Cleaning up the big muddy: psychological ownership and its effect on entrepreneurial persistence




Silla, Michael

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While research has shown that persistence is an important predictor of entrepreneurial success, evidence also indicates that entrepreneurial persistence can lead to disastrous consequences. Therefore, it is crucial to manage entrepreneurial persistence to limit an entrepreneur’s exposure to failure and improve their likelihood of success. However, our current understanding of why entrepreneurs persist is fragmented, as the determinants of persistence have yet to be integrated in a meaningful way. As a result, our current understanding of entrepreneurial persistence lacks the clarity required to manage entrepreneurial persistence effectively. I propose that psychological ownership is a key variable that facilitates the integration of the four (psychological, project, social and structural) determinants of entrepreneurial persistence. I assert that psychological ownership can provide a psychological explanation for entrepreneurial persistence by positing that entrepreneurs persist in order to address the impairment of their self-concept that results from their venture’s failure. I then establish that psychological ownership can provide a link to project determinants by noting that psychological ownership enhances the expected utility of the course of action, which increases the likelihood of entrepreneurial persistence. Following, I articulate that collective psychological ownership can provide a social explanation for entrepreneurial persistence by arguing that a team of entrepreneurs persist to address the collective impairment of their identity that stems from receiving negative feedback. Finally, I demonstrate that psychological ownership can provide a link to structural determinants by noting that psychological ownership motivates entrepreneurs to increase their commitment to their venture following negative feedback in order to prevent investors from gaining control of their ventures. In order to test my hypotheses, I modified and extended Staw’s (1976) seminal research design on escalation of commitment to fit the entrepreneurial context and conducted mediated moderation tests on data collected from 229 entrepreneurs. The results of this study show that psychological ownership is positively related to commitment when controlling for the performance of the venture. Thus, the results indicate that psychological ownership predicts entrepreneurial persistence. In addition, the results suggest that there is tentative support for the notion that psychological ownership can link the four determinants of entrepreneurial persistence and provide a holistic explanation for why entrepreneurs persist. I conclude by highlighting the importance of psychological ownership in managing entrepreneurial persistence. I note that psychological ownership can be a useful criterion for investors to identify which entrepreneurs are likely to persist and go the extra mile to advance their entrepreneurial projects. In addition, I note that an effective measure to mitigate entrepreneurial persistence, when it is time to pull the plug on an entrepreneurial project, is to reduce an entrepreneur’s psychological ownership for their ideas or ventures.



Persistence, Entrepreneurs, Psychological Ownership