Entrepreneurial Failure and Reentry: The Role of Prior Financing Experience

Abstract

Recently, the topic of entrepreneurs’ reentry after failure has attracted increasing interest among scholars given that failure can be valuable resource for the growth of subsequent ventures. While extant research has emphasized the role of the heterogeneity of entrepreneurial experience in entrepreneurs’ decision to reenter after failure, no published research has investigated the relationship between failed entrepreneurs’ prior financing experience and reentry. Based on attribution theory, this article offers a novel explanation of the relationship between prior financing experience and reentry. This study finds that entrepreneurs with prior financing experience are less likely to restart businesses after failure. Especially, this paper shows that failed entrepreneurs with prior financing experience tend to attribute their failure reasons internally and internal attribution of blame mediates the negative relationship between the prior financing experience and reentry. This study contributes to research on entrepreneurial failure literature.