This is a self-archived – parallel published version of this article in the 
publication archive of the University of Vaasa. It might differ from the original. 
Entrepreneurs’ Learning from Business Failures: 
An Emerging Market Perspective 
Author(s): Amankwah-Amoah, Joseph; Khan, Zaheer; Ifere, Simeon 
Emezana; Nyuur, Richard B.; Khan, Huda 
Title: Entrepreneurs’ Learning from Business Failures: An Emerging 
Market Perspective 
Year: 2021 
Version: Accepted version 
Copyright ©2021 Wiley. This is the pre-peer reviewed version of the 
following article: Amankwah-Amoah, J., Khan, Z., Ifere, S.E., 
Nyuur, R.B. & Khan, H. (2021). Entrepreneurs’ Learning from 
Business Failures: An Emerging Market Perspective. British 
Journal of Management, 1-22, which has been published in final 
form at https://doi.org/10.1111/1467-8551.12557. This article 
may be used for non-commercial purposes in accordance with 
Wiley Terms and Conditions for Use of Self-Archived Versions. 
Please cite the original version: 
 Amankwah-Amoah, J., Khan, Z., Ifere, S.E., Nyuur, R.B. & Khan, 
H. (2021). Entrepreneurs’ Learning from Business Failures: An 
Emerging Market Perspective. British Journal of Management, 
1-22. https://doi.org/10.1111/1467-8551.12557 
 
1  
ENTREPRENEURS’ LEARNING FROM BUSINESS FAILURES: AN EMERGING-MARKET PERSPECTIVE 
  Joseph Amankwah-Amoah Kent Business School University of Kent, Kent ME4 4TE E-mail: J.Amankwah-Amoah@kent.ac.uk TEL: +44 (0) 1634 (88)8870  Zaheer Khan* University of Aberdeen Business School University of Aberdeen 
King’s College, Aberdeen, AB24 3FX, UK  School of Marketing & Communication, University of Vaasa, Finland  Email: zaheer.khan@abdn.ac.uk   Simeon Emezana Ifere  Department of Business Administration University of Lagos, Akoka – Lagos, Nigeria  Tel: +234 – 803-314-4937 Email: sifere@unilag.edu.ng   Richard B. Nyuur Newcastle Business School City Campus East 1, Newcastle Upon Tyne NE1 8ST, United Kingdom Tel: +44 (0) 191 227 3336 Email: richard.nyuur@northumbria.ac.uk  Huda Khan University of Aberdeen Business School University of Aberdeen 
King’s College, Aberdeen, AB24 3FX, UK Email: huda.khan@abdn.ac.uk    *Corresponding author    Note: This is a post-review, pre-print accepted version, please cite:   Amankwah-Amoah, J., Khan, Z., Ifere, S. E., Nyuur, R.B., & Khan, H. (2021). 
ENTREPRENEURS’ LEARNING FROM BUSINESS FAILURES: AN EMERGING-MARKET PERSPECTIVE. British Journal of Management, in press. (DOI: 10.1111/1467-8551.12557) 
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 ABSTRACT This article extends prior scholarly works on entrepreneurial failure, entrepreneurial resilience, and learning from failure by examining how the effects of prior experiences of entrepreneurial business failure (EBF) manifest in the entrepreneurial process of subsequent venture formation. We elucidate the pre-founding and post-founding effects of prior entrepreneurial business failure via insights drawn from 25 serial entrepreneurs in Nigeria. The findings demonstrate that entrepreneurs were often motivated to start another venture as a result of the economic hardship and social stigmatization that occurs after business closure. We identified a three-stage fine-grained process perspective of successive entrepreneurial engagement (e.g., pre-founding, formation and development, and post-founding conditions and effects on subsequent entrepreneurial ventures. These stages shed light on entrepreneurial fragility, entrepreneurial resiliency, and development of anti-fragility capabilities that are conducive to subsequent venture formation and survival. We shed light on how individual-level factors shape how prior failure experiences can shift from liability immediately after business collapse and at pre-founding to become an asset during and after new-venture formation. Such learning from past failure is vital in adapting to dynamic environmental changes, especially those observed in emerging-market settings. Taken together, we demonstrate how entrepreneurs bounce back from errors, failures, and setbacks. 
Keywords: learning from failure; entrepreneurial failure; resilience; entrepreneurship; start-ups; stigma; emerging markets; Africa  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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1 INTRODUCTION 
For much of the last three decades, numerous streams of research on entrepreneurship have 
emerged which have sought to explain the effects of prior career experiences on the entrepreneurial 
process (Hogarth and Karelaia, 2012; Le Mens et al., 2014; Rocha and Van Praag, 2020). Indeed, 
it has been demonstrated that prior experience can equip entrepreneurs in integrating technologies 
that facilitate creativity and innovativeness (Weinberger et al., 2018; Mooradian et al., 2016), 
identifying and exploiting untapped market opportunities (Jones and Wadhwani, 2006; Shane and 
Khurana, 2003; Voss and Voss, 2013), and developing greater international engagement (Lafuente 
et al., 2019). Across an array of sectors and industries, new business start-ups by novices have 
often emerged only to enjoy a temporary period of success before eventual exit (Fisch and Block, 
2021) and at times precipitated by global downturns, disasters, and global pandemics such as 
COVID-19 (Amankwah-Amoah et al., 2021; Williams and Shepherd, 2016). Many subsequently 
re-emerge as serial and resilient entrepreneurs to enjoy more prolonged successes after leveraging 
their past entrepreneurial experience (Nahata, 2019; Fisch and Block, 2021; Westhead and Wright, 
1998). At founding and in the early years that follow, newly established ventures are shaped by 
history and past experiences of the entrepreneur, but our understanding of how the “past” of the 
entrepreneur and its influences on subsequent venture formation and success, remains limited and 
yet to be systematically addressed.  
Much of the existing body of research portrays “the past” and past experiences as 
constraining forces that curtail strategic alignments and reduce flexibility in the wake of new 
environmental threats (Argyres et al., 2017; see also Nutt, 1992). Indeed, prior experience of 
entrepreneurial failure can be severely discrediting to the reputation of the entrepreneur and his or 
her social standing, culminating in impression management activities (Neu and Wright, 1992; 
Shepherd and Haynie, 2011). Another line of research argued that “the past” experience can be an 
4  
enabling force in fostering learning, nurturing resilience, and diffusing positive knowledge from 
one failed venture to another (Cope, 2011; Hogarth and Karelaia, 2012). Interestingly enough, 
although entrepreneurial resilience can be cultivated through crisis (Korber and McNaughton, 
2018; Williams, Vorley, and Ketikidis, 2013; Doern, Williams, and Vorley, 2019) or past 
experience of entrepreneurial failure (Lafuente, Vaillant, Vendrell‐Herrero and Gomes, 2019), 
very little research attention has been directed towards examining the mechanisms through which 
such resilience capabilities are developed after business failure. This is surprising given that 
entrepreneurial resilience is essential for success (Doern et al., 2019; Williams et al., 2013; see 
also Liu, Cooper, and Tarba, 2019) and has potential to enrich scholarly understanding of the 
effects of prior experience of entrepreneurial failure. Specifically, little is known as to how the 
prior experience of entrepreneurial failure emerges over time in the entrepreneurial process 
(Wadhwani et al., 2016). 
 Entrepreneurship and organizational scholars have accepted the effects of prior 
entrepreneurial engagement (Hessels et al., 2011; Lafuente et al., 2019), however, there is 
relatively limited research that has explored the underlying process through which prior experience 
of entrepreneurial failure can become assets or liabilities for the subsequent venture. Such process-
based research has much to offer in understanding the temporal how and why aspects of the 
phenomenon rather than explaining the variance-type relationships, which is a dominant approach 
for much of the current research on entrepreneurial new-venture failure (e.g., Langley, 1999; 
Langley et al., 2013; Hogarth and Karelaia, 2012). 
Against this backdrop, the main purpose of this study is to examine how the effects of prior 
experiences of entrepreneurial business failure (EBF) manifest in the entrepreneurial process of 
subsequent venture formation. We depart from much of the existing entrepreneurship research 
5  
(Murnieks, Klotz, and Shepherd, 2019) by developing a unified framework which articulates the 
effects of prior EBF on serial and resilient entrepreneurs. We utilized insights drawn from 25 serial 
entrepreneurs originating from Nigeria to illustrate our theoretical analysis. Nigeria offers an 
interesting context to examine this topic, given that it is one of the important economies of Africa 
with strong influence and roles of the state, and fragile institutional environments. Start-ups receive 
limited institutional support, and the chance of failure is much higher in such contexts compared 
to developed markets, thus understanding learning from prior experience and the subsequent 
venture formation offers important insights to extant literature.  
In addition, the paper makes several contributions to the EBF and strategy streams of 
literature. First, we integrate the literature on the entrepreneurship process (Bygrave, 2006; 
Murnieks et al., 2019), EBF (Byrne and Shepherd, 2015), and entrepreneurial resilience (Korber 
and McNaughton, 2018; Santoro, Bertoldi, Giachino, and Candelo, 2020; Williams, Vorley, and 
Ketikidis, 2013) to provide a much more fine-grained understanding about learning from prior 
experience in the subsequent formation of new ventures. The study also enriches our understanding 
of how and why resilient serial entrepreneurs in institutionally weak and fragile contexts, such as 
those witnessed across emerging-market settings, adjust to adverse experiences of entrepreneurial 
failure, in order to relaunch subsequent ventures while others fail to do so (Williams and Shepherd, 
2016).  
Furthermore, in spite of some attempts by scholars to explore learning from failure (LFF) 
(e.g., Lafuente et al., 2019), their works offer little insight into the more micro-level decision-
making processes and actions that unfold after the experience of business failure. Capitalizing on 
unique data drawn from 25 serial entrepreneurs in Nigeria, we rectify this lacuna by offering a 
three-stage fine-grained process perspective of successive entrepreneurial engagement (e.g., pre-
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founding, formation and development, and post-founding conditions and effects), demonstrating 
the value of generative experiential learning from the past. Such a process perspective is rare in 
understanding how entrepreneurs bounce back from failure and launch successful ventures, despite 
the acknowledgement by some entrepreneurship scholars to of the need to offer a robust 
explanation when exploring such phenomenon (Bygrave, 2006; Moroz and Hindle, 2011; 
Weinberger et al., 2018; Moorradian et al., 2016).  
The paper also builds on the research by offering a granular view of LFF and helps in 
setting the right type of policies for the development of successful entrepreneurship and 
management of entrepreneurial firms, especially in transforming economies, which are going 
through rapid transformation with limited institutional support mechanisms in place for start-ups. 
Learning and unlearning from prior experience, particularly in the context of serial entrepreneurs 
operating in emerging markets, are underexplored, thus the findings of this study provide useful 
insights into the emerging literature on learning and unlearning from past success and failure (cf. 
Martignoni and Keil, 2021).  
Moreover, many of the existing studies have focused on the organizational level of analysis 
rather than understanding individual entrepreneur’s behavior and how such behavior shapes the 
formation of future ventures. Accordingly, past studies offer only a limited insight into career 
transition of entrepreneurs after business failures (cf. Tolentino et al., 2014). By conceptualizing 
the literature on the effects of business failure, we advance a framework which helps to explain 
the underlying processes (e.g., Langley, 1999; Langley et al., 2013) and how the experience of the 
past can help explain decisions and actions for the subsequent formation of a new venture. Thus, 
the study further explicates how prior experience of entrepreneurs can shift from assets at the pre-
founding stage to become liabilities during the later stages of new ventures. Moreover, the study 
7  
adds to the emerging stream of research which has suggested a need to integrate pre-founding 
features of entrepreneurial ventures to explain how competitive advantage is won and lost in the 
post-founding phase (see Barringer and Ireland, 2016; Covin and Miles, 1999). In this direction, 
we chart the mechanisms through which feeble resources and expertise can precipitate business 
failure whilst hampering entrepreneurial resilience after failure. Indeed, the framework that we 
proffer in this paper has a wider implication for the extant literature on organizational failure, as 
previous research lacked a unified and integrated process-based view with strong empirical 
support. 
The rest of the paper proceeds in the following manner. After reviewing the literature on 
the effects of the “past”, we will turn our attention to the research method. The findings are then 
set out. The penultimate section outlines the features of the framework using a phased model. The 
final section sets out the implications of this conceptualization.  
2 ENTREPRENEURSHIP, BUSINESS FAILURE, AND LEARNING: CONCEPTUAL DEVELOPMENT   
For analytical clarity, business failure refers to firms that experience a period of performance 
decline and fail in their attempt to generate a turnaround which concludes with the closure of the 
business (Byrne and Shepherd, 2015; Ucbasaran et al., 2013), thus representing prior 
entrepreneurial failure experience.  
The concept of entrepreneurial process is contentious and clouded by a lack of clarity about 
the specific stages and processes of venture formation, decline, and exit (Moroz and Hindle, 2011). 
The theoretical contention here is that during the life course of new ventures, prior experiences of 
the entrepreneur can become an asset or a liability. Essentially, the prior entrepreneurial failure 
experience can play a pivotal role in determining subsequent venture failure and success, 
8  
particularly in the changing environments of emerging markets. Existing research highlights that 
learning and unlearning from success and failure can be crucial for adaptations, and unlearning 
from failure beliefs is extremely valuable for organizations in dynamic environments (cf. 
Martignoni and Keil, 2021).  
The “past as an asset” perspective contends that prior to founding a venture, the 
entrepreneurs accumulate an array of useful resources, capabilities, established client bases, and 
experiences, which are then brought to bear in the newly established firms (Le Mens et al., 2011; 
Sørensen and Stuart, 2000). Scholars have suggested that such routines and capabilities can 
underpin the venture’s ability to survive, weather the initial storm, and achieve competitive 
advantage (Sørensen and Stuart, 2000). Some entrepreneurs start new businesses with knowledge 
and prior experience including prior business failure, which enables them to adapt and effectively 
respond to market conditions (Cope, 2011). As Gerstrøm and Isabella (2015, p. 230) put it “when 
organizations die, people do not die with them … Organizational members live on”.  
A nascent body of scholarly work has demonstrated that prior experience of business 
failure provides a source of learning and incentives for successive entrepreneurial engagements 
(Amankwah-Amoah et al., 2018; Cope, 2011; see also Fisch and Block, 2021). Entrepreneurial 
learning is taken here to mean where the experience and lessons from business failure are 
“transformed into knowledge, which in turn can be used to guide the choice of new experiences” 
(Politis, 2005, p. 407). Accordingly, the relevant knowledge and capabilities required in launching 
a successful business are predominantly acquired through experiential learning (Lafuente et al., 
2019; Simmons et al., 2016). Serial entrepreneurial venturing generates learning and positive 
economic spillover effects to local economies (Parker, 2013). Similarly, Holcomb et al. (2009, p. 
172) noted that such learning entails witnessing the behaviors and actions, assimilating new 
9  
knowledge, and organizing assimilated knowledge by connecting it with pre-existing frameworks. 
Such learning is crucial for the development of resilience and absorptive capacity which can 
facilitate the new ventures’ survival as well as adaptation to dynamic environmental conditions 
(Zahra and George, 2002; Martignoni and Keil, 2021).  
Moreover, serial entrepreneurs develop the capabilities in building and sustaining valuable 
network relationships, as well as recognizing and better understanding essential patterns through 
such experiential learning (Lafuente et al., 2019). In addition, entrepreneurs and their firms over 
time also accumulate an array of experiences and knowledge stock across functional areas which 
equip them to better deal with new and old circumstances (Chung and Beamish, 2005; Keith et al., 
2016). When confronted by competitive pressures, such firms’ prior experience and expertise of 
dealing with similar rivals’ pressure can help them to respond efficiently (Barnett and 
McKendrick, 2004). It has also been suggested that prior experience enables serial entrepreneurs 
to identify more and better business opportunities (Ucbasaran et al., 2009), which can then mitigate 
the chances of subsequent ventures’ failure. Entrepreneurs who relaunch into business despite their 
past negative entrepreneurial experiences of failure are referred to as resilient entrepreneurs. 
 Parallel to the growing body of research on business failure, another relevant strand of 
research is entrepreneurial resilience (Doern et al., 2019; Williams et al., 2013; Liu et al., 2019). 
By resiliency, we are referring to the capacity to bounce back from past failures or adversity and 
progressively pursue entrepreneurial activities (Cooper, Liu, and Tarba, 2014; Luthans, 2002; Liu 
et al., 2019). Resiliency capability is extremely important for entrepreneurs to bounce back from 
failure and crisis, which in turn can be vital for venture success (cf. Ayala and Manzano, 2014; 
Markman and Baron, 2003). Through generative experiential learning from their past negative 
experience of failure, resilient serial entrepreneurs benefit from enriched cognitive schema which 
10  
enables them to perform better in their subsequent ventures (Lafuente et al., 2019). Such resilient 
serial entrepreneurs leverage their past experiences in enhancing their subsequent performance in 
terms of innovativeness, creativity, economic value, and employment creation (Weinberger et al., 
2018; Moorradian et al., 2016). Moreover, resilience enables serial entrepreneurs to develop 
emotional and mental competencies such as confidence, hope, and optimism (Stephan, 2018; 
Weinberger et al., 2018), as well as other relevant entrepreneurial competencies such as 
technological capabilities, international flexibility, and ambidexterity (Bustinza et al., 2019; Junni 
et al., 2013), which can be vital for the success of the new venture and its growth. Ucbasaran et al. 
(2009) note that resilient entrepreneurs tend to be more realistic in their own skills and expectations 
about subsequent entrepreneurial activities. The resilient serial entrepreneurs are keener in 
exploring new business opportunities and demonstrate preparedness of what to expect in the 
subsequent venture. These together enable resilient serial entrepreneurs to grasp the interrelations 
of complex external and internal systems, and help them bounce back from the past negative 
experience of failure and pursue subsequent business ventures (Lafuente et al., 2019).  
In sharp contrast to the notion of “past as an asset”, the “past as a liability” hypothesis 
contends that these prior experiences alluded to above can become a liability in curtailing the scope 
and activities of new ventures. The past can create conditions for misalignment, thereby increasing 
the chance of organizational morbidity and mortality (Silverman et al., 1997). Indeed, the 
experience of business failure can lead to loss of self-confidence, grief, and guilt, curtailing the 
entrepreneur’s latitude and ability to act, as well as the potential for entrepreneurial re-entry 
(Cardon et al., 2011; Shepherd and Cardon, 2009). Especially, when the adverse experience of 
failure is appraised as more stressful with a greater feeling of grief, harm, or loss, this can impede 
lessons (see Jenkins et al., 2014; Lafuente et al., 2019). An entrepreneur’s prior experience can 
therefore inject fear and despair (Cacciotti, Hayton, Mitchell, and Allen, 2020), curtail risk-taking 
11  
behavior, and influence ability to trust others or willingness to delegate decisions to others (see 
Hessels et al., 2011; Shepherd et al., 2016). Over time, these become a “liability” in relation to the 
entrepreneur's ability to move on and succeed in a new venture. Thus, such entrepreneurs are less 
likely to overcome their past negative experience and re-initiate their entrepreneurial career 
(Lafuente et al., 2019; Weinberger et al., 2018). As some new ventures mature, their capabilities 
and ability to adapt and respond to changing environmental conditions is eroded, largely attributed 
to inertia tendencies (Stinchcombe, 1965). Over time, old firms can develop and hone their routines 
and processes which can restrict their ability to respond to new changes in their business 
environment (Barnett, 1990), and stifle fast decision-making and innovation activities (Gilbert, 
2005; Le Mens et al., 2014).  
Nevertheless, lack of established routines and processes in the early life of newly founded 
firms can hamper their ability to compete effectively against established rival firms, thereby 
jeopardizing their survival chances (Kale and Arditi, 1999, p. 494). In addition, founders of the 
newly launched firms may be required to learn new roles and acquire new sets of skills, which can 
be time consuming, thereby adding to the inefficiency (Shane and Khurana, 2003). Unlike serial 
entrepreneurs with prior experience of business failure, novice entrepreneurs might not carry the 
burden of business failure or experience of LFF. As such, they might not be able to navigate early 
warning signals of business failure and adapt to changing business conditions (Westhead and 
Wright, 1998).  
2.1 Entrepreneurship Failure: An “Open System” Approach 
Research has shown that open systems “interact with their environment in a specific way 
in which they accept inputs from the environment in order to produce outputs that return to the 
environment” (Driscoll, 2011, p. 36). The open system perspective starts with the premise that just 
12  
like a system which consists of inputs and outputs, entrepreneurial ventures’ performance, decline, 
exit, and subsequent engagement can be explained in the same way. Moroz and Hindle (2011, p. 
812) further emphasized the importance of the “open system” approach to entrepreneurship 
research by noting a need for a better understanding of “what goes in, what comes out, and how 
the transformation takes place”. The inputs of distinctive resources and expertise (i.e., social 
capital and human capital) can then be transformed effectively and efficiently to deliver fruitful 
and profitable outcomes (product or service). This also entails operational capability (Winter, 
2000, p. 983) which can help to maintain survival, success, and failure of new ventures (Kale and 
Arditi, 1998).  
Viewing entrepreneurial failure as an input into a system (see Kale and Arditi, 1998) may 
encompass the injection of faulty routines, processes, resources, and prior cognitions of individuals 
which subsequently constrained their actions and strategies (Ferriani et al., 2012). Past studies 
have demonstrated that it is rather the “inadequacy of these internal and external processes” at the 
nascent stage (Kale and Arditi, 1998, p. 458), as well as the post-founding (later life experiences) 
which interact to bring about failure ultimately (Agarwal et al., 2002). These stages encapsulate 
the key components, decision processes, and different levels of firm–environment interactions 
which ultimately shape the business life cycle (e.g., Langley, 1999; Langley et al., 2013). It can be 
deduced that these liabilities/assets unfold at different stages in the life cycle of a focal firm. 
Therefore, entrepreneurs can take mitigating actions to buffer them from the adverse effects. The 
activities occurring at the early stage have more to do with preparation and formation of the venture 
and late activities include running the business and managing stages such as growth, decline, and 
exit.  
13  
It is further contended that assets becoming liabilities and vice versa stems from the human 
capital obsolescence hypothesis (Rothman and Perrucci, 1970), where there is a mismatch between 
the quality of knowledge held by the entrepreneur and quality of knowledge required to handle 
changes which occur after the founding of a venture (Amankwah-Amoah, 2016). This often stems 
from the founder’s inability to update and upgrade his or her knowledge in the face of a change in 
the environment. As demonstrated in Figure 1, prior experience of business failure would manifest 
in the new venture. Accordingly, social capital and human capital of the individual plays a pivotal 
role in determining whether failure experiences lead to positive or negative outcomes. Having set 
out the framework, the next section outlines the research setting and methodology.  
------------------------------ Insert Figure 1 about here ------------------------------     
3 RESEARCH METHODOLOGY 
3.1 The Business Environment in Nigeria 
Nigeria is one of the leading emerging markets in sub-Saharan Africa (SSA) with 
promising potential for growth (Nakpodia et al., 2016). The country has the largest natural gas 
reserves and is the largest oil exporter on the African continent. In April 2014, the country’s 
economy was rebased, and the GDhhP numbers revised up by 90% which made it the largest 
economy in Africa (The Economist, 2014). There are estimates that Nigeria could become the 14th 
leading economy by 2050 (PWC, 2017). Nigeria has a young, ambitious, and increasingly well-
educated population that constitutes roughly over one-quarter of the sub-Saharan African 
population (The Economist, 2014). Furthermore, the country’s population is growing at a rate of 
2–3% per annum and is projected to surpass the population of the USA by 2045 (Elumelu, 2014). 
14  
These factors, coupled with successes of other firms in the country and good returns on 
investments, have further positioned the country as an attractive destination for foreign investment 
in the sub-Saharan African region (Nakpodia et al., 2016; UNCTAD, 2016). Global firms such as 
Unilever, Nestlé, Procter & Gamble, and SABMiller, in addition to the dominant oil companies 
such as Royal Dutch Shell, have been operating in the country for decades. In addition, the 
prospects in the country serve as a good context for its ambitious, well-educated, and young 
population to venture into business start-ups. However, a recent faltering local currency 
precipitated by lower global commodity prices and the incidence of COVID-19 have impacted the 
economy significantly. Arguably, the shortage of electricity is one of the most significant 
challenges facing local Nigerian businesses.  
Furthermore, insecurity in parts of the country (Boko Haram in the north, Herdsman in the 
middle-belt and Militancy in the Niger Delta) is negatively impacting entrepreneurs, especially 
those located in the affected areas. Uncertainty in the Nigerian business environment has led to the 
collapse of many small-scale businesses and industries as well as the relocation of large and 
multinational firms to other stable regional countries (Ogunro, 2014). These together also 
contributed negatively to a significant fall in foreign direct investment into Nigeria from $4.7 
billion in 2014 to $3.1 billion in 2015 (UNCTAD, 2016). Furthermore, market confidence in the 
quality of corporate governance mechanisms, particularly with regard to regulations, is quite low 
(Osemeke and Adegbite, 2016). In addition, the formal institutional and regulatory weaknesses 
have a significant knock-on effect on the business environment and the ease of doing business in 
Nigeria. The Economist Intelligence Unit further ranks Nigeria’s business environment 79th out 
of 82 countries, citing systemic infrastructural problems (The Economist, 2016). Accordingly, the 
ongoing problem of corruption, slow pace of structural reforms, and weak institutions are likely to 
fester, thus creating additional obstacles for existing and new ventures. Such institutional 
15  
constraints are pervasive in emerging economies which provide important context to examine how 
entrepreneurs learn from the past failures.  
Current efforts towards creating an improved and more attractive business environment are 
likely to produce modest results and the economy could quickly deteriorate if political instability 
increases (The Economist, 2016). Most of the entrepreneurs cannot meet the collateral and other 
conditions required to secure credit facilities. This is a major challenge to entrepreneurs who need 
loans to do their business. The government requirement that banks dedicate 10% of their profit to 
funding SMEs is not effective. This increases the cost of entrepreneurship with negative 
implications, especially for those involved in the “real” sector. This implies that entrepreneurs, 
who are involved in some agricultural businesses such as cocoa farming, may not be able to operate 
profitably. There are local, state, and federal taxes which entrepreneurs are subjected to, and these 
taxes sometimes overlap, thereby hampering the motivation for new business formation. The 
recent economic recession has led to significant devaluation of the naira and high levels of 
inflation.  
Nonetheless, Nigeria is a major player in SSA, particularly in the area of business 
operations. According to Lafuente et al. (2019) resilient entrepreneurial capabilities are essential 
in developing-country contexts characterized by high levels of uncertainty, weak institutions, and 
weak economic conditions. Thus, the Nigerian business context provides an ideal setting to explore 
and provide insights into the phenomenon of business failure and LFFs in emerging markets, 
particularly in the under-researched African context.  
  
16  
3.2 Method (Qualitative Exploratory) 
3.2.1 Research protocol 
Scholars have established that there remains limited knowledge on how the prior 
experience of entrepreneurial failure influences entrepreneurs in their new ventures (Marquis and 
Tilcsik, 2013). In the past few years, there has been increased scholarly interest in business failure, 
yet much of the research has largely overlooked the issue in developing countries in general and 
Africa, in particular. This dearth of scholarly works on business failure and effects of business 
failure on successive entrepreneurial engagement led us to adopt the exploratory approach based 
on grounded theory (Glaser and Strauss, 2006). We adopted a qualitative exploratory approach to 
provide more in-depth analysis of the various dynamics and mechanisms through which prior 
experience of business failure are manifested and persisted in the formation of subsequent new 
ventures (Yin, 2014). We explore these issues through the spectacle of serial entrepreneurs. By 
serial entrepreneurs, we are specifically referring to those with prior experience of business failure. 
By focusing on such individuals, we are able to offer much granular insight into multiple 
entrepreneurs in relation to how they learn from failure, thrive from failure, and utilize lessons 
from failure for the subsequent formation of new ventures. 
 
3.2.2 Case selection and description 
The study sample was obtained from serial entrepreneurs based in Nigeria. Given that business 
failure is highly stigmatized in the African context and individuals with prior experience of 
business failure are often automatically perceived to have poor judgement and be incompetent, we 
employed multiple methods to not only overcome many failed entrepreneurs’ unwillingness to 
share their experiences but also societal attitudes to such individuals. We employed a range of 
methods such as a direct approach, social networks, and the snowballing approach for in-depth 
17  
data collection. We used small-business associations in Nigeria and local interest groups such as 
trade unions, universities, students, and local churches to identify individuals who have prior 
experience of starting a new business following the collapse of a previous business. One of the co-
authors also utilized family ties, friends, business associates, and former university colleagues to 
help identify individuals who fitted within the study sampling framework. In the first stage of the 
study, we identified 67 potential informants, but only 25 were willing to share their experiences 
with us due to the reasons noted above. Of the 25 entrepreneurs studied, five of them had at least 
two prior experiences of failed businesses. 
 
3.2.3 Instrument Development (i.e., Semi-Structured Interviews) 
 In order to assemble the data, we conducted semi-structured interviews to help achieve a degree 
of comparability as well as ensuring an unobstructed flow of different story lines from the 
entrepreneurs (Davis and Eisenhardt, 2011; Saunders et al., 2016). The interview questions 
focused firstly on how their previous business was started, how they obtained finance, experiences 
in running the business, and the triumphs and tribulations during the course of the failed business, 
before moving on to explore why their previous business failed.  
In addition, the informants were asked about what lessons they had learnt at the time and since the 
formation of the new venture. In the next phase of questions, we focused on the new venture 
established after the previous failure. Here the informants were asked about the shift and 
motivation for starting another business after the collapse. We explored how the failure affected 
their ability to obtain resources, social support, and capital for the new business. We then explored 
how the experience of failure influenced how they started the business, sources of capital, running 
the business, routines and processes adopted after founding, and how that impacted the experience 
18  
of failure on the new organizations. The aim of these exploratory process-focused questions was 
to pay greater attention to events, meanings, and discourses instead of focusing on things (e.g., 
Rasche and Chia, 2009).  
3.2.4 Interview and secondary data collection 
All the interviews were conducted by one of the co-authors and were recorded. The data were then 
transcribed and coded for subsequent analysis. The interviews were conducted in Lagos in 2016. 
They lasted about an hour-and-a-half accompanied by follow-up interviews and multiple telephone 
calls to clarify issues that emerged during the initial round of interviews. In the next step, secondary 
sources such as press articles, business plans, and posters were collected and examined to inform 
our analysis. Over the course of the data collection, we also assembled secondary data such as 
newsletters, newspaper cuttings, and web postings on small-business formation and failed 
entrepreneurs in the country. In all, our data sources were the in-depth semi-structured interviews, 
documents, and observations of some of the businesses. Appendix 1 provides details of the semi-
structured interview questions used. As demonstrated in Table 1, the informants are from diverse 
backgrounds including age, industry, and prior experience. The multiple informants allowed us to 
leverage individual experiences and identify sources of commonality and difference (Yin, 2014). 
Our approach is particularly effective in developing theory that is more grounded rather than 
relying on a single individual story.  
------------------------------ Insert Table 1 about here ------------------------------ 
3.2.5 Data analysis and data triangulation 
In order to analyze our data in a systematic manner that also allows possible replication, 
we identified multiple categories from our data in line with Gioia, Corley, and Hamilton (2013), 
thus establishing our first-order categories. Here, we deduced insights from our report on each 
19  
individual entrepreneur reflecting on experiences in the failed business, processes leading to 
failure, reasons for failure, and lessons learnt. We also created a summary section reflecting on 
each individual’s experiences in the new venture and how they have utilized lessons from failure. 
In adherence with Strauss and Corbin’s (1998) procedures, we filtered down the categories to allow 
for better understanding of the emerging phenomenon, thus forming the second-order coding. In 
the second-order analysis, we began by comparing individuals’ stories to help identify thematic 
commonalities and differences (e.g., Strauss and Corbin, 1998) in terms of the nature of learning, 
how they utilized experiences of the past, and effects of failure on starting and managing the new 
venture. We then examined the connections between the categories identified to synthesize the 
insights leading to specific themes (Corley, 2004). Our research team then explored the data 
insights to derive connections and linkage culminating in the aggregate dimensions (Corley, 2004; 
Gioia, Corley, and Hamilton, 2013; see also Sminia, 2009, 2014) as depicted in our process 
framework (see Figure 2). This step not only created conditions to identify patterns in terms of the 
entrepreneurial experiences but also allowed us to articulate different levels of learning and areas 
where sources of learning and experience diverge.  
Taken together, this approach is very much in line with the best practice in business and 
management research (see Gioia et al., 2013) in demonstrating the transitions from raw data/quotes 
and secondary materials (first-order insights) to the second-order synthesis and insights, and then 
the aggregated/main findings (illustrating the shifts from Phases 1–3). One of the co-authors 
conducted all the interviews and others helped in coding, transcribing and making sense of the 
data. Throughout these processes, some of the co-authors acted as critical reviewers and 
interrogators to help ensure that there was internal and external validity of the emerging themes 
(Salvato and Corbetta, 2013). 
20  
 
4 FINDINGS: THE EFFECTS OF BUSINESS FAILURE ON SUBSEQUENT VENTURE FORMATION 
The findings indicate three stages in the evolution of the effects of prior experience of business 
failure: pre-founding, formation and development, and post-founding conditions and effects, as 
demonstrated in Figure 2. The pre-founding effects are where the entrepreneurs’ previous 
experiences shape their decisions and actions towards formation of another venture. This stage is 
also characterized by entrepreneurial fragility as the previous adverse experience of failure will 
discourage some from reinitiating their entrepreneurial career. The founding and post-founding 
effects are where the experiences of business failure influence their decisions and actions during 
and after the formation of the venture. At these stages, entrepreneurial resiliency and anti-fragility 
capabilities respectively manifest. Below we discuss these stages with illustrative quotes. 
------------------------------ Insert Figure 2 about here ------------------------------  4.1 Phase 1: Pre-founding stage  
The data indicate that despite the experience of failure, the entrepreneurs were willing to continue 
their entrepreneurial practice. Among the reasons given for the desire to continue are lack of 
alternatives and societal pressure. On the other hand, factors such as business environment, lack 
of infrastructure, difficulty in accessing funds, high interest rates, and corruption in Nigeria acted 
as pull factors in their decisions. These factors played a pivotal role in shaping the pre-founding 
decisions and actions. The pre-founding stage is a somewhat fragile “cultivation” period where 
ideas are conceived and formulated with the aim of bringing them to fruition. It is a fragile stage 
because the negative experiences of the entrepreneur may discourage them from relaunching even 
when bright ideas are conceived. These findings suggest that entrepreneurs operating in emerging 
21  
markets face significant barriers given the weak and fragile institutional environments observed 
across such markets. Access to finance and support from formal institutions is relatively weak in 
emerging markets compared to developed markets and it is in such a context that scholars suggest 
that institutions shape firms’ behavior and strategic choices (e.g., Peng, 2003; Peng and Heath, 
1996).  
As a cultivation period, human capital and social capital accumulations were particularly 
important during this phase. Human capital refers to entrepreneurially held knowledge and 
expertise which can equip the firm for future challenges (Becker, 1964). These include industry-
specific know-how and management know-how. The findings suggest that new-venture formation 
may also be motivated by an individual’s ability to recognize patterns and connections between 
apparently isolated events such as technological breakthroughs and changes in markets. Indeed, 
superior capabilities such as alertness to sudden changes in the business environment have been 
found to equip aspiring entrepreneurs during this phase.  
The pre-founding stage activities may entail mobilizing resources to exploit market 
opportunity, obtaining financial backers, identifying potentially valuable customers, and obtaining 
other relevant stakeholders’ support for the venture. Such pre-founding activities are extremely 
important in institutional contexts such as Nigeria which are witnessing dynamic changes in the 
external business environment. These resources and capabilities might sustain the firm for a period 
after formation. The data indicate that prior experience in business dealings helps potential 
entrepreneurs to develop trustworthy relationships which can then ease access and provide access 
to key resources, as the following quote suggests:  
“When starting a business, do invest in partnership if you do not have time to carry out 
the due diligence.” [Nlagos-2] 
22  
Prior to the founding stage, knowledge and expertise are accumulated based on the career 
experiences of the founder or acquired from external sources through government agencies, from 
other entrepreneurs or by bringing on board another partner.  
4.1.1 Buffering effects 
The findings indicate that the experience of business failure can also have a “buffering effect” in 
preparing the serial entrepreneurs for dealing with sudden declines in firm performance, i.e., 
business ups and downs. The experience of seeing the “worse” makes them more determined to 
see through sudden declines in customer numbers, new sources of competition, and new 
government regulations. Resilience capabilities begin to be nurtured as the perseverance provides 
them with the tools or experiences for dealing with such events. In the immediate failure period 
they reflect and then devise new means of succeeding in the new environment. Such perseverance 
may be important in markets which are going through rapid transformation and have institutional 
voids. One of the serial entrepreneurs (Nlagos-22) noted such perseverance in the following way: 
 “We saw the dark side and became more determined to succeed.” [Nlagos-22] 
4.1.2 The imprint of past experiences 
Our data indicate that prior experience of starting a business tends to have a lasting implication on 
the prospects of the new business. The prior experience of business failure can leave a lasting mark 
on the fragile entrepreneur and his or her ability to move on. After business failure, entrepreneurs 
become more sensitive to the environmental influences and as such develop unique routines, 
norms, and processes in the new venture. The social relationships, including family ties, also 
emerge to have two divergent effects on their ability to move on. When an individual has prior 
experience of starting a business, this equips them to assemble the right set of skills and resources, 
23  
and institutional support to help reduce risk of failure relative to novice entrepreneurs. As one 
serial entrepreneur asserted: 
“No. Everyone […] saw the effort made to save the business […] I did not approach any 
family member for financial assistance because I reverted to another paid employment. I 
have learnt my lesson […]I think financial backers and family support is needed.” 
[Nlagos-1]. 
Interestingly enough, this entrepreneur appears to assemble human capital (knowledge, 
experiences, and lessons from failure to deal with environmental turbulence and new competitive 
moves by rivals) as well as social capital such as networks of relationships formed after the 
collapse and access to quality information, which are then employed to isolate the effects of sudden 
changes in the business environment and unfavorable local regulations. The experience also often 
means assembling more than adequate resources prior to the founding and opening of doors to the 
business. Given that formal institutions in emerging markets are in a state of flux, this human and 
social capital role can be vital for venture survival and growth.  
During this stage, prior experience can prove beneficial in marshalling resources to overcome a 
legitimacy vacuum in the eyes of potential investors and customers. Therefore, assembling 
relevant knowledge and expertise during the pre-founding stage either through teams or training 
can help firms to improve their survival chances. The pre-founding stage also serves as a period 
of leveraging the past experiences in nurturing resilience capabilities required for the actual 
relaunch. After assessing the pre-founding conditions, the aspiring entrepreneurs then marshal all 
the available resources and formulate their strategy. Given the focus on only failed entrepreneurs, 
a possible interpretation is that failed entrepreneurs who decide to start afresh are temperamentally 
more optimistic, resilient, cognitively enriched, and prepared to reframe their failure experience 
24  
as a positive learning experience. However, those fragile entrepreneurs who opt out of starting 
another venture may tend to frame their failure experience as a negative learning experience. In 
order to illuminate  further our understanding of these issues in the wider context of emerging 
markets, the following proposition is offered: 
Proposition 1: Prior experience of start-up and business failure serves as an asset that is 
more likely to motivate an entrepreneur to re-start another venture and adapt to changing 
environmental conditions. 
4.2 Phase 2: Formation and development 
The findings suggest that successive entrepreneurial engagements (starting another 
business after failure) stem from factors such as personal motivation and financial pressure on the 
failed entrepreneurs. These are also referred to as resilient entrepreneurs. Rather than being 
overcome by fear of failure, some failed entrepreneurs were willing to start afresh by drawing on 
the reasons for the previous business exit and lessons learned from the past. They also marshal the 
post-exit resources and expertise to provide a basis to their human and social capital for new-
business development. For these resilient entrepreneurs, prior failure is seen as a learning 
experience which then forces them to engage in a new venture, drawing on the prior lessons. The 
resilient serial entrepreneurs become financially and knowledgeably better equipped during the 
transition period to identify niche markets and unexplored territories. Here most of the 
entrepreneurs pondered whether to “go it alone” or co-found a venture. Indeed, of the 25 
entrepreneurs, 11 subsequently established the new businesses through co-founding. In most cases, 
these were largely to mitigate the risk of subsequent failure due to inherent limitations associated 
with self-funded business and lack of support from the government. As Nlagos-12 puts it, the new 
business needed a “bigger war chest” to fend off rivals. In other cases, the ability to spread the risk 
25  
of any subsequent business failure also motivated them to shift from self-founding in the past to 
co-founding in the subsequent venture.  
By bringing in another partner, they also often had to iron out the “cultural mismatches” 
or “different learning experiences”. This is important given that at least half of those in the new 
venture have experienced business failure, and they were more careful in terms of routines and 
who to employ. The co-founding of a new venture can also provide much needed access to both 
human and social capital which are vital in the context of emerging and transforming economies. 
Other notable features of this stage include managing the business, acquiring know-how about the 
potential industry, and responding to new and emerging threats. These challenges and the dynamic 
nature of the business environment was summed up by one of the serial entrepreneurs in the 
following manner: 
“Because of the very complex and unpredictable business environment in Nigeria, it is 
always advisable to acquire good knowledge of the target industry and business prior to 
going into it – start small and minimize borrowing.” [Nlagos-1] 
Another serial entrepreneur who co-founded his business at the young age of 26, but had to close 
the business within two years, asserted: 
“For me, competitors with larger war chests came into the market with far lower prices 
… and drove us out … if you want to succeed then you need big financial backers at the 
beginning.” [Nlagos-12]. 
4.2.1 Driver of faster transition 
One of the main drivers for making a fast transition from unemployment after business failure to 
employment by establishing another business was the financial hardship which demanded 
26  
formulation of a more detailed business plan, learning from the failure, and identifying and 
exploiting new opportunities. A number of resilient serial entrepreneurs highlighted the 
importance of bouncing back from failure and the role of learning that they have gained from 
failure which played an enabling role for the formation of a new venture. Nlagos-23 noted: 
“After the business closed, I still had to feed my family … This is why I had to start again. 
I was so determined to start again.” [Nlagos-23] 
Another (Nlagos-16) exclaimed:  
“I have no fear of starting another business; I have learnt positive lessons (from the 
failed business).” [Nlagos-16] 
These findings indicate that resilient entrepreneurs wanted to bounce back from failure as the 
learning they have accumulated could be utilized effectively in the formation of a new venture. 
Moreover, it is common for failed entrepreneurs in such developing-countries’ contexts to be seen 
as lacking legitimacy and being untrustworthy on money matters. These lead to a negative 
perception of the individuals. Many of the entrepreneurs started again to help overcome the stigma. 
It is also worth noting that in the haste to start another venture after failure, an entrepreneur might 
not have had the space and time to reflect and learn the lessons from failure, and therefore set 
him/herself on course for another failure. Nevertheless, for fragile entrepreneurs, negative 
interpretations of prior failure experience can not only curtail their future actions but also make 
them reluctant to start a new venture. Another entrepreneur captured it in these terms: 
“I was reluctant to go back into transportation of petroleum products because of drivers’ 
dishonesty and lack of government support for entrepreneurs.” [Nlagos-7] 
27  
The picture emerging is one in which failure lessons can be utilized to inform subsequent venture 
formation and management. A number of observations were made about the barriers such as lack 
of government support to promote their ability to move on. Based on the above analysis, the 
following proposition is put forward: 
Proposition 2: Entrepreneurs with prior business failure experience are more likely to 
co-found the subsequent venture as a mechanism for mitigating against the risk of 
subsequent failure. 
4.3 Phase 3: Post-founding stage and cementing the future 
The findings suggest that the entrepreneurs have developed key mechanisms to facilitate the 
transfer of knowledge and lessons from the failure experience into a new venture. Entrepreneurs 
at this stage are characterized as anti-fragile as they have transitioned through the processes to the 
point that the reasons that impeded some of the failed entrepreneurs cannot negatively impact their 
entrepreneurial careers. Besides acquiring knowledge from co-founders and family, they also 
utilize the past experience to make quality decisions for the management of their new venture. 
Below we tease out the findings related to the post-founding stage. 
4.3.1 Bridging knowledge gaps 
Once the entrepreneurs have been successful in turning their post-failure ideas into new-business 
formation, Phase 3 ushers in an anti-fragile period where they begin a process of applying prior 
experiences in cementing the future of the new venture. The findings indicate that measures taken 
during this phase included designing service delivery strategy and defining target markets, 
anchored in learning from the past. During this stage, the start-up firm begins to launch its new 
products or services and “open its doors” to the target market. The newly established firm then 
becomes a prime vehicle for bringing the ideas and products to market. After formation of the 
28  
business, a new set of skills is required to manage the business and deliver success. As Nlagos-13 
asserted: 
“Yes, because when businesses are built around family and relatives, it is most likely to 
fail based on my experience … sentiments set in. This makes one incapacitated.” [Nlagos-
13 
Prior experience of business failure shapes how the entrepreneurs perceive their relationship with 
others and the direction of new ventures. Interestingly, in the cases of co-founding, a direct failure 
experience was missing from other partners’ profiles and, as such, the imprinting of failure 
experiences was minimal. As Nlagos-23 noted: 
“It is not like I just make all the decisions; the partner also has an influence.”    
[Nlagos-23]  
The expertise accumulated at this stage can play a pivotal role in determining future success or 
failure of the venture. The entrepreneurs highlighted that one of the reasons for business failure 
was due to recruiting management based on family ties and loyalty rather than expertise. As 
Nlagos-5 noted:  
“Yes, there was a member of staff who lacked the competence … I preferred to mentor him 
rather than sack him so that he could take care of his family.” [Nlagos-5] 
Organizational performance requires availability of resources and expertise. Through family 
networks and ties, individuals were put in positions of trust despite lacking the expertise to 
perform. Over time, these became events and contributed to the abysmal performance of the 
businesses and loss-making culminated in the closure. Not long after the collapse, many quickly 
29  
came to the realization that family can also become a liability. One informant (Nlagos-2) puts it 
this way: 
“When starting a business in this climate, do not employ staff out of pity … no family 
member should be hired. You don’t employ somebody you can’t fire. I guessed my partners 
employed their cronies in the management of the business … they kill the business.” 
[Nlagos-2] 
Although after the collapse many steered assiduously clear of blaming family members for the 
failure, they recognized that the lack of expertise from the members hampered their chances of 
success. These findings suggest that sometimes family-based ties can become liabilities in 
emerging economies and can cause business failure. Our analysis indicates that whilst lack of old 
routines associated with new ventures is beneficial, the inability to mobilize necessary resources 
and application of knowledge to buffer the firm against early threats could lead to premature exit, 
thereby triggering early exit. On cementing the future of the business, many of the lessons and 
much of the drive revolves around perseverance. One of the serial entrepreneurs suggested:  
“Five years ago, I faced a similar situation and started the last business … I think I knew 
the people needed to succeed.” [Nlagos-22] 
------------------------------ Insert Table 2 about here ------------------------------ 
Given that newly created firms have no prior track records relating to profitability and customer 
bases, they are often fragile and lack legitimacy which can also constrain their ability to survive 
and thrive immediately after founding. Although luck might have played a part in a new venture’s 
premature demise or early success, as Colletti and Chonko (1997, p. 4) observed over a decade 
30  
ago, “a lucky organization does not deliver great products year in and year out in the face of 
changing markets and technologies”. Rather, sustainable competitive advantage is partly rooted in 
entrepreneurs’ ability to develop unique processes and routines that allow them to outwit 
incumbents and other new entrants (Barney and Clark, 2007). Table 2 summarizes these issues 
and the effects of past experiences of business failure. The preceding analysis suggests the 
following proposition: 
Proposition 3: Serial entrepreneurs’ decisions and measures in the subsequent venture 
tend to be more strategic than in the previous failed venture. 
5 DISCUSSION AND IMPLICATIONS 
The aim of this paper was to explore how the effects of prior experiences of entrepreneurial 
business failure (EBF) manifest in the entrepreneurial process of subsequent venture formation. 
Such studies on learning from failure and developing resiliency capabilities by serial entrepreneurs 
are relatively limited in adverse conditions such as those observed across emerging markets (cf. 
Branzei and Abdelnour 2010; Bullough et al. 2014). We utilized insights from 25 serial 
entrepreneurs in Nigeria and identified three phases in this process: pre-founding, formation and 
development, and post-founding conditions and effects. In this direction, we elucidate the pre-
founding and post-founding effects of prior EBF. Perhaps most importantly, we elucidate how 
individual-level factors shape how prior failure experiences can shift from liability immediately 
after business to become an asset. We uncovered that the entrepreneurs were often motivated to 
start another venture as a result of the economic hardship and social stigmatization that occur after 
business closure.  
The present study also demonstrated that the actions and inactions of entrepreneurs play an 
influential role in turning prior experience of entrepreneurial failure into a liability or an asset. One 
31  
most striking observation is that, over time, the advantages at the founding stage can shift to 
become liabilities. Over time, the inability to update the knowledge base can turn an asset at the 
outset into a barrier to growth and even sow the seeds of underperformance. Our findings 
corroborate prior scholarly works on business failure (Hessels et al., 2011) by demonstrating how 
the past can influence the present.  
Given the characteristics of the Nigerian economy, and quite similar to other emerging 
markets such as high incidence of corruption, weak institutional facilities to support formation, 
and scaling-up of new ventures coupled with government bureaucracy and red tape, it may be that 
these institutional pressures may have had a more positive impact, instilling greater levels of 
resilience in the serial entrepreneurs in motivating them to learn from failure and re-enter 
entrepreneurship. Taken together, we demonstrate how entrepreneurs bounce back from errors, 
failures, and setbacks while operating in extreme and adverse conditions of emerging markets (cf. 
Branzei and Abdelnour 2010; Bullough et al. 2014). 
5.1 Contributions to theory 
The study offers several contributions to entrepreneurship and strategy research. First, in spite of 
the call for a better understanding of the “fundamental process issues of entrepreneurship—what 
goes in, what comes out, and how the transformation takes place” (Moroz and Hindle, 2011, p. 
812), past studies have largely failed to explicate how the underlying processes through founding 
conditions and experiences prior to founding can change to become a liability during the life course 
of a new venture. The study advances the burgeoning streams of research on entrepreneurial 
process (Bygrave, 2010) and entrepreneurial resilience (Korber and McNaughton, 2018; Kossek 
and Perrigino, 2016; Liu, Cooper, and Tarba, 2019; Renko, Bullough, and Saeed, 2021; Tarba et 
al., 2019; Xing, Liu, Boojihawon, and Tarba, 2020) by developing staged-based micro-level 
32  
explanations for the effects of the “past” on subsequent venture formation and growth. Such a 
process-based approach (e.g., Langley et al., 2013) provides a much-needed granular view of 
learning from failure and how individual experiences can shape the formation of new ventures in 
dynamic environments such as those observed in emerging markets (cf. Martignoni and Keil, 
2021), thus culminating in the development of a unified model of the buffering effects of 
experiences of business failure and learning from the past. The findings of this study resonate with 
the emerging scholarship on microfoundations of strategic management processes, indicating the 
need to examine micro-level factors since actions and routines are, as Foss (2011, p.1414) puts it, 
“rooted in individual action and interaction”.  
 Second, although entrepreneurial learning occurs at different stages in different ways (see 
Cope, 2011; Kale and Arditi, 1999), it remains to be adequately explained and conceptualized by 
the existing streams of research. We address this issue by combining the literature on business 
failure (Fisch and Block, 2021) and entrepreneurial learning (Cope, 2011) to demonstrate how the 
experiences of failure shape successive entrepreneurial engagement in a developing economy can 
be harnessed to foster resilience amongst entrepreneurs. In so doing, the work deepens our 
understanding of how prior cognitions and conditions at founding influence the life course of the 
organization. Furthermore, this research lends additional support to the growing stream of research 
in explaining the role and effect of individual experiences and actions in the pre-founding stage in 
influencing the survival chance of emerging entrepreneurial firms (Shane and Khurana, 2003).  
Third, our study sheds important light on the concept of resilient serial entrepreneurs by 
explicating the process and stages through which the past negative experiences discourage fragile 
entrepreneurs from relaunching, while nurturing positive cognitive schemas for resilient 
entrepreneurs to pursue subsequent ventures. In this regard, the study fulfils the recent call from 
33  
Lafuente et al. (2019) for a more in-depth process to enrich understanding of how resiliency 
manifests in entrepreneurial decision making and behavior. By explaining failure as a springboard 
to successive new-business formation by resilient serial entrepreneurs, the study adds to the 
growing body of research which suggests that organizational life cycle extends beyond exit to 
include successive entrepreneurial engagements (see Ucbasaran et al., 2013). Moreover, the study 
demonstrates why and how resilient serial entrepreneurs in this complex and institutionally weak 
context adjust to adverse experiences of entrepreneurial failure, in order to relaunch subsequent 
ventures while others fail to do so (Williams and Shepherd, 2016).  
5.2 Contributions to practice 
The study has a number of important implications for entrepreneurs seeking to start new 
businesses. Although entrepreneurial activities vary across the nation and others in the developing 
world, failed entrepreneurs incur a range of costs including tarnished reputation, diminished 
expertise, and curtailed ability to access affordable financing. These potential costs might hamper 
individuals’ confidence and willingness to re-enter entrepreneurship. Also, given that failure is 
commonly stigmatized in many countries in the Global South, this inhibits risk taking and might 
even force entrepreneurs to persist with an underperforming venture rather than start a new venture 
in a more promising sector. From this observation, the stigmatization of failure may be a more 
potent force, where the individuals lacking the family financial support and resources would find 
other ways to bounce back by relying more on their personal experience and capabilities. One of 
the possible implications is that the conceptualization helps to counter the perceptions in some 
societies, where failure is stigmatized, and business closure is seen as the end of the life cycle. 
Thus, there is a need for the government to deploy resources towards re-training entrepreneurs and 
to motivate them to re-engage. Additionally, the findings also highlight the need for decision-
makers to revisit continuously their prior assumptions and cognition at the formation stage with 
34  
the aim of updating, upgrading, and discarding obsolete knowledge and tools (Covin and Miles, 
1999). Such strategic renewal attempts have the potential to halt the process of any assets turning 
into a liability.  
Moreover, by demonstrating how assets at various stages can shift to become a liability as 
the firm ages, our study sheds light on how competitive advantages are lost or gained during the 
life course of an organization. This helps to bring additional knowledge to help founders to design 
structures to learn from others and mitigate underperformance leading to exit. The experience of 
failure can provide a source of learning for failed entrepreneurs to re-emerge to a greater success. 
The analysis indicates that entrepreneurs could build knowledge reservoirs by capturing lessons 
from failure. Our findings and consequent theory building are grounded in practice and therefore, 
particularly, provide insight for practitioners that reliance on past experience can lead to 
counterintuitive results. The analysis of ageing affects mainly the broad categories of stages, which 
limited the generalizability of our conceptualization. Given that, many firms may transition from 
one stage to another and then reverse on multiple occasions before eventually collapsing. Future 
study could employ such organizations as an empirical illustrative case to illuminate our 
understanding of the driving forces behind such strategic renewals and effects on successive 
entrepreneurial engagement activities.  
5.3 Limitations and Future Research 
The findings of this paper offer opportunities for further research. First, it is worth noting that our 
study only offers one level of analysis in terms of examining business failure in one of the leading 
emerging markets of Africa. There is often an institutional level of analysis where failure might 
be the outcome of the institutional impediments such as corruption, political system, instability of 
the political system, and lack of effective enforcement of the legal system in countries such as 
35  
Nigeria. Besides these, there are factors such as competition and demand for the firms’ 
products/services which might have played a vital role in leading to the failures and affecting the 
source of learning. Although we offer deeper insights on the individuals and their organizations, 
this is insufficient in offering a more comprehensive analysis of the issues explored in this study. 
These vital limitations then present opportunities for future research to broaden our horizons and 
understanding by examining the perspective of industry figures and institutional actors, such as 
government officials and policymakers, to enhance our understanding of this important subject. 
Regarding future research, there is scope to do comparative studies on serial entrepreneurs 
to identify the factors that facilitate or hinder the new venture's survival and growth across different 
emerging markets. Second, it would be interesting to understand the role of social and family ties 
and how such ties can become potential assets as well liabilities in the survival of new ventures in 
emerging economies. Third, future studies could conduct large-scale surveys and test the 
propositions of this article across similar emerging markets. Fourth, future studies could build onto 
this study and longitudinally examine the underlying mechanisms and factors, and the influence 
of the environment on venture failure and subsequent formation of a venture. Fifth, perseverance 
was indicated to be important for serial entrepreneurs, thus there is a need to examine this particular 
factor across different sets of entrepreneurs. Sixth, failure can also have a long-term psychological 
effect on entrepreneurs especially in emerging markets where formal institutional support is quite 
weak, therefore, examining the impact of psychological burnout on venture formation and survival 
can be a potentially interesting topic for future studies.  
Lastly, future studies need to examine the individual-level psychological, emotional, and 
social factors, and how such factors shape the survival and failure of a venture over the lifetime of 
the venture, by taking a more micro-level approach (e.g., Abell et al., 2008; Felin et al., 2012). The 
36  
historical analysis can be further integrated with micro-level factors in understanding the 
individual actions and how such actions interact with wider external factors in enhancing learning 
from the past. In addition, we could not discount the possibility that our findings could be explained 
by the size of the businesses and region in which they were set. As such, future studies could 
examine the regional effects on firm and location-specific factors to help assess the generalizability 
of the findings. Future studies could pay more attention to success and failure-related experience 
and whether new ventures benefit more from learning from success or failure in dynamic 
environments like emerging markets (cf. Madsen and Desai, 2010; Denrell and March, 2001).  
 
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42  
Figure 1: An open system approach to successive entrepreneurial engagement 
   Figure 2: Evolutionary processes and stages 
  
43  
Table 1: The list of the informants  
Informants  Source of funding and educations 
Age at founding Age of firm at the time of failure 
Number of employees of the failed business 
Prior experiences before starting the business Source of advice prior to starting the business 
Nlagos 1 Self-funded  40  5 years 10 Worked in a privately-owned organization for about 10 years. MSC degree. Others and own experiences and knowledge. 
Nlagos 2 
Co-funded     34 4 years 8 4 years in banking and Ba degree. Friends’ advice and information obtained from environmental scanning. 
Nlagos 3 Co-funded  20 years 100 BSC Elect Eng and 8 years Company experience in Telecoms. Family.  
Nlagos 4 Self-funded 37  14 years 10  Msc degree. Bakery and Confectionery Association. 
Nlagos 5 Self-funded 31 5 years 2 Advanced Diploma in Management and 3 years work experience in an Oil company. Friends. 
Nlagos 6 
Self-funded   
62  3 years   5 Doctorate degree  Professional: Chartered Institute of Personnel Management and Institute of Directors 
Over 30 years work experience in banking, manufacturing and Oil industries. Consultation with professionals in the area of the business. 
Nlagos 7 
Co-funded  42  5 years  6  
Master’s degree. -Worked for a multinational oil company. -Professional affiliation (Institute of Chartered Accountants). 
Entrepreneurs in similar businesses. 
Nlagos 8 Co-funded  46 6 months 10 Degree and worked for MNEs in the oil and gas industry for 10 years. Industry experience. 
Nlagos 9 
Co-funded   26  2 years 4   Prior experiences of supporting other businesses in the family. 
Co-founder, family and friends. 
Nlagos 10 
Co-funded textile making business  
25 6 years 14  Trading experience. Co-founder. 
Nlagos 11 
Female- Self-funded 
24 2 years 4-5 Worked with a private firm as a treasury officer. Family and friends. 
44  
Nlagos 12 Co-funded 26 2 years 4 None. Family and friends, some with business knowledge. 
Nlagos 13 Co-funded 32 5 years 12 Higher National Diploma, Retailing.  None. Nlagos 14 Co-funded 28 3 years 3 None, but had a National Diploma. Family and friends. 
Nlagos 15 
Self-funded (17D) 
41 4 years 4 Engineering training. Industry and personal. 
Nlagos 16 f- Co-funded 35 20 years 100 8years experience in a telecom company. Family members. 
Nlagos 17 Self-funded  20 Under 1 year 1 None but had a BSc degree. Relevant industry persons. 
Nlagos 18 
Co-founded family  
25 3 years 4 Basic education. Family and friends. 
Nlagos 19 
Self-funded 40  5 years 10 A member of a  professional organization. Consulted with others who were in similar business and also relied on my own experience/ knowledge. 
Nlagos 20 M- Self-funded       30  2 years 4 Basic education. Industry and personal experiences. 
Nlagos 21 Self-funded 27 30 months 2 Managed a business center. Family members, industry and personal experiences. 
Nlagos 22 self-funded 45 2 years 20 1 year of relevant experience. Industry and personal experiences. 
Nlagos 23 Co-funded   35 6 months  2 Civil engineering employee. Industry and personal experiences. 
Nlagos 24 Self-funded 26 8 months 4 None but had a BSc degree. Family members, industry and personal experiences. 
Nlagos 25 Self-funded 40+ 2 years  4 Good patronage. Industry and personal experiences. 
45 
 
Appendix 1: SEMI-STRUCTURED INTERVIEW QUESTIONS  SEMI-STRUCTURED INTERVIEW  
 Before we start talking about the talent, would it be useful for us to know something about the organization? 
 Could you briefly tell me about the history of the organization? [Prompt for age of organization, age of parent organization,  number of employees, and changes in leadership.]   Section A: Characteristics and Your Former Business 
 Nature of founding; [prompts: Co-funded or Self-funded] 
 Age at founding 
 Number of employees of the former business 
 What was the age of your firm at the time of collapse? 
 Did you change the name or address of the firm during its existence?  Why? 
 What was your educational qualification before starting the business? [prompts: no education; higher education; further education] 
 What was your affiliation prior to starting the business? [prompts: Government; A member of professional organization; No affiliation] 
 What were your prior experiences before starting the business? Tell us a story on this. 
 What was your source of advice prior to starting the business?   Section A:  The following questions focus on early warning signals before the business failure 
 Prior to the businesses demise, what kind of support did you have within the local community?  
 Prior to the collapse, were government agencies interested in your problems or helping to solve them?  
 Before the collapse, did your main business partner or family member withdraw their support/funds? Why?  
 In a desperate search for solutions to save the business, did you turn to God or attend prayer vigil? Was this the main strategy?  
 Were you reluctant to fire less competent employees in order not to deprive them of their livelihood? Can you provide some examples/stories here? 
 Do you think the actions during the decline period of the business were curtailed by your religious beliefs?  
 Why did the business eventually fail and how?  The following questions focus on your experiences and others' views of your identity after the business failure.  
 After the business collapsed, did more people come to view your reputation as tainted? Why? How? 
 After the business failure, did you find out that people frequently questioned your expertise and knowledge on business matters? Can you provide some stories/experiences here? 
 Are family members now extremely reluctant to lend you money or enter into any partnership? 
 Can you say after the business failed, local businesses were unwilling to enter into any partnership or collaboration with you? Why? Any stories? 
 Has the way you have been treated by society changed your perception of starting another business? And why?   Additional information/comments 
 What comments would you like to make about your experiences of starting a business and the failure in Nigeria?