Business and Management INK

Pandemic-Related Disruptions and Perceptions: How They Matter for Entrepreneurship

December 23, 2021 1950

Carsten Bergenholtz, in the Department of Management at Aarhus University; Kim Klyver at the Department of Entrepreneurship & Relationship Management at the University of Southern Denmark; and Oana Vuculescu, in the Department of Management at Aarhus University, the authors of “Self-Efficacy in Disrupted Environments: COVID-19 as a Natural Experiment,” published in Entrepreneurship Theory and Practice, discuss how the advent of a pandemic during their research into self-efficacy presented them a unique natural experiment.

Block made of cubes falling apart
Image: CoxinhaFotos/Pixabay)

Entrepreneurial activity is often driven by people with entrepreneurial self-efficacy who are embedded in everchanging – traditionally slowly changing – environments. In spring 2020, however, the world experienced a sudden disruption as we entered a pandemic characterized by uncertainty, both in terms of the economy and health. We therefore investigated how such a substantial increase in uncertainty combined with varying perceptions of these changes shape entrepreneurial intentions. Do potential entrepreneurs see this upheaval as an opportunity or as a barrier to fulfill entrepreneurial dreams, and to what extent does this vary among potential entrepreneurs depending on their level of self-efficacy? We answer these questions based on a unique two-study design.

Serendipity of timing during our data collection provided us with a unique opportunity to study what happens to the efficacy–intention link when the COVID-19 lockdown suddenly disrupted the environment. We had originally planned a two-wave setup (2017-2020) to study the efficacy-intention link. Yet, in early 2020, the onset of the COVID lockdown allowed us to compare two otherwise similar groups – that is, early responders before the lockdown and late responders one month later – providing us the blueprint for a natural experiment.

Carsten Bergenholtz, Kim Klyver and Oana Vuculescu
Carsten Bergenholtz, left, Kim Klyver and Oana Vuculescu

Our data replicate the known impact of entrepreneurial self-efficacy on entrepreneurial intentions, but further enable us to identify the contingencies related to a disrupted institutional environment. We show that the lockdown induced increase in uncertainty weakens the effect of entrepreneurial self-efficacy on entrepreneurial intentions. In other words, highly uncertain environments reduce the entrepreneurial intentions even among people with high self-efficacy.

To further support our results we conceptually replicate and extend our first study via a randomized controlled experiment in the lab. The COVID-19 pandemic implied not merely a disruption of the business environment, but also society in general, and in our lab-study we therefore teased out the impact of a disrupted business environment by providing different (but real) information on the disrupted business environment. We presented either an optimistic or pessimistic scenario. We confirmed the natural experimental results and, equally important, showed that it is not only the disruption as such that shapes entrepreneurial intentions but also individuals’ varying perceptions of the disruption.

Our results from the two studies have important implications. In terms of policy, we understand why certain stakeholders have an interest in highlighting the disruption and uncertainty characterizing the business environment during a pandemic; this can influence the extent of government support. However, the more uncertain and pessimistic discourses are highlighted, the less potential entrepreneurs, even with high self-efficacy, display intentions to engage in entrepreneurship. Such new potential entrepreneurs are important for the economic recovery. As we write in our paper: “It is conceivable that the effect on entrepreneurial intentions could be stronger and enduring if a fact-driven, optimistic message on business and economic development was provided by the mass media, politicians, business associations…”.

Carsten Bergenholtz is an associate professor at Aarhus University in Denmark. Kim Klyver is a professor in the Department of Entrepreneurship and Relationship Management at the University of Southern Denmark. Oana Vuculescu is an associate professor at Aarhus University in Denmark.

View all posts by Carsten Bergenholtz, Kim Klyver, and Oana Vuculescu

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