Transitional Path or Optimal State? Hybrid Entrepreneurship and the Decisions to Enter and Exit Entrepreneurship

Real-options-based research suggests that hybrid entrepreneurship serves as a transitional path to full-time entrepreneurship. Other theories posit that hybrid entrepreneurship is an optimal state. We refer to these opposing perspectives as the transition and state perspectives, respectively, and identify their differing implications. To this end, we examine how hybrid entrepreneurship influences the impact of switching costs on full-time entrepreneurship entry and entrepreneurship exit. Our empirical results, based on large-scale U.S. data, reveal patterns more consistent with the state perspective. We highlight the need to consider variety among hybrid entrepreneurs and discuss how the state perspective can improve our understanding of hybrid entrepreneurship.