4 Sociological Factors That Shape Post-crisis Entrepreneurship

No one wants to experience a crisis, where even the basic rules of life seem to shift. While every such situation, be it a pandemic or a natural disaster, disrupts the familiar, it also acts as a crucible for change. On an individual or community level, a crisis may become a productive state, provided the aftertaste of the catastrophe is removed.

Perhaps that’s why entrepreneurship tends to accelerate in the wake of societal crisis. In 2024, an average of 430,000 new business applications were filed each month. The figures were nearly 50% higher compared to pre-pandemic numbers.

Traditional economics alone may not be able to explain such dramatic changes in entrepreneurship because they’re deeply sociological. Startups that emerge post-crisis reflect adaptation and agency, not just a search for profits. This article will discuss post-entrepreneurship in light of four important sociological factors.

Institutional Trust and Its Breakdown

In any well-functioning society, people can fully trust institutions like governments, hospitals, regulatory bodies, and corporations. When these institutions fail to uphold safety, justice, and well-being, the fallout is not just political or economic. It’s also deeply social.

Sociology views institutional trust as the cornerstone of social order. Theorist Niklas Luhmann stated that trust reduces the complexity of modern life. It allows individuals to make decisions without verifying every system for themselves.

Consistent underperformance or negligence leads to what scholars call ‘trust erosion.’ The following becomes inevitable:

• Public skepticism
• Decreased civic engagement
• Entrepreneurial responses aimed at restoring integrity

Take the case example of implantable medical devices like the Bard PowerPort. It’s a catheter device used to deliver medications into a patient’s bloodstream.

Over time, patients began reporting serious complications allegedly linked to device malfunction. According to TorHoerman Law, these complications have included deep vein thrombosis, blood clots, and pulmonary embolism.

Such injuries eventually led to the emergence of the Bard PowerPort lawsuit. While the legal process unfolds, the broader social implications are clear. Patients who once trusted the medical system are now questioning the safety of standard devices.

The sociological ripple in such cases makes room for online support communities and alternative health startups promoting transparency and ethical design. Companies may start working on device failure tracking platforms, blockchain-based health records, or wearable medical monitors. The aim is to fill the moral and informational void left behind by institutional failures.

Necessity-Based Innovation

Crises are of various kinds: some displace workers, whereas others disrupt supply chains and fracture conventional career paths. Entrepreneurship may arise then, not out of choice or ambition, but out of necessity.

Sociology perceives this as an act of adaptive agency. It refers to the capacity of individuals or groups for creative response to disruptions or crises. This is not just economic survival, but a sociological reaction to systemic breakdown. People come together and say, “We have no choice but to find a way out.”

The US Chamber of Commerce shares that a record-breaking 5.5 million business applications were filed in 2023. Moreover, this trend has held steady in 2024. A significant chunk of the sustained growth may be attributed to individuals starting businesses out of economic necessity.

If we get to the heart of sociological thinking beneath the surface, this economic necessity may stem from:

• Structures of inequality, in terms of capital, education, or employment
• Loss of institutional support, such as weak social safety nets
• Breakdown of traditional employment due to precarious labor markets or the gig economy

Here’s an example: After the pandemic, many people in marginalized communities lost access to formal employment and healthcare. They showcased adaptive agency by offering informal telemedicine consultations and launching mutual aid food delivery groups.

These entrepreneurs needed no venture capital or storefronts. Through trust, visibility, and community demand, they addressed both economic needs and social belonging.

Collective Memory and Cultural Response

In sociology, collective memory is how groups or communities remember shared experiences, particularly those that are traumatic or transformative. This is not the same as individual memory. Collective memory is generally:

• A product of social construct, created by media, storytelling, and education
• Shaped by power because certain narratives dominate, whereas others don’t
• Responsible for impacting identity and behavior at the community or national level

Sociologist Maurice Halbwachs was the pioneer of this concept, arguing that memory is always filtered through the lens of community life. As per UNESCO, preserving and circulating collective memory is a civic responsibility in the digital age. It’s a way to prevent history from repeating itself.

So, every collective memory has a cultural response: how communities interpret and act on a certain memory. It is based on shared fears, hopes, values, and norms. When a crisis leaves behind widespread social trauma, collective memory and cultural response heavily influence:

• The type of businesses that emerge
• The values those businesses prioritize
• The way people frame their roles in recovery

Take the example of the Flint Water Crisis of Michigan (2014-ongoing). The lead-contaminated water became a collective memory involving trauma. Since 2020, youth-led initiatives have offered free water testing to thousands of Flint residents.

The trauma, now encoded in the city’s identity, also gave rise to several community-driven ventures. They especially emerged in areas emphasizing water testing transparency, environmental justice, and local ownership. Entrepreneurs in this case are not just offering a product; they’re responding to a collective memory.

Social Networks and Community Capital

In post-crisis entrepreneurship, social networks and community capital symbolize the relationships, trust, and shared resources that help individuals:

• Launch new ventures
• Adapt to systemic change
• Be resilient in the face of a disrupted institution

Sociologists often group the two under the broader concept of social capital. Economic capital is all about money. Social capital is more about who you know, what they know, and how much they trust you.

Imagine a woman named Elena who loses her job after a hurricane. Instead of waiting for government aid, she decides to operate a home-based bakery. She doesn’t have much economic capital, so she relies on her social capital.

Her bonding social capital is her close-knit family. Neighbors become her bridging social capital. Finally, a local nonprofit that helps her apply for a micro-grant acts as the linking social capital.

Mark Granovetter’s ‘theory of the strength of weak ties’ is at play here. Individuals with strong interpersonal trust and access to shared community capital are better positioned to discover resources and markets.

As for a real-world scenario, Puerto Rico’s solar startup networks after Hurricane Maria in 2017 are a good example. The formal infrastructure had collapsed, and the Federal response was also delayed. Communities, especially in rural areas, were left without electricity for months.

Local entrepreneurs began installing solar panels and microgrids. These efforts were led by small, interconnected grassroots networks of:

• Engineers
• Diaspora Puerto Ricans
• Community activists, and
• Faith-based organizations

Besides these, institutional voids created due to policy shifts or regulatory gaps may spark entrepreneurial innovation post-crisis. This was the driving force behind micro-schools and EdTech startups during COVID-19 amid delays in school reopening policies.

In each case, it can be observed that the ventures are not chasing lucrative opportunities. They’re striving to reclaim agency, restore trust, and respond to unmet needs. Crises will continue to expose societal and governmental gaps. This makes it all the more crucial to understand the social dynamics behind innovation.

It’s the only way to celebrate entrepreneurs who saw a problem and sought a solution. Plus, it will support communities that make it possible to rebuild resilience during a time of vulnerability.