Back in 1995, Inc. 500 Magazine reported that the owners of America’s 500 fastest growing private companies kept their wage jobs for an average of four months after the birth of their new venture. Using the words of Folta and colleagues, “hybrid entrepreneurship” is still today a reality, as many entrepreneurs initiate their enterprises while simultaneously working for wages. In the U.K., the number of individuals who divide their working time between self-employment and employment is larger than the number of “pure” entrepreneurs.
We propose how individuals should allocate their working time between the wage job and the new enterprise, and contrast these propositions with how individuals allocate, de facto, their time between these two activities. We use the relationship between the new enterprise’s risk and return, and the relationship between the returns from both working activities, to derive the utility-maximizing number of hours to allocate to the enterprise and its sensitivity. The resulting prescriptions are then contrasted with behavioral hypotheses based on regulatory focus theory.
Burmeister-Lamp, Katrin; Lévesque, Moren; and Schade, Christian
"COULD IT BE TIME TO LEAVE YOUR SALARIED JOB? AN EXPERIMENTAL ANALYSIS OF ENTREPRENEUR’S TIME ALLOCATION UNDER RISK-RETURN TRADEOFFS (INTERACTIVE PAPER),"
Frontiers of Entrepreneurship Research: Vol. 30
, Article 13.
Available at: http://digitalknowledge.babson.edu/fer/vol30/iss4/13