Entrepreneurial Coping : Entrepreneurial Reactions and Coping Methods Towards Failur

University essay from Högskolan i Jönköping/IHH, Företagsekonomi; Högskolan i Jönköping/IHH, Företagsekonomi; Högskolan i Jönköping/IHH, Företagsekonomi


An entrepreneur is an innovator, someone who transforms innovations and ideas intoeconomically viable entities; independent on whether in the process she creates oroperates a firm (Baumol 1993). When these firms are created however, sometimes theydo not achieve a viable sustainability; they often face problems and are forced to gobankrupt. When Bankruptcy occurs the entrepreneur is logically affected not onlyeconomically but also mentally and emotionally. Different situations have differenteffects on the entrepreneur´s emotions.

Lazarus´ Cognitive Appraisal Theory states that when faced with a problem or situationpeople "appraise" or perceive it in different ways. The Primary Appraisal happens whenthe entrepreneur first comes into the realization of the problem; she can view itdifferently, either as an event that deserves indifference, an opportunity, or as a harmfulthreat. The Secondary Appraisal happens when the entrepreneur analyses what resourceshe has available and what strategy he will proceed to use in order to tackle the situation.Furthermore, during the course of the situation the entrepreneur may come into therealization of new information that might change his way of perceiving things, this iscalled an Appraisal. The Cognitive Appraisal Theory is closely linked to the CopingTheory which talks about how entrepreneurs "cope" or deal emotionally with theiradversities. Coping can be divided into two types, Problem focused and Emotion focusedCoping. Problem focused coping intents on coming up with viable and practical solutionsto improve the situation, whereas Emotion focused intends on externalizing the blame andreacting with a worsened emotional state that does not help the situation in the long run.

This report is an exploratory research and bases its empirical data on the case studyapproach of five different cases of entrepreneurs leaving in Sweden who had theexperience of engaging in an enterprise that ended up in bankruptcy. During the course ofthis investigation a qualitative method was used and the empirical findings wheregathered by engaging in interviews that were later analyzed and correlated with thetheoretical framework.

In the Analysis we take apart the information gathered in the interviews and try tocorrelate the events to the theories while at the same time striving to find similarities ordifferences between the subjects. We also try to find patterns that may help us understandmore about the subject and finally allows us to address the problem and achieve thepurpose of this report which is to understand how an entrepreneur copes when faced witha business failure.

In our conclusion we came to the realization that people tend to follow specific patterns ofemotional reaction that concretely support the pre established theories. This report servesas a base or foundation of a tool for entrepreneurs. We find that if entrepreneurs hadprevious knowledge of ways to deal with failure they might be more prompt to avoid itentirely and consequently this can be an invaluable tool for them..3

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