Hasso-Plattner-Institut
Prof. Dr. Katharina Hölzle
 

16.04.2020

Katharina Hölzle, Robert Rose & Valeska Maul

How are digital entrepreneurs responding to adversity and uncertainty in times of crisis? Like everyone in the society and economy, entrepreneurs have to comprehend and deal with unforeseen disruptive events. At the same time, they need to protect their start-ups, secure often fragile workplaces, and sustain the future of their company while being heralded as the future of the (digital) economy. The notion of resilience could be a helpful quality against these pressures.
 

Photo: © rkris – stock.adobe.com


In broad terms, resilience connotes the ability to bounce back and succeed when facing adversity. Whereas resilience is a frequently featured topic in the popular press during crisis-driven times, the following thoughts build on a selection of insights available from management and entrepreneurship research in order to help (digital) entrepreneurs and startups to cope better with current and future challenges. 

Entrepreneurs are especially exposed and vulnerable to uncertainties or failure in general. Any major unforeseen event may result in the immediate suspension of their business activities, which holds all the more for digitally-enabled ventures that are often lean by design, operating with little financial reserves. To deal with nowadays’ ambiguities, risks, and disruptions, entrepreneurship research increasingly emphasizes resilience as a key feature of successful start-ups in digital economies.

Resilience is defined differently according to the level of analysis [1], that is, either for individuals and teams at the workplace [2], start-ups or corporates [3], or ecosystems [4]. At the individual level, resilience can be described as the process of positive adaption where personality traits and capacities form a response pattern when experiencing adversity [2]. One of the contributing factors to individual resilience is conscientiousness, “the tendency to be purposeful, organized, diligent, determined, and ambitious” [5, p. 218]. While being conscientious not necessarily implies resilience, most resilient entrepreneurs purposefully organize and structure their operations, herewith being better prepared for sudden internal and external changes [6]. Their determination also not only focuses on being successful but rather on having an impact, allowing them to make incremental changes more easily as the overall big picture is not affected. Resourcefulness and self-efficacy, the belief of entrepreneurs in their abilities to manage stress and to succeed [7] also contribute to resilience. A recent field study of refugee-entrepreneurs by Shepherd and colleagues furthermore indicates a reciprocal relationship between entrepreneurship and resilience, meaning that entrepreneurial actions can foster resilience and vice versa [8].

An entrepreneurial mindset or behavior (e.g., comfort with uncertainty, proactivity, creativity) can in turn prove as a source for organizational resilience [9]. In today’s collaborative work structures, team-level resilience becomes more and more important. Work teams are the very places where people support each other and draw from psychological safety, improvise in the case of discontinuity, and are interdependent in their sharing behaviors [10]. Further, the resilience of firms has often been related to the availability of slack resources, the ability to adapt and reinvent business models, as well as effective leadership that provides guidance and helps to make sense of a crisis [11]. On an even broader perspective, policy-makers are increasingly interested in the resilience of whole ecosystems and whether its interrelated actors can regularly adapt to external shocks and internal pressure [4].

While we may assume that resilience grows upon each level, such that resilient employees make for a resilient organization and a network of resilient organizations may form a resilient ecosystem, this assumption is not yet proven. What we do know is that resilience depends on context, e.g., by the type of work, culture, or disruption [1]. So, if context matters for resilience, what specific insights can we draw for digital entrepreneurship?

Four considerations come into view. First, educating and training resilient entrepreneurs and start-up teams requires a learning environment where purpose is in the center, creativity and failure are fundamental parts of the curriculum, and uncertainty is overcome with instruments and tools. Second, the proactive consideration of iterative business model innovation is at the core of digitally-driven start-ups and corporates, notwithstanding turbulent environments. Third, organizations need to develop the resilience of their employees. Adequate means of development involve direct delivery formats [12] and team-oriented training [13]. Fourth, and notably important for disruptive crises on a global scale, policy-makers have to closely monitor and foster the functioning of digital entrepreneurship at the system level. The resilience of entrepreneurial ecosystems has been proposed to benefit from a balance of diversity and coherence [4], that is, diversity in terms of involved actors and business models, and coherence in terms of collaboration and mutual support.

After all, resilience might not be a panacea but a desirable ability of entrepreneurs, start-ups, and ecosystems worth aiming and training for in the preparation of hardship. In the midst of a crisis, it is essential to be able to cope with overwhelming news and to prepare for what’s next, looking for the well-being of us, our families, friends, and colleagues, as well as that of our workplaces and the economy as a whole. Digital start-ups as a most crucial driver of economic growth are both, vulnerable to disruption, but also accustomed to work against the odds. By systematically building up resilience, they will be best equipped to drive innovations that enable our society to address the substantial challenges ahead.
 

References

[1] M. K. Linnenluecke, “Resilience in business and management research: A review of influential publications and a research agenda,” Int. J. Manag. Rev., vol. 19, no. 1, pp. 4–30, 2017, doi: 10.1111/ijmr.12076.
[2] S. Hartmann, M. Weiss, A. Newman, and M. Hoegl, “Resilience in the workplace: A multilevel review and synthesis,” Appl. Psychol., forthcoming, 2019, doi: 10.1111/apps.12191.
[3] E. Conz and G. Magnani, “A dynamic perspective on the resilience of firms: A systematic literature review and a framework for future research,” Eur. Manag. J., forthcoming, 2019, doi: 10.1016/j.emj.2019.12.004.
[4] P. T. Roundy, B. K. Brockman, and M. Bradshaw, “The resilience of entrepreneurial ecosystems,” J. Bus. Ventur. Insights, vol. 8, pp. 99–104, 2017, doi: 10.1016/j.jbvi.2017.08.002.
[5] P. Mishra and K. McDonald, “Career resilience: An integrated review of the empirical literature,” Hum. Resour. Dev. Rev., vol. 16, no. 3, pp. 207–234, 2017, doi: 10.1177/1534484317719622.
[6] S. Korber and R. B. McNaughton, “Resilience and entrepreneurship: A systematic literature review,” Int. J. Entrep. Behav. Res., vol. 24, no. 7, pp. 1129–1154, 2018, doi: 10.1108/IJEBR-10-2016-0356.
[7] A. Bullough and M. Renko, “Entrepreneurial resilience during challenging times,” Bus. Horiz., vol. 56, no. 3, pp. 343–350, 2013, doi: 10.1016/j.bushor.2013.01.001.
[8] D. A. Shepherd, F. P. Saade, and J. Wincent, “How to circumvent adversity? Refugee-entrepreneurs’ resilience in the face of substantial and persistent adversity,” J. Bus. Ventur., forthcoming, 2019, doi: 10.1016/j.jbusvent.2019.06.001.
[9] L. J. Branicki, B. Sullivan-Taylor, and S. R. Livschitz, “How entrepreneurial resilience generates resilient SMEs,” Int. J. Entrep. Behav. Res., vol. 24, no. 7, pp. 1244–1263, 2018, doi: 10.1108/IJEBR-11-2016-0396.
[10] A. C. Stoverink, B. L. Kirkman, S. Mistry, and B. Rosen, “Bouncing back together: Toward a theoretical model of work team resilience,” Acad. Manag. Rev., forthcoming, 2018, doi: 10.5465/amr.2017.0005.
[11] T. A. Williams, D. A. Gruber, K. M. Sutcliffe, D. A. Shepherd, and E. Y. Zhao, “Organizational response to adversity: Fusing crisis management and resilience research streams,” Acad. Manag. Ann., vol. 11, no. 2, pp. 733–769, 2017, doi: 10.5465/annals.2015.0134.
[12] A. J. Vanhove, M. N. Herian, A. L. U. U. Perez, P. D. Harms, and P. B. Lester, “Can resilience be developed at work? A meta-analytic review of resilience-building programme effectiveness,” J. Occup. Organ. Psychol., vol. 89, no. 2, pp. 278–307, 2016, doi: 10.1111/joop.12123.
[13] J. Lee and J. Wang, “Developing entrepreneurial resilience: Implications for human resource development,” Eur. J. Train. Dev., vol. 41, no. 6, pp. 519–539, 2017, doi: 10.1108/EJTD-12-2016-0090.

Citation

Hölzle, K., Rose, R., & Maul, V. (2020). Resilient digital entrepreneurship. http://doi.org/10.5281/zenodo.3898540