✅ Hagen’s Theory of Entrepreneurship
Proposed by: Everett E. Hagen (American economist and sociologist)

✅ Overview:

Hagen’s Theory of Entrepreneurship is a sociological and psychological explanation of why individuals choose to become entrepreneurs. According to Hagen, entrepreneurship is often a reaction to the withdrawal of status respect—when individuals or groups feel socially degraded, disrespected, or left behind, they are motivated to take bold steps to restore their identity and achieve status through innovation and enterprise.

🔑 Key Concepts of Hagen’s Theory:

1. Withdrawal of Status Respect

• Central to the theory.

• Occurs when a group or individual perceives that their efforts, values, or identity are not recognized or respected.

• Leads to status frustration, which triggers entrepreneurial behavior as a coping or corrective response.

2. Personality Changes

• Status frustration results in emotional disturbance and a shift in personality.

• Affected individuals become autonomous, creative, achievement-oriented, and often rebellious against traditional norms—traits essential for entrepreneurship.

3. Four Conditions Leading to Status Withdrawal:

• Displacement of a traditional elite by colonizers or invaders.

• Defamation of status symbols or values by the dominant group.

• Inconsistency between status and actual performance (e.g., highly skilled but low societal rank).

• Migration to a new cultural environment, where old identities are lost.

4. Role of Authoritarian Families

• Hagen noted that moderately authoritarian family structures are more likely to produce entrepreneurs.

• Too rigid a structure suppresses creativity; too permissive fails to build ambition.