A Smooth Sea Never Made a Skilled Mariner : The Learning Aspect of Entrepreneurial Failure

Abstract: Entrepreneurial failure, in this thesis defined as bankruptcy, is an area within the entrepreneurship research where little or no emphasis has been placed. By combining entrepreneurial failure and learning, it is possible to provide a more balanced view as well as point to the fact that a bankruptcy does not necessarily have to be of negative nature as valuable learning outcomes might be gained. The purpose of this thesis was thus to explore the learning outcomes and its implications from an individual entrepreneur’s failure. A qualitative approach, in the form of a case study, was taken. Seven semi-structured face-to-face interviews were performed to gather primary data which was analyzed. Three research questions helped to fulfill the task, by covering the pragmatic and psychosocial responses, the personal and professional learning outcomes and also the ways that these learning outcomes are used and applied. The respondents reacted to the bankruptcy by blaming external factors, such as the environment, the strategy/structure or the available resources. Through deeper analysis, we found that the entrepreneurs themselves had a clear impact on the bankruptcy. The fact that most of the entrepreneurs rather blamed factors out of their control, than realizing their own involvement, can constitute a barrier for constructive reflection on the failure, which ultimately forms the basis for learning. Most of the learning outcomes, seen from a personal and professional perspective, were classified as corrective. That is; they involved improvement of professional skills and not the personal life. Further, the respondents also showed insight in terms of reforming and intrinsic learning. While the corrective learning outcomes were firm specific, the intrinsic ones were more focused on personal insight. Further, the reforming learning outcomes pointed to issues that had a big impact on both the personal and professional lives of the entrepreneurs. The unproportionally low number of cursory learning outcomes indicate that opportunities of learning from a bankruptcy exist and are large both in terms of personal and professional aspects. Lastly, the majority of the entrepreneurs make use of their learning since they have passed the double loop in Argyris and Schön’s (1996) Single and Double loop learning model. This indicates that an entrepreneurial failure is an important experience and the learning out-comes that can be drawn from it is applied in the entrepreneurs’ daily life in the form of new firms and projects, consultancy firms or even in new ways of living. The conclusions drawn in this section point to the importance of realizing that a failure is not always negative. By this, we suggest that through conscious and honest reflection, a failed entrepreneur can gain insights that could not possibly be gained without going trough a setback.