Beyond educating students about business failure: The role of optimism training and hope

Abstract

ABSTRACT Teaching entrepreneurship students about failure can help them better cope with business failure and learn from it. This is important given evidence that experienced entrepreneurs are more successful. Entrepreneurship educators raise the concern that teaching students about failure may make them apprehensive about pursuing entrepreneurship. We examine the impact of optimism training on individuals who are learning about business failure (distinguishing between large and small failure) to study the impact of failure on career choice. Using a randomized experiment, we study the underlying mechanism – the feeling of hope – in how failure magnitude impacts an individual’s subsequent career choice between wage employment and entrepreneurship. Our findings show that failure magnitude negatively impacts subsequent entrepreneurship career choice by reducing hope. We also find that having an optimistic mind-set moderates this relationship. The negative effect of failure on hope, and subsequent entrepreneurship career choice, is minimized for individuals with an optimistic mind-set.