Back to work? How employers perceive applicants’ experience of entrepreneurial failure

Abstract

Recent research on entrepreneurial failure has started to investigate the impact of failure on entrepreneurs and how this influences their motivation and willingness to engage in subsequent entrepreneurial ventures. We approach this topic from an alternative perspective, focusing on former entrepreneurs seeking to return to paid work and exploring how their experience of venture failure is perceived and appraised by employers in the recruitment process. Such perceptions matter because employers are gatekeepers to the employment market and thus their appraisals influence how easily former entrepreneurs can re-integrate themselves in the paid workforce. We conducted 30 interviews with employers in growing human-capital intensive companies in Sweden, asking these recruiters about their perceptions of former entrepreneurs and how their evaluations affected their hiring decisions. Conceptually, we frame our study using a process model of stigmatization by nuancing this model with fine-grained analyses of employers’ perceptions and appraisals of applicants’ entrepreneurial failure experiences in the recruitment process. This analysis identifies some of the key conditions that lead employers either to value or devalue an applicant’s experience of entrepreneurial failure, further indicating the implications of this finding for entrepreneurs’ careers and prospects of gaining paid employment.