What Causes Entrepreneurial Failure?

－The Sensemaking Process of Business Failure and Its Outcomes－

Abstract

This article is an exploratory single-case study that aims to clarify the sensemaking process of business failure by a entrepreneur. The article focuses on the retelling of reflective dialogue and the update of schema to explain business failure outcomes. An analysis of the verbatim record of dialogue with the researcher revealed findings on the sensemaking process of business failure. First, the role of others motivates the entrepreneur’s critical reflection and behavior to cope with the crisis. Second, the change in differentiating the intropunitive and extrapunitive impact in addition to noticing and considering external judgment. The results indicate reflective entrepreneurial practice regarding the management of negative emotions associated with the business failure. Further, the results imply the presumption of change in the entrepreneur’s judgment criteria.