How Do Entrepreneurs Emerge from Failure? A Study on Failure and Attribution

How Do Entrepreneurs Emerge from Failure?[1]
A Study on Failure and Attribution

Song Lin Jing li

Business School of Central University of Finance and Economics, Beijing, China,

Business School of Central University of Finance and Economics, Beijing, China

AbstractPurposeThis paper focuses on how entrepreneurs emerge from failure; the authors inquire how the attributes of entrepreneurial failure events (EFEs) affect entrepreneurs’ attributions of their failures and how different attributions affect subsequent ventures and industry changes.

Design/methodology/approach—Sensemaking theory is adopted here as the theoretical foundation on which we put forward our study framework with EFEs, attributions, and subsequent ventures. Cases in this paper are entrepreneurial failure cases from a number of major management magazines in China. The authors analyzed 38 cases using text analysis.

FindingsThe longer a business is in operation, the more likely its entrepreneur is to attribute its failure to external factors and vice versa. Entrepreneurs in the service sector tend to attribute their failure to internal factors, whereas those in the physical product sector tend to attribute their failure to external factors. Entrepreneurs who attribute failure to internal factors are more likely to start subsequent ventures in their same industry, whereas external attribution may lead entrepreneurs to change their industries.

Research limitations/implications—The study is limited in that the case studies came from public media reports. The authors’ results thus could have been limited by the inclinations and business perspectives held by the editorial and management staffs of the magazines which are selected as well as by recall bias.

Originality/value—This paper studies how entrepreneurs who have experienced previous failure emerge from it to start new ventures. The conclusions contribute to the theories of entrepreneurial failure, sensemaking, and serial entrepreneurship.

Keywords Entrepreneurial failure events (EFEs) Sensemaking Attribution subsequent ventures

This article is sponsored by Chinese National Natural Science Foundation (71572208) and the program for New Century Excellent Talents in University, NCET.The authors also would like to express their most sincere appreciation to anonymous reviewers for their constructivecomments.

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