Growing From Failure: How to Empower Entrepreneurs to Harness Resilience
Businesses begin with an idea for a product that can change people's lives, or a service that is absent from the market. Known as entrepreneurial intent, this initial inkling to create a company is the genesis of all businesses - from Silicon Valley startups securing their seed money to small businesses all around the world.
Can micro-level factors, such as cognitive resources, be named in order to help everyday people see their potential as business owners? Can macro-level constructs, such as societal or state fragility, serve as signals as to which traits may inspire the entrepreneurial spirit to take hold?
It may seem paradoxical that positive forms of entrepreneurship can occur in adverse, resource-poor or unsafe regions, and what we know through previous research is that adverse environments typically curb entrepreneurship. But entrepreneurship in developing countries is crucial, as it can induce economic development as well as social change and opportunity. Understanding how to inspire entrepreneurship, or how to harness what often already resides in the people of fragile environments, is imperative to ensuring progress and prosperity.
In a study authored by myself and colleagues Amanda Bullough and Saadat Saeed, we examine the “micro-macro-perspective” on how state fragility relates to two entrepreneurial cognitive resources, resilience and self-efficacy, and how all of these components work together to impact the intent of starting a venture. We collected survey data from countries as fragile as Afghanistan and Iraq, as stable as Finland and the United States, as well as two countries in the middle of the fragility spectrum, namely Peru and Tajikistan.
Entrepreneurial self-efficacy (ESE) is the confidence in one’s ability to implement the actions required to successfully start and operate a business. ESE is a well-studied component of positive psychological capital that has been attributed to many founders’ success. However, its supremacy in the minds of those who are only just considering starting a business in fragile states was unclear. Does it help to feel confident you can identify new business opportunities or appropriately commercialize an idea to have entrepreneurial goals under adversity?
As it turns out – it depends. Our study finds and confirms the previous work of Bandura, which found that the power of self-efficacy is not uniform across environments. In the U.S. and Finland, two of the most stable countries in the world, ESE was a meaningful driver in the intent of potential entrepreneurs. However, in places like Afghanistan and Iraq, ESE did not present itself as a determining factor for entrepreneurial intentions. When potential entrepreneurs observe that hard work does not lead to expected rewards due to surrounding corruption, inequality, or persecution, their belief in their abilities as business owners is simply not enough to inspire entrepreneurial goal setting.
What became clear through our research is that resilience is the ultimate virtue of those who aim to start businesses in fragile states. The ability to recover from or positively adapt to adversity, with an emphasis on personal growth, becomes increasingly important in more adverse operating environments. Those who possess resilience often view entrepreneurship as both positive and emancipatory – it is a constructive cognitive resource that helps protect oneself from despair and break free from perceived constraints. Individual agency, and not a lack of adversity, is the determinative ingredient for entrepreneurial intent in countries where political and societal support is hard to find.
In the era of COVID-19, we ought to find this encouraging. As developed nations like the U.S. become more economically fraught, and as gridlocked governments do little to nothing to support the efforts of would-be business owners – new businesses can still emerge, and perhaps from unexpected populations.
In a society where ESE was previously king, the scales may soon tip in the other direction. Those who are naturally resilient, or those who have cultivated resiliency due to circumstance, are better suited to begin thinking about entrepreneurial opportunities in a time such as now. COVID-19’s impact will not be as catastrophic to those who are accustomed to adversity, and those who understand their ability to grow from moments of uncertainty or turmoil have a better chance of becoming entrepreneurially inspired.
In the U.S. and beyond, governments, NGO’s, community leaders, and those involved in entrepreneurship education should consider how to teach, harness, and nurture resilience. Often, people who persistently live within fragile environments do not realize their resilience. By illustrating how individuals in these settings are already controlling and successfully managing their adverse circumstances, they can take pride in their resilience, and entrepreneurship can become a realistic way for them to take further control of their lived experiences.
It will also be important for those trying to inspire entrepreneurship to demonstrate the success stories of others in similarly difficult situations. This can be done through speaking events, mentoring, or simple information sharing. Showing individuals that it has been done before can set folks on a motivational journey, resulting in the desire to also start a business.
Resilient individuals know how to skillfully fail, and understanding the importance of a person’s belief in their ability to learn and grow from their failures has shown itself to be fundamental for empowering entrepreneurship. While providing business acumen classes or executive training seems like a good first step in inspiring people to start businesses in unstable environments, it may not be the most impactful. In fact, simply holding up a mirror could be all it takes.