Entrepreneurial Learning : Entrepreneurial response to firm failure

Abstract: There is a lot of research conducted in the field of general entrepreneurship, entrepreneurial learning, and entrepreneurial innovation. However, as Jason Cope (2003) came across during his research, there is little to none research made within the field of entrepreneurial learning from failure, especially from bankruptcy. The purpose of this thesis is to explore if it is possible forentrepreneurs to obtain “higher-level learning” from a bankruptcy. The research concerns whether or not entrepreneurs can learn from their mistakes, and in turn use this learning in order to become more successful entrepreneur in future undertakings. The thesis contributes to a research project on entrepreneurial response to firm failure, initiated by Anna Jenkins (2008). As stated above, there is little to none research conducted in the field of entrepreneurial learning from a bankruptcy. Therefore theories considered closely and partly related to the subject have been revised. The overarching theory, the “Experiential learning theory” (Kolb, 1984) describes how experience can be transformed into genuine knowledge, through the steps: experiencing an event, reflecting on the event, understanding the principle under which the particular event falls and testing this new understanding under different circumstances. Jason Cope (2003) has found that entrepreneurs can obtain higher-level learning from experiencing discontinuous criticalevents by going through the phases; facing, overcoming and reflecting on events that occur during the running of a firm. This learning can be transformational; the entrepreneur realizes that current methods are insufficient, forcing him or her to adapt and change methods in future undertakings. The main objective in this thesis was not to draw any final conclusions, rather to explore newvaluable information that can be interpreted in the main project as well as in future projects. To gather information we used a qualitative method, in which we interviewed five entrepreneurs who had recently experienced a bankruptcy. The empirical findings were later analyzed in thelight of the frame of references and the authors own viewpoint, by conducting a within case/cross case comparison. The results show that two out of five entrepreneurs had transformed the experience from their bankruptcy into new genuine knowledge, thereby confirming that it is possible to obtain higherlevel learning from a bankruptcy. They realized their own mistakes and changed their methods in order to avoid making the same mistakes again. Three of the respondents had not critically reflected on their bankruptcy, thereby gained no new knowledge of how to change their methods in future undertakings. The major reasons as to why they were unable to do so were that they blamed external factors as the reason for bankruptcy. One of the interviewees was emotionally blocked during the bankruptcy and therefore unable to contemplate what had went wrong.