The Family's Financial Support as a “Poisoned Gift”: A Family Embeddedness Perspective on Entrepreneurial Intentions

Abstract

We argue that greater availability of financial support by the family for creating a new venture entails stronger financial and non‐financial obligations. Cognizant of these obligations, potential founders anticipate negative performance implications for the planned firm and threats to the family system in the case of their non‐fulfillment. We thus postulate that the formation of actual entrepreneurial intentions is less likely the greater the available financial support. We confirm this by studying a sample of 23,304 respondents from 19 countries and find the negative relationship to be dependent on family cohesion and on individual entrepreneurial self‐efficacy.

Notes

1. GUESSS (Global University Entrepreneurial Spirit Students’ Survey) investigates students’ career choice intentions across the world. See www.guesssurvey.org.

2. Following a back‐translation procedure, the German and French versions were also prepared (with the aid of two bilingual native speakers who were not involved in the original survey development). Some GUESSS country teams translated the English survey into their own preferred language and were requested to apply the same procedure. The translated versions were reviewed and checked for categorical and functional equivalence by the GUESSS core team.

3. In most countries, students could win iPads, travel vouchers, or other items. GUESSS reports a response rate of 6.3 percent (Sieger, Fueglistaller, and Zellweger 2011). This compares favorably with previous GUESSS editions and with other online student surveys (Porter and Whitcomb 2003). It is likely to be an underestimation as not all universities necessarily invited all their enrolled students. Unfortunately, reliable estimates are not available for all universities. All GUESSS country teams were required to comply with any ethics‐related requirements in their respective countries. Assistance and support for the corresponding applications were provided by the GUESSS core team.

4. GDP per capita data are taken from the International Monetary Fund (IMF) World Economic Outlook database (see http://www.imf.org/external/index.htm). GDP data for Liechtenstein were not available there. Unemployment rates are taken from the CIA World Factbook (see https://www.cia.gov/library/publications/the-world-factbook/index.html). For the cultural dimensions we used corresponding indices from the GLOBE project (House et al. 2004). These were not available for Belgium, Chile, Estonia, Luxembourg, Pakistan, and Romania. This reduced our sample to 19 countries (Argentina, Austria, Brazil, China, Finland, France, Germany, Greece, Hungary, Ireland, Japan, Mexico, the Netherlands, Portugal, Russia, Singapore, South Africa, Switzerland, and the UK).

5. The agricultural sector can be characterized by long‐term and stable returns (Brewton et al. 2010) which should be appealing to family members who might provide financial support. Also, family financing is particularly important for new ventures in this industry (Alsos, Carter, and Ljunggren 2014). This suggests a positive correlation with AFFS. For power distance, we note that when a society accepts power differences between members and values hierarchy (Hofstede 2001), this could lead to lower AFFS (as the “more powerful”—parents—might be less willing to support the “less powerful”—children). Doing an exchange term, in turn, constitutes a considerable financial investment that is very likely to be financed by parents or family members. For exchange students, it might thus be more likely that parents or family members would also support an entrepreneurial endeavor. For all these three variables, we believe there are no clear and convincing arguments why they should make the formation of entrepreneurial intentions more or less likely.

6. This was done by using the ivreg2/ivendog commands in Stata 13.

7. We also used the “svy: logit” command (with country as the primary sampling unit) instead of the “xtmelogit” command and found stable results.

Additional information

Notes on contributors

Philipp Sieger

Philipp Sieger is Assistant Professor at the University of Bern (Switzerland), Department of Management and Entrepreneurship.

Tommaso Minola

Tommaso Minola is Director at CYFE (Center for Young and Family Enterprise) and Assistant Professor at Department of Management, Information and Production Engineering, University of Bergamo, Italy.