2. Social psychology of entrepreneurship 1.11.2010

1. 2. Social psychology of entrepreneurship 1.11.2010

2. Social psychology of entrepreneurship • Research on entrepreneurship is multi-disciplinary: economics, business management, psychology, sociology, political sciences, … • ”Social psychology of entrepreneurship”: A field of research in the making • Research team at the Department of Social Studies (University of Helsinki): Kari Mikko Vesala; Jarkko Pyysiäinen; Miira Niska; Soili Peltola (public defense of a PhD thesis 5.11.: Kirsti Tonttila)

3. Approaches in social psychology of entrepreneurship • Social cognition • Social context • Social construction (attention: a view to social psychology: from mainsteam experimental-cognitive emphasis to social and societal social psychology) (applied field!)

4. Chell (2008, 247): “Social psychology may provide the link with the socio-economic context of entrepreneurial behaviour and to the mental processes that surround decision-making.”

5. Background • McClelland 1961: The Achieving Society • Weber: protestant work ethic and the spirit of capitalism (diligence, frugality) • Need for achievement (nAch): immediate and precise feedback; challenging tasks; personal responsibility; moderate risk-taking • Running and owning a business enterprise ideal for satisfying nAch (thus explaining career choice and success)

6. Background,cont. • Entrepreneurial personality: theory in psychological e literature + cultural image (next lecture focuses on the latter) • Most popular traits: nAch, internal locus of control, risk-taking propensity • Ambiquous results, severe criticism • E.g. causal explanation vs role expectation (-> a description of the role rather than the actor)

7. Social cognition

8. 2. Outlines of the social psychology of entrepreneurship Shaver 2003: The Social Psychology of Entrepreneurial Behaviour Differentiates s.p. from personality approaches which assume traits as permanent cross-situational dispositions (e.g. nAch, locus of control, risk-taking propensity) Emphasis on intrapersonal processes that ”guide the entrepreneur´s venture-organizing activities” (=business start-up and persistence in it): social cognition (e.g. attributions of success, overconfidence), attitudes (e.g. planned behaviour), self (e.g. self-evaluation, self-efficacy) Shaver focuses on cognitions as separate antecedent entities that affect overt behaviour. He strongly promotes a quantitative (pref. experimental) variable approach and rejects qualitative methods

9. Shaver 2003 • Social psychology: ”study of personal and situationalfactorsthataffectindividual social behaviour” (p.331); Sociallymeaningfulactions? • Entrepreneurship as meaningful action: ”ventureorganizing (eitherbyindividualorteam)? 331) • ”opportunityseeking and recognition, innovation, creation of value, assumption of risk, disregard for resourcescontrolled” (332) • ”New entrants”, ”new companiescreated” (”withoutentrepreneurialbehaviour”) (331)

10. Shaver 2003 • Commitment to experimentalmethodology, and realisticepistemology (p.333-335) • Social cognition: categorization, internalrepresentations of the externalworld (prototypes, schemata); • Biases and heuristics: cognitivestructuresactivating; availabilityheuristics, illusorycorrelation; overconfidence (Busenitz & Barney)

11. Busenitz & Barney propose that the situation of entrepreneurs differs from that of managers, and thus explain difference in overconfidence (start-up of a new venture vs established organizational background) • Critique of entrepreneurial personality –theories: emphasis on situation + person-situation interaction (p.341-342)

12. Shaver 2003 Does Shaver take into account situational factors? What kind of factors?

13. Attributions (internal-external, person-situation) • Stable internal attributions of the cause of action correlated with more time spent on structuring the company • Self-esteem (self-serving bias, Baron) • Enterprise serving bias (optimism) (p.346) • Attitudes: attitude-intention-behavior (Fishbein & Ajzen)

14. Self; self-evaluation (social comparison, self-efficacy)

15. Mainstream cognitive approach, • Entity emphasis: individual, situation; • Elementarism: separate, measurable factors • General, universal patterns (in causal connections)? • Social context missing? (consequently, contextual variation in ”entrepreneurship as socially meaningul action” is missing)

16. Social context • Immediate social context of the actions of small business owner-manager (=trans-action context) • Wider societal context: cultural and political environment • -> Variation in immediate context originating from the variation of environment (organisation, institution, culture system etc., e.g. arts, farming, ) • -> Variation originating from context and situation in which entrepeneurship is used as a model (metaphor) of action

17. Why context? • Deeper understanding of activity and experience; (and cognitions, attitudes, self) • Insight into the functions of entpreneurship in society • Insight into how action and experience (and cognitions, attitudes and self) are affected by contextual factors • And how they are defined and constructed through the context (in the transactions between the individual and other actors)

18. 2. Outlines of the social psychology of entrepreneurship Carsrud & Johnson (1989) Entrepreneurship: A social psychological perspective. C & J elaborate on the description of entrepreneurial behaviour by viewing it as a role/a set of behaviours: pursuit of business opportunities (incl. p. of resources) that takes place in a context of social networks and transaction relations. emphasis on the means and processes of social influence (e.g. ”know-who instead of know-how”, impression management: credible self, equity/fairness in exchange), as well as on taking a role of an entrepreneur ( = adapting ”entrepreneurial” self-definition). no explicit stand on the methods

19. Emphasis on situation as a social context: • Carsrud & Johnson; social networks (Aldrich & Zimmer; johannisson); social embeddedness; Giddens (structuration); social contracting (Star & McMillan) • Entrepreneurial learning (small business as a learning context) • Vesala 2004 The social embeddedness of personal control. A social psychological perspective to rural entrepreneurship.

20. Social context: Vesala 2004 • What are the main points?

21. Social context: Vesala 2004 • What are the main points? • Definitions? • Personal control, control constructs • Relational thinking among small business owner/managers (locus of control: either-or, both-and) • Threat and support; trust

22. 2. Outlines of the social psychology of entrepreneurship: Conclusion there are clear conceptual associations with the self (Shaver: self-efficacy and self-evaluation, C & J: role, self-presentation). (My analytical self concept here: self is assumed to involve reflective, relational and agentic aspects, see Baumeister 1999). Shaver promotesexclusive use of quantitative variable approach, C & J do not question this

23. Social construction • Active individual; • interaction/transaction; communication world (interaction, language, discourse, speech-acts); • social reality as constructed -> actors + systems of action as constructed

24. 3. Social construction approach in the entrepreneurship research: contributions and challenges to social psychology of entrepreneurship? During the latest decade, several researchers have utilised social constructionist approach in the study of entrepreneurship They draw not only on sociologist such as Berger and Luckman, or Giddens, but on social psychologist such as Harre, Gergen, or Potter & Wetherell, narratologists such as Bruner or Polkinghorne, not to mention dramaturgical approach of Goffman. Topics: construction of business opportunities (Chiasson & Saunders 2005;Jack & Anderson 2002; Fletcher 2006); entrepreneurial personality (Chell 2008); entrepreneur identity (Watson 2008, Down & Warren 2008, Downing 2005); entrepreneurial learning (incl.self-beliefs) (Rae & Carswell 2000)

25. 3. Social construction approach in the entrepreneurship research: contributions and challenges to social psychology of entrepreneurship? One background for the research on the construction of entrepreneurial self: Debate on the creation of enterprising self as a target of public policies (”enterprise culture” programs) Some of these studies question a (simplistic) assumption that governmental discourses, however dominant they would appear, could in any straightforward or mechanical way transform individuals into enterprising selves. Instead, the role of individual subjectivity and activiness should be examined.

26. 3. Social construction approach in the entrepreneurship research: contributions and challenges to social psychology of entrepreneurship? Individual seen as intentional creature who takes action, learns, and makes sense, and thus creates and exploits business opportunities and construct him/herself as an entrepreneur while engaged in social interaction that is embedded in social contexts and situations In doing this, individual uses socially shared tools for thought and communication (language etc.), which include criteria for entrepreneurship (=entrepreneurship discourses, representations of E etc.), and participates in controversies and negotiations in transaction relations.

27. 3. Social construction approach in the entrepreneurship research: contributions and challenges to social psychology of entrepreneurship? Such a construction is obviously complicated and multifaceted. Situational and contextual variety is expected in the nature of the process and contents of the construct. Therefore, thick qualitative analysis are favoured. Methodological focus on the analysis of communication and use of language: narratives, discourses, metaphors, rhetoric, self-presentations; (case-studies)

28. 3. Social construction approach… Conclusion The self is again at the focus (e.g. identity) but now the interest is in the construction of self. The approach puts emphasis on viewing the individual as as active agent (in the construction of self as well as in the construction of business opportunity) This is understandable, because at the core of the multi-disciplinary study on entrepreneurship as a whole there is an idea of special agency: Entrepreneur is an actor who ”makes it happen” (is proactive, innovative, risk-taking, and so on) For social psychology, this suggests that concepts associated with the agentic aspect of the self, such as self-efficacy, are of special relevance Such concepts can be approached also from a social construction perspective

29. Coming back to Shaver • Concept of e: start-up? Venture creation • Reasons for this understanding: • Carland et al: distinction between small b owner – e proper • Interest in new ventures, + growth • ”Essence of action” /social meaning: driver of economic growth; a model for action in general (enterprise culture) • Yet small business management is one (profound) context for viewing entrepreneurship

30. Unlike Shaver, no need to define social psychology inside the cognitive processes of the individual, nor within the business start-up process but in various contexts • Why? Because e discourses nowadays are used as a model for developing and changing action in general (citizenship, education, in working-life (wage work, management, institutional and organizational behavior, public policy, citizenship, education, health etc.); and because small business is an influential phenomenon in modern society in economic terms and in social terms as well (untypical work: self-employment, freelancer, practitioners of profession etc.; ) )

31. Examples • Vesala & Peura 2003 + follow-up • Vesala & Peura 2005

32. References 1 • Baumeister, R. F. (1999) The Nature And Structure Of The Self: An Overview. In Baumeister, R. (Ed.) The Self in Social Psychology. Taylor and Francis, Philadelphia. • Berger, P. & Luckmann, T. (1967). The social construction of reality. London: The Penguin Press. • Billig, M. (1996) Arguing & Thinking. • Bruner, J., 1986. Actual Minds, Possible Worlds. Harvard University Press, Cambridge, MA. • Carsrud, A. L., & Johnson, R. W. (1989). Entrepreneurship: A social psychological perspective. Entrepreneurship and Regional Development, 1(1), 21-31. • Chell, E. (2000) ‘Towards Researching the “Opportunistic Entrepreneur”: A Social • Constructionist Approach & Research Agenda’, European Journal of Work and OrganisationalPsychology 9(1): 63–80. • Chell, E. (2008) The entrepreneurial personality. A social construction. London & New york: Routledge.

33. References 2 • Chiasson, M. & Saunders, C. (2005) Reconciling diverse approaches to opportunity research using the structuration theory. Journal of Business Venturing 20 (2005) 747–767 • Down, S. and Warren, L. (2008) Constructing Narratives Of Enterprise: Clichés And Entrepreneurial Self-Identity. International Journal Of Entrepreneurial Behaviour And Research 14(1), 4-23. • Downing, S. (2005) The Social Construction of Entrepreneurship: Narrative And Dramatic Processes In The Coproduction of Organizations And Identities. Entrepreneurship Theory And Practice 29(2), 185-204. • Fletcher, D. E. (2006) Entrepreneurial Processes and The Social Construction Of Opportunity. Entrepreneurship And Regional Development 18(5), 421-440. • Gergen, K.J. (1995). Relational theory and the discourses of power. In D.M. Hosking, H.P. Dachler, &K.J. Gergen (Eds.), Management and organisation: Relational alternatives to individualism. Aldershot:Avebury, 29–50.

34. References 3 • Giddens, A. (1991), Modernity and Self-Identity: Self and Society in the Late Modern Age, Polity Press, Cambridge. • Goffman, E. (1959), The Presentation of Self in Everyday Life, Pelican Books, Harmondsworth. • Jack, S.L. & Anderson, A.R. (2002). The effects of embeddedness on the entrepreneurial process. Journal of Business Venturing, 17, 467–487. • Laitalainen, E., Silvasti, T. & Vesala, K.M. (2008) Attributions and Emotional Well-Being: Giving up Farming in Finland. Rural Society 18 (1), 26-38. • Polkinghorne, D. (1991). Narrative and self-concept. Journal of Narrative and Life History, 1(2–3), • 135–153. • Rae, D. & Carswell, M. (2001). Towards a conceptual understanding of entrepreneurial learning. Journal ofSmall Business and Enterprise Development, 8(2), 150–158.

35. References 4 • Pyysiäinen, J. and Anderson, A. and Mcelwee, G. and Vesala, K. M. (2006) Developing the Entrepreneurial Skills Of Farmers: Some Myths Explored. International Journal Of Entrepreneurship Behaviour and Research, 12(1), 21-39S • Radu, M. & Redien-Collot R. (2008) The Social Representation of Entrepreneurs in the French Press: Desirable and Feasible Models?International Small Business Journal 26; 259 • Shaver, K. G. (2005). The social psychology of entrepreneurial behaviour. In Z. J. Acs, & D. B. Audretsch (Eds.), Handbook of entrepreneurship research. An interdisciplinary survey and introduction (pp. 331-357). New York: Springer. • Skinner, E. A. (1996). A Guide to Constructs of Control. Journal of Personality and Social Psychology, 71, 549-570. • Vesala, K. & Peura, J. (2003) Portfolio Farmers, Entrepreneurship, and Social Sustainability. In Persson, L.O., Sätre Åhlander, A.-M. & Westlund, H. (eds) Local Responses to Global Changes. Economic and Social Development in Northern Europe`s Countryside. Work Life in Transition 2003:11. Stockholm. 219-229.

36. References 5 • Vesala, K. M. and Peura, J. (2005) Presentation Of Personal Control In The Rhetoric of Farm Families Engaged In Business Diversification In Finland. Journal of Comparative Family Studies 36, 443-473. • Vesala, H. and Vesala K. M. (2010) Entrepreneurs and Producers: Identities Of Finnish Farmers In 2001 And 2006. Journal of Rural Studies, 26, 21-30 • Watson, T. (2009) Entrepreneurial Action, Identity Work and The Use Of Multiple Discursive Resources: The Case Of A Rapidly Changing Family Business. International Small Business Journal 27 (3), 251-274.