Relief and exploration after firm failure: Taking into account pre-failure experiences to understand post-failure responses

Conceptualizing firm failure as the loss of something important to the entrepreneur, the literature on emotional responses to firm failure has focused on the negative emotions experienced in response to this loss. We shift emphasis to introduce the positively valanced emotions relief and exploration as emotional responses to firm failure. These emotions reflect the inherently stressful nature of firm failure enabling an exploration into the timing of when stress is experienced during the failure process. Empirically we test our hypotheses, using a combination of a telephone and mail survey, on a sample of 114 entrepreneurs who had recently experienced the bankruptcy of their firm. We extend the literature on responses to firm failure by establishing relief and exploration as common emotional responses to firm failure and provide initial empirical support for the importance of considering pre-failure experiences in the process of entrepreneurial failure. Our findings also lend empirical support to the anticipatory grief argument put forward by Shepherd and colleagues (2009).