The moderating role of social ties on entrepreneurs' depressed affect and withdrawal intentions in response to economic stress

Abstract

Summary: We explored whether contact with business‐related social ties would buffer entrepreneurs against the potentially deleterious effects of economic stress. Our proposed stress‐buffering model builds on the premise that social ties with similar others can serve as both a source of valuable information and a source of empathic support. Findings from a sample of 262 entrepreneurs revealed that the relation between economic stress and intentions to withdraw from entrepreneurial opportunities was stronger among individuals reporting less contact with social ties and weaker among those who reported more contact with social ties. We further examined the indirect effects of economic stress and contact with business‐related social ties on entrepreneurs' future intentions through depressed affect. Results showed that among those reporting less contact with social ties, the indirect effect is positive, meaning greater economic stress leads to higher depressed affect, which in turn results in greater intentions to withdraw from entrepreneurship. Among those with more contact with social ties, there is no evidence of this process at work. We interpret this to mean that social ties serve to buffer the impact of economic stress on depressed affect, which in turn reduces an entrepreneur's intention to withdraw from entrepreneurship. Those who seem most susceptible to the impact of economic stress are those with relatively limited contact with business‐related social ties. We discuss implications and directions for future research. Copyright © 2012 John Wiley & Sons, Ltd.