US AND THEM: THE IMPACT OF DIFFERING FOUNDER MINDSETS ON FIRM STRATEGIC ORIENTATION

Abstract

Historically, small business founders were assumed to be motivated by profit-maximization. Today, we understand that founders also have non-economic goals for starting a business, including furthering their family legacy. This dissertation contrasts two types of founder mind-sets: an entrepreneurial mindset and a small business mind-set. I propose theoretical arguments which predict that founders who identify more with the small business mindset would pursue long-term, trust-based strategies that foster relationships with stakeholders such as suppliers and customers. On the other hand, founders who identify with the entrepreneurial mindset are more likely to pursue strategies that are ambitious, contractual, and profit-enhancing. Using hierarchical regression to analyse data from small business owners in India, I find that entrepreneurial founders rely on both relational governance mechanisms and contractual governance methods. In addition, hard-facts and statistical data negatively influence entrepreneurs across mind-sets, but advice given by network of specialists has a positive effect. Moreover, uncertainty in the business environment negatively affects the relationship between founder mind-set and strategic decisions of the firm. This dissertation contributes to our understanding of founder mind-set and specifically highlights the effect of ‘small business mindset’ on the strategic orientation of ventures.