Title: Building Theory: The Relationship between Attribution Theory and the Perceived Outcomes of Entrepreneurial Venture Failure
Abstract: ABSTRACT When businesses close, attention may (but not necessarily) be given to the economic impact of the closure on the community and consumers (most businesses, like good generals, probably simply fade away without notice). But in all cases, there is an impact on the entrepreneur. What of the individual and the risks that were taken, how has the entrepreneur fared, and what are the social, psychological impacts as that individual moves forward? The purpose of this paper was to provide insight into the manner in which an entrepreneur comes to decide what to do after a venture fails and how the venture experience has affected personal aspects of the entrepreneur's life. It was proposed that a well-understood and influential social psychology of how outcomes are influenced by attributions made by an individual can be used to better understand the nature and scope of the impact of failure on an entrepreneur's life. In much the same way an individual's attributional explanatory style influences consequent attributions and decisions, an entrepreneur's explanatory style should have a role in the perceived outcomes of a entrepreneurial venture, which in turn affects consequent decisions. INTRODUCTION Past research on the entrepreneur who has has been limited because it has been descriptive and not theoretically or empirically based. Yet all failure does not appear equal, at least as it affects the individual. One person's failure may be that person's depression but is the motivation for future success for another. The manner in which failure affects individuals differently may be explained by differences in an individual's general tendencies to interpret the causal nature of failure. Attribution theory is a well-developed set of theories and empirical findings that has directed a social psychological literature in understanding the causal interpretation of events. While it would seem conceptually logical to look at how theories that explain the effects of failure can help us understand the effects of entrepreneurial failure (attributions affect decisions, therefore, attributions should affect business decisions), the connection between these diverse literatures has never been made. To see if work in the area of attributions for failure is relevant to understanding and illuminating the area of the effects of failure on the entrepreneur we use a theoretical technique called substantive modeling (Popper, 1963). In substantive modeling you take a well-understood area of and research in one area and apply it to another. In this research, the better understood stream of research called attribution (specifically attributional explanatory style) was used to understand the effects of failure on future decisions of the entrepreneur. Attributional explanatory style should determine how the business failure experience affects future decisions and behavior in much the same way as it has been found to affect other life decisions. We propose that an individual's explanatory style affects the consequences of a business venture as measured by differences in perceived financial well-being, beliefs about future career opportunities, perceptions of family relations, and self-esteem in much the same way as attributional explanatory style has been found to affect individual behavior in the well developed social psychological literature. BECOMING AND BEING AN EX-ENTREPRENEUR Though the aspirations of entrepreneurs are that their businesses will succeed, the reality is many do not. Even those businesses that are smashing successes are retired, sold, or passed on to someone else. All entrepreneurial enterprises die in some way. But generally, an entrepreneur makes the transition to becoming an ex-entrepreneur through the failure of the venture. Articles dealing with managing failure are often found in business magazines and newspapers and are of the personal account nature--Why my business failed or How I bounced back from bankruptcy. …
Publication Year: 2001
Publication Date: 2001-07-01
Language: en
Type: article
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Cited By Count: 2
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