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Moving forward: Balancing the financial and emotional costs of business failure

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  • Shepherd, Dean A.
  • Wiklund, Johan
  • Haynie, J. Michael
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    Abstract

    Why do owner-managers delay business failure when it is financially costly to do so? In this paper we acknowledge that delaying business failure can be financially costly to the owner-manager and the more costly the delay, the more difficult the recovery. But we complement this financial perspective by introducing the notion of anticipatory grief as a mechanism for reducing the level of grief triggered by the failure event, which reduces the emotional costs of business failure. We propose that under some circumstances delaying business failure can help balance the financial and emotional costs of business failure to enhance an owner-manager's overall recovery -- some persistence may be beneficial to recovery and promote subsequent entrepreneurial action.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Venturing.

    Volume (Year): 24 (2009)
    Issue (Month): 2 (March)
    Pages: 134-148

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    Handle: RePEc:eee:jbvent:v:24:y:2009:i:2:p:134-148

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    Web page: http://www.elsevier.com/locate/jbusvent

    Related research

    Keywords: Failure Entrepreneur Learning Negative emotions Commitment Passion Recovery;

    References

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    Citations

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    Cited by:
    1. Wright, Mike & Kellermanns, Franz W., 2011. "Family firms: A research agenda and publication guide," Journal of Family Business Strategy, Elsevier, vol. 2(4), pages 187-198.
    2. B. Deschamps & S. Geindre, 2011. "Les Risques Du Processus Repreneurial En Pme," Post-Print halshs-00661565, HAL.
    3. Toft-Kehler, Rasmus & Wennberg, Karl & Kim, Phillip H., 2014. "Practice makes perfect: Entrepreneurial-experience curves and venture performance," Journal of Business Venturing, Elsevier, vol. 29(4), pages 453-470.
    4. Uy, Marilyn A. & Foo, Maw-Der & Song, Zhaoli, 2013. "Joint effects of prior start-up experience and coping strategies on entrepreneurs’ psychological well-being," Journal of Business Venturing, Elsevier, vol. 28(5), pages 583-597.
    5. Wood, Matthew S. & McKelvie, Alexander & Haynie, J. Michael, 2014. "Making it personal: Opportunity individuation and the shaping of opportunity beliefs," Journal of Business Venturing, Elsevier, vol. 29(2), pages 252-272.
    6. Sharon Simmons & Johan Wiklund & Jonathan Levie, 2014. "Stigma and business failure: implications for entrepreneurs’ career choices," Small Business Economics, Springer, vol. 42(3), pages 485-505, March.
    7. Mattias Nordqvist & Karl Wennberg & Massimo Bau’ & Karin Hellerstedt, 2013. "An entrepreneurial process perspective on succession in family firms," Small Business Economics, Springer, vol. 40(4), pages 1087-1122, May.
    8. Jenkins, Anna S. & Wiklund, Johan & Brundin, Ethel, 2014. "Individual responses to firm failure: Appraisals, grief, and the influence of prior failure experience," Journal of Business Venturing, Elsevier, vol. 29(1), pages 17-33.
    9. Ucbasaran, Deniz & Westhead, Paul & Wright, Mike & Flores, Manuel, 2010. "The nature of entrepreneurial experience, business failure and comparative optimism," Journal of Business Venturing, Elsevier, vol. 25(6), pages 541-555, November.
    10. Cope, Jason, 2011. "Entrepreneurial learning from failure: An interpretative phenomenological analysis," Journal of Business Venturing, Elsevier, vol. 26(6), pages 604-623.
    11. Cardon, Melissa S. & Stevens, Christopher E. & Potter, D. Ryland, 2011. "Misfortunes or mistakes?: Cultural sensemaking of entrepreneurial failure," Journal of Business Venturing, Elsevier, vol. 26(1), pages 79-92, January.

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