Victim entrepreneurs doing well by doing good: Venture creation and well-being in the aftermath of a resource shock


Title of the Article : Victim entrepreneurs doing well by doing good: Venture creation and well-being in the aftermath of a resource shock

Author Information : Trenton A. Williams (Whitman School of Management, Syracuse University)
Dean A Shepherd (Kelley School of Business, Indiana University)

Year of Publication : Journal of Business Venturing (2016)

Summary of Findings : Disasters are potentially traumatic events; locals that draw upon their human capital (experience and knowledge) to create ventures to help others are more likely to be resilient to the disaster, whereas those who fail to deploy their resources in this way are more likely to experience dysfunction.

Research Questions : How does venture creation to alleviate the suffering of others impact those entrepreneurs (and non-entrepreneurs) who are also victims (e.g., are also suffering)?

What we know : Venture creation creates different forms of value: economic, social and environmental. However, a small number of recent studies explore how entrepreneurship can function as a vehicle to help founders overcome adversity. We build on this existing research and find that engaging in entrepreneurship activity can help victims of a disaster avoid disruption to functioning.

Novel Findings : Scholars have sought to explain the psychological consequences of venture creation for the entrepreneur him- or herself as this helps explain the broader implications and motivations of engaging in venture creation. Generally, the focus of this research is psychological motivations for an entrepreneurial career, including the personal satisfaction derived from self-employment and autonomy in life and career decisions. In our study we expand these conceptualizations of psychological outcomes of venturing, suggesting that venturing functions as a vehicle for providing resilience to adversity. This is important in that it demonstrates additional forms of value created in the process of venturing. Similarly, it suggests that despite the risks inherent in creating a new business, engagement in venturing activities could provide substantial benefit to the actor when faced with difficult environmental conditions.

Novel Methodology : In this paper, we take a novel approach to conduct a quantitative analysis of qualitative data. Specifically, we draw upon data produced in a government inquiry into the Black Saturday Bushfire disaster. Part of that inquiry involved gathering witness testimony from victims of the disaster. We analyzed these transcripts and used structural equation modeling (SEM) to test our hypotheses.

Implications for Practice : Many traditional approaches to disaster events involve treating victims as helpless and resourceless. Unfortunately, this attitude has resulted in over-generalized psychological interventions that in many cases lead to greater trauma outcomes for victims. When disasters strike, victims are likely to benefit by being an active and central voice in identifying solutions to ongoing challenges. Businesses, governments and other activist groups should consider these findings when developing disaster response strategies, programs and policies.

Implications for Society: According to a vast body of research on stress, every individual will be exposed at some point in their life to a potentially traumatic event. While some individuals require psychological interventions, the majority of people are generally resilient and require other forms of support. Our study builds on these findings and suggests that as a society we need to reevaluate how we view "victims" of potentially traumatic events. Specifically, victims are not always "helpless" but rather can benefit by being encouraged to engage in prosocial actions that allow for individuals to help themselves by helping others.

Implications on Research: This study expands our understanding of the value that is created by entrepreneurial ventures. Future research can continue to build on this by exploring how these principles might apply in more traditional entrepreneurial environments. Does the act of venturing again help individuals overcome entrepreneurial failure? Are there different risks associated with different types of venturing (e.g., venturing to help others vs. venturing as a livelihood) depending on the nature of a crisis (e.g., job loss vs. exposure to a disaster)?

Full Citations : Trenton Williams, "Victim entrepreneurs doing well by doing good: Venture creation and well-being in the aftermath of a resource shock" (with Shepherd, D.A.), Journal of Business Venturing, 2016.

Abstract : Venture creation generates value in a variety of forms both for the entrepreneur him or her-self and the venture's stakeholders. Recent research explores entrepreneurial action as a vehicle for personal transformation and development for the individual, especially as it pertains to overcoming adversity. We build on this emerging literature by exploring victims creating new ventures in the aftermath of a disaster event, where widespread adversity threatens entire communities. Following the disaster, some victim resources are destroyed (e.g., property) while others remain (e.g., human capital) at varying levels. We build on organizational emergence and conservation of resources theories and use structural equation modeling to test a victim entrepreneur model of functioning through the creation of ventures to alleviate others' suffering. We find that venture creation mediates the positive relationship between human capital and functioning and that for those who do not create ventures, human capital is negatively related to functioning—highlighting the important role of venture creation for the victim-actor following a disaster event. Implications of these findings for literature on venture creation and responses to adversity are discussed.

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In the aftermath of a disaster, individuals can successfully overcome adversity and maintain resiliency during great stress by focusing on new venture creation.

Trenton Williams

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