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What leads entrepreneurial employees to want to quit, or stay in, their job? Exploring two conflicting mechanisms

Growing evidence suggests that entrepreneurial employees are becoming increasingly important for established organizations’ competitive advantage. However, relatively little research has been done to understand the factors that positively or negatively influence intentions to quit among these employees. The current paper explores two motivational mechanisms: employee engagement and intentions to start a business.

Why? Firstly, there is both a theoretical and empirical literature to implicate a positive relationship between entrepreneurial tendencies and work engagement. For instance, entrepreneurial individuals have been found to have a more positive and optimistic mindset, be more proactive and absorbed at work, and have higher self-regard. Employees who are self-efficacious and have a positive and optimistic mindset, in turn, are found to be “most likely to experience high levels of work engagement”. Supporting these theoretical links, recent research has found a positive and moderately strong relationship between entrepreneurial tendencies and engagement at work. Employee engagement, in turn, has been shown to be one of the most important antecedents of organizational turnover. As employee engagement is related to a positive work experience, this is likely to result in greater attachment to one’s job and, consequently, lower quit intentions. As such, employee engagement is hypothesized to be an important positive mediator in the relationship between entrepreneurial tendencies and turnover intentions.

Secondly, entrepreneurial tendencies have also been linked to higher intentions to start a business (i.e. becoming self-employed), in line with theories of vocational choice (Armstrong, Su, & Rounds, 2011). The transition from employment for an incumbent organization to self-employment is an important cause for employee turnover (Douglas & Shepherd, 2002). As such, we hypothesize an inconsistent mediation effect, whereby entrepreneurial employees are more likely to be engaged, but at the same time also more likely to be considering starting their own business. This, in turn, implies that entrepreneurial tendencies should have both a positive and a negative relationship to intentions to quit.

Our results support our hypotheses: entrepreneurial employees were more likely to be engaged, but at the same time also more likely to be considering starting their own business, leading to a conflicting relationship to turnover intentions. This demonstrates the paradoxical, yet intriguing nature of entrepreneurial employees – a workforce that can be likened to a double-edged sword within organizations. The current study indicates that the negative co-variation between the two mediators is of key importance, namely, that entrepreneurial employees who are more engaged within organizations are less likely to want to venture out on their own and therefore leave their job.

From a practical perspective, these results indicate that selecting entrepreneurial employees without appropriate management of their engagement levels may be unwise. Thus, it may be necessary to consider organizational processes and structures that influence engagement levels within the company, before selecting or promoting entrepreneurial employees. Of particular interest would be those processes and structures that may negatively impact engagement levels of entrepreneurial employees – given that these employees tend to have higher ‘baseline levels’ of engagement.

The impact of organizational structure and work autonomy in fostering entrepreneurial tendencies and job performance

The impact of organizational structure and work autonomy on workers’ job performance is well documented in the literature (e.g. Robbins and Judge, 2008). However, very little research has looked at how factors such as structure and autonomy may influence entrepreneurial tendencies of employees, and how that in turn may impact their level of performance. Given that corporate entrepreneurship and innovation have become major strategic goals within organizations (Kuratko, 2007), it seems timely that empirical research pays due attention to the factors that facilitate and inhibit these processes. Although authors have hypothesized that organizational structure and autonomy would have an impact on entrepreneurial tendencies and performance (e.g. Gupta et al., 2004), few studies have examined this assertion empirically. This was the aim of this study.

Organizational level variables aim to shape and organize the roles and activities of individual members within a firm toward maximizing performance (Mintzberg, 2007). Thus, job performance is an aggregation of employees’ tendencies and behaviors, and as such the effects of organizational level variables on job performance are likely to be explained through the effect of these variables on individual tendencies. For instance, research indicates that structural components, such as high levels of formalization and centralization, as well as larger number of organizational members, can limit internal knowledge-sharing capabilities, which play an important role in employees’ entrepreneurial tendencies (Harper, 2008; Kim and Lee, 2006). Similarly, the literature suggests that one of the processes by which entrepreneurial people’s performance can be enhanced is by allowing for exploration and individual initiative – that is, granting work autonomy in order to capitalize on the individual’s creative and opportunistic insights (Mumford et al., 2002). In other words, we propose that organizational structure and work autonomy are likely to have an effect on job performance by providing (or removing) opportunities for employees to manifest certain tendencies or behaviors. We hypothesize that lower levels of organizational structure and higher levels of work autonomy will be significantly and positively related to entrepreneurial tendencies and, in turn, job performance.

Our results partially supported our hypotheses. Contrary to expectations, organizational structure did not impact on individual-level variables. On the other hand, work autonomy influenced workers’entrepreneurial tendencies, indicating that there may be indirect effects of organizational structure on individual-level variables, via the more proximal organizational variable, work autonomy. As hypothesized in a number of theories of work design and occupational performance (Robbins & Judge, 2008), the current results demonstrate the importance of autonomy both for individual-level attitudes and behaviors (i.e. entrepreneurial tendencies and locus of control) and job performance. In particular, the results indicate that higher autonomy at work enables people to become (or feel) more entrepreneurial, and in turn perform better. This is in line with theoretical work suggesting that granting autonomy to employees is a key factor in facilitating corporate entrepreneurship and innovation within organizations (Lee et al., 2011; Covin and Wales, 2012).

From a practical perspective, granting entrepreneurial people autonomy to plan their own schedules, organize the order in which things are done, and empower them to take decisions may be a great way to increase their performance at work. A second implication of the results is that recruiting and hiring people with higher entrepreneurial tendencies may be beneficial not only for corporate entrepreneurship and innovation, but also for “traditional” job performance (i.e. task and contextual performance). That is, entrepreneurial individuals may be valuable assets to organizations because they innovate more and perform better than individuals with lower entrepreneurial tendencies. Thus recruiting and selecting such individuals, as well as individuals higher on locus of control, may be a fruitful HR strategy

The relationship between the entrepreneurial personality and the Big Five personality traits

Does personality help predict entrepreneurial success? Entrepreneurship is a key driver of employment, economic growth, technological progress, and innovation (Kuratko, 2007, Reynolds et al., 2004). Since people are the main agents in entrepreneurship, research on understanding entrepreneurial tendencies has received unprecedented attention in the past decades. This paper sets to examine the relationship between a narrow measure of entrepreneurial tendencies (META, Ahmetoglu, Leutner, & Chamorro-Premuzic, 2011) and the Big Five with respect to a wider range of entrepreneurial outcomes.

Ample research supports that personality is a valid predictor of employee job performances, yet little is known about personality as a predictor of entrepreneurial success. Although recent meta-analytic studies did highlight significant associations between personality and entrepreneurship (Brandstätter, 2011), these findings are limited to business performance (Zhao, Seibert, and Lumpkin, 2010), entrepreneurial intentions (Zhao et al., 2010) and occupational status (Zhao & Seibert, 2006). Research found that narrow traits (e.g. need for achievement, self-confidence, innovativeness) matched to more specific entrepreneurial behaviours or outcomes produced higher correlations with business creation and success compared to broad, unmatched traits (e.g. Conscientiousness, Extraversion; Rauch & Frese 2007). This stronger association between matched traits and entrepreneurial success could be due to explicit descriptions that are task specific (Barrick and Mount, 2005, Rauch and Frese, 2007). Furthermore, such matched traits produce distinct variance that contributes to the prediction of entrepreneurial success (Rauch and Frese, 2007, Tett et al., 2003). Unfortunately, Rauch and Frese (2007) did not directly test the comparative predictive validity of the Big Five vis-à-vis narrow traits.

Given the literature gaps, this study extends previous research to examine the relationship between a narrow measure of entrepreneurial tendencies, the Big Five, and a wider range of entrepreneurial outcomes. Narrow traits matched to the above entrepreneurship operationalization are assessed with the Measure of Entrepreneurial Tendencies and Abilities (Ahmetoglu et al., 2011). META assesses entrepreneurial personality by measuring the degree to which individuals differ in their tendency to engage in entrepreneurial behaviours (opportunity recognition, opportunity exploitation, innovation, and value creation). We propose that the Big Five personality traits and META will predict a wide range of entrepreneurial success outcomes other than business creation and success respectively, and that META will demonstrate incremental validity over the Big Five in the prediction of entrepreneurial success outcomes and produce stronger effect sizes than the Big Five.

Our results reveal that personality predicts several entrepreneurial outcomes and that narrow personality traits are stronger predictors compared to broad traits. This provides empirical evidence to support the significance of personality as a predictor and thereby demonstrating the influence of personality on entrepreneurial success. Practically this finding indicate that personality inventories could extend useful implications in promoting entrepreneurial success - not limited to business owners. Organizations could use personality inventories to select for entrepreneurial individuals to gain competitive advantage in their markets (Lumpkin, 2007). Thus, Big Five inventories and META in particular can be valuable tools for identifying such individuals, both for employee selection and retention, but also for other areas including minimizing the risk of start-up failure.

The entrepreneurial organisation: The effects of organisational culture on Innovation

The technological era that is home to companies in the 21st century has a high screening policy for its residents:
time is now. Holding and maintaining competitive advantage is rooted in innovation, creativity, and entrepreneurial activity, which means that companies have to create and re-create as a modus vivendi in order to keep their place. Such behaviours are difficult to bring about once, let alone continuously, yet management practices that could foster such a unique environment are not established, and the workforce often lacks the ‘talent’ to continuously bring about innovative ideas, and critically, tangible output of these ideas.

Some ideas exists  (Covin and Slevin, 1991) suggesting that entrepreneurial orientation can be enacted by key decision makers (e.g. managers) towards employees, nurturing risk-taking, proactive and innovative behaviours.
Hornsby et al. (2013) provided some more practical ideas in terms of managing such an environment, basing innovation on work autonomy, rewards, and management support. However, this provides limited guidance to practice, as promoting such behaviours at the individual level is often a challenge, partially due to the unequal distribution of creative and entrepreneurial potential in employees, and mostly in the difficulty of promoting and maintaining such behaviours as if they can be requested – again, innovation output is very hard to bring about.

Our study of 523 adults aimed to identify the relationship between entrepreneurial culture and innovation output, considering individual ability towards innovation (entrepreneurial personality) and necessary mechanism for its sustainable promotion in an organisation (work engagement). Interestingly, we found that the relationship between entrepreneurial culture and innovation output was fully mediated by work engagement. Based on the several positive components of work engagement in fighting burnout, positive affect and commitment toward the company, the positive relationship between culture and engagement prompt us to firstly acknowledge the utility of engagement even in the absence of output (in this case by innovation).

At the same time, entrepreneurial culture positively moderated the relationship between an individual’s entrepreneurial personality and innovation output. In fact, the data suggested that if an individual has low levels of entrepreneurial personality, being in an entrepreneurial culture does not increase the tendency to produce such innovations. Yet, high levels of an entrepreneurial culture can significantly increase the tendency to produce corporate innovations if the individual has high levels of entrepreneurial personality. It seems that the proclivity towards innovation by trait differentiates those who will benefit from such a culture, in support of the genereal theoretical framework of Person-Organisation fit.

However, it’s not just about setting the stage for entrepreneurial people to flourish. Entrepreneurial people do appear to be the central agent when innovation is needed, which means that organisations should pay attention in identifying them, recruiting them and engaging them sufficiently. At the same time, similar to a sports team that centralises play around superstars, ensuring the entire team is involved in the innovation process is necessary, in hope of maintaining an innovative, dynamic culture within the team. This serves as a backbone for those ‘superstars’ to blossom, while they also help managers in modelling these behaviours across the team, leading to their engagement and its benefits in their own respect, as well as the very important part of innovative output.

It does seem that the best view of the technological era residency is for those that continuously innovate.
Culture, which goes as deep as rooting individuals within a community, builds sustainable models for organisations to do that. While innovation is central in surviving today’s turbulent markets, organisations should not begin there. They should begin instead with identifying talent, building a right environment for everyone to work in, hence creating an engaged, collective and innovation-oriented workforce.