Childhood adversities: Mixed blessings for entrepreneurial entry

Abstract

The developmental psychology literature has linked childhood adversities to detrimental development outcomes that can undermine labor market participation and performance. In contrast, emerging entrepreneurship studies raise the possibility that childhood adversities may positively affect entrepreneurial action with some diverging findings. We reconcile these opposing theoretical perspectives in their effects on entrepreneurial entry by theorizing that childhood adversities are a mixed blessing for entrepreneurship and affect entry through two countervailing theoretical mechanisms. Childhood adversities increase the likelihood of entrepreneurial entry by promoting rule-breaking tendency and simultaneously decrease the likelihood of entry by negatively impacting individual ability (self-efficacy and educational attainment). We further theorized that childhood adversities have different implications for different types of entrepreneurial entry (incorporated and unincorporated) and for men versus women. We tested our hypotheses on a longitudinal sample of 4222 individuals from the NLSY79 child and young adult cohort data, which tracks the development of children born to a representative sample of U.S. young women from childhood through youth to adulthood. Our study offers new insight into the effects of childhood adversities on entrepreneurship, including gender-specific manifestations and outcomes of childhood adversities.