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Expectancy theory and nascent entrepreneurship

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Abstract

Motivation is an important factor that distinguishes those nascent entrepreneurs who make progress towards an operating venture from those who do not. Based on Vroom’s (Work and motivation, 1964) expectancy theory, we predict that startup-specific instrumentality, valence and expectancy are key components of entrepreneurial motivation and closely related to those intentions, efforts, and behaviors that will eventually lead to operating a firm. Hypotheses are tested using data from the first Panel Study of Entrepreneurial Dynamics I. Our results show that valence is a multidimensional construct, and that various types of valence are related to different intent and behavioral outcomes. All types of valence, instrumentality, and expectancy are related to a nascent entrepreneur’s intended effort level in a cross-section of data, and over time, intended effort is positively related to operative firm status. Overall, our results suggest that expectancy theory holds promise for research on nascent entrepreneurs’ motivation.

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Notes

  1. In addition to answering “yes” to the question “Are you, alone or with others, now trying to start a new business?”, an individual only qualifies as a nascent entrepreneur if they expect to be owners or part-owners of the new firm, have been active in trying to start the new firm in the past 12 months, and are still in the startup or gestation phase of an independent firm.

  2. The PSED dataset and related codebooks are publicly available on the consortium’s website http://www.psed.isr.umich.edu/main.php.

  3. Note that this item was originally developed as a measure for expectancy (Gatewood 2004), but has later also been used as a scale item in a scale measuring entrepreneurial self-efficacy (Cassar and Friedman 2009; Hechavarria et al. 2011, in this issue). Since the theoretical constructs of expectancy and self-efficacy have similarities (Bandura 1977; Steel and Konig 2006), such measurement overlap is justifiable.

  4. CFI value is based on comparison between the hypothesized model and a null model. CFI varies between 0 and 1. The current value of .902 is acceptable (Kline 1998).

  5. RMSEA value up to .08 indicates an acceptable fit (Browne and Cudeck 1993).

  6. CMIN is the minimum value of the discrepancy. CMIN divided by its degrees of freedom (df) is suggested as a measure of fit, and the closer it is to 1, the better the fit. According to Marsh and Hocevar (1985), the ratio between 2 and 5 indicates a reasonable fit.

  7. The PSED protocol includes 26 startup activities, out of which we chose 14 based on previous research. Some of the 26 activities included in PSED are only completed by a small number of the respondents, which may raise questions about the generalizability of these actions across startups. The 14 actions we chose are all widely reported.

  8. However, in tests of Hypotheses 5a–5d, we picked the dependent variables (operational business status) from later waves of PSED, adding a longitudinal aspect to the research design.

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Authors and Affiliations

  1. Department of Managerial Studies, The University of Illinois at Chicago, MC 243, University Hall, 601 S. Morgan St., Chicago, IL, 60607, USA

    Maija Renko

  2. Department of Management and International Business, Florida International University, 11200 SW 8th Street, Miami, FL, 33199, USA

    K. Galen Kroeck

  3. Walker Center for Global Entrepreneurship, Thunderbird School of Global Management, 1 Global Place, Voris Bldg B 115, Glendale, AZ, 85306, USA

    Amanda Bullough

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  1. Maija Renko
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Correspondence to Maija Renko.

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Renko, M., Kroeck, K.G. & Bullough, A. Expectancy theory and nascent entrepreneurship. Small Bus Econ 39, 667–684 (2012). https://doi.org/10.1007/s11187-011-9354-3

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