Business Failure and Meaning Threat: Disentangling how founders respond to failure

The present grounded theory study of over one hundred stories told by failed tech entrepreneurs, and our following of the careers of over eighty of these individuals, allowed us to uncover three insights. First, under conditions of entrepreneurial failure: guilt, the feeling that entrepreneurs get when they feel they have done something wrong, interacts with shame, the feeling that entrepreneurs get when they feel that they are wrong to be who they are, to drive mechanisms that maintain meaning. Second, entrepreneurs engage in one of five meaning maintenance mechanisms: 1) Assimilation of an experience 2) Abstraction of meaninglessness, both from low guilt and shame; 3) Accommodation of existing meaning structures, from low guilt and high shame; 4) Assembly of new meanings, from high guilt and low shame; and 5) Affirmation of other meanings from high guilt and high shame. Third, the mechanisms engaged relate directly to subsequent learning and persistence: Assimilation and abstraction lead to quixotic learning and same industry serial entrepreneurship. Accommodation lead to low learning and new industry serial entrepreneurship. Assembly lead to high learning and same industry serial entrepreneurship. Affirmation lead to low learning and leaving entrepreneurship.