![Sample our Global Development journals, sign in here to start your access, latest two full volumes FREE to you for 14 days]({"type":"image" , "src" : "/sda/5929/TOC-Subject-Sample-2021-Global-Development.jpg"})
ABSTRACT
What makes nascent entrepreneurs more or less likely to complete the founding process and to actually start their business? To address this fundamental question, we introduce founder social identity and economic prosperity as potential explanatory factors that are still insufficiently understood. Specifically, we theorize that having a Darwinian, Communitarian, or Missionary founder social identity affects the transition from nascent to active entrepreneurship in distinct ways. Furthermore, we expect economic prosperity to act as a relevant contingency factor. We test our hypotheses in a two-wave dataset of nascent entrepreneurs from the GUESSS project and conduct a supportive post-hoc analysis in a sample of nascent entrepreneurs from a longitudinal PSED-type study (SwissPEB). We find support for most of our expectations, namely that having a Communitarian or Missionary founder social identity makes the nascent-active transition more likely and that economic prosperity moderates the Darwinian- and Communitarian-related main effects.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1. Austria, Belgium, Brazil, Canada, Colombia, Estonia, Germany, Hungary, Italy, Japan, Liechtenstein, Malaysia, Poland, Portugal, Russia, Spain, and Switzerland.
2. Because our observations are nested within each other (i.e. we have individual-level and country-level observations), we considered estimating multi-level mixed-effects logistic regressions (‘melogit’ command in STATA 15) (Rabe-Hesketh and Skrondal Citation2008). However, the intra-class correlation coefficients (ICC) were smaller than 0.05 (an ICC of 0.05 is regarded as small, see Brieger and Gielnik Citation2021; Hox, Moerbeek, and Van de Schoot Citation2017). Therefore, the ICCs are considered too small to justify applying multi-level models.
3. Items and the relevant indices (factor loadings, average variance extracted [AVE], corrected item-total correlations, and Cronbach’s Alpha) appear in the Appendix. For all three primary founder social identities, the corresponding five items load unidimensionally on the respective construct.
4. In line with existing literature, we regarded respondents as having a pure identity when their agreement to all five items that belong to a specific identity type was at 5 or higher, with no such agreement to other identity types. Given our variable specification, not having a specific pure founder social identity (i.e. those respondents that are coded ‘0’) implies that these respondents have either a different pure identity, any kind of hybrid identity – which entails features of more than one primary identity – or do not exhibit any type of identity. As an example, not having a pure Darwinian founder social identity (‘0’ in our corresponding dummy variable) covers pure Communitarians, pure Missionaries, all possible hybrid identity combinations, and those respondents with an unidentified identity. Of the 150 nascent entrepreneurs at time 1, 26 are pure Darwinians, 11 are pure Communitarians, and 11 are pure Missionaries. Of the 26 nascent entrepreneurs who had transitioned to active entrepreneurship at time 2, 5 have a pure Darwinian identity, 4 have a pure Communitarian identity, and 4 have a pure Missionary identity.
6. ‘Discussed product or business idea with potential customers’, ‘Collected information about markets or competitors’, ‘Written a business plan’, ‘Started product/service development’, ‘Started marketing or promotion efforts’, ‘Purchased material, equipment or machinery for the business’, ‘Attempted to obtain external funding’, ‘Applied for a patent, copyright or trademark’, ‘Registered the company’ and ‘Sold product or service’.
7. For two-item measures, the Spearman-Brown coefficient is more appropriate to assess scale reliability than Cronbach’s Alpha (Eisinga, Te Grotenhuis, and Pelzer Citation2013).
8. House et al. (Citation2004) used four items for collectivism and four items for uncertainty avoidance. However, our tests revealed problems with scale reliability. Thus, we did not use the problematic items.
10. This variable has been logarithmized. Data retrieved from https://data.worldbank.org/indicator.
11. We also performed a confirmatory factor analysis (CFA) with the 15 items of the founder social identity scale of Sieger et al. (Citation2016). The corresponding three-factor structure exhibits an acceptable fit (χ2(78) = 171.828, CFI = 0.920). The results for a one-factor structure are significantly worse (e.g. χ2 (90) = 545.911, CFI = 0.611; difference in χ2 = 374.083, df = 12, p < 0.001), which mitigates common method bias concerns.
12. A conservative threshold for VIF is 5 (Hair et al. Citation2006). Our results are based on OLS regressions in STATA.
13. We did not test for non-response bias. Due to the two data collection waves and corresponding varying start and end dates of the individual countries and universities, it was not possible to determine and compare early and late respondents reliably, as suggested by Oppenheim (Citation1966) to test for potential non-response bias.
14. Detailed results of all our tests are available from the authors upon request.
15. Parts of the SwissPEB data has previously been used in another study on venture emergence (Koumbarakis et al. Citation2021). The detailed results of our analyses using the SwissPEB dataset are available from the authors upon request.
16. In summer and autumn 2015, 28,599 people were screened in an omnibus telephone survey and asked whether they are currently trying to start a new business. Overall, 680 respondents qualified as nascent entrepreneurs (2.4%). Of all identified nascent entrepreneurs, 298 were willing to participate in our study and completed the long wave 1 interview. Of the respondents from wave 1, 225 participated in the wave 2 interview one year later (summer/autumn 2016). All the people who were still nascent entrepreneurs in wave 2 or who could not be contacted in wave 2 were then contacted for a last interview in summer 2017. Overall, 125 people participated in the wave 3 survey. All surveys were conducted by telephone by one of the largest market research firms in Switzerland, LINK Institute for Market and Social Research, Lucerne.
17. People qualified as nascent entrepreneurs when they answered the following three questions affirmatively: 1) ‘Are you, alone or with others, currently trying to start a new business. This includes any self-employment or selling any goods or services.’; 2) ‘Over the past twelve months have you done anything to help start a new business, such as looking for equipment or a location, organizing a start-up team, working on a business plan, beginning to save money, or any other activity that would help launch a business?’; and 3) ‘Will you personally be owner or co-owner of this new business?’ In addition, for being a nascent entrepreneur, people had to answer the following question in the negative: ‘Has this business generated any returns or revenues for more than six of the past twelve months?’ or, if they generated revenues, that monthly revenue had not ‘been more than monthly expenses for more than six of the past twelve months?’, including the salaries of the founders.
18. There are only two items for measuring the Darwinian founder identity, rendering Cronbach’s Alpha not very insightful. For all three primary founder social identities, the corresponding three (or two in the case of Darwinian) items load unidimensionally on the respective construct. A Confirmatory Factor Analysis (CFA) suggests a good overall fit for these constructs (RMSEA: 0.068; CFI: 0.956; Chi2(17): 39.94).
19. Of the 126 nascent entrepreneurs at time 1, 16 are pure Darwinians, 18 are pure Communitarians, and 10 are pure Missionaries. Of the 59 entrepreneurs who had transitioned to active entrepreneurship at time 2 or 3, 8 are pure Darwinians, 7 are pure Communitarians, and 3 are pure Missionaries.
20. The prompt was: ‘Now, I would like to go through a series of activities or actions (…) that often take place while starting a new business. I would like you to confirm whether the following actions have already taken place for [company name], whether they will take place in the future, or whether they are not relevant’.: ‘Conducted research on market opportunities of your business idea’, ‘Discussed your business idea with potential customers’, ‘Started to work on a business plan’, ‘Bought or rented physical space for the business’, ‘Purchased equipment, facilities, property or other major items’, ‘Attempted to get external financial support’, ‘Invested money into the business’, ‘Started to work on patent, copyright or trademark application’, ‘Hired first employee or intern’, ‘Created a web page for your business’, ‘Initiated first marketing or promotion efforts’, ‘Started to develop a prototype for the product or service’, ‘Started to collected information about competitors’, ‘Registered the company’ and ‘Contacted a program or organization that helps new businesses get established’. Afterwards, the number of startup activities already conducted was calculated, potentially ranging from 0 to 15.