The Effect of Work - Family Role Conflict on Business Startup Decision-Making Processes

Text-only Preview

Journal of Behavioral Studies in Business
The Effect of Work - Family Role Conflict on Business Startup
Decision-Making Processes

John Leaptrott
Georgia Southern University

Abstract

Many important strategic decisions made by business owners in the early stages of
operation are both commonly encountered and have important consequences. These decisions
relate to the initial configuration of the business regarding the initial business scope and size and
procurement of the resources necessary for that configuration. A logic-based decision-making
process including information search and analysis can be very complex and time consuming.
Small business owners frequently face conflicting demands for time and cognitive resources
from their family and their developing business that adversely affect their ability to perform both
roles effectively. One adverse effect is an impediment of their decision-making processes by
both reducing the time and attention available to properly gather and analyze information for
each major business or family decision and by increasing the number of major decisions to be
made. This study assessed the effect of work family conflict on the information search behavior
in a sample of female entrepreneurs that recently started childcare businesses and found evidence
of a significant negative relationship between work-family conflict and the use of professional
advisors as information sources when making important startup decisions.
The Effect of Work-Family Role Conflict, Page 1


09218 – Journal of Behavioral Studies in Business


Introduction


Many small business owners strive to perform concurrent demanding roles. One role
frequently involves a shared or sole responsibility for managing a family. The other role
involves successfully creating and managing a new venture. Both roles usually require
substantial time and use of the owner’s physical and mental resources. These roles can
frequently result in conflicting demands for these personal resources. This reduction in
available resources potentially impairs the performance of both roles. An impairment of the
decision-making process related to an early stage small business could have serious, long-
lasting adverse economic consequences. If this role conflict limits the information search
activity, important startup decisions may be made quickly and intuitively rather than made
after an appropriate amount of due diligence. Poor startup decisions that result in poor fit
between the new venture and its environment may threaten the performance or even survival
of the new venture (Venkatraman and Prescott 1990; Baum 1996).

A small business owner typically makes a series of very important decisions before,
during and after starting a new business. These include strategic decisions such as what
products and services to offer, how to promote them, and where to procure the resources that
are needed to begin business operations. For example, a person starting a childcare business
will likely have to make decisions about the number and ages of children the business will
admit, hours of operation, business location, the number of employees that will be required,
the manner the business will be promoted and the method of financing the startup of the
business. Poor initial decision-making may require changing locations because of incorrectly
estimating market demographics or competitive density, or may involve replacing furnishings
or remodeling in order to care for a different age or number of children than originally
planned. These examples underscore the importance of making correct initial decisions about
the configuration of the prospective small business because of the severe financial impact that
making significant revisions to major decisions often have on minimally capitalized small
businesses.

Shelton (2006) proposes that while individuals differ in their ability to reduce the
impact of this conflict such conflict is more likely to occur for a woman than a man because
she typically has greater family management responsibilities. Prior research has supported the
greater likelihood that women would face higher degrees of work-family conflict than men
(Noor 2004). Studies have also found that such conflict does indeed negatively impact the
performance of a small business (Williams 2004; Stoner, Hartman and Arora 1990). These
studies suggest that this conflict imposes time pressures that reduce the available hours to
manage the business, increases the business owner’s dissatisfaction with their performance of
these roles and negatively impacts their perception of the financial health of the business.


Because of the likelihood that women who own small businesses will
frequently face this conflict, they constitute an appropriate group for testing effects of work-
family conflict on their decision-making behavior. The present study assesses the effects that
this conflict has on personal and professional information source usage in the decision-
making processes related to important startup decisions for a sample of women who had
recently started childcare businesses. Assessing the significance of the relationship between
this conflict and the use of these sources is significant impact because many small business
owners possess little relevant business experience and business education at startup and are
The Effect of Work-Family Role Conflict, Page 2


09218 – Journal of Behavioral Studies in Business

unable to make important startup decisions using logic-based reasoning without receiving
input from these sources.

Literature review and hypotheses


Many recent descriptive decision-making models are based on two distinct systems of
reasoning (Sloman 1996). Although the terminology used to describe these two systems
varies, the characteristics of the two systems are described in a similar manner. Epstein (1994)
described the two systems as experiential and rational; Sloman (2002) characterized them as
associative and rule-based, Stanovich and West (2000) and Kahneman (2003) have labeled
them as System 1 and System 2. The System 1 or the experiential system describes a fast,
effortless, intuitive process that is subject to emotional influences and is utilized to make
many decisions in a near simultaneous manner. The System 2 or the rational system describes
a slow, effortful, rational process that results in decisions that are made sequentially rather
that simultaneously. The underlying assumptions regarding the use of the two systems are
that System 2 reasoning requires the use of appropriate information and analysis (Kahneman
2003) and that a greater use of System 2 or logic-based reasoning by the decision maker will
result in better solutions to more complex problems than a greater use of intuitive reasoning
(Stanovich and West 2002).


Work-family conflict


The decision-making research related to the dual processes of reasoning suggests that
time pressure and concurrent involvement in multiple cognitive tasks inhibits the use of
System 2 reasoning (Kahneman 2003). These two factors can inhibit the process of
information search and other aspects of System 2 reasoning in a number of ways. Ordonez
and Benson (1997) note decision makers often expedite the decision process under time
pressures. Consequently, expediting the decision-making process can result in behavior that
includes switching to simpler decision strategies, relying more heavily on negative
information and reducing the input of information.

Gilbert (2002) provides evidence of the negative effect of concurrent cognitive
involvement of decision-making behavior. He based his research on the premise that
“conscious attention is a scant resource” (p. 169). As a result, concurrent involvement in
multiple cognitive tasks reduces the ability of an individual to use information in decision-
making. In addition to demonstrating the effect of concurrent cognitive activity on initial
decision-making, he also offers evidence that effect may be even more significant on
subsequent decisions necessary to correct prior erroneous ones. His research has shown
information relevant to the correction of an initial categorization is often noticed but not used.
He has found evidence that self-regulation by the individual involved in routine everyday
tasks can create enough cognitive busyness to severely limit the amount of information used
to correct initial categorizations. Thus, the business owner that experiences cognitive
busyness from sources such as significant role conflict not only has more difficulty making
initial logic-based initial decisions, but will also likely face greater impediments to correcting
prior incorrect decisions.
Many prospective small business owners often lack financial resources that limit the
scope of the new venture planning process, including information search activities. For
example, dealing with normal startup matters related to starting a childcare venture such as
The Effect of Work-Family Role Conflict, Page 3


09218 – Journal of Behavioral Studies in Business

hiring suitable employees, preliminary marketing activities and childcare facility procurement
and modification consume valuable time, attention and effort that would otherwise be
available to engage in information search. These startup matters typically result in the
prospective business owner being increasingly mentally engaged as the date for
commencement of operation nears. Issues related to the members of her family also consume
time available for information gathering. Providing care to elderly parents, infant children, or
family members with special needs can drastically reduce time available for dealing with
business startup issues. Domestic relations issues with spouses or domestic partners,
maintenance of preexisting social relationships or even routine household maintenance
activities also can require time, attention and effort that would otherwise be available to
accomplish logic-based decision-making.
One can envision the limitations on elements of logic-based reasoning, such as
information search, that might result when the prospective small business owner is subject to
time pressures and is immersed in a multitude of activities related to the creation and early
operation of a small business. Additional involvement in matters other than those pertaining
to the business, such as those pertaining to her family, could also enhance a state of cognitive
busyness or sense of time pressure that further limits the ability of the small business owner to
engage in logic-based reasoning when making important early-stage business decisions.

Information search activity



The assessment of information search activity related to the assessment of
environmental conditions in the strategic management of a business has been the subject of
much research. One stream of research has assessed the frequency that information sources
are utilized in the environment given various factors external to the organization such as
environmental uncertainly (Daft, Sormunen, and Parks 1988; Sawyerr 1993; Elenkov 1994;
May, Stewart, and Sweo 2000). Another stream has assessed the intensity of the search that the
small business owner employed in that environmental assessment (Cooper, Folta, and Woo
1995). The strategic importance of information search stems from the need for organizations
to achieve acceptable levels of fit with their environment in order to sustain satisfactory levels
of organizational performance (Venkatraman and Prescott 1990).

The extent of information search activity can affect the quality of important startup
decisions and can be provided by a multitude of information sources. Personal sources such
as family and friends can provide some information relevant to business decisions,
particularly with respect to information related to consumer perceptions of competitors and
proposed product or service offerings. Professional sources can provide information about
business planning, resource availability, business administration and the general business
environment. The degree of information search can affect the quality of the decision-making
process. For example, faced with the need to make a critical startup decision such as the
minimum level of initial funding required by the new business, the owner may quickly and
intuitively decide to start the business based on little or no information search activity.
Without seeking relevant information from knowledgeable sources about how much funding
would likely be required or what alternative sources are available, an owner would rely upon
whatever funds are on hand or available through increasing personal consumer debt.
Alternatively, the owner may use a more logic-based approach that includes the gathering of
relevant information from knowledgeable sources, particularly sources such as Certified
Public Accountants, attorneys and bankers. The owner can then independently, or with the aid
The Effect of Work-Family Role Conflict, Page 4


09218 – Journal of Behavioral Studies in Business

of these advisors, evaluate the information about funding requirements and potential funding
sources that has been gathered using criteria such as funds availability, rates and terms and
choose the optimum alternative.
In addition to deciding the required capitalization of the new childcare business, the
owner makes many other decisions of major importance such as the scope of childcare that
will be provided, the required staffing, initial promotional activities and the composition of
her team of professional business advisors. The level of information search activity
performed by the business owner before making each of these decisions is an important
indicator that the owner is engaging in a logic-based decision-making process rather than
making decisions quickly and intuitively.
The significance of the relationship between work-family conflict and the intensity
and frequency of information search activity should therefore be assessed for both personal
and professional sources of information.

Hypothesis 1. There is will be a significant negative relationship between work-
family conflict and the entrepreneur’s information search intensity using personal
sources.

Hypothesis 2. There is will be a significant negative relationship between work-
family conflict and the entrepreneur’s information search intensity using professional
sources.

Hypothesis 3. There is will be a significant negative relationship between work-
family conflict and the entrepreneur’s information search frequency using personal
sources.

Hypothesis 4. There is will be a significant negative relationship between work-
family conflict and the entrepreneur’s information search frequency using professional
sources.

Methods

This study sampled the population of daycare providers licensed in Florida during
2004 and 2005. A list of licensees was obtained from the supervising state agency.
Potential respondents were called and only those agreeing to participate were sent a survey for
completion. A total of 1,897 calls to business owners were attempted. Nine hundred forty two
calls were unable to be completed because of disconnected phone service, wrong numbers or
repetitive busy signals resulting in 955 calls completed. Two hundred ninety three potential
respondents declined to participate, and fourteen identified their businesses as owned by a
non-profit organization and therefore were excluded from the sample. Thus, six hundred forty
eight childcare business owners were sent surveys.
A 28.9 percent response rate (187/648) was achieved. The instrument included an
item allowing the respondent to report his or her gender. Several respondents chose not to
report their gender. Because the focus of this study is information search by women, only the
respondents reporting their gender as female were included in the analysis. Approximately
one third of respondents chose not to report their gender resulting in 120-125 responses being
used in the quantitative analysis. Approximately 45 percent of responding owners had no
The Effect of Work-Family Role Conflict, Page 5


09218 – Journal of Behavioral Studies in Business

employees, 41percent had 1 to 4 employees with the balance having more than 4 employees.
Approximately 62 percent of the businesses were 2 to 5 years old, 28 percent were more than
five years old and 10 percent reported being less than two years old.

Work-family conflict


Gilbert (2002) notes conscious attention is a scant resource. He offers evidence to
suggest that a state of cognitive busyness reduces the capacity of the individual to use
information in drawing inferences. The creation of a new venture occurs over time and
periods of cognitive busyness may appear and then ameliorate. Both temporary and long
lasting factors impose time pressures and involve current cognitive involvement. For many
women, their family and her business have the potential to be long lasting source of both time
pressure and cognitive busyness during the initial startup and early operation periods.
Therefore, measures of conflict between their family and their business are likely to be
reflective of both these two impediments to logic-based reasoning.
The present study slightly modified the Netemeyer, Boles and McMurrian (1996)
work-family conflict scale by substituting the term “this business” for the term “work” and
the term “my family or my other business activities” for “family”. Rather than replicating the
seven-point response scale used by Netemeyer et al., this study used five-point Likert scale
items with “strongly agree” and “strongly disagree” anchor points. The five-point scale was
used in order to achieve consistency with other items in the instrument. The scale seeks the
respondent’s degree of agreement with statements such as “the demands of the new venture
interfere with my family or other business activities”. The scale exhibited a unitary factor
structure in the present study based on a minimum Eigenvalue of 1.0 and a Cronbach’s alpha
of .85.
Netemeyer, et al. and others (for example Kelloway, Gottlieb, and Barnham 1999)
have developed both work-family and family-work conflict scales. Noor (2004) reasoned that
work into family conflict is likely to be much more significant than family into work conflict
in a sample of women because the family role is usually more important than the business
role. Therefore, work into family conflict would likely be more distressing, be the cause of
more cognitive busyness, be more limiting to system 2 reasoning and therefore be more
detrimental to organizational performance than family into work conflict. Consequently, to
achieve parsimony the present study limits assessment of the relationship between conflict
and information search to work-family conflict.

Information Search Intensity.

Information search intensity is the importance of an informational source to the owner
in planning his or her business (Cooper et al. 1995). This study used a five point Likert scale
based on the scale developed and also used by Cooper et al. (1995) as the criterion variable
reflecting the degree of information search with “extremely important” and “not used” as
anchor points. The scale seeks a response to the question, “how important is each information
source?” for each of five sources used by Cooper et al. (1995): accountants & bookkeepers,
friends or relatives, other business owners, bankers and lawyers or attorneys. The scale in the
present study included the Internet as a sixth information source. The scale responses were
assessed using factor analysis with Varimax rotation. Two factors with emerged. The first
factor consisted of items reflecting importance of accountants, bankers and lawyers as
The Effect of Work-Family Role Conflict, Page 6


09218 – Journal of Behavioral Studies in Business

professional sources. The second factor, reflecting personal information sources, consisted of
a single item reflecting the importance of friends and relatives. The items relating to other
business owners and the Internet as information sources cross-loaded as items on both factors
and were not included in further analysis related to either factor. Cooper et al. experienced a
similar result with respect to the sources comprised of accountants, bankers and lawyers
loading on the factor representing professional information sources. This professional
information source scale achieved a Cronbach’s alpha of .81 in the present study and
exhibited a unitary factor structure at a minimum factor Eigenvalue of 1.

Information Search Frequency.

Information search frequency is the number of times useful information about the
environment is received from each information source. This study measured information
search frequency for the personal source consisting of friends and relatives and professional
sources consisting of accountants, bankers and lawyers using the same categorization as the
information search intensity scale. This study used a five point scale modified from the scale
used by Daft el al. (1988) with “less than once a year”, “a few times a year”, “monthly”,
“weekly” and “daily” as possible responses to “…how often do you receive information that
is helpful to your business from each information source?” The three-item professional
source scale only achieved a Cronbach’s alpha of .64. This result, falling short of the
recommended .70 minimums for exploratory research (Nunnally 1978), was also below the
range of scale reliabilities reported by Sawyerr (1993), May et al. (2000). Daft (1988) and
Elenkov (1997) did not specifically report reliability information for the scanning frequency
scales. As this was not the sole measure of information search activity, the scale was retained
to provide a comparison with the information search intensity measure.

Control variables

The present study replicated the use of control variables by Cooper et al. (1995) which
included the amount of initial capitalization, the percentage of the business owned by the
owner and her family and the number of co owners. They predicted that the amount of
information search activity would be positively related to the degree other parties such as
other investors, lenders or partners would be involved and would require justifications for
requests for funding. Even though the size of new childcare ventures would normally require
modest amounts of outside funding, these control variables were utilized in testing the
hypotheses in the present study. This study measured initial capitalization with a one-item,
eight choice scale with values for the amount of capital invested by the time of the first sale
ranging from “under $5,000” to “$500,000 and over”. The percentage of the business owned
by the owner and her family was measured with a one-item, five choice scale with responses
ranging from under 25% to 100% and number of business partners with a one-item six choice
scale ranging from no partners to five or more.
Additional control variables were included to assess individual characteristics of the
respondents that could affect their likelihood of utilizing personal and professional sources in
the decision-making process. The age of the business owner represents more personal
experience with business ownership directly or through the observation of the behavior of
other business owners and could, therefore, decrease the perceived value of professional
advice to provide information which they may have already acquired. Respondent age was
The Effect of Work-Family Role Conflict, Page 7


09218 – Journal of Behavioral Studies in Business

measured with a one-item eight choice scale with under 25 and 56 and over as anchors. The
degree that an owner employs logic-based reasoning in making decisions related to her
business would likely be influenced by the degree of exposure to a formal study of business
administration. This exposure has the potential to introduce the individual to a normative
business formation and management model that involves understanding the risks of business
ownership, the benefits of the preparation of a business plan, the necessity of establishing
adequate accounting systems and controls and the desirability of achieving a satisfactory fit
with the environment. To assess the effect of that exposure on information search behavior a
single-item five choice scales was used to measure the number of college level business
administration classes completed. The anchors for this scale were “none” and “four or more”.
Results

Correlations, means and standard deviations for all variables are presented in Table 1.





TABLE 1
Correlations, Means and Standard Deviations


Variable
Mean
S.D.
1
2
3
4
5
6
7
8
9
1
Initial
1.83
1.56









capitalization
2
Percentage
1.11
.52
.29**








owned
by the
immediate family
3
Number of
1.06
.28
.11
.33**







co owners
4
Age
4.74
1.99
.17
.14
.11






5
No. of College
2.56
1.70
.10
-.15
-.11
.09





Business Courses
6
Work – family
2.95
1.19
-.18
.01
.06
.09
.04




conflict
7
Information search
3.50
.87
.14
.06
.10
-.12
.01
-.07



intensity –
Personal sources
8
Information search
3.10
1.16
.38**
.06
.05
.10
.19*
-.33**
.36**


intensity –
Professional sources
9
Information search
3.44
1.13
.15
.03
.03
-.22*
-.01
-.05
.52**
.17

frequency –
Personal sources
10
Information search
1.83
.73
.33**
.08
.01
.11
.10
-.26**
.07
.56**
.27**
frequency–
Professional sources
*p< .05 level (2-tailed); **p<.01 level (2-tailed) N=109

The level of significance of the predictor variable measured after entering the control
variables into hierarchical multiple regressions were used to test the hypotheses. The results
of these regressions are presented in Table 2.
The Effect of Work-Family Role Conflict, Page 8


09218 – Journal of Behavioral Studies in Business














TABLE 2
Results of Hierarchical Regression Analyses

Criterion: Information Search Intensity-Personal Sources
Predictor: Work-Family Conflict
Variable ___ ___ B ___ _SE_B ___
β___
Step 1

Constant



3.29

.40



Initial Capitalization


.06

.06
.12

Percent owned


.03

.18 .02

Number of co owners

.29

.32
.09

Age




-.06
.04
-.14

No. of Business Classes

.02

.05

.03

R2
.04

Step 2

Constant



3.46

.44



Initial Capitalization


.06

.06
.10

Percent owned


.04

.18
.02

Number of co owners

.31

.32
.10

Age




-.06
.04
-.13

No. of Business Classes

.02

.05
.04

Work-Family Conflict

-.07
.07
-.10

R2



.01

Overall R2



.05
Adjusted R2


.01
Model F .92
N




116
___________________________________________________________________

* p<.05 ** p<.0
The Effect of Work-Family Role Conflict, Page 9


09218 – Journal of Behavioral Studies in Business


TABLE 2 (continued)
Results of Hierarchical Regression Analyses

Criterion: Information Search Intensity-Professional Sources
Predictor: Work-Family Conflict
Variable ___ ___ B ___ _SE_B ___
β___
Step 1

Constant



2.23
.51



Initial Capitalization


.26
.07
.34**

Percent owned


-.10

.23 -.05

Number of co owners

.04

.40
.02

Age




.04

.05
.07

No. of Business Classes

.11

.06

.15

R2
.15

Step 2

Constant



2.94
.52



Initial Capitalization


.22

.07
.28**

Percent owned


-.07

.22
-.03

Number of co owners

.20

.38
.05

Age




.05

.05
.09

No. of Business Classes

.12

.06

.17*

Work-Family Conflict
-.30

.08
-.31**

R2



.09


Overall R2



.24
Adjusted R2


.20
Model F 5.83**
N




117
____________________________________________________________
* p<.05 ** p<.01
The Effect of Work-Family Role Conflict, Page 10