Self, agency, and the social psychology of entrepreneurship

1
Self, agency, and the social psychology of
entrepreneurship

• Kari Mikko Vesala
• University of Helsinki

2
Background

• Social psychology of entrepreneurship A
  research team at the Department of Social Studies
  (University of Helsinki)
• Aim of the team to analyse entrepreneurship as a
  psychological, social and cultural phenomenon
  from an agency and self perspective
• Existing outlines of social psychology of
  entrepreneurship are not satisfactory for our
  purposes

3
Introduction

• Main points of the lecture
• -previously proposed cognitive approach can be
  complemented with a social construction approach
• -self-related beliefs can be viewed as part of
  social construction of entrepreneurship
• -both qualitative and quantitative methods can
  be utilised in such approach

4
Self, agency, and the social psychology of
entrepreneurship

• 1. Introduction
• 2. Outlines of the social psychology of
  entrepreneurship
• 3. Social construction approach in the
  entrepreneurship research contributions and
  challenges to social psychology of
  entrepreneurship?
• 4. The construction of personal control in the
  rhetoric of farmers involved in business
  diversification
• 5. Personal control beliefs among rural small
  business owners and farmers
• 6. Conclusions

5
1. 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)
• Intrapersonal processes that guide the
  entrepreneurs venture-organizing activities
  (business start-up and persistence in it)
  social cognition, attitudes, self (e.g.
  attributions of success, overconfidence,
  self-efficacy)
• Variable approach explains overt behaviour by
  (internal) cognitive factors rejects qualitative
  methods

6
1. Outlines of the social psychology of
entrepreneurship

• Carsrud Johnson (1989) Entrepreneurship A
  social psychological perspective.
• Entrepreneurship as a role pursuit of business
  opportunities that takes place in a context of
  social networks and transaction relations.
• -gt emphasis on the means and processes of social
  influence viewed as interpersonal behaviour and
  communication (contact creation, impression
  management etc.)
• No explicit stand on the methods

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1. Outlines of the social psychology of
entrepreneurship Conclusion

• Shaver focuses on intrapsychic (cognitive)
  factors that presumably contribute to business
  start-up behavior and persistence in it. Such
  cognitions are approached as separate antecedent
  entities that affect business behavior
• C J elaborate on the description of
  entrepreneurial behaviour it is viewed as a
  role/a set of behaviours (a process of pursuing
  business opportunities in a social context).
  Thus, it involves, for example, influencing other
  actors or gaining resources, as well as taking a
  role of an entrepreneur ( adapting
  entrepreneurial self-definition or identity).
  
• -gt In both outlines, there are conceptual
  associations with the self (self-efficacy and
  self-evaluation in Shaver, role in C J). (e.g.
  Baumeister Self concept involves reflective,
  relational and agentic aspects).

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2. 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 like Harre, Gergen, or Potter
  Wetherell, narratologists like Bruner or
  Polkinghorne, not to mention dramaturgical
  approach of Goffman.
• Topics construction of business opportunities
  (Chiasson Saunders Jack Anderson Fletcher)
  entrepreneurial personality (Chell) entrepreneur
  identity (Watson, Down Warren, Downing )
  entrepreneurial learning (incl.self-beliefs) (Rae
  Carswell)
• 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)

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2. 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 opportunites and construct
  him/herself as an entrepeneur 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.

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2. 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)

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2. Social construction approach Conclusion

• Entrepreneurship is understood as a social
  construction
• -of business opportunity (recognition and
  realisation)
• -of entrepreneurial self.
• Thus, the self is again at the focus (now esp.
  identity, agency), but the interest is now in the
  construction of self
• At the core of the multi-disciplinary study on
  entrepreneurship there is an idea of special
  agency Entrepreneur is an actor who makes it
  happen
• 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

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4. The construction of personal control in the
rhetoric of farmers involved in business
diversification

• Control constructs (Skinner 1995) locus of
  control, self-efficacy, perceived behavioural
  control -gt personal control
• P.C. as a criterion and a resource for the
  construction of entrepreneurial self (identity,
  agency)
• Vesala Peura 2005 how farm business owners
  present themselves in terms of personal control
  in the market arena?

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4. The construction of personal control in the
rhetoric of farmers involved in business
diversification

• 40 interviews with farmers engaged in diversified
  business activities
• 10 statements concerning customer and marketing
  related means for enhancing the business (e.g.
  Salesmanship is crucial for success in
  business, It is difficult to work things out
  with my clients by talking)
• Free comments were requested further accounts
  and justifications were encouraged
• Stands and justifications were analysed in
  detail the overall rhetoric was interpreted from
  the perspective of self-presention regarding
  personal control in the market arena
• The connection between self-presentations and the
  customer structure of each case was checked and
  the cases were compared to each other

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Case1 Paavo (machine contracting)

• Paavo owns a crop farm, but earns over a half of
  his living by working under contract for a large
  Europe-wide forest industry group. Paavos
  machinery is capable of doing all the different
  procedures from thinning to felling of timber. He
  owns his firm with his wife and they have one
  employee. The limited company was started 10
  years ago, but Paavo has been engaged in forest
  industry even longer.
• The interview was conducted with Paavo.

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Case 2 Mika (tourism)

• Mika and his wife have been in the rural tourism
  business for 10 years. They have a small farm (7
  hectares) on which they practice berry and apple
  production and processing. The income from
  agriculture has not been sufficient and the
  tourism business has become more and more
  important for them. They have four cottages to
  rent, and additional two apartments under
  construction. The customers come mostly from
  Southern Finland but also from Central Europe.
  Many of them come on regular basis. The interview
  was conducted with Mika.

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Case1 Paavo (machine contracting)

• Statement 1 It is worthwhile to invest in
  advertising. As an immediate response to this
  statement, Paavo agrees on a general level.
  However, thereafter he denies clearly the
  usefulness of advertising in his own business. He
  justifies his stand by saying that his firm has
  got one key customer, and that the private forest
  owners do business with this key customer (the
  Company). He gets his contracts through the
  Company, and therefore in his case
  advertising is totally useless.

17
Case 2 Mika (tourism)

• Statement 1 It is worthwhile to invest in
  advertising. Mika starts to comment the statement
  with a reservation that it is possible to invest
  in advertising any amount of money, and thats
  the purpose of advertising agencies. After that,
  he takes a tentative stand for the statement,
  referring particularly to his own business
  industry In the tourism industry you have to be
  visible, to some extent, every once in a while.
  In his argumentation Mika specifies different
  forms of advertising and deliberates the pros and
  cons of them. He mentions a short ad in a
  nationwide newspaper, contact information in
  nationwide tourist guides, and the firms own
  website as such forms of advertising that he has
  found worthwhile and profitable in his own
  business. He justifies his comments plausibly
  with his own experience. He also stresses the
  importance of timing and the fact that
  advertising must be done in several languages.
  All in all, in spite of the reservations, he
  agrees that advertising is, to a certain extent,
  profitable for him.

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Case1 Paavo (machine contracting)

• Statement 6 It is difficult to work things out
  with my clients by talking. For Paavo, it is easy
  to agree with this statement. His immediate
  response goes as follows
• 1 Paavo This is exactly how it is.
• 2 Interviewer So this fits.
• 3 Paavo It is right then (well), it is
  exactly, you couldnt say it any better.
• 4 Interviewer ((laughs))
• 5 Paavo They are in the dominating market
  position and, well they have 6 control over
  how much money you get from these ( ). When you
  cant
• 7 really influence those just like those
  rates, you cant influence them in
• 8 any way, you just have to listen.
• ---
• 12 Paavo There is no, there is really no, yes
  these gentlemen well, they call it negotiation
  but it is,
• 13 I think it is entirely a matter of
  dictation.

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Case1 Paavo (machine contracting)

• Excerpt shows that Paavo takes a clear stand for
  the statement. He justifies his view also quite
  credibly. His client is in the dominating market
  position the representatives of the Company name
  the prices, and there is no way Paavo can affect
  the tariffs. According to Paavo, in the
  negotiations with the client the role of the
  contractors is to listen, and accept the
  decisions made. In the end the interviewer asked
  if there are any issues open to debate with this
  client. Paavo mentions some examples, but
  stresses that they are only minor issues in his
  business.

20
Case 2 Mika (tourism)

• Statement 6 It is difficult to work things out
  with my clients by talking. Mika absolutely
  disagrees with the sixth statement. He justifies
  his stand by giving examples of managing negative
  feedback, which he in his own words rarely
  receives. He claims that it is a fundamental
  thing to work things out by talking, and
  emphasises the need to be flexible enough in
  order to prevent small problems becoming bigger
  ones.
• In his further commenting he gives two examples
  of unsatisfied customers, who have tried to get
  some of their money back afterwards. Both
  incidents happened when the marketing company,
  The Agency, was the intermediate reseller for
  him, and both unsatisfied customers directed
  their feedback and claims to the intermediate,
  not directly to our interviewee. Mika continues,
  that there have been no such difficulties after
  he has done the business directly with the end
  users, without the intermediate organization. In
  other words, Mika views it quite beneficial that
  he has been able to establish a direct channel to
  sell his services to the end users.

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Case1 Paavo (machine contracting)

• Taken together, Paavo presents himself in his
  argumentation as an actor who does not have much
  personal control over his success, at least in
  terms of marketing and customer related means. He
  has no use for advertising and no need for
  salesmanship, he has not been able to
  differentiate his service, and renewing the
  business is difficult due to financial issues. A
  close customer relationship could be beneficial,
  but he does not mention of having any. He is not
  able to negotiate with his client and for him it
  is not possible to be selective with his
  customers or contracts. He is actually able to
  mention only one thing, with which to affect the
  customer. That is the quality and
  cost-effectiveness of his production work.

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Case 2 Mika (tourism)

• In all, Mika has lots of rhetorical resources to
  make a presentation of an entrepreneur who has
  personal control in the market arena. He argues
  for the usefulness of the various means of
  control that are mentioned in the statements, and
  he is able to justify his comments by referring
  to his own experiences and practices, and giving
  illustrative examples, too. He also considers the
  limitations of the different means and tells how
  he has learned to use them in the course of time.
  
• Mika refers to vertical relations in his
  argumentation. Even though disconnected from the
  marketing agency, he mentions it in many
  occasions and emphasises that he keeps avoiding
  the situation in which he would be dependent on
  the marketing agency or on too few customers.

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4. The construction of personal control in the
rhetoric of farmers involved in business
diversification conclusion

• Clear differences in self-presentations (The
  other 38 cases fell somewhere in between these
  two extreme cases extra variety in rhetoric )
• Self-presentations were actively constructed by
  the interviewees
• Construction was constrained/enabled by the
  availability of rhetorical resources provided by
  the perceptions and experiences of own activities
  and position in relation with customers
• Personal control in the market arena appears as a
  socially constructed belief, which is embedded in
  the immediate social transaction context

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5. Personal control beliefs among rural small
business owners and farmers

• Follow-up of Vesala Peura 2003
• A postal questionnaire survey 2006
• Total sample 1093 (response rate 30)
  Conventional farmers (n 235), farmers with
  business diversification (n663), non-farm rural
  small business owners (n195)
• General purpose to compare the level of
  entrepreneurship in these groups on several
  dimensions
• Aim of this presentation to show quantitative
  differences in personal control belief between
  these groups and point out the special relevance
  of personal control in the study of
  entrepreneurial self and agency

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5. Personal control beliefs among rural small
business owners and farmers

• The items used in the measurement of personal
  control
• To a great extent I can personally control the
  success of my firm,
• My personal chances to influence the
  successfulness of my business are practically
  rather low (inverted),
• I am able to affect the success of my firm
  through decisions concerning products and through
  production,
• I am able to affect the success of my firm
  through marketing and customer connections.
• (Cronbach alfa for the sum variable .77)

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Figure 1. Experience of personal control among
the sample groups in year 2006. The proportion
of respondents who partly or strongly agree with
the statements
27
Table 1. Correlations (Spearman) between personal
control and some other variables
Variable Correlation
age -.03
sex -.04
education .07
revenue year 2006 .16
non-family employees .26
competitiveness .39
profitability .19
customer activeness .39
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Table 2. Best predictors of personal control
experience. Linear regression analysis
Dependent variable Predictors Beta-value std. Beta t-value
Personal control
Customer activeness .32 .30 8.71
Competitiveness .36 .26 7.26
Profitability .09 .09 2.73
Model R Square.25 adjusted R Square.24
29
Figure 2. Competitiveness and profitability among
three sample groups. Proportionate distributions.
30
Figure 3. Customer relationships and non-family
employees among three sample groups.
Proportionate distributions.
31
5. Personal control beliefs among rural small
business owners and farmers conclusion

• Results from 2006 conform to results from 2001
• Personal control in business significant (.001)
  differences between the three groups
• Differences in personal control beliefs were
  connected to differences in business (esp.
  competitiveness customer activeness)
• These results are understandable in the light of
  the qualitative analysis of the construction of
  personal control belief in the self-presentations
  of diversified farmers
• These results are statistical generalizations
  based on the responses by farmers and small
  business owners. They do not falsify the
  interpretation of personal control beliefs as
  social constructions. However, they do not
  uncover the active role of the individual in the
  construction process, nor do they uncover the
  variety and richness of details at the level of
  individual cases

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5. Personal control beliefs among rural small
business owners and farmers afterword

• Entrepreneurial self and agency should be
  understood as a multi-dimensional construct
• e.g. the differences between the three group vary
  on different dimensions

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Entrepreneur identity
F28.3, plt.001 Pairwise comparison Conventional
farmers weaker than other groups, no significant
difference between the other two groups.
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Correlations between entrepreneur identity,
personal control, self-efficacy, innovativeness,
risk-taking, growth orientation and conservatism.

Entr. Identity Risk Inno Growth Conserv. Self-efficacy
Risk .197
Inno .262 .460
Growth .260 .273 .425
Conserv. -.351 -.557 -.408 -.429
Self-efficacy .428 .326 .331 .388 -.374
Personal control .400 .139 .442 .276 -.358 .556
All correlations plt.001
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6. Final conclusions I

• It seems possible and worthwhile to complement
  the previously proposed cognitive approach in the
  social psychology of entrepreneurship with a
  social construction approach that analyses the
  formation of entrepreneurial self in different
  contexts
• -the typical research questions differ (e.g.
  what intrapsychic factor contributes to business
  start-up behavior, how do business owners
  construct their identity).
• -therefore, the choice of approach must depend,
  of course, on the particular contexts under
  study, and the particular research interests

37
6. Final conclusions II

• Self and agency related concepts (such as the
  control constructs) can be utilised also in the
  social construction approach, not only in the
  cognitive approach
• -theoretical (ontological) assumptions connected
  to these concepts must be discussed, however.
  (Cognitive) constructivism is a relevant issue
  here.

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6. Final conclusions III

• Both qualitative and quantitative methods can be
  utilised in social construction approach
• -although qualitative methods suit particularly
  for uncovering the active role of the individual
  as well the variation and detailed nature of the
  construction processes, while quantitative suits
  for searching generalizations on the base of
  already constructed variables

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Introduction

• Research on entrepreneurship is
  multidisciplinary economics, management studies,
  psychology, sociology
• Distinction between small business ownership and
  entrepreneurship (Carland et al 1983)
• - dynamic process start-up, growth, major
  change of the venture
• - generic orientation or mode of action
  innovation, risk-taking, pro-activeness, pursuit
  of opportunities (not only within small
  business!)

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2. Social construction approach Conclusion

• Social construction of entrepreneurial self?
  (comp. Baumeister)
• -Reflection Individual reflects upon her action
  and agency, on her relations with others, (e.g.
  identity, self-efficacy)
• -Relation individual must relate to others and
  to the fact that others perceive and define her
  (e.g. self-presentation, transaction)
• -Agency Individual regulates and governs
  herself, attempts to influence and control her
  situation and environment (e.g. utilising
  contacts and networks, managing impressions)

42
Case2 Paavo (machine contracting)

• Paavo does not make a self-presentation of an
  entrepreneur with personal control. Our
  interpretation is that there would not be much
  rhetorical resources available for him to do so.
  Additional grounds for this interpretation can be
  found in Paavos commenting during the third
  statement
• 25 Paavo It is a little like, difficult
  because this is goddamn difficult to
• 26 interview, this forest machinery business
  well, these questions dont kind
• 27 of dont apply. Its fucking difficult to
  answer them.
•  
• Paavo grows inpatient with the statements and
  expresses his feelings by cursing. This kind of
  meta-level comment gives additional support to
  our interpretation, that for Paavo the rhetorical
  resources based in his own practical experience
  are lacking. Even though Paavo is able to view
  the usefulness of the different means on a
  general level (statements 1, 2, and 5), he is
  unable to do that is his own case and unable to
  draw examples from his own business activity.
  Anyhow, it became evident from his comments that
  he wished he had more personal control.

43
Case21 Paavo (machine contracting)

• All in all, based on his argumentation on the
  market-related personal control, Paavo fails to
  construct himself an entrepreneurial identity.
  And as a matter of a fact, right after the
  tape-recorded interview, Paavo doubted explicitly
  whether he should be regarded as an entrepreneur
  at all because in his business he is lacking the
  space to pursue and control his success. Mika, on
  the contrary, gave the impression that he
  considers himself to be an entrepreneur (see
  excerpt 3)
• The difficulty in constructing entrepreneurial
  identity in the case of Paavo seems to be related
  to the vertical position, in which there is only
  one buyer, and the relation between the farmer
  and the buyer is asymmetrical and hierarchical,
  the latter being a large company and the former
  running a small business.