Coping with failure, mental health and career intentions among failed entrepreneurs.

Subramanian, S. ; Kumar, M. Vinoth

Introduction

The ratio of research studies on entrepreneurs are more predominantly tilted towards determinants of entrepreneurial success stories than exploration of failures and its effect on entrepreneurs life style (Shepherd, 2003; Minniti and Bygrave, 2001). Exploration of attributes to failure of business operations were reported more often than the types of coping styles, mental health, and future career choices of those entrepreneurs who had failed. For instance, attributes to failure in entrepreneurial venture were in general classified into two broad categories--internal factors (poor management, inexperience, arrogance, poor business policy etc) and external factors (strong competition, slow market growth, small market size, lack of parental support, difficulty in staffing, non utilization of professional advice from experts etc) (Ballantin et.al, 1992; Gaskill et al., 1993; Gaskill et al., 1994; Pech and Alistair, 1993; Zacharakis et al., 1999). In recent times, the types of coping mechanisms adopted by those entrepreneurs who had encountered adverse situation are gaining much attention among the researchers (Cannon & Edmondson, 2001; McGrath, 1999; Minniti & Bygrave, 2001; Saraswathy, 2004; Shepherd, 2003; Shepherd, 2004). Such type of studies which are aimed at examining what happens after the firm fails in the business venture and its impact on person's life with respect to economic, psychological, physiological and social aspects will certainly facilitate to take appropriate corrective actions for all those, who had associated with such collapsed business venture. Systematic examination on the extent to which entrepreneurs cope with failure experience and the influence of such coping mechanisms on the capacity of entrepreneur's learning from failure will immensely help to provide suitable assistance to those targeted categories of miserable entrepreneurs, who are in dire need of helping hand. The entrepreneurial failure may lead to have different career intentions to pursue in their life. Some gets scared and eventually prefer working for others to venture once again, some may opt to re-start once again based on the their trial and learning process. Research studies acknowledged strongly that failure may provide learning that improves an entrepreneur's probability of success in subsequent entrepreneurial initiatives (Folkman et.al, 2004; Folkman et al., 1986; Kinicki et al., 2000; and Choo and Wong 2006; Singh et al., 2007). Alvarez and Barney (2005) offered "creation" view of entrepreneurship which describes opportunity identification as an emergent process, wherein commercially viable opportunities take shape through a trial and error learning process of entrepreneurs' failure. It appears very important to study the topic of coping with entrepreneurial failure because Shepard (2003), suggests that entrepreneurs who experience grief from business failure may likely trigger a negatively emotional response in every activity that interferes with entrepreneur's learning ability. Hence, enhancing a proper coping mechanism for such an entrepreneurial failure event seem to facilitate enriching their knowledge base very widely to turn them around in future ventures.

The present study examines how do entrepreneurs cope with the failure experience and how does coping affect the intentions to venture again. These questions are important to address in entrepreneurship research because entrepreneurship coping strategy and resulting learning may well improve the probability of success in a future entrepreneurial endeavor (Minnite and Bygrave, 2001; Canon and Edmondson, 2001). Cognitive emotional regulation coping refers to all the strategies that are used to reduce, maintain or increase emotions (Gross, 2001). Emotional regulation coping strategies are implicated in personality, emotional, cognitive, and social development, including resiliency. When they are biased, they also play a prominent role in the development and maintenance of emotional disorders. In fact, the concept of emotional regulation is very broad and encompasses a wide range of conscious and unconscious physiological, behavioral and cognitive processes (Gross, 2001). Garnefski et al., (2001) showed that people who adopt adaptive strategies, report fewer depression and anxiety symptoms than people, who use non-adaptive strategies. The specific objectives of the study are:

*To explore the extent to which the three categories of failed entrepreneurs--(A) those who have strong intentions to re-start the business process once again in near future (B) those who do not have any intention at all to venture once again instead prefer working for others and (C) those who are indifferent about future plans--vary in adapting various types of coping strategies to overcome the adverse failure in their business venture.

* To find out the extent to which self-esteem and mental health vary among those three categories of entrepreneurs.

Research Methodology

Participants

A list of around 200 entrepreneurs who had discontinued their business operations during the period of 2006-2007 was obtained from six major employers association dealing with manufacturing hosiery goods, wet grinder and accessories, electronics and electrical components, export knitwear products, and power loom clothes. All these associations are located in Coimbatore District, Tamil Nadu. Among 200 entrepreneurs, only 140 entrepreneurs who had discontinued their business operations exclusively due to failure in business operations were selected. Further, these entrepreneurs had failed to repay their loans to the commercial banks due to various recurring problems relating to their business operations. Those who had discontinued their business operations due to problems in partnership, leaving abroad for higher studies, handing charges over to others, selling to other parties etc. were omitted. These entrepreneurs belong to small and medium scale enterprises. The age group of the entrepreneurs range between 26 and 48. These failed entrepreneurs have a loss of investment ranging from 8 to 28 lakhs and had employed a workforce ranging from 12 to 52. All the units were in operation for 4-8 years. When enquired about their future course of action plan, the entrepreneurs showed varied responses ranging from restarting business process again in the same filed to looking for executive position in other companies, switching over to other business with lesser amount of risk, joining educational institutions as faculty, starting consulting firms etc.

Classification of Entrepreneurs

The entrepreneurs were contacted personally after getting a prior appointment and they were asked to indicate what they have been doing at present and their intentions in future course of action by choosing the following options:

* Have strong intentions to re-start business process once again in near future

* Do not have any intention at all to venture again, instead prefer working for others

* Unable to decide at present and not having any concrete plans about future.

Among 140 entrepreneurs who are willing to share their career intentions, 48 entrepreneurs showed their strong intentions to re-start business process once again, 52 entrepreneurs showed that they do not have any intentions at all to venture, instead prefer working for others the remaining 40 entrepreneurs are totally indifferent about their future career plans and unable to decide.

Measures

(i) Coping Style: Cognitive Emotion Regulation Questionnaire (CERQ) The CERQ is a 36 item self reporting questionnaire with a 5 point Likert response format (1 almost never to 5 almost always) designed to evaluate the cognitive aspects of emotion regulation coping strategies. The questionnaire is introduced by the following sentences, which are written at the top: "Every one gets confronted with negative or unpleasant events now and then and everyone responds to them in his/ her own way. With the following question, you are asked to indicate, what you generally think, when you experience negative or unpleasant events like business failure. This questionnaire consisted of nine dimensions which were classified into two categories as adaptive strategies (Acceptance, Positive Focusing, Refocus on Planning, Positive Reappraisal and putting into Perspective) and non adoptive strategies (Self-Blame, Rumination, Catastrophizing and Blaming Others).

(ii) Mental health

A 29 item Mental Health questionnaire developed by Priya Daniel (1997) was used to measure Mental Health. The subject is asked to respond Yes or No to each of these statements which reflecting feelings of adjustments to self, others, environment and life aspects. Among these 29 items, 11 items are positively loaded statements and 17 items are negatively loaded statements. A value of score 1 is assigned in case respondent chooses 'Yes' option for positively loaded items and 0 for 'No' options. Similarly, a value of score 1 is assigned for choosing 'No' options for negatively loaded statement and 0 for 'Yes options. The total score may range from 0 to 29. A higher score indicates higher mental health on the part of the respondents.

(iii) Self-Esteem

Rosenberg Self-Esteem Scale (Rosenberg, 1965) was used to assess the self-esteem of the subjects. The scale has been originally developed by Rosenberg in 1965. The scale contains 10 items requiring a general evaluation of the respondents self-worthiness as a whole on a 4 point scale ranging from strongly agree to strongly disagree. The total score ranges from 0 to 30.

Results and Analysis

Relationship between Coping strategies, Mental Health and Self Esteem Pearson's correlation between coping strategies and mental health and coping strategies and self-esteem were calculated and presented in Table 1. The five adaptive strategies were found to be positively correlated with mental health and self-esteem levels of entrepreneurs and the four non-adaptive strategies were found to be negatively correlated with mental health and self esteem levels. It showed that the internal characteristics will have a significant impact on the types of adaptive and non-adaptive cognitive emotion regulation coping strategies while encountering adverse situations. Implementing suitable psychological interventions among those aggrieved entrepreneurs targeting their cognitive and emotion regulation coping strategies will enhance their mental health.

The coping strategies among three categories of failed entrepreneurs has been shown in Table 2. The results obtained showed that the three categories of entrepreneurs differ significantly from each other with respect to the types of coping strategies and mental health and self-esteem. The entrepreneurs who have strong intentions to re-start again tend to follow mostly adaptive coping strategies such as positive refocusing, refocus on planning and putting into perspective than other two categories of entrepreneur--those who do not have any intention at all to venture once again in future and those who are undecided about future career plans. Further, the results revealed that the types of intentions of future course of action are likely to moderate the cognitive, emotive regulation coping strategies and their subsequent mental health and self esteem. Those who prefer for working for others tend to have significantly higher scores on non-adaptive coping strategies such as self blame and blaming others than those who prefer venturing once again to carry their business. There was no difference between the entrepreneurs who do not have strong intention (Category B) and the entrepreneurs who are indifferent about future plans (Category C). But, it is also revealed that the level of self esteem and mental health tend to moderate the adoption of the types of coping strategies significantly. This information can be of much importance in determining the purpose and the type of assistance required for the entrepreneurs who are in adverse situations. For example, the internal resources of individual can be enhanced sizably through some intervention which will facilitate to overcome non-adaptive cognitive strategies and subsequently facilitating to adapt more adaptive coping strategies to deal with adverse failure situations. The Cognitive Emotive Regulation Coping questionnaire can be used for the diagnosis of entrepreneurs' coping styles with the purpose of explaining the extent to which these nine specific cognitive coping strategies differ among the three categories of entrepreneurs who have different types of intentions and decisions in their career choice. Obviously, those who opted to re-start the business process again (category A) are likely to have higher scores on adaptive (functional) coping strategies than the other two categories(category B and C) of entrepreneurs; perhaps the category A possess typical characteristics of successful entrepreneurs such as risk taking, aspiration and achievement, gut feelings etc. It is expected that category B and C, who had encountered more or less similar type of the adverse situations like category A are likely to exhibit same type of cognitive coping strategies but they tend to adapt non-adaptive (dysfunctional) coping strategies.

Discussion

A number of implications have emerged from the results of the present study. First, when a stressful adverse situation arises in business field some preventive strategies such as enhancement of entrepreneur's emotional intelligence, strengthening cognitive and emotional regulation coping mechanism (positive perception, appraisal and expression of emotion, emotional facilitation of thinking, understanding and analyzing emotion) may have a buffering effect on the stress. Also, cultivating interpersonal relations skills in managing others' emotions help people to regulate moods in positive direction and try to establish intimacy with them (Schutte et.al, 1998). Strengthening the internal resources such as hardiness, optimism, positive health and self-esteem will mediate the choice of coping strategies by altering the individual's cognitive appraisal process in such a way that the entrepreneurs are able to reframe or reinterpret adverse experiences of failure in their business venture into somewhat viable business opportunity in different or same fields in a later period. Subsequently, it is presumed that the level of psychological distress experienced by them may reduce sizably. Further, it is evident that entrepreneurs with such strong internal resources prefer relying on functional coping strategies such as acceptance, positive focusing, refocus on planning, positive reappraisal and putting into perspective to dysfunctional coping strategies such as self blame, blaming others etc which may facilitate to transform cognitively negative event into a potential growth generating experience. From health point of view, it is expected that the entrepreneurs who are engaged in problem focused coping strategies generally demonstrate fewer indication of distress and maladjustment.

Implementing suitable intervention at earlier developmental stage of business operations will help build adequate internal resources (self-esteem, mental health, hardiness etc), which in turn enrich their cognitive, emotive and interpersonal capacities that may help to promote the development of more adaptive coping strategies to recover grief. Financial institutions that provide loan to entrepreneurs can render possible assistance by setting up supportive mechanisms such as offering consulting services in suggesting alternative options in view of failures, mentorship programs for technical and administrative guidance, providing networking or collaborative arrangements, evolving progressive business policies etc. Such support, according to current findings, may enable entrepreneurs who have failure in business to cope better with the repercussions of the losses, learn from it and find another venture. By following a holistic approach encompassing social, psychological, physiological and economic aspects to redress the ramifications of entrepreneurial failure will certainly facilitate to turn them around.

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S. Subramanian[1], M. Vinoth Kumar (2)

Department of Psychology, Bharthiar University, Coimbatore--641046, India

(1) E-mail: sugisubbu@hotmail.com, (2) E-mail: vinoth1330@gmail.com

Table 1: Correlation between Subscales of Cognitive Emotion Regulation
Strategies, Mental Health and Self-Esteem

Coping Strategies Mental Health Self-Esteem

Acceptance 0.14 0.11
Positive Refocusing 0.28 ** 0.27 **
Refocus on Planning 0.31 ** 0.12
Positive Reappraisal 0.17 0.34 **
Putting into Perspective 0.35 ** 0.31 **
Self-Blame - 0.29 ** - 0.35 **
Rumination - 0.10 - 0.08
Catastrophsing - 0.11 - 0.13
Blaming others - 0.36 ** - 0.33 **
Adaptive Strategies 0.26 ** 0.34 **
Non-Adoptive Strategies - 0.33 ** - 0.37 **

Note: Degree of Freedom is 138 for all the correlation

** p< .01 Level

Table 2: Coping Strategies among Three Categories of Failed
Entrepreneur

Coping Strategies(CERQ) Category A Category B Category C
 Strong No Intention to Unable to
 Intention Reventure-- Decide about
 to Revenue Prefer Working Future Plans
 once again for others N=40
 N=48 N=52

 Mean S.D Mean S.D Mean S.D

Acceptance 11.45 2.76 11.23 2.11 11.36 2.71

Positive Refocusing 12.43 2.54 10.75 2.35 10.47 2.61

Refocus on Planning 11.75 2.34 9.67 2.79 9.75 2.54

Positive Reappraisal 11.03 2.61 10.85 2.38 10.47 2.47

Putting in to
Perspective 12.41 2.59 9.91 2.54 9.82 2.81

Self-blame 9.18 2.31 11.82 2.64 11.64 2.21

Rumination 7.03 2.29 7.74 2.85 7.51 2.08

Catastroping 7.31 2.19 7.65 2.91 7.85 2.19

Blaming others 9.13 2.13 11.82 2.83 11.82 2.41

Mental Health 22.17 3.42 17.27 3.5 17.96 3.34

Self-Esteem 23.40 3.58 19.2 3.72 20.08 3.36

 't' Value

 A&B A&C B&C

Acceptance 0.45 0.17 0.267

Positive Refocusing 3.51 ** 3.84 ** 0.542

Refocus on Planning 4.07 ** 3.92 ** 0.15

Positive Reappraisal 0.36 1.09 0.74

Putting in to
Perspective 4.90 ** 5.07 ** 0.17

Self-blame 5.17 ** 4.82 ** 0.35

Rumination 0.60 0.94 0.33

Catastroping 0.66 1.05 0.41

Blaming others 5.47 ** 5.27 ** 0.2

Mental Health 2.81 ** 2.41 * 0.39

Self-Esteem 2.28 * 1.08 0.47

* p < .05 Level

** p < .01 Level