Social Class and Entrepreneur Resilience: How Entrepreneurs Respond to Institutional Deterioration

Abstract

There has been a growing recognition of the role of social class in the field of entrepreneurship, and the prevailing view highlights that entrepreneurs from lower social classes will encounter more material deficiencies and cognitive constraints than those from higher social classes in their business. In this study, drawing on insights from social psychology, we argue that those lower-class entrepreneurs could also be more resilient in dealing with adverse situations. Specifically, our empirical analysis of Chinese private entrepreneurs reveals that while entrepreneurs with lower social class origins tends to invest less in long-term development activities (e.g., innovation and employee training), when encountering a deteriorating institutional environment that generally discourages long-term investment, lower-class entrepreneurs show greater resilience in embracing the challenges and the perseverance of their investments compared to those from higher social classes. This study bridges research on social class and entrepreneur resilience to reveal the dual impact of individuals’ social class origins in entrepreneurship.