NEW RESEARCH | High confidence in entrepreneurship in times of crisis

Do sudden crises such as pandemics, wars and financial crises lead to more entrepreneurship? Well, at least that’s what the entrepreneurs themselves think.

Technological breakthroughs, environmental disasters, wars, regulatory reforms and demographic transitions. These are examples of changes in the world we have always lived with, creating opportunities for entrepreneurship. But recent crises such as the COVID-19 pandemic, the global financial crisis and the digital revolution have had an unusually strong impact on entrepreneurship.

– There is also a growing demand for entrepreneurial solutions to address climate and migration crises,” says Jiyoung Kim, Jönköping International Business School.

High expectations for radical change

In her doctoral thesis, she has studied how entrepreneurs and other actors in the entrepreneurial ecosystem perceive the potential for entrepreneurship in the face of changes in the business environment.

– They believe that radical changes generate more entrepreneurial initiatives than gradual changes. It is also believed that companies started in the wake of radical crises have better performance, survivability and higher growth than the others.

In contrast, the individuals in the study believe that the firm-level benefits created by changes in the environment, such as increased demand, legitimization or reduced uncertainty, are more numerous when the shift develops gradually than when it develops radically.

Previous experience matters in evaluation

Jiyoung Kim’s research shows that when entrepreneurs talk about the entrepreneurial potential of environmental change, they do so based on their own or others’ past experiences.

– Recent external changes, such as the COVID-19 pandemic and blockchain technology, were frequently mentioned in the study. The more recent such experiences or examples are, the more likely they are to evaluate positively the entrepreneurial potential of the change.

What messages do you have for entrepreneurs and stakeholders around them?

– I would like to warn entrepreneurs not to rely too much on their gut feeling when calculating the entrepreneurial potential in a changing environment, as they are easily influenced by current experiences.

– “Counselors and mentors have an important role in helping entrepreneurs to temper the possibly overly positive attitude by also pointing out the potentially negative aspects of a changing environment,” says Jiyoung Kim.

Contact jiyoung.kim@ju.se

More about the thesis
Jiyoung Kim defended her thesis earlier this fall at Jönköping International Business School with the thesis External enablers and new venture creation .