A Cognitive Process Model of Necessity Entrepreneurs: Fostering Persistence through Resilience

The goal of this research was to build and test theory on the process through which necessity entrepreneurs interpret and respond to challenges in their resource-constrained contexts of new venture formation. We integrate insights from conservation of resources theory (Hobfoll 1989) and entrepreneurial interpretation theory (Barreto, 2012) to develop a process model that captures entrepreneurs’ psychological and cognitive drivers of strategic behaviors that influence their persistence as new entrepreneurs. Specifically, we argue that entrepreneurs’ resilience is a psychological resource that helps to substitute for their minimal financial, structural, and social resources, thereby enabling them to cognitively appraise the situation as a challenge from which they can grow. We further assert that when entrepreneurs process information with these challenge appraisals, they are more likely to engage in proactive planning that helps their new venture to gain traction. As a result, they are more likely to actua...