ENTR 207 – Entrepreneurs & Entrepreneurship
Entrepreneurs typically learn from failure
Florian Moron ID: 33265062
Lancaster University Management School
Michaelmas Term 2012
Entrepreneurs typically learn from failure.
“Develop success from failures. Discouragement and failure are two of the surest stepping stones to success”. In this respect, Dale Carnegie (2010) argues that one of the most important lessons from success is failure. It is interesting that Carnegie talks of failure being in everybody’s past, indicating that failure is not a process confined to the ...view middle of the document...
However only one definition of the concept focuses on personal mishaps and hardships experienced by the entrepreneur. In this respect, not only external factors requiring a voluntary termination of the business, such as bankruptcy and insolvency, are considered but also the responsibilities of the entrepreneur in the decision-making process. So ventures fail not only due to external factors but also because of mistakes entrepreneurs make or skills they lack. Cope’s paper (2009) highlights this point: for example, a socially confident entrepreneur might allow resource decisions that increase the probability of business failure (Harward et al., 2006). Also it has been argued by Van Gelder et al. (2007) in Diamanto Politis et al.’s paper (2009) that many venture failed because of entrepreneurs strategies or because they set poor business models that reduce automatically their chances of success. However, the importance of environmental factors such as governments’ decisions about law, politic and economic environment cannot be denied if it is in opposition to support enterprise development (Carter and Wilton, 2006, cited by Cope 2009). These two different views of defining business failure are related to the cultural stigma of it, that Lee et al. (2007, cited by Cope 2009) demonstrate as an opposition between misfortune driven and entrepreneurial mistakes. Thus, the entrepreneur has a critical position in business such as Sitkin (1992) point of view pinpoint: “failure happens when the entrepreneur is experiencing a deviation from expected and desired results when establishing or managing a business”.
Failure is not an inherently desirable outcome of entrepreneurial activity and previous research has established the existence of six interconnected spheres in which failure has a significant influence (Shepherd, 2003, cited by Cope 2009): financial, emotional, physiological, social, professional and entrepreneurial. The data held by Cope (2003) accentuate the detrimental impact of financial costs of failure for the personal and entrepreneurial life as Ben admits: “I couldn't open anything, it cleaned me out basically…I had to go back to being an employee again”. In any case the emotional impact of failing is associated with extreme levels of emotional commitment and stress that failure implies. George’s experience of failure (Cope, 2009) emphasizes this impact: “In the end, the hardest part is that you do feel responsible…to the people who work for you, the people that invested in you, your customers who gave you money for things that you can no longer do”. On top of that, the emotional cost for the entrepreneur is indistinguishably linked to its social cost for two main reasons: first, because it can create a diminishing social environment and secondly, because it creates a sense of division. For example, in Cope’s paper (2009), Cave et al.’s (2001) important findings exhibit the relation between the societal stigmata of failure perceived by...