs regarding their capabilities will be more persistent in their efforts and exert greater effort to accomplish their goals. Stajkovic and Luthans (1998) explained that self-efficacy enhances focus, direction, persistence, and intensity of action. Without little self-efficacy, little will happen. For example, high growth firms with high self-efficacy believe that they have all of the resources within themselves, and at hand, to accomplish their task goals (Chen et al, 1998). According to Boyd & Vozikis (1994, p. 94) ‘rather than seeking to identify a list of contextual factors and stable personality characteristics that influence entrepreneurial behaviour, the investigation of self-efficacy provides a more dynamic approach to understanding the process of becoming an entrepreneur.’
Personal background
In terms of education, Stam et al (2010) state that ‘highly educated people are more likely to develop the necessary skills for realizing their entrepreneurial ideas and running a business successfully.’ Although he adds to this that, on the other hand highly educated entrepreneurs face high opportunity costs in comparison to wage labour and thus exit. A finding by Wennberg et al (2010) states that higher levels of education are negatively related to a harvestable business. A possible explanation could be that high-educated entrepreneurs assume that they have the right knowledge and skills to build a successful business, but fail to meet expectations (Wennberg et al, 2010).
Age has an effect on entrepreneurial intentions as well. First, young persons are more likely to be adventurous and experimenting than older people. Second, young people are more likely to exit because they have less experience and more alternative labour market opportunities (Stam et al, 2010). Wennberg et al (2010) found a positive association between age and a sales (harvest or distress) exit compared to liquidation and suggests that age influences the willingness to exit. Harrisson and Rutström (2007) cited by Wennberg et al (2010, p. 30) state the following: ‘Where human capital theory posits that age is a proxy for experiences, this study shows that there is also a strong behavioral component of age with a clear affect on entrepreneurs decision-making.’
In previous research support is found for the relationship between family background and the development of entrepreneurial intentions. According to Stam et al (2010) persons with self-employed parents will be more committed to entrepreneurship due to both social norms and the entrepreneurial skills that they have acquired.
Networks
‘Networks are defined as patterned relationships between, individuals, groups and organizations (Dubini & Aldrich, 1991, p. 305).’ Networks are an important aspect of context and process of entrepreneurship (Low and MacMillan, 1998 cited by Ucbusaran (2001). Dubin & Aldrich (1991) have proposed two concepts in network analysis; personal networks, associated with individuals (all those persons with whom the entrepreneur has direct relations) and, extended network associated with organizations. Birley (1985) instead, is talking about formal networks like banks, accountants, lawyers etcetera, and informal networks like family, friends, colleagues, and previous employers. According to Birley (1985, p. 115) ‘the choice of networks is key to understanding the nature of the subsequent firm.’ An interesting suggestion by Birely (1985, p. 115) is that ‘when the entrepreneur is only using his informal network, he is likely to re-create the elements of previous employment, even when he may be starting in a different market.’
In several studies networks are found to be important especially during the start-up phase of the firm. DeTienne (2010, p. 2010) states that ‘in this phase entrepreneurs seek partnerships and develop working relationships, all of which make it more difficult to terminate or abandon the new venture.’ According to Lee & Tsang (2001), the existence of partners provides the firm with a large pool of resources to tap, and facilitates its development and growth. With regard to growth opportunities networks and partnerships offer, Wennberg & DeTienne (2014) argue for the importance of networks for high-growth ventures, stating that they provide important contacts and complementary skills. Aldrich, Rosen & Woodward (1987) cited by Bird (1998, p. 450) add to this that the content of networking, the activity involved and the history behind networking is associated with the creation of new ventures, and, subsequently how profitable they will be. Also, various empirical researches have found support for a positive relationship between networking and performance
(Lee & Tsang, 2001). Ostgaard & Birley (1996, p. 37) state that ‘a network provides the entrepreneur with support, contact, performance and credibility.’ However, Wennberg & DeTienne (2014) add additional research is needed in order to understand how networks influence entrepreneurial intentions.
2.4 Firm-level concepts
In entrepreneurship literature, researchers often assume that individuals engage in goal-driven behaviours focusing on maximizing returns, competitive analysis and business planning. In the next paragraph two perspectives of entrepreneurial decision-making processes will be discussed in order to understand how intentions and behaviours are translated into actions. This paragraph is followed by a novice typology of firms by Wennberg & DeTienne (2014) that is strongly linked to the individual entrepreneurs decision-making process.
Entrepreneurial decision-making
Studying entrepreneurial intentions offers a means to better explain and predict entrepreneurship (Krueger et al, 2000). DeTienne & Chandler (2010, p. 3) state that ‘the main body of entrepreneurship research has been focused on rational decision making models.’ This means that the dominant view is that entrepreneurs engage in rational goal-driven behaviours with a specific end in mind. In order to reach this end, resources are gathered and strategies are developed. The previous process is a causation process (Sarasvathy, 2001). However, Sarasvathy (2001) argues there is another entrepreneurial decision-making model: effectuation. Sarasvathy (2001) proposes that many entrepreneurs do not follow a linear goal-setting process, but rather an effectuation process when creating and developing a venture. Effectuation is the process of decision-making based on affordable loss, exploiting environmental contingencies by experimenting and remaining flexible. Sarasvathy (2001, p. 250) argues that effectuation processes are ‘more frequent and very much more useful in understanding and dealing with spheres of human action, especially when dealing with uncertainties of future phenomena.’ The view of Sarasvathy is in line with the findings of Wennberg & DeTienne (2014) who state that entrepreneurs start a firm without much thought of the eventual outcome while others maintain a fairly explicit exit strategy from the onset (DeTienne and Cardon, 2012). In the previous statement, a link is indicated between founders’ goals and the development of an exit strategy.
Alberti (2013) states that the process of entrepreneurial exit is a process that takes time and unfolds through successive phases and influences future decisions of entrepreneurs. In planning for exit it remains unclear whether entrepreneurs follow a goal-driven linear process (causation) or a reactive (effectuation) process. Only few researchers have empirically tested the concepts of causation and effectuation. For example, Chandler et al (2011) established measures in order to differentiate between entrepreneurs following causation and effectuation processes during the start-up processes.
Type of firm
Davidsson (1995) states that studying entrepreneurial intentions is providing more information than comparing entrepreneurs to a non-entrepreneur control group. Due to the reason that within a group of entrepreneurs there are great differences in the factors that have lead to decision to start a firm. Wennberg & DeTiennes (2014) suggest that firms can be categorized into different types. The three types indicated by Wennberg & DeTienne (2014) are: growth firms, lifestyle firms and income replacement firms. Wennberg & DeTienne (2014) expect exit to be an explicit goal for the entrepreneur in a growth firm. In the research by Baum & Bird (2010) the entrepreneur in a growth firm is called a high-growth entrepreneur (HGE), this type of entrepreneur entails ‘founders who own and manage their young promising ventures with a vision of significant employment and wealth creation (Baum & Bird, 2010, p. 398).’ In contrast to HGEs, lifestyle entrepreneurs are driven by non-economic motives. Wennberg & DeTienne (2014) suggest exit is rarely an explicit goal to this type of entrepreneur. According to Dewhurst & Horobin (1998 cited by Ateljevic & Doorne, 2000) lifestyle entrepreneurs are more focused on a continued ability to preserve their chosen lifestyle. Further explanation of the concept income replacement entrepreneur has been found in the study by (Folta et al, 2010; Kunkle, 2001 cited by DeTienne & Wennberg, 2014). An income replacement entrepreneur is ‘a founder who creates a venture to supplement current income, for example a college student who starts a business next to studying or a parent who starts a business in order to ensure his or her family stability (Wennberg & DeTienne, p. 6).’
Conclusion literature review
available on the topic of entrepreneurial exit intentions. The literature is fragmented and taking various scientific approaches derived from other disciplines than entrepreneurship. Therefore it is not surprising that findings from prior research cannot be brought together to a theory of entrepreneurial exit. This is mainly due to: 1) differences in analysis, 2) to many factors that are taken into account (both individual and firm-level factors), 3) differences in theoretical perspectives, 4) differences in contexts and 5) choices of dependent and independent variables (Alberti, 2013, p. 136). Following DeTienne (2010), the author states that there is need for a qualitative study exploring, challenging and building theory on the development of exit intentions as an individual-level choice of the entrepreneur.
III. RESEARCH DESIGN 3.1 Grounded theory approach
The purpose of this study is to explore the factors playing a role in the development of entrepreneurial exit intentions. The extensive literature review showed that there is little qualitative work exploring, challenging and building theory on entrepreneurial exit (DeTienne, 2010). Exit intentions as an individual-level choice of the entrepreneur is an emerging field of interest within research streams of entrepreneurial exit. Therefore, this study is explorative in nature. Taking steps towards building new theory on entrepreneurial exit is the ultimate goal of this research. The methodology that fits this type of research is grounded theory research (Boeije, 2010). Grounded theory offers a systematic approach to qualitative analysis (Glaser & Strauss, 1967). The purpose of grounded theory research is systematic generation of data, followed by step-by-step analysis. After each step of data generation, the data were transcribed and prepared for analysis, which resulted in a deep understanding of the data.
Another designation of a grounded theory approach is the method of constant comparison. Data is constantly compared to previous data with the aim to overturn the findings of the research (Mortelmans, 2009). During this process, the concepts that remain are the first steps towards new theory development. At the end of this process, all data is abstracted and related to existing knowledge. The main contribution of this research is therefore to make new connections between concepts and ideas (Mortelmans, 2009). Data is therefore placed in central position in reaching a theoretical description of the exit intentions of individual entrepreneurs (Boeije, 2010).
3.1.1 Theoretical sampling
A design that fits the grounded theory approach is a multiple case study design. Case study research is the most suitable approach for exploratory research emphasizing on context and process (Boeije, 2010). In this study, each entrepreneur represents an individual case, a selection criterion for the cases was that they were key decision makers and fulltime engaged with the firm at the moment of the interview. In order order to be able to control the context to an extent as large as possible, I choose to
carry this research out in the IT sector of the Netherlands. This sector is growing fast due to technological developments in the field of software, cloud services and big data. Fast growth and fast failures of these technological companies have been a topic of interest in entrepreneurial research for a while (Timmons & Bygrave, 1986). The theory of this research is grounded in data, instead of established in advance of the fieldwork (Boeije, 2010). The sampling technique that fits this approach is called theoretical sampling. Glaser (1978, p. 36) defines theoretical sampling as ‘the process of data collection for generating theory whereby the analyst jointly collects, codes, and analyses his data and decides which data to collect next and where to find them, in order to develop his theory as it emerges.’ As the research progresses, data generation becomes aimed at verifying the results found earlier in the process. Then, comparative cases are sought to expand, confirm or deepen the findings (Boeije, 2010). This comparative process continues until a point of saturation is reached. At this point the sampling process will be stopped (Boeije, 2010). The goal of theoretical sampling is to replicate or to extend the emergent theory by filling conceptual categories (Eisenhardt, 1989).
The sample of the eight entrepreneurs selected for this study was obtained using the principles of theoretical sampling. The emerging theory indicated large differences between entrepreneurs in terms of intentions and motivations. As a result I found two main types of entrepreneurs; entrepreneurs driven by passion and lifestyle reasons and entrepreneurs driven by financial incentives. The emerging data indicated other concepts that have theoretical relevance as well (appendix 2) as well. The sampling process was stopped when the emerging concepts reached a point of saturation.
Table 3: Characteristics of the sample. Case Firm size Person interviewed Purpose Location (The Netherlands) A Small CEO Web development &
e-commerce
Amsterdam
B Micro CEO Web development Utrecht
C Micro CEO Customer service analysis software
Amsterdam
D Small CEO E-commerce Culemborg
E Micro CEO Developer Ethernet san technology and software
Arnhem
F Small CEO Online marketing Nijmegen
G Small CEO Software development, ERP solutions & apps
Nijmegen
H Small CEO Web design & development, online marketing, financial software
Amsterdam
* Firm size: Small (<50 employees); Micro (<10 employees) (Source: MKB, 2015).
3.1.2 Semi-structured interviews
In order gain in-depth understanding of the exit intentions and context surrounding exit intentions, face-to-face semi-structured interviews were conducted. The goal of the interviews was to gain insight into the drivers of exit intentions from the perspective of the entrepreneur. However, in order to get to an in depth conversation it was important to 1) understand the context of the participant and 2) not to spend too much time on getting to know the firm at the expense of getting to know the entrepreneur. Therefore, the business activities of each case were studied in advance of the interview.
According to Corbin & Strauss (2008, p. 65) ‘asking questions is an analytic tool that opens up the line of inquiry and directs theoretical sampling.’ For this purpose, it was important to give the entrepreneurs the opportunity to share their story and provide their own perspective and views (Boeije, 2010; Cresswell, 2003). Therefore, the interviews were semi-structured with open-ended questions with a broad focus. The advantage of this technique is that it allowed for an open response in
the participants’ own words rather than a ‘yes’ or ‘no’ type answer (Longhurst, 2010). It was important to listen and not interrupt the flow of the participant because this letting them speak freely, yielded valuable information for this research. In some cases, prompts were used to elicit the views and opinions of the participants. Ideas and concepts that resulted from the foregoing analysis were checked with newly collected data in comparative cases (Boeije, 2010). The order in which the topics were discussed was not determinative for the outcome of the data analysis. At the end stage of the interview process, data collection was aimed at filling gaps in the findings. For this reason, the interview protocol (appendix 4) was in a slight degree subject to change. The interviews were all recorded and transcribed.
3.2 Data analysis
This data analysis consisted of several consecutive steps. The first step in data analysis was transcribing the interviews and going through all the data. The cases were being studied consecutively; therefore data was continuously compared to previous data (Mortelmans, 2009). Due to the cyclical, approach the data being collected became more specific along the way. The obtained data of this research was analysed using the analytical techniques of Strauss (1987) and Strauss and Corbin (1990). This technique is called coding. Coding is the process of organizing material into categories and themes before bringing meaning to those categories and themes. (Boeije, 2010).
The coding process has three elements. First, the coding process starts with a brainstorming approach (Corbin & Strauss, 2008) referred to as open coding which entails ‘assigning a code to a summarizing phrase or piece of text that explicates the meaning of the fragment (Boeije, 2010, p. 96).’ Open coding has resulted in a coding scheme that is included in the appendices (appendix 2). The open coding process produced 64 codes. Second, axial coding, has the purpose to ‘determine which elements in the research are the dominant ones and which are the less important ones (Boeije, 2010, p. 108).’ Axial coding produced 25 categories (appendix 3). Third, in the last phase of the coding process, categories and subcategories were integrated with theoretical concepts (Boeije, 2010 p. 115). In the selective coding stage (appendix 4), the categories produced in the axial coding phase were narrowed down to 7 main themes. The emerging themes were developed and compared to existing theoretical
concepts and frameworks (Eisenhardt, 1989). This process resulted in a step towards theoretical development of entrepreneurial exit intentions (Boeije, 2010).
3.2.1 Quality procedures Validity
The comparison of the findings to existing frameworks in literature is the first step taken to ensure validity in this study. Second, interviewees were provided with a transcript of their interview, allowing for input. Third, this research explicitly looked for negative cases in order to disprove earlier findings. Negative cases are cases that do not fit the pattern and enable the researcher to offer an alternative explanation (Corbin & Strauss, 2008). This approach will strengthen the research (Boeije, 2010).
IV. RESULTS
Each interview was recorded, transcribed and studied several times in order to get an in-depth understanding of the data. Subsequently, the transcriptions of the interviews were imported into Nvivo. Nvivo is a software application that helps qualitative researchers with very rich text-based information with the coding part of the analysis (QSR, 2005). Within Nvivo, codes can be listed or organized in different ways (Boeije, 2010). The software does not carry out the analysis but helps to gradually build more complex categories or groups of codes (Yin, 2013). The results of this research are presented in two parts. First to be represented is the within-case analysis, which focuses on each individual case. The second part presents the cross-case analysis; in this analysis, codes are used to find common themes throughout all collected data (Boeije, 2010).
Exit intentions are studied at the individual-level of the entrepreneur. This level of analysis is challenging in the sense that each individual has different viewpoints and opinions and is part of a different context. In the within-case analysis familiarity with the data is gained. Also, this analysis leads to a better understanding of context and the identification of significant statements in each single case (Eisenhardt, 1989). In the cross-case stage of the analysis these statements are compared to identify commonalities (Ayres et al, 2003).
4.1 Within-case analysis
The within case analysis studies exit intentions for each individual founder. The intentions greatly differ for each case, the background and context of the individual entrepreneurs are taken into account in this analysis. The following part gives a detailed description of each case, providing for understanding of the context of the individual.
Case A
Case A is a 31-year-old male. His firm was founded six years ago and is growing fast in several countries. He started his firm in college stating in his own words that he was bored and wanted something to do. He was curious to see if he could make his own money, and indeed he could. He has a partnership with two friends and reported that the partnership has motivated him to push through when things got tough. He
explicitly stated financial independence as his goal; he never wants to work again. The firm can either continue while he is gaining a substantial income from it or the firm can be sold for enough money that he never has to work another day again.
Case B
Case B is a 24-year-old male who started his entrepreneurial career when he was 16 years old. He does not consider himself an entrepreneur, because what he does now is what he has always done before. Even though he is involved with various enterprises and projects, he does not engage in any long-term planning or goal setting. Rather, he awaits for new opportunities to cross his path. If a new opportunity arises and inspires him to start a partnership or a new project, he will not think twice and start a new challenge. He also stated that he is still searching for a specialization or focus in order to obtain higher growth for his software firm. Whether he would consider an exit depends on the growth potential of his firm. He argued that at the beginning he had only been worried about what could go wrong and a possible negative exit as a consequence of failure.
Case C
Case C is a 25-year-old male. After he obtained his masters degree, two of his professors selected him to start an online marketing firm under the trade name of their own firm. The idea to become an entrepreneur seemed ‘kind of cool’ to him. His incentives were mainly financial, and he stated that he was in desperate need of an income after he had travelled for a couple of months after graduating. These financial incentives kept coming forward during the interview. He argued that he would love to obtain a position in which he would never have to work again, but adds that he would rather have a comfortable life than being listed in the quote magazine.
Case D
Case D is a 36-year-old male; he shares an interesting story in which he explains his career development path and intentions very explicitly. He was working at a chip factory as a production assistant, until the manager of another department offered him the opportunity to obtain an engineering degree. However, his manager at the time did not allow this and stated that he would only get the opportunity to develop himself
when he would think it was the right moment for him. This appeared to be a crucial moment for him in his life because afterwards he decided someone else would never dominate him again in his life. He quit his job and independently obtained two degrees; first at the university of applied sciences and afterwards a university degree. Afterwards, he started his company, which has been a great success so far. He strives for financial independence. Once he has earned enough money and never has to work again, he intends to sell his firm immediately.
Case E
Case E is a 67-year old male, who has had several firms before starting his current firm. He started his career as a scientist and musician and is now running a global software firm that experiences significant growth year after year. His wife wants him to retire within three years, but he does not want to think about retiring yet. He enjoys his work too much and he is very concerned about the welfare of his partner and employees, stating that the only condition under which he can exit would be one where the firm and its employees could continue. Despite his age, he is dreaming about moving his firm to the United States where it can grow much larger than in Europe.
Case F
Case F is a 32-year-old male, who he speaks very passionately about his firm and his future ambitions. On a personal level he wants to develop himself as a lean expert and he says he is working 24/7 and doing everything he can to make his firm a great success story, which it already is. He states that he is very good in the start-up phase but does not see himself becoming a manager. When the firm becomes too large, he no longer wishes to be in charge of the daily operations. On the contrary, he sees himself in a strategic position and is not planning to continue working up to the age of 60. He explicitly stated he will either win or lose and thinks that is the ultimate goal
of entrepreneurship.
Case G
Case G is a 34-year-old male. He was very conscious of his decision to become an entrepreneur and stated that he has always been a very entrepreneurial person since he
was a child. He began his firm right after graduation and was determined to find an investor to ensure a good start and a guaranteed level of income. He found an investor and, guided by their partnership, his firm continued to grow and flourish. The growth aspect and scaling up when possible is very important to him. Moreover, he emphasized the importance of continuity; he would love to see his son take over the firm at some point in time. At this point he did not have any intention to exit the firm, he takes to much enjoyment out of leading the firms daily operations.
Case H
Case H is a 40-year-old male who started his professional career in the army. He obtained his high school diploma after he served in the army. On the advice of family members he decided to enrol in a course of business informatics. He worked at a bank for 8 years before he decided to become an entrepreneur. He launched a very successful software company in 2007, followed by another in 2008 and another one in 2013. At the moment he is facing the tough decision of whether to expand his business or bring the firm back to only a few employees. He stated that he likes the creative part of developing and selling new products, but he does not like all the incidents and troubles that come along with having many employees and a larger firm in general.
4.2 Cross-case analysis
The cross-case analysis forced a new approach to the data through multiple lenses (Corbin & Strauss, 2008). The cross-case analysis consists of several steps. First, a brainstorming approach was taken in order to open up the data and all its possible meanings (Corbin & Strauss, 2008). This resulted in open coding, followed by axial and selective coding. During the final stage of the coding process, higher-level themes have emerged from the data. The results in this chapter present the emergent themes and identify the connections between these themes. At the end of each theme, the findings are related to exit intentions and linked to other themes through a process of constant comparison between the cases.
Both first-order data and second-order data are included in this part of the analysis. First-order data include text passages, ideas and phrases from interviewees. Second-order data are theoretical explanations for the patterns observed in words of the interviewee (Kreiner et al, 2006, p. 1037). Table 4 (p. 29) shows the selective
coding scheme. The analysis suggests that there are many themes relating to the development of entrepreneurial exit intentions; the selective analysis presents five themes that emerged from the sample in this study:
1) Attitudes 2) Motivation 3) Networks
4) Firm-development process 5) Exit intentions
These themes are the core categories of the analysis. A distinction can be made between individual-level and firm-level themes. Because of the focus on individual exit intentions, it is not surprising that most of the themes that came out of the analysis are individual-level themes. However, there is one firm-level theme that seems to relate to the development of exit intentions. This theme is the firm-development process. The themes that emerged from the data are shown in table 4. The themes consist of several sub-themes, which are subcategories that are relevant to more than one theme (Cresswell, 2003).
Table 4: Selective coding scheme Selective coding scheme
Main themes (core categories) Sub-themes
1. Attitudes Individual-level attitudes
Autonomy Personal background Firm-level attitudes Expectations - Growth - Money 2. Motivation Intrinsic Extrinsic Achievement motivation Self-efficacy 3. Networks Partnerships Networking
4. Firm-development process Firm growth
Future growth potential Planning
Decision-making
5. Exit intentions Conditions
Expectations Future dreams
The next paragraph describes the attitudes that come forward in the analysis. There are two types of attitudes, individual-level attitudes and firm-level attitudes. Within the individual-level attitudes theme, two factors emerged. First, the need for autonomy, which was stated by all cases and is expected to play a role in the development of exit intentions. Second, personal background factors, which are expected to play a role in the development of entrepreneurial intentions but not necessarily exit intentions. Furthermore, firm-level attitudes consist of expectations about growth and money; income and profit as a result of entrepreneurship.
1. Attitudes
General attitudes Autonomy
A large sub-theme within the attitude theme is autonomy and independence from others. The need for autonomy differs for each case. Some cases state the occurrence of an event that triggered them to resign from their job. Case F: “I saw room for
improvement of processes in my previous job and decided to write a report on what could be improvement and optimized. I handed the report over to my boss who, in turn, handed it over to his boss. I had a conversation with him and then I was told that I should only do work within my own tasks and not interfere with the tasks of my boss. Two weeks afterwards I resigned because I could not do it, I need to be able to think out of the box otherwise I will not be happy in my career.” For Case D a similar
event happened, resulting in the following statement: “At one point I made the choice
that I would never let myself be dominated by someone again, and this is still true.”
There is one overarching statement that emerges from all cases, the cases do not consider themselves suited to work for an employer. Case A states that he has become too stubborn and annoying in order to work for a wage and he thinks this true for any
entrepreneur over the age of 30: “They are not suited to be led by someone else.” In accord with the previous statement, Case C states he would rather work 80 hours for himself instead of 40 hours for a boss. In contrast, Case B states he would not mind working for a pay check as long as he has the freedom to choose his own projects. These results offer insights into the individual beliefs of the cases studied and show that autonomy is a strong attitude amongst the cases. The need for autonomy is part of the individual beliefs and perceptions that trigger the intention to perform an actual behavior (Krueger et al, 2000). Therefore, this factor is expected to play a role in the motivations of the entrepreneur and strengthen the entrepreneurial intentions. The mainly extrinsically motivated cases seem to have a greater need for autonomy and independence than the intrinsically motivated entrepreneurs. Therefore it is expected that the greater the need for autonomy, the greater the intention to make a profitable exit.
Personal background
Within this sub-theme, three factors were identified; age, education and family background. Firstly, age seems to play a role in two ways. On the one hand, age is sometimes part of a goal as Case F states: “It would be nice if I could take things
more slowly when I am 45” and Case D: “My goal is to retire before I am 45.” On
the other hand, age is also a reason to exit the firm as it was for Case E: “In
approximately 3 years I will leave the company; at least that is what I promised my wife. Whether that is going to happen for real I don’t know yet.” Secondly, in terms
of education, there is evidence of a link between level of education and entrepreneurship in the IT sector; every interviewee has obtained a university degree. The knowledge-intensive nature of this specific sector could offer a possible explanation for this outcome. Thirdly, there is evidence that family background plays a role in the development of entrepreneurial intentions. Several cases indicated that they grew up in an entrepreneurial environment as with Case B: “My father has
always led his own company, to me it was very natural to start my own business.”
Case E: “My father and my brother are farmers. My wife’s father was an
entrepreneur, so was her grandfather. My uncles are all gardeners, farmers and entrepreneurs actually.” Case H: “Both my parents are entrepreneurs, my father was running an IT business.” This confirms findings from earlier research stating that
