Experiencing and Learning from Entrepreneurial Failure

Abstract

Entrepreneurship literature has long focused on stories of entrepreneurial success. However, in recent years consensus has begun to build around the importance of also studying failure in order to develop a more holistic understanding of entrepreneurship. It has been argued that failure can have an impact on entrepreneurial decision-making in subsequent ventures and can be a difficult experience for an entrepreneur to go through. In spite of such speculations and acknowledgements, failure remains a relatively underresearched area, except perhaps from the primary perspective of the reasons behind failure. While this is an important area of investigation − as understanding reasons behind failure can improve the probability of success in subsequent entrepreneurial endeavours – it is equally important to understand the experience of failure. The primary aim of this thesis is to understand failure from the perspective of entrepreneurs who have experienced it. Its second aim is to build a theoretical framework of failure based on those experiences. The overarching research question for this study is: “How do entrepreneurs experience venture failure and learn from this experience?” The three supporting subquestions are: “What do entrepreneurs experience when their venture fails?”, “How do entrepreneurs stay resilient when the venture fails?”, and “What do the entrepreneurs learn from experiencing venture failure?” Using the philosophical position of interpretive, phenomenological symbolic interactionism and narrative as a strategy of inquiry, stories of failure as told by 21 entrepreneurs during in-depth interviews are analysed. Using the metaphor of fabric tear and repair, theoretical constructs developed from the findings are integrated into a framework and discussed in the light of relevant literature. The framework highlights that failure leads to considerable challenges for the entrepreneurs and triggers grief. After grief, however, comes resilience. In this journey, resilience came from acceptance and hope, states that shifted the entrepreneurs’ perspective on venture failure from one which saw it as a negative, end-all event to one that framed it as a challenging, survivable event. This resilience fuelled their efforts to adapt to their changed reality. Grief faded as entrepreneurs dealt with the challenges. From this experience, the entrepreneurs learnt business lessons and transformed in such a way as to become more spiritually inclined. The study extends the understanding of the phenomenon of failure in entrepreneurship by presenting an empirical evidence-based framework that incorporates failure-related challenges, entrepreneurs’ adaptation to these challenges, and the lessons learnt from this experience. Second, this study illustrates the importance of hope and acceptance in building entrepreneurial resilience, and how entrepreneurs’ social environment and sometimes spiritual beliefs play an important role in nurturing hope and an acceptance of adapting to the challenges. Policy makers, educators, and entrepreneurs can benefit from the findings of this study as it highlights factors leading to failure, the repercussions of it. The study also shows how failure, although an undesirable experience, can be utilised as a springboard to bounce into a satisfying career by tapping into one’s spiritual beliefs, support networks, and resources within the social environment.

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