Why do Entrepreneurs Found Startup and How DiverseExperience and Multiple Motivations
Influence Success? The Case of Harvard Students
Being an entrepreneur is not easy, and may not even be financially worthwhile (Hamilton, 2000;
Moskowitz & Vissing-Jorgensen, 2002). Why do people choose to start a new venture anyway? Scholars
havereceived widely-differing answers, includingautonomy, achievement, making money, desire to
exploit a market opportunity, desire to innovate,and make use of skills that have been acquired (Cromie,
1987). Research in both the psychology and business literatures has documented that motivation
regarding a specific assignment varies as a function of several factors in the work environment, including
evaluation expectation, actual performance feedback, expected reward, autonomy, and the nature of the
work itself (e.g., Deci & Ryan, 1985).Overall, theory and empirical findings suggested that human
motivation should be categorized into two distinct types: intrinsic motivation, which arises from the
intrinsic value of the work for the individual, and extrinsic motivation, which arises from the desire to
obtain outcomes that are apart from the assignment itself(Ryan & Deci, 2000).
High levels of extrinsic motivation toward a specific goal will lead to a decline in intrinsic motivation
(e.g., Deci & Ryan, 1985). Following this tradeoff approach, some entrepreneurial researchersargue that
an entrepreneur is primarily motivated by external rewards such as money and power (Carsrud &
Brännback, 2011). Other entrepreneurial-tradeoff researchers claim that entrepreneurs’ “non-economic
(intrinsic) motives are very important for them” (Cromie, 1987, p.259). Other scholarsresist the tradeoff
approach, instead claiming that entrepreneurial activity requires a combination of intrinsic motivation and
extrinsic motivation but in a more coincident way (e.g., Amabile, 1997).The two types of motivation
often co-occur, heightening the need to understand how they might combine and interact. Thus the first
aim of this research is to delve into a range of entrepreneurial motivations and the ways in which they
may interact with each other.
Entrepreneurial motivations are extremely important to understand at the university environment
where students take founding role. Students are often young individuals, eager to learn, look for fun
experience, ready to take risk and work hard, and usually have low level of commitments; which
1
altogether make them better suited for entrepreneurial activity(Boh, De-Haan, & Strom, 2012). Given the
emphasis within the academic environment on knowledge creation and innovation,the university
environment can provide a strong test for entrepreneurial activity.
Indeed, in recent years, there has been noticeable growth in the efforts of universities and other
educational institutions to incubate student startups (Boh, et al., 2012).Most of these universities
designate “incubator” space (e.g., the Innovation Lab, or i-lab, at Harvard) where students usually receive
office space and other resources, enabling the intersection of knowledge, resources, and a large pool of
talented and skilled students coming from diverse educational backgrounds. The universities’ declared
motivation for investing effort and resources in facilitating students’ startup teams is educational,
providing a relatively safe environment for them to try to translate their creative ideas into real
companies.
Although the university’smotivation is relatively clear, it is not clear what drives students to try to
found their own company. What are the students’ attributes that lead them to try and develop their own
startup? Is it related to their young age and a naïve, idealistic perspective of life and a desire to change the
world? Is it connected to their academic background?Is it their perception of the work industry that drives
them away from being another small cog in a large organization? The literature indeed verifies that
founders’ demography and experience shapes the range of actions they will consider(Beckman, Burton, &
O'Reilly, 2007), but has not leveraged university incubators to gain insights into these questions. Thus,
our second goal is to investigate the influence of simultaneously extrinsic and intrinsic motivationsalong
with founders’ experience on the development of students’ startup and its future success.
For answering our research questions, we began examining student motivationsby performing
qualitative field research with students developing startupsin the Harvard Innovation Lab (i-lab).Six main
motivations arose on interviews: obtain sufficient personal income, develop technology, provide the
world with a better product/service, work with friends, experience entrepreneurial activity while obtaining
an academic degree, and help others. Initial results suggested that indeed entrepreneurs are
simultaneously motivated by extrinsic motivationand intrinsic motivations. To explorethese motivations
2
more systematically, and to study the connections between student attributes and motivations to their
startup’s success,we developed two research surveys. The first survey was conducted at the beginning of
the semester, when teams were first entering thei-lab. The founders were asked to rank order the 6
motivations mentioned above that triggered their startup and answer questions about theirs’ prior
experience. The second survey was conducted at the end of the semester and founders were asked to
specify the business opportunities that they identified.Large number of identified opportunities used as
one of the success indicators, as it demonstrates the startup potential sustainability and enables them to
pivot when needed (e.g. Gruber, MacMillan, & Thomphson, 2013).
Overall 225 founders participated, from 71 teams. Our early results demonstrate that the extrinsic
motivation to “obtain sufficient personal income” was the most common and was rated as high (appeared
as one of the top 3 options) by 74.3% of founders. The intrinsic motivation to “provide the world better
product/service” was the least popular motivation; 84.9% of the founders rated as low (bottom 3). These
two motivations were negatively correlated (r=-.5). Logistic regression on founder attributes showed that
engineering students (†p=1.18) with low (vs. high) work (**p=-.49) experience were more likely to have
extrinsic motivation. The intrinsic motivation “to provide the world better product/service” was
significantly affected by studentswith low (vs. high) level of work experience (*p=-.47) and low level of
industry experience(†p=-.45).
For assessing startup success we regressed number of opportunities identified on the teamdivers’ prior
experience, intrinsic and extrinsic motivation interaction, and controlled for team size and number of
semesters working at the i-lab (µ= 1.14 semesters). Our initial results demonstrate that startups with more
homogeneous prior experience and high level of both intrinsic and extrinsic identified more business
opportunities than startups with more heterogeneous prior experience. These results suggest that for
business opportunities identification, a high level of heterogeneity within team experience can substitute
for high levels of intrinsic and extrinsic motivations.Within incubated teams, heterogeneous motivations
can compensate for a lack of diverse experiences which is highly needed at the founding stage (Beckman,
et al., 2007).Future research will compare these results with other universities incubators to further
3
understand its influence on student’s startup success.
Reference:
Amabile, T. M. (1997). Entrepreneurial creativity through motivational synergy.The Journal of
Creative Behavior, 31(1), 18-26.
Boh, W. F., De-Haan, U., & Strom, R. (2012). University technology transfer through
entrepreneurship: faculty and students in spinoffs. Available at SSRN 2125203.
Beckman, C. M., Burton, M. D., & O'Reilly, C. (2007). Early teams: The impact of team
demography on VC financing and going public. Journal of Business Venturing, 22(2), 147-173.
Carsrud, A., & Brännback, M. (2011). Entrepreneurial motivations: what do we still need to
know?. Journal of Small Business Management, 49(1), 9-26.
Cromie, S. (1987). Motivations of aspiring male and female entrepreneurs.Journal of
Organizational Behavior, 8(3), 251-261.
Deci, E. L., & Ryan, R. M. (1985). Intrinsic motivation and self-determination in human
behavior. Springer Science & Business Media.
Gruber, M., MacMillan, I. C., & Thompson, J. D. (2013). Escaping the prior knowledge corridor:
What shapes the number and variety of market opportunities identified before market entry of
technology start-ups?.Organization Science, 24(1), 280-300.
Hamilton, B. H. (2000). Does entrepreneurship pay? An empirical analysis of the returns to selfemployment. Journal of Political economy, 108(3), 604-631.
Ryan, R. M., & Deci, E. L. (2000). Intrinsic and extrinsic motivations: Classic definitions and
new directions. Contemporary educational psychology, 25(1), 54-67.
Moskowitz, T. J., & Vissing-Jorgensen, A. (2002). The returns to entrepreneurial investment: A
private equity premium puzzle? (No. w8876). National Bureau of Economic Research.
4