Entrepreneurial Failure and the Search for Success

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Type and Duration

FFF-Förderprojekt, May 2020 until October 2021

Coordinator

Chair of Entrepreneurship and Technology

Main Research

Growth and Complexity

Description

Failure is an integral part of business life. Organizations are regularly confronted with various failure experiences that range from minor accidents, project failures, and performance problems in general to scandals that threaten organizational reputation and survival (Dahlin, Chuang, & Roulet, 2018; Eggers & Suh, 2019; Haunschild, Polidoro Jr, & Chandler, 2015; Madsen & Desai, 2010; Shepherd, Patzelt, & Wolfe, 2011). Especially firms facing high technological and market uncertainty, such as entrepreneurial and innovative ventures, frequently experience failure (Cardon, Stevens, & Potter, 2011; Mantere, Aula, Schildt, & Vaara, 2013; Yamakawa, Peng, & Deeds, 2015).
Failure or, more broadly, negative performance feedback is widely regarded as an important predictor of organizational behavior, triggering search and organizational change (e.g., Desai, 2016; Gavetti, Greve, Levinthal, & Ocasio, 2012; Greve, 2003; Kuusela, Keil, & Maula, 2017; Maslach, 2016). Drawing on Cyert and March's (1963) behavioral theory of the firm, studies specifically suggest that failure to meet an aspiration level (i.e., the lowest level of performance deemed acceptable by decision makers) can lead organizations to increase their R&D intensity (Chen & Miller, 2007), launch innovations (Joseph & Gaba, 2015), undertake acquisitions (Iyer & Miller, 2008), invest in information systems (Salge, Kohli, & Barrett, 2015), implement strategy changes (Greve, 1998), and engage in risk-taking behavior more broadly (Audia & Greve, 2006). The process through which decision makers respond to failures by searching for and implementing alternative solutions that restore performance has been referred to as "problemistic search" (e.g., Cyert & March, 1963; Greve, 2003; Posen, Keil, Kim, & Meissner, 2018). In this project, we seek to provide new insights into the process of search strategies by examining entrepreneurs' behavioral responses to failures by leveraging high data availability and transparency on digital crowdfunding plattforms, where failure to reach funding goals is the norm rather than the exception.

Principal Investigator

Sponsor

  • Forschungsförderungsfonds der Universität Liechtenstein

Publications

  • Piening, E. P., Thies, F., Wessel, M., & Benlian, A. (2020). Searching for Success- Entrepreneurs' Responses to Crowdfunding Failure. Entrepreneurship Theory and Practice. (FT_2016 50_2016: yes; VHB_3: A)

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