Research paper

“The influence of intrinsic and extrinsic motivation on

the stress levels of entrepreneurs”

University: Rijksuniversiteit Groningen (RUG)

Study: Pre-MSc Small Business and Entrepreneurship Course: Research Paper for Pre-MSc 2016-2017

Student: Folkert Bosma Student number: S3203956

Research paper

Pre-MSc

Introduction

Entrepreneurship is in a lot of cases associated with high levels of stress (Buttner, 1992; Rahim, 1996; Carree & Verheul, 2011; Alstete, 2008). Buttner (1992) gives a clear and understandable definition of (entrepreneurial) stress, where stress is defined as “a function of discrepancies between one’s expectations and one's ability to meet demands”. When an entrepreneur is unable to fulfill his or her role demands, stress occurs. This research paper defines the entrepreneur as the creator of new organizations (Gartner, 1988).

Factors that can influence the amount of stress an entrepreneur suffers from, differ from work demand (working hours) to detachment and from leisure time to for example the amount of employees. Schwab, Wolf and Memmert (2015) have found that when an

individual is motivated, he or she has reduced stress levels. Since entrepreneurship is often associated with high levels of stress (Buttner, 1992; Rahim, 1996; Carree & Verheul, 2011; Alstete, 2008), it would be interesting to study the effect of motivation on the stress levels of entrepreneurs.

The motivational theory, that will be used in this research, is the theory Deci (1971, 2000) composed, which makes the distinction between intrinsic and extrinsic motivation. According to Deci (1971, 2000), depending on the degree of autonomy, extrinsic motivation can be split up into integrated regulation, identified regulation, introjected regulation and external regulation. Where integrated regulation has the highest degree of autonomy and external regulation the lowest. Deci (1971, 2000) merges the four types of extrinsic

motivation, therefore, for this research paper, we also only focus on the distinction between intrinsic motivation and extrinsic motivation. Intrinsic and extrinsic motivation can be applied to entrepreneurship, since the drivers to become an entrepreneur consist of the need for

autonomy, income and wealth, challenge and recognition and status (Kolvereid, 1996; Feldman & Bolino, 2000; Carter et al., 2003; Wilson et al., 2004), which can be classified as intrinsic and extrinsic motives.

Intrinsic motivation is driven by the individual’s propensity to achieve something, the activity itself can be seen as a reward (Bhuvanaiah & Raya, 2015), such as the need for autonomy (Benzing & Chu, 2005; Tagrafa & Akin, 2009) or the desire for challenges of an entrepreneur (Swierczek & Ha, 2003; Sloka, Kantane, Avotins & Jermolajeva, 2014). Extrinsic motivation, on the other hand, is motivation which is caused by an external drive (Bhuvanaiah & Raya, 2015), such as the desire for status or the desire for wealth (Carter et al., 2003).

Carree and Verheul (2011) argue that intrinsic motivation and that of combining responsibilities lowers stress, they also mention in their results that intrinsic motives enhance satisfaction with psychological well-being and that entrepreneurs appear to be more able to cope with stress when they are intrinsically motivated.

or the profit is declining (Singh, Corner & Pavlovich, 2015), the entrepreneur experiences high levels of stress (Waldman, Ramirez, House & Puranam, 2001).

Limited amounts of research have investigated the relationship between extrinsic motivation and stress. Knoop (1994) has found no relationship between extrinsic motivation and stress in general. Research devoted to investigating the relationship between extrinsic motivation and stress of an entrepreneur has not yet been conducted.

We see that both intrinsic and extrinsic motivation lead up to a gap in the literature, when studying the relationship with entrepreneurial stress. Intrinsic motivation can both increase and decrease the stress levels of an entrepreneur, depending on the performance of the company. The relationship between extrinsic motivation and entrepreneurial stress has not yet been investigated, also leading up to a gap. An individual who is active in the

entrepreneurial life because of his or her need of autonomy and/or competence might endure another amount of stress than an entrepreneur whose reasons to be an entrepreneur are associated with the need for wealth, status and/or job security. This research aims to find out whether intrinsic and extrinsic motivation influence the amount of stress an entrepreneur experiences. Therefore the following research question has been conducted:

What is the influence of intrinsic and extrinsic motivation on the stress levels of entrepreneurs?

Theory section

To find out whether there is a relationship between the (intrinsic and extrinsic) motivation of an entrepreneur and the amount of stress the entrepreneur suffers from, the concerning variables will be defined more extensively.

The concept of entrepreneurship has been introduced by Cantillon (1697-1734) who defined it as a specialist in taking risks. Schumpeter (1883-1950) followed up to this

definition by adding the aspect of innovation to it. According to Schumpeter, an entrepreneur is viewed as an innovator, an individual who comes up with ideas and embodies those ideas into a business venture. Kirzner (1973, 1985) contributes to the definition of entrepreneurship by noting the essence of opportunity recognition. According to Kirzner, an entrepreneur is a decision maker who predicts and is alert to opportunities in a changing market environment. For this research paper the definition of Gartner (1988) is used: an entrepreneur is the creator of new organizations.

Stress

Building upon Buttner (1992)’s definition of stress in the introduction: a function of discrepancies between one’s expectations and one's ability to meet demands, important aspects of his definition include the role overload and responsibility pressure of the individual. Responsibility pressure comes from having to make difficult, risky decisions where the outcome could have a significant impact on the welfare of the firm. House et al. (1979) support this definition arguing that responsibility pressure leads to high levels of stress.

Entrepreneurial stress

cent work more than 65 hours a week. This indicates the time entrepreneurship demands, which causes high levels of stress (Kodz, Lain, Sheppard, Davis, Bates & Cummings, 2001; Shagvaliyeva & Yazdanifard, 2014).

Motivation in the case of entrepreneurs

In order to understand the effect of motivation on stress of entrepreneurs, we have to be aware of what the intrinsic and extrinsic motivation means in the case of an entrepreneur. This research paper views intrinsic motivation as the desire for autonomy, passion and the challenges an individual (entrepreneur) experiences from his or her work processes. According to the Self-determination theory (SDT), which builds upon Deci’s (1971, 2000) motivational theory, the intrinsic motivation of an individual can be maintained by fulfilling the need for autonomy - the experience of behavior as volitional and reflectively

self-endorsed, and the need for competence - being able to meet challenging demands (Niemiec & Ryan, 2009). Also, two (intrinsic) drivers to start a business venture are the need for

autonomy (Benzing & Chu, 2005; Tagrafa & Akin, 2009) and the need for competence (Swierczek & Ha, 2003; Sloka, et al., 2014).

Extrinsic motivation on the other hand is an individual’s motive to do something because it leads to a separable outcome (Ryan & Deci, 2000). An individual can engage into the entrepreneurial life because of extrinsic reasons, such as the desire for wealth, status and/or job security (Vansteenkiste, Lens & Deci, 2006; Carter et al., 2003).

Intrinsic motivation and entrepreneurial stress

two drivers to become an entrepreneur are associated with aspects of intrinsic motivation, the need for autonomy and competence (Benzing & Chu, 2005; Tagrafa & Akin, 2009; Swierczek & Ha, 2003; Sloka et al., 2014). On top of that, when an individual is not able to fulfill the need for autonomy, stress occurs (Murphy, 1995). These findings lead to the assumption that intrinsic motivation is negatively associated with stress.

On the other hand, being intrinsically motivated for starting a business could lead to an entrepreneur being too attached to his or her (failing/declining) enterprise. In this case, an entrepreneur could get caught up in trying to keep up with its business, even though it is failing/declining. Resulting in the inability of exiting the troubled venture in an environmental dynamism (Singh, Corner & Pavlovich, 2015), which causes stress (Waldman et al., 2001). Therefore the first hypothesis will research the relationship between intrinsic motivation and entrepreneurial stress, where we assume that intrinsic motivation is reducing the amount of stress an entrepreneur experiences.

Hypothesis 1: Intrinsic motivation reduces the amount of stress an entrepreneur experiences.

Extrinsic motivation and entrepreneurial stress

The amount of literature studying the effects of extrinsic motivation on stress are limited. Knoop (1994) has found no relationship between extrinsic motivation and the effects on stress levels. Because this research studied the relationship of extrinsic motivation and stress in general and not for entrepreneurs, we find a gap in the literature, where the

Hypothesis 2: Extrinsic motivation has a significant influence on the stress levels of entrepreneurs.

Methods

Sample description

For this research 26 female and 74 male entrepreneurs, with the average age of 42 and of which 95% are located in the Netherlands, participated (N = 100). The participants were selected on the criterium of being the individual who has founded the organization or is currently managing the organization. 20 students were collaborating, in order to reach the amount of 100 participants for the research, where everybody approached participants from their personal network. To question the participants, an online survey has been set up. Participation to the questionnaire could be done by receiving a personalized e-mail or by using the anonymous link, redirecting the participant to the survey.

Measures

Motivation: the independent variables used are intrinsic motivation and extrinsic

motivation. To measure (intrinsic and extrinsic) motivation, the work extrinsic and intrinsic motivation scale (WEIMS) is used, which is an 18-item measure of work motivation

theoretically grounded in Deci & Ryan’s (2000) self-determination theory (Tremblay et. al, 2009). The WEIMS scale also distinguishes extrinsic motivation into four different types. As already been mentioned in the introduction, these four types will be merged into the

(Tremblay et. al, 2009). Analyzing the Cronbach’s alpha for the WEIMS measure in this study, using SPSS, results in a value of .767, also suggesting adequate reliability.

Stress: the dependent variable for this research is the amount of stress. In order

measure stress, Cohen’s (1983) perceived stress scale (PSS) is used. The PSS is used for examining the role of nonspecific appraised stress in the etiology of disease and behavioural disorders and as an outcome measure of experienced levels of stress (Cohen et. al, 1983). The PSS varies in a 4-item, 10-item and a 14-item questionnaire. Of these versions, the 14-item questionnaire is used (PSS-14) which consists of 7 positively and 7 negatively framed items rated on a 5-point Likert scale (Lee, 2012). In order to have an accurate score of the amount of stress, the scores of the 7 negative items had to be reversed. The Cronbach’s alpha of the PSS-14 was >.70 in 11 of the 12 studies in which this version was evaluated (Lee, 2012). Analyzing the Cronbach’s alpha for the PSS in SPSS, results in a value of .697, which can be considered as reliable and internally consistent.

Analyses

Results

The following section will reveal the results of the conducted research, where two hypotheses have been tested in order to investigate the effect of intrinsic motivation and extrinsic motivation on the amount of stress an entrepreneur experiences. In order to test these effects the following two hypotheses have been conducted.

Hypothesis 1: Intrinsic motivation reduces the amount of stress an entrepreneur experiences. Hypothesis 2: Extrinsic motivation has a significant influence on the stress levels of

entrepreneurs.

Descriptive statistics

Regression analyses of stress on intrinsic- and extrinsic motivation

In order to test the hypothesis further, linear regression is applied. As stated in the theoretical framework, the expectation is that both intrinsic motivation and extrinsic motivation reduce the amount of stress. We expect that intrinsic motivation is contributing more to the reduction of stress than extrinsic motivation. To test these hypotheses, stress is regressed on both independent variables, intrinsic motivation and extrinsic motivation. The table below illustrates the results of the linear regression, representing as well the model summary as the linear regression itself.

The linear regression is used to test the influence of intrinsic and extrinsic motivation on the dependent variable, stress. As table 2 shows, when we take a look at the model

summary, the linear regression is significant (P < .05). What is also worth mentioning, is that the R2 of the regression is .067, meaning that only 6,7% of the independent variables

(intrinsic motivation and extrinsic motivation) can explain the difference in the dependent variable (stress).

motivation, as expected, reduces the amount of stress of an entrepreneur. Therefore, based on the results from the linear regression, the first hypothesis is supported.

No significant relationship is found between the independent variable extrinsic motivation and stress (p > .05). Therefore, the second hypothesis is rejected.

Discussion

In the literature review we found that intrinsic motivation can have both a positive and a negative effect on the amount of stress an individual (entrepreneur) experiences. Where intrinsic motivation can have a negative effect when the enterprise is failing or has declining profits (Singh et al., 2015). This research has shown a correlation between intrinsic

motivation and stress. Although we see a correlation between these two variables, it could be that the correlation goes the other direction than expected, that stress influences the amount of intrinsic motivation of an entrepreneur, instead of intrinsic motivation lowering the levels of stress (as expected in the theoretical section).

can negatively influence intrinsic motivation (Deci, Koestner & Ryan, 1999) and therefore, when the intrinsic motivation is lowered, the levels of stress are increased.

Limitations

One source of weakness in this study which could have affected the significance level of the current study is the sample size of the study (N = 100). Compared to other researches this sample size was relatively small, resulting in less power, making it less likely to find significant effects. An additional uncontrolled factor is the possibility that the respondents became less motivated as the survey continued. The average length of the survey was 30-45 minutes, which is in comparison to other surveys, relatively long. One could assume that unmotivated respondents would quit the survey earlier than motivated respondents or bungle the survey, possibly affecting the outcomes. Another limitation of this study might be

concerning the selection of the participants. Most of the participants were selected from the researchers’ environment, resulting in a nonprobability sampling, which does not involve random selection of the respondents. Lastly, building on the previous limitation, we could assume that none of the (homogeneous) participants have a failing/declining business, and therefore affecting the outcomes of the relationship between intrinsic motivation and stress.

Practical implications

intrinsically motivated, by, for example, setting goals and trying to achieve those goals by carrying out entrepreneurial activities.

As an entrepreneur, in order to reduce the perceived stress, it would be helpful to focus more on the achievement of intrinsic motivation. And therefore get yourself intrinsically motivated. Try to challenge yourself during your work by setting goals and focus on the satisfaction of your intrinsic needs, rather than to focus on extrinsic motives.

Future studies

This research has shown a correlation, possibly suggesting that intrinsic motivation reduces the perceived stress of an entrepreneur. Although we assume that intrinsic motivation reduces the perceived stress, we do not know for sure in what direction this correlation goes. It could be that low levels of stress increase the amount of intrinsic motivation of an

individual, or that another moderator (e.g. performance) influences the relationship. Future studies can do an experimental design to establish causalities, where they can make clear in what way this correlation actually goes.

The significance level of the relationship between extrinsic motivation and stress (p = .079) could lead to a reason for future studies to further study the effects of extrinsic

motivation on the amount of stress of an entrepreneur. Since this study found a nearly significant effect (despite the limitations) of extrinsic motivation on stress levels of

Conclusion

This research has been trying to find out the effects of intrinsic motivation and

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