Scriptie: Learning from entrepreneurial failure

[marcwijdoogen]

This paper gives an answer to the question: How does an entrepreneur’s prior business failures affect his/her subsequent ability to start a new firm and which factors have an influence on this?

 

This thesis gives a contribution to the scientific debate because it extends the understanding of in what extent entrepreneurs learn from entrepreneurial failure and what factors affect this learning from failure. This thesis suggests that entrepreneurs can learn a lot from entrepreneurial failure. There are more benefits of failure but I only focused on the learning benefits from failure. Entrepreneurial failure can be defined as an initiative that is terminated as a consequence of actual or anticipated performance below a critical threshold. In this thesis I divide entrepreneurial learning into two learning outcomes: (1) the discovery of entrepreneurial opportunities; (2) the exploitation of entrepreneurial opportunities. Entrepreneurial opportunities are those situations in which new goods, services, raw materials, and organizing methods can be introduced and sold at greater than their cost of production.

 

Entrepreneurs only discover opportunities if they possess information necessary to identify an opportunity and have the ability to see new means-ends relationships. The exploitation of an opportunity is a decision to act upon a perceived opportunity, and the behaviours that are undertaken to achieve its realization such as acquisition of resources, legitimacy building, market research, network building etc. The results show that entrepreneurial failure can have a major impact on the discovery of opportunities. It discovers uncertainties that were previously unpredictable and it can function as a real option.

 

The results also show that entrepreneurs I interviewed learned quite different things in the field of the exploitation of opportunities. The entrepreneurs learned lessons in the following domains: acquisition of resources (labour and capital), timing, accounting, network building, marketing, sales etc. I also looked for factors that affect the learning from entrepreneur.

 

Beforehand, I selected the following factors from the literature: emotions, self-efficacy (people’s beliefs

about their capabilities to exercise control over their own level of functioning and over the events that affect their lives), locus of causality (indicates whether a failure is due to reasons internal to the entrepreneur experiencing the event, or due to reasons outside of their control), networks, prior start-up experience. I found that emotions had a negative impact on learning. However it seemed that the extent in which an entrepreneur has negative emotions is dependent on the alternative opportunities in reserve, the structure of the business, the self efficacy of an entrepreneur, and the feedback of the network. Self-efficacy has a two-folded effect.

 

First, it has a direct effect because entrepreneurs with a high self-efficacy see failure as a learning experience and thus they are more prepared to learn from it. Second, it has an indirect effect because it affects emotions. It seemed that entrepreneurs with an internal focus of control had the ability to realistically appraise the situation and thus are better to learn from entrepreneurial failure.

 

I also found that networks were very important to learn from failure. First, it has a direct effect because support from the informal network is important to cope with entrepreneurial failure, feedback from the formal and informal network increases the understanding why a business failed and how to organize and manage a business in the future, and feedback provides information to recognize entrepreneurial opportunities. Second, networks have an indirect effect because negative reactions from the environment may lead to

a low self-efficacy and an increase in negative emotions. I did not find any evidence that prior experience had any influence. Instead, I found that the stigma of failure has a negative influence on learning.

 

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Download hier de scriptie van Marc Wijoogen: "Learning from entrepreneurial failure" (PDF).

 

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[Joost Rietveld]

Hi Marc,

 

I am very interested about the subject you've tackeled. As a business advisor I hope your insights can help me understand why certain entrepeneurs insist on doing what they are failing at and how I can help them do what they do best.

 

I'll comment on your paper this week. Is in Dutch okay or do you need HL comments to be in English?

 

Thanks in advance.

 

Joost

[Nano Hendrik]

Erg interessant onderwerp!

 

Ik vind het wel jammer dat de methodologie niet heel hoogstaand is.. Ik heb zelf ook onderzoek gedaan binnen het ondernemerschap domein en ben veel kwalitatief onderzoek tegengekomen. Een goede enquête zou zijn conclusies wat meer kunnen onderbouwen.

 

Maar goed, wie ben ik. In ieder geval geen scriptie-beoordelaar.. ;D

 

 

[Jeroen Bakker]

Hoewel de scriptie in het Engels is, is Marc gewoon Nederlands :)

 

Voor de duidelijkheid: deze scriptie staat online naar aanleiding van dit topic.

[marcwijdoogen]

Ik had eventueel mijn eigen theorie kunnen testen door middel van een enquête, maar dat zou niet te realiseren zijn geweest in de paar maanden beschikbare tijd die ik had. Daarnaast vergt een enquête een groot aantal respondenten. Het is erg moeilijk om ondernemers te vinden die (a) een mislukte onderneming achter de rug hebben en (b) alreeds weer een nieuwe onderneming hebben gestart. Daarnaast hebben veel ondernemers niet de behoefte om mee te werken wanneer het gaat over hun mislukte ondernemingen wat de zoektocht naar voldoende respondenten alleen maar bemoeilijkt. Dat u (Nano Hendrik) de methode niet hoogstaand vindt, mag u vinden. Ik snap uw kritiek. Op het begin heb ik nog overwogen om ook een enquête te doen, maar in overleg met mijn scriptiebegeleider heb ik toch besloten om het niet te doen, omdat het bijna niet te realiseren was. De scriptiebeoordelaars waren in ieder geval erg enthousiast over mijn scriptie. Dus dat was alleen maar prettig

 

Groet,

 

Marc

 

[Joost Rietveld]

Marc,

 

Dank je wel. Leerzaam en toepasbaar in de praktijk.

 

Groet

Joost

[Hans v N]

The results show that entrepreneurial failure can have a major impact on the discovery of opportunities. It discovers uncertainties that were previously unpredictable and it can function as a real option.

 

Heb de scriptie gelezen en begrijp het grootste deel maar met de bovenstaande zinnen, vooral de tweede, kan ik erg weinig. Mogelijk komt het omdat ik een dyslect ben.

 

Bedoel je te zeggen dat zakelijk falen kan leiden tot een andere kijk op kansen doordat onzekerheden er nu meer de rem op zetten?