Entrepreneurial resilience

The concept of resilience

Resilient is a word in English, Spanish, French, and German that relates to the ability to recover. For a physical object, resilience means that it is being capable of regaining its original shape or position after bending, stretching, compression, or other deformation (Wikipedia, 2011). Resilience is also used to characterise individuals who are able to overcome setbacks related to their life and career aspirations (De Vries & Shields, 2005). When talking about a person, resilience is used in the meaning of recovering easily and quickly from such setbacks (Zautra, Hall, & Murray, 2010). For the entrepreneur, resilience is a key trait (De Vries & Shields, 2005). Entrepreneurial resilience can be augmented by enhancing networking and forming a professional network of coaches and mentors, accepting that change is a part of life, and avoiding seeing crises as insurmountable (Davidson, 2000).

In social research, resilience has been referred to as the positive ability of a system or company to adapt itself to the consequences of a catastrophic failure caused by power outage, a fire, a bomb, or similar event (Masten, 2009). Also, the term has been used to describe a burgeoning movement among entities such as businesses, communities, and governments to improve their ability to respond to and quickly recover from catastrophic events such as natural disasters (Rutter, 2008), and the resilience concept has also been extended to business continuity initiatives (Sheffi, 2005). Generally, resilience is best understood as a process. Initially, it assumed to be a trait of the individual, an idea more typically referred to as ‘resiliency’ (Masten, 1994). Most research, however, now shows that resilience is mainly the result of individuals interacting with their environments and the processes that either promote well-being or protect them against the overwhelming influence of risk factors (Zautra et al., 2010). Resilience in its psychological and social meaning is therefore generally understood as something acquired (Rutter, 2008). Such processes can be individual coping strategies or may be helped along by supporting families, schools, communities, and social policies that make resilience more likely to develop (Leadbeater, Dodgen, & Solarz, 2005). In this sense, resilience is more likely to occur when there are cumulative ‘protective factors.’ Ungar (2004) argues that this conceptual definition of resilience could be problematic since it does not adequately account for cultural and contextual differences in how people in various systems express resilience. Through collaborative mixed methods research in 11 countries, Ungar and colleagues (2007) at the Resilience Research Centre have shown that the cultural and contextual factors exert a great deal of influence on the factors that affect resilience among a population of youth-at-risk (Ungar et al., 2007 2008). Resilience has been shown to be more than just the capacity of individuals to cope well under adversity. Resilience may in fact be better understood as both the capacity of individuals to navigate their way to the psychological, social, cultural, and physical resources that sustain their well-being and their capacity individually and collectively to negotiate for these resources to be provided and experienced in culturally meaningful ways (Masten, 2001; Ungar, 2008; Werner, 1995). Studies of demobilised child soldiers, high school drop-outs, urban poor, immigrant youth, and other populations at risk are showing these patterns (Eggerman & Panter-Brick, 2010; Zautra et al., 2010).

Characteristics of entrepreneurial resilience

Several factors are known to modify the negative effects of adverse life situations in general and, therefore, related to the concept of resilience. A primary factor is to have relationships that provide care and support, create trust, and offer encouragement, both within and outside the family. Additional factors also associated with resilience are the capacity to make realistic plans, have self-confidence and a positive self-mage, possess communication skills, and have the capacity to manage strong feelings and impulses (see American Psychological Association [APA], 2010). Ungar and colleagues (2007) identified seven aspects of resilience across many different cultures (Table 1).

Table 1. General external (1 and 2) and internal (3–7) aspects of resilience (from Ungar et al 2007, p. 295)

	Aspect	Explanation
1	Access to material resources	Availability of financial, educational, medical, and employment assistance and/or opportunities, as well as access to food, clothing, and shelter
2	Access to supportive relationships	Relationships with significant others, peers, and adults within one's family and community
3	Development of a desirable personal identity	Desirable sense of one's self as having a personal and collective sense of purpose, ability for self-appraisal of strengths and weaknesses, aspirations, beliefs, and values including spiritual and religious identification
4	Experiences of power and control	Experiences of caring for one's self and others, the ability to affect change in one's social and physical environment in order to access health resources
5	Adherence to cultural traditions	Adherence to, or knowledge of, one's local and/or global cultural practices, values, and beliefs
6	Experiences of social justice	Experiences related to finding a meaningful role in one's community that brings with it acceptance and social equality
7	Experiences of a sense of cohesion with others	Balancing one's personal interests with a sense of responsibility to the greater good; feeling a part of something larger than one's self socially and spiritually

The extent of entrepreneurial resilience may not only be dependent on internal or personal characteristics, but also on structural and external factors. In recent work by Acs (2010), he proposes that entrepreneurship activities across different cultures could offer an explanation that entrepreneurial resilience may be dependent on external as well as internal factors and, just like entrepreneurship itself, related to ‘a dynamic interaction of attitudes, activities, and aspirations that vary across stages of economic development, i.e. in different societies. In this perspective, the work on entrepreneurial failure by Liao (2004) is relevant. In an integrated model on entrepreneurial failure, the author relates the causes of entrepreneurial failure to one internal and three external factors: the entrepreneur (personal characteristics), the company (structure and strategies), the context (environment, micro/macro), and the process (events of failure). Just like the components of entrepreneurial failure (Liao, 2004), the extent of entrepreneurial resilience may be related to a combination of such internal and external contextual factors.

The resilient entrepreneur and attitudes towards failures

The current understanding of the concept of entrepreneurship and characteristics of the entrepreneur largely stems from three sources. The first comes from the contributions of economic writers and researchers on the role of the entrepreneur in economic development and in the application of economic theory. The second approach is related to entrepreneurship as a psychological trait based on personality characteristics of the entrepreneur. The third is a social behavioural approach, which stresses the influence of the social environment as well as personality traits in forming the entrepreneur. In addition, there is some dispute over whether or not ‘entrepreneurial’ characteristics can be identified at all (Deakins, 1999). Traditionally, entrepreneurship theory focused on entrepreneurs through the trait aspect. However, in the last decades, new models have evolved that focus on the action and outcomes as a way to define entrepreneurs (Aldrich & Martinez, 2001). Davidson, Low, and Wright (2001) argued that in today's research on entrepreneurship, the focus is shifting more toward the behavioural and cognitive aspects of the field rather than the personality characteristics. The idea that the characteristics of entrepreneurs cannot be taught or learned, that they are innate traits one must be born with, was long the prevailing concept (vide supra). Such traits include pro-activeness, initiative, drive, a willing to take risks, analytical ability, and skill in human relations.

Entrepreneurs are not always successful in their venture activities. In fact, a substantial part of promising start-ups fail and will never grow to flourishing ventures (Klofsten & Norrman, 2010). This can be due to their non-ability to attain a strategic position of relative stability in accordance with the business platform model (Klofsten, 2010). External as well as internal attitudes towards entrepreneurial failure are factors that contribute to the willingness of nascent entrepreneurs to start or continue with their entrepreneurial ambitions in spite of difficulties and uncertainty (De Vries, 1977). The way external stakeholders react to failure, influences whether or not nascent entrepreneurs are willing to adopt risk and pursue entrepreneurial opportunities (cf. Middleton, 2010). The level of risk adoption and the degree of entrepreneurial resilience may therefore be related to a combination of such internal and external contextual factors facing nascent entrepreneurs. The extent of entrepreneurial resilience in a particular society may also be related to social norms. Characteristics of entrepreneurs such as willingness to take risks also make them more prone to experience failure. Learning from failure is an important characteristic, particularly for entrepreneurs, and there are multiple case reports on how failures and the ability to rebuild after failure have formed successful entrepreneurs (De Vries, 1977; Gratzer, 2001).

Interestingly, failure of an entrepreneurial start-up represents a social stigma in some societies but less so in others. Thus, social norms may impact on entrepreneurial activity and the degree of entrepreneurial resilience in a particular society. Different cultures respond to entrepreneurial failure differently. For example, the acceptance of failure is higher in the United States and considered as an experience for future success, while in Japan and Europe entrepreneurial failure is more of a social stigma (European Commission, 2003; Vaillant & Lafuente, 2007). As an indication of that, the high level of firm creation in the US economy contrasts to the relatively lower levels of entrepreneurial dynamism in e.g. Europe and Japan (Acs, 2010). The fact that such differences and discrepancies can exist between countries and regions may indicate that a resilient behaviour of entrepreneurs is more easily adopted in societies and communities where failure of an entrepreneurial venture is not seen as a social stigma. Notably, entrepreneurial activity varies substantially across nations and regions and such differences may very well be related to the perceived social stigma of failure. This may, for example, be a factor contributing to the delay of the introduction of free market solutions in some societies such as in Russia (Buss, 2001).

Another aspect of entrepreneurial resilience may be related to attribution theory (Heider, 1958; Weiner, 1986); that is, how individuals use attributions to establish the relationship between cause and effect. This model explains how individuals attribute success or failure according to the three dimensions: locus of causality, stability, and controllability. It is conceivable that entrepreneurial individuals also tend to explain the outcome of their activities in respect to these dimensions. Rotter (1966) argues that an individual generally perceives the outcome of a specific event to be either within or outside his/her personal control. Entrepreneurs are considered to have a greater internal than external locus of control; that is, they tend to believe that they have an influence over outcomes through their own ability, effort, or skills. Most entrepreneurs also tend to take responsibility for their own future and often act independently of others (McClelland, 1961). Entrepreneurs thus tend to attribute success as well as failure only to him or her self and their own actions, which may be an important underlying factor for entrepreneurial resilience and drive.

Contemporary understanding of entrepreneurial behaviour requires a more complete understanding of not only innovative behaviour, but also how entrepreneurs perceive and cope with difficulties and failures. As the field of entrepreneurship has developed over the past decades, research has progressed from empirical surveys of entrepreneurs to more contextual and process-oriented research; but still, no comprehensive theory base of entrepreneurship has emerged (Kuratko & Hodgetts, 2001). Our understanding for the discipline of entrepreneurship requires taking into consideration the socio-economic context within which we are discussing the theory of the entrepreneur (Abouzeedan, 2003). There is a continuing need to develop a more complete theoretical framework of entrepreneurship that includes theoretical variables and the relationship between those variables (Wortman, 1987). Certainly, investigating process-based characteristics, such as resilience, will be valuable in developing the concept of ‘the entrepreneur’ further.

Thomas Hedner and Adli Abouzeedan

Innovation and Entrepreneurship

Department of Medicine

Sahlgrenska Academy

University of Gothenburg, Gothenburg, Sweden

Magnus Klofsten

IEI/PIE/HELIX Excellence Centre

University of Linköping, Linköping, Sweden