Time Is Not Money! Temporal Preferences for Time Investments and Entry into Entrepreneurship

Abstract

Starting a business requires investing both money and time in the hope of future financial benefits. Because investments and potential gains happen over time, the way in which individuals value the future relative to the present—that is, their temporal preferences—may be an important driver behind the decision to become an entrepreneur. Whereas existing research examines temporal preferences for financial gains, we advance this research by theorizing about temporal preferences not only for money, but also for the future time commitments that entrepreneurship entails. Results from a laboratory-in-the-field study show that individuals who heavily discount future time investments are more likely to become entrepreneurs. In two follow-up studies, we confirm that recent start-up founders discount future time investments more than salaried workers. We also provide suggestive evidence of the mechanisms at play: recent start-up founders perceive the future differently than salaried workers, both viewing themselves as more agentic vis-à-vis the future and perceiving the future as more distant. We discuss the implications of temporal preferences—not only for money, but also for time—for understanding the behavioral drivers of entrepreneurship. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2023.1681 .