Failure’s virtues: the seeding of an emerging entrepreneurial ecosystem in a peripheral region

Abstract

A key strategy of governments in economically-lagging regions is to provide financial support to innovative start-ups. Yet, if such businesses fail, governments are criticized for ‘wasting tax-payers money’. This paper challenges this narrative. It provides a case study of Consilient Technologies, located in St John’s, Newfoundland and Labrador, Canada’s most economically under-developed province. The company had developed technology for the emerging cellular-phone market. It received significant funding from the Federal and Provincial governments. It recruited talent who would have left the province to seek employment and attracted others back to the province. It provided its workforce with the opportunity to acquire new competences, experience and knowledge along with entrepreneurial learning. Following its closure, its employees either moved to other technology firms in the emerging local entrepreneurial ecosystem or started their own businesses. The company also had significant demonstration effects for aspiring technology entrepreneurs. The study demonstrates to policy-makers that businesses that they support but which subsequently fail can nevertheless have a positive impact on the ecosystem. Accordingly, they need to have need to a tolerance for failure.

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