Examining Perceived Entrepreneurial Stress: A Causal Interpretation through Cross-Lagged Panel Study

The entrepreneurial stress construct’s nomological validity is not well established as past studies have not delineated between entrepreneurial and employee stress. This study investigated several entrepreneurship-specific stressors positing their causal effect on perceived entrepreneurial stress (PES). It examined four directional hypotheses testing the causal, reverse, reciprocal relationships and moderation effects between stressors and PES. Further, it looked at the moderating impact of psychological capital. More than 300 entrepreneurs in emerging markets, namely India, Pakistan, and the United Arab Emirates, participated in this longitudinal study (Time 1 n = 325, Time 2 n = 310). The study adopted a cross-lagged competing model research design and analyzed the data using structural equation modeling (SEM). The results show that entrepreneurship-specific personal, social, and occupational stressors cause PES. Further, the results also support the reverse causal effect of PES on stressors and a reciprocal relationship. The study advances resource-based theory to an entrepreneurial background, highlighting the role of intangible resource gaps in perceived entrepreneurial stress. The study concludes that entrepreneurship-specific intangible resources are useful to entrepreneurs at personal, social, and occupational levels. An actual or perceived loss of these resources may lead to perceived entrepreneurial stress. Furthermore, PES can interfere with the entrepreneurial capacity for innovation over time. Psychological capital can be an effective coping response as a moderator of perceived entrepreneurial stress’ adverse effects. This is one of the first studies that examines PES in an emerging market context, specific to entrepreneurial employment.