The motivational effect of perceived failure stigma for re-starting entrepreneurs

Abstract

The current study challenges the prevailing perspective that failure stigma is uniformly detrimental to entrepreneurs. Drawing on social identity theory and stereotype reactance theory, we develop a model that portrays perceived failure stigma as a source of motivation for entrepreneurs’ restarting endeavors. We predict that perceiving failure stigma may increase restarting entrepreneurs’ desire to defy the negative stigma, which in turn leads to more opportunity recognition activities and improved new venture performance. We further consider entrepreneurs’ external attribution of failure as a boundary condition in the relationship between perceived stigma and desire to defy stigma. We tested our hypotheses by collecting three waves of survey data from 348 Korean entrepreneurs who had entrepreneurial failure experience and restarted new venture after failure. Our findings provide support for the positive effect of perceived stigma on restarting entrepreneurs’ opportunity recognition activities and new venture performance through their desire to defy stigma. We also find that entrepreneurs’ external attribution of failure accentuated the effect of perceived failure stigma on desire to defy stigma. The research and practical implications of these findings are discussed.