This paper reports an investigation of entrepreneurial failure using hermeneutic analysis of five entrepreneurship narratives. The data used in this study was collected between 2002 and 2005. The research focuses on entrepreneurial orientation anddefines entrepreneurs as individuals who can "see what is not there." The researchers adopted "a deviation from the entrepreneurs' desired expectations" as their working definition of entrepreneurial failure. The paper progresses throughfour levels of interpretation in the development of theoretical understanding of personal and organizational learning from failure. The researchers found that individuals and organizations can learn from failure and thus improve chances of ultimate success. However, sometimes individuals and organizations do not learn from entrepreneurial failure and other times there are no lessons to be learned from entrepreneurial failure. The authors created a model of entrepreneurial failure based on an ecological perspective. The study adds to the growing body of research into entrepreneurial failure. It introduces researchers to the importance of seeing entrepreneurial failure within the context of endogenous and exogenous forces. The study provides a mechanism for practitioners to determine whether or not there is learning available from particular instances of entrepreneurial failure.
A Hermeneutical Approach to Understanding Entrepreneurial Failure
INTRODUCTIONEntrepreneurship literature has tended to view failure negatively and focus on failure avoidance (Aley, 1993; Buccino & McKinley, 1997; Gatewood et al., 1995; McGrath, 1999; Shepherd et al., 2000; Simon et al., 2000; Sitkin, 1992). However, scholars such as McGrath (1999) have proposed that the focus of academic inquiry should be redirected from a preoccupation with achieving success and avoiding failure to a more integrated view of how success and failure are related.Previous studies have used quantitative investigation in an attempt to shed light on the failure rate of new ventures (Aley, 1993; Bates, 1995; Blunden, 1987; Duncan, 1994; Headd, 2003; Lussier & Pfeifer, 2000; Watson & Everett, 1 996) and have looked into the characteristics of failed ventures (Bates, 1995; Buccino & McKinley, 1997; Gatewood et al., 1995; Gimeno et al., 1997). These quantitative studies have generally been unsuccessful in building a consensus of how many firms fail and why new ventures fail . By grave (1989) has criticized entrepreneurship researchers for being guilty of "physics envy", which he defines as the inappropriate imitation of the theoretical and empirical methods of advanced rational scientific paradigms. Wortman (1986) noted the primary methodologies of US entrepreneurship research are mail questionnaires and directed interviews. These methodologies may not be best suited to entrepreneurship research, since entrepreneurship consists of idiosyncratic phenomena connected by non-linear relationships often with reciprocal causality (Stevenson & Harmeling, 1990). Low and MacMillan (1988) indicated the need for more contextual and process oriented research in the field of entrepreneurship. Boje (1991) has described storytelling in organizations as "...the preferred sense-making currency of human relationships." Research that seeks to interpret stories allows phenomena to be viewed through the subject's eyes (ernie point of view), rather than from the more limited viewpoint of an outsider (etic point of view) (Hansen & Kahnweiler, 1993). The research reported in this paper utilizes qualitative investigation, particularly the analysis of the stories that entrepreneurs tell about their failures, to come to an understanding of entrepreneurial failure.The authors of this paper use a hermeneutical approach to come to an understanding of the nature of entrepreneurial failure and the impact that failure has on the entrepreneurs connected with the new venture. Hermeneutics is a post-modern app...