In rural areas of China the various resources held by farmers’ families heavily influence farmers’ entrepreneurial decision making, the results they achieve, and ultimately their entrepreneurial will and behavior (Kong et al., 2019). However, rural families generally have limited resources and it is easy for them to fall into financial difficulties following accidents or crises such as droughts, floods, or diseases (George et al., 2016). Individual farmers have different reactions when their families are faced with negative family events, which may lead to differences in their entrepreneurial behavior.

When negative events happen to rural households, farmers may look for opportunities that lead to income growth or they may behave rigidly. To date, there has been no consensus about how people respond to negative events. Some scholars have found that when a family suffers from a resource loss or property crisis, this event will trigger a frantic search for new sources of income and, as a result, may inspire their entrepreneurial will (George et al., 2016; Paul & Sarma, 2013). However, others have found that when major crises or threats are encountered in organizations or by individuals, people become stressed and anxious and adopt conservative or introverted methods to deal with these external pressures or crises (Chattopadhyay et al., 2001; Shimizu, 2007).

When households in rural areas encounter negative events such as illnesses, unexpected losses, droughts, floods, or business failures, the negative impact on the household can be immense. There is no consensus in the extant research on whether farmers will actively respond to such an event negatively, or can respond positively by choosing to become more entrepreneurial to alleviate risks and obtain income. We believed that this lack of consensus may be related to the different types of negative events that can be encountered in farmers’ households. Following the extant literature (Chen et al., 2015; George et al., 2016; Khayesi et al., 2014), we categorized negative events into two types: family-member-based negative events, which are negative personal events involving family members, such as serious illnesses and accidental injuries, and property-based negative events, which are negative events involving household property loss, such as droughts and floods, crop or livestock diseases, or business losses.

To investigate the effects of these two types of negative event on farmers’ entrepreneurship, we drew upon conservation of resources theory (Hobfoll, 1989), which states that individuals strive to acquire, nurture, and protect their personal resources, including physical and psychological resources. When there is a potential or actual loss of resources, the induced tension and pressure will motivate individuals to make corresponding adjustments to prevent or reduce the loss (Hobfoll et al., 2018). An illustration of this is when a rural family encounters property-based negative events, such as drought, flood, or business loss, the entrepreneurial farmer’s priority is to recover property loss by seeking resources in multiple ways to alleviate the negative consequences (Chen et al., 2015; Doane et al., 2012). In contrast, some research has shown that when a family member suffers from a serious disease or injury, farmers focus on taking care of the family member, resulting in their own emotional and psychological resources being exhausted, and the emotional/psychological support of their families decreasing (Aldrich & Cliff, 2003; Renzulli et al., 2000; White et al., 2015). Although both types of negative events can be emotionally exhausting it would appear that some types of events are more likely to result in an emotional rather than a financial response. The above theoretical analysis led us to propose that family-member-based negative events and property-based negative events would have distinct effects on farmers’ entrepreneurship.

In addition, we introduced socioeconomic status as a moderating factor in the relationship between negative family events and farmers’ entrepreneurship, given that socioeconomic status will affect their ability to acquire entrepreneurial resources and to deal with negative family events (Kimmitt et al., 2020; Pollack et al., 2012). Farmers with a high socioeconomic status are likely to receive a high level of social support since they can receive more encouragement and support from relatives, friends, and others, enabling them to deal with negative events with a positive psychological outlook, which relieves the psychological pressure involved in finding alternative sources of income, such as starting a business (Podsakoff et al., 2007). The entrepreneurial resources and information that such farmers obtain can improve their entrepreneurial will in the face of negative events, and hence help them better seize financial opportunities (Pollack et al., 2012).

Negative Family Events and Farmers’ Entrepreneurship

Moderating Role of Socioeconomic Status

Method

Participants and Procedure

We used field survey data from the China Land Economic Survey (Nanjing Agricultural University, 2020) conducted in rural Jiangsu Province for our analysis. The survey items covered, among other factors, farmers’ entrepreneurship and employment, agricultural production, and rural finance. The sample covered 2,628 people from 2,600 households in 52 administrative villages. We studied farmers’ entrepreneurship and selected 2,513 rural samples for analysis based on the answer to the item in the China Land Economic Survey, “Does this address have agricultural household registration?”

Measures

Dependent Variable: Farmers’ Entrepreneurship

According to the research of Xavier-Oliveira et al. (2015) and the China Land Economic Survey (Nanjing Agricultural University, 2020) an entrepreneurial household was one in which the income is self-generated from manufacturing or a business conducted in the home. When answering the same question in our study “Is this an entrepreneurial household?” the answers were binary coded: No = 0, Yes = 1. We used the Logit model to test our hypotheses.

Independent Variables: Family-Member-Based Negative Events and Property-Based Negative Events

In accordance with the research of Doane et al. (2012) and George et al. (2016), we classified negative events based on the answer to the item “What were the major events in your family?” If the answer was “Serious illnesses or accidental injuries of family members” they were classified as family-member-based negative events, and if the answer was “Unemployment or business losses, droughts, floods, diseases of crops and livestock” they were classified as property-based negative events.

Moderator: Socioeconomic Status

We drew on the research of Hoang and Yi (2015) and rated socioeconomic status according to the answer to the question from the China Land Economic Survey (Nanjing Agricultural University, 2020), “How high do you feel your local socioeconomic status is?” Farmers rated this statement on a 5-point Likert scale ranging from 1 (very low) to 5 (very high).

Control Variables

We divided the control variables into two types: personal characteristics and entrepreneurial characteristics. Personal characteristics included the farmer’s gender, age, and education level, and entrepreneurial characteristics included whether they had received entrepreneurial training or whether relatives and friends had entrepreneurial experience (Xavier-Oliveira et al., 2015).

Results

Preliminary Analysis

Table 1 shows the descriptive statistics and correlations of all study variables. Family-member-based negative events were significantly and negatively correlated with the entrepreneurship of farmers, and property-based negative events and the entrepreneurship of farmers were significantly and positively correlated. There was also a significant positive correlation between socioeconomic status and farmers’ entrepreneurship.

Hypothesis Testing

This paper used the Logit regression method to test the research hypotheses. The analysis results are shown in Table 2. The average value of the variance inflation factor of each model was 1.11 and the maximum value was 1.30. These are all much smaller than the threshold value of 10, indicating that multicollinearity was not a significant problem.

Model 1 tested the relationship between farmers’ entrepreneurship and each control variable. Results for Models 2 and 3 show that family-member-based negative events had a significant negative association with farmers’ entrepreneurship, whereas the impact of property-based negative events on farmers’ entrepreneurship was significantly positive. Model 4 shows that family-member-based negative events still had a significant negative association with farmers’ entrepreneurship, and property-based negative events still had a significant positive impact on farmers’ entrepreneurial behavior. Therefore, Hypotheses 1 and 2 were supported.

Model 5 shows that socioeconomic status had a significant association with farmers’ entrepreneurship and that the interaction term between family-member-based negative events and socioeconomic status had a positive association with farmers’ entrepreneurship. Model 6 shows that socioeconomic status had a significant association with farmers’ entrepreneurship and that the interaction term between property-based negative events and socioeconomic status had a positive association with farmers’ entrepreneurship. Finally, Model 7 shows that socioeconomic status had a significant association with farmers’ entrepreneurship. The interaction term of family-member-based negative events and socioeconomic status had a positive association with farmers’ entrepreneurship, and the interaction term of property-based negative events and socioeconomic status had a positive association with farmers’ entrepreneurship. This shows that socioeconomic status positively moderated the impact of both family-member-based negative events and property-based negative events on farmers’ entrepreneurship. Therefore, Hypotheses 3 and 4 were supported.

To further verify Hypotheses 3 and 4 regarding the moderating effect of farmers’ socioeconomic status, we drew moderating effects graphs for farmers whose socioeconomic status was one standard deviation above and below the mean, as shown in Figures 2 and 3.

Discussion

To assess Chinese farmers’ entrepreneurship, we divided negative family events into family-member-based negative events and property-based negative events and, drawing insights from conservation of resources theory, introduced socioeconomic status as a moderating variable.

Theoretical Implications

First, we have contributed to the literature on farmers’ entrepreneurship by incorporating the role of negative family events. Prior studies mainly focused on the impact that either a single negative event or multiple negative events (e.g., natural disasters and diseases, or human resource and financial capital losses) had on farmers’ entrepreneurship (George et al., 2016), and paid limited attention to the influence of negative events involving illness or injury to family members or property loss. We divided negative family events into family-member-based negative events and property-based negative events and found that these different types of negative events had distinct effects on farmers’ entrepreneurship.

Second, we have expanded the application scope of conservation of resources theory by examining the impact of negative events on the entrepreneurial behavior of rural households. According to conservation of resources theory, people will try to maintain and protect valuable resources, and losing those resources will make them feel threatened so they will take measures to adjust and respond (Hobfoll et al., 2018). We showed that when rural household were threatened with loss of property they responded by being more entrepreneurial and seeking resources in multiple ways to alleviate the negative consequences. In addition, when farmers' family members suffered from severe illness or violence, farmers spared more attention and energy to take care of their family, which negatively affected their entrepreneurship.

Finally, our research enriches the existing literature on individuals’ responses to external crises. To date, there has been no consensus reached among researchers on how people respond to crises. When faced with negative events, farmers may look for opportunities that lead to income growth (Doane et al., 2012) or they may respond rigidly (Dew et al., 2009). Our research shows that when farmers encounter negative events, such as droughts, floods, major injuries, or business losses, property-based negative events have a positive impact on their entrepreneurship, whereas family-member-based negative events have a negative impact on their entrepreneurship.

Practical Implications

The research conclusions of this paper also have practical implications. In rural areas of China farmers’ entrepreneurship has high complexity and uncertainty. Rural households are highly vulnerable and can fall into financial trouble when there are unexpected events, such as diseases, droughts, and floods, due to insufficient infrastructure, social security, information networks, and medical care, as well as limited financing channels or opportunities for entrepreneurial training, making it difficult for farmers to start a business. We showed that the distinct types of negative events have different impacts on farmers’ entrepreneurship. Therefore, the local government in rural areas should improve the pensions, medical care, maternity care, and other aspects of basic security of rural households in areas of China with low socioeconomic levels.

Limitations and Directions for Future Research

The data used in this study were cross-sectional; thus, it was impossible to observe the longitudinal impact of negative family events on farmers’ entrepreneurial behavior. In addition, we quantitatively tested the impact of negative events occurring in farmers’ families on their entrepreneurial behavior, but farmers’ entrepreneurial activities are a complex process, and a simple empirical analysis may not fully reveal their nature. Future researchers could combine qualitative research analysis methods to conduct a more comprehensive study in greater depth.

This research was funded by the National Social Science Foundation of China (20BGL203).

Megan Yuan Li, College of Economics and Management, Nanjing University of Aeronautics and Astronautics, 29 Jiangjun Road, Jiangning District, Jiangsu Province, People’s Republic of China. Email: [email protected]