Hybrid Entrepreneurs’ Resource Allocation and the Role of Exogenous and Endogenous Uncertainties

While prior research has made valuable contributions towards understanding why most individuals enter entrepreneurship next to their wage job, evidence on how these hybrid entrepreneurs manage their business after entry is largely absent. We fill this gap by studying hybrid entrepreneurs’ resource allocation while being in hybrid entrepreneurship compared to that after transitioning to full-time entrepreneurship. Drawing on real options theory, we argue that hybrid entrepreneurs’ resource allocation towards R&D tasks and sales tasks depends on whether these tasks are related to endogenous or exogenous uncertainty. Our empirical analysis based on a matched panel-dataset encompassing 797 hybrid entrepreneurs yields support for our hypotheses. Our paper offers contributions to the hybrid and the broader entrepreneurship literature, as well as to research on real options theory.