Do you plead guilty? Exploring entrepreneurs’ sensemaking-behavior link after business failure

Abstract

Abstract Taking account of prior entrepreneurial experience, this study explores how the perceived cause of business failure influences an entrepreneur’s decision to start another business or to abandon entrepreneurship. Using Qualitative Comparative Analysis, we find that the attributional dimensions of locus of causality, controllability, and stability explain a large proportion of novice, serial, and portfolio entrepreneurs’ subsequent behavior in terms of abandoning entrepreneurial activity after business failure. Additionally, we found commonalities and differences between the different types of entrepreneurs. While across all experience levels perceiving the cause of business failure to be permanent yet controllable leads them to decide against starting another venture, differences in the decision to seek a different career path are evident, and depend on whether the entrepreneurs assess the cause of business failure to be internal or external, controllable or uncontrollable, and permanent or temporary.