The stereotype of the hardened entrepreneur
When asking entrepreneurs how they deal with crises, we often focus on the venture and how it is pulled from the brink of failure by some daring decisions. But we rarely ask how they, as a person, deal with their venture being on the brink of failure. By contrast, we can imagine employees’ fears when for instance AI threatens to replace their job. But for entrepreneurs we seem to assume the answer based on a stereotype.
That stereotype is of the entrepreneur as a tenacious go-getter in the face of adversity; a portrayal based on Silicon Valley success stories. However, for most entrepreneurs, such a stereotype can be difficult to live up to, and not fitting the stereotype can be difficult to live down.
Studying the soft side
Our open-access publication in PLoS ONE reports on our empirically study of this stereotype. We asked 300 leaders of small businesses in Flanders how hard the 2010 financial crisis hit their venture. We also asked them about their self-confidence in being an entrepreneur and about the job security they experience. By analyzing the connection between these answers we hope to promote a more empathetic view on entrepreneurs.
By analyzing the connection between these answers we hope to promote a more empathetic view on entrepreneurs.
The first thing to realize is that the financial crisis is experienced very differently by different ventures. Some ventures could hire workers and enjoy profits as they please, while others experienced years of hardship before recovering from the crisis, similar to how small businesses are still failing today due to not being fully recovered from the Covid crisis. These differences in experience of hardship for the venture could influence entrepreneurs as a person.
What further sets our study apart is that we look at the long-term effect of the crisis. Specifically, we asked entrepreneurs about their current feelings and beliefs about themselves when the crisis was about five to ten years prior. This means we do not study how some entrepreneurs regulate their emotions to prioritize what is best for the venture, but rather focus on how the experience of hardship permanently shapes their baseline attitude.
What does the data say
We found that entrepreneurs whose venture experienced harder crisis times, still experienced lower job security years later. Note that we find this effect even though we only study ventures that survived the crisis. The entrepreneur’s self-confidence was also weakened by harder crisis times, but only slightly so.
Furthermore, we asked ourselves, does this effect on the entrepreneur as a person also impact the venture; specifically, do the affected entrepreneurs still making daring decisions? We found that self-confidence and job security are needed for the venture’s risk taking, innovativeness, and pro-activity, but job security only slightly so.
Bringing it all together, we see that ventures’ hardship in crisis times slightly reduces their daringness to this day via reducing entrepreneurs’ self-confidence and sense of job security. The relation is only weak because self-confidence is most related to the daringness while job security is most related to the crisis. However, it is striking that entrepreneurs are so affected by the financial crisis that it is still observable five to ten years later. The question arises whether the affected entrepreneurs have enough daringness to face the next crisis.
Entrepreneurs are so affected by the financial crisis that it is still observable five to ten years later.
Accept not only the threat of failure, but also your fear of it
In sum, entrepreneurs are not so tough as the stereotype suggests. Do not be discouraged by people saying that you cannot be an entrepreneur if you are afraid to fail; the data show that many entrepreneurs are still affected by their past brushes with bankruptcy.
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