Founder regulatory focus: Effects on entrepreneurial orientation and venture performance

Research SummaryThis article draws upon regulatory focus theory to examine the ways in which founders influence entrepreneurial orientation and performance in young ventures. Findings from studies of young ventures in Ghana (N = 226) and Kenya (N = 205) suggest that founder promotion focus has a positive effect on entrepreneurial orientation, while founder prevention focus has a negative effect. Furthermore, we find that entrepreneurial orientation mediates the effects of founder regulatory focus on young venture performance and that the strategic decision speed of founders moderates the entrepreneurial orientation—venture performance relationship. The results extend theory on entrepreneurial orientation and regulatory focus by elucidating the role of founders' characteristics in setting an entrepreneurial tone for their firms and enhancing the effects of entrepreneurial orientation on venture performance.Managerial SummaryWith this article, we highlight the roles of regulatory focus and decision speed with entrepreneurial orientation (EO) to suggest the founder is vital in setting an entrepreneurial tone in their organizations. Leaders in young ventures should realize that their dispositions have outsized influence in both the development of EO and how EO is put into action. Founders who recognize the merits of cultivating a promotion‐focused orientation can strategically leverage this orientation to fuel their ventures' EO. Conversely, the negative influence of founder prevention focus on EO signifies the potential challenges associated with risk aversion and loss avoidance in entrepreneurial ventures. Finally, leaders who acknowledge the significance of quick, informed decisions are better positioned to leverage the positive impact of EO on new venture performance.