Although there is by no means a consensus, a number of scholars in the social sciences adopt the premise that the definition of resilience includes two essential features: (1) exposure to a context of adversity and (2) a positive adaptation translating into some sort of evolution (Bernard and Barbosa 2016; Kent et al. 2014). The research which specifically investigates the resilience of the individual entrepreneur draws on an adaptive conception of resilience, identifying a combination of three outcomes of that resilience: recovery from adversity, positive adaptation, and the acquisition of learning and resources for future resilience. Although in a minority of studies entrepreneurial resilience relates to entrepreneurial mindset in a variety of settings including corporate entrepreneurship, the main focus of the extant literature on the resilience of individual “entrepreneurs” typically defines them in studies as founder-owners starting and managing their own business ventures for up to 6 years. Collectively, the research to date spans different stages in the entrepreneurial process, including the intention to start a business, new venture formation, surviving and/or growing as a small business, and the closure of a business. Some studies focus specifically on resilience in one of these stages (e.g., Bullough et al. 2014; Hayward et al. 2010), while others do not limit their scope in relation to the entrepreneurial process (e.g., Ayala and Manzano 2014).
The vast majority of businesses in all countries – between 70% and 95% – are micro-businesses, i.e., enterprises that employ fewer than ten people (OECD 2017). Their impact on the economies and societies in which they operate is therefore significant, collectively acting as important sources of employment, growth, and innovation (ibid., 2017). However, the existence of many of these businesses is often precarious, especially in the early stages of their development. Many newly created businesses fail within the first few years of life with mortality rates ranging from around 10% (UK, USA, Sweden) to 45% (Slovak Republic) in the 1st year (ibid., 2017). As a result, the entrepreneurial activity to create and manage these businesses is very demanding and exposes entrepreneurs to situations which would be expected to create high levels of stress among the general population (e.g., a rapidly changing and unpredictable environment, high responsibility, high workload). The demands of business start-up and ownership could be expected to create a higher risk of mental health problems. Isolation and long working hours could contribute to an increased risk of depression. Moreover, for many entrepreneurs, their business ventures are personal passions, and their self-worth and well-being can be intimately connected to the success of those ventures (Murnieks et al. 2014). On a practical level, the pressures are often high and can create anxiety as personal financial well-being is often directly related to the ability to close the next deal. Furthermore, Spivak et al. (2014) highlight a possible “dark side” of entrepreneurship outcomes, finding that habitual entrepreneurs can suffer from symptoms of behavioral addictions – withdrawal-engagement patterns, obsessive thoughts, and negative emotions – arising from repeated venture creation activities. However, at the same time, Baron et al. (2016) find that entrepreneurs experience lower stress compared to other occupational groups when creating new ventures. Baron et al. (2016) suggest self-selection effects as the underlying mechanism producing entrepreneurs that are above average (as a group) in their capacity to handle stress effectively, arguing that those who persist in entrepreneurship acquire this capacity, the resilience to handle the stressors and challenges of their entrepreneurial context.
Entrepreneurial resilience has seen a relatively small but nonetheless noteworthy and persistent increase in research activity since 2008. However, although the extant literature on entrepreneurial resilience offers promising insights, research on entrepreneurial resilience is “still in its infancy,” and there is a growing recognition of significant limitations and scope for further development in the field (Lee and Wang 2017, p. 533; Korber and McNaughton 2017). Nevertheless, the findings to date are promising and underline the importance of the subject, particularly for positive impacts on entrepreneurial activities such as increasing the likelihood of starting a new business venture, achieving success, continuing in business in spite of challenges, and starting new businesses when a previous one fails (Loh and Dahesihsari 2013; Flores et al. 2013; Trevelyan 2008; Ayala and Manzano 2014; Yang and Danes 2015; Bullough et al. 2014; Pollack et al. 2012; Hayward et al. 2010). Bullough and Renko (2013) found that “entrepreneurial intentions are less affected by perceived danger in those who are very resilient” (p. 485). Ayala and Manzano (2014) have concluded that the resilience of the entrepreneur has a predictive value for business growth based on a longitudinal study which demonstrates a positive association between the resilience of entrepreneur and the growth of their companies over 5 years. A stream of literature focusing on entrepreneurial stress argues for the inclusion of the entrepreneur’s subjective well-being when identifying the impact of the mediation of stressors by resilience (e.g., Dijkhuizen et al. 2016; Wincent and Ortqvist 2009; Baron et al. 2016). However, literature on entrepreneurial resilience to date have not examined this kind of impact in-depth, and there is scope for further research in this field to explore the linkages of entrepreneurial resilience with the entrepreneur’s subjective well-being alongside the achievement of positive entrepreneurial impacts and the potential interrelationships between these impacts.
This chapter is structured as follows. First, it discusses the two key components of the definition of resilience, as they are represented in the literature to date, examining the nature of adversity to which resilience must respond in the entrepreneurial context and the application of an adaptive conception of resilience in that context in terms of three key outcomes. Second, it outlines alternative conceptualizations of entrepreneurial resilience – as trait, process, and resource – in this developing field of research. Third, it explores the current understanding of resource-based categories of entrepreneurial resilience relating to emotional, cognitive, and social resources. The chapter concludes with a summary of directions for future research and practice to support the role of micro-businesses in economies and societies around the world and the health and well-being of the entrepreneurs who create and own them.
Uncertainty in relation to income and the outcomes of business ventures
Imperfect information which means that the entrepreneur is likely to have to cope with being wrong and handle ambiguity
Risk and the high likelihood of failure because of the exploratory nature of entrepreneurial activity
High responsibilities for the strategy, actions, and success of their company, demands across multiple activities, and the range of business skills required
High workload and extremely long work hours
Autonomy and responsibility for decision-making in uncertain situations
Isolation and loneliness
Studies of entrepreneurial role stress add further insights into the inherent stressors of entrepreneurship. Wincent and Ortqvist (2009) argue that the entrepreneurial role is one in which role stress – in the forms of conflict, ambiguity, and confusion – can be expected due to the complexity of the expectations of stakeholders on that role as well as the levels of innovation, boundary spanning, and the complexity of the work required. The degree of role stress experienced is strongly influenced by the competitiveness, dynamism and heterogeneity of the venture environment, and the complexity of the venture technology (ibid., 2009), with the implication that it will therefore vary across businesses in different sectors.
Recovery involves addressing the harmful effects of adversity and on its own would imply a return to the state enjoyed by the entrepreneur preceding the adversity. Resilience is not about struggling: the term “bouncing back” is used frequently (e.g., Bullough et al. 2014; Ayala and Manzano 2014) which seems to imply energy and momentum in this recovery from adversity.
Adaptation is described as “positive” in two senses: it is future-oriented, looking forward and evolving to address future circumstances, and it supports the fulfillment of the core purposes of the entrepreneur (Manzano-Garcia and Ayala 2013). This positive adaptation means that resilience is about more than coping with adversity. Coping is a related but not identical concept, defined by Drnovsek et al. (2010) as “the process of expending efforts to solve personal and interpersonal problems and reducing stress induced by unpleasant and stressful situations” (p. 193). The notion of positive adaptation also differentiates entrepreneurial resilience from persistence. Patzelt and Shepherd (2011) note that resilience requires persistence, but not all persistence is resilience, pointing to the dangers of “escalating commitment to a failing course of action” (p. 333). Korber and McNaughton (2017) suggest that entrepreneurs who fundamentally change their strategy and even end their business venture in response to emerging challenges could be considered to be more resilient than individuals who maintain a relentless persistence in a particular course of action. Persistence can imply the commitment of the individual to a particular goal such as the survival and success of a business venture, while resilience may continue beyond business venture failure and may be implicated in the formulation by the individual of new goals and new ventures (Corner et al. 2017).
The acquisition of learning and resources for future resilience suggests an evolution in the capacity for resilience as an outcome of responding to adversity, and this features strongly in the literature. These sources are clear that recovery and adaptation to adversity is accompanied by new learning and resources equipping the entrepreneur for situations requiring resilience in the future (Manzano-García and Ayala Calvo 2013; Bullough et al. 2014). The entrepreneur is strengthened by the experience of a resilient response to adversity (Ayala and Manzano 2014; Patzelt and Shepherd 2011; Hayward et al. 2010).
Conceptualizations of entrepreneurial resilience. When attempting to examine entrepreneurial resilience further, the literature on entrepreneurial resilience engages to varying degrees with three conceptualizations of resilience – as trait(s), as process, and as resource(s). However, early studies largely employed a trait-based approach, some framing resilience as a single psychological trait (Loh and Dahesihsari 2013; Flores et al. 2013), others presenting resilience as a “multidimensional construct” (Manzano-García and Ayala Calvo 2013, p. 246), utilizing differing amalgamations of a range of personal and behavioral qualities or factors to describe it, such as optimism, realism, flexibility, self-confidence, resourcefulness, motivation, creativity, and innovation (Ayala and Manzano 2014; Sun et al. 2011). This approach has accompanied a bias in this literature toward observing, describing, and in some cases measuring entrepreneurial resilience rather than focusing on its development. Indeed, a trait-based approach would appear to limit that possibility, although these studies are unclear about the extent to which these traits should be considered as fixed, and some do state that development is possible without much further elaboration on how this might occur or might be facilitated. The use of words such as qualities (e.g., Ayala and Manzano 2014) and factors (McAuley et al. 2011) interchangeably with traits serves to maintain ambiguity in relation to this issue. To explore how entrepreneurial resilience develops and might be supported with practical applications in entrepreneurship education and business support, the understanding of resilience needs to go beyond a descriptive definition. Recognizing the limitations of the trait-based approach, process-based studies are now beginning to emerge in the entrepreneurial resilience literature. This mirrors developments in the discipline of psychology which explore individual resilience as a natural and dynamic intra- and interpersonal process that can be developed through interventions (Rutter 2012; Kent et al. 2014). Yang and Danes (2015) adopt a process perspective to focus on the dynamics of the utilization of social resources to create resilience capacity and productive entrepreneurial outcomes; a process approach is adopted in a number of studies of business failure (e.g., Cope 2011); and Bernard and Barbosa (2016) examine the processes of resilience preceding the decision to start a business venture.
Resource-based categories of entrepreneurial resilience. Hayward et al. (2010) frame entrepreneurial resilience in respect to the types of resources that enable entrepreneurs to establish a new venture. Resilience is conceptualized as the development of processes, described as “thought-action repertoires,” which help entrepreneurs to generate three categories of resources: (1) emotional, (2) cognitive, and (3) social.
Emotion-focused coping. Hayward et al. (2010) begin with emotional resilience in their discussion because business ventures can be sources of profound emotions for entrepreneurs. Cope (2011) highlights the emotionality of business failure. Ucbasaran et al. (2013) in a survey of literature on business failure list a number of negative emotions commonly experienced, including fear, shame, anger, and guilt. Studies which explore entrepreneurial coping also recognize the emotional nature of entrepreneurship. Byrne and Shepherd (2015) highlight the importance of emotion-focused coping to help deal with negative emotions. Uy and Foo (2013) suggest that in selecting and utilizing appropriate coping strategies, resilient entrepreneurs need to proactively manage their own personal well-being. Patzelt and Shepherd (2011) see an important role for decision autonomy here, noting that entrepreneurs may be in a better position than employees because autonomy allows the entrepreneur to tailor their use of coping strategies to their own preferences, to effectively create their own coping toolkit.
Positive emotions “widen the array of thoughts and actions that come to mind” (p. 572), which supports the perception of adversity by ensuring an openness and integration of new information, creativity in devising new solutions, and flexibility in decision-making and improvisation when taking action.
Positive emotions act like “emotional reserves” (p. 573) which can strengthen the motivation to persevere in the face of setbacks.
Positive emotions support the development of resilience resources: “broadening attention and thinking expands our scope to learn from failure” and “promotes the discovery of novel ideas, actions and social bonds” (p. 572), building resources which leads to a greater capacity to adapt and function in a wide range of situations.
The beneficial influence of positive affect on entrepreneurial resilience appears to be strong and pervasive. Moreover, Baron et al.’s (2012) study found that entrepreneurs as a group appear to have a high default position for the experience of positive moods and emotions, scoring significantly higher than all other occupational groups tested. However, these authors also found upper limits to the beneficial effect, suggesting that it is important for entrepreneurs to learn to regulate their high levels of positive affect to gain its benefits while avoiding the significant “downside,” often manifesting in overconfidence, which positive affect may also create (p. 320).
Alternative frames for adversity. Bullough et al. (2014) emphasize the role of the entrepreneur’s perceptions of adversity, pointing out that not all individuals perceive a situation in the same way. Indeed, Mihic et al. (2015) found that business owners “perceive high levels of responsibility and flexible working hours as ‘positive’ stress,” concluding that “these stressors are not important factors for giving up on starting a business” (p. 452). Yang and Danes (2015) concur, stating that “how entrepreneurs frame the challenges that come with venture creation is crucial in determining their resilience capacity” (p. 7). Furthermore, Crick and Crick (2016) suggest that alternative evaluations of adversity – for example, viewing a negative event as a challenge or learning experience – can be an important cognitive resource for entrepreneurs which enhances their ability to cope with adversity. Flores et al. (2013) found that successful entrepreneurs as a group appear to exhibit a significant bias in their framing of adversity “commonly tending to overemphasise the extent to which their skills can increase performance in situations where chance plays a large role and skill is not necessarily a deciding factor” (p. 7) and tending to use limited information inputs in making this appraisal. Yang and Danes (2015) discuss the influence of the entrepreneur’s life outlook here, arguing that this can be a protective mechanism when it is more optimistic but that it may also increase the experience of stress when it is more pessimistic.
Creative improvisation strategies. Positive adaptation requires the generation of creative alternatives to the current course of action, including scanning the environment for information to spot novel opportunities, a conscious search for multiple alternatives and finding inventive ways to deal with apparent constraints (Bullough et al. 2014; Flores et al. 2013; Sun et al. 2011). The resilient entrepreneur improvises with a trial and error approach (Loh and Dahesihsari 2013), persisting in the attempt to find a solution for the situation rather than in a particular course of action. There is a willingness to take difficult decisions, to act, and to change decisions quickly where necessary – “to change strategy on a dime” (Renko and Bullough 2013, p. 345). There appears to be a role for intuition in this improvisation, acting on “hunches” (Ayala and Manzano 2014) “to do the right things without overanalysing the situation” (Loh and Daheshsari 2013, p. 6). Crick and Crick (2016), drawing on Sarasvathy (2001), suggest that effectuation strategies can also play a role here, arguing that entrepreneurs start from the assumption of an uncertain world and select between a set of means available to them based on the effects of those means, rather than selecting an end goal and then selecting the means to create it. This leads them to identify affordable losses, take advantage of relationships, and act on what is controllable in the midst of unpredictability. This approach provides the entrepreneur with the ability to move forward and can also protect them from the risks of escalating commitment.
Key relationships. While the literature based on the experience of US and European entrepreneurs has focused on the individual entrepreneur in its conception of resilience, there is an emerging trend toward a more interpersonal perspective (Cope 2011). Hayward et al. (2010) highlight the importance of the relationships that an entrepreneur develops with the entrepreneurial team created for the business venture and the network of supporters willing to provide financial backing, thereby linking social and financial resources. Pollack et al. (2012) found that the perception of adversity and regulation of negative emotion can be strongly influenced by business-related social ties, suggesting that they affect the ability to perceive stress as a challenge rather than as a problem, providing both “structural” support and “functional” support to cope effectively with economic stress. Shepherd et al. (2009) note the potential for entrepreneurs to find people to support them through their grief process to recover and learn from the experience of business failure, in particular pointing to a potentially important role for family members in this process. The family context has a distinctive importance for entrepreneurs, where the economic ties of marriage and even formal co-ownership of the business mean that the spousal couple is often “the primary decision context of entrepreneurs” and spousal commitment has a significant effect on the attainment of new venture goals and new venture sustainability (Yang and Danes 2015). There is another sense in which social resources are at a premium for entrepreneurs. As Cardon and Patel (2015) point out, entrepreneurs face “extreme scarcities” of social resources, lacking the social support from supervisors compared to employees and so need to create their own support team.
Social costs. However, as Crick and Crick’s (2016) case study illustrates, there is both the potential for utilization of social resources by entrepreneurs and the potential for social costs too. There are potential trade-offs for entrepreneurs to balance. As Mihic et al. (2015) observe, social resources can be a stressor, particularly within family businesses with unclear hierarchies. Ucbasaran et al. (2013) point to the social costs of failure in terms of its impact on personal and professional relationships. The social context of entrepreneurship can be tricky to navigate: it does not always provide resources, and moreover, the level of those resources available could be impacted by the nature and stigma (Singh et al. 2015) associated with the entrepreneurial challenges, especially venture failure, requiring resilience. It would also appear from Yang and Danes’ (2015) findings that social resources are more influential in relation to some entrepreneurial resilience impacts than others, where social resources were found to be more significant for the achievement of break-even than for long-term perceived business success which was more positively associated with business confidence and life outlook.
Development of resilience resources. Hayward et al. (2010) depict the process of developing resources for future resilience as a process operating in parallel to the process of responding to a particular challenge such as starting a first business venture, identifying the development of such resources as “second order effects” of resilience, resources that can be developed as by-products even if the first venture results in failure. These resources are durable and are not automatically weakened by the failure of the initial venture.
The entrepreneur’s self-confidence may have an important role, alongside positive emotion with which it interacts, in promoting this parallel development of all types of resilience resources (Hayward et al. 2010). There appear to be two key components of this self-confidence which are explored in the research on entrepreneurial resilience. Business confidence is self-confidence in the ability to carry out the entrepreneurial tasks involved in starting and running a business venture (Yang and Danes 2015). Business confidence arises from and in parallel to experience, but what matters is not just accumulating experience but the conclusions the entrepreneur draws from their experience about their capabilities so that “business confidence is built on both mastery and positive self-evaluation” (Yang and Danes 2015, p. 25). The latter is required for effective mobilization of the acquired knowledge and capability. The literature offers some clues about the mechanisms by which business confidence influences resilience. Yang and Danes (2015) suggest that business confidence impacts on the perception of adversity as it allows the entrepreneur to take a more positive view of their progress, for example, with new venture creation, as they understand and expect temporary setbacks, while Bullough et al. (2014) point to a sense of control over the entrepreneurial process which arises from such confidence.
The entrepreneur’s self-confidence also encompasses the entrepreneur’s belief in their own resilience and their ability to manage the intense stressors associated with entrepreneurial endeavor (Renko and Bullough 2013). Baron et al. (2016) point to “entrepreneurs’ metacognitive knowledge—their understanding of their personal capacity to cope with stress” as potentially playing a self-selective role for those who persist as entrepreneurs (p. 745). Crick and Crick (2016) argue that the development of such metacognitive knowledge requires deliberate and self-conscious effort to use the entrepreneurial venture as “a learning vehicle” (p. 322).
Conclusions and Future Directions
This chapter has highlighted the significance of micro-businesses to economies and societies around the world and the challenges faced by the entrepreneurs who create and manage them, with potential implications for their health and well-being. Reflecting current scholarship in this field, entrepreneurial resilience has been defined as an adaptive response to adversity within the business environment and within the inherent challenges of entrepreneurial activity, leading to the threefold outcomes of recovery, positive adaptation, and resources for future resilience. The nature of this resilience has been explored further, with a specific focus on the key resources – emotional, cognitive, and social – needed to sustain entrepreneurial endeavor and highlighting the important role of self-confidence in their development.
However, entrepreneurial resilience is a relatively new field of research, and there are a number of areas where further research and development are needed. Firstly, there is scope to develop a more fine-grained contextualization of resilience in entrepreneurial settings. Applying the concept of resilience to individuals within a work setting, Kossek and Perrigino (2016) highlight the need to define precisely how the operation of resilience is shaped by the nature of the adversity in a given occupation and the resources available and most effective in responding to adversity in that context. Research investigating the resilience of entrepreneurs began by applying generic constructs of resilience to this particular group of individuals, and a separate construct of “entrepreneurial resilience” has yet to fully emerge. More recent qualitative studies have started to explore the distinctiveness of entrepreneurial resilience, but there is more to be done to understand the nuances of resilience in the entrepreneurial context. Moreover, the field of entrepreneurship encompasses a wide variety of businesses in terms of scale and impact, to the extent that Grégoire et al. (2015) suggest that “there is probably more diversity among entrepreneurs than across entrepreneurs and non-entrepreneurs” (p. 141). The extant literature on entrepreneurial resilience and coping does not always explicitly differentiate the solo and micro-business contexts from that of larger SMEs. In addition, Kossek and Peregino (2016) speculate that occupational resilience may be impacted by the nature of the business activity, such as a service/non-service orientation or a back-end/front-end customer contact business model. The entrepreneurial resilience literature to date does not explore differences in the resilience required in different business sectors, and there is scope to examine different types of business as distinctive contexts for entrepreneurial resilience. Furthermore, some studies suggest some differentiation is possible in the application of the concept of entrepreneurial resilience in different cultures (e.g., Sun et al. 2011; Tanski et al. 2010). As these differences were not the main focus of these studies, there is insufficient data in the literature reviewed to relate such differences in detail. However, these findings are intriguing and perhaps suggest that there is potential for further exploration of cultural similarities and differences in the use of entrepreneurial resilience processes and resources.
Secondly, and crucially, there is as yet little research on the operation and development of entrepreneurial resilience over time and how this might be supported. Bernard and Barbosa (2016) observe that the literature on entrepreneurial resilience has “until recently studied the impact of resilience on entrepreneurship whilst underestimating the aspect of process and evolution in relation to resilience” (p. 89). As Davydov et al. (2010) point out, trait approaches are “difficult to operationalise” (p. 481) as a character trait may be difficult to change, while a process approach to resilience, in contrast, can be more easily influenced when its key elements are understood and so opens up the possibility for learning and change, potentially forming the basis for evidence-based methods or techniques that could be learned and practiced to enhance the resilience of individuals seeking to develop as entrepreneurs (Montpetit et al. 2010; Bernard and Barbosa 2016; Min et al. 2013).
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