Launching a business can be a risky endeavor, especially in the early stages, as entrepreneurs may find themselves without resources, like a steady income and health insurance. To mitigate those risks, many entrepreneurs start and operate their ventures while working another job. A recent study investigates the trade-off these “hybrid” entrepreneurs face between their venture’s performance and their own well-being.
Approximately 40 to 50 percent of entrepreneurs maintain traditional employment while launching and growing their businesses. The research team of Timothy Munyon, professor in the Department of Management and Entrepreneurship at the University of Tennessee, Knoxville’s Haslam College of Business, Nick A. Mmbaga (HCB Ph.D., ‘19, Butler University), Michael P. Lerman (HCB Ph.D., ‘19, Iowa State University) and Stephen E. Lanivich (University of Memphis) found that although this strategy offers security, balancing numerous time commitments often takes a toll on entrepreneurs’ stress levels, self-care and venture performance.
When hybrid entrepreneurs spend a disproportionate amount of time on outside employment, their well-being suffers. Conversely, becoming too absorbed in entrepreneurial endeavors can negatively impact performance at their day job, jeopardizing their financial security and creating a different kind of stress.
“Practically speaking, hybrid entrepreneurship helps entrepreneurs manage financial and career risk, and improves the survival rates for new ventures,” Munyon says. “However, hybrid entrepreneurs are also more susceptible to ‘health-wealth’ trade-offs than other workers or traditional entrepreneurs.”
How Experience Affects Entrepreneurial Performance
The health-wealth trade-offs differ depending on entrepreneurial experience. Surprisingly, the researchers found that as time spent on traditional employment increases, seasoned entrepreneurs experience greater stress and poorer venture performance than newcomers.
“Novice entrepreneurs seem to manage the extra demands of work better than their more experienced colleagues as their job-related demands increase,” Munyon says. “Similarly, time spent on the job for novice entrepreneurs enhanced new venture performance, while it had no strong effect on new venture performance for experienced, or serial, entrepreneurs.”
The team speculates that seasoned entrepreneurs have a harder time managing tension caused by outside work because experience has taught them that day jobs can hinder their venture’s growth. As they dive back into entrepreneurship, they may also pressure themselves to achieve better results in their new ventures or to prove their capability, which might cause added stress.
“Our findings suggest that experienced entrepreneurs who are still employing a hybrid strategy may have either failed in a prior venture or face different constraints than their novice colleagues,” Munyon says.
The tension of the health-wealth balancing act may be why ventures headed by hybrid entrepreneurs underperform and why many such entrepreneurs never transition from traditional jobs to full-time entrepreneurship, the researchers say.
“Juggling act: Waged time investments and the health-wealth tradeoff of hybrid entrepreneurs” was published in the Journal of Business Research in March 2023 and is available online.
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CONTACT:
Stacy Estep, writer/publicist, sestep3@utk.edu
