Speed to Legal Registration and Nascent Venture Performance: A Temporal Dilemma for Nascent Entrepreneurs in an Emerging Economy

In this paper, we examine the effect of a nascent venture's speed to legal registration during its formation on the initial venture performance in an emerging economy. Quickly obtaining legitimacy via legal registration in the early stages of a new venture's formation accelerates its resources acquisition and transition to other start‐up activities, facilitating the venture to seize dynamic entrepreneurial opportunities; however, in an emerging economy, quick legal registration also incurs substantial costs and compliance activities that may inhibit the venture's engagement in other start‐up activities. A nascent venture in an emerging economy suffers from being either too fast (early) or too slow (late) in registering its business during the formation process, and the relationship between the speed to registration and nascent venture performance is best reflected by an inverse U‐shape. Moreover, the inverse U‐relationship becomes more pronounced when the entrepreneurial opportunity is more innovative. Based on analyzing 145 nascent entrepreneurs from the event history data set of the China Panel Study of Entrepreneurial Dynamics (CPSED), we found strong support for our arguments.     

What Happens to Nascent Entrepreneurs? An Econometric Analysis of the PSED

abstract This article follows the progress of a large and nationally representative sample of American nascent entrepreneurs – identified in the initial interview of the Panel Study of Entrepreneurial Dynamics (PSED) – over the next 12 months of the panel. We develop a novel theoretical framework based on maximisation of expected utility and the value of waiting, and estimate it to reveal which personal and economic characteristics are associated with venture start-up – and which are associated with remaining a nascent entrepreneur, or giving up entirely. The value of waiting turns out to play a key role in helping us understand what happens to nascent entrepreneurs. We discuss the implications of our results for entrepreneurs, lenders, business start-up support agencies and policy-makers.*The authors would like to thank two anonymous referees, as well as participants at Imperial College, London; Palm Springs (USASBE 2005); Babson College (BKERC 2005); and Clemson University (2004 PSED Symposium) and in particular Tom Lumpkin and Kelly Shaver for helpful comments on an earlier draft. The usual disclaimer applies.     

Planning and the Entrepreneur: A Longitudinal Examination of Nascent Entrepreneurs in Sweden

We studied 623 nascent entrepreneurs during a six‐year period, examining how their planning decisions impact venture‐level performance. Our study is unique in that we tracked nascent ventures, examining their planning behavior, including changes to plans. Relying on the theory of legitimacy, this paper adds to the scholarly debate over the merits of business planning by examining, longitudinally, the impact of planning during a six‐year period, accounting for both pre‐emergent nascent activity and post‐emergent success factors. We found that neither formal planning nor changes in the business plan increased venture‐level performance over the six‐year study period.     

Women business owners in traditional and non-traditional industries

Small businesses continue to grow in importance to the national economy. According to the Small Business Administration, America's 22 million small businesses generate more than half of the nation's Gross Domestic Product and are the principal source of new jobs. The National Foundation for Women Business Owners reported that between 1987 and 1994, the number of women-owned businesses grew by 78% and women-owned firms accounted for 36% of all firms. Although the growth in the number of women-owned businesses is encouraging, the size of such businesses remains small in terms of both revenues and number of employees, especially in comparison to male-owned businesses. One explanation for this disparity is that female business ownership is concentrated primarily in the retail and service industries where businesses are relatively smaller in terms of employment and revenue as opposed to high technology, construction, and manufacturing.One of the most fruitful streams of research in women's occupational choice has been based on social learning theory. Specifically, self-efficacy has been found to relate to both type and number of occupations considered by college men and women, and with regard to traditional and non-traditional occupations. Entrepreneurship researchers have also used social learning theory to study entrepreneurial intentions. This study builds on that background of women's career development and entrepreneurial intentions to examine differences between traditional and non-traditional women business owners. We examine 170 women business owners in various traditional and non-traditional businesses in Utah and Illinois. Questionnaires were the primary method of collecting data, in addition to 11 in-depth interviews from a sample of the survey respondents. Using a careers perspective, based on social learning theory, we hypothesized that women in these two different categories of industries would differ on levels of self-efficacy toward entrepreneurship or venture efficacy, their career expectations and their perceived social support. A second analysis was also done that explored the relationship between the same independent variables and success or performance of the business. The results offer support for using this integrative model to understand differences between women in traditional and non-traditional industries. The first analysis revealed that significant differences exist between the two groups on several of the independent variables. Traditional business owners had higher venture efficacy for opportunity recognition, higher career expectations of life balance and security and they reported that the financial support received from others was more important to them than those in non-traditional businesses. On the other hand, the non-traditional owners had higher venture efficacy for planning and higher career expectations for money or wealth than the traditional group.The second analysis explored whether success, as measured by sales, was affected by differences in venture efficacies, career expectations, or perceived support received by women in traditional businesses as compared to those in non-traditional ones. This analysis revealed that traditional women business owners might have different factors that contribute to their success than non-traditional owners. Specifically, for the traditional owners, venture efficacies for opportunity recognition and economic management as well as the career expectation of autonomy and money (or wealth) were positively related to sales. For the same group efficacy toward planning and the need for security were negatively related to sales. For the non-traditional women, venture efficacy toward planning and the career expectation of autonomy were positively related to sales while the expectation of money or wealth was negatively related. Also for the same group, the perceived importance of the emotional and financial support was negatively related to sales.In the past, most of the entrepreneurial research has used predominantly male samples of entrepreneurs. Those that include women entrepreneurs generally are comparative, between men and women. This study's comparison of two groups of women entrepreneurs offers a unique contribution to the field.Future research is recommended to further understand how venture efficacy and career expectations affect the decision to start a new business in a particular industry. It would be particularly beneficial to study venture efficacy and career expectations of prospective women entrepreneurs prior to the start of the business. Similarly, greater attention should be given to understanding how venture efficacy develops in different individuals.     

Argonauts and Icaruses: Social networks and dynamics of nascent international entrepreneurs

Drawing on Bourdieu’s theory of practice, we consider internationalization as a process of field crossing and apply this framework to nascent international entrepreneurs. The analysis of 37 interviews with French entrepreneurs, managers, and support providers in China allows identifying two types of international entrepreneurs: (1) “Fallen Icaruses”, unable to incorporate and exhibit a global habitus and who fall back to the home field, and (2) “Global Argonauts”, incorporating and exhibiting a global habitus and who proceed with internationalization. Our findings show that social networks can be hostile to newcomers and that incumbents in those networks first assess newcomers’ “compatibility”. We posit that the success of international initiatives by entrepreneurs depends on their ability to cross and fit into different “fields”, and to develop various forms of social relationships in those fields.     

The Two Sides of the Story: Network Investments and New Venture Creation

It is widely recognized that networks provide access to resources necessary for founding a new venture. However, they also come along with opportunity costs of time. We therefore argue that maintaining a set of network relationships is an investment that may not always pay off. More specifically, we develop detailed hypotheses on why the relationship between investing time in developing and maintaining a larger network and more intense network relationships and success in new venture creation may be best described by an inverted U. Testing our hypotheses on longitudinal data of 137 nascent entrepreneurs, we find broad support for our propositions.     

An investigation of hindsight bias in nascent venture activity

We posit that individuals who are actively engaged in activities to develop their own venture will exhibit hindsight bias when recalling their startup experiences. We observe that those who fail to develop their startup activity into an operating business demonstrate substantial hindsight bias concerning the probability of venture formation. In particular, the recalled probability of success, reported after their decision to quit, is lower than the probability of success solicited during the nascent process. We argue that the systematic distortion of the past has important implications for individuals involved in the venturing process. Specifically, we suggest that these individuals are at risk of overestimating their chances of success when starting future nascent activity if they do not correct for their optimistic tendencies. The evidence from this study suggests it is important to recognize that what nascent entrepreneurs believe they experienced, and what they actually experienced, may not be equivalent.     

The Effects of Pre-venture Plan Timing and Perceived Environmental Uncertainty on the Persistence of Emerging Firms

This paper explores the effects of when pre-venture planning occurs (early or late) in the sequence of activities accomplished during the process of new business emergence, and the moderating effects of environmental context (the degree of perceived financial, competitive and operational uncertainty), on the persistence of emerging business startup efforts. Using data from the U.S. Panel Study of Entrepreneurial Dynamics (PSED), our analyses found a strong main effect for business planning: Nascent entrepreneurs who completed a business plan were 2.6 times more likely to persist in the process of business emergence than those who did not complete a plan. In addition, the likelihood of venture persistence increased when nascent entrepreneurs engaged in planning early in the sequence of start-up activities in perceived uncertain financial and competitive environments, while venture persistence increased when nascent entrepreneurs engaged in planning late in a sequence of activities in perceived certain financial and competitive environments.     

Venture distress and problemistic search among entrepreneurs in Brazilian favelas

When do entrepreneurs in emerging markets seek out help from organizational sponsors? Problemistic search theory suggests that entrepreneurs will seek out sponsors in moments of venture distress. However, this theory was developed in the context of large organizations; it is not clear how it might apply to entrepreneurs in resource-constrained contexts. We use three inductive studies conducted in favelas in Brazil to examine when entrepreneurs seek help. Consistent with problemistic search theory, we find evidence that entrepreneurs seek out help from organizational sponsors in moments of venture distress. We also explore what types of entrepreneurs are most likely to seek help in a situation of venture distress and find that entrepreneurs who are more socially embedded and have more social obligations are more likely to take up sponsorship services, leading to important heterogeneity in our results on take-up. We find that women, more mature ventures, and middle-aged entrepreneurs are all more likely to engage in problemistic search. We contribute to a more contextualized theory of problemistic search for small entrepreneurs in emerging markets. We also provide important theoretical and practical insights about the demand-side of organizational sponsorship.     

The advantage of experienced start-up founders in venture capital acquisition: evidence from serial entrepreneurs

Entrepreneurs with prior firm-founding experience are expected to have more skills and social connections than novice entrepreneurs. Such skills and social connections could give experienced founders some advantage in the process of raising venture capital. This paper uses a large database of venture-backed companies and their founders to examine the advantage associated with prior founding experience. Compared with novice entrepreneurs, entrepreneurs with venture-backed founding experience tend to raise more venture capital at an early round of financing and tend to complete the early round much more quickly. In contrast, experienced founders whose earlier firms were not venture-backed do not show a similar advantage over novice entrepreneurs, suggesting the importance of connections with venture capitalists in the early stage of venture capital financing. However, when the analysis also takes into account later rounds of financing, all entrepreneurs with prior founding experience appear to raise more venture capital. This implies that skills acquired from any previous founding experience can make an entrepreneur perform better and in turn attract more venture capital.     

Entrepreneurship ecosystems and women entrepreneurs: a social capital and network approach

This study investigates the effects of venture typology, race, ethnicity, and past venture experience on the social capital distribution of women entrepreneurs in entrepreneurial ecosystems. Social network data from two municipal ecosystems in Florida, USA (Gainesville and Jacksonville), suggest that network connectivity and the distribution of social capital are significantly different for men and women entrepreneurs. This difference is contingent on the venture type. Male entrepreneurs show higher comparative scores of bridging social capital in aggressive- and managed-growth venture networks, while women entrepreneurs surpass their male counterparts’ bridging capital scores in lifestyle and survival venture networks. Lastly, experienced women entrepreneurs that self-identified as white showed a higher degree of network connectivity and bridging social capital in the entrepreneurial ecosystem than less experienced non-white female entrepreneurs. Implications for entrepreneurship practice and new research paths are discussed.

     

Will the startup succeed in your eyes? Venture evaluation of resource providers during entrepreneurs' informational signaling

Experienced founders and investors are arguably the venture community members most likely to possess needed financial and social resources for startups. We present a model of venture evaluation where entrepreneurs solicit these resource providers for needed financial and social resources. Our model addresses how resource providers' venture investment propensity influences their evaluation of entrepreneurs' informational signals and how their venture evaluation predicts their willingness to provide financial and social resources. We test our model using real-time decisions and find resource providers with founding experience (both non-investor founders and investors with founding experience) leverage their investment propensity more than non-founder investors when evaluating new ventures. In addition, our post-hoc analysis reveals that resource providers' founding experience is associated with their willingness to confer social resources. Overall, this paper focuses on the perspective of resource providers and addresses how their investment propensity, types of venturing experience, and venture evaluation influence their willingness to render resource support to new ventures.     

Intrapreneurship or entrepreneurship?

I explore the factors that determine whether new business opportunities are exploited by starting a new venture for an employer (‘nascent intrapreneurship’) or independently (‘nascent entrepreneurship’). Analysis of a nationally representative sample of American adults gathered in 2005-06 uncovers systematic differences between the drivers of nascent entrepreneurship and nascent intrapreneurship. Nascent entrepreneurs tend to leverage their general human capital and social ties to organize ventures which sell directly to customers, whereas intrapreneurs disproportionately commercialize unique new opportunities which sell to other businesses. Implications of the findings are discussed.     

Exit, stage left why entrepreneurs end their entrepreneurial careers before retirement

This article examines the process of entrepreneurship from a different perspective. It considers evidence not only about practicing entrepreneurs but also about ex-entrepreneurs: individuals who have ended their entrepreneurial pursuits to work for someone else.Why entrepreneurs ended their entrepreneurial careers is understood by examining not only their expressed reasons for leaving, but also by observing how they exited, when they exited, and who exited compared to who remained.The study's findings are tentative. They are published now because they have important implications for potential entrepreneurs, for practicing entrepreneurs, and for those working with entrepreneurs either directly or indirectly (e.g., policymakers) who must make important decisions before more evidence is available .Overall, the findings indicate that a high-risk profile exists that distinguishes ex-entrepreneurs, particularly those with brief careers, from “more seasoned” entrepreneurs who have experienced longer lives as entrepreneurs.Perhaps the most important implication is that early-career start-ups may be better than previously thought. Preexisting profiles of the “ideal entrepreneurs” place them in their mid- to late thirties at the time of venture start up. But this start-up age (and older ages) were highly correlated in this study with very short, aborted careers compared to practicing entrepreneurs and ex-entrepreneurs who started earlier.A second implication is related to the first: those who started earlier were able to do a better job of anticipating their future entrepreneurial pursuits than were those who started later, mainly because they were sensitized to entrepreneurship as a career possibility at a much earlier age. Early planning for an entrepreneurial career is correlated with longer careers not just because they start earlier but because they last longer.A third implication is the need to scale down the scope (and risk) of the first venture. Such venture “downsizing” can lessen financial requirements while also giving new entrepreneurs the flexibility to start another, often better, venture after they get into business and learn about new opportunities, contacts, and skills that they could not foresee or develop before starting their first ventures.A fourth implication reinforces existing notions about the relative perils of the first few years of an entrepreneurial career. Survival rates increase considerably after the completion of the second year and the probability of a long career rises substantially after the sixth year of entrepreneurial life.A final implication is that the overall costs, risks, and dangers of entrepreneuring have been overstated. Career exit rates are much lower than venture exit rates. Relatively few ex-entrepreneurs apparently suffered truly catastrophic career exits, at least to the extent that they felt that their careers had been very unrewarding and that they had ruled out ever entrepreneuring again.     

Early-stage business model experimentation and pivoting

Recent literature suggests entrepreneurs struggle to pivot—or fundamentally change aspects of their venture—due to identity-based resistance to change. Yet, when entrepreneurs receive negative feedback, overcoming this resistance may be important to pivoting their business model. We adopt a convergent, mixed methods research design to explore when and why some entrepreneurs overcome resistance to change in response to negative feedback during early-stage business model experimentation. Building upon qualitative data that we gathered and analyzed, we theorize entrepreneurs may resist pivoting their value proposition relative to other business model components despite receiving negative feedback on this aspect of their business model. However, we find three factors – entrepreneurial experience, startup mentoring, and team size – may enable entrepreneurs to pivot in response to negative feedback. We theorize that these factors broaden a startup team's perspective, enabling value proposition pivoting during early-stage business model experimentation. We test these relationships with quantitative data from 80 startups engaged in business model experimentation and find support across hypotheses. We contribute to understanding when and why entrepreneurs pivot aspects of their business models in response to negative feedback during early-stage business model experimentation.Executive summaryThe entrepreneurship literature suggests startups may benefit from experimentation and pivoting different parts of their business model in response to negative feedback from stakeholders (Andries et al., 2021; Camuffo et al., 2020; Shepherd and Gruber, 2021). In early stages of starting a new venture, a business model refers to a cognitive schema or belief about an activity system that could potentially create and capture value (Massa et al., 2017; Shepherd and Gruber, 2021). Business model experimentation is the process of testing assumptions underlying this potential business model and pivoting business model assumptions in response to negative feedback (Andries et al., 2013; McDonald and Eisenhardt, 2020; Leatherbee and Katila, 2020). Building upon prior literature, we define business model pivoting as a fundamental change to parts of the business model (Berends et al., 2021; Snihur and Clarysse, 2022; Shepherd and Gruber, 2021). Yet, literature also suggests founders often struggle to pivot assumptions despite negative feedback. Motives to preserve and protect certain assumptions relevant to founders' identities can interfere with pivoting (Grimes, 2018; Kirtley and O'Mahony, 2023; Zuzul and Tripsas, 2020). Despite the general understanding that founders struggle to change their ideas, however, the entrepreneurship literature currently lacks precise insight into when and why founders can overcome resistance to pivoting.In this research, we explore when and why startups pivot different parts of their business model. We do so within the context of early-stage business model experimentation, where founders explicitly state assumptions about different parts of their potential business model, test those assumptions against stakeholder feedback, and are encouraged to pivot business model components in response to negative feedback. Through a mixed methods research design, we find (1) founders tend to resist pivoting their value propositions relative to other parts of a business model in response to negative feedback; and (2) entrepreneurial experience, startup mentoring, and team size enables startups to overcome this resistance to pivoting in response to negative feedback. We theorize these factors broaden founders' perspectives (Warshay, 1962), contributing to a greater willingness to pivot during experimentation.We contribute to the literature on entrepreneurial pivoting by explaining nuanced variation in pivoting distinct business model components during experimentation. This contribution is important because it reveals that resistance to pivoting the business model may be more complex than previously thought. We also contribute to the literature at the nexus of business model experimentation and entrepreneurial cognition by finding that entrepreneurial experience, startup mentoring, and team size enable startups to pivot despite psychological resistance to pivoting in response to negative feedback because it broadens founders' perspectives. This insight is important theoretically because it advances what we know about enabling experimenting with business models under conditions of uncertainty. The research presented here has clear and important implications for practice. This research suggests founders often resist changing the value proposition versus other components of their business models in early stages of venture development. This resistance can impede experimentation and pivoting in response to negative feedback. To the extent founders want to broaden their perspective to enable pivoting their value propositions in response to negative feedback during early stages of venture development, our data suggest they may be able to do so by recruiting members with entrepreneurial experience on their team (or gain entrepreneurial experience themselves), engage frequently with startup mentors, and increase the size of their team. Overall, we view the breath of perspective that comes from experience and interactions with others as an advantage for entrepreneurs when experimenting with their business models during early stages of venture development.     

Saudi women entrepreneurs: A growing economic segment

The purpose of this study is to explore the sources of knowledge and support for Saudi Arabian women entrepreneurs when starting or operating a new venture. The study examines factors relevant to knowledge base, family support, and external support from outside sources that may influence venture creation. The findings reveal that women are the principal in the majority (55%) of women-owned businesses. A total of 70% of the women own more than 51% of the business and 42% started the business by themselves. Saudi Arabian businesswomen are highly educated, receive strong support from family and friends, and rate themselves as excellent in people skills and innovation. Further research should focus on qualities that contribute to successful women-owned firms in Saudi Arabia. The current study contributes to the literature by focusing on Saudi women entrepreneurs. The understanding of entrepreneurship around the world grows through these findings from a Saudi Arabian context. The results show that Chang, Memili, Chrisman, Kellermanns, and Chua's (2009) model of venture creation is applicable to the broader entrepreneurial and family business population. A discussion of the implications relevant to the business environment, challenges, and opportunities in Saudi Arabian women's entrepreneurship brings this paper to a close.     

The effects of perceptions of risk, environmental uncertainty, and growth aspirations on new venture creation success

This study extends Xu and Reuf (Strateg Organ 2:331?C355, 2004) by exploring the strategic and non-strategic risk-taking propensity perceptions of nascent entrepreneurs as it relates to the subsequent likelihood of venture formation success. In addition, the moderating influences of perceptions of environmental uncertainty and venture growth aspirations are also examined. Findings from an analysis of data from the Panel Study of Entrepreneurial Dynamics (PSED) I indicate that an entrepreneur??s risk-taking propensity has no relationship to the likelihood of successfully starting a business. Perceptions of environmental uncertainty and venture growth aspirations were positively related to non-strategic risk-taking propensity, yet none of these variables (strategic and non-strategic risk-taking propensity, environmental uncertainty and growth aspirations) had a significant effect on venture creation success. We suggest that risk-taking propensity, as measured in this study, does not play a significant role in differentiating between nascent entrepreneurs or others, or between those that are successful or unsuccessful at starting businesses.     

Entrepreneurs as prime targets: Insights from Mexican ventures on the link between venture visibility and crime of varying severity

This study addresses entrepreneurs as targets of crime. Leveraging insights from strategic responses to institutional pressures as the main theoretical frame, coupled with supporting insights from routine activities theory and interview data from 14 entrepreneurs who have been victims of crime, we introduce entrepreneur-led ventures becoming targets of crime via their engagement in routine activities that increase venture visibility. We then conceptualize that crime severity pushes entrepreneurs toward venture visibility-reduction responses, such as truncating growth, relocating, or discontinuing the venture. Survey data from 87,486 legally registered entrepreneur-led ventures in Mexico provide strong support for the relationships in our theoretical model. We find that as routine venture activities increase, entrepreneurs encounter crime of increasing severity, with the routine venture activity of making transactions at a bank serving as the strongest attractor of crime. Building on these findings, we observe an indirect effect through crime severity such that the choice to relocate the venture is the most likely response to being targeted by criminals. Our results advance the literature at the intersection of crime and entrepreneurship, especially in developing economies, and offers venture visibility as a mechanism that shapes both criminals' targeting of ventures and entrepreneurs' attempts to reduce being targeted.     

Women's entrepreneurship and well-being at the base of the pyramid

Women's entrepreneurship at the base of the pyramid can offer a way out of poverty for families, foster the development of communities, and provide a route to modernizing countries. Yet, we know little about what entrepreneurship means for the well-being of these entrepreneurs. This study investigates the well-being of marginalized women entrepreneurs engaged in an entrepreneurship training and venture creation program. Based on a qualitative case study method, our findings show that despite successful venture creation, the women differed in their experiences of well-being, with some flourishing and others languishing. Specifically, we found that the languishing women entrepreneurs lacked family support and prior work experience outside the home, which was associated with abstract goals and unrealistic expectations of venture creation outcomes. In contrast, flourishing women entrepreneurs, benefitting from prior work experience and family support, tended to set concrete goals for their entrepreneurial endeavors and had realistic expectations. Our findings provide new insights into some of the limitations of entrepreneurship programs for women at the base of the pyramid and emphasize the importance of well-being as a measure of successful venture creation.     

Can prosocial motivation harm entrepreneurs' subjective well-being?

Entrepreneurship research on prosocial motivation has outlined its positive impact on well-being, but still little is known about its power, which may have deleterious personal consequences under certain conditions. In this study, we ask whether prosocial motivation can harm entrepreneurs' subjective well-being when they run a commercial venture. Embedded within a contingency perspective informed by self-determination theory, we build on longitudinal survey data to explain the effect of prosocial motivation on entrepreneurs' overall life satisfaction. Our analysis demonstrates that prosocial motivation has a negative effect on entrepreneurs' life satisfaction due to increased levels of stress. However, our findings show that the negative effect of prosocial motivation dissipates when perceived autonomy at work is high compared to when it is low. Overall, our research raises questions on the role of prosocial motivation for entrepreneurs' subjective well-being and, in particular, discusses its potential “dark side” in the context of commercial entrepreneurship.Executive summaryCan there be a “dark side” in helping others? If so, how can we better understand under what conditions it emerges? Entrepreneurship research conventionally presents prosocial motivation as a positive driver for social venture creation and entrepreneurs' well-being. However, we have little knowledge about the consequences of prosocial motivation when we move outside the social entrepreneurship context. When prosocially motivated entrepreneurs lead a commercial venture, they face the difficult task of balancing the desire to help others with the financial requirements of the business. The challenge of simultaneously accomplishing commercial and prosocial goals can result in a stressful experience that is detrimental to the entrepreneur's well-being. In this study, we ask whether and under what circumstances prosocial motivation can harm entrepreneurs' well-being.Embedded in a contingency perspective informed by self-determination theory, this article expands our knowledge on the effects of prosocial motivation in the context of commercial entrepreneurship. We draw from original longitudinal survey data on 186 entrepreneurs in the United Kingdom to demonstrate that prosocial motivation causes entrepreneurs stress and through that stress has a negative effect on their life satisfaction. We also show that the negative effect of prosocial motivation diminishes when the degree of autonomy entrepreneurs perceive in the pursuit of daily work tasks is high. To explore the uniqueness of the entrepreneurial context, we run a comparative analysis with a sample of 544 employees. This analysis confirms that stress fully mediates the negative relationship between prosocial motivation and subjective well-being, but for employees, this negative effect disappears when their level of intrinsic motivation—the desire to expend effort based on enjoyment of the work itself—is high.Building on our findings, we generate several important contributions. First, we help develop an understanding of the “dark side” of prosocial motivation by demonstrating that under certain circumstances, the desire to help others can be detrimental to entrepreneurs' subjective well-being. Second, we expand knowledge about the link between prosocial motivation and well-being by considering the boundary conditions (perceived autonomy and intrinsic motivation) that influence the dynamics of their relationship. Third, we set the stage for further investigations that aim to clarify the relationship between motivation and perceived autonomy and its effect on personal outcomes across different work domains.The key insight of the study is that prosocial motivation creates a dilemma for entrepreneurs when operating a commercial business such that the desire to help others outside the context of immediate work tasks can harm their personal well-being. We also find that the perception of autonomy is key for commercial entrepreneurs to be able to realize their prosocial motivation without creating stressful situations. Extending our understanding of the conditions that shape the relationship between prosocial motivation and well-being among entrepreneurs would help in developing a more holistic notion of prosocial business venturing, one that includes the role of both commercial and social enterprising activities in contributing to personal and societal well-being.