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Do Entrepreneurial Goals Matter? Resource Allocation in New Owner-Managed Firms

Author

Listed:
  • William Dunkelberg

    (Department of Economics, Temple University)

  • Carmen Moore

    (Department of Business Administration, Morgan State University)

  • Jonathan Scott

    (Department of Finance, Temple University)

  • William Stull

    (Department of Economics, Temple University)

Abstract

This paper focuses on how entrepreneurial goals affect the resource allocation of new firm owners. It connects research in psychology and management that examines the core motivations of entrepreneurs with research in economics that models the behavior of owner-managers as utility-maximizing rather than profit-maximizing. We hypothesize that new owners with nonmonetary goals allocate their resources differently than do owners with monetary goals and that the differences are meaningful in size. To test these hypotheses, we estimate firm level equations based on economic theories of factor demand that show how input quantities depend on owner goals. Data come from a national survey of new U.S. business owners. We find owner goals have both a statistically and substantively significant effect on resource allocation for new firms. Owners with nonmonetary goals put in more of their own and family hours rather than hiring outside employees. Implications for research and policy are discussed.

Suggested Citation

  • William Dunkelberg & Carmen Moore & Jonathan Scott & William Stull, 2012. "Do Entrepreneurial Goals Matter? Resource Allocation in New Owner-Managed Firms," DETU Working Papers 1203, Department of Economics, Temple University.
    • Handle: RePEc:tem:wpaper:1203
    as

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    File URL: http://www.cla.temple.edu/RePEc/documents/detu_2012_03.pdf
    File Function: First version, 2012
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Entrepreneurs
      by UDADISI in UDADISI on 2012-10-27 18:02:00

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    Cited by:

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    More about this item

    Keywords

    Entrepreneurship; Small Business; New Firms; Owner Goals; Resource Allocation;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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