The Effect of Entrepreneurial Failure and Human Capital on Learning : A multiple case study

Abstract: Failure is something which most people probably try to avoid. However, even though entrepreneurial failure can put the entrepreneur through emotional, social and financial stress, it can also be viewed as a learning experience (Ucbasaran et al., 2013) and as an opportunity for the entrepreneur to gain human capital like knowledge and skills (Quan & Huy, 2014).The purpose of this thesis is to investigate what impact business failure and human capital have on the entrepreneurial learning of habitual entrepreneurs. Drawing on theory from the field of entrepreneurial failure, human capital and learning, this multiple case study has investigated eight habitual entrepreneurs qualitatively through semi-structured interviews.  The findings suggest that entrepreneurial failure is strongly connected to learning regardless of whether the failure is a bankruptcy or a smaller failure, and on the other hand that financial cost after failure can act as a barrier to learning. In addition, the findings suggest that human capital is is both an outcome of learning, in the sense that knowledge and skills increase with learning, but also that human capital is an enhancer of further learning as well. This implies that entrepreneurs on one hand should be aware of the risks of suffering financially after a failure, but on the other hand that failure can potentially be beneficial and positive as well due to the learning, knowledge and skills it generates.