How Do Constraints Affect Early-stage Entrepreneurial Activity? A Regulatory Focus Perspective

Abstract

Academics and practitioners tend to accept that people found new ventures only primarily for economic reasons, but is that always true? Emerging work in the field suggests other non-economic key motives that may drive entrepreneurial decisions. My dissertation explores one such critical non-economic motive, namely, founders’ feelings of constraint. A puzzle addressed in this research is whether constraints help or hinder entrepreneurial behaviors. The literature is unclear, with evidence supporting both positive and negative views. To solve this theoretical puzzle, this dissertation offers three separate empirical papers, each examining the role of constraints in different stages of a typical entrepreneurial process (i.e., idea generation, idea selection, and resource acquisition). In doing so, it developed and validated three theoretically meaningful original measures (i.e., chronic and acute constraints, and perceived constraint). Moreover, this research looked at and tested the moderating effects of one’s regulatory focus on the relationship between constraints and the entrepreneurial process. Using MTurk panels, three papers found support for the main hypotheses. As such, this dissertation makes several significant contributions to the study of entrepreneurship. While many previous studies limit their analyses to a single stage of the entrepreneurial journey, this work shows how a phenomenon (i.e., constraints) affects entrepreneurial decision-making in different stages of venture creation. Such a multi-stage perspective enhances our understanding of constraints and their roles in the entrepreneurial process. Second, this research helps us realize the conditions under which, even after facing diverse constraints, some entrepreneurs successfully meet various challenges associated with new venture creation. Third, to the best of my knowledge, this is the first empirical testing of the notion that a founder’s ability to exhibit both promotion- and prevention-oriented behaviors are instrumental for entrepreneurial success.