Embracing failure : how failure rhetoric and the peer network influence entrepreneurial success

In most places, failure is stigmatized. Yet, failure is the most likely outcome in entrepreneurship. Entrepreneurs, particularly those wishing to remain in entrepreneurship, must be able to navigate failure. This dissertation is motivated by the question of how entrepreneurs recover from failure. Through interviews with founders of failed firms, I learn that entrepreneurs turn to failure narratives to make sense of entrepreneurial failure. By analyzing these failure narratives as cultural artifacts with audiences and genres, I learn that peers are a significant yet undertheorized audience of entrepreneurial failure narratives. After scoping the phenomenon to public peer-to-peer entrepreneurial failure narratives, I propose that peers are an ideally situated audience for making sense of failure while avoiding stigma because they are close enough to the failure experience to understand it but not so close as to be harmed by it. Because of this privileged position, entrepreneurs can turn to peers to learn from failure, collectively redefine failure on more positive terms, access necessary social capital, and re-affirm their entrepreneurial identity, which all contribute to recovery from failure and entrepreneurial persistence. I further propose that this peer engagement is made possible, vitally so in the case of isolated entrepreneurs, through the publication of the failure narrative. However, publication of a failure narrative should invoke stigma. Attribution theory suggests that entrepreneurial failure narrative authors may avoid peer stigma through rhetoric that externalizes failure, which should destigmatize their failure experience and help them to recover their social capital. I apply inductive computational text analysis and correspondence analysis to a set of startup postmortems published on blogging platform Medium.com to analyze how entrepreneurs talk about failure and how peers react to these rhetorics. I combine this with LinkedIn data to identify whether narrators continue in entrepreneurship. I find evidence to support the argument that externalizing rhetoric results in destigmatization. But I also find evidence that entrepreneurs turn to internalizing rhetoric to claim the entrepreneurial identity through their failure narrative. I show how positive peer response may play a critical role in entrepreneurial persistence by providing an empathetic support network that connects failed entrepreneurs to social capital. The final empirical chapter of the dissertation investigates community network dynamics as one mechanism for this relationship. I test the argument that more centrally embedded peer community members engage in more exclusionary community boundary work in response to failure narratives using data from a virtual entrepreneur community on Reddit. I confirm the importance of such online interactions through interviews with authors and commenters of failure narratives to determine whether commentary ties are activated off-line and whether they influence subsequent entrepreneurial outcomes. In a regression of comment sentiment on three measures of community embeddedness -- degree, betweenness, and tenure -- I find that embeddedness, particularly tenure, is directly related to stigmatization of failed members. However, by looking beyond the structure to the content of the tie, my findings suggest that the sentiment of a peer's response might instead predict future centrality, such that boundary work is the explanans rather than explanandum of peer community structure. In such a case, rather than gatekeepers excluding the stigmatized, supportive peers might act as a bridge that connects the stigmatized with social capital for failure recovery and ultimately expands the peer community. I conclude with prospective avenues for future research made possible by these studies.

Keywords: Sociology.
Advisor: Cook Karen S. 
Sorensen Jesper B.
Granovetter Mark S. 
McFarland Daniel (Daniel A.)