Melissa S. Cardon, Columbia School of Business
Rita Gunther McGrath, Columbia School of Business


This paper extends a carefully developed perspective in the
psychological literature to the phenomenon of entrepreneurial failure
and motivation, with particular implications for entrepreneurial
behavior during the post-startup period. We develop a new instrument
to assess psychological predispositions concerning three key
constructs: attribution of the cause of failure; reactions to failure,
and goals for the achievement of personal acclaim or personal
development. Results from a sample of pre-entrepreneurial individuals
suggest that these constructs from psychology, appropriately
translated, may offer a richer understanding of how individuals are
likely to react to inevitable setbacks during the entrepreneurial
process. This has potentially important implications for the
discovery, training and preparation of entrepreneurs, as well as for
how they should be managed and monitored during the post-startup


"Failure isn't fatal unless you let it be."-Mike Ditka 

Starting a business, growing a business and being in on the beginnings
of a new industry are by their very nature uncertain
undertakings. That some individuals voluntarily choose to make
themselves vulnerable to the risks of uncertainty in these situations
has long fascinated entrepreneurship researchers, leading to a
substantial literature on the topic of entrepreneurial motivation (for
instance, McClelland's (1961) seminal work on need for
achievement). In its focus on the motivation to start a business,
however, this literature is relatively silent on two additional
problems of equal importance to our understanding of the
entrepreneurial process.

First is the question of what happens to entrepreneurial motivation
after the startup phase. This is a non-trivial problem, as most
businesses require what MacMillan and Subba Narasimha (1987) describe
as long-term, sustained, effort on the part of the
entrepreneur. Second, there is relatively little discussion of
de-motivation, or those factors that might lead a formerly motivated
entrepreneur to become discouraged, disaffected or disgruntled. We
have little theory or evidence to guide us as to what qualities lead a
founder to persist in the development of a business, even after
start-up hurdles have been overcome. Both these issues are crucially
important if we are to understand the process through which
entrepreneurs engage in "fostering new combinations that improve our
economic life" (Bull & Willard, 1995: 5). Indeed, as Bull and Willard
point out, the intensity of the motivation of the entrepreneur will
inevitably affect the way in which the entrepreneur carries out
discontinuity-causing actions.

This suggests a fruitful intersection between the economic and
psychological aspects of entrepreneurship. Of particular concern is
how individuals respond to the inevitable setbacks and frustrations
(and even outright flops) of the entrepreneurial
process. Understanding the psychological aspects of entrepreneurial
failure and motivation are thus our focus. We borrow extensively from
psychological research, which suggests that how individuals attribute
their experiences influences how they react and whether they persist
(Weiner & Kukla, 1970).

On one hand, failure can be attributed to innate ability. Failure
signals that this ability is inadequate, creating a `helpless'
reaction. This impairs performance, and often results in individuals
seeking to end their involvement in future activities similar to the
one that failed (Weiner & Kukla, 1970). An alternative attribution is
to believe that failure is simply due to a lack of effort or planning,
and that a similar situation could be mastered in the future with a
renewed focus and drive. Such a `mastery' reaction usually involves
the individual increasing their effort level and remaining optimistic
even in the face of repeated failure experiences (Weiner & Kukla,
1970). Attribution theory might thus provide a useful means to
understand why some entrepreneurs simply give up when facing setbacks,
while others persist.

The purpose of this study is to identify first, whether attribution
theory might add value to our understanding of failure in the
entrepreneurial process, and second whether the techniques used by
psychologists on subjects in controlled, experimental environments
might shed useful insight to the behavior of entrepreneurs. In the
next section, we examine the first question, suggesting that
attribution theory might better help us understand the entrepreneurial
process. We then turn to the second question, and describe new scales
developed for this study to measure constructs from psychological
attribution theory and present results of our analysis of a sample of
entrepreneurial aspirants from an elite business school in the United
States. Implications for the further development of these ideas, and
their applicability to a theory of entrepreneurship and
entrepreneurial capital deployment are discussed.

Reply via email to