Entrepreneurs also get turned out of their homes

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By Claus Rosenkrantz Hansen

Entrepreneurs are today’s heroes because the national economy is dependent on development and entrepreneurs play a crucial role in creating growth, subsequently making entrepreneurship a lifeline that the welfare society clings to.

Seen from this perspective it is hardly surprising that the media, public and entrepreneurship research have difficulty accepting that entrepreneurs sometimes fail, at least according to researchers Lena Olaison and Bent Meier Sørensen, the authors of the award-winning article “The abject of entrepreneurship: failure, fiasco, fraud”.

By analysing what politicians, researchers and entrepreneurs have said and written about entrepreneurship, Olaison and Meier Sørensen discovered that it is surrounded by such a dominant discourse of success that failure of ordinary entrepreneurial projects is never brought into the light.

Olaison explains that, “The narrative on entrepreneurs has become a fairy tale that leaves no room for the numerous failed attempts at entrepreneurship that we know exist. When entrepreneurs fail people often get turned out of their homes and investors lose their money. But these consequences are hardly referred to at all because entrepreneurship is trapped in a narrative of success.”

The case of Stein Bagger
This does not mean that failed entrepreneurs are never mentioned, but the examples that do come to the surface are not found among the everyday small failures. On the contrary, they are often of the most grotesque (and frequently criminal) nature.

A well-known case is Stein Bagger. According to the researchers, the abrupt rise and fall of Bagger’s company, IT Factory, is an excellent example of how this narrative of success rules the roost, to the point where it obliterates the sound judgement of both accountants and business journalists, who otherwise ought to know better.

According to Meier Sørensen, “The media have also eagerly annexed this fairy tale portrayal of entrepreneurship. The Stein Bagger affair is an obvious example. Much of the media were busy celebrating IT Factory as a huge entrepreneurial success. Only a few journalists reflected critically on the sustainability of the company despite the fact that a review of its books would rapidly reveal that the company was not the model of success it was believed to be.”

Meier Sørensen clarifies the phenomenon with the fact that the culture becomes stronger than the individual observer. Thus, when enveloped in a culture where seeing the hideous truth is undesirable and only successes are welcomed, then only the successes become visible.

“Of course we talk about successes like Richard Branson but we also need to address how the vast majority of entrepreneurs manage when fiascos lead not to success but to the loss of business contacts and being thrown out on the street.”

Fiascos – just a small hindrance on the path to success
Even though everyday entrepreneurs who fail are not described as failures, the field is nonetheless changing. Fifteen years ago failure was not at all a topic of entrepreneurship research. Only successes were discussed.

The times, however, are changing. Today talking about failure is permitted but only when adroitly embedded in the discourse of success, the failure portrayed as just another part of succeeding. 

“The existing literature discusses failure as a cognitive process or as a learning curve that the entrepreneur must endure to become a success. Accordingly, bankruptcies and fiascos have paradoxically nearly become a prerequisite for entrepreneurs to succeed. Going bankrupt is not perceived as definitive, but as a step on the path to success. Implicitly, the more you fail, the closer you are to achieving success,” says Olaison.

Philosophy as the springboard of new insights
Meier Sørensen and Olaison believe that too much of the academic literature on entrepreneurship has bought into the story of defeat as one of the steps on the path to success. In that regard, it is of interest that the International Journal of Entrepreneurial Behaviour & Research, where the research was published, highlighted the article as one of its three best .

“We think that it’s a sign that entrepreneurship research is now ready to look more critically at its own practices,” says Meier Sørensen.

The article presents a diagnosis of existing entrepreneurship literature. By involving philosophy, the piece demonstrates to the reader how the existing literature is running in circles around failure.

“Our article effectively uses various philosophical concepts in a discipline where it hasn’t played an especially prominent role. It’s not really a coincidence because this is a general feature of European entrepreneurship research, which to a much greater extent draws on philosophy research. The point is that philosophy provides new perspectives on something that is already well described,” explains Meier Sørensen.