• Monday, July 15, 2024
businessday logo


The frustration that drives people to become entrepreneurs


It’s not great ideas or dreams of a billion-dollar payday that are leading many people down the path of entrepreneurship. Rather, it’s frustration that’s inspiring them to start their own businesses, new research suggests.

A feeling of being blocked from advancing in their careers is the impetus that drives many employees to leave their jobs in favor of starting their own business, according to a study from the Stanford Graduate School of Business and the University of Chicago’s Booth School of Business.

Jesper Sorensen, a Stanford professor and co-author of the study, said that, for these people, the feeling extends beyond the belief that they can’t get ahead with their current employer; it’s also the belief that they can’t get a job with another employer that they feel is better than the one they already have.

“And because I feel stuck, I’m more likely to be tempted by an opportunity to start my own firm,” Sorensen said in a statement.

This belief applies to high-performing employees as much as to anyone else, according to the research. Because many employees do well in their job because they are well matched to the unique demands of their current position, their value tends to be not as high to another employer. The study’s authors said that, as a result, these employees don’t receive many job offers from other companies, while colleagues who are not as well matched move on to better, higher-paying jobs.

Although high-performing employees could stay put if they were to work for a company that allows them the chance to move up the ladder, self-employment starts to look attractive to those who work at a small firm with little room to advance, or to those whose career trajectory is blocked at a larger organization, researchers said. Becoming wealthy or getting an opportunity to innovate aren’t the driving factors of entrepreneurship, either, according to the study. The researchers pointed to a Washington University in St. Louis study showed that with the exception of the very top earners, most entrepreneurs would be better off financially if they remained in salaried employment.

Additionally, many new entrepreneurs aren’t trying to be completely innovative when they start a business of their own, Sorensen said.

“When they start their corner convenience store, they aren’t dreaming of creating the next Walmart or 7-Eleven,” Sorensen said.

The research shows that frustration with current career standing may have more to do with the choice of becoming an entrepreneur than the perceived appeal of being one’s own boss, Sorensen said. Businesses that want to retain their high-performing employees need to recognize that even if these employees aren’t getting other job offers, they could still leave if they aren’t getting advancement opportunities, according to the research.

“The key is to recognize that this may have less to do with their desire for independence than their desire for new opportunities to get ahead,” Sorensen said. “Thinking creatively about how to provide such opportunities can help you retain your best performers.”

The study was co-authored by Amanda Sharkey, an assistant professor at the University of Chicago’s Booth School of Business.

Originally published on Business News Daily.