Sociological theories of entrepreneurship

By Priya Chetty on March 11, 2020

Sociological theories are different from other theories because they analyse entrepreneurial activities from the standpoint of social contexts and corresponding processes and effects. They subscribe to the notion that the construction of entrepreneurship is narrowly a purposive action that leads to the formation of a new formal organization. They also broadly indicate various efforts that help introduce robust innovations in routines, technologies, organisational structures and social institutions (Ruef and Lounsbury, 2007).

Various entrepreneurship theories have been proposed by scholars over different periods of time that aid in the process of development of the field of entrepreneurship. They are broadly segregated into:

The identifying feature of sociological entrepreneurship theories is that they focus on the social context of entrepreneurship development (Simpeh, 2011). Some of the prominent theories include Max Weber’s theory of social change, EE Hagen’s theory, the Theory of Frank Young, Cochran’s theory, and the Attention-Motivation Theory of McClelland. Some of them are discussed in this section.

Cochran’s theory of entrepreneurship

The Cochran theory was introduced by Thomas Cochran in 1965. This theory explains the entrepreneurial approaches of an individual from standpoints like occupational hazards that he encounters and expectations he has from his own profession (Pawar, 2013; Otaghsara and Hosseini, 2014). It explains that entrepreneurship is determined by variables like cultural values, role expectations, and social sanctions. This theory also proposes that entrepreneurs are not supernormal individuals. Rather, they are people who represent the modal personality of society. ‘Modal personality’ is the term used by the anthropologist Cora DuBois in order to indicate behavioural traits few individuals develop in response to psychological, neurological and cultural factors (Birx and Fogelson, 2012). Thus, if a person performs like an entrepreneur, their performance is shaped by factors such as:

  • the attitude of the person towards their profession,
  • the societal role expectations that are held by sanctioning groups and,
  • the operational requirements of the job he is engaged with (Pawar, 2013).

EE Hagen’s theory of social change

EE Hagen introduced the theory of social change as an endeavour to explain how individuals change their social status in order to gain societal respect. The core notion that drives this sociological theory is that when individuals feel that they are no longer respected by society, they tend to implement innovative ways by means of which their social status can get positively transformed. The aim is to regain their lost status.

This desire to change the prevailing social status can be indicated as the acquired tendency of an individual to become an entrepreneur. This happens in three situations:

  1. When the individual loses their existing social status to someone who has suddenly regained superiority and enhanced social respect.
  2. If there is any form of defamation of the values and position of the individual by someone superior to him.
  3. If the individual is unable to accept the newly acquired social status due to the transformation of the existing society into a new social order (Hagen, 1963).  

Thus, this theory emphatically shows that withdrawal from existing social status acts as a driver which influences entrepreneurial qualities in an individual. Eventually, this transforms an individual from an ordinary person to an entrepreneur (Hagen, 1963; Lehmann, 2010).

Max Weber’s theory of social change

The theory of social change was proposed in the 1980s by the most socially compelling thinker of is time, Max Weber. The major basis of this theory is religion and social change. Thus, in order to explain this theory elaborately, the scholar indicates that religious beliefs have a strong influence on the process of the development of entrepreneurship.

This sociological theory proposes that the entrepreneurial qualities of an individual or a group remain ingrained within the society the person belongs to. This perspective of society is in turn influenced by the religious and ethical beliefs it subscribes to (Jackson, 1983; Rao and Singh, 2018). In addition to this, the Weberian theory of social change also talks about the integral role of capitalism in the process of developing entrepreneurial qualities in an individual (Beetham, 2018).

Weber particularly extended his theory on entrepreneurship to Indian society and explained that the religious belief of Hinduism that exists in India lacks the spirit of capitalism. Moreover, the ethical values prevalent in India are mostly concentrated towards individuals rather than the Hindu society at large. Hence, it fails to excite the feeling of entrepreneurship in the country (Pawar, 2013). Thus, in explaining the emergence of modern entrepreneurship traits in an individual, this theory shows that his religious and ethical approaches serve as the major determinant. Furthermore, the theory also explains that if the individual belongs to a society where capitalistic approaches dominate, they will possess entrepreneurial qualities.

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Theory of Frank Young

The entrepreneurial theory that was proposed by Frank Young is distinct from many other theories of entrepreneurship because it objects to the idea that individual-level calibre and beliefs help in developing entrepreneurship. According to this theory, paying attention to individual-level qualities will never be conducive to developing entrepreneurship tendencies (Nee and Young, 1991; Pawar, 2013). Rather, entrepreneurship can only develop when groups or individuals are able to identify and appreciate clusters of qualities that are needed for developing such a quality.

In terms of modern sociological theories of entrepreneurship, this theory suggests that the identification of clusters of entrepreneurial qualities acts as a motivation that influences an individual to accomplish these credibility goals so that they can become a successful entrepreneur. However, the theory emphasizes that individual-level entrepreneurial characteristics should always be under sided and group-level patterns should be preliminarily emphasized if successful entrepreneurship qualities are to be developed (Pawar, 2013). This shows that a group of individuals have more propensity to become successful entrepreneurs than individuals.

In the modern entrepreneurial setting, several sociological factors are undergoing a change. For instance, digitalisation is picking pace rapidly, penetrating almost every sector of business. The startup culture facilitated by various governments is also bringing about a change in attitudes and aspirations of an entrepreneur to drive bigger changes in society. However, some instances of modern entrepreneurship are radically different from those that existed during the nineteenth and twentieth centuries, warranting a new class of sociological elements in societies. Therefore, newer sociological theories of entrepreneurship need to be developed that encompass these factors and build upon their relevance.


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