Entrepreneurs’ Emotional Responses to a Bankruptcy

Entrepreneurs are often perceived to be creative and risk taking (Kreuger, 2002). The purpose of this paper is to investigate entrepreneurs’ response to a failure namely a bankruptcy. People react differently to a bankruptcy and tend to blame different things as the cause. Some blame themselves while others blame things out of their control. These differences can have an impact on the learning process and how easy the entrepreneur moves on after the failure. These findings can be used for situations when dealing with failures and entrepreneurial activities. There is no single theory already existing for this topic, therefore several theories have been looked at and used for the analysis. The theories can be divided into five main areas: entrepreneurship, failure, entrepreneurial response to failure, factors affecting responses to failure and learning. Entrepreneurship is treated as the creation of new economic activity (Davidsson, 2004) and entrepreneurial traits (Kreuger, 2002) are considered in the analysis. Locus of control is an important trait since it shows the ability of the entrepreneur to think that they are in control of the environment. (Rotter, 1966) In order to explain the cause of a bankruptcy people tend to use certain attributions. Locus of causality refers to whether a person blames internal or external causes and stability whether these causes are changeable in the future or not. (Martinko, 1995) Several factors will influence the response to a bank-ruptcy and in this thesis motivation for the start-up, culture and separation of the company are looked upon. After a failure an entrepreneur can learn false lessons (McGrath & Cardon, 1997) and stop any entrepreneurial activities. However failure can also be positive if something true has been learnt. (Wiklund, 2006)This report is an exploratory type of study and a case study was conducted…


1 Introduction
1.1 Background
1.2 Problem
1.3 Purpose
2 Frame of reference
2.1 Entrepreneurship
2.1.1 Characteristics of the entrepreneur
2.2 Failure
2.2.1 Failure Factors
2.3 Entrepreneurial response to failure
2.3.1 Attribution theory Locus of causality Stability Identification of causes
2.4 Factors affecting responses to failure
2.4.1 Motivation Theory
2.4.2 Cultural factors
2.4.3 Separation of the entrepreneur and the company
2.5 Entrepreneurial learning
2.6 Summary of frame of reference
3 Research questions
4 Method
4.1 Type of study
4.1.1 How to conduct the type of study
4.1.2 Primary vs. secondary information
4.2 Interviews
4.2.1 Case selection
4.2.2 The interviews
4.2.3 The questions
4.3 Method for Analysis
5 Empirical findings
5.1 Interview with Lisa
5.2 Interview with Johan
5.3 Interview with Åke
5.4 Interview with Rahi
5.5 Interview with Gunnar
6 Analysis
6.1 Which factors does the entrepreneur attribute to a failure
6.2 Does the entrepreneur see himself as a failure
6.3 What role does culture play in an entrepreneurial failure
6.4 Can the entrepreneur learn anything from the failure
7 Conclusion
8 Discussion
8.1 Limitations
8.2 Future studies
9 Appendix: Interview questions

Author: Purohit, Nisha,Gustafsson, Helén,Näs, Maria

Source: Jönköping University

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