Withdrawal of status respect theory of entrepreneurship
Everett E. Hagen was a political scientist and economist writing at MIT in the 1950s and 1960s. He sought to explain how traditional societies changed into those with continual technological progress and rising incomes.
Hagen (1963) argues that a process eventually leading to entrepreneurship is triggered when a social group loses status in relation to other groups in a society.
The Core Mechanism
When members of a given social group perceive that they are denied their due respect by the dominant groups in society, it triggers a creative spark that encourages entrepreneurial behaviors (Dana, 1995).
Specific examples of "withdrawal of status respect" include:
- Displacement: A formerly higher-status group is displaced by a new group.
- Insults: A social group's symbols are insulted or devalued by the dominant group.
- Inconsistency: A group's symbols become unaligned with their actual economic reality.
- Migration: A group's status is lowered due to migration to a new place (see Misfit Theory).
The Reaction: From Anxiety to Innovation
Hagen explains that a lowering of status may take generations before leading to the development of anxiety and the rejection of traditional values. This eventually leads to creativity and sometimes authoritarianism.
A lowering of status is met by different reactions. An individual may acquiesce (work without hope), or they may rebel against the system by trying out innovations.
Historical Examples
The Samurai of Japan
Hagen used the example of the Samurai community, which traditionally enjoyed high status. When they were defeated by other groups with superior weapons, their status was lowered. To regain their status, the Samurai pursued entrepreneurial development and contributed to the fastest-growing Asian economy.
The Russian Schism
Similarly, when the Russian Tzar (1650s) adopted Greek practices to attain diplomatic ends, it undermined the Orthodox church and its members. This withdrawal of respect triggered change processes that eventually led to revolution.
Relation to Modern Theory
In a way, Hagen's theory is similar to Christensen's theory that neglected stakeholders are the early target markets for disruptive innovations. In this case, the stakeholders are those individuals who feel they are locked out of real advancement and who use entrepreneurship to get ahead—a means of social mobility.
Video Overview: Theories of Social Change
Sources
- Dana, L. P. (1995). Entrepreneurship in a remote sub-Arctic community. Entrepreneurship Theory and Practice, 20, 57-72.
- Hagen, E. E. (1963). How economic growth begins: a theory of social change. Journal of Social Issues, 19(1), 20-34.
