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Stigma and business failure: implications for entrepreneurs’ career choices

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  • Sharon Simmons
  • Johan Wiklund
  • Jonathan Levie

Abstract

We use data from global entrepreneurship monitor to examine the act of entrepreneurial reentry by entrepreneurs who exit a failed business. We study reentry by mode of entry and by form of organizing. We find that, in countries where the levels of stigma and regulatory conveyance of stigma markings were at their highest, entrepreneurs who exited failed businesses were less likely to reenter into entrepreneurial activity. Our finding suggests that negative social and economic sanctions that are associated with stigma markings speak only to one side of the entrepreneurship phenomenon. On the other side, stigma can function as a stimulus for entrepreneurs to defy the illegitimacy of the failed business and to actively seek out and engage in innovative behaviors that contribute to the overall diversity of entrepreneurial activities in their country. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • 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.
    • Handle: RePEc:kap:sbusec:v:42:y:2014:i:3:p:485-505
    DOI: 10.1007/s11187-013-9519-3
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    More about this item

    Keywords

    Entrepreneurship; Business failure; Stigma; Serial entrepreneurship; Entrepreneur careers; Global entrepreneurship monitor; M13; L26; J24;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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