Dissertations / Theses on the topic 'Entrepreneurial failure and resilience'

There is a lot of research conducted in the field of general entrepreneurship, entrepreneurial learning, and entrepreneurial innovation. However, as Jason Cope (2003) came across during his research, there is little to none research made within the field of entrepreneurial learning from failure, especially from bankruptcy. The purpose of this thesis is to explore if it is possible forentrepreneurs to obtain “higher-level learning” from a bankruptcy. The research concerns whether or not entrepreneurs can learn from their mistakes, and in turn use this learning in order to become more successful entrepreneur in future undertakings. The thesis contributes to a research project on entrepreneurial response to firm failure, initiated by Anna Jenkins (2008).

As stated above, there is little to none research conducted in the field of entrepreneurial learning from a bankruptcy. Therefore theories considered closely and partly related to the subject have been revised. The overarching theory, the “Experiential learning theory” (Kolb, 1984) describes how experience can be transformed into genuine knowledge, through the steps: experiencing an event, reflecting on the event, understanding the principle under which the particular event falls and testing this new understanding under different circumstances. Jason Cope (2003) has found that entrepreneurs can obtain higher-level learning from experiencing discontinuous criticalevents by going through the phases; facing, overcoming and reflecting on events that occur during the running of a firm. This learning can be transformational; the entrepreneur realizes that current methods are insufficient, forcing him or her to adapt and change methods in future undertakings.

The main objective in this thesis was not to draw any final conclusions, rather to explore newvaluable information that can be interpreted in the main project as well as in future projects. To gather information we used a qualitative method, in which we interviewed five entrepreneurs who had recently experienced a bankruptcy. The empirical findings were later analyzed in thelight of the frame of references and the authors own viewpoint, by conducting a within case/cross case comparison.

The results show that two out of five entrepreneurs had transformed the experience from their bankruptcy into new genuine knowledge, thereby confirming that it is possible to obtain higherlevel learning from a bankruptcy. They realized their own mistakes and changed their methods in order to avoid making the same mistakes again. Three of the respondents had not critically reflected on their bankruptcy, thereby gained no new knowledge of how to change their methods in future undertakings. The major reasons as to why they were unable to do so were that they blamed external factors as the reason for bankruptcy. One of the interviewees was emotionally blocked during the bankruptcy and therefore unable to contemplate what had went wrong.

Det finns mycket forskning inom området entreprenörskap, entreprenöriel inlärning, och entreprenöriel innovation. Däremot finns det, vilket Jason Cope (2003) har upptäckt, lite eller ingen existerande forskning inom området entreprenöriel inlärning från ett misslyckande, som till exempel en konkurs. Syftet med den här uppsatsen är att utforska om det är möjligt för entreprenörer att uppnå ”higher-level learning” från en konkurs. Vi ämnar undersöka om entreprenörer kan lära sig av sina misstag och sedan använda dessa lärdomar i framtida projekt i sin strävan mot att bli bättre entreprenörer. Uppsatsen är tänkt som ett bidrag till ett forskningsprojekt om entreprenörers reaktion på företagsmisslyckande, bedriven av Anna Jenkins(2008).

Som nämnt ovan finns det knappt någon existerande forskning angående entreprenöriel inlärning från en konkurs, vilket har lett till att de teorier som är relaterade till ämnet har blivit reviderade. Den övergripande teorin, ”The Experiental Learning Theory” (Kolb, 1984) beskriver hur erfarenhet kan bli omvandlad till kunskap genom att följa stegen: aktivt uppleva en händelse,reflektera över händelsen, kunna förstå och analysera händelsen, och slutligen använda sin nya kunskap vid ett senare tillfälle. Jason Cope (2003) har upptäckt att entreprenörer kan nå en ”higher-level learning” genom att uppleva diskontinuerliga kritiska händelser och gå igenom dessafaser: tillmötesgå, övervinna/bemästra och reflektera över händelser som inträffar under företagandets gång. Den här inlärningen kan sedan omvandlas; entreprenören inser att hans nuvarande företagarmetoder inte är optimala, vilket leder honom/henne till att anpassa sig till situationen och ändra sina metoder i framtida projekt.

Målsättningen med den här uppsatsen var inte att dra några avgörande slutsatser, utan istället att utforska och behandla ny, värdefull information som kan bli användbar i den avhandling vi önskar bidra till, samt för andra framtida forskningsprojekt. För att samla information använde vi oss av kvalitativa intervjuer. Vi intervjuade fem entreprenörer, vilka alla nyligen hade upplevt en konkurs. Empirin analyserades sedan med hjälp av våra utvalda teorier och våra egna synpunkter, genom att göra en ”cross case comparison”.

Vårt resultat visar att två av fem entreprenörer har omvandlat sina upplevelser kring konkursen till genuin kunskap och därmed bekräftat att det är möjligt att uppnå ”higher-level learning” av en konkurs. De har insett sina egna misstag och ändrat sina metoder för att förhindra att samma misstag upprepas. Tre av respondenterna har inte reflekterat kritiskt över konkursen, och därför inte fått någon ny kunskap angående hur de skulle kunna ändra sina metoder inom företagande inför framtida projekt. Den främsta anledningen till varför de var oförmögna att reflektera över händelsen var att de skyllde konkursen främst på externa faktorer. En av de intervjuade var även känslomässigt blockerad under konkursen och därför inkapabel att begrunda sina misstag.

An entrepreneur is an innovator, someone who transforms innovations and ideas intoeconomically viable entities; independent on whether in the process she creates oroperates a firm (Baumol 1993). When these firms are created however, sometimes theydo not achieve a viable sustainability; they often face problems and are forced to gobankrupt. When Bankruptcy occurs the entrepreneur is logically affected not onlyeconomically but also mentally and emotionally. Different situations have differenteffects on the entrepreneur´s emotions.

Lazarus´ Cognitive Appraisal Theory states that when faced with a problem or situationpeople "appraise" or perceive it in different ways. The Primary Appraisal happens whenthe entrepreneur first comes into the realization of the problem; she can view itdifferently, either as an event that deserves indifference, an opportunity, or as a harmfulthreat. The Secondary Appraisal happens when the entrepreneur analyses what resourceshe has available and what strategy he will proceed to use in order to tackle the situation.Furthermore, during the course of the situation the entrepreneur may come into therealization of new information that might change his way of perceiving things, this iscalled an Appraisal. The Cognitive Appraisal Theory is closely linked to the CopingTheory which talks about how entrepreneurs "cope" or deal emotionally with theiradversities. Coping can be divided into two types, Problem focused and Emotion focusedCoping. Problem focused coping intents on coming up with viable and practical solutionsto improve the situation, whereas Emotion focused intends on externalizing the blame andreacting with a worsened emotional state that does not help the situation in the long run.

This report is an exploratory research and bases its empirical data on the case studyapproach of five different cases of entrepreneurs leaving in Sweden who had theexperience of engaging in an enterprise that ended up in bankruptcy. During the course ofthis investigation a qualitative method was used and the empirical findings wheregathered by engaging in interviews that were later analyzed and correlated with thetheoretical framework.

In the Analysis we take apart the information gathered in the interviews and try tocorrelate the events to the theories while at the same time striving to find similarities ordifferences between the subjects. We also try to find patterns that may help us understandmore about the subject and finally allows us to address the problem and achieve thepurpose of this report which is to understand how an entrepreneur copes when faced witha business failure.

In our conclusion we came to the realization that people tend to follow specific patterns ofemotional reaction that concretely support the pre established theories. This report servesas a base or foundation of a tool for entrepreneurs. We find that if entrepreneurs hadprevious knowledge of ways to deal with failure they might be more prompt to avoid itentirely and consequently this can be an invaluable tool for them..3

Small businesses are the backbones of the American economy and contribute nearly 46% of the U.S. gross domestic product. However, the failure rate for small businesses is high. Only half of all small businesses will be able to survive for 5 years, and only 20% of small business can survive 10 years. Failure is a common phenomenon among entrepreneurs of small businesses. This qualitative phenomenological study involved examining entrepreneurs’ perceptions of their failure experiences. The study involved exploring the impacts of failure on entrepreneurs, the valuable lessons that entrepreneurs have taken from their failure experiences, and how they have applied what they have learned into business practices. Ten participants were purposefully selected for an individual face-to-face interview. The researcher created and asked 12 open-ended interview questions during the interviews under the framework of 3 research questions. Through analysis of the data gathered from the interviewees, the findings revealed that failure has a tremendous impact on entrepreneurs’ finances, relationships, and emotions. The findings also included valuable lessons that entrepreneurs have learned from their failure experiences, including acquiring knowledge on business management, awareness of self-limitations, enhancing faith, and leading changes by setting examples and showing care to employees. The research also revealed entrepreneurs apply what they have learned from failure directly back into daily business practices. In the process, they had to accept their personal weaknesses by adapting to changes. Learning from failure is a continuous process. The lessons shared are critical to entrepreneurial growth, especially in leadership. What these entrepreneurs have learned and practiced is worth exploring in hopes of shedding light on entrepreneurial education.

Entrepreneurial failure, in this thesis defined as bankruptcy, is an area within the entrepreneurship research where little or no emphasis has been placed. By combining entrepreneurial failure and learning, it is possible to provide a more balanced view as well as point to the fact that a bankruptcy does not necessarily have to be of negative nature as valuable learning outcomes might be gained. The purpose of this thesis was thus to explore the learning outcomes and its implications from an individual entrepreneur’s failure.

A qualitative approach, in the form of a case study, was taken. Seven semi-structured face-to-face interviews were performed to gather primary data which was analyzed. Three research questions helped to fulfill the task, by covering the pragmatic and psychosocial responses, the personal and professional learning outcomes and also the ways that these learning outcomes are used and applied.

The respondents reacted to the bankruptcy by blaming external factors, such as the environment, the strategy/structure or the available resources. Through deeper analysis, we found that the entrepreneurs themselves had a clear impact on the bankruptcy. The fact that most of the entrepreneurs rather blamed factors out of their control, than realizing their own involvement, can constitute a barrier for constructive reflection on the failure, which ultimately forms the basis for learning.

Most of the learning outcomes, seen from a personal and professional perspective, were classified as corrective. That is; they involved improvement of professional skills and not the personal life. Further, the respondents also showed insight in terms of reforming and intrinsic learning. While the corrective learning outcomes were firm specific, the intrinsic ones were more focused on personal insight. Further, the reforming learning outcomes pointed to issues that had a big impact on both the personal and professional lives of the entrepreneurs. The unproportionally low number of cursory learning outcomes indicate that opportunities of learning from a bankruptcy exist and are large both in terms of personal and professional aspects.

Lastly, the majority of the entrepreneurs make use of their learning since they have passed the double loop in Argyris and Schön’s (1996) Single and Double loop learning model. This indicates that an entrepreneurial failure is an important experience and the learning out-comes that can be drawn from it is applied in the entrepreneurs’ daily life in the form of new firms and projects, consultancy firms or even in new ways of living. The conclusions drawn in this section point to the importance of realizing that a failure is not always negative. By this, we suggest that through conscious and honest reflection, a failed entrepreneur can gain insights that could not possibly be gained without going trough a setback.