The anatomy of business failure: A qualitative account of its implications for future business success

Author(s):

Artur Dias, (Faculdade de Economia, Universidade do Porto, Porto, Portugal)

Aurora A.C. Teixeira, (Faculdade de Economia, Universidade do Porto, Porto, Portugal)

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Abstract:

Purpose

The purpose of this paper is to analyze the aftermath of business failure (BF) by addressing: how the individual progressed and developed new ventures, how individuals changed business behaviors and practices in light of a failure, and what was the effect of previous failure on the individual’s decisions to embark on subsequent ventures.

Design/methodology/approach

The authors resort to qualitative methods to understand the aftermath of BF from a retrospective point of a successful entrepreneur. Specifically, the authors undertook semi-structured interviews to six entrepreneurs, three from the north of Europe and three from the south and use interpretative phenomenological analysis.

Findings

The authors found that previous failure impacted individuals strongly, being shaped by the individual’s experience and age, and their perception of blame for the failure. An array of moderator costs was identified, ranging from antecedents to institutions that were present in the individual’s lives. The outcomes are directly relatable to the failed experience by the individual. The authors also found that the failure had a significant effect on the individual’s career path.

Originality/value

While predicting the failure of healthy firms or the discovery of the main determinants that lead to such an event have received increasingly more attention in the last two decades, the focus on the consequences of BF is still lagging behind. The present study fills this gap by analyzing the aftermath of BF.

Keywords:

Business failure, Entrepreneurship, Consequences, Interpretative phenomenological analysis, Learning from failure, M21, L26

Type:

Research paper

Publisher:

Emerald Publishing Limited

Received:

17 August 2016

Revised:

05 January 2017

Accepted:

13 February 2017

Acknowledgments:

The second author’s research has been financed by the European Regional Development Fund through COMPETE 2020 – Programa Operacional Competitividade e Internacionalização (POCI) and by Portuguese public funds through FCT (Fundação para a Ciência e a Tecnologia) in the framework of the project POCI-01-0145-FEDER-006890.

Copyright:

© Artur Raimundo Dias and Aurora A.C. Teixeira 2017
Published by Emerald Publishing Limited
Published in the European Journal of Management and Business Economics. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Citation:

Artur Dias, Aurora A.C. Teixeira, (2017) "The anatomy of business failure: A qualitative account of its implications for future business success", European Journal of Management and Business Economics, Vol. 26 Issue: 1, pp.2-20, https://doi.org/10.1108/EJMBE-07-2017-001

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