A Tug of War: Attribution Bias and Problemistic Search In Entrepreneurial Responses To Failure

Abstract

While failure is both a frequent and distressing part of entrepreneurship, whether and when project failure improves subsequent project success remains unclear. We argue that subsequent project success may depend on the severity of the prior failure that, in turn, is contingent on both behavioral responses to failure and types of entrepreneurs. Drawing on problemistic search and attribution theory, we suggest and find partial support for a curvilinear relationship between the failure severity and the level of subsequent project goal attainment. We next study the moderation effects of two predominant behavioral responses to failure, category change and goal reduction, and suggest that portfolio and hybrid entrepreneurs that experienced failure will each achieve different subsequent project outcomes. We examine these questions in the context of crowdfunding projects during the period of 2015-2019 and a total final sample of 1,321 single-founder projects following a failure to achieve funding. We advance the entrepreneurship and crowdfunding literature with a nuanced view of post failure outcomes as contingent on different entrepreneurial behaviors and human capital as well as the potential role of attribution bias and learning.