Entrepreneurship responding to adversity: Equilibrating Adverse Events and Disequilibrating Persistent Adversity

Resilience and entrepreneurial action

While conventional wisdom suggests that adverse events lead to a major negative disruption in functioning, this is not always the case and perhaps not even the most common reaction. For example, studies have found that during the first six months after the 9/11 terrorist attacks, only 6% of people from the New York metropolitan area exhibited post-traumatic stress disorder (PTSD) (Galea et al., 2003) and that one-third of those directly exposed to this adverse event exhibited few or no symptoms of PTSD (Bonanno, Rennicke, & Dekel, 2005). Indeed, it appears that resilience, rather than disfunction, may be the most common response to adverse events. While definitions may vary to some degree across levels of analysis, we define resilience as “the process by which an actor (i.e., individual, organization, or community) builds and uses its capability endowments to interact with the environment in a way that positively adjusts and maintains functioning prior to, during, and following adversity” (Williams et al., 2017, p. 742). This definition is inclusive of both different levels of analysis and the crisis-as-process/crisis-as-event perspectives.

Resilience can lead to entrepreneurial action, and entrepreneurial action can reinforce resilience. Specifically, resilience can lead to entrepreneurial action in the form of compassion venturing. Such compassionate entrepreneurial action is performed through the creation of de novo (new independent) or de alio (new corporate) ventures, which are distinct from established organizations whose primary mission is to help people (e.g., hospitals) and from established organizations that redirect normal operating routines to help their employees in need (e.g., Dutton et al., 2006). Indeed, in several studies, we found that after a natural disaster, some of the locals who experienced the adverse event (e.g., the deaths of friends and family, lost property and livestock, and physical injuries) maintained positive functioning to create ventures to alleviate the suffering of others. For example, in the aftermath of the Black Saturday bushfires in Australia, resilient individuals were hyper-functional in relying on remaining resources (i.e., local values, local knowledge, and local relationships) to create ventures that alleviated suffering through improvising locally, performing needed community roles, and engaging in important symbolic actions (Shepherd & Williams, 2014). Similarly, in the aftermath of the Haiti earthquake in 2010, resilient individuals created local (compassionate) ventures, which involved “the arrangement of resources and organizational structures in novel ways by those within the disaster zone to alleviate the suffering of victims” (Williams & Shepherd, 2016a, p. 2070). Some of these newly created local ventures worked toward sustaining people, while others worked toward transforming victims of the adverse event by helping them develop autonomy, self-reliance, and—ultimately—a new status quo so they no longer needed help.

While resilience enables entrepreneurial action in response to an adverse event, it appears that engaging in entrepreneurial action also reinforces entrepreneurs’ resilience. For example, some victims (i.e., individuals who lost property, loved ones, and pets) of the Black Saturday bushfires engaged in entrepreneurial action (through the creation of local ventures) to alleviate others’ suffering (Williams & Shepherd, 2016b). This action to create ventures generated more positive outcomes for the actors themselves compared to others with similar resource capabilities who either took no entrepreneurial action or engaged in short-term volunteering. Specifically, the mechanisms shaping resilience outcomes for these entrepreneurial actors included receiving feedback from those they helped, experiencing positive emotions by making a difference, and witnessing others’ acts of kindness, all of which reinforced a hope and belief that despite the crisis, common humanity remained (Williams & Shepherd, 2016b). Such interactions generated by entrepreneurial action reinforce entrepreneurial actors’ resilience by enabling them to maintain behavioral functioning (Bonanno, 2004; Hobfoll, Mancini, Hall, Canetti, & Bonanno, 2011); emotional functioning (Bonanno & Jost, 2006; Folkman & Moskowitz, 2000); and the functioning that comes from positive fundamental assumptions about the self, others, and the world (Beder, 2005; Janoff-Bulman, 1992).

In a related study, we found that compassionate venturing can benefit organization and community actors as it can bind communities closer to one another, unearth previously unused resources, and promote a positive long-term trajectory for the actors involved (Williams & Shepherd, 2020). For example, communities and organizations co-emerged in response to the 2010 Haiti earthquake, enabling community members to function in essential supply-chain roles for the emergent organizations, while the emergent organizations simultaneously provided customized responses that ensured a more stable status quo well-being for these organizations and communities (Williams & Shepherd, 2020). It appears that victimized actors are often the most effective at addressing their own needs in a rapid, customized, and appropriately scaled manner (Drabek & McEntire, 2003; Shepherd & Williams, 2014).

Entrepreneurial action and recovery—actor self-help

Entrepreneurial action can also help actors recover from an adverse event. First, entrepreneurial action can provide a vehicle for building the foundation for a new career for people who lose a valued work identity that cannot be captured again. For example, in a study of entrepreneurship programs in prison, we found that as the prisoners recognized potential business opportunities they could pursue once released, they began to adopt more positive attitudes toward their entrepreneurial competence, toward their imprisonment, and toward others (including their fellow inmates and those outside the prison walls) (Patzelt et al., 2014). That is, entrepreneurial thinking enabled these constrained individuals to think positively and constructively about the future, which facilitated their persistence with education programs and a belief that their lives had changed for the better. The hope is that as these individuals develop new skills and attitudes and leave prison, they will contribute to society (rather than cost society by re-offending and going back to prison). Similarly, in another study, we found that marines and soldiers injured in combat lost their valued careers (i.e., they were honorably discharged) and used the notion of becoming an entrepreneur to orient themselves away from their past (i.e., traumatic injury) and from the obstacles to a traditional career (i.e., employers’ insufficient accommodation of their physical and/or mental injuries) and toward an entrepreneurial career that would provide renewed meaning and purpose (Haynie & Shepherd, 2011). Consistent with the case of individuals released from prison, entrepreneurship can, it is hoped, not only help individuals injured in combat improve their well-being but also enable society to benefit from what has heretofore been an underutilized asset.

For some, the foundation from which to explore alternatives essential for recovery only comes after hitting rock bottom—that is, “when negativity is brought to a climax by the formation of links among the negative features of one’s current life situation and a belief that the future is likely to ‘contain much of the same’” (Bauer, McAdams, & Sakaeda, 2005, p. 1182)—which in turn fundamentally undermines their “commitment to a role, relationship, or investment” (Baumeister, 1994, p. 282). By hitting rock bottom, individuals are in a better place to engage in the identity play necessary to find a new work identity, which is essential for recovery (Shepherd & Williams, 2018).

Second, an entrepreneurial career provides the flexibility for individuals to construct an organization that is suited to them and their personal development of a valued career. For example, for the veterans disabled in combat, creating a new organization satisfied their need for autonomy, which was essential to these individuals because they felt it was following orders that nearly got them killed, and they were tired of following the hospital’s rules during their physical recovery. Moreover, these individuals recognized that they needed the flexibility provided by an entrepreneurial career because they could structure their organizing around their physical needs resulting from the adverse event (e.g., taking time off work for doctors’ visits, working around headaches that typically occurred in the afternoon, and so on).

Finally, entrepreneurial action facilitates actors’ recovery by encouraging organizational members to think about their experiences before and after the adverse event they endured in a new light. For example, entrepreneurs who experience the adverse event of business failure can learn from the experience (by regulating grief) to improve their competence such that they feel they are better prepared to try again (Shepherd, 2003). Similarly, as the veteran marines and soldiers who were injured in combat developed an entrepreneurial mindset, they began to think more deeply (structurally) about the competences they had developed both in their careers and in coping with their injuries that could be linked to the competences required for advancing their entrepreneurial organizations. Therefore, starting an entrepreneurial journey after an adverse event can help people recover to regain their pre-adversity well-being or create well-being that exceeds the pre-adversity level (consistent with post-traumatic growth; see Maitlis, 2009).

Entrepreneurial action and others’ recovery and resilience from adverse events

While some individuals, organizations, and communities are resilient to adverse events and therefore have the capacity to help alleviate victims’ suffering, others face a substantial disruption to their functioning. Entrepreneurial action (by those who are resilient to adversity) provides a mechanism by which others who are disrupted by an adverse event can recover their positive functioning over time as well as develop resilience to future adversity. Entrepreneurial action thus provides critical, timely, and customized solutions to address victims’ suffering by accommodating and addressing the evolving consequences of an adverse event and helping victims learn how to re-establish well-being once the major disruption has passed.

Adverse events and chronic dysfunction

Not all paths lead to entrepreneurial action, and not all paths enable actors to regain their pre-adversity status quo well-being (see Figure 1). Indeed, the literature on stress response (at multiple levels) suggests that some efforts to manage stress—namely, some forms of coping—can be destructive in nature (Scheier, Weintraub, & Carver, 1986). At the individual level, a number of “ugly coping” behaviors can arise (Bonanno, Keltner, Holen, & Horowitz, 1995; Bonanno et al., 2005) such that some individuals escape the adversity of an event through cognitive deconstruction. Cognitive deconstruction refers to an attempt to blot “out threatening implications . . . [through] a refusal of insights and a denial of implications or contexts” and thus put oneself in a numb state to escape the negative emotions generated by thoughts of an event or situation (Baumeister, 1990, p. 92). For example, drug use represents an “ugly coping” behavior that some people use to escape the adversity of an event (Haynie & Shepherd, 2011), which can lead to cognitive deconstruction. This cognitive deconstruction can lead to chronic suffering and even suicide (Baumeister, 1990; Singh, Corner, & Pavlovich, 2007).

For members of failed businesses (Ucbasaran, Shepherd, Lockett, & Lyon, 2013) or “dead” organizations (Crosina & Pratt, 2019), such cognitive deconstruction typically involves chronic grief (Shepherd, 2003), or what psychologists call complicated grief (see Prigerson et al., 1995). We also found evidence that some of the marines and soldiers injured in combat engaged in cognitive deconstruction in the form of heavy drug use as an emotion-focused mechanism to cope with PTSD (Haynie & Shepherd, 2011). Similarly, for some of the prisoners we studied, cognitive deconstruction seemed to materialize as unrelenting externalization of blame; feelings of low control over their lives; pessimism about the future; negative attitudes toward themselves, prison, and others; and dropping out of education courses (Patzelt et al., 2014). ²

We found a similar type of response to crises by organizations and communities. For example, we found that in aftermath of the 2010 earthquake, some organizations emerged and functioned in a seemingly permanent “survival” state—operating day to day, barely subsisting, and relying heavily on outside donors for basic functions (Williams & Shepherd, 2016a). Indeed, rather than developing and building for the future, these organizational actors engaged communities to preserve a relatively dysfunctional state of existence—maintaining and institutionalizing “tent city” encampments, engaging in illegal resource-gathering activities (including posing as authorities and stealing water or food), and so forth. In a separate study, we also found that some organizational actors “took action” so they could get their mind off the tragedy. However, while this action provided some relief to the actors for having “taken action,” when it was not customized to the challenge at hand (e.g., timeliness, scale, and scope), it inhibited progress for the targets of the help (Williams & Shepherd, 2018). Thus, action served as a numbing agent to deal with the adversity but ended up causing additional suffering (in some cases) due to misappropriated resources.

Similarly, in a related study, we found that organizations and communities co-emerged and pursued a trajectory that sought to provide “numbing” help for community members (e.g., alcohol sold out of anti-freeze bottles) to help them “escape” from the reality of their extremely adverse environment (Williams & Shepherd, 2020). These findings, while relatively novel in the organizational literature, suggest that chronic dysfunction can be promoted by organizational and community actors when facing adversity. That is, in some cases, just as at the individual level, organization and community action can (1) be numbing in nature; (2) be focused on providing an “escape” from the adversity at hand; and (3) result in long-term subsistence rather than resilience for communities, organizations, and individuals. This chronic dysfunction could be considered a new form of “permanently failing organization” (Rao, 1990), where the organization and the community around it persist but do so with major failings (Meyer & Zucker, 1989).

In sum, adverse events present potentially traumatic situations that actors can respond to in a variety of ways, including with entrepreneurial action or destructive behaviors that perpetuate dysfunction. In abstracting from the emerging literature in this area, we theorize that, whether by resilient actors or those attempting to recover from the adversity at hand, entrepreneurial action can play an equilibrating role—namely, it helps those affected overcome the disruption caused by adverse events. However, other action focused on escape (e.g., drug consumption, un-customized organizing, and community numbing) can lead to chronic dysfunction for both the subjects and targets of the action.

Persistent adversity

Persistent adversity is the notion that an actor faces enduring hardship, which, if unmanaged, can result in permanently disabling outcomes. For example, the organizational literature explains that actors face “daily perturbations” that, when combined, can result in organizational hardship and/or failure (Cobb, Wry, & Zhao, 2016; Rudolph & Repenning, 2002; Turner, 1976). These perturbations may be as simple as drift in an organization’s mission (Grimes, Williams, & Zhao, 2020) but could also include extensive and ongoing environmental threats. Indeed, there are many forms of persistent adversity. One form of persistent adversity is faced by individuals who live in slums (approximately 860 million people)—neighborhoods that are so poor that their residents lack ready access to safe water, sanitation, and other essential infrastructure such as housing, which is often poorly constructed, overcrowded, and located on land that does not have a secure residential status (United Nations Human Settlements Program, 2003). The residents of slums are poor (earn less than US$16 per month), are illiterate or semiliterate (Banerjee, Bandyopadhyay, Dasgupta, Paul, & Chattopadhyay, 2016), and engage in low-skilled work (Subbaraman et al., 2014). As a result of their poverty, living conditions, and work, these individuals face serious health issues (Haushofer & Fehr, 2014; Wyk & Bradshaw, 2017). What is worse, many of those living in the poorest of conditions are the most vulnerable to the economic and social consequences of crisis events, such as high mortality rates, loss of infrastructure, and economic and governmental failure (Guillaumont, 2010; Peduzzi, Dao, Herold, & Mouton, 2009). Thus, those experiencing persistent adversity are doubly disadvantaged in (1) the daily challenges they face for survival and (2) the extraordinarily high costs they face when crisis events occur (Williams & Shepherd, 2016a).

Persistent adversity has a number of individual costs that, when aggregated, impact all members of society (including organizations, communities, and so forth). To elaborate on this point, we highlight three major issues currently shaping individual, organizational, and community well-being. First, individuals’ mental health challenges are imposing increasing constraints on society in that mental health problems function as a multiplier of other adverse conditions. According to the Johns Hopkins Bloomberg School of Public Health and the National Institutes of Health (NIH) (in the United States), in a given year, 26% of the adult population suffers from a mental disorder, 9.5% of the adult population suffers from a depression-based disorder, and 18% of adults between 18 and 54 suffer an anxiety-based disorder. Similarly, the Centers for Disease Control and Prevention (in the United States) reported that mental disorders were the primary reason for 56.8 million visits to physicians in 2016 and 4.8 million emergency department visits in 2017. We refer to suffering from a mental disorder as persistent adversity because these individuals can experience high levels of anxiety, depression, unemployment, and social exclusion, which can lead to suicide (according to the NIH, most people who commit suicide have a diagnosable mental disorder, and there were 47,173 suicides in the United States in 2017; Kochanek, Murphy, Xu, & Arias, 2019).

Second, beyond mental health challenges, there is currently a global refugee crisis influencing individuals and organizations as well as economic, social, and political policy. Approximately 13.6 million people were forcibly displaced worldwide in 2018, which takes the total to 70.8 million refugees in the world currently (25.9 million refugees under United Nations mandate, 41.3 million people internally displaced, and 3.5 million asylum seekers). For example, at the start of 2019, there were 5.5 million Palestinian refugees (UNHCR, 2019), and many adults living in the Palestinian refugee camps in Lebanon were born in these camps. These refugees face persistent adversity in the form of extreme poverty and overcrowding (Khali, 2011), unsanitary living conditions (Cutler, 2016), low literacy rates (Segal, Khoury, Salah, & Ghannam, 2018), and mental health problems (Ssenyonga, Owens, & Olema, 2013; Steel, Silove, Bird, McGorry, & Mohan, 1999). The refugee crisis is motivating a number of actors to organize solutions (i.e., alleviate suffering) and is also generating interest in developing policy that supports refugee-driven entrepreneurial activity that goes beyond mere subsistence.

Third, many women throughout the world are facing persistent adversity. In one study, Chin (2012) reported that 16–37% of married Bangladeshi women experience sexual or other forms of physical abuse from their husbands over an extended period, and in our study of women who applied for microfinance loans, we found that 27.76% of respondents experienced sexual and other forms of physical abuse from their husbands (Shahriar & Shepherd, 2019). There are many other countries similar to Bangladesh that have a patriarchal society in which violence against women is normalized, girls are married at an early age to older men and forced into having sex, and women remain subordinate to males throughout society (Field & Ambrus, 2008; Schuler, Hashemi, & Badal, 1998). Women in such patriarchal societies face considerable persistent adversity, which has significant individual-, organization-, and community-level implications for well-being.

In the face of considerable persistent adversity, some actors display resilience through their entrepreneurial action to create a space for themselves, their organizations, and their communities to experience a better life, thereby perforating the structure of the status quo that has diminished their well-being. Other resilient entrepreneurial actors “shake up” existing structures to enhance their well-being and the well-being of many others, thus creating a substantial disruption to the status quo (for both the recipients and perpetuators of adversity). Whether the entrepreneurial action perforates the status quo (for the focal actors’ enhanced well-being) or otherwise substantially disrupts it (for most who suffer under it), entrepreneurial action can disequilibrate persistent adversity.

Resilience, entrepreneurial action, and persistent adversity

Resilient individuals act entrepreneurially in the face of persistent adversity by ignoring or circumventing constraints, looking for potential opportunities, and thinking differently about the benefits generated by potential opportunities.

First, a key to both resilience and entrepreneurial action in the face of persistent adversity is ignoring or circumventing constraints. For example, when facing resource constraints, entrepreneurial actors appear to engage in bricolage—that is, making do with the resources at hand and recombining these resources for new purposes (Baker & Nelson, 2005). For example, in one study, we found that business owners in resource-poor rural India engaged in a local variant of bricolage called jugaad, which involves recombining available resources through trial and error and an attitude of assertive defiance to improvise frugal quick fixes to problems (Shepherd, Parida, & Wincent, 2020a). Similarly, in our study of entrepreneurs in the slums of Mumbai, we found that resilient individuals were highly resourceful in using attributes of their slum environment (e.g., highly dense living conditions; shared facilities, such as water outlets and toilets; low-cost housing; access to cheap labor; and so on) to generate lower operational costs, rapid word-of-mouth advertising, and a culture of caring and support that ultimately contributed to business success (Shepherd et al., 2020b). For refugees, we found that resilience and entrepreneurial action went hand in hand in the development of social capabilities, social integration, and social capital to help these individuals build entrepreneurial businesses in contravention to the law and avoid sanctions from breaking the law (Shepherd et al., 2020).

Second, in the face of persistent adversity, resilient actors identify and pursue entrepreneurial opportunities. For example, given their substantial and persistent adverse environment in rural India, the individuals who engaged in jugaad (i.e., jugaadus) were oriented to look for potential opportunities. The jugaadus were continuously looking for problems to solve, whether these problems were recognized from their own experiences, the experiences of friends and family, or the experiences of strangers. For the refugees we studied, the problems exacerbated by the ambiguity of their citizenship status led to complicated identity issues: they were born in a country different from the one they were “assigned,” so, with varying degree, they identified with their host and traditional home countries and had the additional identity of being a refugee. Some resilient refugees used the role of entrepreneur as a means to align their multiple identities with pursuing business opportunities, and this entrepreneurial action helped them further build their resilience and find a space for themselves where they were somewhat protected from the persistent adversity (Shepherd et al., 2020). Similarly, entrepreneurship enables individuals with mental disorders to find or create a career space in which their disorders are more functional (or less dysfunctional) than in the typical employment context (Miller & Le Breton-Miller, 2017; Wiklund, Hatak, Patzelt, & Shepherd, 2018; Wiklund, Patzelt, & Dimov, 2016).

Finally, in the context of persistent adversity, we found evidence that resilient entrepreneurial actors think differently about the outcomes of their opportunity pursuit vis-a-vis entrepreneurial action in response to an adverse event and entrepreneurial action absent adversity. In resource-poor rural India, the jugaadus were not interested in (nor did they achieve) a sustainable competitive advantage for their businesses (because their inventions were difficult to market, scale, and protect), but their entrepreneurial action generated inclusive growth by enhancing others’ well-being (e.g., helped other users facing the same problems, fostered entry into self-employment that improved the entrants’ well-being, and connected people for accessing and sharing resources) (Shepherd et al., 2020a). Moreover, the jugaadus increased their well-being through satisfaction with solving problems, a positive social reputation, and enhanced feelings of self-worth.

The slum entrepreneurs also defined success in a way inconsistent with entrepreneurial success in more munificent environments; the slum entrepreneurs uniformly defined business success as ensuring their children were educated so that their children could secure a good job and a good marriage and move out of the slum. Their actions were not directed at improving their own lives but those of their children because they realized that it would require a generation (or two) to climb out of the adverse situation into which they were born.

The refugees we studied also induced benefits from the activities involved in their entrepreneurial action, including feelings of competence from solving problems and demonstrating self-reliance, feelings of belongingness from integrating their multiple identities, feelings of purpose from serving a larger cause (i.e., solidarity in the Palestinian cause), and feelings of hope from forming optimistic realism about the future (Shepherd et al., 2020). It is clear that for individuals facing persistent adversity, the typical (perhaps Western) notions of entrepreneurial outcomes do not appear to apply; rather, the goal of entrepreneurial action in the context of persistent adversity, at least for many of these entrepreneurs, is to disrupt their status quo to enhance well-being for themselves, their families, and perhaps also their communities.

However, in our study of Bangladeshi women receiving microfinance loans, we found that the entrepreneurship solution to persistent adversity was less accessible to those who needed it most. All the women in the study undoubtedly faced persistent adversity, but those women who suffered sexual and other physical violence from their husbands had lower self-efficacy (which we theorized was the result of the abuse) and were therefore less likely to use their loans to create their own businesses, businesses that could have reduced their husbands’ control and thus reduced their persistent adversity (Shahriar & Shepherd, 2019). Therefore, while entrepreneurship can help diminish persistent adversity, there appear to be types of adversity that reduce the likelihood of entrepreneurship and thus reduce individuals’ ability to carve out a space for themselves where they can experience a better life.

The status quo for one group can be persistent adversity for another group

The status quo for well-being is unlikely to be universally valued—something that is hardly ever explicitly accounted for in the extant literature. Specifically, the bulk of the literature on adversity suggests that a return to a pre-adversity state (when adversity is an event)—a return to previous functioning—is the primary goal. However, this literature does not account for differences in the factors driving the maintenance of the status quo. Indeed, one of the main purposes of our theoretical arguments in this article is to isolate (1) different types of adversity and (2) different responses to adversity based on the nature of the adversity in order to (3) theorize the individual-, organization-, and community-focused implications at the intersection of these previously isolated streams of research.

For example, for some, the status quo provides many benefits and a high-quality life, whereas, for others, the same status quo represents persistent adversity. For example, much is made of the wealth gap in the United States and how this gap appears to be widening, but the implications of the wealth gap appear to be even greater in developing countries. Those at the top of the wealth distribution benefit from high-quality education, access to high-quality healthcare, and access to trusting and supportive communities (Sampson, Raudenbush, & Earls, 1997). In contrast, those at the bottom of the wealth distribution suffer from persistent adversity, such as reduced access to healthcare (Sood et al., 2014), ineffective teaching and education (Battin-Pearson et al., 2000; White, 1982), and physical and psychological problems (for a review, see Matthews & Gallo, 2011). Those with low socio-economic status also typically live in neighborhoods characterized by a high incidence of violence and environmental hazards (Bradley & Whiteside-Mansell, 1997), less supportive communities (Gallo & Matthews, 2003; Matthews & Gallo, 2011), and a relative lack of social order (Sampson et al., 1997). Therefore, while the wealthy (and powerful) are likely to value the status quo and reinforce the institutions that perpetuate it, the poor are likely to experience the status quo as substantial persistent adversity. As such, while there may be some consensus about adversity across disparate people—for example, an earthquake that kills tens of thousands of people, breast cancer, and climate change—adversity depends on perception, and perception depends on “where you sit.”

The implication for the contradicting motivations relating to adversity (one party seeking to return to the status quo, and the other seeking to revise the status quo) are evident in a number of recent phenomena. For example, the current refugee crisis involves (in many cases) individuals fleeing countries that were former colonies of the developed countries in which they seek refuge (e.g., England, France, and other European Union countries). In some cases, the conditions they are fleeing (e.g., forced labor in factories, disrupted socio-political contexts, and so on) serve as the basis for well-being in more developed locations (e.g., low prices in the West for consumer products and goods). Therefore, solutions to alleviating suffering (for entrepreneurial actors or others) may not be universally “acceptable” in terms of well-being. Accordingly, recent entrepreneurship scholarship has pressed for a greater focus on the “dark side” of entrepreneurship, which could have important implications in organization theory as well (see Shepherd, 2019; Shepherd, Williams, & Zhao, 2019).

Entrepreneurial action in response to persistent adversity can be perceived by others as an adverse event

As we have theorized above, those experiencing persistent adversity are motivated to engage in entrepreneurial action to challenge the status quo to improve the well-being of themselves and their communities. While many community members will appreciate such disequilibrating entrepreneurial action, those who value the status quo are likely to perceive the others’ entrepreneurial action as an adverse event—an event that challenges their valued status quo and thereby triggers entrepreneurial action to return the status quo to its previous equilibrium. For example, the entrepreneurial action of those facing persistent adversity include the illegal businesses of Palestine refugees in Lebanon, improvised quick-fix solutions (jugaad) by farmers in rural India, and the operation of manufacturing businesses out of homes in the slums of Mumbai. However, such entrepreneurial action can be perceived as adverse events by those Lebanese people who want to “keep a lid on” refugee access to resources, jobs, and power; by local governments concerned about the lack of safety from quick-fix solutions and those who die from them; and by the owners of legitimate businesses undercut by those who do not follow government regulations for safety and taxes, respectively. These actors with a vested interest in the status quo have been found to engage in innovative actions to quash these entrepreneurial challenges, to which we now turn.

Entrepreneurial action in response to an adverse event can quash others’ attempts to eliminate persistent adversity

While entrepreneurship is typically associated with positive outcomes, such as economic gain, for entrepreneurial actors (Carter, 2011), regions (Fritsch & Wyrwich, 2017), the natural environment (Meek, Pacheco, & York, 2010), communities (Peredo & Chrisman, 2006), and others (Mair & Marti, 2006), entrepreneurial action can also be destructive (Baumol, 1996; Shepherd, 2019). That is, while the exploitation of an opportunity can benefit the entrepreneurial actor and perhaps a focal group of people, it may also maintain persistent adversity for others. For example, entrepreneurial actors in the oil, gas, and mining sector engage in prospecting, developing, and exploiting new mines to extract gold and silver (Bakker & Shepherd, 2017), yet these mines can cause substantial damage to the local landscape, such as acid mine drainage, multi-elemental contamination of the environment, elevated levels of trace elements in top soils in the vicinity of smelters, plant contamination, and so on (Dudka & Adriano, 1997). In addition, the release of carbon from these production facilities creates persistent adversity for some groups, such as those experiencing pollution from a local refinery and fracking operation, those living on lands that have faced extended periods of drought from climate change, and residents of large cities (e.g., Shanghai) who experience asthma and other health problems related to particulates in the air (Watts, 2006). Therefore, while the energy industry promotes economic opportunities (e.g., jobs, economic growth, and so on), the long-term costs may outweigh what becomes an ephemeral benefit.

Similarly, entrepreneurial action in perpetually disrupted communities can rely on those communities remaining fragmented and broken. For example, after the 2010 Haiti earthquake, we (Williams & Shepherd, 2016a) found that some individuals organized “relief” efforts in tent cities until they became de-facto mayors of these informal communities. However, these tent cities came at the cost of those living in the community, keeping vulnerable people, including women, in a condensed location where they could be leveraged to obtain new resources and provide easy targets for human and sex traffickers. Therefore, while acting in the guise of “helping” victims, some entrepreneurial actors actually rely on maintaining the status quo of persistent adversity for the vulnerable.

Alternatives to an exploitative model of status quo

We have theorized above that the entrepreneurship equilibrating sub-model can work against the entrepreneurship disequilibrating sub-model and vice versa. That is, entrepreneurship can deliver benefits to those who value the status quo at the expense of those who face persistent adversity (equilibrating stronger than disequilibrating), or alternatively, entrepreneurship can deliver benefits to those who face persistent adversity at the expense of those who value the status quo (disequilibrating stronger than equilibrating). However, these equilibrating and disequilibrating forces do not need to act in opposition to each other. In this section, we theorize about how entrepreneurship can be simultaneously equilibrating and disequilibrating to enable the betterment of all actors involved.

First, individuals, organizations, and communities facing a persistently adverse environment at least appear to have entrepreneurial action as a means to try to improve their well-being or the well-being of others. We realize that this tool—entrepreneurial action—in the hands of one actor is unlikely to create a major disruption to the status quo (because if the change was easy, the adversity would not have been able to persist for so long). Indeed, across numerous studies, we found that entrepreneurial actors facing this persistent adversity were able to create a space within a larger domain that offered increased well-being for themselves or close others, but these various forms of entrepreneurial action were not appraised as a threat to the status quo by those who benefited from the status quo. For example, the Palestine refugees in Lebanon created organizations to improve their well-being (e.g., income, social connections, and the pursuit of a larger cause), and because these organizations were small and “flew under the radar” (because they were illegal), the Lebanese who valued the status quo either did not notice or ignored these refugee businesses (Shepherd et al., 2020). Similarly, farmers in rural India were able to generate quick-fix frugal solutions to work-related problems (based on jugaad) to enhance the efficiency of their work, generate a positive reputation in their local communities, and help other farmers who imitated their solutions, but these jugaads were discounted by large established organizations and experts (including one reviewer) as not being innovative and not being the basis of a competitive advantage (Shepherd et al., 2020a). Therefore, while not singlehandedly destroying the structure maintaining their persistent adversity, these entrepreneurs were able to put a little hole in it—to perforate the adversity structure.

This perforation approach may not have the visibility of a major disruption, but for entrepreneurial actors, it is something within their control to improve their well-being and the well-being of others. For example, in our recent study (Williams & Shepherd, 2020) on community–organization emergence following a natural disaster, we found that community–organization collaborations that focused on small, community-level impact activities were more successful in generating traction toward societal change than those that sought to solve major issues (i.e., homelessness and orphans). Indeed, these actors explained that their goal was to address issues in their “immediate communities,” something they hoped would be perpetuated in other affected communities. This type of bottom-up institutional change is necessary in places where institutional or economic structures are essentially in a “failed state.” Entrepreneurial actors in these contexts have little choice to wait for coordinated and organized macro-economic policies; rather, they seek to make changes in their immediate, controllable environment. While a single perforation likely has little impact on the status quo, many perforations might—as highlighted by those seeking to inspire other Haitian communities to replicate their community–organization collaborations (Williams & Shepherd, 2020). That is, the spaces created by entrepreneurs to improve their well-being and that of those around them can inspire other entrepreneurs, organizations, and communities to also carve out spaces for themselves, and these many perforations may aggregate such that there a tipping point at which the spaces undermine the institutional structure so much that the structure collapses. Perhaps the institutional entrepreneur is the “straw that breaks the camel’s back” to overthrow and replace the structure being attacked (to mix metaphors). In this case, the many entrepreneurial actors who are carving out spaces for enhanced well-being for themselves represent the institutional entrepreneur.

Second, not only is perforating the persistent-adversity structure within reach of these entrepreneurial actors, it seems to represent a response that carves out sufficient space for them to improve their well-being without disrupting the status quo so much that it triggers a response from those benefiting from the status quo. That is, these disequilibrating entrepreneurs fly below the radar by creating disruptions that are below the response threshold of the powerful. In such a situation, the incumbents (i.e., those benefiting from the status quo) may be unaware of the perforations until there is a revolution, structural change, and the elimination of this form of adversity.

Finally, entrepreneurial actors who face adverse events that disrupt their status quo can use entrepreneurial action to return to a positive status quo (for them) that is not so negative for individuals facing persistent adversity. Similarly, entrepreneurial actors facing persistent adversity can engage in entrepreneurial action that is less directed at disrupting others’ status quo and more at replacing the current status quo with one that enhances the well-being of both parties (i.e., those who value the status quo and those who experience an adverse status quo)—a win-win.

Resilience and entrepreneurial action

Given the specific purposes of the entrepreneurship studies on responses to adverse events, such as the natural disasters of the Black Saturday bushfires and the Haitian earthquake, it is not surprising that as we begin to abstract from the specific relationships and detailed mechanisms within each paper to a more general model across papers we are left with a number of important gaps in our knowledge about the relationship between resilience and entrepreneurial action. Here are what we believe to be the most critical research questions arising from our theorizing on the equilibrating and disequilibrating roles of entrepreneurship in responding to adversity.

First, although our theorizing has involved various levels of analysis, we were not explicitly focused on mechanisms explaining cross-level relationships. Specifically, because resilient individuals act entrepreneurially to alleviate the suffering of others (e.g., community members, friends, family members), more research is needed to explain how entrepreneurial action (by individuals and organizations and even by collectives of organizations created to alleviate community members’ suffering) contributes to community resilience to adversity. For example, how do entrepreneurs define community, and what impact does that have on those deemed “outside” one’s community? Furthermore, how many resilient entrepreneurial individuals are needed for a community to be resilient—that is, for the community to maintain positive functioning in the aftermath of large-scale adverse events? Do one or two entrepreneurial actors have a multiplying effect on the alleviation of suffering, or do those individuals gain disproportionate power over a vulnerable community (resulting in subsequent abuses)?

Over and above the relationship from the lower level (resilient entrepreneurial individuals and their organizations) to the higher level (a resilient community), future research can explore why and how some communities (higher level of analysis) generate compassionate ventures (lower level of analysis) in the aftermath of an adverse event, while others do not (or do so to a lesser extent). There is some preliminary evidence that local community culture (Shepherd & Williams, 2014) and national culture (Williams & Shepherd, 2016b, 2020) drive resilient individuals to create ventures to help others and, in doing so, contribute to a level of community resilience. However, even this research has demonstrated that different levels of community focus (e.g., geographic, shared values, or a combination of the two) lead to different types of venturing (and alleviation-of-suffering outcomes). Similarly, as entrepreneurial action reinforces actors’ resilience, this may help explain, in part, why some communities that have faced adverse events in the past are more resilient to subsequent adverse events (Seery, Holman, & Silver, 2010); e.g., the increased resilience of Holocaust survivors (Shrira, Palgi, Ben-Ezra, & Shmotkin, 2010]). There is much to learn about how an actor’s resilience influences a community’s resilience to adverse events and how community resilience influences an actor’s resilience to adverse events.

Second, in our theorizing, we did not explore the differences between new ventures that are de novo and those that are de alio. Perhaps compassion venturing through the creation of a new venture within an established organization arises from a resilient organization (and perhaps an organization’s resilience is reinforced by its venture’s entrepreneurial action to alleviate the suffering of others impacted by an adverse event). In contrast to de alio ventures, the processes of resilience and entrepreneurial action might be completely different in emergent response groups (Majchrzak, Jarvenpaa, & Hollingshead, 2007) that take the form of de novo compassionate ventures. We highlight these possible distinctions between de alio and de novo ventures to encourage future research to explore the different forms of entrepreneurial action in response to adversity, the different antecedents at different levels of analysis, and differences in these ventures’ effectiveness in responding to different adverse events and different forms of persistent adversity.

Third, while some resilient actors engage in entrepreneurial action to alleviate individuals’ suffering, other resilient actors may engage in forms of non-entrepreneurial action (e.g., volunteer at the local fire station) to alleviate others’ suffering, and perhaps some high in resilience do not act at all. Hopefully, future research will investigate how variations in the resilience process lead actors to respond to adverse events in different ways that have (or do not have) an impact on others’ recovery from the adverse events and/or contribute to their communities’ resilience to such events. Given that resilient actors are well positioned to engage in entrepreneurial action to help others recover from adverse events (and contribute to community resilience), it is important to investigate the nature of the relationship between their resilience and their prosocial motivation. For example, Bonanno and colleagues (2005, p. 984) found that individuals high in self-enhancement—individuals who use “unrealistic, self-serving biases”—have greater resilience and that this relationship is fully mediated by low perceived social constraints. Perhaps because of their unrealistic, self-serving biases and/or their lack of perception of social constraints, resilient individuals are less sensitive to others’ suffering and are thus less motivated (than less resilient individuals) to engage in compassion venturing in the aftermath of adverse events. If this is the case, then those who are most capable of engaging in entrepreneurial action to help others facing adversity may be among the least motivated to do so. We hope future research explores the nuances of the social considerations of resilient actors in helping (or not) those suffering in the aftermath of adverse events.

Finally, although we theorized (from evidence) that entrepreneurial action to help others reinforces resilience in the aftermath of an adverse event (see Williams & Shepherd, 2016b), are there some contexts in which actors’ resilience is diminished because they took entrepreneurial action (to help others recover from an adverse event and thereby contribute to community resilience)? For example, while investing personal resources to help others may contribute to the helper’s behavioral, emotional, and assumptive functioning (Williams & Shepherd, 2016b), there may be an upper limit to such investment—it might be important to conserve at least a bare minimum of resources to provide “fuel” for ongoing functioning. Indeed, it is not difficult to imagine things becoming “too much” for an entrepreneur during an extended period of acting entrepreneurially to help alleviate others’ suffering—the entrepreneur does too much activity without sufficient sleep, the suffering caused by the adversity becomes more salient (than the help), the entrepreneur faces setbacks in terms of delayed help, and so on. Indeed, studies have found that entrepreneurs (Wei, Cang, & Hisrich, 2015), volunteer firefighters (Huynh, Xanthopoulou, & Winefield, 2013), and those helping others with their trauma (i.e., compassion fatigue; Figley, 1995) can experience burnout—“a prolonged response to chronic emotional and interpersonal stressors on the job” (Maslach, Schaufeli, & Leiter, 2001, p. 397). Therefore, someone who is initially resilient may need to self-regulate to ensure continued resilience in the face of an adverse event, and we suspect that such regulation will involve finding the optimal balance between investing and conserving personal resources. Process studies can explore the dynamic inter-relationship between resilience and entrepreneurial action and perhaps when the relationship turns negative (if it does) as well as why some actors in some organizational contexts are able to avoid disruption to their functioning from prolonged compassionate responding.

Resilience, entrepreneurial action, and persistent adversity

The fledgling research stream on dealing with persistent adversity suggests that entrepreneurship and organization scholars need to break the shackles of strategic management’s focus on the outcome of sustainable competitive advantage because evidence suggests that sustainable competitive advantage is of diminished import and is even irrelevant to those managing organizations in adverse contexts. ³ Rather than worrying about whether a resource is rare, future research in adverse contexts can focus on resources that are available yet ineffectively deployed. Such a focus is consistent with legacy research (Penrose, 1959) which has suggested that objects can be evaluated differently in terms of their application to entrepreneurial problems (Sonenshein, 2014), such that the mere possession of objects or resources is insufficient; they need to be applied to solve problems. As such, rather than worry about whether a resource bundle can be protected from imitation, future research in adverse contexts can explore how frugal quick-fixes can provide solutions that improve people’s lives; rather than worry about how entrepreneurial action can facilitate firm growth, future research in adverse contexts can focus on how firms can be vehicles for inclusive growth (benefits beyond the firm level); and rather than worry about resource slack for innovation, future research in adverse contexts can explore how necessity motivates invention.

Future research can also examine the relationship between ground-up institutional disruption by institutional entrepreneurship and established institutions. Some may argue that institutional change is best managed by government authorities, yet in many countries, governments and other institutional actors are broken and otherwise incapable of providing institutional stability. For example, Haiti is home to thousands of non-government organizations (NGOs) that provide nearly 80% of the country’s basic healthcare and other needs, yet they do so in an uncoordinated way. Future research should explore the nexus of ground-up institutional entrepreneurs and top-down institutional actors to identify how macro-economic policy and micro-community activities can be coordinated to make long-term changes.

Furthermore, in this paper, we took a rather traditional entrepreneurship perspective by theorizing on those who have created and run businesses, particularly small businesses. However, entrepreneurial action can take other forms, such as multinational corporations, NGOs, and governments, and perhaps these larger players’ entrepreneurial action is less about perforating the structure of persistent adversity and more about making substantial changes to governing systems. However, we note that such substantial changes typically reflect entrepreneurial action by powerful outsiders rather than the resilience of actors immersed in adversity generating entrepreneurial action to improve their well-being and the well-being of those around them.

Although hybrid firms are important in helping people facing adversity, our emphasis in this paper (and our inductive studies) has primarily been on the actors facing adversity (persistently or as an event) because we found that such actors appreciate the agency of helping themselves and local community members rather than seeing themselves as victims receiving others’ charity. It is this agency for entrepreneurial action in which the essence of resilience lies. We do not deny the potential benefits of governments, NGOs, and other hybrid organizations in helping people, but we need to explore the consequences of their “help” and whether it builds resilience or dependence.

Entrepreneurial action and recovery from adverse events

We focused our theorizing on how resilient entrepreneurial actors help others recover from adverse events and on how actors help themselves recover from adverse events through their own entrepreneurial action. While useful, these theorized relationships can be problematized to extend knowledge on this important topic. Importantly, can those whose functioning is substantially disrupted by an adverse event engage in entrepreneurial action that helps others recover in a way that also helps them—the entrepreneurs—recover? While we recognize that it is more difficult for individuals to act entrepreneurially when their functioning is disrupted, it seems possible that if they can muster sufficient personal resources to invest in such prosocial entrepreneurial action, then their own recovery of well-being can be enhanced—a true win-win. It is important for future research to explore how an entrepreneurial actor’s prosocial motivation drives entrepreneurial action after an adverse event and how it impacts the recovery of all victims of the adverse event, including the entrepreneurial actor.

Entrepreneurial action can also facilitate resilience to adverse events by building self-efficacy. Research on self-efficacy has found that coping with one natural disaster builds the belief that one can successfully deal with a subsequent disaster and that individuals who hold this belief do indeed cope better in the aftermath of a subsequent natural disaster (Benight & Harper, 2002; Benight, Swift, Sanger, Smith, & Zeppelin, 1999). This evidence suggests that experience with adverse events enhances the speed of recovery from subsequent adverse events and perhaps enhances resilience. Thus, it is important to move beyond coping self-efficacy to explore other resources, capabilities, and beliefs individuals build while recovering from one adverse event that facilitate recovery from or resilience to subsequent adverse events. We wonder how similar a subsequent adverse event needs to be to the one recovered from for newly developed resources, capabilities, and beliefs to foster resilience (or recovery).