Misfit theory of entrepreneurship

Hofstede et al. (2004) suggest that misfit individuals attempt to start ventures because they do not share the dominant cultural values. The assumption is that misfit individuals are dissatisfied with their job prospects and are more likely to attempt entrepreneurial careers as alternatives.

The misfit theory of entrepreneurship has been used to explain why immigrants are often more entrepreneurial than native born populations. Immigrants’ credentials may not respected in their new home countries. Their skills may be undervalued, their certifications and degrees may not be trusted or considered invalid or inadequate. Moreover, immigrants from countries with a different language and culture find it more difficult to integrate and find it more difficult to find lucrative employment (Kahn et al., 2017).

In sum, imperfect information from foreign experience and education coupled with lingual and cultural differences make it more difficult to enter the workforce as salaried employees. This necessitates an alternative occupation like entrepreneurship. Where immigrants find it difficult to find employment in their areas of expertise, they may pursue entrepreneurial ventures as an alternative to working in low paying jobs outside their fields.

Others have argued that pirates, hackers and gangsters also represent a type of misfit entrepreneurship (Clay and Phillips, 2016) though at times a potentially unproductive or destructive type. Overall, it is interesting to think of entrepreneurs as rule breakers. Perhaps there exists some potential for cross-overs with informal entrepreneurship and institutional theory.

Sources:

Kahn, S., La Mattina, G., and MacGarvie, M. J. (2017). “Misfits,”“stars,” and immigrant entrepreneurship. Small Business Economics, 1-25.

Clay, A., and Phillips, K. M. (2016). The Misfit Economy: Lessons in Creativity from Pirates, Hackers, Gangsters and Other Informal Entrepreneurs. Simon and Schuster.

Hofstede, G., N. Noorderhaven, A.R. Thurik, L. M. Uhlaner, A.R.M. Wennekers, and R.E. Wildeman. 2004. Culture’s role in entrepreneurship: self-employment out of dissatisfaction. In Innovation, entrepreneurship and culture, eds. T. E. Brown and J. M. Ulijn, 162-203. Cheltenham: Edward Elgar.

Interesting selective samples:

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2 comments for this post
  1. Jessyca Rusyn

    Statistics show that immigrants are entrepreneurial based on business ownership. However, there is no research that indicates self-employment by less-skilled immigrants generates economic benefits (Lofstrom, 2019).
    Immigrant entrepreneurs have been shown to significantly contribute to high-skilled industries such as technology and engineering. In addition to this, immigrant-owned businesses provide ongoing jobs to approximately 16 million workers. However, immigrant-owned businesses tend to create fewer jobs than native-owned businesses and tend to be lower paying positions. Also, immigrant-owned businesses are more likely to fail, but those that succeed experience a faster employment growth in the first six years (Lofstrom, 2019).
    Education was the most significant factor that predicted the success of immigrant-owned businesses. In the US Asian immigrant owned businesses had higher average earnings when the education levels were substantially higher than the national average. Higher education levels can have conflicting effects on entry into entrepreneurship for immigrants; higher education levels generate more opportunities and higher wages which therefore increase the opportunity costs of entrepreneurship making self-employment less likely. On the other hand, higher education levels may generate the required skills for entrepreneurship (communication and analytical capabilities) and therefore may lead to greater business success (Lofstrom, 2019).

    Reference:
    Lofstrom, M. W. (2019). Immigrants and entrepreneurship. IZA World of Labor.
    https://wol.iza.org/articles/immigrants-and-entrepreneurship/long

  2. BER

    Hsu and his collaborators’ paper “I know I can, but I don’t fit”: Perceived fit, self-efficacy, and entrepreneurial intention examines perceived person-entrepreneurship fit to entrepreneurship and shows that it moderates the relationship between entrepreneurial self-efficacy and entrepreneurial intention. Hsu and team led three studies to increase the utility of randomized experiments and different approaches to overcome the limitation of the interpretations of empirical results. Their findings show that when a strong perception of fit with entrepreneurship is achieved, entrepreneurial intention is strongly predicted by entrepreneurial self-efficacy. In contrast, if one perceives a low level of fit or no fit, entrepreneurial intention will be low, regardless of entrepreneurial self-efficacy. This paper is relevant to this blog post because it took the concept a step further. Instead of potentially using visible traits, these researches used the subject’s intentions and sense of fitting in.

    Reference:
    Hsu, D. K., Burmeister-Lamp, K., Simmons, S. A., Foo, M.-D., Hong, M. C., & Pipes, J. D. (2019). “I know I can, but I dont fit”: Perceived fit, self-efficacy, and entrepreneurial intention. Journal of Business Venturing, 34(2), 311–326. doi: 10.1016/j.jbusvent.2018.08.004

    https://www.sciencedirect.com/science/article/abs/pii/S0883902617302847

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