The impact of founder’s regulatory focus on the process of firm birth and firm abandonment

Abstract

PurposeThe purpose of this paper is to show how self-regulation influences the relationship between nascent entrepreneurial exploitation activities, firm birth and firm abandonment.Design/methodology/approachThis study draws from a unique longitudinal dataset of 181 nascent entrepreneurs from Switzerland who have been interviewed by phone in 2015 and 2016. It uses a moderated binary logistic regression to test the hypotheses.FindingsThis study provides evidence that discrepancies in promotion orientation can explain different ways exploitation can lead to an increased likelihood of firm birth and a decreased likelihood of firm abandonment while respectively increasing persistence. Findings suggest that this is attributed to the regulatory fit between a promotion orientation and exploitation activities.Research limitations/implicationsFor scholars, our findings provide insights into reasons for entrepreneurial persistence, as well as how firm birth can be achieved with different levels of exploitation activities.Practical implicationsThis study provides entrepreneurs with information on how to increase their persistence as well as the likelihood of firm birth while considering their regulatory focus.Originality/valueBased on regulatory focus theory, this paper highlights different paths to firm birth with varying quantity of exploitation activities. We contribute to a greater understanding of firm emergence by accounting for the impact of regulatory foci.