Entrepreneurial Motivation in Service Industries

8/8/2019 Entrepreneurial Motivation in Service Industries

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ENTREPRENEURIAL MOTIVATION IN SERVICE INDUSTRIES:

PUBLIC ACCOUNTING FIRMS AS UNINTENDED INCUBATORS

Jeffery S. McMullen

Graduate School of Business Administration

University of Colorado at Boulder

Boulder, Colorado 80309-0419

Ph (303) 410-0968

Fax (303) 492-5962

E-mail [email protected]


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ABSTRACT



The professional services (i.e. public accounting, law, investing, consulting) are highlysusceptible to the loss of entrepreneurially-inclined employees. Often these firms watchtheir departing employees become instantaneous competitive threats within their marketniche. Thus, it is essential that professional service firms understand the factors thatmotivate their entrepreneurs to leave, as a means of preventing costly attrition, predictingand preparing for the ensuing competitive landscape, and maximizing opportunityrecognition. Drawing on interview data from founding partners of three mid-sized publicaccounting firms, this paper identifies motivational factors that contribute to the decision

for employees to become entrepreneurs. The role and characteristics of the incubatororganization (that organization where the entrepreneur was employed prior to starting anew venture) are then examined to determine whether they: 1) contributed to themotivation to leave and 2) influenced the characteristics of the new firm. The role andcharacteristics of the professional service incubators are then contrasted with those ofhigh-technology incubator organizations. Similarities in motivational factors areestablished, and differences are attributed to innovation. Finally, a framework is offeredto suggest that employee-retention strategies developed for high-technology industriesmight be successfully implemented by service industries when the motivational factorscontributing to the loss of entrepreneurially-inclined employees are non-innovative.


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The professional services (i.e. public accounting, law, investing, consulting) are highly

susceptible to the loss of entrepreneurially-inclined employees. Often these firms watch

their departing employees become instantaneous competitive threats within their market

niche. Thus, it is essential that professional service firms understand the factors that

motivate their entrepreneurs to leave, as a means of preventing costly attrition, predicting

and preparing for the ensuing competitive landscape, and maximizing opportunity

recognition. Drawing on interview data from founding partners of three mid-sized public

accounting firms, this paper identifies motivational factors that contribute to the decision

for employees to become entrepreneurs. The role and characteristics of the incubator

organization (that organization where the entrepreneur was employed prior to starting a

new venture) are then examined to determine whether they: 1) contributed to the

motivation to leave and 2) influenced the characteristics of the new firm. The role and

characteristics of the professional service incubators are then contrasted with those of

high-technology incubator organizations. Similarities in motivational factors are

established, and differences are attributed to innovation. Finally, a framework is offered

to suggest that employee-retention strategies developed for high-technology industries

might be successfully implemented by service industries when the motivational factors

contributing to the loss of entrepreneurially-inclined employees are non-innovative.


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In this paper a conceptual framework is offered that suggests under which

motivational circumstances employee-retention strategies introduced by high-technology

industries can be successfully implemented by service industries. By integrating

interview data with the incubator literature and that of entrepreneurial motivation, the

proposed framework generalizes and applies industry-concentrated research in effective

high-technology incubation to service industries suffering similar but less attended

dilemmas.

After a short review of factors affecting incubator success (location, business,

type and size of incubator organization, team formation, and motivation) (Cooper 1986),

findings from interviews with founding partners of three mid-sized public accounting

firms are presented which suggest that professional services and high-technology

industries share similar characteristics and motivational factors contributing to the loss of

entrepreneurially-inclined employees. These entrepreneurial motivational factors are

classified in accordance with the push and pull models derived by Shapero and Sokol

(1982) and Vesper (1983) in which both individual differences and economic factors are

incorporated. Subclassification of the push and pull factors as innovative or non-

innovative is then suggested, and an argument is made that employee-retention

strategies developed for high-technology industries can be generalized and applied to

service industries when they are targeted at addressing non-innovative entrepreneurial

motivational factors. Finally, a framework is presented that suggests which motivational

factors are non-innovative and therefore responsive to alleviation through the transplant

of high-technology employee-retention strategies to service industries.


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PREVIOUS RESEARCH

The organizations where entrepreneurs were employed prior to starting their own

firms have been shown in past research to influence the nature and success of new

ventures. (Cooper, 1986) Although this paper emphasizes the motivational factors

behind an employees decision to seek fulfillment through entrepreneurship, it also

considers the influence that the incubator organization has on the characteristics of the

new enterprise.

Incubator Organizations

Prior incubator investigation has focused upon intentional high-technology

incubator organizations (those organizations designed for the sole purpose of providing a

controlled environment in which new enterprises may thrive) (Smilor and Gill, 1986;

Rice and Matthews, 1995) or potential high-technology incubators (high-technology

firms where entrepreneurs work before leaving to start new ventures) (Cooper, 1985a;

Feeser and Willard, 1989). While this concentration on high-technology industries has

provided insight into the characteristics necessary for successful new venture creation in

innovative industries, it has not been extended to industries perceived as less innovative,

such as services. Cooper and Dunkelberg (1987) affirm this limitation by acknowledging

that very small firms and businesses in the service industries are underrepresented in their

survey of 890 entrepreneurs when contrasted with the U.S. business population.

Characteristics and Relatedness

Incubator organizations have been studied by Cooper (1985a) and others. These

previous studies have identified location, nature of business, type andsizeof the

incubator organization, team formation, and motivation as factors that potentially


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influence the entrepreneurial off-spring, findings in each area have not always been

consistent.

Location. Location is defined as the proximity of the new venture to the

incubator organization where the entrepreneur worked before leaving to start the new

firm. Numerous studies have found that at least one of a new companys founders was

already working in the geographic area where the new entrepreneurial firm is located.

Percentages ranged from 97.5% in Palo Alto, 90% in Austin, Texas, and in England, 75%

in a broad study of 890 founders across the United States (Cooper, 1970; Susbauer, 1972;

Watkins, 1973; Cooper and Dunkelberg, 1981). Other studies have shown that 90 percent

or more of founders start their companies in the same marketplace, technology, or

industry in which they had been previously working (Brockhaus, 1982). However,

Cooper and Dunkelberg (1987) found that a surprisingly high 25% of nontechnical

founders moved when starting. They sought to explain the nontechnical entrepreneurs

decision to move as a means of finding a more promising local market or avoiding

competition with a previous employer.

Nature of the Business. Cooper (1985a) contends that entrepreneurs, in most

technical industries, usually start businesses related to what they did before. Conversely,

he finds that the prospective founders of nontechnical firms appear to be less tied to the

experience gained in an incubator organization. Whereas previous studies have found

that 85% of 250 technical entrepreneurs (Cooper, 1970) and 70% of 890 founders from a

cross section of industries (Cooper and Dunkelberg, 1981) started new businesses

closely related to the technologies or markets of their respective incubator organizations,

only about 70% of founders of low technology manufacturing firms in Michigan and


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about 60% of service enterprises in Rhode Island had experience in similar businesses

(Hoad and Rosko, 1964; Mayer and Goldstein, 1961) These studies suggest that service

industries may be less influenced by the experience founders gain in incubator

organizations.

Type. The incubator literature to date has classified type of organization as

university, publicly and privately held profit-seeking firms, not-for-profit organizations,

and an other category that includes founders with no previous experience. Cooper

(1985b) argues that the extent to which universities and not-for-profit organizations

function as incubators varies widely depending upon the industry. Although the firms

studied by Kenney (1986), Roberts (1972), Susbauer (1972), and Lamont (1972) suggest

that substantial percentages of new technical firms studied are direct spin-offs from a

university, Cooper (1971) discovered only six of 243 firms founded in Silicon Valley

during the 1960s had one or more full-time founders who came directly from a

university. In fact, Feeser and Willard (1989) contend that, although it may be a popular

belief that universities are the source of technical start-up companies, Bruno and Tyebjee

(1984) are more accurate in noting that this is actually the exception, not the rule.

Size. Cooper (1985b) observes that the size of the incubator organization seems

to have a bearing upon the spin-off rates among firms in the same industry. Smaller

firms tend to have higher spin-off rates than larger firms, according to a study of small

firms (fewer than 250 employees) in England that found them to incubate at six times the

rate of larger firms (Johnson and Cathcart, 1979). This is in support of Coopers earlier

(1971) study, which determined spin-off rates of high-technology firms with less than

500 employees to be ten times that of larger firms. Birch (1979) surprised researchers,


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politicians, and the business world when he reported that 81.5% of net new jobs in the

economy from 1969-1976 stemmed from enterprises with 100 employees or less. His

study and Kirchhoffs (1995) recent reconfirmation suggest that, on average, firms with

less than 100 employees create the majority of net new jobs in the U.S. economy, but

whether new job creation and incubation are synonymous is beyond the scope of this

paper.

There have been conflicting findings as to the size of effective incubators. A

Canadian study observed that 64% of founders studied were from government

organizations or firms with more than $10 million in annual sales (Doutriaux, 1984).

Additionally, Cooper (1985b) studied the origins of 161 companies that had grown

rapidly to discover that three out of four had been started by entrepreneurs from large

industrial companies.

Team Formation. Founding teams are often formed at incubator organizations.

In a study of 955 high-technology foundings, Shapero (1971) found that 59% involved

teams. However, Cooper and Dunkelbergs (1981) study of 890 founders indicated that

only 31% involved teams. Cooper and Dunkelberg (1981) contend that the difference in

the percentages of founding teams between the two studies might be due to the fact that

the latter study included service as well as high-technology firms. As high-technology

firms are usually manufacturers or assemblers, their ability to function is naturally more

dependent upon the team concept. For high-technology industries, incubator

organizations provide excellent settings in which entrepreneurially-inclined employees

with diverse functional backgrounds can organize. Thus, a founder strong in

manufacturing might seek another founder who is strong in marketing, and vice versa.


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Motivation. Although the incubator literature acknowledges that the

entrepreneurs motivation is subject to the influence of the incubator organization,

discussion is limited. Cooper (1985a) attributes entrepreneurial attrition to strong

negative pushes, including getting fired, getting out of the military, or becoming a

refugee (Shapero and Sokol, 1982). Less drastic examples of circumstances that might

encourage a potential entrepreneur to make a career change include being passed over for

a promotion, having a pet project turned down, or concluding that the organization is not

growing or developing properly. On the other hand, in Cooper and Dunkelbergs (1981)

study of 890 entrepreneurs, only 22% left their prior position due to pushes (i.e. they

reported being fired, being forced to leave by factors such as their business closing, or

quitting with no plans for the future), while 58% left due to the positive pull of plans

for the new business. Cooper and Dunkelbergs (1981) findings are somewhat

contradictory of one of Coopers earlier (1970) studies which found that 13% of

entrepreneurs were forced to leave their prior jobs, 30% quit with no plans for the future,

and 40% were determined to leave even if they had to start their own businesses.

Shapero and Sokol (1982) also observed, in a study of 109 technical company formations

in Austin, that 65% of the influences leading to new venture creation were negative.

After reviewing the current incubator literature, it becomes clear that different

expectations exist for high-technology and service industries. Founders of service

industries are expected to be more likely to move during new venture creation, less

influenced by their incubator organization, and less likely to form teams than their high-

technology counterparts. Where clear expectations have not yet been derived for high-

technology industries, such as in the characteristics of type and size of incubator


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Patton (1990), who provides guidelines for sampling and suggests that the logic and

power behind purposeful selection of informants is that the sample should be information

rich. Specifically, extreme case sampling is used to select participants who exemplify

characteristics of interest because extreme cases maximize the factors of interest by

clarifying factors of importance. Thus, the public accounting industry was selected

because (on an innovative, entrepreneurial continuum) it could be perceived as the

extreme opposite of high-technology industries. Furthermore, the founders of the firms

discussed were known to be what Morse (1991) defines as good informants, people who

have the knowledge and experience the researcher requires, have the ability to reflect, are

articulate, have the time to be interviewed, and are willing to participate in the study.

CASE STUDIES

In semi-structured, tape-recorded interviews lasting about an hour, eight founding

partners of three public accounting firms were encouraged to give their account of the

factors that motivated them to start their own firm and the role that the incubator

organization, if any, played in the process. Following are profiles of the firms selected

and partners interviewed.

Riggs Stepford Co., P.C. Riggs, Stepford and Company, is one of the five

largest public accounting firms in a mid-sized city. It offers audit and tax services as well

as the most technologically progressive management consulting in its area.. Research

was conducted at its office, where about 20 people are employed.

Wishing to escape poverty and financial dependence as his uncle had done

through entrepreneurship, Larry Riggs majored in accounting at a small college with the

goal of being self-employed. After working for a national firm for three years, he started


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his own firm with the intention of using it as a launching pad for other enterprises. After

several partnerships and other semi-successful endeavors, Larry realized the need for

finding a partner who was interested in working in the business while he worked on the

business.

Enter Burt Stepford. After several years at a national firm, Burt decided to leave

public accounting and return home to continue his fathers business. However, a

misunderstanding occurred amongst Burt, his father, and the management, which led Burt

to a string of controllerships at companies that he misperceived to be promising

opportunities. While working at one of these companies, Burt met Larry Riggs, who was

engaged as the companys independent auditor. Larry encouraged Burt to come work for

him, but Burt had already begun building his own practice at night. After a frustrating

partnership with an established local accountant, Burt reconsidered Larrys offer and

Riggs Stepford, P.C. was born in 1986.

Tasker Johnson, P.C. Tasker Johnson, P.C. currently employs about 35 people

and is one of the fifteen largest public accounting firms in one of the ten largest U.S.

cities. Tasker Johnson, P.C. specializes in audits of commercial banks although it offers

audit, tax, legal, and accounting consultation services as well. Interviews were conducted

by phone.

With the desire to climb the ladder, Robin Johnson sought employment at a

national firm. After a few years of working there, he and a couple of his friends whom he

supervised began to share their frustration with the firm hierarchy. Due to their

realization that advancement was, more reliant upon years of employment than


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intelligence or work ethic, they sought to take control of their own destinies and exploit

the market niche in which they were working.

George Tasker was one of Robins staff. He had recently received his MBA with

an emphasis in banking. George had a natural gift for marketing and had been

encouraged by his parents while growing up to seize the opportunity to work for himself

should it ever appear. He, Robin, and another employee left to work with a couple of

friends from another national firm only to leave again shortly thereafter to create their

own firm which exists today, twenty years later.

Stuart, Williams, Stevens, and Malone, P.C. Stuart, Williams, Stevens, and

Malone, P.C. is a recent upstart and spin-off of Tasker Johnson, P.C. It has existed

approximately three years and employs about 15 people. Services include audit, tax, and

internal audit. However, the firm specializes in the audits of financial institutions and

private manufacturing firms.

After several years of employment at a small local firm, Jack Stevens sought a

position with greater opportunity at a slightly larger public accounting firm. As years

passed his firm became top-heavy with senior managers who had little hope of becoming

partners. Mutinous camaraderie collided with financial opportunity as a civil war ensued

within the incubator organization. Casual conversation led Jack to the realization that

both Stuart and Malone were equally frustrated with their current positions and were

considering leaving to start their own firms. Williams was then approached for his tax

expertise, and plans were made. The result was the birth of a new firm mirroring the old

in such attributes as location, structure, and market niche.


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RESULTS

In each of the eight interviews, the partners were asked to discuss the motivation

behind starting their own firm. They were then requested to consider the role that their

previous experience had played in their decision and the characteristics of their new firm.

If not volunteered by the interviewee, factors affecting incubator success such as

location, nature of business, etc., were inquired about directly. Interview findings were

compiled to determine their congruency with the expectations suggested for service

industries by the existing incubator literature, and information was analyzed according to

the framework provided by the incubator literature to determine similarities with, and

deviations from, the current literature.

Following are the three categories of data to which a high proportion of the

individual interviews contributed:

Inevitable Incubator Influence. The greater the entrepreneurial inclination, the

shorter the duration spent as an employee. However, the period of apprenticeship, even

when short, did have a lasting influence upon the entrepreneurs and the ventures they

created. Many of the founders interviewed were latent entrepreneurs who sought

entrepreneurship as the solution for their frustration with the incubator organization. All

fell victim to the abusive parent syndrome, creating the very environment they felt

overwhelming compelled to flee. This proclivity permeated every characteristic of the

firm, whether organizational structure, location, specialty, or size of the organization.

Hierarchy, Impatience, and Childhood Impressions. Everyone interviewed

had subscribed to the belief that a period of apprenticeship was necessary early in his or

her career, and many preferred national firm experience, no matter what their individual


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background. But, background contributed to the entrepreneurs degree of impatience

with hierarchy, and impatience was king in determining the duration of apprenticeship.

Reference was made by many to a childhood impression that shaped a life perspective

conducive to entrepreneurship. However, this was not limited to an entrepreneurial

parent or role model. In fact, one interviewee captured this best by expressing his intense

desire to control his own chances for success. After growing up on a farm, he vowed

never to let the greatest factors of success or failure be determined by something as

arbitrary as the weather and felt this so strongly that it eventually extended to supervisors

as well.

Prominence of Teams. Team formation also emerged as an inevitable theme, but

the motivation for its development was dependent upon the individuals and situation

involved. Teams emulated marriages in depth of relationship and were based upon

complementary personalities (adapter and innovator), complementary skills (marketer

and expert), or necessity (financial and emotional support). Furthermore, they served as

incubators of enthusiasm and confidence, sometimes bordering on irrational. Whatever

the reason for their prominence, partnerships were the norm.

HYPOTHESIS DEVELOPMENT

The above findings suggest that fundamental similarities exist between

professional services and high-technology industries for location, nature of business,

type, and team formation. As studies are inconclusive in the incubator literature

regarding size of incubator organization for high-technology industries, contrast with

professional service findings is difficult. However, the interviews appear to share the

literatures tendency to favor larger firms when considering incubation frequency.


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Finally, motivation in professional service firms shared high-technologys muddled

results according to push and pull classifications.

In accordance with this studys interview findings and previous research outlined

in the literature review, several hypotheses have been developed in an attempt to extend

the incubator literature to the professional services and potentially the service industries

in general.

Location. Based upon the interviews conducted in this study, it seems unlikely

that a founding partner of a professional service firm would move to a new geographic

region and forgo: (1) the ability to establish a foundation for the new business by

moonlighting, (2) the utilization of previous contacts (such as friends, clients, bankers,

etc.), and (3) the knowledge of the local market. Although contrary to Cooper and

Dunkelbergs (1987) findings that 25% of non-technical firm founders relocated before

starting their new venture, interview results from this study suggest that entrepreneurial

employees who start their own professional service firms are highly likely to do so in the

same geographic location as the incubator organization. Stated formally:

Hypothesis 1: Professional service firms are likely to be located in close physicalproximity to their incubator organizations.

Tenure. Cooper and Dunkelbergs (1987) findings share the incubator

literatures implicit definition of technical as pertaining to innovative, engineer-laden

industries. Although public accounting firms or professional services in general would

not be considered technical under this definition, there is the potential that their study

might resemble these technical findings more than other service industries. Like

technical industries, professional services would appear to necessitate a competence


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that is primarily developed through a period of apprenticeship (Timmons, 1999) in which

entrepreneurs acquire a wealth of experience that allow them to achieve competence as

defined by their field. However, recent studies suggest that this period of apprenticeship

is common to all industries since the average entrepreneur has 8-10 years of experience

before departing. (Timmons 1999) This period of apprenticeship allows for thoughtful

preparation and planning (Cooper and Dunkelberg, 1981), the opportunity to acquire

years of substantial experience, the development of know-how (Vesper, 1984), and the

establishment of contacts and a track record in the industry, market, and technology niche

within which the entrepreneurs eventually launch, acquire or build a business (Timmons,

1999).

Although it appears that public accounting firms and professional service firms in

general are likely to represent the incubator characteristics of technical industries, this

studys interview findings also suggest that founders of professional service firms may

serve less than the average eight to ten year apprenticeship that is more common to

technical industries. Thus, professional services fulfill, to some extent, the literatures

expectation that service industries may be less dependent upon incubation (Cooper and

Dunkelberg, 1987). Accordingly, the following hypothesis is proposed:

Hypothesis 2: Founders of professional service firms will serve a shorter periodof apprenticeship than founders of high-technology organizations.

Nature. Perhaps more so than in other service industries, it is expected that firms

in industries as highly specialized as the professional services would be started by

founders who had attained related experience at incubator organizations, especially in

public accounting where the creation of a firm by a recent college graduate seems


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unlikely. However, the nature of a public accounting practice (or law, investing,

consulting, etc.) provides for many products or areas of expertise within the discipline,

such as audit, tax, or internal audit. In addition, a firm may have a specialty within one of

these areas of focus, such as the audit of commercial banks. Therefore, the influence of

an incubator organization on the new venture can be determined by how closely the

services of the new entity reflect the old. The interview results suggest that the nature of

the new public accounting firm will be related initially to the founders area of emphasis

at the incubator organization and that any immediate firm specialty at the new firm will

also be the result of a similar specialty at the incubator firm. Formally stated:

Hypothesis 3: Professional service firms will share the product emphasis ormarket niche of their incubator organizations.

Type. The dominance of publicly and privately held profit-seeking firms in the

incubation of new technical ventures might be expected in the professional services as

well. The potential for a university to fulfill the role of unintended incubator by

providing highly adept accounting students or faculty members is unlikely due to the

dissuasive effect of a lack of knowledge regarding market opportunities, experience in

selling and/or building an organization, or sources of capital. Creation of public

accounting firms by someone in a private industry position, such as that of a controller, is

doubtful for similar reasons. Finally, many professional service industries require some

sort of professional license, most of which have experience or supervision requirements

that can only be met through a brief period of apprenticeship. These reasons may explain

why all eight partners interviewed had come from public accounting firms. Thus, it

appears that public accounting firms dominate in the incubation of new public accounting


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firms just as publicly or privately held profit-seeking firms spawn the majority of new

ventures in high-technology industries. Formally stated:

Hypothesis 3: Professional service firms are more likely to be incubated by other

professional service firms than by universities, non-profit agencies,or profit-seeking firms in other industries.

Size. Although the influence of the size of the incubator organization is

somewhat inconclusive, the author shared Coopers logic (1985a) and expected that

smaller firms would generate a higher rate of spin-offs than larger firms. First,

employees learn about technologies or markets in small companies that can be exploited

by small firms. Second, they have greater opportunity to develop broad experience and

to participate in the management of a small firm. Finally, those who choose to work for

smaller firms might have done so due to self-selection based upon latent entrepreneurial

inclinations. Similar reasoning would suggest that most founders of public accounting

firms are from regional or local firms rather than Big 5 national firms.

However, public accounting is a more mature industry than high-technology and

has already undergone extensive mergers and industry consolidation. Moreover, the

product of a public accounting firm, like many service industries, is inseparable from an

employees reputation. Accordingly, seven of the eight accountants interviews had

sought to establish credibility in the industry by attaining experience at a national firm

with name recognition, just as an individual might favor a name university when pursuing

a degree. Thus, it appears large national firms produce entrepreneurs who seek

credentials but discover unmet market niches along the way. Formally stated:

Hypothesis 4: Founders of professional service firms are more likely to come

from incubator organizations that are large.


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Although most of the founders interviewed had come from large incubators, the

fact that the research sample consisted of three mid-sized public accounting firms may

have skewed the results to favor larger incubators. This is because larger public

accounting firms are typically structured in a way that demands greater employee

specialization. As a result, it might be expected that national or regional public

accounting firms would incubate the majority of mid-sized to larger new firms. In

contrast, small local firms with very general practices would be more likely to spin-off

new firms with less specialization and fewer employees. Therefore, the author suggests

the following hypothesis:

Hypothesis 5: The size of the professional service firm is likely to be reflective ofthe size of the incubator organization.

Team Formation. Although founders of service industries could also benefit

from the well of talent that incubator organizations provide, functional necessity might

not be as great a motivator. Often the allure of service industries is that the founders

expertise is the product, making the functional purpose of a team less compelling.

However, other factors exist that encourage team development in the venture creation

process. These include start-up capital, encouragement, complementary skills, and

customer base. Because these factors appear to be as compelling as functionality, if not

more so, one might expect founding teams developed at incubator organizations to be as

prevalent at service firms as they are at high-technology firms. Accordingly, the author

expects:

Hypothesis 6: Professional service firms will have more than one founder.

Hypothesis 7: Founders of professional service firms will be from the sameincubator organization.


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Motivation. Although the current literature has been inconclusive in determining

push or pull factors in the decision to pursue the process of entrepreneurship, it does

appear to suggest that negative pushes are more prevalent. Furthermore, there is a

widespread stereotype that there is no such thing as an entrepreneurial accountant,

implying the greater again of negative push factors motivating a risk-averse accountant

to assume the role of an entrepreneur. Such logic would tend to favor the argument that

negative push factors would be more prevalent in the partners decisions to create their

own firms. However, the attempt to classify this studys interview findings as push or

pull led to the awareness that this classification schema may be insufficient.

DISCUSSION

Two fundamental flaws presented themselves during the authors effort to classify

the interviewees entrepreneurial motivational factors as push or pull. First, this

studys interview findings suggest that push factors contributing to employee attrition

in high-technology industries may not necessarily be the same as those affecting

professional service industries. For example, lack of organizational support for a product

idea may contribute to employee-attrition at a high-technology company, but such an

explanation from a founder of a public accounting firm would not appear likely. Instead,

push factors such as frustration with management, feeling insulted, or perceiving

a lack of opportunity were far more prevalent in the interview findings. However, these

push factors do not appear to be industry specific. A similar phenomenon occurs in

classifying pull factors such as desire to realize the fruition of a product idea as

opposed to recognition of an economic opportunity (Gartner, 1988) and


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encouragement (financial or otherwise) of a customer, investor, or partner (Shapero

and Sokol 1982) to pursue it. Obviously, the latter appears universal whereas the former

would seem inapplicable to the professional service industries.

Although often used in the literature to account for potential differences between

industries (Cooper, 1986; Feeser and Willard, 1989), classifying an industry as

technical or non-technical sheds very little light on the universality or specificity of

motivational factors. As discussed during hypothesis development, public accounting,

law, and many forms of consulting could all be defined as technical. Therefore,

segregation is more likely attributable to innovation. This seems logical when one

considers that the study of incubation developed from a desire to understand how

innovation is fostered in an effort to attain and sustain competitive advantage (Smilor and

Gill, 1986). Most of the corporate entrepreneurship literature remains grounded in this

desire (Peters and Waterman, 1982; Ross and Unwalla, 1986; Hoffer, 1986). This focus

has allowed for great advancement in understanding how and why incubation occurs, but

it has also led to the inability to extend the literature to other industries deemed less

innovative such as the professional services and service industries in general.

Although a variety of perspectives, such as a focus on individual differences (trait

and behavioral) between entrepreneurs and non-entrepreneurs (Wortman, 1987) and

economic opportunism (Gartner, 1988) have been used by researchers to determine the

influences of an individuals decision to undertake the process of new venture formation,

the incubator literature has primarily focused its motivational analysis in accordance with

the integrated push and pull models that incorporate both individual differences and

economic factors (Shapero and Sokol, 1982; Vesper, 1983). Because this paper suggests


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that similarities exist between incubation in the industries of high-technology and the

professional services, the author has chosen to use the push and pull models currently

serving as the convention in the incubator literature as the framework upon which

subdivision of motivational factors by innovative inclination might be applied.

Accordingly, Table 1 presents a method of separating those motivational factors that

remain constant between industry settings from those that are unique to the high-

technology industries.

------------

Insert Table 1 about here

------------

Because far more time and energy has been invested on understanding why

entrepreneurs leave high-technology industries than service industries, many strategies

have been designed and implemented to reduce attrition of entrepreneurially-inclined

employees. Furthermore, it is expected that most factors motivating employees to

become entrepreneurs are of a non-innovative nature as Table 1 suggests, even in high-

technology industries. Thus, many of these strategies might prove successful in non-

innovative industries as well. This appears even more likely after considering the

fundamental similarities between the factors of effective incubation identified for high-

technology and professional service industries.

The second fundamental flaw identified while attempting to implement the

push/pull classification was that the two are not mutually exclusive as the literature

suggests. Perhaps, this accounts for the incubator literatures inconclusive results as to

which is more dominant. Everyone interviewed subscribed to the belief that a period of


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apprenticeship was necessary early in their career, no matter what their individual

background. But, there was no denying that background contributed to the entrepreneurs

degree of impatience with the incubator organizations hierarchy.

Superficially, it appeared that the founding partner left the incubator as a result of

push factors such as frustration with the management, lack of opportunity, or being

bored, insulted, or angered, but the degree to which these push factors were

experienced was heavily reliant upon pull factors, such as childhood exposure to

entrepreneurial parents or role models, encouragement by others to pursue self-

employment, or an inherent personal need for control. Thus, it would appear that push

factors are only push factors when the individual has latent entrepreneurial tendencies.

In other words, a push isnt felt unless a pull is present. This is not to say that the

most risk adverse individual cant be pushed into entrepreneurship through a crisis or that

the most entrepreneurial-inclined employee cant be enticed to stay with an environment

conducive to his personal work preferences. Rather, this relationship suggests that a

continuum exists in which the degree a push is felt is contingent upon an employees

inherent attitude toward becoming an entrepreneur. See Figure 1.

------------

Insert Figure 1 about here.

------------

What this means for the company that wishes to retain their most innovative

employees is that innovative and entrepreneurial may not necessarily be the

synonyms that the literature has considered them. If pull factors (inherent or external)

are not present for many of the innovative employees, then their ability to tolerate


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pushes without leaving to start their own company could be equal or even greater than

that of less innovative employees. But, entrepreneurial-inclined employees (innovative

or otherwise) who would consider leaving may begin to display some indication of their

intentions in accordance with the degree of push pressure they are experiencing long

before taking the entrepreneurial leap. In fact, push motivational factors, like

frustration with management, boredom with their job, or frequent agitation could be

viewed as symptoms of the push pressure being endured by the employee. This would

give the incubator organization an opportunity either to reduce the degree to which the

employee is feeling the push, if the factor is considered controllable, or to prepare for

the possibility that their employee may soon be a competitor, if the factor is deemed

uncontrollable. See Table 2. Such forewarning could allow the incubator organization

to take the appropriate steps necessary to prevent the loss of their employees or clients.

-------------

Insert Table 2 about here.

-------------

IMPLICATIONS

Identifying the similarities and differences between high-technology and

professional service incubator organizations is the first of many steps needed to extend

and apply industry-concentrated knowledge to service industries. With the realization

that similarities exist comes the question of whether programs designed for one industry

can be successfully implemented for another. Although the study of the role of the

incubator organization in new firm development began as a means of identifying the

elements needed to foster innovation and become more competitive, it has resulted in a


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better understanding of why employees decide to pursue entrepreneurship. Such

knowledge has led to the creation of intrapreneurship programs designed to retain

innovative, entrepreneurially-inclined employees. Because many of the motivating

factors addressed in these intrapreneurship programs are not exclusive to innovative

industries, it is possible that many of these programs could be implemented to retain

entrepreneurially-inclined employees in service industries. Research along these lines

could determine which motivational factors are and are not of an innovative nature in

an effort to suggest when programs designed for high-technology industries might be

successfully transplanted to less innovative industries.

Although some of the motivating factors identified in the interviews were pull

oriented or individualistic in nature, their degree of intensity and gestation period

appeared to be reliant upon the environment created by the incubator organization.

Moreover, the majority of motivational factors were negative push factors, which

suggests that the incubator firm may have had some ability to alleviate the pressure

leading to their emergence. Although these findings suggest that the incubator

organizations control many of the sources of pressure which lead employees to decide to

pursue entrepreneurship, they do not address the question of whether an organization

shouldattempt to retain entrepreneurially-inclined employees. It might be expected that

an organization would want to retain the employees in whom they have invested time and

money, but there can be consequences associated with the retention of an employee who

might be happier as an entrepreneur. Often that which is necessary to make an

employees job satisfying can not be willingly provided by the incubator organization.


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However, to come to this conclusion, management must be able to adequately assess the

costs of entrepreneurial attrition by understanding its causes.

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Table 1. Push and Pull factors of entrepreneurial motivation grouped byinnovative inclination.

Non-Innovative Innovative

Push

Fired Insulted, Angered Bored Reaching middle age Divorced or widowed Frustration with

management of project

Lack of ownershippotential

Passed over forpromotion

Lack of opportunity foradvancement

Having a pet projectkilled

Lack of organizationalsupport for idea

Pull Encouragement bypartner, mentor,

investor, customer

Need for achievement Need for control Entrepreneurial parents

Desire to realizefruition of an idea


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Motivation Profile of Individual 1: Motivation Profile of Individual 2:

Few pull factors. Many pull factors.

Greater immunity to push pressure; Push pressures felt early, perhapsonly felt when intense. immediately.

Reluctant to leave incubator unless Entrepreneurially-inclined. Likely toforced by push pressure. leave with little prompting.

Figure 1. Individual response to push pressure based upon presence of pullfactors.

IncubatorOrganization

New VentureCreationl 2


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Table 2. Push and Pull motivational factors grouped by incubatorcontrollability.

Push Motivational Factors

Inclination: Controllable by Incubator: Uncontrollable by Incubator:

Non-innovative Insulted, Angered Bored Frustration with management

of project Lack of ownership potential Passed over for promotion Lack of opportunity for

advancement

Reaching middle age Divorced or widowed

Innovative Having a pet project killed Lack of organizational

support for idea

None

Pull Motivational Factors

Inclination: Controllable by Incubator: Uncontrollable by Incubator:

Non-innovative Need for achievement Latent / Inherent: Entrepreneurial parents

and role models Parental encouragement

to pursue self-employment

Need for controlExternal:

Encouragement bypartner, mentor, investor,customer

Innovative Desire to realize fruition ofan idea

None

Documents

Entrepreneurial Motivation in Service Industries