The paradoxical nature of new venture failure

'With each tottering attempt to walk, our bodies learn from the falls what not to do next time. In time we walk without thinking and think without falling, but it is not so much that we have learned to walk as we learned not to fall' (Petroski 1985: 13) This research represents a contribution to the academic literature on entrepreneurship by exploring what entrepreneurs and intrapreneurs learned from their failed ventures. The purpose of this study is to demonstrate what can be learned from new venture and business failure. In addition, it reveals that although entrepreneurs and intrapreneurs perceived new venture and business failure differently, they shared similar experiences in their failed ventures, and generated similar knowledge. New venture failure is a well-researched field, in which the emphasis in the academic literature is on the importance of learning and recovering from such reverses. However, studies related what it is that one can learn from new venture failure are scant. This research explores the relationship between two fields: new venture failure and entrepreneurial learning. In this study, new venture and business failure is defined as 'the entrepreneur’s dissatisfaction with the venture’s progression', and it is emphasised that the entrepreneurs and intrapreneurs decide whether or not their venture has failed, regardless of the objective state of the venture. Learning is defined as a combination of behavioural and cognitive patterns: 'a creation of knowledge that leads to a behavioural change'. It is suggested that entrepreneurs and intrapreneurs learn from every action they perform, gaining experience from both successful and failed activities. However, they learn more from critical events. This exploratory, qualitative study explores how 27 experienced Australian entrepreneurs and intrapreneurs perceive new venture failure, and what they have learned from it. The research used practice-based theories to convert the participants' experiences into academic theories. The data was analysed using cognitive maps for categorising and sorting the data, and classic content and word count techniques for the analyses. The results of this research indicate that entrepreneurs perceived new venture and business failure as identical, while intrapreneurs distinguished between them. The majority of the entrepreneurs who participated in this research defined a failed new venture or business as a business or new venture that does not make a profit and suffers from lack of cash. However, the majority of the intrapreneurs who participated in this research defined a failed business as a business that is not managed properly, and a failed new venture as a venture that does not grow. A significant addition to the body of knowledge in this domain is depicted. Since this study is a first of its kind to integrate entrepreneurial learning and new venture failure, the following finding is highlighted: Venture failure is not perceived in a negative context by entrepreneurs, as long as they learn from the experience/s. As such, it is identified that ventures fail, not entrepreneurs! This finding would, however, provide a base for further empirical research into the psychological aspects of entrepreneurs' perceptions to new venture failure. From a research methodology perspective, using cognitive maps and entrepreneurial scripts in the above context constitutes an addition to the body of knowledge. Such methodology has been identified as an innovative research concept in examining the cognitive structures of entrepreneurs. The study concludes with a list of suggestions for novice and nascent entrepreneurs and intrapreneurs given by the participants in this research. These suggestions are the summary of their learning from their failed ventures. It is suggested that nascent entrepreneurs and intrapreneurs may adopt recommendations from the suggested list, thereby marginalising their risk of failure by learning from others. As this is qualitative exploratory research, it had a small data set. Any future researchshould ideally be expanded into a quantitative study and include entrepreneurs and intrapreneurs from different countries, thus enabling the findings to be generalised and the effect of cultural differences to be overcome.