Frontiers of Entrepreneurship Research
1996 Edition
SUMMARIES

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RELUCTANT ENTREPRENEURS: FACTORS OF PARTICIPATION, SATISFACTION, AND SUCCESS


Craig S. Galbraith
Donald R. Latham

Cameron School of Business
University of North Carolina
Wilmington, NC 28043

Telephone/Fax: (910) 395-3424 / (910) 395-3815

Principal Topics

An important, yet often overlooked result of the current corporate and public sector downsizing craze is the rapidly increasing pool of potential entrepreneurs. This new breed of entrepreneur hails from a variety of professional, educational, and industrial backgrounds. They include the recently discharged aerospace engineer at Northrop Corporation, the middle manager whose research project at AT&T was just de-funded, and the Annapolis graduate who has been asked to take early retirement from his now shortened Navy career. While most individuals in these situations will likely find employment elsewhere, many others will elect to join the entrepreneurial ranks, not necessarily out of any entrepreneurial zeal but rather out of perceived necessity. These are the reluctant entrepreneurs of modern America, and the subject of this study. In this paper we identify fundamental differences between the traditional notion of the entrepreneur and the modern reluctant entrepreneur.

Method

In this empirical study we examined the important differences and similarities of three groups: a) a sample of thirty reluctant entrepreneurs, individuals who have lost their employment with a larger organization and have recently established an entrepreneurial enterprise, b) a sample of thirty individuals who have lost their employment with a larger organization and have found alternate employment with another organization, and c) a sample of thirty traditional entrepreneurs, individuals who have voluntarily established an entrepreneurial enterprise.

In particular, we explored three broad research questions. First, what are the differences and similarities in personal characteristics between the three groups? To examine this research question the survey instrument utilized questions examining a variety of personal characteristics discussed in the entrepreneurship literature including risk taking, need for achievement, control, personal value orientation, and innovativeness. Second, what, if any, are the differences in satisfaction levels between the three groups? A series of questions addressing the issue of personal and professional satisfaction, and perception of future satisfaction was developed to examine the second research question. And third, what are the differences in entrepreneurial strategies, and success of those entrepreneurial strategies? To examine this research question, survey items which examine type of entrepreneurial activity, including entry strategies and competitive strategies was developed.

Major Findings

Based on preliminary research it appears that the reluctant entrepreneur shares certain characteristics with the traditional entrepreneur of the literature, but they also share other important characteristics with the corporate manager. In essence, we found that the reluctant entrepreneur is actually a hybrid personality, retaining certain characteristics of their past corporate life but also enjoying some characteristics of the traditional entrepreneur. In particular, it appears that the reluctant entrepreneur shares similar risk taking and higher need for achievement as the traditional entrepreneur sub-sample. However, reluctant entrepreneurs appear to have similar levels of need for independence and innovativeness as the corporate manager sub-sample. Need for control appeared to vary depending on the length of time involved with their entrepreneurial activity.

No significant differences were noted between the three sub-samples on the various satisfaction indices, although there was a significant positive correlation between satisfaction and perception of success for the reluctant entrepreneur. In addition, a significant strategy for the reluctant entrepreneur appeared to be franchising, with the reluctant entrepreneur establishing, or desiring to establish, franchise operations significantly more often than traditional entrepreneurs.

Implications

The reluctant entrepreneur92s higher need for achievement may stem from the desire to prove to himself, and others, that they can still make it in the business world. However, it is important to note that with respect to the need for independence and innovativeness the reluctant entrepreneur is actually closer to his corporate counterparts. This may explain the greater emphasis on franchising strategies. The final characteristic, the need for control, appears to evolve over time. The reluctant entrepreneur, still shell-shocked from recent personal and professional downturns, often longs for the warmth of the organizational family, the team. One of the mistakes we often see with the reluctant entrepreneur is the over emphasis on team management and delegation, the hallmarks of modern corporate management techniques. In small business, the entrepreneur must take charge--this is difficult at first for many reluctant entrepreneurs. Over time, however, the reluctant entrepreneur may become more comfortable with his or her new role as sole decision maker. Regardless, it is important that reluctant entrepreneurs understand the hybrid nature of their own personas before embarking on new ventures.

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