Building theory: the relationship between attribution theory and the perceived outcomes of entrepreneurial venture failure.

Askim, Mary K. ; Feinberg, Richard A.

ABSTRACT

When businesses close, attention may (but not necessarily) be given to the economic impact of the closure on the community and consumers (most businesses, like good generals, probably simply fade away without notice). But in all cases, there is an impact on the entrepreneur. What of the individual and the risks that were taken, how has the entrepreneur fared, and what are the social, psychological impacts as that individual moves forward? The purpose of this paper was to provide insight into the manner in which an entrepreneur comes to decide what to do after a venture fails and how the venture experience has affected personal aspects of the entrepreneur's life. It was proposed that a well-understood and influential social psychology theory of how outcomes are influenced by attributions made by an individual can be used to better understand the nature and scope of the impact of failure on an entrepreneur's life. In much the same way an individual's attributional explanatory style influences consequent attributions and decisions, an entrepreneur's explanatory style should have a role in the perceived outcomes of a failed entrepreneurial venture, which in turn affects consequent decisions.

INTRODUCTION

Past research on the entrepreneur who has failed has been limited because it has been descriptive and not theoretically or empirically based. Yet all failure does not appear equal, at least as it affects the individual. One person's failure may be that person's depression but is the motivation for future success for another. The manner in which failure affects individuals differently may be explained by differences in an individual's general tendencies to interpret the causal nature of failure.

"Attribution theory" is a well-developed set of theories and empirical findings that has directed a social psychological literature in understanding the causal interpretation of events. While it would seem conceptually logical to look at how theories that explain the effects of failure can help us understand the effects of entrepreneurial failure (attributions affect decisions, therefore, attributions should affect business decisions), the connection between these diverse literatures has never been made.

To see if work in the area of attributions for failure is relevant to understanding and illuminating the area of the effects of failure on the entrepreneur we use a theoretical technique called substantive modeling (Popper, 1963). In substantive modeling you take a well-understood area of theory and research in one area and apply it to another. In this research, the better understood stream of research called attribution theory (specifically attributional explanatory style) was used to understand the effects of failure on future decisions of the entrepreneur. Attributional explanatory style should determine how the business failure experience affects future decisions and behavior in much the same way as it has been found to affect other life decisions. We propose that an individual's explanatory style affects the consequences of a failed business venture as measured by differences in perceived financial well-being, beliefs about future career opportunities, perceptions of family relations, and self-esteem in much the same way as attributional explanatory style has been found to affect individual behavior in the well developed social psychological literature.

BECOMING AND BEING AN EX-ENTREPRENEUR

Though the aspirations of entrepreneurs are that their businesses will succeed, the reality is many do not. Even those businesses that are smashing successes are retired, sold, or passed on to someone else. All entrepreneurial enterprises die in some way. But generally, an entrepreneur makes the transition to becoming an ex-entrepreneur through the failure of the venture.

Articles dealing with managing failure are often found in business magazines and newspapers and are of the personal account nature--"Why my business failed" or "How I bounced back from bankruptcy." These accounts usually focus on turning the failure of the business into a positive that results in the future success of another venture. To think of failure as a positive experience seems endemic in the popular entrepreneurial literature. "Our company failed, but we didn't. We learned. The label 'failure' would have applied to us only if we had called it quits and had lost our entrepreneurial drive" (Wiley, 1993, p. 8). " ... we should take the gifts that failure is offering to us and use them in a spirit of modesty and good sense. Failure is not defeat. Failure is part of the learning process that leads to success" (Stein, 1990, p. 72).

The positive attitudes of entrepreneurs are clearly Darwinian (in a sense), since the road to success is paved with failure (at least statistically). The scent of success at some point in the future clearly drives some entrepreneurs. "Making sure that you can play the game another day" (Jamison, 1994, p. 242) financially as well as emotionally, enables some entrepreneurs to continue their attempts with business ventures. For would-be entrepreneurs, recognizing that failure is likely to occur at sometime, managing failure instead of it managing them, seeing it as a chapter in their lives rather than an end to their lives' plans, and focusing on the lessons learned from the failure experience are the words of wisdom given by those who have failed. The proclamations of how failure leads to success almost makes one want to fail so that success is more likely. The preparation for success can come from how one deals with failure but is not necessarily its consequence.

The search for why a business fails is in the eye of the beholder, the perception of the entrepreneur who has failed. Driscoll (1989) said it this way, "Three words spell the difference between success and failure: expectations, perceptions, and reactions" (p. 47). A social psychologist would recognize this thinking as the basic tenets of attributional theory and this serves as the foundation for this study. This study proposed that perception and attribution of the causes that led to failure would affect the reactions or perceived outcomes as a result of that failure in the entrepreneurial setting as it does in other areas of one's social psychological life. In considering the consequences and risks of an entrepreneurial startup, Liles (1974) posed four risk areas for consideration: financial well being, career opportunities, family relations, and psychic well-being (self-esteem). These risks tap into the professional and personal aspects of the entrepreneur's life and Liles suggested that entrepreneurs undertake a careful analysis of these risks before making the startup decision. These four areas would seem a fruitful place to start to look for the effects of attributional explanatory style on the consequences of failure.

Financial Well-Being

Startup businesses create some degree of financial burden on the individual and family. That financial burden may be in the form of the initial capital investment, the instability of family income as a result of unpredictable profitability and pressures to reinvestment back into the business, or the continued personal financial support of the business through lean times. The financial well-being of the entrepreneur may be compromised in these situations and may impact and be impacted by an entrepreneurial failure.

Ronstadt (1985, 1986) found that nearly 75 percent of the ex-entrepreneurs interviewed exited their entrepreneurial careers because of financial reasons. In addition, 61 percent thought their entrepreneurial careers weree financially disappointing. Financial disappointment has been found to be the result of entrepreneurial failure in other studies of entrepreneurs (Brockhaus, 1985; Wicker & Conn, 1990). The nature of exit from an entrepreneurial venture would clearly affect the financial well-being of the entrepreneur. If the exit was as a result of a merger, takeover, or sale of the business, finances may be more positive than if the exit was due to bankruptcy or some other failure of the business. But there is more to perceptions of financial well-being following entrepreneurial failure than simply the absolute level of finances after failure.

If personal financial gain was a primary consideration for beginning a business venture, then not attaining that goal would be more devastating to the entrepreneur than if it was a negligible consideration. How long the entrepreneur is willing to wait for success may be another determinant. Is the entrepreneur patient enough to wait for long-term results in the light of short-term disappointments? Cooper, Folta, Gimeno-Gascon, and Woo (1992) actually showed the power of entrepreneurial attributions by showing that attributions affected the outcome of the venture (not simply the post-definition of the experience as we hypothesize). They found that that firm survival was significantly determined by the entrepreneur's personal expectations of success. If entrepreneurial firm performance fell short of a personal threshold, continuing the venture did not provide the expected benefits to the entrepreneur so the decision to exit was more likely.

If personal expectations influence perceived entrepreneurial outcomes (Cooper et al., 1992; Naffziger, Hornsby, & Kuratko, 1994), how may expectations vary with entrepreneurs? Though no research has specifically addressed this question, Ronstadt's (1984) descriptive study of 94 ex-entrepreneurs did indicate that "ex-entrepreneurs clearly had more enterprising initial goals when defined in terms of sales and profit objectives compared to practicing entrepreneurs and nonstarters" (p. 449).

Since Ronstadt (1984) indicated the likelihood of initial financial expectations being greater for entrepreneurs who had failed, the perceptions of their financial outcomes after the failures may be influenced by these high expectations. An entrepreneur's perception of financial well-being after a venture failure may also be influenced by the events that took place while the business was operating and what meaning is attached to these events, in essence, causal explanations or attribution. It cannot be said that all outcomes will be identical for all entrepreneurs who start a venture and fail. Part of the variance may lie with perceptions and the meaning attached to those perceptions.

Career Opportunities and Risks

What career risks lie on the entrepreneurial career path? Does starting one's own business and then failing in that venture place the individual in a disadvantaged position to reenter the job market or to gain support for another venture? Does the entrepreneur who has failed attempt again to become committed to another venture idea?

The research on entrepreneurs exiting their businesses has concentrated on the characteristics of these individuals and what happens next in their lives. Ronstadt (1981, 1982, 1984, 1986) found entrepreneurial careers to last the longest when entrepreneurship was chosen as a first career versus entering later in life. Younger entrepreneurs were associated with staying in the career field rather than exiting and working for someone else. Ronstadt's rationale was that younger individuals may have fewer opportunities available, be less risk sensitive because of experience, and have different aspirations than older individuals starting a business. He found the longer the entrepreneurial experience and the fewer career exits, the greater tendency to start additional ventures.

Though the professional risks may be perceived as being minimal by some, for others, the perceived risk of entrepreneurship may be greater. The differences may lie in how the entrepreneur perceives the entrepreneurial experience. And these differences may be explained by differences in attribution explanatory style.

Family Relations

The time, energy, and emotional commitments demanded by a business venture often come at the expense of family relationships (Ronstadt, 1985). A strong family support system is believed to be an asset to an entrepreneur (Brockhaus, 1985; Harrell, 1994). Family relationships may come under significant strain when an entrepreneurial venture does not meet with success.

It is easy to understand why family relationships may cause and be strained by entrepreneurial activities. The financial burden may destabilize family income and family lifestyles may have to be compromised. Commitment to employees and investors, and increased work hours can also create stress and anxiety. With the time commitment that is necessary to start and build a business, time with family appears to be compromised.

Psychological Well-Being (Self-Esteem)

The total immersion of the entrepreneur into an entrepreneurial business venture takes its toll on the individual (Stolze, 1994). The long hours of work, the weight of decision making, the financial commitments, not knowing the ultimate outcome (success or failure) creates a state of "entrepreneurial terror" (Harrell, 1994). This terror is clearly seen in light of entrepreneurial failure. The failure experience puts an individual's sense of self and values at risk (O'Connor & Wolfe, 1987). Failure forces the entrepreneur to deal with self-confidence, internalization of the failure, and ramifications with one's personal life. Liles (1974) refers to this risk area as psychic well-being. Numerous studies have dealt with the impact of stressful events on the life of an individual: self-esteem and private vs. public failure (Baumeister, 1982; Baumeister & Tice, 1985; Brown & Gallagher, 1992; Greenberg & Pyszczynski, 1985), and self-esteem and emotional reactions to success and failure (Brown & Dutton, 1995).

Self-esteem protection or enhancement after failure has also been found to be aided by self-handicapping, a strategy used to discount or augment the attribution of causes for success or failure (Arkin & Baumgardner, 1985). It has been found that individuals with high self-esteem are better protected against negative effects of failure (Rhodewalt, Morf, Hazlett, & Fairfield, 1991; Tice, 1991). Based on the research in this area, how the cause of the failed venture is explained should influence the effect on self-esteem. It was expected that entrepreneurs who have failed in a business venture and who maintain their high levels of self-esteem, will view the outcomes of those failed ventures in a more positive light.

ATTRIBUTION THEORY

Attribution theory describes the hypothesized process by which individuals interpret events and behaviors and make causal explanations for answering why things happen. Attributions allow allowing individuals to predict and control their environment (Heider, 1958; Kelley, 1967, 1973). The consequences of attributions have an impact on the perceivers' subsequent thoughts, emotions, and behaviors (Harvey & Weary, 1984).

To summarize a wide body of social psychological literature: When people see their personal characteristics play a primary role in attributing success and failure, ability or the lack of it influences the causal explanation. If people see personal characteristics as fundamental and they see individuals fail at endeavors, they attribute the failure to the difficulty of the situation rather than individual ability. If success is attained by most, the situation or task is perceived as being relatively easy and does not require great ability. On the contrary, when few individuals attain success or when failure results for only a few, ability becomes more influential in attributing an explanation. When failure is the exception, the lack of ability becomes a more likely causal explanation.

At the other end, people might attribute success and failure to environmental factors; things outside their person. An individual may postpone an endeavor until the environmental conditions are more favorable, then the individual would take advantage of the opportunity presented hoping that will lead to a greater likelihood of success. Since the conditions can be favorable or unfavorable and dependent on chance because of their instability, luck enters into the explanation when it is linked with the consistency of the individual's performance. Consecutive failures followed by a success, or failing once in a series of successes, denote inconsistency in performance. This inconsistency would be attributed to the luck factor while consistent performance is more likely attributed to ability or the lack of it (Weiner and Kukla, 1970).

Attributions are defined by distinctiveness, consistency, and consensus. Distinctiveness refers to the uniqueness of the entity; the behavior or impression is present when the entity is present and does not occur in its absence. Consistency over time and modality refers to the response being the same whether the time element is different or the entity's form varies. Other individuals in the same environment exhibiting the same behavior or impression are reflective of the consensus criteria.

The first personality construct hypothesized to define the individual's tendencies to make attributions was locus of control (Rotter, 1966). Individuals who have a tendency to describe events as caused by them were said to have an internal locus of control while those who believed that events happened because of fate luck or powerful others were said to have an external locus of control orientation. (Lefcourt, 1966; Rotter, 1966). Entrepreneurial studies involving locus of control have not always supported the construct in attributing success or failure (Begley & Boyd, 1987; Brockhaus & Nord, 1979; Chebat, Zuccaro, & Filiatrault, 1992; Duchesneau & Gartner, 1990; Hull, Bosley, & Udell, 1980). It appears that more than one dimension may provide a greater understanding of how entrepreneurs attribute causality to events that occur during their entrepreneurial ventures and how this explanation may influence perceived outcomes if failure results.

Attributional Explanatory Style

Although individuals may offer an array of reasons for why something has happened, good or bad, attribution theorists argue that these causes may be described by dimensions that create an overall explanatory style. Particularly with uncontrollable events, explanatory style is relatively stable and habitual throughout adult life (Burns & Seligman, 1989; Peterson, Maier, & Seligman, 1993). A contrary opinion, though, is that individuals may not be consistent in their explanations of events across a variety of situations (Weiner, 1985, 1986). Situational factors, such as achievement outcome, can influence the causal attributions made by the individual. Therefore, how individuals dimensionally categorize these causes, rather than the inherent causes themselves, may influence cognitive, affective, and behavioral consequences.

Seligman and his colleagues (Abramson, Seligman, & Teasdale, 1978; Maier & Seligman, 1976; Peterson et al., 1993; Peterson & Seligman, 1984) incorporated the previous work on causal attribution and social learning with their reformulated theory of learned helplessness. The learned helplessness model hypothesized how individuals respond to uncontrollable events and basically asserts that a state of helplessness results when exposed to unsolvable and uncontrollable problems. When it is apparent that outcomes are uncontrollable, behavior is affected on three levels-cognitive, emotional, and motivational (Maier & Seligman, 1976). If the individual expects (learns) that outcomes are uncontrollable, the depressed effect influences the motivation to initiate other responses; the experiences can have debilitating effects on subsequent responses.

Abramson et al. (1978) noted the limitations with the learned helplessness hypothesis and specifically wanted to address the conceptual problems of (1) universal versus personal helplessness situations (are outcomes uncontrollable for all or for only some); and (2) when helplessness may be a general rather than specific state (is helplessness generalized to other expectancies or specific to the situation). Addressing these conceptual deficiencies laid the groundwork for the development of their three dimensions of causal explanation: internality (internal/external), stability (stable/ unstable), and globality (global/specific).

Another body of literature that has relevance to formulating the dimensions of explanatory styles is that concerning attribution in achievement situations (Weiner, 1979, 1985, 1986; Weiner, Frieze, Kukla, Reed, Rest, & Rossenbaum, 1971; Weiner, Heckhausen, Meyer, & Cook, 1972; Weiner & Kukla, 1970). Weiner's attribution model proposes that the causal dimensions mediate the effects of the causal attributions on success and failure outcomes. The dimensional properties of attributions are viewed as determining such consequences of the attribution process as affective reactions and future expectations of success. Weiner presented three dimensions based upon attributions of causality for success and failure: locus of causality, stability, and controllability.

The previous work done in the areas of attribution theory and explanatory style have provided the foundation for the four dimensions of explanatory style used in this research: internality (internal/external), stability (stable/unstable), globality (global/specific), and controllability (controllable/uncontrollable). This paper sought to investigate attributions in a highly significant achievement event for business individuals, the entrepreneurial venture. The risks that an entrepreneur assumes are consequential. If failure results, how the entrepreneur interprets the failure and makes attributions concerning its causes, may likely impact the individual's personal and professional life.

Internal-External Dimension

"When people believe that outcomes are more likely or less likely to happen to themselves than to relevant others, they attribute these outcomes to internal factors. Alternatively, persons make external attributions for outcomes that they believe are as likely to happen to themselves as to relevant others" (Abramson et al, 1978, p. 52). Success or failure can be attributed to the power and ability of the individual and/or to the context of the situation, specifically, the difficulty of the task. If the individual believes that few individuals experience either success or failure with the endeavor, then when an individual does succeed or fail, it may be attributed to one's ability or the lack of it because the endeavor was a difficult one. Contrary, if the rate of success is high, the endeavor must have been relatively easy and did not really take any great ability. Following this logic, then when most individuals fail, the endeavor is perceived as being very difficult. The ability of the individual is not in question and there must be some external reason (environmental or situational factors) for the failure. It would be irrelevant who was in that situation, the outcome would be similar for all.

In achievement-oriented situations, self-esteem is protected in situations involving failure and ability attributions are discounted (Tice, 1991; Weiner & Kukla, 1970) and ability attributions are augmented when there is success (Rhodewalt et at., 1991; Tice, 1991; Weiner & Kukla, 1970). The individual does not blame oneself when failure has occurred. There is still the belief that the next task can be accomplished. If it is thought that another individual would have possibly made the same or similar response to the situation, then, that individual would be more likely to make an external attribution for perceived control.

In these situations, since ability attributions are discounted, it seems likely that an entrepreneur would make an external attribution with a failed business venture. The external attribution would provide impetus for the entrepreneur to proceed with another startup while keeping self-esteem intact or enhancing self-esteem. If ability is not in question and self-esteem is still present, these positives may likely transfer to other factors with the failed venture--family relations and financial well-being.

It is difficult to separate finances and family from the entrepreneurial venture (Dyer, 1992). If the entrepreneur starts another venture, then financial well-being may be less affected by the failure, or at least not in a debilitating manner. Since external attribution transfers the cause of the failure to other situational factors or implies that what happened is common for most people in that situation, there may be a higher tolerance level within the family and a more supportive environment for the entrepreneur. Even though failure of the business occurred, family relations may not suffer. Contrary to that thought, if the entrepreneur thought he/she was the cause of the failure (based upon lack of ability rather that an external situational factor), the "it's all my fault" rationale could transfer to the home and family setting. Anything wrong that happened within the family would be internalized by the entrepreneur and self-blame would result.

If the entrepreneur fails in the venture but has attributed the cause of the failure to external situations, it is most likely the entrepreneur will not perceive it as the end to the entrepreneurial career, but rather as a positive learning experience. Depersonalizing the experience will lessen the fear that causes immobility. The likelihood of the entrepreneur starting another venture should be greater.

Stable-Unstable Dimension

The stability dimension addresses the issue of whether an event is a general rather than specific state (Abramson et al., 1978). The theory's premise is that an individual learns in uncontrollable situations that outcomes are response noncontingent. Consequently, the individual expects future response-outcome noncontingency to be formed, which makes new responses difficult to learn and inhibits the motivation to continue at the task or related task. This reflects stability, which has a recurring element; whereas, unstable factors have an intermittent tendency.

Attribution to stable factors supports the chronicity of the deficits the individual feels in present and future situations. This dimension is easily applied to an entrepreneurial situation. If an entrepreneurial venture fails, there are many plausible attributions. The entrepreneur may feel the appropriate skills were not possessed to start the venture and manage it successfully; if another venture was started, the same outcome is likely (internal-stable). Not as much time was put into the venture as was deemed necessary; the entrepreneur knows better for the next time that starting a business is a major time commitment (internal-unstable). Success does not come to the majority of entrepreneurs. It is an extremely difficult undertaking; that is why the failure rate is high (external-stable). A key supplier went out of business so the needed component parts were no longer available at the price and quality level needed; this happened by chance and was not able to be predicted (external-unstable). Those scenarios that reflect the stability dimension would have a negative impact on present and future outcomes, there is a carryover effect.

Why would the entrepreneur try again if failure is inevitable? If failure is inevitable, self-esteem is lowered; self-worth and self-confidence are jeopardized. Since self-esteem is not enhanced, it becomes a chronic issue. Conversely, instability should leave self-esteem intact. The entrepreneur feels the failure was situational and the likelihood of the failure's cause happening again is not likely. Even if the entrepreneur attributed the cause to be internal, yet situational, the impact on self-esteem would be lessened.

The perception of continual failure with this type of venture may also negatively impact the entrepreneur's financial well-being. With stability, the entrepreneur may perceive more long-term financial effects associated with the failure rather than seeing it as a short-term setback. With instability, there is optimism. The entrepreneur may have developed financial contacts that could assist in the next venture; therefore, the financial outlook is not as bleak. Or, even though the entrepreneur realizes a risk was taken financially with the venture, since the cause of failure will not happen again if another venture is started, the entrepreneur's financial position may not be perceived to be so negative.

Relationships with family members also can be tested in times of failure. It is difficult to keep the business and family worlds separate, they are intertwined. The degree of emotional support, the level of communication, and the restrictiveness of family activities can all be affected. With venture failure, a stable attribution concerning the cause should lead the entrepreneur into feeling that any stress placed upon the family will follow if another venture is started. The emotional support will not be better, the communication among family members will not improve, and the amount of time that is available to spend with family will most likely not increase with starting over. Even if another venture is not in the entrepreneur's sight, the retrospective view of the experience may lead to thoughts that the failed venture destroyed the family's fabric. Antithetic to this thinking, instability has a transitory inference. The cause is only situationally-specific and once that is removed, the entrepreneur may feel "things will get back to normal." Therefore, family relations may not be negatively affected. The entrepreneur may even look back on the experience and say "we had some tough times, but it really pulled us together", family relations may have even improved.

The basis behind the stability dimension is that the outcome (in this case, failure) will occur in a similar situation no matter what the individual does. Outcomes are not contingent on the individual's behavior. With this premise, an entrepreneur will not start another venture because if the cause is perceived to be stable, it would be thought that failure would most likely occur in the next venture no matter what was done differently. The reverse would be likely for an unstable attribution.

Global-Specific Dimension

In refining the possible attributions for outcomes, Abramson et al. (1978) proposed a third dimension, global-specific. This dimension addresses the generality issue and has an orthogonal relationship to the internality and stability dimensions. Global attributions affect a diversity of outcomes whereas specific attributions do not. Helplessness generalizes to dissimilar situations when an individual makes a global attribution for the uncontrollable events in the original situation. The implication is that the outcomes will be independent of the individual's responses. Specific attribution implies that helplessness generalizes only to new situations that are similar to the original. Based upon the individual's responses, the outcomes need not be the same when the situation changes (Alloy, Peterson, Abramson, & Seligman, 1984; Anderson, Anderson, Fleming, & Kinghorn, 1984; Mikulincer, 1986).

The generality of the deficits will depend on the globality of the attributions. Adding this dimension to the internality and stability dimensions can provide insight into the explanations entrepreneurs may have for failure of an entrepreneurial venture and how that failure may affect other outcomes. For example, venture failure may be attributed to lack of overall intelligence (internal, stable, global) versus lack of ability for this particular type of business (internal, stable, specific). If the entrepreneur attributes lack of intelligence to the failure (global), then the entrepreneur would most likely not start another venture (irrespective of the type of venture) because the globality dimension generalizes the failed outcome to dissimilar situations. Because of this generalizing to dissimilar situations, the entrepreneur may feel that overall his or her career outlook is less positive. The failure may be seen as a disadvantage in regards to reentering the employment circle and that it was a setback concerning career development. If the cause of the failure was perceived as specific to that situation, the entrepreneur may think the experience provided a good learning opportunity that could further advance the career. The lessons learned would enhance future job prospects.

Self-esteem becomes lowered with globality because the entrepreneur's thoughts fall along the lines of--"No matter what I may attempt, I will fail." Helplessness is present and it is difficult to maintain a sense of self and value. These feelings can transcend to other areas of the entrepreneur's life.

Since the premise of globality is that global attributions affect a diversity of outcomes, this generality for failure outcomes may also affect the entrepreneur's views of personal finances and the relationships with family members that resulted from the failed venture. Any loss of money with the venture could be "magnified" in the entrepreneur's mind and could be interpreted as financial ruin. The entrepreneur may also become distant from the family because of this helplessness deficit. Communication lines may be weakened, it may be difficult for family members to show emotional support because they feel no matter what is said or done will be to no avail, and overall family relations will be under more strain. The generality of the failed outcomes may seem to produce a compounding effect for the failed entrepreneur that could result in long-term debilitating effects.

Controllable-Uncontrollable Dimension

Perceptions of controllability and uncontrollability are believed fundamental in determining the effects of failure (Abramson et at., 1978; Alloy et al., 1984; Peterson et al., 1993; Peterson & Seligman, 1984). A controllable outcome is when the occurrence of the outcome is related to the individual's response; if the probability of the outcome is the same whether the response is made or not, the outcome is uncontrollable.

When individuals learn that outcomes are uncontrollable, deficits result in three areas--cognitive, motivational, and emotional. When an individual learns that an outcome is uncontrollable, it hinders learning any alternative responses (cognitive deficit) that could produce a different outcome. The uncontrollability of the outcome can inhibit the drive to initiate any responses (motivational deficit) because the individual sees the outcomes as incapable of being altered. A depressed effect (emotional deficit) results knowing that outcomes are uncontrollable.

When an entrepreneurial venture results in failure, how the entrepreneur perceives the level of controllability of that failed outcome may create a state of learned helplessness for the entrepreneur. The more controllability the entrepreneur perceived about the venture outcome, the more negative may be the effect concerning the areas of risk undertaken. For example, if the family played a crucial role in its sacrificing of time and money for the venture and the entrepreneur did not put forth the needed optimum effort in order to insure a greater likelihood of success, family relations may suffer. Too, financial status may seem worse and the entrepreneur's self-esteem may be lowered. If the entrepreneur perceives that decisions were not made that should have been (controllable) and that this is what had the major impact on the financial status of the firm and the family's financial status, these outcomes could be perceived as more serious because the entrepreneur could have done something about them but did not. Lowered self-esteem would most likely result because personal blame for inaction is assigned.

On the contrary, failure of the venture by a factor attributed to be outside the control of the entrepreneur may leave family relations, financial status, and self-esteem intact. Irrespective of what actions the entrepreneur may have taken, the results of the situation would have been the same. It is difficult to be blamed for something when the individual does not have control. This lack of controllability may also not inhibit the entrepreneur from starting another venture or going into another line of work outside entrepreneurship because the occurrence of failure was not related to the entrepreneur's response (actions).

Overall Explanatory Style

An individual may have an overall explanatory style when attributing causes of failure (Abramson et al., 1978; Alloy et al., 1984; Burns & Seligman, 1989; Nurmi, 1992; Peterson & Seligman, 1984) and success (Nurmi, 1992). When uncontrollable bad outcomes are explained by internal, stable, and global causes, a helplessness or depressive state results. This affects the individual's behavior in similar and dissimilar situations. Antithetic to this, when uncontrollable bad outcomes are explained by external, unstable, and specific causes, the individual proceeds feeling that the responses made which resulted in the bad outcome were situation specific and do not have characteristics of chronicity and generality.

It is expected that an individual's explanatory style will help explain outcomes in the failure of an entrepreneurial venture. The dimensions of external, unstable, specific, and uncontrollable should be the more likely explanatory style for those entrepreneurs who have maintained a positive self-esteem, perceive their financial well-being and family relations to have not been negatively affected by the venture failure, and who perceive career opportunities to still be available to them. Failure has not had such a perceived negative impact on the risks that were undertaken with the entrepreneurial venture as influenced by the entrepreneur's attributional explanatory style.

IMPLICATIONS FOR PROFESSIONAL PRACTICE OR APPLIED SETTINGS

Businesses are born and businesses die. As the title of Brockhaus' (1985) work on ex-entrepreneurs is so aptly put, "Is There Life After Death?" Being an "ex" does not have to be seen as having only negative connotations. Many entrepreneurs who have left one venture, whether by choice or not, proceed to undertake another. They do not attribute failure to themselves as much as they do to situational factors. They persevere, become resilient, and take their lessons learned into the next venture.

Learning about the next chapter in the ex-entrepreneurs' lives has had problems because of the difficulty in locating them after the venture failure. This should not deter the continuance of this area of research. Rather this "... supports the need for continued efforts to better research the experiences of ex-entrepreneurs after they cease doing business. In this way, future ex-entrepreneurs can better assess the consequences of failure" (Brockhaus, 1985, p. 476).

Of what value is there in understanding how entrepreneurs or ex-entrepreneurs attribute the causes of a failed venture? First, it would enable business counselors to counsel new entrepreneurs (understanding what their general tendencies are) to go in with their eyes open with no false expectations. A business can start with much aforethought and planning or hastily with the generally misguided thoughts that money can be made quickly and the entrepreneur can have an easier schedule than with current employment. With both of these instances, often the entrepreneur does not assess all that is at risk besides personal time and money. Entrepreneurs, in creating the venture, indeed assume a level of risk, but often do not perceive to be taking such great risks because they believe so intensely in their ideas and that they will succeed. Yet, the fear of failure and its resultant consequences are ever present in the mindsets of entrepreneurs (Harrell, 1994). Running a business affects the family, self-esteem, and the individual's career path. Knowing one's attributional explanatory style will provide insight into what the responses may be after venture failure concerning the impacts on other aspects on the entrepreneur's life. Would-be entrepreneurs could then envision the venture process from beginning to end and be aware of the consequences, personally and professionally, of a possible venture failure.

Second, when a venture fails the entrepreneur may decide to proceed with another venture startup. Knowing how explanatory style affects determining causation for events could improve decision making and thereby, new venture survival. Erroneous attributions can lead to actions that fail to correct the problem(s) in another entrepreneurial situation. In fact, those actions could even intensify the problem. Considering the limited resources with most venture startups (whether that be financial, time with family, or the expertise gained from managing a previous business), inaction or taking the wrong action could lead to failure for the first venture and continued failure for subsequent ventures. For example, an entrepreneur may attribute the business failure to an external cause, such as a new competitor, rather than a poor service strategy. If the entrepreneur starts another venture, irrespective of the business type, poor service may continue to be provided to the customers that may result in that business failing, too.

Third, as educators, as consultants, and as policy advisors, helping potential entrepreneurs to envision the holistic process, rather than just the 4 Ps of marketing, would enable a startup decision to have a broader-based foundation. The decisions made and actions taken during the business venture have far reaching effects beyond the scope of the business. Rather than always taking a retrospective look, attributional explanatory style may provide a crystal ball look into how outcomes may be perceived if a venture does not succeed; it can imply how the entrepreneur may react if the venture fails. Would-be entrepreneurs can learn to make the attributions that would inoculate them against the effects of failure. In essence, attributions may be taught so there would be learned optimism.

Is there life after death of an entrepreneurial venture? For most entrepreneurs the answer is typically yes. But researchers have generally assumed the entrepreneurial venture itself defines all that there was to know. Attributional explanatory style may allow us to predict and explain the events and effects of entrepreneurial success and failure and may lead to a new line of research looking at what happens after the success and failure of a venture.

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Mary K. Askim, University of North Dakota

Richard A. Feinberg, Purdue University