Abstract
In case of failure, entrepreneurs could endure various financial, psychological, and social costs. These intertwined costs could affect their learning from failure. All individuals do not react in the same way when dealing with adversity. Rather than focusing on (negative) consequences of business failure, we took a more positive approach by using the Conservation of Resources (COR) model theory to build our conceptual model. Psychological capital, which refers to “an individual’s positive psychological state of development characterized by high levels of self-efficacy, optimism, hope, and resilience,” could be considered as a resource to recover from entrepreneurial setbacks. We suggest that a high level of psychological capital plays a mediating role in the relationship between the negative consequences of failure and learning from failure. By learning from this experience, failed entrepreneurs will increase their intention to re-create a venture and pursue their entrepreneurial career. This theoretical research, by building a conceptual model based on resources, offers a more positive approach of entrepreneurial failure and investigates key psychological assets, such as psychological capital, that support the development of entrepreneurial resilience rather than the prevention of business failure.
Highlights
Faced with a complex, uncertain and ever-changing world, the creation and disappearance of firms are common and inherent in the economic process (Cannon and Edmondson, 2005; European Commission, 2007; Ucbasaran et al, 2013)
By building a conceptual model based on resources, we offer a more positive approach of entrepreneurial failure and investigate key “psychological assets,” such as PsyCap, that support the development of entrepreneurial resilience rather than the prevention of business failure
Many researchers agree that entrepreneurs learn from their entrepreneurial failure (McGrath, 1999; Minniti and Bygrave, 2001; Shepherd, 2003; Cannon and Edmondson, 2005; Cope, 2011; Ucbasaran et al, 2013)
Summary
Uncertain and ever-changing world, the creation and disappearance of firms are common and inherent in the economic process (Cannon and Edmondson, 2005; European Commission, 2007; Ucbasaran et al, 2013). Some researchers believe that the latter play a key role in learning from a business failure and have called to further investigate their role (Byrne and Shepherd, 2013; Ucbasaran et al, 2013) Based on this call, the question at the heart of this conceptual article is: How to explain at the individual level that some entrepreneurs have the intention to re-start after a business failure while others do not?. We suggest that a high level of PsyCap plays a mediating role in the relationship between the negative consequences of failure and learning from failure By learning from this experience, failed entrepreneurs will increase their intention to re-create a venture and pursue their entrepreneurial career. We will discuss the theoretical and practical implications of this model
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