The experience of regret in small business failure: who’s to blame?

Abstract

Purpose Framed within the theoretical domain of attribution theory, this study aims to investigate the antecedents of experienced regret following an entrepreneur’s business failure (defined as firm discontinuance, closure or bankruptcy) and the impact of regret on personal well-being. Design/methodology/approach The population of interest was business owners whose businesses had failed within the past five years. The data was collected from 319 failed entrepreneurs using an online survey. Structural equation modelling was used to test the hypotheses presented in this study. Findings External attribution, including economic uncertainty and contract restrictions, was positively related to feelings of regret. Considering internal attribution, due diligence had a positive effect on regret whereas customer relationship development ability can reduce feelings of regret. Moreover, prevention-focused entrepreneurs were likely to experience higher levels of regret when engaging in extensive consideration in using information. Finally, regret had a detrimental effect on the entrepreneurs’ well-being. Research limitations/implications The research provides fresh perspectives on experienced regret, a relatively unexplored emotion in the entrepreneurship literature. In the context of small business operations, the locus of attribution (associated with business failure) is the key influence on learning following failed business attempts. Practical implications This study extends current knowledge of regret in the context of entrepreneurial failure, which has a significant catalytic effect on employment and entrepreneurial mobility. Originality/value This research sheds light on how emotional responses are derived from an entrepreneur’s self-assessment of their performance and attribution of blame for failure.