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The power of motivation-goal fit in predicting entrepreneurial persistence.

"It's not that I'm so smart. It's just that I stay with problems longer."--Albert Einstein

Many people dream of starting their own businesses, but few actually take action and fulfil their dreams, and even fewer persist long-term (Timmons, 1992; Wu, 2007). It has been said that a key factor in such a large number of entrepreneurial failures is lack of persistence (Holland & Shepherd, 2013). The entrepreneurial path is often full of unpredictability and uncertainties (Burke & Miller, 1999). Therefore, to start a business requires entrepreneurs to be willing to take on various types of risks (Lumpkin & Dess, 1996). When faced with difficulties and uncertainties, entrepreneurs need to be persistent in order to be successful (Hatch & Zweig, 2000). Walt Disney's persistence despite two bankruptcies led to the creation of one of the greatest companies in the world (Burnes, Viets, & Butler, 2002). We note that in many scholarly works and anecdotal stories persistence has been pointed to as an entrepreneurial success factor. However, very few empirical studies have been conducted in which researchers have made inquiries into this aspect of entrepreneurship. Among the few exceptions are studies by Cardon, Gregoire, Stevens, and Patel (2013) and Holland and Shepherd (2013). Our aim in the current study was to fill this research gap by examining how the fit between organizational goals and need for achievement can influence entrepreneurial persistence.

Literature Review

Persistence

Persistence can be defined in various ways. It can mean sticking to one's course while facing risks and difficulties. It can also be described as the behavior of staying in a specific direction over a certain time (Kanter, 1990), or a propensity to undertake certain activities in the face of adverse situations (Bradley-Geist & Landis, 2012; Markman, Baron, & Balkin, 2005).

We argued that persistence is relevant to nascent entrepreneurs because it can be regarded as a behavior over time. Entrepreneurship is a process that involves spending time so as to explore and exploit attractive opportunities (Shane & Venkataraman, 2000). According to Carter, Gartner, and Reynolds (1996), during this complicated process, an entrepreneur needs to acquire finance, buy supplies, rent/build an office, form a founding team, and engage in many other activities associated with the venture. Even though it may be difficult to identify commonalities shared by all nascent entrepreneurs, Carter et al. contended that the entrepreneurship dream is a dynamic process that takes time to fulfil. Thus, any study of entrepreneurial persistence may need a longitudinal approach (Markman et al., 2005).

Persistence and Motivation-Organizational Goal Fit

In attraction-selection-attrition (ASA) theory it is proposed that individuals do not simply "select themselves into and out of real organizations" (Schneider, 1987, p. 440). They choose to work for an institution that they find attractive in regard to personal characteristics, culture, and values (attraction-selection; Schneider, 2001). Once employees have chosen the organization that they believe is a good match with their goals and values, they become committed to the company, remain very satisfied, and consequently intend to stay longer (attrition; Schneider, 1987).

The ASA model has been extensively used for research on personnel recruitment and training (Schneider, Goldstein, & Smith, 1995). However, we argued that the first stage of venture creation, when nascent entrepreneurs explore and exploit their ideas, is also a suitable setting for such a model.

Entrepreneurs can be viewed as individuals who have to decide on a particular kind of organization to found (Joardar, Wu, & Chen, 2014). In ASA theory it is emphasized that founders come first (Schneider et al., 1995). It is the values, motivations, goals, and personalities of entrepreneurs that shape the organizational cultures, processes, policy, and structures (Schneider, 2001). Because founders of an organization are oftentimes the organization's leaders and its most powerful actors (Andrews, 1987), Lau, Shaffer, and Au (2007) observed that "entrepreneurial firms are a natural extension of entrepreneurs" (p. 126).

Nascent entrepreneurs are potential founders. They represent a group of people who desire to achieve and to be successful. Typically, they choose one idea among several to explore and exploit. If the idea is a good fit, they stay the course and create their own businesses (De Cooman et al., 2009). Gimeno, Folta, Cooper, and Woo (1997) regarded entrepreneurs as choosing between venturing and alternative employment. In this regard, entrepreneurs are comparable with people who search for employment in other organizations. Instead of choosing the right company to work for, nascent entrepreneurs choose to work for themselves, and find the idea that fits to pursue. Schneider et al. (1995) recommended that researchers should study the initial period of organizing. Jansen and Kristof-Brown (2006) also suggested examining fit factors over different stages of the recruitment and training cycle. Specifically, they indicated that person-organization fit may be a powerful predictor of entrepreneurial persistence at the hiring stage.

However, in previous research on ASA both theoretical and methodological difficulties have been encountered. For example, person and organization contrast with each other on two levels of analysis. It is easy to research personal characteristics. However, organizational characteristics reference the homogeneity of personality or characteristics. Hence, in analysis at the organization level it is hard to measure the fit between a person's characteristics as against that of the organization. Investigating fit among nascent entrepreneurs may alleviate the difficulty if not completely resolve it. Schneider et al. (1995) suggested that "the ideal research design would be one in which organizations ... are about to be founded, or newly founded organizations" (p. 762). Venture creation by nascent entrepreneurs poses an ideal setting to test ASA theory whereby future entrepreneurs can engage in founding new businesses.

The most important concept in the ASA framework is that of organizational goals, especially the goals of the founders, because these are the guide for organizations (Nielsen & Nielsen, 2010; Schneider, 1987; Schneider et al., 1995). Entrepreneurs differ in their goals, which leads them to found different kinds of organizations. Some may pursue opportunities in high-tech industries whereas others may focus on providing superb services (Schein, 1993). However, the framework focus is not solely on the importance of organizational goals, but also on the importance of person characteristics and organization-goal fit. Schneider stated that "it is goals to which people are attracted, it is goals with which they interact, and if they don't fit, they leave" (p. 443). Hence, we argued it is not the organizational goals per se, but the congruence between the person and the organizational goals that determines to which organizations people are attracted and in which organizations they thereafter retain their position over a long period of time.

We argued that entrepreneurs who set high organizational goals for themselves must possess a strong need for achievement. Researchers have shown that entrepreneurs are a group of rather optimistic individuals (Chen, Liao, Redd, & Wu, 2013). For instance, they often overevaluate their chances of success (Cooper, Woo, & Dunkelberg, 1988). Because entrepreneurs are often faced with adversities while pursuing their opportunities, entrepreneurial optimism means that it can take a long time before entrepreneurs come to the realization that their expectations may be too rosy and, hence, unrealistic and unattainable. We argued that higher goals that are set by entrepreneurs with weak desire may have been inflated and, hence, be empty promises. Such a misfit can often mean weak commitment that leads to less entrepreneurial endeavor. Hence, when adversity emerges, nascent entrepreneurs with a misfit of high goals and weak motivation simply quit.

Based on the above discussion, we proposed the following hypothesis:

Hypothesis 1: The fit between an entrepreneur's need for achievement and his/ her organizational goals (such as a strong need for achievement with high goals or a weak need for achievement with low goals) will be positively related to the level of entrepreneurial persistence.

Method

Data Collection

We collected data from nascent entrepreneurs working in a state in midwestern USA, who were attending seminars offered by a small group of nonprofit organizations. These seminars were designed to teach nascent entrepreneurs how to successfully start and operate a business (Minniti & Bygrave, 1999). As the study was a longitudinal design, we collected our data in two phases. First, we contacted the seminar organizers and asked for their permission to visit the seminar participants. We then distributed our survey forms to the attendees at seminar workshops. We received 230 useable responses.

In the first survey, we had asked seminar participants to provide either a postal address or an email account so that we could send a second survey. Three months after the distribution of the first survey we sent out the second survey and collected more data. Our final sample contained 90 useable returned survey forms (40% return rate) that we received either through email or by post.

Dependent Variable

Persistence. In the second survey we asked our participants if they were still exploiting the business ideas that they had selected three months earlier. We assigned 1 if the answer was yes, and otherwise, 0.

Independent Variable

Misfit. The independent variable was misfit and we calculated the degree of misfit by the following steps. First, four survey items (e.g., "I need to meet the challenge.") were used to measure the construct of need for achievement (labeled achievement). The respondents were asked to what degree they would agree with the four statements, rated on a 5-point Likert scale ranging from 1 = strongly disagree to 5 = strongly agree. Second, we asked the respondents to estimate their sales at the end of their first year of operation and after the fifth year. Then we calculated organizational goals as the ratio of five-year sales over one-year sales (labeled growthfin). Third, we computed the z scores for need for achievement and organization goals, respectively, using the following formula.

z = (X - M)/SD

Fourth, we calculated the differences between the two z scores, that is, [z.sub.achievement] - [z.sub.growthfin]. Fifth, we took the absolute value of the score we obtained. A larger value for this measure was taken to mean a greater degree of mismatch (misfit).

Control Variables

Control variables examined were age, gender, status of parents as entrepreneurs or not (labeled parentbus), education level (education), marital status, having children or not (children), previously employed (employed), and previous entrepreneurial experience (ownbus). We controlled the above variables because they have been identified as having an impact on entrepreneurial behavior (Brodzinski, Scherer, & Wiebe, 1990). We also controlled for motivation and organizational goals.

Results

In Table 1 the logistic regression analysis is shown with persistence as the dependent variable. How control variables influenced entrepreneurial persistence is presented in Model 1. Of all the variables, only previous experience of business ownership and need for achievement exhibited a weak but positive effect on persistence. In Model 2 the results for testing our hypothesis are shown. Our hypothesis received strong support. Fit led to nascent entrepreneurs persevering longer with the enterprise they were working to establish. The overall statistics also supported our hypothesis. Entering the fit variable, in Model 3 the classification accuracy increased from 72% to 78%.

Discussion

Entrepreneurial persistence is important to entrepreneurial success and, to a larger degree, to society (Timmons, 1992; Wu, 2007). However, there have been very few scholarly empirical studies of this phenomenon (Holland & Shepherd, 2013). We took a small step on the path to comprehending the factors that lead to entrepreneurial persistence. Our study is unique in several ways. First, we conducted a longitudinal study, an approach that may potentially mitigate retrospective biases that have marred earlier studies (Short, Ketchen, Combs, & Ireland, 2010). Second, we showed fit is a more powerful predictor in entrepreneurial behavior than is examining the factors of organizational goals and need for achievement separately.

Our contention was that congruence between motivation and a reference point (organizational goals) leads to entrepreneurial action. Our data analysis lends supports to our motivation-goal-fit theory, that is, that fit has a positive relationship with entrepreneurial persistence.

Limitations and Implications

Our research is limited in several ways. First, that the respondents in our study were staying with the same business idea that they had selected three months earlier may not indicate persistence. It is only a proxy measurement. Future researchers could study the actual actions taken by entrepreneurs when they are experiencing real obstacles and hardships. That may be a better indicator of entrepreneurial persistence. Second, the three-month gap between the two stages of data collection may be too short. Future researchers may examine persistence over a longer period.

Our results may have practical implications. We advocate that entrepreneurs should learn to align their motivation with their goals. We also recommend that venture capitalists do not fund those entrepreneurs who have a mismatch between their motivation and their organizational goals.

http://dx.doi.org/10.2224/sbp.2014.42.8.1345

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HAIFENG ZHAO

Tongji University

SIBIN WU

University of Texas-Pan American

Haifeng Zhao, Department of Management Science and Engineering, Tongji University; Sibin Wu, College of Business Administration, University of Texas-Pan American.

This research was supported by the National Natural Science Foundation of China major program (71090404/71090400) and general program (71272045, 71101107).

Correspondence concerning this article should be addressed to: Sibin Wu, College of Business Administration, University of Texas-Pan American, 1201 W. University Drive, Edinburg, TX 78541, USA. Email: sibinwu@utpa.edu
Table 1. Results of Logistic Regression on Persistence of
Entrepreneurs

Variables                      Coefficients

                             Model 1      Model 2

Education                    -.12         -.20
Age                          -.05         -.06
Gender                        .32          .23
Marital status                .20          .04
Ownbus                        .88 *        .77 *
Parentbus                    -.51         -.36
Employed                      .15         -.02
Children                      .40         -.47
Achievement                   .09+         .14+
Growthfin                     .01          .04
Misfit                                    -.20 *

Chi square/df                17.3/10+     23.0/11*
Classification (% correct)   72           78

Note. ownbus = previous entrepreneurial experience, parentbus = parent
is or is not an entrepreneur, employed = previously employed,
achievement = need for achievement, growthfin = organizational goals
as a ratio of five-year sales to one-year sales. n = 90, + p < .10,
* p < .05.
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Author:Zhao, Haifeng; Wu, Sibin
Publication:Social Behavior and Personality: An International Journal
Article Type:Report
Date:Sep 1, 2014
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