Self, agency, and the social psychology of entrepreneurship Kari Mikko Vesala University of Helsinki

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

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

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

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 entrepreneur´s 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

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. -> 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

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´). -> 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).

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)

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.

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)

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

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 … -> 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?

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

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. Paavo’s 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.

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.

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.

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 that’s 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 firm’s 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.

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 couldn’t 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 can’t 7 really influence those… just like those rates, you can’t influence them in 8 any way, you just have to listen 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.

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.

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.

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.

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.

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

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 (n=663), non-farm rural small business owners (n=195) 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

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)

Figure 1. Experience of personal control among the sample groups in year The proportion of respondents who partly or strongly agree with the statements

Table 1. Correlations (Spearman) between personal control and some other variables VariableCorrelation age-.03 sex-.04 education.07 revenue year *** non-family employees.26 *** competitiveness.39 *** profitability.19 *** customer activeness.39 ***

Table 2. Best predictors of personal control experience. Linear regression analysis Dependent variable PredictorsBeta-valuestd. Betat-value Personal control Customer activeness *** Competitiveness *** Profitability *** Model: R Square=.25; adjusted R Square=.24

Figure 2. Competitiveness and profitability among three sample groups. Proportionate distributions.

Figure 3. Customer relationships and non-family employees among three sample groups. Proportionate distributions.

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

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

Entrepreneur identity F=28.3, p<.001; Pairwise comparison: Conventional farmers weaker than other groups, no significant difference between the other two groups.

Correlations between entrepreneur identity, personal control, self- efficacy, innovativeness, risk-taking, growth orientation and conservatism. Entr. Identity RiskInnoGrowthConserv.Self- efficacy Risk.197 Inno Growth Conserv Self- efficacy Personal control All correlations p<.001

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

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.

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

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!)

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)

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 Paavo’s 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 don’t kind 27 of don’t apply. It’s 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.

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.