Entrepreneurial resourcefulness in unstable institutional contexts: The example of European Union borderlands

• Author: Friederike Welter,David Smallbone,Mirela Xheneti
• DOI: http://doi.org/10.1002/sej.1274
• Published date: 01 March 2018
• Date: 01 March 2018

RESEARCH ARTICLE

Entrepreneurial resourcefulness in unstable

institutional contexts: The example of European

Union borderlands

Friederike Welter

1,2

| Mirela Xheneti

3

| David Smallbone

4

1

Institut für Mittelstandsforschung, Bonn,

Germany

2

University of Siegen, Germany

3

Department of Business and Management,

School of Business, Management and

Economics, University of Sussex, Brighton,

U.K.

4

Small Business Research Centre, Kingston

Business School, Kingston University,

Kingston upon Thames, U.K.

Correspondence

Mirela Xheneti, School of Business,

Management and Economics, University of

Sussex, 212 Jubilee Building, Falmer, Brighton,

BN1 9SL, East Sussex, U.K.

Email: m.xheneti@sussex.ac.uk

Funding information

Sixth Framework Programme, Grant/Award

number: CIT5-029038; European Commission

Research Summary: This article advances our understanding of

entrepreneurial resourcefulness in unstable institutional contexts,

which are characterized by resource constraints and institutional

changes but are rich in intangible resources of a sociocultural

nature. Drawing on qualitative data of individuals engaged in infor-

mal cross-border activities in EU borderlands, we theorize

resourcefulness along two core dimensions: continuity and change

in relation to sociocultural, spatial, and institutional conditions and

development and coping as outcomes. We identify six configura-

tions of resourcefulness patterns and outcomes that extend cur-

rent understandings of the variations in how individuals interact

with their contexts, offering a nuanced view of resourcefulness.

Managerial Summary: This article aims to understand entrepre-

neurial resourceful behavior in contexts characterized by difficult

economic conditions and institutional changes. We use qualitative

data of individuals involved in informal cross-border activities in

EU borderlands that have undergone the collapse of communism

and EU enlargement rounds. The data shows that resourcefulness

relies on continuity, reflected in previous skills and networks, family

and friends, or common cultural understandings and change,as

resourcefulness where individuals implicitly or explicitly challenge

the new border regulations. Individuals' resourcefulness translates

into “coping”outcomes, as in achieving a minimal income to main-

tain the current way of life and/or to sustain social relationships

and “development”outcomes, whereby individuals earn more

income and improve their business activities.

KEYWORDS

European Union borderlands, informal activities, resourcefulness,

symbolic bricolage, unstable institutional contexts

Received: 25 July 2012 Revised: 28 March 2017 Accepted: 30 March 2017 Published on: 23 October 2017

DOI: 10.1002/sej.1274

Copyright © 2017 Strategic Management Society

Strategic Entrepreneurship Journal. 2018;12:23–53. wileyonlinelibrary.com/journal/sej 23

1|INTRODUCTION

Resource-constrained environments have been researched widely. Most research has focused on the different

resourceful ways in which individuals respond to the scarcity of their resource environments, such as financial boot-

strapping (Winborg& Landström, 2001), social resourcing and effectuation (Sarasvathy,Dew, Read, & Wiltbank, 2008),

or bricolage (Baker, Miner, & Eesley, 2003; Baker & Nelson, 2005). While these studies have certainly increased our

understanding of how entrepreneurs deal with resource constraints, they have focused mainly on stable institutional

contexts, providing fewer directinsights into how resource-constrained entrepreneurs respondwhen faced with insti-

tutional instability(Mair & Marti, 2009; Puffer, McCarthy,& Boisot, 2010; Sutter, Webb, Kistruck, & Bailey,2013). This

leads us to the question that has guidedour analysis in this article: How do entrepreneurs behave resourcefullyin con-

texts that are characterizedby both persistent resource constraintsand unstable institutional conditions?

In order to explore this question, we studied informal entrepreneurial activities in borderlands between old and

new member states of the European Union (EU) and neighboring countries, drawing on interviews with 100 individ-

uals. These borderlands provide a strategic site to understand resourcefulness under unstable conditions. The pres-

ence of the border has opened up economic opportunities such as (informal) cross-border trading that support the

livelihood of individuals (Anderson & O'Dowd, 1999; Yukseker, 2007) who are otherwise faced with very challeng-

ing economic conditions and resource constraints. The Eastern enlargement of the EU and the associated change in

borders have also affected the nature and extent of such activities as a result of narrowing price differentials and

creating either stricter or softer border regimes (Egbert, 2006). The context of our study reflects institutional insta-

bility related to the collapse of communism and the dissolution of the Soviet Union in 1991 and the EU enlargement

rounds in 2004 and 2007.

In this article, we show that in unstable institutional contexts, resourcefulness oscillates between continuity and

change. We define continuity as resourcefulness that draws on known and trusted resources, including intangible

resources such as networks, sociocultural commonalities, and understandings originating from socialist times.

Change is by defined as resourcefulness that both challenges and embraces the individuals' new contexts. These pat-

terns of resourcefulness are influenced by individuals' particular life circumstances (i.e., their motivations to pursue

informal entrepreneurial activities across borders, which reflect their differential access to resources such as net-

works, for example) and the respective border regions they inhabit (hard or soft). We also find that for most individ-

uals, resourcefulness—whether shaped by continuity, change, or both—translates into “coping”outcomes, i.e., into

the means to achieve a minimal income in order to maintain their current way of life and/or to sustain social rela-

tionships within their communities. For a few others, resourcefulness results in “development”outcomes, i.e., into

the means to earn more income and to improve their business activities.

We contribute to the literature on resourcefulness in several ways. First, we extend existing theorizing to incor-

porate resourcefulness in unstable institutional contexts. Our theorization of patterns of resourcefulness in relation

to continuity and change and outcomes of resourcefulness as development and coping allows us to extend the cur-

rent understanding of the variations in how individuals interact with resource constraints. We build on recent work

on antecedents of entrepreneurial resourcefulness, including identity-based explanations (Powell & Baker, 2014) and

entrepreneurial passion explanations (Stenholm & Renko, 2016) for variations in resourcefulness, drawing attention

to the continuous interplay of individual experiences and context. Second, we also extend current theorization on the

outcomes of resourcefulness. In relation to bricolage, for example, Baker and Nelson (2005) assumed that develop-

ment may be hindered because entrepreneurs choose not to accept new challenges. Our findings show much more

varied configurations of resourcefulness and outcomes for unstable institutional contexts where continuity or a com-

bination of both patterns of resourcefulness can also result in development and changein a coping outcome.

Third, our continuity and change constructs allow us to demonstrate how broadly individuals draw on a nd combine dif-

ferent tangible and intangible resources from their contexts. This has direct implications for the ca ll to integrate symbolic

bricolage—making do with institutional and cultural elements—into entrepreneurship studies (Phillips & Tracey, 2007).

24 WELTER ET AL.