Rising from the Ashes: Cognitive Determinants of Venture Growth after Entrepreneurial Failure

Abstract

How does previous entrepreneurial failure influence future entrepreneurship? More specifically, under what conditions do entrepreneurs who rebound from failure do better in the next round? Drawing on the cognitive literature in attribution and motivation, we focus on entrepreneurs’ reaction to failure and the growth of their subsequent ventures. Leveraging a survey database of new–venture founders with failure experiences, we investigate how their internal attribution of the cause of failure, their intrinsic motivation to start up another business after failure, and the extent of their failure experiences impact the growth of their subsequent ventures.