Empowering growth: delegating decision-making authority during the evolution of new businesses

Purpose As startups grow, entrepreneurs must transition from focusing on their business ideas to managing people, requiring them to delegate decision-making authority. This study examines the factors that influence entrepreneurs’ delegation behavior, focusing on entrepreneurial, employee-related, and situational characteristics specific to startups. Design/methodology/approach This field study used an online survey to assess 186 entrepreneurs and 47 matched co-founders in Pakistan. The study examines how entrepreneurs’ characteristics (psychological ownership and ambition), perceived employee attributes (trust, capability and responsibility) and situational factors (workload and perceived venture risk) influence delegation levels. Findings Entrepreneurs were more likely to delegate decision-making authority to employees they perceived as capable and trustworthy. A trend indicated that higher workloads encouraged delegation, whereas greater perceived venture risk discouraged it. Entrepreneurs’ psychological ownership had no significant effect, but highly ambitious entrepreneurs delegated less than their less ambitious counterparts. Strong alignment was observed between founders’ and co-founders’ perceptions of delegation levels. Originality/value This study provides empirical insights into the micro-foundations of new business growth by investigating entrepreneurs’ delegation of decision-making authority to employees. The findings emphasize the importance of employee attributes and situational factors, offering practical guidance for entrepreneurs navigating role overload in scaling ventures.