Highlights
- This article studies some of conditions that many hybrid entrepreneurs face as they struggle to maintain a sustainable balance between their job and their business.
- By interviewing a number of hybrid entrepreneurs, the research was able to begin the process of explaining some of the duality and instability entrepreneurs may face when making decisions about the future of their businesses.
- The findings contribute to the understanding of how and why hybrid entrepreneurs decide to become full-time entrepreneurship and the tension they feel leading up to that decision.
1Instagram, Groupon, GitHub, and the biggest of them all Apple were all started by founders who already had full-time jobs [1], [2], [3]. Although hybrid entrepreneurship is seen as a growing business phenomenon as well as an increasing area of research, the relevant literature reveals some inconsistency in its definitions [4]. However, it seems clear that at its root is the practice of combining employment with entrepreneurial activities. Schulz, Urbig, & Procher [5] and Solesvik [6] concluded that not all hybrid entrepreneurship is the same and called for further research to explore it.
2Although combining working for a wage and being involved in entrepreneurial activities is not a new endeavor, it has more recently become more visible and vital to policymakers and others. Why now? Because of rapid advances in technology, especially information communication technology, The Internet, and social changes (e.g., changes in the labor markets), the tools and “raw materials” for business startups is not only much more widely available, but also available at inexpensively and in many cases free [7]. These changes have significantly lowered the barriers to entry and growth [8]. Further, it has created an environment where individuals can create billion dollar firms not only in their garages but their bedrooms after work or even after school.
3As a result, hybrid entrepreneurs do not have to be small one-person affairs any longer. This change is made possible by tools and innovative management practices such as virtual organizations, outsourcing, crowdsourcing, user innovation, co-creation, etc. Entrepreneurs can use these tools and techniques to grow their businesses beyond what is typically thought of has part-time entrepreneurship and the like.
4While in the past it entrepreneurs have been able to hold down a job and be entrepreneurs over long periods of time. However, we argue that the ability for entrepreneurs to have the luxury of combining employment and entrepreneurship may not be stable or viable long-term, given some of the conditions of today.
The Growth Question
5According to research [9] there are a number of conditions that point to the possibility that ventures of hybrid entrepreneurs will more likely survive longer, more likely to be in higher growth industries and more likely to have access to tools and system that enable growth than typical entrepreneurial venture. This will lead to 1) they may have to make important decisions about the growth of their business sooner, and 2) the ability to be employed full-time and an entrepreneur part-time is not as stable as it once was.
6This is important because more and more people are moving to part-time entrepreneurship. A recent report shows that the US alone has over 27 million entrepreneurs, many of which are still employed at their day job [10]. Further as found by Folta, Delmar, & Wennberg [11], hybrid entrepreneurs are expected to become full-time entrepreneurs at higher rates than the employed. Therefore, hybrid entrepreneurs and entrepreneurship have a significant growth effect on the world economy. Despite this, hybrid entrepreneurs are under the radar, especially to most policymakers, politician and other decision makers.
7Using the language of Thorgren and her colleagues [12] hybrid entrepreneurship is a two-step decision process. The first step is to decide to be a hybrid entrepreneur. The second step is to determine whether or not to move to full-time entrepreneurship. However, based on a combination of research, observation and a series in-depth, semi-structured interviews with five hybrid entrepreneurs, we believe that hybrid entrepreneurs face other related questions they need to answer as well. For example, one of the most critical questions entrepreneurs of all types [13], [14] must answer is—What type of entrepreneurs will they be? In other words, will they be lifestyle, slow growth or high growth entrepreneurs? The answer to this question can delay the need to make that Thorgren’s part-time versus full-time decision. Consequently, is there a (half) step missing? We think there may be.
8Therefore, the purpose of this article is to introduce the idea that the hybrid entrepreneurship process is affected by an additional question. We will call this—the growth question. A second and related purpose of the article is to highlight how several conditions surrounding hybrid entrepreneurship impacts the growth question. The third and final objective is to suggest that hybrid entrepreneurship at the individual-level may become a less stable (permanent) activity over time, due to a new concept we identify and introduce called the Wobble Effect.
9Finally, this article is intended to help entrepreneurs and policymakers understand that growth is a choice and that entrepreneurs need to make decisions to create it. And these choices have ramifications about on how they run the business, on the resources they need, and ultimately if and when they must decide to move to full-time entrepreneurship.
What is Hybrid Entrepreneurship?
10Though hybrid entrepreneurship is seen as a burgeoning business activity as well as a burgeoning area of research, pertinent literature exposes some inconsistencies in its definitions [15]. However, because the field is in its early stages, it is appropriate to use a broad definition. So, for this article, it seems clear, that at its root hybrid entrepreneurship is the practice of combining employment with entrepreneurial activities.
11In their influential and early piece, Folta et al. [16] described hybrid entrepreneurship as a phase on the way to self-employment. They divide the concept into three useful theoretical categories. The first category is hybrid entrepreneurship as a path to supplemental income. Here individuals engage in entrepreneurial activities to create additional sources of income. There is a related practitioner term that gaining some popularity in the mainstream—side hustle. A side hustle can be defined in this manner—a “sideline that brings in cash; something other than your main job” [17]. Second, hybrid entrepreneurship can be a path to nonmonetary benefits. The non-monetary benefits can be wide ranging from the flexibility of work schedule to more psychological benefits. The third and final category is a path to transition. Here hybrid entrepreneurship provides safe passage from the relative safety of full employment to the unknown of self-employment. Items such as employment benefits, retirement benefits, health care, status, and prestige are among the things that could be at risk with self-employment. As a result, the remaining employed acts as a safety net.
What does growth have to do with it?
12Recent research has shown there are a number differences between a hybrid entrepreneur and a full-time entrepreneur.
13– First, hybrid entrepreneurs may be less financially constrained than full-time entrepreneurs especially in the early stages of the venture [18], [19]. This may have an impact on some of the strategies and tactics available to the entrepreneur. In other words, they may have some additional resources they could use for growth tactics and strategy.
14– Second, people with high switching costs are more likely to become hybrid entrepreneurs. Put another way, individuals with higher education, higher salaries, more prestigious position, etc. (i.e., more to lose) are more likely to key their jobs while starting their ventures. So, while these higher switching cost people have more to lose, they also have more to give to the enterprise as they probably have more resources both tangible and intangible. Additionally, more highly educated hybrid entrepreneurs to use their new ventures to assess new potential business opportunities. They also react more quickly to environmental changes than full-time entrepreneurs of less educated hybrid entrepreneurs [20].
15– Third, hybrid entrepreneurs who transition to full-time entrepreneurship have a higher rate of survival than those that transition from full-time employment directly [21]. Longer survival increases the likelihood of growth for these businesses.
16– Fourth, hybrid entrepreneurship is popular with people in the high tech and R & D intensive industries [22], [23]. Both of these areas are populated with high growth ideas and opportunities and as a result, high growth potential businesses and more likely to be developed.
17All four of these differences (cf., fewer financial constraints, higher levels of education, higher survival rates and high-tech industries) point to the idea that hybrid entrepreneurs should be more likely to start high growth potential ventures. It also leads to the idea that hybrid entrepreneurs may be in a better position than “regular” entrepreneurs to achieve this goal.
Duality, Instability, and Growth
18Hybrid entrepreneurship can be a feasible route for individuals desiring to fulfill their entrepreneurial dreams in a lower-risk manner. All five entrepreneurs (e.g., A, B, C, D & E) interviewed confirmed that having a “normal or “regular” job helped them to reduce the overall risk of starting their ventures. Not all hybrid or part-time entrepreneurs wish to become full-time entrepreneurs. According to Solesvik, “Some (hybrid entrepreneurs) enjoy a dual status of having a high-paid, secure, and prestigious job while also deriving some extra income from the entrepreneurial activity that can further improve their lifestyle.” [24] Entrepreneurs C and D specifically mentioned the duality, but not for the reason of status. Entrepreneur C expressed that he had some “organizational goals” that he wanted to accomplish in a large firm that he would not be able to accomplish in his venture currently. Additionally, Entrepreneur C enjoyed the “comradery, sense of community and culture” that he found at his work office, but was not yet available in the more isolated environment of his startup. This notion is close to Folta et al.’s [25] ideas about the non-monetary benefits sought by some hybrid entrepreneurs. One question is—how stable is that dual status?
19Our exploration with the interviewed entrepreneurs reveals it is not that stable. Put another way; hybrid entrepreneurs may not be able to maintain this dual status very long, but not for the reason you may think. The intuitive reason is that it is too challenging to work a job and start a business so that the business is likely to fail or a person is drawn back to his or her job full-time. Conversely, we are proposing a counterintuitive idea.
20Many argue if your business isn’t growing, it’s dying as each day you are losing ground to competitors, new promising innovations, etc. Therefore, (some) growth is necessary for survival. However, that growth can throw the work balance off as more attention may need to be paid to the growing venture, resulting in the “dual status” being more likely to be temporary. This is especially true when the enterprise is a high growth venture.
21Accordingly, the two-step conceptualization [26] is inherently unstable and in fact, increasingly so. While researchers have stated that hybrid entrepreneurship can persist for the working life of the entrepreneur, we believe this is a rarity or an exception and will be more so in the future. Why? Because according to some researcher, we live in a Cambrian world. Siegele [27] paints a metaphorical picture as he describes the current entrepreneurial environment in the same terms as the Cambrian Period 540 million years ago, which led to an explosion in the number and variety of life forms on Earth. During this era, the Earth and its swamps were teeming with raw nutrients, chemical compounds, heat and energy from the sun and lightning creating the basic building blocks of life. Similarly, the current startup environment is teeming with qualified and willing talent, financial resources, support organizations such as incubators, accelerations and startup schools creating the basic building blocks of new ventures, especially in the areas of information and communication technology (ICT), digital and other knowledge-intensive industries.
22Further, there are thousands of tools that are widely available to help people start and grow their businesses (marketing, accounting, management, productivity, design and coding, hosting, etc.). Most of the tools are free or for a nominal cost. Moreover, there are systems and platforms to make outsourcing easy. In the past, the startup environment was nothing like this. All of our interviewed hybrid entrepreneurs mentioned that they relied on freely available tools, specifically communications tools, document management tools, and project management tool. IT entrepreneur B, whose business is developing software as a service, admitted that he was barely doing any real coding because there were so many free available code libraries that he was mainly cutting and pasting snippets and modules. Today a person can start a business and have worldwide exposure and distribution in a matter of minutes. Entrepreneur E agreed and added that by using “modern business modeling techniques, “ideas can be tested, discarded, changed and re-tried with fewer costs and less time.” In addition to specific tools, there are administrative and managerial innovations including new business models/modeling techniques and support organizations, helping and pushing firms to grow.
The Wobble Effect
23Accordingly, based on our research, we are claiming that in the past individuals could maintain a job and run a small business on the side over long periods of time in a relatively steady and stable state; however, conditions have changed. For example, Entrepreneur D said that she was facing a “struggle to juggle.” In other words, she has faced instability in her feeling, thoughts and ultimately behavior about devoting more time to her job or more time to her business. As a result, we propose that this “instability” is caused by tension within the hybrid entrepreneur. We call this tension the wobble effect because hybrid entrepreneurs wobble between dedicating more time to their job and between spending more time building their business. More specifically we define the wobble effect as the tension within the hybrid entrepreneur created by—a) the pressure to grow his or her venture; b) the pressure to perform well at his or her job; and c) the availability of low cost and free business tools that can enable the entrepreneur to start, grow, and manage their business.
24What does this mean for the hybrid entrepreneur?
25It means that for current hybrid entrepreneurs ventures are easier and quicker to start. These enterprises have a lower risk of failure and a higher chance of success. Additionally, these side business affairs no longer need to be small, solo income replacement or income supplementing activities. Further, these ventures can be global from the start as free tools enable rapid internationalization [28]. This new situation created additional stresses, decisions, and choices for the hybrid entrepreneur. With these new opportunities and possibilities, how long with can/will and entrepreneur balance his or her job and their business? How long can the entrepreneur keep both his or her day job and his or her business?
26When will the wobble become too great?
Make The Growth Decision
27This new environment for entrepreneurship leads to a number propositions or suggestions concerning hybrid entrepreneurship within the Thorgren et al.’s [29] two-step process framework that should be further investigated and tested.
281. Firm growth does not occur by accident or chance. Entrepreneurs must make conscious decisions to grow or not and at what speed [30], [31]. These “growth decisions” have an impact on the timing of Thorgren et al.’s [32] second question—part-time versus full- time entrepreneurship.
292. Having to make these growth decisions may delay when the growth question must be addressed.
303. Modern startup and entrepreneurship tools allow the firm to grow faster and larger before that the growth question needs to be raised. Therefore, by the time the entrepreneur needs to make that full-time decision, the size of the firm, as well as its rate of growth, can be so large that the decision may already be a foregone conclusion. The entrepreneur may not have a real choice other than to leave his or her employment position or closed the business.
314. There is a growth bias, which possibly interferes any the balance of maintaining a full-time job and being an entrepreneur. Although there is a great deal of debate on this issue, firms typically have to grow, or they die [33], [34]. This idea coupled with the environment which makes it easier to grow and makes it more likely to grow is apt to make the decision to be a full-time entrepreneur more likely.
325. The average length of time that the dual status lasts is probably shrinking, because of the wobble effect and pressure of managing a larger and growing firm is greater today. However, this needs to be examined more closely, as there are countervailing forces here and a level of irony. On the one hand, there are tools and systems making it easier to grow fast and large and to be able to manage a venture more easily. On the other hand, these same tools make it ultimately, harder to keep a job as the firm may outgrow those tools and demand more attention. As a result, being employed full time and being a growth entrepreneur (the duality) is less likely to be sustainable.
Implications
33Hybrid entrepreneurship seems to hide in plain sight. It is a huge and growing business phenomenon that has a tremendous impact on society and the economy, but it is not a mainstream topic. While combining working for a wage and being involved in entrepreneurial activities is not new, the current entrepreneurial environment is such that individuals can create a global startup with not only high growth potential but also the potential to disrupt large and traditional businesses and industries. However, the ability for entrepreneurs to have the luxury of combining employment and entrepreneurship may not be stable or viable long term, because the managerial and environmental pressures may force the hybrid entrepreneurship to choose to become a full-time entrepreneur or give up and go back to just working full-time.
34The implications from a practitioner’s perspective are relatively clear, although they not be easy to manage. The hybrid entrepreneur must decide early, whether or not he or she wants to start a high growth potential business or a lifestyle business. This choice will influence the industry, the type of business and certain early startup decisions. Secondly, if the hybrid entrepreneur does decide to create a growth-oriented firm, he or she must be aware that it is likely that this path will lead them to full-time entrepreneur surer and more quickly than they might expect.
35Additionally, there are implications for policymakers. There are opportunities for politicians to build support organizations like incubators and accelerators to assist entrepreneurs of all types. This type of support can help hybrid entrepreneurs and traditional entrepreneurs make that growth decision. Further, policymakers can acknowledge that in addition to the full-time self-employed, there are also many people that are part-time self-employed. The part-timers may not have the benefits from their jobs nor their businesses. As a result, they may need some additional and specific types of assistance.
Possible Important Future Questions
36Like most exploratory research, it raises more questions than it answers. Here are a few questions, if answered, may be helpful to understand the phenomenon of hybrid entrepreneurship better.
376. Can the wobble effect be isolated and measured?
387. Are there other factors that impact the wobble effect?
398. How does external funding play a role? Does external funding change the timing of the growth question or the part-time versus full-time question?
409. How do the business, the background, and experience of the hybrid entrepreneur affect decisions related to growth?
4110. What is the difference between those that take the no growth or slow path rather than the high growth path?
42However, with much of the focus of this article on management tools, it is important to remember what Entrepreneur A said, “New tools and techniques make it easier to start and grow a firm. They have helped me, but the real limiting factor for growth for me is the access or lack of affordable talent or people. The new tools don’t really help with that.” So, to conclude, it seems that Penrose was correct [35].
Notes
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