- Centre for Enterprise and Entrepreneurship Studies
This blog post is based on findings from a UKRI-funded project that focuses on examining entrepreneurial resilience and Covid-19. Professor Nick Williams is working alongside colleagues from Edinburgh University, Cardiff University, Lancaster University, Stirling University and Oxford Brookes. The project involves interviews with high-growth businesses across the UK. The below article originally appeared on the ERICC Project Blog on 16 September 2020.
Prior entrepreneurship research shows that entrepreneurs' social networks are important for performance. A key resource in social networks is informal support, through encouragement, empathy, closeness, familiarity etc. Studies of the economic downturn of 2008 showed that social ties lessened some of the negative business impacts. Social support can shape individuals’ performance through four mechanisms: positivity catalyst, positivity enhancer, negativity buffer, negativity exacerbator. During the current COVID-19 crisis, lockdown and physical distancing have meant that entrepreneurs have had to search for new ways to obtain this type of support. Our project shows that finding this type of informal support has been critically important to entrepreneurs.
In our interviews with high growth firms, a consistent finding has been how entrepreneurs have come together to provide each other with support. This occurs with firms who are in the same sector or industry, and who would ordinarily be in competition. In Leeds, for example, firms who traditionally compete for the same talented staff, who have experienced employees move between businesses in search of new opportunities, have set aside competitive rivalries to offer each advice and emotional support. One entrepreneur we interviewed described this type of support as ‘very Leeds’.
A city such as Leeds with a high concentration of finance businesses was hit hard by the financial crisis of 2008/09. However the city is much more diverse now, with a greater range of businesses including a growing media industry, meaning that it is more able to bounce back, although of course the medium to long term of the current COVID-19 crisis is not known. With this increased diversity has come stronger entrepreneurial networks, with businesses in different sectors able to work together to emotionally support each other. Yet this support is also happening in other areas we are conducting interviews, including London, Lancaster, Cardiff, Edinburgh and Belfast.
This emotional support is often focused on the individual rather than the business. Entrepreneurs are supporting each other to discuss their mental health and well-being during the crisis, sharing stories of how they have coped, and often how they have struggled to cope. They discuss childcare issues, how their families are impacted, and how they are trying to come up with ways of supporting them while keeping the business going. This assists in keeping each other positive and focused on the lived experiences they are going through. Emotional support plays an important role as a negativity buffer yet is more difficult to obtain than usual, given the constraints created by the COVID-19 lockdown. Research has shown that entrepreneurs could be expected to experience increasing demand for, but decreasing supply of, emotional support because face-to-face exchange has been removed during lockdown.
Yet our research shows that entrepreneurs are actively increasing emotional support for each other, creating a more cohesive community. The impacts of a crisis can be traumatising, but the entrepreneurial networks that people have access to can help to alleviate this trauma. Knowing that others are going through the same issues and listening to how they have tackled them helps. It helps to bind communities of entrepreneurs together. We have found evidence of lots of informal chats between entrepreneurs, sometimes individuals talking on Zoom or community message boards being used for groups. This type of support is viewed as being incredibly valuable, and is not possible for formal support programmes to replicate.
The role of informal support through pre-existing networks or networks created during a crisis in harnessing the resilience of a place to bounce back is something that we are seeking to investigate through the project. Economic resilience signifies the ability of a place to mitigate impacts of overcome a shock to which it is subjected. A range of factors contributes to this resilience: for example, skills, industrial structure, infrastructure, and finance. Yet entrepreneurial dynamics matter too. Given that entrepreneurship has a role to play in finding solutions in a crisis, how effective support is matters too.
Previous studies of crises such as Hurricane Katrina have shown that entrepreneurs can signal that a recovery period has begun. This can be done through informal support. Entrepreneurs can signal to each other that they are returning to some sort of norm, and that their ability to manage the crisis has been to some extent successful, advising others on strategies they have applied. This in turn can give others confidence that they can increase their activity for example following a lockdown, enhancing cohesion.
As we continue our project we are looking at how entrepreneurs can satisfy their need for emotional support and how this translates to new business strategies. The emotional support created among entrepreneurs on the basis of common and collective identity (for example, pride in their city, shared experiences of lockdown) is important. We will be investigating if the emotional support mechanisms created during the crisis are continued and what the impact on the entrepreneur and their businesses are. While the future is uncertain, what is for sure is that people are social animals and their desire to help each other should not be underestimated, even in competitive environments.
The views expressed in this article are those of the author and may not reflect the views of Leeds University Business School or the University of Leeds.