Depression and Entrepreneurial Exit
This week’s paper of choice, linked very much to my continuing research, has been Depression and Entrepreneurial exit, a Hessels et al paper from 2018.
The paper takes a deep dive into the necessary adaptive nature of an entrepreneur and subsequent external factors that create consistent mental and wellbeing agitation and challenge.
This paper was researched and written before Covid. Of which I am sure that there will be many papers written post COVID challenges, especially when combined with the economic shocks that have continued to reverbrate, post global lockdowns.
Hessels et al’s main synopsis is that depression may lead to a voluntary and involuntary exit through levels of reduced self-efficacy.
Historically the psychological world and business world greet each other like neighbours, there is a casual morning from across the fence and gentle waving whilst remaining in their own territories. This has progressed over the last 30 years as research has investigated the parallels and marriages between these two areas.
A quick dive into Bandura, 2001 (and Maddux 1995 for further reading), educates on self-belief, efficacy, being influential on that person being able to organise and effectively accomplish tasks to achieve goals. Bandura’s self-efficacy theory provides a sound critical framework for understanding how adverse personal circumstances may influence task and goal achievement. These are primary functions for any entrepreneur. Without goal achievement the performance of the business is likely to be hampered with vary degrees of severity.
Specifically, the three main functions of depression, namely social, physical and cognitive, reducing, creates a potentially platform of ability and performance reduction. Without intervention this could prove disastrous to business and entrepreneur.
Entrepreneurs value to the economy global is essential. Ability to drive growth and innovation, jobs and product is what continues to keep the wheels of industry turning. Yet, pre COVID, the World Health Organisation estimate that 350 million people suffer from it. Post COVID I would hypothesise that this number is larger. The influence on entrepreneurs and their commercial and social circles is without argument. It is unlikely to be untouched by depression.
There are a number of globally accepted characterisations for depression, such as those detailed in SF36 Health Survey, and the five item Mental Health Inventory which contain less critically academic language and more colloquial measurements such as ‘felt so down nothing could cheer you up’ and ‘felt calm and peaceful’. Measuring depression can only be measured through a series of indicators in the first instance that lead to further investigation. Equally Parlin and Schooler (1978) devised a similar measurement tool for self-efficacy. It’s essential to have some understanding of depression to start to think about the influencers on entrepreneurs.
The adaptive nature of both global factors and entrepreneurs gives sound reasoning to continue research, and more qualitative study into the relationship between exits and wellbeing. The continuing large numbers of businesses winding up in the UK give evidence of continued and relentless tough circumstances creating large numbers of exits for several reasons. Wellbeing, regardless of type of exit, continues to play a significant part of the process to exit and outcome.