Entrepreneurship in times of economic stress: unraveling the U-shaped relationship between the internality of causal attributions and growth

Abstract

Purpose

This paper examines the relationship between entrepreneurs' internality of causal attributions and firm growth during an economic crisis. We propose a U-shaped relationship between the two variables, arguing that the highest-growth entrepreneurs are those with either the highest or lowest levels of internal attribution (IA) during such periods.

Design/methodology/approach

To test our hypothesis, we analyze a database of 804 interviews with entrepreneurs in Brazil during a period of economic stress. Due to the existence of endogeneity, we estimate a model of simultaneous equations in two stages.

Findings

We find evidence of a U-shaped relationship. This means that during economic stress, the fastest-growing entrepreneurs are those who rely more on their own effort (high IA) and those who attribute their success to the economic crisis (low IA).

Practical implications

Tailoring interventions based on attribution patterns and recognizing the U-shaped relationship ensures effective support during economic stress. Entrepreneurial support programs should align with internality levels, emphasizing external awareness or skill development accordingly. Policymakers should take attributions into account when promoting financial resilience. Entrepreneurs would benefit from awareness programs on attributions for reflective decision-making. Ecosystems should foster collaboration by recognizing diverse attributions, enhancing a collective understanding of entrepreneurial responses in crises.

Originality/value

Our results have important implications for understanding the role of entrepreneurs in economic crises. Our results are relevant because they challenge the usual claim that entrepreneurs with high IA are the ones who perform better in situations where external economic conditions are adverse.