Learning from Entrepreneurial Failure : Emotions , Cognitions , and Actions

We start with a real-life story. A young lecturer has just returned to his office after teaching one of his favorite classes. In this class, he discussed the high risks associated with entrepreneurial action – that failure was a very real possibility. But importantly, and to quote from the textbook, “Businesses fail, but entrepreneurs do not. Failure is the fire that tempers the entrepreneur’s steel and street savvy” (Timmons 1999). The point is that the entrepreneur and the business are separate entities such that when a business fails, the entrepreneur can go on to create a subsequent business. The failure experience informs and motivates entrepreneurial action. The lecturer’s contemplation of the discussions in class was interrupted by a phone call from his father who revealed that the family business was performing poorly. After hearing more details about the financial state of the business, the lecturer advised his father to close the business. The business was subsequently closed, and his father experienced a range of negative emotions. He was angry with others who let him down. He was disappointed that his dreams for the business could not be realized. He believed that he had not only failed as a business person, but because he could no longer hand the business on to his other son, he felt like he was a failure as a father. He became depressed. This caused his family great anxiety. The next time the lecturer taught the class on entrepreneurial failure, he was highly sceptical of the optimistic story told by textbooks that entrepreneurs automatically and instantaneously learn from failure. This no longer rang true given his experience with his father. The young lecturer described here was the first author of this book (Dean Shepherd) as a doctoral student almost twenty years ago. 1