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Stigma and business failure: implications for entrepreneurs’ career choices

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Abstract

We use data from global entrepreneurship monitor to examine the act of entrepreneurial reentry by entrepreneurs who exit a failed business. We study reentry by mode of entry and by form of organizing. We find that, in countries where the levels of stigma and regulatory conveyance of stigma markings were at their highest, entrepreneurs who exited failed businesses were less likely to reenter into entrepreneurial activity. Our finding suggests that negative social and economic sanctions that are associated with stigma markings speak only to one side of the entrepreneurship phenomenon. On the other side, stigma can function as a stimulus for entrepreneurs to defy the illegitimacy of the failed business and to actively seek out and engage in innovative behaviors that contribute to the overall diversity of entrepreneurial activities in their country.

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Notes

  1. Belgium, Croatia, Czech Republic, Denmark, France, Finland, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Netherlands, Norway, Portugal, Romania, Slovenia, Spain, Sweden, Turkey, United Kingdom, and United States.

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Authors and Affiliations

  1. Cotsakos College of Business, William Paterson University, Wayne, NJ, USA

    Sharon A. Simmons

  2. Martin J. Whitman School of Management, Syracuse University, Syracuse, NY, USA

    Johan Wiklund

  3. Jönköping International Business School, Jönköping University, Jönköping, Sweden

    Johan Wiklund

  4. Stockholm School of Economics, Stockholm, Sweden

    Johan Wiklund

  5. Hunter Centre for Entrepreneurship, University of Strathclyde, Glasgow, UK

    Jonathan Levie

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  1. Sharon A. Simmons
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  2. Johan Wiklund
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Correspondence to Sharon A. Simmons.

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Simmons, S.A., Wiklund, J. & Levie, J. Stigma and business failure: implications for entrepreneurs’ career choices. Small Bus Econ 42, 485–505 (2014). https://doi.org/10.1007/s11187-013-9519-3

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