Research On The Relationship Among Entrepreneurial Failure Experiences,Entrepreneurial Competency And Growth Performance Of Subsequent Ventures

Innovation and entrepreneurial activities play an important role in promoting the development of Chinese economic in the context of transition economies.According to the Globe Entrepreneurship Monitor(GEM)research data,entrepreneurial activities in China are at the forefront in both efficiency-driven way and innovation-driven way.In contrast,the high failure rate of entrepreneurship shows that the survival and the growth of enterprises are difficult.However,entrepreneurs in China are not afraid of failure and entrepreneurs who fail and start a successful business all over again take a certain proportion,which means serial entrepreneurship has been the engine of business development.The resource-based theory and experience learning theory take failure experiences as valuable and inimitable resource which entrepreneurs can learn from and enhance their entrepreneurial competency.Whereas,cognitive theory holds that entrepreneurial failure experiences may lead to negative emotions,cause cognitive difficulties,and affect decision-making ability.Based on different research perspectives,there is no consensus theory on existing researches regarding to the impact of entrepreneurial failure experience on entrepreneurs and subsequent entrepreneurial activities.Based on these,this paper analyzes the effects which entrepreneurial failure experiences bring to the entrepreneurs and start-ups,reveals that entrepreneurial competency is a mediator between failure experiences and growth performance of new enterprises,and environmental dynamism has moderation effect on the relationship between entrepreneurial competency and the growth performance of subsequent ventures in the context of transition economies.The purpose of this paper is to answer four theoretical questions:(1)how does entrepreneurial failure experiences affect the entrepreneurs?(2)what is the impact of entrepreneurial failure experiences on the growth of subsequent enterprises?(3)what are the roles of opportunity-related competency and management-related competency as different dimensions of entrepreneurial competency in the relationship between entrepreneurial failure experiences and growth performance of subsequent enterprises?(4)what is the impact of environmental dynamism on the relationship between entrepreneurial competency and the growth performance of subsequent ventures in the context of transition economics? This paper provides a theoretical guidance and a reference for entrepreneurs to recover fromfailure and foster entrepreneurial competency to enhance growth performance in the context of transition economics.The theory of human capital holds that entrepreneurs' prior experience is the key factor to new venture performance and entrepreneurial experience plays an important role for helping entrepreneurs be familiar with the entrepreneurial process and acquire management expertise in the process of establishing and developing new businesses.In view of the different effects which different characters of entrepreneurial experiences bring to the growth of entrepreneurial enterprises,this paper distinguishes entrepreneurial failure experiences from entrepreneurial experience and define it preliminarily by combining the the concept of entrepreneurial failure and entrepreneurial experience.To understand the nature and the influence of entrepreneurial failure experiences,this study interviewed four entrepreneurs from Guangzhou,Tianjin,Changchun and Hohhot respectively to do multi-case study.Through cross validation of case study and theoretical analysis,this paper revises the definitions and divides the dimensions,then finds that the number and degree of entrepreneurial failure experiences influence subsequent venture growth through two dimensions of entrepreneurial competency,which are opportunity-related competency and management-related competency.Based on these,this paper builds the research framework and proposes the hypotheses.Then this study adopts the questionnaire to collect data and finally gets 247 usable questionnaires mainly from Beijing,Tianjin,Guangzhou,Changchun,Hohhot and Zhengzhou.We use factor analysis,Pearson correlation analysis to test the reliability and validity of the questionnaire,and test the hypotheses through multivariate linear regression and bootstrap.Results show that most hypotheses are supported by the data,the main conclusions are as follow:(1)there are inverted U-shaped relationships between the number and the extent of entrepreneurial failure experiences and the growth performance of subsequent ventures respectively,meanwhile,the interaction of the number and the extent of entrepreneurial failure experiences plays a positive role in promoting subsequent venture growth;(2)there are inverted U-shaped relationships between the number and the extent of entrepreneurial failure experiences and the two dimensions of entrepreneurial competency respectively,namely,opportunity-related competency and management-related competency;(3)the opportunity-related competency and management-related competency partially mediate the relationships between the number and degree of failure experiences and subsequent venture growth respectively;(4)the dynamic environment plays a positive role in the relationship between the opportunity-related competency,management-relatedcompetency and growth performance of subsequent ventures.The purpose of this paper is to reveal the impact of entrepreneurial failure experiences on entrepreneurs and subsequent ventures,and the mechanism of entrepreneurial failure experiences on the growth of subsequent ventures in the context of transition economies.The theoretical contributions are mainly reflected in three folds:First,combining the extant theoretical research and case study,we define the concept and dimensions of entrepreneurial failure experiences and open the black box of entrepreneurial failure experiences to subsequent entrepreneurship.This study concerns that entrepreneurs experience entrepreneurial failure in person and the influence so that we should define the concept of entrepreneurial failure in the first place and then generate the concept of entrepreneurial failure experiences.Former studies define entrepreneurial failure based on the original intention,failure reasons or final status which can not distinguish the relationship between entrepreneurial failure and exit,individual failure and business failure.Through the literature review and case study,this paper defines the concept of entrepreneurial failure and entrepreneurial failure experiences,puts forward and tests the extent of entrepreneurial failure experiences,which contributes to the understanding of the entrepreneurial failure and lays foundation for subsequent empirical research.The author tracks the entrepreneurial process for 2-6years respectively and obtains the primary data about the entrepreneurial experiences and entrepreneurial process.Combining with the semi-structured interview,this paper describes the process of recovery from failure,changes,growth track of subsequent enterprises and opens the black box of entrepreneurial failure experiences to subsequent entrepreneurship.Meanwhile,this study finds that entrepreneurial exit is the way to avoid the happening or development of entrepreneurial failure and contributes to decrease entrepreneurial failure cost and keep entrepreneurial passion,which verifies the significance of studying entrepreneurial exit and provides examples for scholars to explore the choice of entrepreneurial exit routes.Second,based on entrepreneurial process theory and resource-based theory,this paper constructs the model of entrepreneurial failure experiences on the growth of subsequent ventures and emphasizes the mediating effect of entrepreneurial competency.For different characters of entrepreneurial experiences have different effects on the thoughts,knowledge and ability of the entrepreneurs,this paper focuses on entrepreneurial failure experiences and discusses different dimensions of entrepreneurial failure experiences taking to the entrepreneurs and subsequent ventures,which contributes to the combing of the theory ofbusiness failure and serial entrepreneurship.Research on the mediating effect of entrepreneurial competency explains the mechanism of entrepreneurial failure experiences on the growth of subsequent ventures.Though empirical research,this paper indicates that under certain extent and amount,entrepreneurial failure experiences contribute to the improvement of entrepreneurial competency and the growth of subsequent enterprises,and forms the cognition of the different characters of entrepreneurial failure experiences on subsequent entrepreneurship.Third,based on the context of transition economies,this paper discusses the moderating effect of environmental dynamism on the relationship between entrepreneurial competency and subsequent venture growth.This paper holds that the main feature of transition economies is uncertainty and the dynamic environment has become an important factor to the survival and development of the start-ups.This paper combines environmental dynamism with entrepreneurial competency and subsequent venture growth,and emphasizes the significance of entrepreneurial competency,which contributes to entrepreneurs adapting the environment.