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Strengthening Trust and Credibility in the Direct Selling Channel: The Importance of Industry Self-Regulation

By Peter Marinello

For over a century, American businesses have embraced the belief that industries should be accountable for maintaining their own ethical standards. This principle is especially ingrained in the direct selling channel, where consumer trust and entrepreneurial opportunity have long gone hand in hand.

Since the 1970s, the Direct Selling Association (DSA) has upheld this commitment through a comprehensive Code of Ethics, overseen by an independent administrator, which governs everything from marketing practices to income disclosures.

Even before the rise of social media and digital advertising transformed the marketplace, DSA member companies recognized that trust is not imposed by regulation—it’s cultivated through consistent, principled behavior. Strengthening trust in the direct selling channel requires companies and their independent salesforce members to uphold ethical, transparent, and substantiated marketing practices.

Central to this effort is BBB National Programs’ Direct Selling Self-Regulatory Council (DSSRC), an independent oversight program created in 2019 in partnership with DSA. DSSRC offers a robust and technologically advanced self-regulatory model that builds on the channel’s existing business ethics foundation. Leveraging modern internet-wide monitoring tools, DSSRC reviews online direct-selling promotional content to identify potentially misleading product and income claims and engages with companies to resolve issues quickly before they escalate.

In an era where digital misinformation travels at lightning speed, the channel’s continued support for independent, proactive self-regulation is not only prudent—it is essential to preserving trust and credibility.

This article explores the value of industry-led self-regulation as a tool for promoting business accountability, protecting consumers, and strengthening public trust. In the direct selling sector, DSSRC exemplifies this commitment, working independently, but alongside companies, trade associations, and compliance professionals to up-hold ethical standards and proactively address emerging challenges. By complementing government oversight, self-regulatory initiatives like DSSRC demonstrate how independent monitoring and accountability can support sustainable business practices to reinforce confidence in the industry over the long term.

Understanding Industry Self-Regulation

At BBB National Programs, industry self-regulation refers to a structured, voluntary process in which industries adopt and adhere to standards of conduct that promote responsible business practices, protect consumers, and address potentially deceptive or misleading behavior—often before regulatory action becomes necessary.

Effective self-regulation is rooted in independent oversight, transparent procedures, and a credible commitment to accountability. It empowers industries to lead in shaping ethical norms while building a culture of compliance.

Self-regulation initially emerged in the US as a proactive response to consumer protection challenges. In 1971, the National Advertising Division (NAD) was established by leaders in the advertising industry to set a new benchmark for independent review of truth-in-advertising claims. Administered by BBB National Programs, NAD has long served as a reliable and efficient forum for resolving advertising disputes and upholding standards of truth and accuracy—offering an alternative to the time and expense associated with litigation.

It is important to recognize that self-regulation is not a replacement for government enforcement. Rather, it acts as a complementary safeguard, offering a proactive approach that allows industries to identify and correct problematic practices early. Regulatory agencies such as the FTC have recognized the value of credible independent self-regulation, often referring matters to self-regulatory programs or factoring voluntary compliance into their enforcement decisions.

Self-regulation delivers substantial benefits to businesses, consumers, and regulators alike.

  • It promotes consumer confidence by signaling that companies are committed to ethical, transparent, and credible business practices. This assurance is particularly critical in industries such as direct selling, where independent salesforce members are on the front lines of customer engagement.
  • For government stakeholders, self-regulation can reduce the burden on regulatory agencies by independently resolving routine or lower risk matters.
  • Self-regulation can serve as an early-warning system for regulators, flagging and addressing emerging issues before they become widespread.
  • It provides flexible, real-time guidance informed by industry expertise, ensuring that compliance expectations keep pace with innovation and evolving business practices.

Ultimately, industry self-regulation—when done right—bridges the gap between the industry stakeholders and public accountability, reinforcing ethical standards that benefit the marketplace as a whole. By allowing businesses to reconcile misleading or unsubstantiated claims early, advertising self-regulation programs help prevent consumer harm, level the playing field for reputable business to engage with consumers and support the broader public interest.

The Direct Selling Industry: Scale, Reach, and Challenges

Direct selling is a global method of marketing and retailing goods and services that takes place outside of a fixed retail location. It typically involves independent salesforce members—often referred to as distributors, consultants, or ambassadors —who engage in person-to-person sales, whether through in-home demonstrations, online platforms, or social networks. Beyond selling products, direct selling offers individuals the opportunity to build a business with low entry barriers, flexible hours, and the potential for supplemental income.

The industry operates at significant scale. According to the World Federation of Direct Selling Associations, the global direct selling market surpassed $167 billion in sales in recent years, with more than 100 million independent sellers participating worldwide. In the US alone, DSA reports that tens of millions of individuals are engaged in the channel.

DSSRC’s Oversight Role

The creation of DSSRC in 2019 was driven by the direct selling channel’s recognition of the need and desire to demonstrate continued commitment to ethical conduct and to modernize business compliance practices for companies across and outside of DSA membership. Rooted in the belief that integrity and responsible conduct drive sustainable growth, DSA and its member companies recognized the importance of enhancing consumer and regulatory trust through transparent, responsible business and marketing practices.

DSSRC was established as a proactive initiative to reinforce the industry’s values expressed in the DSA Code of Ethics and ensure that direct sellers’ product and income claims align with high standards of integrity and accountability— reinforcing the central role that trust and transparency play in the direct selling channel’s long-term success.

To create concrete impact, DSA partnered with BBB National Programs to create DSSRC as an independently administered self-regulatory program. Serving as an impartial monitor of the marketplace and independent of DSA, DSSRC reviews income and product claims made by companies and their independent salesforce members, addresses complaints, and refers matters to regulators when appropriate. This initiative provides a transparent and effective mechanism for accountability.

Pillars of Effective Self-Regulation

For self-regulation to be a meaningful force in promoting trust and integrity in the direct selling channel, it must be built on four foundational pillars: credibility, transparency, accountability, and an objective standard of review.

Credibility begins with independence. To be most effective, a self-regulatory program should be administered by a third party that is free from industry influence, ensuring that decisions are impartial and grounded in established principles rather than business interests. This independence lends weight to its findings and garners respect from both industry participants and regulators.

Transparency is often the most challenging and important component in establishing a credible self-regulatory framework. Processes must be clearly defined, publicly accessible, and include the publication of decisions or outcomes to demonstrate how standards are applied. This openness not only builds confidence among stakeholders but also serves as a guiding framework for industry-wide compliance. DSSRC maintains program transparency through publicly available case decisions, annual reports that highlight the basis for DSSRC’s findings and the companies’ responses and the publication of industry guidance.

Accountability ensures that businesses are held responsible for their conduct. A self-regulatory program must have effective mechanisms to address non-compliance and, when necessary, escalate unresolved matters to government agencies. Accountability is achieved by DSSRC through a structured referral system: when companies fail to respond, refuse to make the recommended changes, or cannot be located, DSSRC refers these matters to the FTC or the appropriate state attorney general.

Finally, an objective standard of review requires that all marketing claims, particularly those concerning income opportunities and product efficacy, are communicated truthfully and accurately and are substantiated by reliable evidence.

As Drs. Linda and O.C. Ferrell of Auburn University outline in their article featured in this journal, self-regulation allows industries to proactively establish standards, build public trust, and maintain credibility without relying solely on external enforcement. This principle is demonstrated across a range of sectors.

  • The Financial Industry Regulatory Authority (FINRA) plays a vital role in safeguarding market integrity by enforcing ethical rules among broker-dealers and educating investors.
  • In the child-directed food marketing industry, BBB National Programs’ Children’s Food and Beverage Advertising Initiative (CFBAI) ensures that its participants only advertise foods to children that meet strict nutrition criteria and provides companies with a unique opportunity to regularly collaborate and engage with other like-minded industry leaders.
  • The Distilled Spirits Council of the U.S. (DISCUS) has implemented a rigorous code that governs advertising and marketing across the alcohol industry, setting standards that often exceed legal requirements.

Through these efforts, businesses demonstrate that self-regulation is not only a tool for compliance but also a commitment to ethical leadership and public accountability.

DSSRC similarly exemplifies these principles through a rigorous and impartial process. DSSRC proactively monitors the marketplace, identifying potentially problematic claims across digital platforms, including social media and independent salesforce communications. These findings trigger formal inquiries in which DSSRC reviews the claim in the context of the advertising, engages with the company, and issues a public case decision with recommendations for corrective action, when necessary.

Since its inception, DSSRC has identified over one million pieces of online content across various platforms related to direct selling companies and their independent salesforce members. DSSRC inquiries have resulted in the removal or substantial revision of more than 4,000 product and earnings claims disseminated by almost 500 different direct selling companies, significantly reducing the presence of misleading or unsubstantiated information in the marketplace.

A recent study conducted by Dr. Sandy Jap of the Goizueta Business School at Emory University examining the effectiveness of DSSRC found that the self-regulation program provides substantial benefits to DSA-member companies. An article highlighting Dr. Jap’s findings is also featured in this journal. Compared to non-member organizations, DSA members exhibit stronger adherence to responsible marketing practices. Dr. Sandy Jap’s independent analysis of DSSRC case data shows that DSA members make fewer product and income claims, respond to compliance concerns more promptly, and are less likely to require additional enforcement to resolve violations.

The study also revealed that DSA members resolve inquiries more efficiently and show higher levels of cooperation with DSSRC’s final decisions. Moreover, DSA members are significantly more proactive in modifying or removing problematic claims and addressing compliance issues, distinguishing them from non-DSA member companies.

Credible self-regulation promotes a level playing field by holding companies to consistent standards, discouraging bad actors, and reinforcing the integrity of the broader industry. For responsible businesses, self-regulation is not a shield against external scrutiny—it’s a strategic commitment to long-term sustainability, transparency, and public confidence.

Building a Foundation for Responsible Business Practices

Sustaining consumer trust in the direct selling channel requires more than reactive enforcement—it demands a long-term commitment to transparency, ethics, and responsible business practices. Since 2019, DSSRC has played a pivotal role in helping the channel establish and uphold these principles. By working collaboratively with companies and offering guidance grounded in legal and regulatory expectations, DSSRC has helped shift the channel toward a more proactive and preventative compliance culture.

A key component of this shift has been DSSRC’s focus on education and outreach. Through webinars, guidance, one-on-one consultations, and published case decisions, DSSRC provides companies and their independent salesforces with practical tools to identify and avoid problematic claims.

A cornerstone of this effort has been the development of practical compliance guidance for direct selling companies and their salesforce. DSSRC collaborated with industry stakeholders to produce the Guidance on Earnings Claims in the Direct Selling Industry and the Guidance on Income Disclosure Statements in the Direct Selling Industry. These resources serve as clear, objective frameworks for ensuring that income-related representations are presented in a way that avoids ambiguous or unsupported projections of expected income for prospective salesforce members interested in the direct selling business opportunity.

Through company education, DSSRC has also contributed to the decline of outdated and potentially misleading terms, such as “financial freedom,” “unlimited income,” and “career-level income,” which were once common in the channel. Today, companies are more mindful of the language used in promotional materials, leading to improved claim substantiation and enhanced consumer protection, building a stronger foundation for ethical growth across the channel.

As the direct selling channel continues to evolve, so must the standards that govern it. Emerging challenges from digital marketing, social media, influencer promotion, and international expansion require adaptive oversight. DSSRC has expanded its monitoring scope to include influencer content, global claims, and even AI-generated promotional materials.

By embracing new technologies and staying ahead of marketplace trends, DSSRC ensures that self-regulation remains relevant, effective, and responsive—providing timely guidance that helps companies navigate complexity while upholding consumer trust and ethical standards in a rapidly shifting environment.

As policymakers consider the future of consumer protection in the direct selling channel, several core principles of effective self-regulation should be reinforced.

  1. Self-regulation is most effective when it is truly independent and enforceable, with clear standards and consequences for non-compliance.
  2. Ongoing marketplace monitoring—such as that conducted by DSSRC—helps deter misconduct early, preventing consumer harm before it escalates.
  3. Collaboration between self-regulatory bodies and government agencies strengthens enforcement efforts, enabling a more efficient and responsive system of consumer protection.
  4. Education is essential; empowering companies and their salesforce with clear guidance fosters a culture of proactive compliance.

Conclusion

Robust, independent self-regulation is a powerful tool for reinforcing trust, credibility, and long-term success—particularly in dynamic distribution channels like direct selling. By taking ownership of high standards and ethical business practices, direct selling companies can demonstrate accountability, protect consumers, and elevate the reputation of the entire channel.

The work of DSSRC exemplifies how industry-led oversight—rooted in transparency, education, and proactive monitoring—can effectively reduce the need for reactive enforcement and align business practices with public expectations. As direct selling continues to evolve, sustained collaboration among industry leaders, regulators, and consumer advocates will be essential to strengthening marketplace trust.

Is Direct Selling Self Regulation Effective?

Dr. Sandy Jap

The direct selling channel seems to be a favored target for Federal Trade Commission (FTC) scrutiny. In 2019, the Direct Selling Self-Regulatory Council (DSSRC) was established by the Direct Selling Association (DSA) in partnership with the BBB National Programs (BBBNP). The mission of the DSSRC is to enhance consumer and regulatory confidence in the advertising and marketing practices of the direct selling channel through independent, third-party review of claims disseminated by or on behalf of direct selling companies. Since its founding in 2019, the job of the DSSRC has been to educate and encourage direct selling companies to follow and comply with ethical sales and advertising practices.

Has this self-regulation effort in the direct selling channel been effective? Industry self-regulation is an important, yet under-studied phenomenon in business of which we know little. And whether self-regulatory organizations are truly successful at curbing marketing misbehavior is an open question that I seek to answer. To this end, we conducted an evaluation of the effectiveness of the DSSRC’s efforts and case outcomes since its inception in 2019 through February 2024. This analysis was based on their internal reports as well as those represented in the BBB and DSSRC database. Here is the evidence, by the numbers. For the full report, please click here.

Self-monitoring reduces inappropriate marketing practices. First and foremost, there is substantial support for the DSSRC’s value in promoting self-regulation and ethical sales and marketing practices in the direct selling channel. Over the five-year period, the DSSRC accomplished the following:

  • The DSSRC addressed more than 3,600 product and income earning claims involving over 236 different direct selling companies. These inquiries involved an almost identical number of DSA member companies and non-DSA member companies, which might suggest a lack of bias towards DSA members in program administration and self-regulatory efforts.
  • The DSSRC brought about a wide range of claim responses from direct selling companies ranging from product and income claim removal and modification, additional disclosures or substantiation to social media posts, changes in company policies, increased monitoring and education, and consultant actions such as the removal/modification of misleading or false claims or termination/suspension.
  • DSSRC inquiries have resulted in over 400 instances of expeditious resolutions, formal administrative closures, additional education, and dialogue, as well as 25 referrals to the FTC.

This leads to the conclusion that the DSSRC’s self-regulation efforts represented a substantial workload that did not land on the FTC’s desk, require an intervention by a state attorney general office or persist unaddressed.

DSA membership matters. DSA members showed clear evidence of better and more compliance with ethical marketing practices than non-DSA members. While the full report details a substantial number of statistically significant differences between the behaviors, claims and investigative outcomes of inquiries brought against DSA member companies and non-DSA member companies, I highlight a few here:

1) DSA member companies (compared to non-DSA member companies) have fewer product and earning inquiries than non-members. Moreover, their DSA member company consultants are more responsive at removing and modifying problematic product and income earning claims.

2) DSA member companies also average fewer problematic product and income earning inquiries than non-member direct selling companies, and when the problematic inquiries arise, they are removed or resolved significantly faster than the problematic inquiries of non-member companies.

Specifically, DSA members average 3.4 product inquiries versus 7.7 for non-DSA members and will remove 87% of those problematic product inquiries versus 69% for non-DSA members. Additionally, DSA members average 6.4 earning inquiries versus 7.4 for non-DSA members and will remove 81% of those problematic earning inquiries versus 67% for non-DSA members.

3) DSA member companies are less likely to require actions to remedy non-compliance and have a greater number of expeditiously resolved inquiries.

4) DSA direct selling companies demonstrate greater compliance with DSSRC final decisions than non-member direct selling companies.

This suggests that DSA membership is very meaningful in terms of encouraging appropriate sales and marketing practices among direct selling companies. This is likely because DSA members adhere to a written Code of Ethics which established industry standards for consumer protection, receive access to additional educational materials, get updates on the “rules of the road,” and the opportunity to engage in and acclimate to supplementary regulatory and compliance dialogue than non-DSA member companies.

Is self-regulation working in the direct selling channel? Absolutely! I find substantial support for the DSSRC’s value in promoting self-regulation and ethical sales and marketing practices in the direct selling channel. Through February 2024, the DSSRC has accomplished the following:

  • The DSSRC has addressed more than 3,600 product and income earning claims in 450 inquiries involving over 236 different direct selling companies. These 450 inquiries involved almost an identical number of DSA member companies and non-DSA member companies.
  • It has brought about a wide range of claim responses ranging from removal and modification, additional disclosures or substantiation to social media posts, changes in company policies, increased monitoring and education and consultant actions such as the removal/modification of false claims or termination/suspension.
  • The DSSRC’s investigations have resulted in over 400 instances of expeditious resolutions or administrative closures, additional education, and dialogue, as well as 25 referrals to the Federal Trade Commission (FTC). An administrative closure means that the direct selling company has made a bona-fide, good faith effort to address DSSRC’s concerns (i.e., by removing the claims at issue or showing that they have attempted to contact the individual responsible for the claims to have the claims removed or significantly modified).

How can the direct selling channel continue to build trust? The research highlights potential next steps in self-regulation of the direct selling channel. Along with publishing this report in its communications and on its website, the DSSRC and the direct selling channel should consider the following:

1) Pool this data report with other findings from the academic self-regulation task force and promote a direct selling white paper that assesses self-regulation efforts since the DSSRC was established.

It is critically important that the DSA and the DSSRC continue to publicize and make available aggregate data on the number of cases, companies, and inquiries that are regularly investigated through its self-monitoring efforts. This has been a constant source of criticism from both the FTC and groups such as Truth in Advertising (TINA) at annual DSA compliance and legal events. These statistics should be regularly shared through social media and prominently displayed on the DSSRC and DSA websites.

2) Standardize reporting to the DSSRC. The DSA’s Ethics and Self-Regulation Committee and General Counsel Committee should standardize internal reporting activities to the DSSRC. The goal is annual reporting of aggregate measures of their self-policing activities and enforcement efforts over time.

3) The DSSRC should collect anonymized aggregate data from compliance officers at direct selling companies on the nature, and effectiveness of their company and consultant education efforts.

4) A survey of DSA-member company compliance officers should be conducted to:

a) Measure and validate the perceived value of the DSSRC.

b) Identify additional support needed from the DSSRC in self-regulation efforts and education.

DSA members should continue to work together to learn best practices from each other regarding policy compliance, as well as shaping and developing corporate policies and monitoring encouraging salesforce compliance. Such roundtable groups have been shown to be particularly effective in a wide range of industries and are a useful template that could be fruitfully applied to the direct selling channel as well.

5) The DSSRC would benefit from receiving regular feedback from DSA members on what type of policy information, education content, and other actions that would be of most use to direct selling companies and their employees.

6) Collect data on education efforts and outreach effectiveness. Such data should be regularly collected on how often its education content is being shared or presented to DSA member companies and with which employees. It is not enough for compliance officers and team members to be educated. Company leadership, marketing teams – all direct sales corporate employees – as well as independent sales consultants need to be regularly instructed and informed on appropriate marketing sales practices and product and income earning claims. Moving forward, information on the number, names, and positions of attendees at DSSRC education events should be retained. Efforts should also be made to provide education in a wide range of formats including synchronous and asynchronous media forms, at industry events, in blog forms, and in podcasts.

Importantly, the value of self-regulation is not solely evidenced by casework, but by education regarding appropriate sales and advertising practices, ongoing dialogue with direct selling companies, and program socialization of industry commitment to meaningful and effective self-regulation. Establishing the DSSRC is not enough. Continuing this commitment and building upon it as evidenced by DSA members working together to build consumer and FTC trust, disseminating the quantitative evidence of these efforts, and ongoing education, is the path forward to building and sustaining trust in the direct selling channel.

 

Direct Selling Consumers: What They Think, Why They Buy and Why They Join

By Lisa Gudding and Monica Wood

In an era where online marketplaces and big-box retailers dominate the shopping landscape, direct selling continues to thrive in the United States. From beauty products to wellness supplements, services and home goods, millions of Americans choose to buy from direct sellers every day. However, what are the drivers of this consumer behavior? A recent consumer study conducted for the Direct Selling Education Foundation by Ipsos has revealed many of the top reasons why US consumers are turning to direct sellers.

Top Reasons Why Consumers Buy from Direct Sellers in the United States

1) Supporting Small Business Owners in Their Community

One of the most compelling reasons consumers choose direct sellers is the opportunity to support local entrepreneurs. Direct sellers are often friends, neighbors, or community members who operate small, independent operations or businesses. By purchasing from them, consumers feel a sense of pride and purpose, knowing their money is helping someone they know achieve financial goals and personal growth.

This community-based commerce fosters stronger local economies and builds trust between buyers and sellers, creating a more meaningful shopping experience within the community.

2) Knowledgeable Direct Sellers

Direct sellers are often deeply familiar with the products they offer. Unlike traditional retail employees who may have limited training, direct sellers typically use the products themselves and receive ongoing feedback from customers and ongoing education from their companies. This first-hand experience allows them to provide detailed insights, usage tips, as well as honest and personal recommendations in contrast to the typical e-commerce or retail experience.

Consumers appreciate this expertise, especially when purchasing items that require a personal touch such as skincare, nutrition, wellness, and home durables products.

3) Personalized Customer Service

In a world of automated responses and impersonal transactions, direct sellers stand out by offering highly personalized customer service. They take the time to understand each customer’s needs, preferences, and concerns. Whether it’s remembering a customer’s favorite product, offering tailored solutions or suggestions, or following up after a purchase, direct sellers build lasting relationships that go beyond the sale. This level of care and attention is often unmatched in traditional retail settings.

4) Convenience of Buying from Direct Sellers

Direct selling offers a level of convenience that appeals to busy consumers in the United States. Purchases can be made through home parties, social media, personal websites, or even text messages. Direct sellers can place orders for you – like having a personal shopper at no extra cost – eliminating the need to visit a store or navigate complex online platforms. Direct sellers also offer flexible delivery options, including direct shipping and home drop-offs. This ease of access, combined with the comfort of buying from someone you trust, makes direct selling a hassle-free alternative to conventional shopping.

Direct selling also continues to resonate with American consumers because it offers more than just products—it offers connection, trust, and community. Whether it’s the desire to support local entrepreneurs, benefit from expert advice, enjoy personalized service, or simply shop with ease, consumers are finding real value in buying from direct sellers.

Positive Perceptions About Purchasing from Direct Sellers Continue Steady Rise

In recent years, the direct selling channel in the United States has seen a notable upward trend in consumer perception. Consumer attitudes have become significantly more favorable, reflecting a growing trust in and preference for this personalized method of shopping. Below is a closer look at the key factors driving this positive trend:

A 21% Increase in Positive Perception

Whether it’s the quality of the products, the professionalism of the sellers, or the appeal of supporting small businesses, consumers have been increasingly embracing the direct selling model during the 2019-2024 period. Since 2019, positive perceptions of direct selling have jumped 21%. Importantly, consumers are 27% more likely to buy from a direct seller today than they were just a few years ago. Additionally, 4 out of 5 have a neutral to favorable opinion of direct selling as a method of shopping. This trend suggests that more people recognize the value of direct selling as a modern, customer-focused retail channel.

More Consumers Are Willing to Buy from Direct Sellers

Today, 27% of consumers say they are more likely to purchase from a direct seller than they were just a few years ago. This growing openness is likely fueled by positive experiences, word-of-mouth recommendations, and the convenience of buying from someone they know and trust. As direct sellers continue to offer personalized service and expert product knowledge, more consumers are choosing this route over traditional retail.

Widespread Neutral to Favorable Opinions

Perhaps most telling is the fact that 4 out of 5 consumers now hold a neutral to favorable opinion of direct selling. Neutral opinions also suggest room for growth—many consumers are open to learning more and potentially becoming loyal customers.

What’s Behind the Shift?

Several factors may be contributing to the rise in positive sentiment:

  • Increased transparency in direct selling business practices and product sourcing.
  • Enhanced training and professionalism among direct sellers.
  • Greater emphasis on community and relationship-building.
  • Digital tools that make the buying process smoother and more accessible.

With a 21% increase in positive perception, a growing willingness to buy, and widespread favorable opinions, the direct selling channel is well-positioned for the future. As more Americans seek meaningful, personalized shopping experiences, direct sellers are stepping up to meet the moment—one relationship at a time.

Public Preference for Flexible Work and Entrepreneurial Opportunities

As the modern workforce continues to evolve globally and in the United States, flexibility and autonomy are becoming top priorities for many Americans. This Consumer Attitudes data study highlights a continued interest in entrepreneurial opportunities that offer adaptable schedules and income potential particularly in the form of direct selling.

Some important consumer insights on this front include:

77% of Participants Want Flexible Work Options

A striking 77% of study participants expressed a strong interest in flexible work arrangements. This reflects a broader cultural shift toward work-life balance, especially in the wake of the pandemic and the rise of remote work. People are increasingly seeking opportunities that allow them to:

  • Set their own hours
  • Work from home or on the go
  • Balance personal and professional responsibilities

Direct selling fits this model for many, offering individuals the freedom to build a business on their own terms.

1 in 3 Participants Are Specifically Interested in Direct Selling

Among those surveyed, 1 in 3 participants indicated a specific interest in pursuing direct selling as a flexible entrepreneurial path. This is a significant indicator of the industry’s growing appeal, especially among those looking for:

  • Low-barrier entry into entrepreneurship
  • A supportive community of peers and mentors
  • Opportunities to sell products they believe in

This interest spans across age groups, with younger generations especially drawn to the digital and social aspects of direct selling.

Earning Extra Income Is a Top Motivator

Earning extra income is one of the top reasons people consider direct selling. Whether it’s to supplement a full-time job, save for a specific goal, or build a long-term business, direct selling was viewed as offering a scalable income opportunity that aligns with individual goals and lifestyles.

Other motivators include:

  • Personal development and skill-building
  • The ability to work independently
  • The chance to turn a passion into profit

Americans are increasingly drawn to flexible, entrepreneurial opportunities—and direct selling is an important part of this trend. With 77% of people seeking flexible work, 1 in 3 showing interest in direct selling, and income potential as a key motivator, the direct selling channel is well-positioned to meet the needs of today’s evolving workforce.

The Path Forward

As the retail landscape evolves, the human touch of direct selling remains a powerful force in shaping how and why people choose to shop. Additionally, as more individuals seek low-risk opportunities to earn extra income, flexible work schedules, and social connection to trustworthy brands, direct selling offers a compelling path forward.

Consumer Attitudes Toward Social Media Platform Power in the Banning of Business Models

By Dr. Debra Zahay, Dr. Janna M. Parker, and Dr. Kevin W. James

The research was conducted independently of several funding organizations in the spirit of academic inquiry.

Abstract

The focal questions this research addresses are what are consumer perceptions of, 1) the power that social media platforms have when banning specific legal business models, and 2) is it fair to do so. The research design operates at the consumer level using an online experiment to understand consumer opinions regarding the fairness of a ban based on either the company type or the decision process for the ban. Results of this exploratory study suggest consumers are most concerned that the processes and procedures in any ban are fair rather than the type of business mode (direct selling vs. traditional retailing). This research suggests avenues for public policy determinations and the extent to which social media platforms should be allowed to censor companies and business models at will.

Literature Review

Motivation

This research explores consumer sentiment regarding the banning of specific business models from social media platforms. The study’s initial motivation emerged when TikTok became the first social media platform to ban multi-level marketing companies (MLMs), hereafter referred to as direct sellers, from making social media content (Social Selling News, 2021). Not only was direct selling initially misclassified as a Ponzi-style pyramid, but TikTok’s community guidelines also prohibited independent distributors from using their accounts to sell products and direct selling companies are prohibited from using their business accounts to promote products. TikTok claimed it wanted to protect users from fraud and scams (Tiffany, 2020). However, at the same time, platforms allowed content such as live streaming and paid advertising from psychics and tarot card readers, which many consider fraudulent business forms (Mughal, 2020).

Direct selling is still misclassified as a fraudulent practice in the TikTok community guidelines because it has a hierarchical organization structure. Therefore, recruiting of salespersons for direct selling companies is prohibited on the platform. Under the fraud and scams section of the community guidelines it states that “recruiting for companies that sell products or services in a pyramid structure through independent distributors (multi-level marketing or MLM)” is not allowed (TikTok, 2024). While this is a step back from previous guidelines from 2020/2021, which banned all direct selling content, it still demonstrates a misunderstanding of how the direct selling business model operates. While the guidelines were changed in May of 2024 for a more nuanced approach to banning MLM content focusing on recruitment, this example illustrates the power of social media platforms to change their policies at will.

How Social Media Platforms ‘Police’ the Internet

While there are positive benefits to social media usage, the advent of social media has provided an online outlet for the emergence of consumer misbehaviors towards individuals and brands, such as trolling (Golf-Papez & Veer, 2022), collaborative brand attacks (Rauschnabel et al., 2016) and ‘canceling’ (Parker, James, & Zahay, 2024). In this complex environment, social media platforms also often engage in controversial behavior by banning accounts and individuals. Over the past few years, some social media platforms have effectively become ‘custodians’ of the internet, policing content without supervision (Gillespie, 2018). Justification for assuming this role is based on Section 230 of the Communications Decency Act (CDA), which gives these platforms a broad mandate to oversee content, as it protects internet firms from civil liability due to their activities in restricting content (West, 2017).

Method

Exploring Consumer Perceptions of Platform Power

A two-stage process was utilized to investigate the research questions listed above. An initial qualitative study comprising 31 in-depth interviews of undergraduate and graduate business students indicated that consumers believe that the social media platforms’ ability to ban companies and business models has the potential to suppress entrepreneurship and, therefore, stunt economic growth. Next, Prolific was used to recruit subjects who completed a survey on Qualtrics. A between-subjects randomized experiment consisting of a 2 x 2 study design was used, comparing 2 (a national retailer launching a direct selling product line vs. a direct selling company launching a new product line) x 2 (posted platform community guidelines vs. employee discretion to ban).

Subjects were randomly assigned one of the following scenarios that described fictional companies banned from a fictional social media site after a user complained to the platform, with each scenario explained in Table 1. Each scenario began with the following statement:

“Please read the following scenario carefully. You will be asked a series of questions that will require you to think of the fictional direct selling company and the fictional social media platform in the scenario when answering the questions that follow.” Each scenario contained a retailer type and a ban type. Finally, a summary paragraph was included at the end of each scenario.

Subjects were almost all daily social media users, with the majority using social media more than once a day, as illustrated in Table 2 below.

In each scenario, the entity is portrayed as using an MLM business model for the product, and the model is legal. To ensure that subjects read and understood the scenario presented, after reading the scenario and moving to the next page, a question was asked for each condition in which the subject identified the type of business and the type of ban. Additionally, to ensure that subjects read the survey items, two attention-check items that required them to check a specific answer were randomly inserted into the survey. Finally, a minimum time to complete was established during a pre-test. Twenty-four subjects answered at least one attentiveness item incorrectly, missed a manipulation check, or finished in less than the average time determined in a pretest (n=67) and were eliminated from the sample. The final sample size is N = 135 (49.6% male, 54.8% never married, 42.2% had at least a 4-year degree, 37.7% made less than $50,000 a year, and 61.5% between ages 18-34).

After reading the scenario, subjects were asked to think of the fictional company and fictional social media platform as they answered survey questions. Using a seven-point Likert scale ranging from “very unfair” to “very fair,” social media account termination fairness was measured with an adapted version of Konovsky and Cropanzano’s 1991 scale, which is comprised of two dimensions that focus on distributive justice (α = .90) and procedural justice (α = .96). An example item for procedural justice is “The account ban process used by the social media platform was fair” and an example item for distributive justice is “The company’s social media account termination by the social media platform was fair.” Ban reaction (α = .96), a new scale developed from the qualitative interviews, initially had nine items but an exploratory factor analysis (EFA) resulted in dropping two items. Subjects used a five-point Likert scale ranging from “Not very likely” to “Very likely” to rate their reaction to discovering a company had been banned from a social media platform. Example items from this scale are “Likely to decide not do business with the company” and “Likely to be suspicious of the company.” Similarly, four items for the new platform power (α = .78) scale were reduced to three due to cross-loading and low loadings (Hair et al., 2010). An example item for platform power is “The social media platform has all the power in their favor,” and was rated using a five-point Likert scale ranging from “strongly disagree” to “strongly agree.”

Results

MANCOVA (Multivariate Analysis of Variance) in SPSS 29.0 was used to analyze the results found in the Table 3 below The Box’s test of equality of covariance matrices and Levene’s test of equality of error variances met the requirements of being non-significant (Hair et al., 2010).

Results indicate that subjects were concerned with the fairness of the process (procedural justice) but not the outcome (distributive justice) in banning business models. Ban type as a main effect and Procedural Justice as a dependent variable yielded a significant effect. Specifically, the Procedural Justice mean is higher for violating community guidelines than when the banning was at the employee’s discretion (Mean Community Guidelines = 5.069, S.D. = 1.58, Mean Employee Discretion = 4.37, S.D. = 1.6). The company type manipulation did not affect procedural or distributive justice. An examination of the differences in means for each item indicated that respondents felt more comfortable with the ban if community guidelines were not met, but less comfortable if the ban was made based on platform employee discretion.

Ban type and company type main effects were both significant main effects when platform power is the dependent construct. Specifically, Ban Type and Platform Power yields a significant P value and F value. Means indicate the perception that platform exerted its power over the company more so in the employee discretion scenario than in the violating community guidelines scenario (Platform Power Mean Employee Discretion = 3.25, S.D. = .71; Platform Power mean Violating Guidelines = 2.83, S.D. = .85).

Company type and platform power also yielded a significant main effect. Specifically, when the company type is a direct seller, subjects believe platform power was used more so than when the company type is a retailer (Platform Power Mean Direct Seller = 3.23, S.D. = .697; Platform Power Mean Retailer = 2.87, S.D. = .86).

In addition, actions at employee discretion were particularly viewed as an abuse of platform power. However, the way the company makes money, through direct selling or retailing, was not as important to consumers as was organizational justice, both distributive and procedural.

Public Policy and Managerial Implications of Platform Power

While the field of social media has seen numerous academic studies, there has been a noticeable gap in research into the actual power that social media platforms wield and consumer attitudes toward these platforms. The results of this exploratory study indicate that consumers perceive social media platforms to have excessive control over business bans, a sentiment that is prevalent regardless of the type of company. Respondents’ primary concerns revolve around distributive justice (overall fairness) and procedural justice (the process of banning business models) when evaluating their attitude towards a specific company ban.

Since social media platforms are the main source of news for many consumers, trust is a key issue in social media. Thus, consumers are most concerned that the processes and procedures in any ban are fair, making these processes and procedures transparent can improve consumer trust. Detailed explanations of platform actions, independent oversight and audits, a robust and effective appeals process, and user empowerment in the process in terms of user control over content and a role in decentralized platform governance could enhance positive perceptions of distributive justice in these cases.

For practitioners in any industry, but the direct selling channel specifically, these results are good news. While social media platforms (TikTok in particular) have been eager to ban or censure their content, consumers are less likely to care about the type of company being banned in the interest of overall fairness and justice exercised by the social media platform companies. Platforms should be aware that their actions on behalf of consumers are not always appreciated; businesses that find themselves on the wrong side of the platform policing issue should determine the source of the ban (employee discretion versus community guidelines) and if they might use consumer sentiment in favor of procedural justice to defend their business presence on social media.

If platform actions have negatively impacted a brand, standard crisis management procedures, such as acknowledging what has happened and taking corrective action, could be helpful. Suppose the platform decisions do not appear to follow the guidelines of procedural and process fairness. In that case, it might be useful to appeal to the platform and the brand’s followers directly. While issues should be raised with the platform, these decisions often take a long time to reverse. Appealing directly to customer communities and testimonials as to the unfairness of the action might do more toward rebuilding trust than appealing to the platform itself. Key findings of this research are summarized in Figure 1.

These findings strongly suggest a potential need for public policy interventions in social media platform governance, focusing not only on more specific guidelines but also on procedural justice or fairness concerns in banning a legal business model. However, public policy alone cannot ensure fair marketplace access. Platform self-regulation must play a role, as we have seen recently with the actions of several social media platforms, most notably Facebook (Meta), admit that it engaged in censorship and bowed to government pressure on key issues. Since this research was conducted, the platform has, of its own, accord, reduced the role of fact-checkers and relaxed content moderation policies. (Rosenberg, 2025). These actions have yielded a cautious optimism that platforms will respond favorably to consumer and business concerns. This study also highlights the importance of trade organizations such as DSA, whose efforts to have TikTok’s policy on direct selling organizations and their representatives changed have been successful, at least for now.

Finally, these findings have significant implications for future academic research. The study suggests a promising opportunity for a comprehensive conceptualization and examination of the concepts of social media platform power as well as social media platform activism, akin to the extensive studies on consumer activism. The findings also suggest opportunities for further research into the public policy implications of giving social media platforms such broad powers. More research funding would be welcome in this area, whether provided by public or private sources.

References

  • Gillespie, T. (2018). Custodians of the internet: Platforms, content moderation, and the hidden decisions that shape social media. Yale University Press.
  • Golf-Papez, M., & Veer, E. (2022). Feeding the trolling: Understanding and mitigating online trolling behavior as an unintended consequence. Journal of Interactive Marketing, 57(1), 90–114. https://doi.org/10.1177/10949968221075315
  • Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis. Prentice Hall.
  • Konovsky, M. A., & Cropanzano, R. (1991). Perceived fairness of employee drug testing as a predictor of employee attitudes and job performance. Journal of Applied Psychology, 76(5), 698–707.
  • Mughal, A. (2021, October 20). The improbable appeal of TikTok Tarot: You’d think that having a reading delivered via machine algorithm would make it feel less useful or relevant. You’d think wrong. Wired. https://www.wired.com/story/the-improbable-appeal-of-tiktok-tarot/
  • Parker, J. M., James, K. W., & Zahay, D., “Cancel Culture for Human Brands and Firms: Punishment versus Accountability,” In Angeline Close Scheinbaum (Ed.) Corporate cancel culture and brand boycotts: The dark side of social media for brands. Routledge/Psychology Press.
  • Rauschnabel, P. A., Kammerlander, N., & Ivens, B. S. (2016). Collaborative brand attacks in social media: Exploring the antecedents, characteristics, and consequences of a new form of brand crises. Journal of Marketing Theory and Practice, 24(4), 381–410. https://doi.org/10.1080/10696679.2016.1205452
  • Rosenberg, S. (2025, January 5). Zuckerberg and Meta say good riddance to fact-checking. Axios. https://www.axios.com/2025/01/10/mark-zuckerberg-joe-rogan-facebook-censorship-biden
  • Social Selling News (February, 2021), TikTok imposes ban on direct selling content.
  • Tiffany, K. (2021, December 17). The internet is starting to turn on MLM. The Atlantic. https://www.theatlantic.com/technology/archive/2020/12/tiktok-bans-multilevel-marketing-mlm/617422/
  • West, S. (2017). Raging against the machine: Network gatekeeping and collective action on social media platforms. Media and Communications, 5(3). https://doi.org/10.17645/mac.v5i3.989

The Self-Regulation Imperative: Effectively Managing Legal & Ethical Risks

By Dr. OC Ferrell and Dr. Linda Ferrell

Industry self-regulation exists when members of an industry, trade association or sector of the economy establish and monitor adherence to legal, ethical and/or other standards (best practices) to reflect effective consumer protection, ethical industry performance and meet public policy requirements. Self-regulation provides a mechanism to respond to legal, regulatory and ethical issues that provide fair competition and enhance the reputation of an industry. Compliance with these standards is not just for industry trade association members, but all participants in the industry or channel. Self-regulation, using third party oversight, facilitates addressing non-compliance of the entire industry by working with government agencies such as the Federal Trade Commission (FTC) (Soft Law Summit: Activating Industry Self-Regulation, 2023). This research provides an overview of the objectives of self-regulation and reviews the activities and components of leading self-regulatory programs to provide a template for evaluating the Direct Selling Self-Regulatory Council (DSSRC), which serves as an industry-wide self-regulation program for the direct selling channel.

Overview of Self-Regulation

There has been a general movement against government-imposed rules globally. The main focus of government deregulation is to promote economic efficiency, competition, and innovation in the business sector. While deregulation initially reduces costs and increases profits for business, critics often claim it can lead to unintended social costs. For example, deregulation in the energy sector has generally led to increased competition, innovation, and market openness, but its short-term effects on lowering electricity prices are inconsistent, and it can expose consumers to higher risks and reduce regulatory protections (Necoechea-Porras, López, & Salazar-Elena, 2021). Politicians, both left and right, globally, have embraced deregulation. The European Commission (EC) pledged to cut reporting requirements by at least 25%, and 35% for small and medium-sized firms. Vietnam is in the process of abolishing 25% of government agencies. In the United States (US), President Donald Trump issued an Executive Order to eliminate 10 regulations for every new regulation added (Economist, Feb 1, 2025. “The War on Red Tape (Rule Breakers)”.

Nowhere has there been a greater reduction in government regulation than in Argentina. The country has taken 800 steps to reduce regulation with more structural reforms to come. Certain imports into Argentina have seen a significant drop in prices as a result of the government’s efforts. These examples illustrate that self-regulation coupled with government deregulation can improve the efficiency of economic systems. Since taking office, Argentine President Javier Milei has issued roughly two deregulation reforms per day on average, including weekends (Vasquez, 2025). As government deregulation continues, industry self-regulation can shift some monitoring and oversight responsibilities to the private sector, including industry trade associations.

Regulation is even more problematic for the small businesses and independent contractors that typically drive market innovation because they often lack the resources to address complicated regulatory rules. Many small businesses say that dealing with regulation hinders growth and takes up too much of their time (Swanek, 2024). Small businesses and new firms are typically most impacted by inefficient regulation (Cordes, Dudley, and Washington, 2022). Additionally, regulation can reduce incentive to innovate. A study of mandatory financial disclosures in Europe found that requiring companies to publish detailed financial reports discourages innovation, particularly among smaller firms, by exposing proprietary information, which reduces their incentives to innovate (Breuer, Leuz, & Vanhaverbeke, 2025).

Complex regulations can stifle flexibility, making it harder for companies to adapt to changing market conditions, distribution methods, technology or consumer behavior. Additionally, rapid changes in technology can make some regulations obsolete. There is no doubt that resources used to monitor, report and comply can increase costs and prices to consumers. It is difficult to eliminate regulations that are obsolete and a cost to society, and the United States seems to fall behind many other developed countries in actively working to cut red tape and speed up regulatory processes (Cordes, Dudley, and Washington, 2022). In addition, regulation can limit consumer and business options and decrease competitiveness. On the other hand, government regulation, such as antitrust laws, are essential for maintaining a level playing field, promoting fair competition and ensuring markets remain competitive (Sokol & Zhou, 2024). Regulations also protect consumers from criminals who engage in fraud and exploitative practices. Some regulations are necessary to protect general public interests, including health and safety, environmental issues, unsafe products and workplace safety. Self-regulatory bodies do not have the authority to enforce laws, regulatory rules or legal actions to stop misconduct in most cases. Self-regulation programs, hand-in-hand with government regulation can work together to promote responsible business conduct.

Industry members committed to ethical and socially responsible conduct have the potential to provide more insights into the efficiencies of practical standards, more than those developed by governments. Government regulation is often developed to restrain a few rogue firms that have engaged in misconduct, but it can result in costly compliance with rules that impede the efficiency and effectiveness of the entire industry. Effective self-regulation with independent third-party oversight can help educate members of an industry about compliance and misconduct as well as educate participants on ethical conduct and best practices. Self-regulation tends to be more effective when outside groups, like industry organizations, independent auditors, nonprofit watchdogs, and government partners, are involved to provide oversight and support (Maman & Feldman, 2025). Firms that refuse to stop engaging in misconduct can be referred to government regulatory agencies such as the US Federal Trade Commission (FTC) to protect consumers as well as other industry participants. Self-regulation can fill gaps in areas where even the government is limited due to resource shortfalls and the need to focus on the most egregious of cases. This illustrates how self-regulation and government regulation can work together to assure responsible conduct. Effective self-regulation involves monitoring and addressing the conduct of all members of an industry.

The Case for Industry Self-Regulation

Self-regulation has many advantages over government regulation. First, it can educate the industry on standards to prevent and correct misconduct. Self-regulation offers flexibility and allows organizations to respond quickly to evolving practices, including new technology (Platt Majoras, 2025). Gaining cooperation with government agencies and other stakeholders provides a balance of responsibilities and most effectively addresses challenges. All stakeholders gain from the resources an industry invests in self-regulation. The industry benefits through proactive risk management and enhancing its reputation with key stakeholders and government regulators can use their limited resources more effectively.

Self-regulation can take place within individual companies, across entire industries, or within the broader business community as part of the economic system (Hemphill, 1992). Trade association self-regulatory initiatives provide guidance beyond legal requirements. Companies with high ethical standards go beyond legal compliance. These ethical standards and expectations create a buffer zone to prevent employees or representatives from engaging in misconduct. All firms have mandated requirements from laws and regulations. Business ethics programs and industry standards go beyond just compliance with the law. In business, states often have conflicting regulations and specific laws for an industry. Therefore, while these laws and regulations must be obeyed, holding firms to a higher standard can be helpful in avoiding legal issues.

Industry participants develop core practices that account for the legal dimensions while also incorporating self-regulatory standards and addressing the concerns of stakeholders. For example, the BBB National Programs (BBBNP) is an important self-regulatory body that provides directions for managing disputes, and the National Advertising Division (NAD) reviews advertising cases involved in disputes. Core practices in industry self-regulation programs evolve as they gain acceptance and reflect the expectations of key stakeholders. Core practices could also be considered norms that are behavioral expectations not legally required. The US government encourages industries and firms to establish proactive ethical standards that are core practices. Chapter 8 of the Federal Sentencing Guidelines for Organizations requires the board of directors to be responsible for ethics and compliance activities. If misconduct occurs, firms are given incentives, such as reduced penalties, if they can demonstrate an effective ethics and compliance program (United States Sentencing Commission, 2024).

Trade associations play a role in shaping industry-wide corporate social responsibility, especially in highly regulated and scrutinized sectors (Schaefer & Kerrigan, 2008). In addition to setting ethical expectations and advocating on behalf of members, trade associations may also establish voluntary standards or promote practices that go beyond the legal requirement. This includes engaging in philanthropic activities, giving back to communities and supporting employee development and retention through education, training and benefits. When an entire industry faces stronger outside pressure to act responsibly, its trade association is more likely to take an active role in addressing social and ethical concerns (Schaefer & Kerrigan, 2008).

The FTC recognizes the importance of self-regulation in an industry and encourages the adoption of self-regulatory practices (Rosch, 2007). If businesses focus on self-regulation, this allows the government to use its resources on significant competition issues and give best practices advice on issues where the government cannot intervene with its existing resources. The FTC does provide guidance on how businesses can develop effective self-regulatory programs. The FTC also recognizes that business has the necessary hands-on experience that enables it to address many issues more capably than a government agency. Since self-regulation is a quicker, more flexible and less adversarial means to establishing and enforcing standards, the benefits to society are significant. The FTC is very active in assisting and supporting industry self-regulation and establishing standards.

Better Business Bureau and BBB National Programs Leadership in Self-Regulation

One of the most visible and comprehensive industry-level, self-regulatory organization is the Better Business Bureau (BBB), founded in 1912. Through the International Association of BBBs (IABBB), there are more than 180 local offices in the United States, Canada and Mexico. Each bureau, through its offices, provides community oversight for ethical business, but there is limited enforcement of codes and rules. The bureau uses the mass media to warn businesses and consumers of the offending firms. If this firm is a member of the BBB, then membership can be revoked. These programs influence the future of government regulation in a firm’s industry and demonstrates its commitment to being accountable.

By contrast, BBB National Programs is an independent, nonprofit organization with a shared history, but not affiliated with, the International Association of Better Business Bureaus. BBB National Programs, is home to the independent, industry self-regulation programs that were a part of the Council of Better Business Bureaus since the 1970’s.

Industry standards and dispute resolution protect consumers and promote fair competition (BBB National Programs, 2022). These programs not only reduce the need to expand government regulation, but also help firms maintain an ethical interface with their stakeholders. BBB National Programs provides third-party oversight to companies and industries. BBB National Programs has helped many industries develop effective self-regulatory programs. This research overviews the BBB National Programs’ Direct Selling Self-Regulatory Council (DSSRC), focusing on product and earnings claims compared to other industry self-regulation programs.

An example of one of the oldest and most well-known national programs is the National Advertising Division (NAD). While the FTC is in charge of enforcing consumer protection in advertising laws that aim to prevent deception, many of the cases are handled by the NAD. While the NAD operates independently, it takes its cue from the FTC. The FTC could not monitor and enforce advertising deception without the resources of the NAD (Federal Trade Commission, 2009). One reason the FTC supports self-regulation is the number of complaints received each year. In 2024, the FTC received 6.5 million complaints from consumers (Consumer Sentinel Network Data Book, 2024). The most common complaints are related to credit bureaus and information furnishers, identity theft, imposter scams, online shopping and reviews, and banking. It is clear that self-regulation contributes to reducing the FTC involvement in the need for enforcement of laws. Self-regulation can prevent misconduct and gain efficient results with respect to questionable conduct.

Evaluating Self-Regulatory Programs

The FTC prioritizes key elements and characteristics of self-regulatory organizations. These include: the authority to create and enforce its own policies; governance-including independent boards, transparency and a defined process; conflict management to address conflicts of interest with transparent mechanisms for resolution; effective and transparent processes and procedures for oversight and regulating members of the industry; appropriately resourced, technically and advanced surveillance programs; adequately funded enforcement program that polices misconduct; regulatory database of information about outcomes that is accessible to stakeholders; market disruption procedures in case of capacity, continuity or computer failures that impact operations; innovation to stay ahead of the curve; and a dispute resolution process that employee find offers fair and transparent policies and procedures (Evens, 2014).

Each self-regulatory group was evaluated based upon: ethical leadership, independent oversight, clear standards and guidelines, scope and focus of accountability, transparency, education and training and continuous improvement (ongoing risk management). Appendix A provides an overview of each program using this template. The programs evaluated include: Financial Industry Regulatory Authority (FINRA), Distilled Spirits Council of the U.S. (DISCUS), Direct Selling Self-Regulatory Council (DSSRC), Children’s Food and Beverage Advertising Initiative (CFBAI), Children’s Advertising Review Unit (CARU), National Advertising Division (NAD), Online Behavioral Advertising (OBA) and Online Lenders Alliance (OLA). All of these programs focus on advertising, promotion and communication with key stakeholders.

A review of the DSSRC compared to other self-regulatory programs indicates that all of the components of the DSSRC program reflect BBB National Programs’ best practices and the characteristics of effective regulatory programs. With DSSRC managed by BBB National programs, it provides independent, non-profit oversight of the program. The key features of BBB National Programs are accountability, trust, impartial monitoring, enforcement and dispute resolution (Marinello, 2024).

By working with the DSSRC guidelines, direct selling companies demonstrate their commitment to ethical marketing practices, transparent disclosure of material information and the correct positioning of the direct selling opportunity (Marinello, 2024). The DSSRC is strengthening consumer trust and addressing potential misconduct issues before legal and/or regulatory intervention. This proactive approach not only prevents misconduct in the marketplace, often by non-DSA member firms, but also educates these firms about appropriate conduct in the marketplace. While the FTC and state legislation may develop unpredictable rules and regulations, the DSSRC can provide stability in developing and challenging regulations that can best be addressed by self-regulation.

References

Appendix A
Self-Regulatory Program: Core Elements

Direct Selling Self-Regulatory Council (DSSRC)

Website: https://bbbprograms.org/programs/all-programs/dssrc

Executive Director: Peter Marinello

Ethical Leadership: Peter Marinello is vice president of the BBBNP and serves as the executive director of the DSSRC. He brings a wealth of legal and self-regulatory experience from the National Advertising Division and the Electronic Retailing Self-Regulation Program.

Independent Oversight: BBB National Programs’ oversight, auditing and monitoring of product and earnings claims violations ensures a high level of credibility, expertise and effectiveness in program implementation and integration with legal and regulatory frameworks. DSSRC provides third-party oversight in conjunction with clear principles of business ethics set forth by the Direct Selling Association (DSA).

Clear Standards and Guidelines: Clear industry standards on issues such as product and earning representations (Direct Selling Code of Ethics I DSA Business Standards).

Scope and Focus of Accountability Mechanisms: Monitors the entire direct selling channel and embodies the following:

  • Relevant best practices from other self-regulatory models
  • A process that both monitors and enforces strict business principles; and
  • Guidance to raise the bar of excellence for DSA members and the entire direct selling channel

Transparency:

  • Shares summaries of case outcomes over the years (2019-2024): cases referred to the FTC (non-response and non-compliance); number of public case decisions; unique URLs reviewed to expose non-compliance; specific number of COVID-tagged postings; and number of administratively closed cases.
  • Comprehensive 2024 Activity Report with great detail on information on monitoring, origin of awareness of misconduct, nature of the misconduct (earnings claims vs. product claims), location of claims (social media accounts vs. company websites), etc.
  • Providing Code Administration for the DSA involving complaint handling procedures related to concerns about adherence to the DSA Code of Ethics (including annual Code of Ethics Compliance Reports).

Education and Training:

  • Direct Selling Education Foundation (DSEF) Building Trust in the Marketplace Conference (August 29-30, 2023) brought together direct selling industry business leaders, legal professionals, advertising experts, and salesforce members.
  • DSA Direct Selling Compliance Officers Certification and Handbook helps companies stay compliant by offering certification on compliance, best practices, tips and suggestions for new compliance officers.
  • DSSRC provides Earnings Claims Guidance, Income Disclosure Statement Guidance, and field training for companies seeking to establish or enhance their ethics/compliance programs.

Continuous Improvement and Ongoing Risk Management:

  • Recognition of emerging areas of concern (COVID-19 product claims, as an example).

Financial Industry Regulatory Authority (FINRA)

Website: https://www.finra.org/

President/CEO: Robert W. Cook

Ethical Leadership: Robert W. Cook served as the Director of the Division of Trading and Markets of the U.S. Securities and Exchange Commission for three years prior to joining FINRA. Mr. Cook earned his JD from Harvard Law School, a Master of Science in Industrial Relations and Personnel Management from the London School of Economics, and an A.B. in Social Studies from Harvard College. Under his leadership, FINRA helps write and enforce rules to foster an environment of market transparency.

Independent Oversight: FINRA works under the direct supervision of the SEC to protect the investing public against fraudulent and unethical practices. The US Congress has granted the SEC authority to ensure the broker-dealer industry and associated regulatory bodies operate fairly and honestly.

Clear Standards and Guidelines: FINRA’s rules and guidelines ensure a safe and fair market. These rules are constantly changing to adapt to new developments in the industry.

Scope and Focus of Accountability Mechanisms: Plays a critical role in ensuring the integrity of America’s financial system by

  • Writing and enforcing rules governing the ethical activities of all registered broker-dealer firms and registered brokers in the US.
  • Examining firms for compliance with rules.
  • Fostering market transparency and educate investors.

Transparency:

  • Shares information regarding individual transactions in active US Treasury securities on a same- day basis for FINRA members and professionals who subscribe to their data product. This information is made publicly available on FINRA’s website for non-commercial use the next day.
  • Offers several reporting tools based on compliance requirements that allow users to report mandatory trades, view display-only quotes and activity, and easily access and reference the Uniform Practice Code to assess operational and settlement issues.

Education and Training:

  • College of Examinations (COE) and College of Risk Monitoring (CORM): Periodic training programs for entry-level employees that include both onsite and virtual training sessions covering various aspects of the industry.
  • Securities Industry Essentials (SIE) Examination: Passing the SIE is a mandatory prerequisite for beginning employment at FINRA. FINRA’s new-hire training involves integration of SIE exam study materials and resources.
  • FINRA Honors Program: A two-year full-time rotational program open to recent law school graduates and attorneys that provide the opportunity to complete sophisticated legal work and protect investors and financial markets.

Continuous Improvement and Ongoing Risk Management:

  • FINRA maintains a dedicated Risk Monitoring Team including executive Risk Monitoring Director and Risk Monitoring Analyst roles to actively maintain communication with firms and provide prompt and accurate answers to their regulatory concerns.

Distilled Spirits Council of the U.S. (DISCUS)

Website: https://www.distilledspirits.org/

President/CEO: Chris R. Swonger

Ethical Leadership: Chris Swonger is President and CEO of DISCUS and Responsibility.org, a non-profit organization that has raised over $250 million from leading distillers to fight driving under the influence and underage drinking. With over 25 years of experience in the public and private sector, representing elected officials and three diverse, global consumer goods companies, Chris has led integrated corporate affairs strategies with responsibility for public affairs, international government affairs, corporate reputation management, corporate communications, brand public relations, philanthropy, and social responsibility. Upon taking over DISCUS he declared his focus on breaking down the traditional barriers that often separate corporations, non-government organizations, and activist groups.

Independent Oversight: Two critical bodies of experienced professionals, the Code Review Board and Outside Advisory Board, serve to execute and ensure adherence to the Code. For several decades, the Code Review Board has served to evaluate complaints and inquiries about advertising and marketing materials subject to this Code. The Code Review Board complaint process is transparent, and the resulting decisions and actions are regularly published on the DISCUS website. The Outside Advisory Board is composed of highly esteemed professionals with extensive experience related to responsible advertising. The Advisory Board is available to provide anonymous guidance on Code compliance, as well as their opinion if the Code Review Board cannot arrive at a majority decision on a complaint.

Clear Standards and Guidelines: Code of Responsible Practices used as a model of self-regulation, providing rigorous yet fair standards.

Scope and Focus of Accountability Mechanisms: DISCUS code applies to all activities in the United States undertaken to advertise and market distilled spirits, including beer and wine brands marketed by both DISCUS members and non-members. DISCUS regulates the responsible placement and content of beverage alcohol advertising materials and provides detailed guidelines to encourage safe and responsible consumption. DISCUS is more rigorous than the First Amendment has a transparent and accountable process covering the full breadth of advertising and marketing practices.

Transparency:

  • Code Review Board takes complaints and provides decisions and reasoning on certain beverage- marketing issues. These resulting decisions and any further actions are regularly published on the DISCUS website for public access.
  • Companies should provide a copy of their code of ethics to advertising agencies, media buyers, and other external consultants involved in a member’s advertising or marketing activities

Education and Training: DISCUS partners with several esteemed course providers to educate employees and non-employees alike on suitable beverage advertising practices. These courses include Level 1 and Level 2 Awards in Spirits, which focuses on the history of spirits, their significance in the U.S. economy, and the applicable regulations and laws surrounding their advertisement.

Continuous Improvement and Ongoing Risk Management: The DISCUS Safety and Risk Management Committee is made up of industry experts from DISCUS member companies and is responsible for evaluating and proactively engaging applicable regulatory agencies, insurance companies, and other standards. The committee keeps up to date with technological developments and legal proceedings to ensure an atmosphere of ongoing risk management throughout the industry.

The Children’s Food & Beverage Advertising Initiative (CFBAI)

Website: https://bbbprograms.org/programs/all-programs/cfbai

President/CEO: Eric D. Reicin

Ethical Leadership: Eric D. Reicin has served as Vice President, General Counsel, and Corporate Secretary for MorganFranklin Consulting LLC, a management consulting and government contracting firm. Since 2019 he has served as BBB National Programs’ President and CEO, where he leads the organization in fostering an environment of trust, innovation and competition.

Independent Oversight: The Children’s Food and Beverage Advertising Initiative is overseen by BBB National Programs, which also administers the Children’s Advertising Review Unit (CARU). BBB National Programs provides oversight ensuring that participants commit that advertising primarily to children under age 13 in the US will meet certain nutrition criteria.

Clear Standards and Guidelines:

  • Clear guidelines on what company-specific nutrition criteria may be advertised to children under 13.
  • Core Principles regarding requirements of food advertising to children for advertising and elementary school participants.

Scope and Focus of Accountability Mechanisms: CFBAI monitors the broad industry of child-directed food advertising expenditures in the US and most of the food advertising on children’s TV programming. CFBAI monitors and evaluates the participants’ compliance with their pledge commitments, and companies also submit annual self-assessments. Participants represent the majority of child-directed food advertising expenditures in the US and most of the food advertising on children’s TV programs.

Transparency:

  • All participants must comply with CFBAI’s Core Principles and must submit nutritional information regarding foods to be advertised to children. CFBAI’s website is regularly updated with a product list that reflects these foods.
  • The program requires participants to submit detailed self-assessments annually to easily and efficiently address non-compliance and disagreements between CFBAI and participants.
  • CFBAI regularly publishes annual reports discussing participants’ complaints and progress.
  • CFBAI accepts complaints on their website although these complaints are rare.

Education and Training: Periodic required training of employees across multiple divisions which might include nutrition, legal, marketing, policy and planning, product development, etc.

Continuous Improvement and Ongoing Risk Management: CFBAI regularly reviews the Uniform Nutrition Criteria to ensure it reflects the most current nutrition science and government guidance. The organization often references and directly communicates with the FDA to determine nutrition guidelines and compliance.

The Children’s Advertising Review Unit (CARU)

Executive Director: Eric D. Reicin

Ethical Leadership: Eric D. Reicin has served as Vice President, General Counsel, and Corporate Secretary for MorganFranklin Consulting LLC, a management consulting and government contracting firm. Since 2019 he has served as BBB National Programs’ President and CEO, where he leads the organization in fostering an environment of trust, innovation and competition.

Independent Oversight: The Children’s Advertising Review Unit is overseen by BBB National Programs, which also administers the Children’s Food & Beverage Advertising Initiative (CFBAI). BBB National Programs provides oversight ensuring that participants commit that advertising primarily to children under age 13 in the US will meet certain nutrition criteria. This self-regulatory body is voluntarily supported by brands such as Coca-Cola, Disney, McDonald’s, General Mills, Google, and others.

Clear Standards and Guidelines:

  • CARU Advertising Guidelines – monitors child-directed media to ensure compliance with these guidelines, seeking voluntary cooperation of companies and referral for enforcement action to authorities, such as the FTC or state attorneys general.
  • CARU Privacy Guidelines – address those concerns by providing guidance on specific issues involving online data collection and other privacy-related practices by operators of a website known to be collecting data on children under 13 years of age.

Scope and Focus of Accountability Mechanisms: Monitors all advertisers or websites that may deal with data collection from those aged 13 years or younger. The goal is for these companies to understand the implications of their advertising, as well as the effects and deceptiveness of advertising on children. Participants who have complaints filed against them are accountable to larger regulatory bodies.

Transparency:

  • Voluntary participants must comply with CARU’s core principles of the role of advertisers and data collection to not abuse the impact it has on children.
  • CARU makes the distinguishment between content and advertising is for children.
  • CARU releases an annual press release detailing best practices, compliance with laws, and responsibility for these advertisers that target children.

Education and Training:

  • CARU hosts various events annually encouraging those participating to come learn about updates and recent findings and best practices.
  • On their website, there are multiple resources available to CARU members such as archives and services provided.
  • CARU supporters also have access to CARU experts for questions, pre-screening and guidance from staff, and invitations to the annual supporters’ council meeting.

Continuous Improvement and Ongoing Risk Management:

  • CARU provides updates and news articles with recent developments in this spaces.
  • Pre-screening allows advertisers to have their practices checked out by CARU staff for best practices and compliance.

National Advertising Division (NAD)

Executive Director: Eric D. Reicin

Ethical Leadership: Eric D. Reicin has served as Vice President, General Counsel, and Corporate Secretary for MorganFranklin Consulting LLC, a management consulting and government contracting firm. Since 2019 he has served as BBB National Programs’ President and CEO, where he leads the organization in fostering an environment of trust, innovation and competition.

Independent Oversight: The National Advertising Division is overseen by BBB National Programs, which also administers the Children’s Food & Beverage Advertising Initiative (CFBAI) and Children’s Advertising Review Unit (CARU). BBB National Programs provides oversight ensuring that participants commit that advertising primarily to children under age 13 in the US will meet certain nutrition criteria. This self-regulatory body is voluntarily supported by brands such as Coca-Cola, Disney, McDonald’s, General Mills, Google, and others.

Clear Standards and Guidelines:

  • Clear policies and procedures are provided to understand the definitions, proceedings, and guidance relating to the NAD.
  • See 2024 Annual Report
  • If an advertiser wants to appeal their case, it will be reviewed by the National Advertising Review Board (NARB).

Scope and Focus of Accountability Mechanisms: The goal of the NAD is to help regulate advertising to be truthful and accurate for consumers with claims in national advertising. Its monitoring efforts are governed by its procedures and policies in place, and its resolution letters from disputes with the Federal Trade Commission (FTC) are listed publicly to ensure consumers are aware of such discrepancies.

Transparency:

  • All resolution letters from the FTC are listed publicly on their website.
  • It is known and made aware that the entire NAD is voluntary, and the annual reports list details of recent developments and case trends & statistics.

Education and Training:

  • There are annual meetings with the NAD with special speakers featuring companies and advertisers with personal testimony of changes in the industry.
  • There is an executive summary in the annual report, detailing stats of various cases and how often there are referrals in the industry about certain types of advertising.

Continuous Improvement and Ongoing Risk Management:

  • These highlights and annual reports provide for monitoring and updates regarding advertising for the NAD and changes to the industry.
  • If there are issues brought about from cases and the advertiser complies with recommended changes, the case is closed. If there are discrepancies noted, and the advertiser does not wish to make changes, then it is referred to the FTC or other regulatory bodies

Online Behavioral Advertising (OBA)

Website: https://www.iab.com/news/self-regulation-2/

Executive Director/Leadership:

  • Association of National Advertisers (ANA)
    Bob Liodice
  • American Association of Advertising Agencies (AAAA)
    Marla Kaplowitz
  • American Advertising Federation (AAF)
    Steve Pacheco
  • Direct Marketing Association (DMA)
    Lawrence M. Kimmel
  • Interactive Advertising Bureau (IAB)
    David Cohen

Independent Oversight: The United States Federal Trade Commission (FTC) closely monitors and provides independent oversight of behavioral targeting techniques used by online advertisers. They hold consistent workshops and publish periodic reports and articles on OBA.

Clear Standards and Guidelines: Cross-industry guidelines for applying consumer-friendly standards to online behavioral advertising across the internet.

Scope and Focus of Accountability Mechanisms:

  • The principles apply to numerous diverse entities that work to deliver relevant advertising intended to enrich the online consumer experience.
  • Online behavioral advertising (OBA) consists of “any collection of data online from a particular computer or device regarding web viewing behaviors over time and across non-affiliate websites for the purpose of using such data to predict user preferences or interests to deliver advertising to that device.”
  • Principles do not apply to websites’ collection of viewing behavior solely for its own uses.

Transparency: “The Transparency Principle requires the deployment of multiple mechanisms for clearly disclosing and informing consumers about data collection and use practices associated with online behavioral advertising. This Principle applies to entities collecting and using data for online behavioral advertising and to the websites from which such data is being collected and used by third parties. Compliance with this Principle will result in new links and disclosures on the web page or advertisement where online behavioral advertising occurs.”

Education and Training: “The Education Principle calls for entities to participate in efforts to educate consumers and businesses about online behavioral advertising. It is expected that there will be a robust industry-developed website(s) that provide consumers with educational material about online behavioral advertising. Additionally, it will result in numerous online impressions educating the public about how online behavioral advertising works and the choices that are available to consumers.”

It’s worth noting that there is no one particular education program entities require their employees to undergo, and these education efforts vary from company to company.

Continuous Improvement and Ongoing Risk Management: Programs systematically and/or randomly monitor the internet for compliance with the Principles. There is a process in place for taking and addressing complaints from the public, from competitors, and from government agencies concerning possible non-compliance. When an entity is informed regarding its non-compliance they are required to send public reports of corrections and uncorrected violations to appropriate legal entities.

Online Lenders Alliance (OLA)

President/CEO: Andrew Duke

Website: https://onlinelendersalliance.org/

Ethical Leadership: With 27 years in public policy, Andrew Duke brings extensive experience to OLA. He spent two decades on Capitol Hill, including as Chief of Staff for three members of Congress, notably Chairman Jeb Hensarling. He also led the Consumer Education Division at the CFPB. As OLA’s leader, Andrew oversees a diverse membership of job creators, lenders, fraud experts, privacy advocates, and more. He is dedicated to educating the public, media, and policymakers on the benefits of safe, regulated access to credit through online lending innovations.

Independent Oversight: The OLA is a self-regulatory trade association, so it is not directly supervised by a single government agency. Instead, it operates under its own governance and oversight, providing resources and setting standards for online lenders. However, the OLA works closely with various regulatory bodies that oversee aspects of online lending and financial services, including the Federal Trade Commission (FTC).

Clear Standards and Guidelines:

  • OLA’s federal policy team advocates for members and the industry by engaging with policymakers, sharing industry insights, submitting comments, and participating in meetings with key groups and coalitions to strengthen advocacy efforts.
  • OLA Policy Resources

Scope and Focus of Accountability Mechanisms: The OLA plays a crucial role in maintaining the integrity of the online lending industry by:

  • Developing and promoting best practices and standards for responsible online lending.
  • Advocating for fair, transparent, and responsible lending practices that protect consumers and businesses.
  • Collaborating with policymakers and regulators to ensure a balanced regulatory environment.
  • Educating stakeholders, including lawmakers and the public, on the benefits of safe, regulated access to credit through online lending platforms.

Transparency:

  • Provides detailed information on online lending practices, including loan performance, compliance with industry standards, and best practices, available to OLA members and stakeholders.
  • Shares relevant data and insights on regulatory updates, industry trends, and member activities through OLA’s website and newsletters to promote transparency and industry knowledge.

Education and Training:

  • OLA Training Programs: Periodic training sessions for industry professionals, offering both in-person and virtual courses on best practices, compliance, and key topics related to online lending.
  • Online Lending Essentials (OLE) Certification: A required certification for new employees in the online lending space, integrating foundational knowledge and industry standards to ensure responsible lending practices.
  • OLA Leadership Program: A rotational program for emerging leaders in the industry, providing hands-on experience and training in regulatory compliance, legal issues, and innovations in online lending.

Continuous Improvement and Ongoing Risk Management: OLA maintains a dedicated Risk Management Team to support members with real-time regulatory updates, compliance resources, and best practices to mitigate risks and enhance industry standards.

Inspiring Direct Selling Microentrepreneurs: The Passion To Persist

By Dr. Charla F. Brown, Dr. Victoria L. Crittenden, Dr. Joseph F. Hair, Dr. Greg W. Marshall

According to Peterson and Crittenden (2024), relatively little is known about microentrepreneurs, a subset of entrepreneurs who employ a microenterprise business model. While not easily defined given the socioeconomic heterogeneity of those engaged in microentrepreneurial endeavors (Bogenhold & Klinglmair, 2015), Barratt, Goods, and Veen (2020) expounded on this labor market trend of a network of microentrepreneurs who have shifted from dependent employees to their own boss. Zhang, Bufquin, and Lu (2019) attributed nonhierarchical relationships with a company via a platform (e.g., Uber, Airbnb, Taskrabbit) and sales of another company’s products (e.g., Amway, Mary Kay, CUTCO Cutlery) as examples of the trend toward microentrepreneurship.

The microentrepreneurial business model, however, is not a new or recent phenomenon. The peddler model of distribution that set the stage for the large independent workforce in direct selling is an early example of a pre-industrialization microentrepreneurial model (Luce & Crittenden, 2021), with Grinder, Pascal, and Schwartz (2010) noting the peddler model as one of the earliest examples of entrepreneurial marketing. Unlike small business owners, such microentrepreneurs can achieve financial and social affordances without the associated demands of becoming a small business owner. According to Torregrossa (2016), the key characteristics of microentrepreneurs are:

  • They plan to keep their businesses at a manageable size, without the intention to hire employees and/or grow into a larger company.
  • They can begin engaging in trade/exchange immediately without the need for infrastructures, funding, and/or a business plan.
  • They often learn business skills as they go.
  • They measure success in their own ways by balancing income generation with business autonomy, flexibility, long-term self-reliance, and personal well-being.

The characteristics of microentrepreneurs are exhibited in direct selling since the microentrepreneurs are backed by established brands that provide support in building the business and ongoing opportunities for development. Essentially, engaging in direct selling provides the microentrepreneur with a business-in-a-box (Crittenden & Bliton, 2019). Unfortunately, little research has been conducted that examines microentrepreneurs (Peterson & Crittenden, 2024), with traditional human and organizational research focusing attention on the more identifiable employer-employee relationship (Keith, Harms, & Tay, 2019; Meijerink & Keegan, 2019). As such, while the literature suggests that microentrepreneurs need an environment in which identities are nurtured (Barley & Kunda, 2006), there is little effort devoted to exploring human and organizational relationships that exist in the context of a labor-intensive, independent salesforce as found in the context of direct selling. Rather, Barley and Kunda (2006) noted what exists is an “excess of ideology and a dearth of data” (p. 46).

In the direct selling model of microentrepreneurship, training, socialization, and support represent resources provided by the direct selling company to offer a low-risk pathway for an individual to build his or her business. To this end, the current research was guided by the following two research questions:

  1. What resources encourage a direct selling microentrepreneur to persist?
  2. What resources can boost a direct selling microentrepreneur’s passion?

More precisely, guided by the management literature, the research examines how resources (i.e., sales training, socialization, and organizational support) and self-efficacy influence the direct selling microentrepreneur’s passion and persistence. The next section offers the theoretical framework upon which the research project was framed. In that theoretical exposition, hypotheses are derived. The research methods employed to examine the hypothesized relationships are then articulated, followed by the data analysis and a discussion of the analytical results. Implications for those engaged in the direct selling marketplace are then offered.

Theoretical Foundation

This research is grounded in two theories that provide the foundation for considerable work in the field of organizational sciences. Central to the conservation of resources theory is the resources tenet that “individuals strive to obtain, retain, foster, and protect those things they centrally value” (Hobfoll, Halbesleben, Neveu, & Westman, 2018, p. 104). Social cognitive theory provides an understanding for predicting behavior based on learning and change (Bandura, 1986). Self-efficacy is the focal construct of Social Cognitive Theory (SCT) and is defined as “belief in one’s capabilities to organize and to execute the courses of action required to produce given attainments” (Bandura, 1997, p. 2).

Conservation of Resources Theory (COR)

The conservation of resources theory (COR) is substantively a “motivational theory that explains much of human behavior based on the evolutionary need to acquire and conserve resources for survival, which is central to human behavioral genetics” (Hobfoll et al., 2018, p. 104). COR theory is one of the most researched theories in the fields of organizational sciences, being applied in studies ranging from general stress (Hobfoll, 1988) to work-specific stress (Bono, Glomb, Shen, Kim, & Koch, 2013), and burnout (Halbesleben, 2006). In COR, resources are defined as “those objects, personal characteristics, conditions, or energies that are valued by the individual or that serve as a means for attainment of these objects, personal characteristics, conditions, or energies” (Hobfoll, 1989, p. 516).

Hobfoll (1989) categorized resources into the following four resource groupings:

  • Object resources – value based on a condition of their physical nature or the value assigned to them by the individual based on rarity and/or expense,
  • Conditions – relative to the degree they are valued/sought after (e.g., tenure, marriage),
  • Personal characteristics – based on the level of stress resistance they offer, and
  • Energies – more finite (e.g., time, money, and knowledge).

At the heart of COR theory is that people are motivated to protect their resources. COR’s principle of resource investment holds that “people must invest resources in order to protect against resource loss, recover from losses, and gain resources” (Hobfoll et al., 2018, p. 105). In their work, Hobfoll et al. (2018, p. 104) maintained that people “employ key resources not only to respond to stress, but also to build a reservoir of sustaining resources for times of future need.” According to Bono et al. (2013), positive events can accumulate over time to help build resiliency in case of resource loss. From a direct selling perspective, in conjunction with COR, the variables of salesforce training, salesforce socialization, and organizational support are resources that lay the groundwork for the independent salesperson to have a stronger sense of self-worth.

Research Implications

Prioritize Sales Training and Company Connectivity
with Microentrepreneurs

  • A noted strength of the direct selling industry is its established use of technology to foster relationships, enhance product knowledge, and lend company-provided content to support marketing efforts.
  • Direct selling companies can continue to monitor which resources best fit the needs of the sales organization.

Prioritize Intentional Passion-Building

  • Task-specific self-efficacy can be associated as a person’s belief in his or her abilities rather than an individual’s self-esteem or intentions. As such, it can be a predictor of accomplishment depending on whether a person believes he or she can complete the task, and it can be a critical component to summoning the motivation to continue.
  • In this study of direct sellers, microentrepreneurial passion is a tool through which self-efficacy increases the likelihood a direct seller will persist. Operating as a mediator, passion served as a link between task-specific self-efficacy and microentrepreneurial persistence.
  • Direct selling companies should continue to prioritize intentional passion-building within their salesforce.

Passion and Persistence Spur Sales Success,
Build Reservoirs of Resources for Challenging Times

  • The results of this research suggest that microentrepreneurial passion and persistence make a powerful combination that can spur sales success. The results provide support for the mediating role of passion through task-specific self-efficacy to microentrepreneurial persistence.
  • As direct selling microentrepreneurs build reservoirs of sustaining resources for times of future need, they equip themselves to handle future challenges in the marketplace.

Social Cognitive Theory (SCT)

From the SCT perspective, Bandura (1982) proposed four primary ways to increase self-efficacy:

  • Enactive mastery (gaining expertise through task-specific or work-related experience),
  • Vicarious modeling (learning through observation or comparison of others),
  • Verbal persuasion (gaining encouragement from verbal affirmation and/or perceived support), and
  • Emotional arousal (using psychological and emotional states to boost confidence).
  • Enactive mastery captures the experience of task performance. Bandura (1982) declared it the most influential and authentic source of efficacy information. Experience can make a lasting impression. Success can beget success; just as failure can beget failure. Successful experiences can heighten perceived self-efficacy; just as repeated failures can decrease it. As knowledge and skill development increase, task mastery can increase.

Bandura (1982, p. 126-127) defined vicarious modeling as “Seeing similar others perform successfully can raise efficacy expectations in observers who then judge that they too possess the capabilities to master comparable activities.” Learning by such observation “enables people to acquire rules for generating and regulating behavioral patterns without having to form them gradually by tedious trial and error” (Bandura, 1982, p. 19). A competent role model can both share knowledge and information in context of the environment and communicate appropriate strategies to overcome challenging situations.

Verbal persuasion can encourage an individual’s capability beliefs regarding task and/or goal achievement. The influence of verbal affirmation, social persuasion and encouragement can generate enduring increases in self-efficacy beliefs (Anderson & Betz, 2001; Bandura, 1982). Accordingly, Bandura (1982) claimed the persuasive boosts in self-efficacy can direct them to try hard enough to succeed, thereby promote skill development and a sense of personal efficacy. Persuasive efficacy’s impact can be greatest when the encouragement is realistically grounded and is considered reasonable by the individual based on past performance or similar circumstance. What a person believes about their ability can affect what he or she can achieve.

Emotional arousal incorporates an individual relying on their “physical and emotional states in judging their self-efficacy” and can be strengthened in relation to a reduction in stress or anxiety (Bandura, 2012, p. 13). By using psychological and emotional states to boost confidence, an individual can judge their capabilities in relation to the situation and expectation of success.

Self-efficacy research is divided into two categories: general self-efficacy and task-specific self-efficacy. In his meta-analysis regarding self-efficacy and personal selling, Peterson (2020) described general self-efficacy as an overall confidence one has in his or her capabilities, and task-specific self-efficacy as a belief in ability subject to specific tasks or circumstances. He asserted that general self-efficacy is more commonly identified as a fixed personality trait, whereas task-specific self-efficacy can be modified, developed, and changed over time. The sales literature supports the use of task-specific self-efficacy in relation to sales-related outcomes (Brown, Cron & Slocumb 1998; Chowdhury 1993; Sujan, Weitz & Kumar, 1994).

Microentrepreneurial Passion and Persistence

Passion research is central to the entrepreneurial literature. Baum and Locke (2004) were proponents of passion as a means of enabling entrepreneurs to face challenges of uncertainty, resource shortages, surprises, and rapid change. Cardon, Wincent, Singh, and Drnovsek (2009, p. 517) later defined entrepreneurial passion as, “consciously accessible, intense positive feelings experienced by engagement in entrepreneurial activities associated with roles that are meaningful and salient to the self-identity of the entrepreneur.”

Entrepreneurial persistence is the sustained use of goal-directed energy over time (Cardon & Kirk, 2015; Shane, Locke, & Collins, 2003). It requires motivation, confidence, and resilience (Baum, Frese, & Baron, 2014; Shane et al., 2003). The literature utilizes several terms interchangeably when discussing persistence – grit, tenacity, perseverance, and goal-direction (Baum & Locke, 2004; Duckworth, Peterson, Matthews, & Kelly, 2007; Howard & Crayne, 2019; Shane, Locke, & Collins, 2003).
However, even with a toolbox of resources and tapping into emotional sustenance, fulfilling what a direct seller aims to accomplish is not without difficulty. Persistence through difficulty, fueled by passion, might be the difference between accomplishment and defeat. Dale Carnegie spoke to the need for both passion and persistence when he said, “Flaming enthusiasm, backed up by horse sense and persistence, is that quality that most frequently makes for success.”

Conceptual Model

With COR and SCT as complementary, adjoining theories, the hypothesized model in the current research is shown in Figure 1. The three independent variables explored in this study are: sales training, salesforce socialization, and perceived organizational support. Foundationally, SCT explains human functioning through a trio of factors (behavioral, personal, environmental) that can influence a person’s learning experience and capabilities. By operationalizing Bandura’s (1982) four sources of self-efficacy, these three independent variables are argued to serve as predictive vehicles to influence a salesperson’s task-specific self-efficacy while also mirroring the behavioral, personal, and environmental factors identified in SCT. Drawing from principles of COR and SCT, the study reported here investigated the influence of sales training, salesforce socialization, and perceived organizational support on task-specific self-efficacy, and, ultimately, on microentrepreneurial passion and persistence.

Hypotheses Development

Sales Training
Wilson, Strutton, and Farris (2002, p. 78) defined sales training as a “deliberate and formalized accumulation of information, concepts, and skills that are intended to foster competence or enhance the performance of salespeople.” As the direct seller’s sales role expands, so do increasing requirements to “process, internalize, and manage requisite capacities to fulfil their job roles” (Sager, Dubinsky, Wilson, & Shao, 2014, p. 1). Sales training is a program and a process; it is a conduit of information and an organizational channel for communication. Sales training is an investment. As Cummings (2004, p. 26) argued, organizations that “skimp on training, particularly for new sellers, risk losing staff—and sales.”

Numerous scholars (e.g., Attia, Honeycutt, & Leach, 2005; Bradford, Rutherford, & Friend, 2017; Lassk, Ingram, Kraus, & Mascio, 2012; Pelham & Kravitz, 2008; Román, Ruiz, & Munuera, 2002) have conducted research in sales training and its impact. In their meta-analysis, Singh, Manrai, and Manrai (2015) reviewed 56 articles of sales training research spanning from 1985 to 2014. They advocated enhanced sales training skills to be a potential source of a firm’s competitive advantage. The authors pointed to advanced technology, customer relationship management, and globalization as sources of the potential importance of sales training programs, and they asserted the potentiality of productivity and financial gains as reason to view sales training as a firm resource.

Thus, the following hypothesis is offered:

H1: Sales training is positively associated with task-specific self-efficacy.

Salesforce Socialization
As the foundational study regarding socialization in a sales context, Dubinsky, Howell, Ingram, and Bellenger (1986) asserted that successful assimilation of the salesforce was critical to an organization’s overall sales success. Salesforce socialization is a process through which an individual comes to understand behaviors, gains social knowledge, and develops skills associated within an organization’s sales role. This socialization can take place via training, observation, and experience. Sager et al. (2014) claimed that salesforce socialization’s critically important capacity to link goals and behaviors, increase sales job proficiencies, and build beliefs regarding those proficiencies is often downplayed or outright ignored.

As the social aspects of salesforce socialization are expected to increase task-specific self-efficacy through vicarious modeling and verbal persuasion and encouragement via organizational assimilation in microentrepreneurs, the following hypothesis is offered:

H2: Salesforce socialization is positively associated with task-specific self-efficacy.

Perceived Organizational Support
Perceived organizational support refers to the beliefs employees form regarding the “extent to which their organization values their contributions and cares about their wellbeing” (Eisenberger, Huntington, Hutchison, & Sowa, 1986, p. 500). As employees tend to assign humanlike characteristics to their organization, perceived organizational support is filtered through their perceptions of favorable or unfavorable treatment. According to this logic, favorable treatment by the organization equates to an organization’s favor regarding the employee. Conversely, an organization’s unfavorable treatment of the employee signals its disfavor. Further, the humanistic characterization of the organization affects how employees attribute an organization’s intent. Just as in social relationships, there are similarities in the formation of POS regarding an organization’s intent and/or commitment to the employee. Eisenberger et al. (1986) ascribed attributional heuristics on employees’ perception of resources received from the organization as either sincerely/voluntarily given and earned versus resources given through legal parameters or regulatory enforcement. Perceived organizational support is looked upon more favorably if the recipient believes they result from the organization’s voluntary actions as opposed to external constraints (Rhoades & Eisenberger, 2002).

In a meta-analysis designed to evaluate organizational support theory, Kurtessis, Eisenberger, Ford, Buffardi, Stewart, and Adis (2017) reviewed 558 organizational support theory studies based on hypotheses involving social exchange, attribution, and self-enhancement. Generally, the results indicated that perceived organizational support is inherently important in the employee-organization relationship, with positive implications regarding an employee’s well-being and favorable view of the organization. DeConinck and Johnson (2009) examined the effects of perceived organizational support as it related to salesforce turnover in 384 salespeople. The authors found that perceived organizational support positively related to organizational commitment.

As perceived organizational support can encourage salesperson well-being through emotional arousal via reducing work-related stress, providing positive coping strategies for the work environment, and promoting self-enhancement by fulfilling socioemotional needs in microentrepreneurs, the following hypothesis is offered:

H3: Perceived organizational support is positively associated with task-specific self-efficacy.

Microentrepreneurial Persistence
Ahearne, Mathieu, and Rapp (2005) found that a salesperson’s persistence and engagement may increase as self-efficacy increases. Thus, the higher the self-efficacy, the higher the likelihood that a salesperson will be persistent and engage in task-specific sales activities. That is, salespeople are more likely to persist in activities in which they have confidence. With each challenging encounter, salespeople with high self-efficacy develop confidence and a sense of greater competence. Higher levels of confidence can foster a cycle of increased effort and participation as competence increases. Greater levels of self-efficacy can impact an employee’s behavior through an increase in the areas of effort allocation, persistence, and coping strategies when faced with task-related obstacles (Chebat & Kollias, 2000; Srivastava & Sager, 1999). Brown et al. (1998) found that salespeople with higher self-efficacy set higher goals and were more likely to achieve them.

Research has shown self-efficacious individuals tend to take advantage of built-in organizational opportunities. Self-efficacious salespeople manage resources from their organization in anticipatory response to work demands and challenges, finding that higher levels of self-efficacy led to greater focus, competence, and confidence in these individuals performing their work (Mulki, Lassk & Jaramillio, 2008). This is consistent with COR in that salespeople are motivated to build resource reservoirs to equip themselves to handle future challenges. Thus,

H4: Task-specific self-efficacy is positively associated with microentrepreneurial persistence.

Microentrepreneurial Passion
Vallerand, Blanchard, Mageau, Koestner, Ratelle, Léonard, Gagné, and Marsolais (2003, p. 756) defined passion as “a strong inclination toward an activity that people like, that they find important, and in which they invest time and energy.” Forest, Mageau, Sarrazin, and Morin (2011) asserted that passionate activities are more central to the individual’s identity and can, therefore, be expected to have greater personal, positive impact than goals or motivation. Cardon and Kirk (2015, p. 1041) examined the emotions of passion and persistence together, “If we don’t consider passion or other emotions in our research on persistence, then we may be missing a full understanding of drivers of this and other important outcomes in entrepreneurship.”

COR theory discusses a building up of resources as laying the groundwork for positive gain spirals to occur. Recognizing that positive gain spirals can take time to build (Hobfoll et al., 2018) the positive gains inherent in building task-specific self-efficacy may also take time to build. As the positive gains in task-specific self-efficacy serve as resources that can have an impact on microentrepreneurial passion through replenishment via their resource investment, the following hypothesis is offered,

H5: Task-specific self-efficacy is positively associated with microentrepreneurial passion.
As microentrepreneurial passion reflects the consciously accessible, intense positive feelings experienced by engagement in microentrepreneurial activities, the following hypotheses are examined in the research:

H6: Microentrepreneurial passion is positively associated with microentrepreneurial persistence.

H7: Microentrepreneurial passion mediates the relationship between task-specific self-efficacy and microentrepreneurial persistence.
The following section describes how the trio of independent variables was examined as key resources to help promote further resource gain and how these resources contribute to giving direct selling microentrepreneurs the passion to persist with their business-in-a-box.

Research Methodology

The research methodology employed in this project utilized knowledge gained from previous direct selling research conducted by Peterson, Crittenden, and Albaum (2019) and Crittenden, Crittenden, and Ajjan (2019) in which data from direct sellers were derived as clearly and precisely as possible. To this end, a questionnaire was developed that would capture, rigorously and theoretically, the information about the hypothesized relationships and a data collection process was identified. In this section, both the questionnaire design and the data collection process are articulated. Additionally, a demographic overview of the respondents is also provided here.

Questionnaire Design

A survey instrument was developed from items adapted from previously validated scales. In general, the scales were developed originally for companies and/or sales divisions within companies. Thus, minor editing was completed to adapt all scales to a direct selling context. In addition, a limited number of items were added, where appropriate, to update the measures for emerging social media and business analytics topics. Demographic information was also collected.

Sales training was measured using items adapted from four sales training scales and was assessed through the dimensions of perceived sales training climate, perceived sales training effectiveness, and product knowledge. Perceptions of sales training were measurement utilizing Sager et al.’s (2014) three-item training climate scale and four-item organizational support of training scale. Direct sellers’ perceptions of the overall effectiveness of their company’s sales training were measured by Johlke, Stamper, and Shoemaker’s (2002) perceptions of firm training scale. Perceptions of the effectiveness of their company’s product knowledge sales training was assessed using the Wilson et al. (2002). Additionally, three items were added from Rentz, Shepherd, Tashchian, Dabholkar, and Ladd’s (2002) technical knowledge scale. All items were on a 7-point Likert-type scale ranging from 1 (strongly disagree) to 7 (strongly agree).

Salesforce socialization was assessed using the social aspects (i.e., serial and investiture socialization dimensions) from Jones (1986). In addition, several new items were added to extend the queries about socialization in terms of perceived value to the company. Respondents answered on a 7-point Likert-type scale ranging from 1 (strongly disagree) to 7 (strongly agree).

Direct sellers’ perceptions of organizational support were assessed using eight items adapted from Evans, Landry, Li, and Zou’s (2007) sales supportiveness scale. Evans et al. adapted their measure to a sales context from Wayne, Shore, and Liden’s (1997) short-form adaptation of Eisenberger et al.’s (1986) Survey of Organizational Support. A 7-point Likert-type scale ranging from 1 (strongly disagree) to 7 (strongly agree) was used.

Task-specific self-efficacy was measured using items adapted from three self-efficacy scales. Direct sellers’ confidence for selling compared to others was measured using seven items adapted from Jones’ (1986) eight-item self-efficacy scale. Intuitive selling skills assessment was adapted from Sujan et al.’s (1994) seven-item self-efficacy as a salesperson scale. Skills capability assessment was measured using Wang and Netemeyer’s (2002) self-efficacy scale, capturing the confidence level a salesperson has in their capability to do their sales job. A 7-point Likert-type scale ranging from 1 (strongly disagree) to 7 (strongly agree) was used for all items.

Microentrepreneurial passion was measured using 10 items adapted from Cardon, Gregoire, Stevens, and Patel’s (2013) entrepreneurial passion scale. The original scale included 13 items assessing two dimensions (intense positive feelings and identify centrality) across the domains of inventing, founding, and developing. Items were adapted from the domains of inventing, founding, and developing into an overall domain of direct selling. Four items were retained from the original 13-item scale with no adjustments and six items were modified to reflect a direct selling context. Direct sellers responded on a 7-point Likert-type scale ranging from 1 (strongly disagree) to 7 (strongly agree).

Microentrepreneurial persistence was assessed using an adapted version of Howard and Crayne’s (2019) Multidimensional Persistence Scale (MPS). The MPS is a 13-item measure that assesses three dimensions of persistence: Persistence Despite Difficulty (five items), Persistence Despite Fear (five items), and Inappropriate Persistence (three items). Only the Persistence Despite Difficulty and Persistence Despite Fear dimensions were used and adapted to a direct selling context. Responses were on a 7-point Likert-type scale ranging from 1 (strongly disagree) to 7 (strongly agree).

Additionally, to gain a better understanding of how direct selling microentrepreneurs receive training (e.g., in-person versus online) and the hours associated with each type, the following questions were asked: “How many hours of face-to-face (in-person) sales training have you received in the past year?” and “How many hours of online (not in-person) sales training have you received in the past year?” In assessing how often direct sellers engage in digital sales training activities, survey respondents were asked to indicate their frequency of use on a graphical slider bar scale, with 0=Never to 10=Very Frequently/Daily. Digital training tools queried were instructor-led sales training videos, interactive online sales coaching, downloadable sales training kits, and self-selected online sales training courses. Finally, in gauging how often direct sellers utilize digital support tools, survey participants were asked to indicate their frequency of use on a graphical slider bar scale with 0=Never to 10=Very Frequently/Daily. The following digital support tools were included: communicating within direct selling company (e.g., instant messaging, text messaging, blogs, dashboards); interacting within company via private social media platforms; participating in web-based video conferencing (e.g., Zoom, Microsoft Teams, Skype); utilizing downloadable social media content via a mobile device.

As typical in survey work and in particular in previous studies of direct sellers, demographic information was collected regarding education level, gender, race, ethnicity direct selling industry tenure, direct selling hours worked per week, direct selling product category, and direct sales average monthly income.

Data Collection

A sample of direct sellers was obtained by means of an Internet-based survey via the use of Qualtrics. The survey employed standard screening protocols to obtain meaningful data. Initially, the survey included a screening verification question confirming the participant was 18 years of age or older, proficient in the English language, currently engaged as a direct seller, and willing to participate in the study. Participants who did not answer affirmatively were not allowed to continue with the survey.
Following the initial screening question, a rigorous screening protocol was employed to ensure all respondents were involved in direct selling. After clearing the initial, standard protocol screening, the participant was provided an expanded description of the terms “direct selling” and “direct seller.” The expanded description of direct selling and direct seller terms was:

“In this questionnaire, you will see the term ‘direct selling.’ For the purposes of this questionnaire, we consider direct selling to be a business model that provides entrepreneurial opportunities to individuals as independent contractors to market and/or sell products and services, typically outside of a fixed retail establishment. Direct selling includes sales made through one-to-one selling, in-home product demonstrations, as well as online sales. Compensation is based on sales and may be earned based on personal sales and/or the sales of others on their sales team. A ‘direct seller’ is an individual affiliated as an independent contractor with a direct selling company, who 1) sells products/services to consumers, and 2) may sponsor people to join their direct sales team.”

Directly after this description, participants were asked, “Are you currently an independent contractor (i.e., an independent associate) for a direct selling company?” Participants who did not answer affirmatively were not continued with the survey effort. To further screen appropriate direct selling participants, potential respondents were then asked, “How many direct selling companies are you affiliated with?” Possible responses were “I am not affiliated with a direct selling company,” “one direct selling company,” “two direct selling companies,” and “more than two direct selling companies.” Again, participants who answered they were not affiliated with a direct selling company were removed from the survey. Individuals who declared affiliation with one or more direct selling companies were also asked to provide the company’s name. This additional screener served as a manual check to ensure an appropriate sample.

Rigorous participant screening and continual refinement of the Qualtrics sales panel inclusion criterion yielded responses from 42 verified microentrepreneurs engaged in direct selling activities. The demographic characteristics of the sampled group are displayed in Table 1.

Data Analysis

Partial least squares structural equation modeling (PLS-SEM) was selected for this data for several reasons. One, the research objective involved prediction of theoretical relationships in assessing the role of organizational resources and task-specific self-efficacy in influencing microentrepreneurial passion and persistence. Two, PLS-SEM enables the ability to work with non-normal data with sample size challenges. Three, the technique offers the flexibility in assessing higher-order constructs. Specifically, PLS-SEM derives solutions with small sample sizes when models are comprised of many constructs and a large number of items (Hair, Ringle, & Sarstedt, 2011; Hair, Risher, Sarstedt, & Ringle, 2019).

The evaluation of a PLS-SEM model includes a two-stage assessment of first the measurement model, followed by a subsequent evaluation of the structural model (Sarstedt, Hair, Cheah, Becker, & Ringle, 2019). The data were analyzed using the Confirmatory Composite Analysis (CCA) process for partial least squares structural equation modeling (Hair, Howard, & Nitzl, 2020). Smart PLS-SEM 3.0 was used to execute PLS-SEM and assess the measurement and structural models.

The final model, including construct indicators, is shown in Figure 2. To test the hypotheses, the model was assessed for significance and relevance of the path coefficients. Confirmatory composite analysis (CCA) is the recommended approach for assessing PLS-SEM results (Hair et al., 2020). In using CCA, the following analyses were examined: estimates of loadings and significance, indicator and composite reliability, average variance extracted, discriminant validity, and selected prediction metrics, including PLSpredict (Schmueli, et al., 2019). To test the hypotheses, the model was then assessed for the significance and relevance of the path coefficients. Table 2 provides the path coefficients and significance for the hypothesized relations and for training, task specific self-efficacy, and microentrepreneurial persistence as higher order constructs.

In the next section, the results of this data analysis are presented for each hypothesis and for the additional training characteristics for which the respondents were queried that addressed the questions underpinning this research effort:

  1. What resources encourage a direct selling microentrepreneur to persist?
  2. What resources can boost a direct selling microentrepreneur’s passion?

Results

The seven research hypotheses related to how resources contribute to giving direct selling microentrepreneurs the passion to persist with their business-in-a-box are restated here:

H1: Sales training is positively associated with task-specific self-efficacy.

H2: Salesforce socialization is positively associated with task-specific self-efficacy.

H3: Perceived organizational support is positively associated with task-specific self-efficacy.

H4: Task-specific self-efficacy is positively associated with microentrepreneurial persistence.

H5: Task-specific self-efficacy is positively associated with microentrepreneurial passion.

H6: Microentrepreneurial passion is positively associated with microentrepreneurial persistence.

H7: Microentrepreneurial passion mediates the relationship between task-specific self-efficacy and microentrepreneurial persistence.

H1-H3 proposed positive associations between the variables of sales training, salesforce socialization, and perceived organizational support with task-specific self-efficacy. H4 & H5 proposed positive associations with microentrepreneurial persistence and microentrepreneurial passion, respectively. H6 proposed a positive association with microentrepreneurial passion with microentrepreneurial persistence. The summary results of the hypotheses testing are offered in Table 3. The results indicated full support for H1, H5, H6, and H7, marginal support for H4, and no support for H2 and H3.

Of the trio of independent resource variables predicted to help promote further resource gain and contribute to giving direct selling microentrepreneurs the passion to persist with their business-in-a-box, sales training (H1) was the resource most strongly predictive of task-specific self-efficacy. It might be that the small sample size contributed to the lack of support for salesforce socialization and perceived organizational support and is something that deserves further investigation. In terms of sales training, the current data suggest that successful experiences through sales training can heighten task-specific self-efficacy. Through a multi-faceted training experience, a direct seller can be exposed to potential selling situations in a learning environment, observe and emulate others, and receive verbal encouragement lending confidence in selling skills and increasing self-efficacy beliefs.

Sales training programs represent actionable, practical resources that can help propel sales success. In addition to the scale items capturing dimensions of sales training, questions regarding frequency of use of a direct selling company’s digital learning and support tools were included in the survey. Online and/or digital learning tools include use of instructor-led sales training videos, online sales coaching, downloadable training kits, and self-selected online training courses. These tools offer flexibility in online delivery and can be customized to the training needs of a direct seller.

Table 4 shows the means and standard deviations of the responses. Interestingly, there was dispersion in reported frequency of use, with evenly distributed responses on both ends of the scale. This finding can lead to actionable results for the direct selling company. Gaining a greater understanding of which tools are most frequently used can help tailor a company’s digital offering to fit specific salesforce needs.

In similar fashion, survey participants were asked to assess frequency of use of their company’s online and digital training support tools. These support tools included assessing within-company digital communication (e.g., instant messaging, text messaging, blogs, dashboards), within-company social media interaction, participating in web-based video conferencing (e.g., Zoom, Microsoft Teams, Skype), and downloading training/social media content via a mobile device.

The results shown in Table 5 indicate more frequent use of digital support, especially in the areas within-company digital communication and downloading training/social media content. Direct sellers commonly use this path of digital connectedness to foster relationships, enhance product knowledge, and company-provided content to support marketing efforts (Fleming, 2019). These digital support tools can offer a direct selling company connection and training consistency with a remote salesforce.

Once built, via the impact of sales training, task-specific self-efficacy was hypothesized to increase both microentrepreneurial persistence (H4) and microentrepreneurial passion (H5). Of the hypothesized associations, self-efficacy influenced both passion (p<.001) and persistence (p<.02) positively. This pathway of self-efficacy to passion to persistence indicates those who are higher in task-specific self-efficacy are more likely to experience passion for their direct selling activities, thus making them more inclined to persist (Bandura 1982, 1997; Brown et. al., 1998; Cardon & Kirk, 2015; Holland & Shepherd, 2013). As such, a direct selling microentrepreneur’s task-specific self-efficacy perceptions, coupled with persistence in goal-pursuit, represent a potentially important link in influencing direct selling success. However, the relationship between task-specific self-efficacy and persistence in this sample was weak (p < .10).

The discovery illustrates the importance of passion in the self-efficacy to persistence path and strengthens the assertion that passion helps drive the relationship between the two. Cardon and Kirk (2015) reached similar findings using a different conceptualization of entrepreneurial passion (i.e., passion for inventing, passion for founding, and passion for developing). Following a hierarchical regression framework, their results indicated a significant relationship between entrepreneurial self-efficacy and entrepreneurial persistence before passion was entered into the model. Once dimensions of passion were entered, the significance of entrepreneurial self-efficacy either decreased or became non-significant. Positive gains in task-specific self-efficacy serve as resources that can have an impact on microentrepreneurial passion. It could be that passion is increased through resources gained, particularly through sales training and self-efficacy.

Finally, passion was also expected to amplify persistence (H6). Passion and persistence are considered drivers of entrepreneurial action. Cardon and Kirk (2015, p. 1041) examined the critical role of entrepreneurial passion in overcoming the challenges inherent to starting and running a business and stated, “If we don’t consider passion or other emotions in our research on persistence, then we may be missing a full understanding of drivers of this and other important outcomes in entrepreneurship.” In the current research, direct selling microentrepreneurial passion strongly influenced microentrepreneurial persistence. As microentrepreneurial passion reflects the consciously accessible, intense positive feelings experienced by engagement in microentrepreneurial activities, passion serves as the driver of sustained action through persistence. The current study demonstrates such passion-related intentions and behaviors can amplify a direct selling microentrepreneur’s ability to persist.

The final hypothesis (H7) stated that microentrepreneurial passion mediates the relationship between task specific self-efficacy and microentrepreneurial persistence.

As the relationship was marginally significant between task-specific self-efficacy and microentrepreneurial persistence, the hypothesized model was rerun in the absence of passion. Results revealed a strong direct relationship between task-specific self-efficacy and persistence, with a path coefficient suggesting that passion partially mediates the relationship between task-specific self-efficacy and microentrepreneurial persistence. The total indirect effect from task-specific self-efficacy to microentrepreneurial persistence through microentrepreneurial passion was statistically significant and meaningful. These results indicate further support for the mediating role of passion through task-specific self-efficacy to microentrepreneurial persistence.

Implications for Practice

Sales training emerged as an applicable resource in this model of direct selling microentrepreneurial passion and persistence through its influence on task-specific self-efficacy. Sales training is an investment, a program, and a process. As such, sales training can serve as a directive conduit of information as well as a channel of communication with a remote salesforce. Because of its potential to improve company connectivity with microentrepreneurs, sales training can be characterized, beyond salesforce socialization and perceived organizational support, as a crucial direct selling company resource. Direct selling companies should continue prioritizing effort in bolstering their training programs.
Sales training tools can be dispersed virtually and can lessen the distance between a direct seller and the company. Just as respondents in the current research were asked to rate the frequency of use of specific sales training tools and digital support, a direct selling company can employ similar within-company measures. Direct selling companies gain practical insight on company-specific sales training resources routinely used by their salesforce through continually monitoring these training tools and resources. Instructor-led sales training videos, online sales coaching, downloadable training kits, and self-selected online training courses offer flexibility in online delivery and can be customized to the training needs of a direct seller.

A noted strength of the direct selling industry is its established use of technology to foster relationships, enhance product knowledge, and lend company-provided content to support marketing efforts. Technology allows for an actionable approach to bolstering such communication. As digital training and communication efforts offer increased connectivity and consistency with a remote salesforce, direct selling companies can continue to monitor which resources best fit the needs of the sales organization.

In the context of professional selling, perceived task-specific self-efficacy relates to a salesperson’s self-assessment of capability regarding sales-related tasks. Task-specific self-efficacy can be associated as a person’s belief in his or her abilities rather than an individual’s self-esteem or intentions. As such, it can be a predictor of accomplishment depending on whether a person believes he or she can complete the task, and it can be a critical component to summoning the motivation to continue.

In this study of direct sellers, microentrepreneurial passion is a tool through which self-efficacy increases the likelihood a direct seller will persist. Operating as a mediator, passion served as a link between task-specific self-efficacy and microentrepreneurial persistence, highlighting its importance within this context. Cardon, Glauser, and Murnieks (2017) asserted that sources of entrepreneurial passion can be as individual as the entrepreneur and it “provides the fire that fuels innovation, persistence, and ultimate success” (p. 24). Direct selling companies should continue to prioritize intentional passion-building within their salesforce.

The results of this research suggest that microentrepreneurial passion and persistence make a powerful combination that can spur sales success. The results provide support for the mediating role of passion through task-specific self-efficacy to microentrepreneurial persistence. As direct selling microentrepreneurs build reservoirs of sustaining resources for times of future need, they equip themselves to handle future challenges in the marketplace.

Study Limitations

Despite contributions, this study’s potential limitations must be acknowledged. The survey necessitated same-source data that was collected at one time. As this study is a cross-sectional design, there are concerns with common method variance (i.e., variance that is attributable to the measurement method rather than the constructs the measures represent). Actions were taken throughout the data collection process, however, in an effort to reduce the possible biasing influence of common method variance.

Also due to the cross-sectional nature of this study, the ability to draw causal conclusions is a concern. Since the data were collected at one time, there was no temporal separation between independent and dependent variables, thus limiting a causal interpretation. The constructs in this study represent variables that can fluctuate over time. As such, this study’s design may hinder the ability to assess if the changes in one construct led to changes in another. A cross-sectional survey design limits the interpretation of causality. As such, a causal interpretation cannot be applied to this study’s results (e.g., sales training cannot be interpreted as causing increases in task-specific self-efficacy, despite strong evidence of its positive influence).

Another potential limitation is the use of Qualtrics response service instead of collecting data within direct selling companies. Despite extensive description and identification through the initial data request process with Qualtrics, the sample population available in their databases is limited. This opens concerns about whether the participants were current direct sellers. However, several iterations of screening check questions were required to verify participants were indeed actively involved in the direct selling industry. Participants who did not answer affirmatively were not surveyed. As a result of these screens, there is no reason to suspect any deficiencies in the sample.

Finally, this study’s sample size was 42 direct selling microentrepreneurs currently engaged in the direct selling industry. While the sample size fell within the recommended minimum requirements, this number could limit the power to detect significant relationships as well as the ability to reproduce results. For future research, recruiting greater numbers of respondents could add to the study’s ability to detect significant relationships. Additionally, although efforts were made to tailor survey items to the direct selling context, there is still the possibility that survey items may have been too general or irrelevant for the respondents. Going forward, working directly within direct selling companies to refine items and obtain data would allow survey items to be tailored to company-specific programs and processes. This approach would allow the development of survey items that are possibly more meaningful to both direct selling microentrepreneurs and direct selling companies.

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