TO START OR NOT TO START? AN EMPIRICAL EXAMINATION OF THE DECISION TO START A BUSINESS Justin Kelly Kent A dissertation submitted to the faculty at the University of North Carolina at Chapel Hill in partial fulfillment of the requirements of the degree of Doctor of Philosophy in Business Administration from the Kenan-Flagler Business School in the Strategy and Entrepreneurship area. Chapel Hill 2020 Approved by: Atul Nerkar Christopher Bingham Isin Guler Hugh O‘Neill Elad Sherf i © 2020 Justin Kelly Kent ALL RIGHTS RESERVED ii ABSTRACT Justin Kelly Kent: To Start or Not to Start? An Empirical Examination of the Decision to Start a Business (Under the direction of Atul Nerkar) The decision to start a business is a fundamental issue in entrepreneurship research and has significant economic implications for policymakers and individuals. In this dissertation, I build on the entrepreneurial decision-making literature by exploring certain contextual and cognitive factors associated with the decision to start a business. Using data collected from potential entrepreneurs over four years (2015–2019), I analyze how work experience, motivation, and cognitive style influence decisions to engage in entrepreneurial action in two situations: (a) entrepreneurship through acquisition decision context and (b) forming a new business. I find that experience length, experience type, implicit motivations of status, and cognitive style are associated with the decision to proceed with an entrepreneurial opportunity. Keywords: entrepreneurial decision-making, entrepreneurship through acquisition, implicit motivations, cognitive style iii Dedicated to my wife, Jami, and my girls, Emma, Macie, Annie, and Livvy. iv ACKNOWLEDGEMENTS This dissertation is the culmination of many years of effort spent on my behalf by family, faculty, and fellow PhD students. It is an honor to express my gratitude to those who have helped me along my doctoral journey. First and foremost, I want to thank my wife, Jami. With her encouragement, I left a stable but unfulfilling career to pursue my dream of becoming a professor. She has supported me from the beginning as I struggled to adjust to the rigors of academia including preparation for comprehensive exams, the job market, and dissertation defense. She was always ready with words of encouragement and love whenever I was nervous or discouraged. Without complaint, she took on a larger portion of the parenting responsibilities while I worked late and on weekends. Certainly, I could not have done this without her. I also want to thank my wonderful girls, Emma, Macie, Annie, and Livvy. So many times they were patient when I had to work on Saturday or teach in the evenings. The prospect of spending time with them also motivated me to be efficient at the office. We made a point to spend time together as a family, however infrequently, during my time as a doctoral student. It meant lunches in the McColl cafeteria, and no screen weekend trips and Sunday family time. I always felt energized for work after spending time with these wonderful little people. Outside of my family, I would like to acknowledge the tremendous contributions of Atul Nerkar in my doctoral journey. As soon as I finished my comprehensive exams, Atul brought me on as an instructor in his intro to entrepreneurship course. From there, our relationship grew. Our discussions on how to teach entrepreneurship flowed into interesting research ideas that v ultimately sparked my interest in research. Not only did Atul teach me how to be an effective instructor, he also suggested we work together after he learned of my frustration with research. There‘s a good chance I would not have finished my PhD without Atul‘s help. I cannot thank him enough for his time, including the Saturdays and Sundays he spent helping me prepare for the job market and dissertation defense, and his patience as I learned the art of research. I consider Atul a lifelong friend and mentor and look forward to working with him on future projects. I would also like to thank the other members of my dissertation committee, Chris Bingham, Isin Guler, Hugh O‘Neill, and Elad Sherf, for their input and support. Their input and timely feedback have been of significant help throughout the dissertation phase and my development as a scholar. Chris and Hugh, in particular, met with me early and often during my time as a doctoral student and have had a profound effect on research interests and how I approach research in general. In addition to the outstanding faculty at UNC, I would like to thank my fellow doctoral students. Kevin Miceli was a great resource to new PhD students, and I looked forward to his daily visits to my desk during his time in Chapel Hill. Kevin was one of a few doctoral students interested in entrepreneurship and our discussions have led to collaborations that I hope will continue in the future. Another entrepreneurship scholar, Travis Howell, has been a great resource and friend always willing to discuss ideas or provide feedback. My advice to any PhD student has been, ―Do what Travis has done.‖ I also appreciate the help and friendship I received from Tian Chen, Deepak Jena, Ting Yao, Shirish Sunderesan, and other PhD students. Together, we celebrated and commiserated the ups and downs of the PhD program, which has resulted in friendships that I hope will last a lifetime. vi Finally, I thank my parents, Kelly and Connie Kent. As I was growing up, they fostered an environment at home that valued education, self-improvement, and hard work. I‘m sure neither could have predicted my pursuit of a doctorate given my apathetic attitude and proclivity to cut class in high school. I credit my father for my interest in entrepreneurship. As a young college student, I approached him for help in starting my first venture. He was highly willing to help me get started and was always ready to help if needed. Without his support I would not have experienced entrepreneurship and probably would have chosen a different career path. vii TABLE OF CONTENTS LIST OF TABLES .................................................................................................................x CHAPTER 1: INTRODUCTION ..........................................................................................1 CHAPTER 2: LITERATURE REVIEW AND RESEARCH QUESTIONS ........................4 Organic Form of Entrepreneurship ............................................................................6 Inorganic Form of Entrepreneurship ..........................................................................6 CHAPTER 3: THEORY AND HYPOTHESIS DEVELOPMENT ......................................19 CHAPTER 4: DATA AND METHODOLOGY ...................................................................30 Measurement of Dependent Variable-Organic Entrepreneurship.............................30 Measurement of Dependent Variable-Inorganic Entrepreneurship ..........................31 Measurement of Independent Variables ...................................................................36 Control Variables ......................................................................................................39 Model Specification ..................................................................................................40 CHAPTER 5: RESULTS ......................................................................................................42 CHAPTER 6: DISCUSSION AND CONCLUSION ............................................................46 Contributions.............................................................................................................46 Limitations and Future Research ..............................................................................50 Implications...............................................................................................................52 TABLES ................................................................................................................................53 APPENDIX ............................................................................................................................60 viii Jim Southern Case Information .................................................................................59 Intro to Entrepreneurship Syllabus ............................................................................60 REFERENCES ......................................................................................................................77 ix LIST OF TABLES Table 1: ETA, LBO, and Franchise Comparison ....................................................................53 Table 2: Study 1 Descriptive Statistics and Correlation Table ...............................................54 Table 3: Study 1 Main Results ................................................................................................55 Table 4: Course Outline and Questions used to Evaluate Cognitive Factors .........................56 Table 5: Study 2 Descriptive Statistics and Correlation Table ...............................................57 Table 6: Study 2 Main Results ................................................................................................58 x CHAPTER 1: INTRODUCTION Why do some individuals and not others become entrepreneurs? This fundamental question in entrepreneurship research motivated early scholars from a wide range of disciplines including economics, sociology, and psychology to investigate the differences between entrepreneurs and non-entrepreneurs