Is it too novel to succeed? How technological novelty affects observer responses to entrepreneurship failure

Abstract

Entrepreneurial failure is both inevitable and often subject to harsh judgment from observers. Although prior research has examined various factors that shape or mitigate observers’ negative perceptions of failure, little attention has been paid to the role of the technology entrepreneurs adopt. This study investigates how the novelty of the technology used by entrepreneurs influences observers’ cognitive, emotional, and behavioral responses to failure. Three laboratory studies showed that the more novel the technology adopted by the failed entrepreneur, the more likely observers were to attribute the failure to external factors, show sympathy, and buy and recommend the product/service offered by the failed entrepreneur’s second venture. We also found that observers high in involvement with technology were more likely to attribute the failure of entrepreneurs who start businesses with novel technologies to external factors than those low in involvement with technology.