Hybrid entrepreneurship theory

What is hybrid entrepreneurship?

Most entrepreneurs work for organizations before or while they start their businesses. There is macho entrepreneurship dogma that says you have to go all in, experience "the fear" and dedicate yourself for 80 hours a week to your venture. Implicit in this is the notion that an entrepreneur cannot succeed if they hedge their bets by keeping one foot in employment.

Why go all in to a startup if startups are probabilistic events, not givens. Many employers and regulators allow employees the freedom to pursue new ventures on the side, especially those that do not directly compete with their employers (and therefore not breaching a duty of loyalty). 

Hybrid entrepreneurship refers to entrepreneurship whereby an employee starts a business on the side and keeps their day job until the startup reaches a certain size. Once the business is large enough to command the founder's full attention, then the employee makes their exit. However, it is important to note that many attempts will also be halted at some point along the way, delaying the probability of exit. There might usually be an equal or sequential balance of emphasis between them, but both the startup and the employer's job, get done.

Folta et al. (2014) argue that:

"In contrast to previous efforts to model the individual‘s movement from wage work into entrepreneurship, we consider that individuals might transition incrementally by retaining their wage job while entering into self-employment."

Their research on Swedish wage earners in the knowledge sector demonstrates that hybrid entrepreneurs represent a large minority of entrepreneurial activity.

Don't quit your day job!


Raffiee and Feng (2014) say: Don't quit your day job!

"hybrid entrepreneurs who subsequently enter full-time self-employment (i.e., quit their day job) have much higher rates of survival relative to individuals who enter full-time self-employment directly from paid employment"

Perhaps if more employers knew that hybrid entrepreneurs are more successful, they would be more forgiving of it. Policymakers could also get involved and ensure that employers do not overly restrict employees from starting businesses.

Related theories about entrepreneurship

Hybrid entrepreneurship is related but distinct from an employee spinout. Hybrid entrepreneurship may be seen as part of the process that some entrepreneurs use, it may also be a different type of entrepreneurship. Hybrid entrepreneurs are more risk averse than entrepreneurs who take the full plunge. This throws a wrench into the idea of the entrepreneur as a risk-taker, and seems to lend some credence to the hubris theory of entrepreneurship.

Sources:

Folta, T. B., Delmar, F., and Wennberg, K. (2010). Hybrid entrepreneurship. Management Science, 56(2), 253-269.

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