http://www.smallbusinessinstitute.biz A B S T R A C T Keywords: Journal of Small Business Strategy 2019, Vol. 29, No. 01, 30-42 ISSN: 1081-8510 (Print) 2380-1751 (Online) ©Copyright 2019 Small Business Institute® w w w. j s b s . o rg Entrepreneurship and related behavior have at- tracted a great deal of research concentrated on finding the antecedents of entrepreneurial ventures (Hannafey, 2003; Miskin & Rose, 1990). However, research should focus on the elements that enable entrepreneur- ial success and efforts that lead to entrepreneurial fail- ure (McGrath, 1999; Shepherd, 2003; Singh, Corner, & Pavlovich, 2007). To gain a holistic view of entre- preneurship, studies have focused on the causes of fail- ure (Abdullah, Hamali, Deen, Saban, & Abdurahman, 2009; Bruno, McQuarrie, & Torgrimson, 1992) and how failure drives subsequent venture success (Minniti & Bygrave, 2001). Lussier and Halabi (2010) demon- strated that an entrepreneur who is highly motivated does not guarantee the success of a venture. Establish- ing a new firm involves high risks, and ventures fre- quently fail despite entrepreneurs making great efforts (Holtz-Eakin, 2000). New firms struggle to survive and achieve success in an unstable, complex, dynamic, and global environment, particularly when they lack resources and capabilities. Failure can be painful and costly for an entrepre- neur, who may be required to cope with the stigma of failure in addition to a damaged reputation (Coelho & McClure, 2005; Politis & Gabrielsson, 2009; Shepherd & Haynie, 2011). Failure can cause entrepreneurs to feel shame (Smith & McElwee, 2011), grief (Shepherd, 2003; Shepherd, Wiklund, & Haynie, 2009), discour- agement, rejection (McGrath, 1999), and many other negative emotions (Smith & McElwee, 2011). Studies have observed that business failure leads to financial (Dew, Sarasathy, Read, & Wiltbank, 2009; Peng, Ya- makawa, & Lee, 2010; Van Auken, Kaufmann, & Her- rmann, 2009) and social costs (Hasan & Wang, 2008; Kirkwood, 2007; Shepherd et al., 2009) for an entre- preneur. Other costs caused by business failures have Introduction Don Jyh-Fu Jeng1, Ta Huy Hung2 1National Chengchi University, Taiwan, jeng@nccu.edu.tw 2Thuongmai University, Vietnam, hungth@tmu.edu.vn Comeback of the failed entrepreneur: An integrated view of costs, learning, and residual resources associated with entrepreneurial failure Failed entrepreneur, Entrepreneurial failure costs, Learning from entrepreneurial failure, Entrepreneurial resource, Venture restart intention Although failure can be financially, socially, and psychologically costly, it can promote future entrepreneurial success. This study inves- tigated how failure can be utilized as a springboard for new ventures by considering the cost recognition, learning ability, and resources of entrepreneurs within a social environment. Failure costs, learning outcomes, and residual resources following business failure and how they influence the intention to undertake subsequent entrepreneurial endeavors were considered. With the motivation–opportuni- ty–ability (MOA) framework as a theoretical foundation, we quantitatively analyzed the sample, which comprised 216 entrepreneurs who had experienced business failure. Perceived residual resources were a major factor affecting an entrepreneur’s decision-making in subsequent ventures, even when the entrepreneur had learned from failure and overcome the associated costs. Additionally, the psy- chological costs incurred exhibited a nonsignificant effect on learning from failure. Based on the MOA framework, failure costs can be regarded as learning opportunities for an entrepreneur as well as drivers promoting the intention to resume business. Such intentions are mediated by the learning ability of entrepreneurs and moderated by motivation in terms of residual resources. This study provides a holistic view re-examining the mechanisms of frustrated entrepreneurs to identify opportunities and evaluate resources. APA Citation Information: Jeng, D. J. F., & Hung, T. H. (2019). Comeback of the failed entrepreneur: An integrated view of costs, learning, and residual resources associated with entrepreneurial failure. Journal of Small Business Strategy, 29(1), 30-42. http://www.smallbusinessinstitute.biz http://www.jsbs.org 31 D. J. F. Jeng, & T. H. Hung Journal of Small Business Strategy / Vol. 29, No. 1 (2019) / 30-42 also attracted research attention (Hayward, Forster, Sarasvathy, & Fredrickson, 2010; Shepherd, 2004; Singh et al., 2007). Studies have analyzed the costs of a single failure, considering the total costs of a business failure and how those costs affect the entrepreneur’s life (Singh et al., 2007; Ucbasaran, Shepherd, Lockett, & Lyon, 2013). Although business failure leads to negative conse- quences, failure can also lead to tremendous learning opportunities for an entrepreneur (Cope, 2005, 2011; McGrath, 1999; Singh et al., 2007). Huovinen and Ti- hula (2008) demonstrated that business failure can lead to the improvement of entrepreneurial skills, which can be applied to subsequent businesses. The experience of failure also effects motivation and decision-mak- ing; entrepreneurs may delay starting a new business, or conversely, they may become more determined to succeed (Cardon, Stevens, & Potter, 2011; Cope, 2011; Singh et al., 2007). Although scholars consider failure-related experiences as crucial in the entrepre- neurship process, how failure influences intention in subsequent entrepreneurial activities is not understood. Researchers have indicated that business failures benefit the economy and society overall because of the resources and knowledge generated from bank- rupt firms (Hoetker & Agarwal, 2007; Knott & Posen, 2005; Ucbasaran et al., 2013); these resources can be utilized to establish new businesses (Delacroix & Car- roll, 1983; Ucbasaran et al., 2013). Moreover, business failures can help reduce the costs for surviving busi- nesses through vicarious learning (Madsen & Desai, 2010; Ucbasaran et al., 2013). The effects of business failure on individual entrepreneurs are more complex and damaging. Although failures are a useful resource because of the learning experience for the entrepreneur (McGrath, 1999), they often lead to negative emotions or traumatic experiences (Cope, 2011; Shepherd, 2003; Ucbasaran et al., 2013). The costs of failure (i.e., so- cial and psychological costs) can be seen to outweigh the benefits of learning from failure (Ucbasaran et al., 2013). This study explored the mechanism of failed entre- preneurs’ intention to start a new venture. Specifically, we investigated the correlations among the costs asso- ciated with entrepreneurial failure (i.e., social and psy- chological cost), experience of learning from failure (i.e., incurred by oneself, networks, and relationships), and residual resources after a business fails (i.e., hu- man and social capital). The correlation between busi- ness failure and learning from failure has attracted studies focusing on management practices (Cannon & Edmondson, 2005; Madsen & Desai, 2010; Mellahi & Wilkinson, 2004) and entrepreneurship (Cope, 2011; McGrath, 1999; Minniti & Bygrave, 2001; Politis, 2005; Shepherd, 2003). Entrepreneurs have investigat- ed the reasons for business failure and used these les- sons to revise their methods to achieve more effective management of the venture process (Shepherd, 2003). Scholars have argued that failure sends a “clear signal” regarding what went wrong and motivates entrepre- neurs to be more cautious (Sitkin, 1992). This signal encourages learning through reflection on the rea- sons for failure, which prompts changes to individual thought processes (Minniti & Bygrave, 2001; Politis, 2005; Ucbasaran et al., 2013). Although many studies have addressed the relationship between failure and the process of learning from it, none have established a holistic perspective of the mechanisms driving a failed entrepreneur to start a new venture. Theoretical Background Motivation–Opportunity–Ability Framework The motivation–opportunity–ability (MOA) framework is commonly adopted in research in the fields of industrial and social psychology (Siemsen, Roth, & Balasubramanian, 2008). In the MOA frame- work, motivation theory is used to predict individual behavior. Hughes (2007) defined motivation as the im- petus toward a behavior or motivation that reflects a willingness to act. Bayton (1958) defined motivation as the driver that initiates a behavior. In this study, motivation was considered to lead the entrepreneur to- ward subsequent venture behaviors, ability comprised the requisite skills and capabilities to complete the en- trepreneurial action, and opportunity represented the contextual and situational constraints that prompt the development of an ability. Numerous studies on entrepreneurship have fo- cused on the human capital of an individual entrepre- neur. Venkataraman (2002) suggested that an entrepre- neur’s knowledge comprises opportunity recognition and prior knowledge, which also influence opportunity exploration. Rosenbusch, Brinckmann, and Bausch (2011) used education, start-up experience, manage- ment experience, and work experience to measure human capital. Shane (2000) suggested that prior 32 D. J. F. Jeng, & T. H. Hung Journal of Small Business Strategy / Vol. 29, No. 1 (2019) / 30-42 knowledge is paramount to the human capital of en- trepreneurs, which leads to the recognition of entre- preneurial opportunities. Therefore, human capital is a source of motivation and increases opportunity rec- ognition. In this study, the ability to learn from failure was seen as a rich resource for a failed entrepreneur (McGrath, 1999) as well as a great opportunity to learn from experience and acquire valuable knowledge for the preparation of future ventures. Attribution Theory Attribution theory concentrates on the motivational and emotional consequences of perceived attributions of a particular experience (Weiner, 1985; 1986). This theory is relevant for understanding feedback on fail- ure because it is based on the personal interpretation of an individual’s own behavior (Prussia, Kinicki, & Bracker, 1993). Adapted from Zacharakis, Meyer, and De Castro (1999) and Cardon et al. (2011), attribution theory has been applied to the interpretation of entre- preneur reflection and motives following business fail- ure. The attribution of failure has attracted the atten- tion of many researchers, such as Gaskill, Van Auken, and Manning (1993) and Zacharakis et al. (1999). At- tribution is often triggered by negative events (Wong & Weiner, 1981) or experiences of business failure (Diener & Dweck, 1978). Because business failures are often defined as negative (Shepherd, 2003; Shep- herd et al., 2009; Singh et al., 2007), attribution theory is highly capable of exploring the learning process fol- lowing business failures. Literature Review Opportunity and Ability Factors: Social Costs, Psy- chological Costs, and Learning from Failure Failed entrepreneurs learn from prior business fail- ures by reflecting upon and revising existing knowledge and perceptions (Shepherd, 2003). Entrepreneurs learn that internal and external stakeholder relationships are weakened as a result of the social costs of failure. More- over, they can learn about creating and managing part- nerships with entrepreneur teams that have been affect- ed by business failure (Cope, 2011; Singh et al., 2007). Business failures signal that something negative has happened and motivate entrepreneurs to consider what happened more closely to further understand (Sitkin, 1992). These signals, which arise when businesses fail, motivate learning because entrepreneurs often conduct postmortems for the business to understand what led to its failure; this leads to informative and motivational changes to the perspective of the entrepreneur (Minniti & Bygrave, 2001; Politis, 2005). Close relationships, such as those with family and friends, encourage failed entrepreneurs to be more vigilant and understand the causes and consequences of failure. Cope (2011) cat- egorized the outcome of learning from experience as a deeper understanding of oneself, the reason for the failure, the extent of social networks and relationships, and how to more effectively manage ventures in the future. Failed entrepreneurs often engage in this higher level learning to recover and learn to mitigate the costs of failure. The MOA framework enables us to view the failure of an entrepreneur in terms of social cost and as an external learning opportunity that triggers a deeper learning process. Hypothesis 1. Social costs of entrepreneurial failure positively affect learning from entrepreneurial failure. Failure usually represents an entrepreneur’s per- sonal loss of network relationships and motivation because of the psychological losses from negative emotional responses. Negative emotions generat- ed by failure may affect the ability to learn from an event (Shepherd, 2003), especially if the problems concerned are ambiguous (Kumar, 1997; Shepherd, 2003). Shepherd (2003) demonstrated that to acquire a deep understanding from the costs of failure, entre- preneurs must identify the role that negative emotions play in that understanding. For entrepreneurs and their families, a firm can be considered a context for family activity, epitomizing pride and social position (Shep- herd, 2003). Thus, business failure can create nega- tive emotional feedback in the form of grief. Grief is negative emotional feedback that hinders the ability to concentrate sufficiently for information processing (Mogg, Mathews, Bird, & Macgregor-Morris, 1990; Shepherd, 2003). Moreover, this interference negative- ly affects the ability to learn from a negative situation (Bower, 1992; Shepherd, 2003). Based on the MOA framework, psychological cost is an internal opportu- nity for learning that has a negative influence on the learning process. Hypothesis 2. Psychological costs of entrepreneurial 33 D. J. F. Jeng, & T. H. Hung Journal of Small Business Strategy / Vol. 29, No. 1 (2019) / 30-42 failure negatively affect learning from entrepreneurial failure. Ability and Motivation Factors: Learning from Failure, Human Capital, and Social Capital Cope (2005) mentioned that experiential learning is the primary form of entrepreneurial learning. How entrepreneurs learn from formative experiences is de- pendent upon entrepreneurial learning mechanisms. These learning mechanisms can be more accurately comprehended by considering the prominent role of critical events or episodes in entrepreneurial learning as a motivator (Cope, 2005; Rae & Carswell, 2000). Relevant studies have observed that the changes in perspective that result from learning from failure affect entrepreneur behavior and may improve entrepreneur- ial capabilities or prompt adjustments to firm strategies and practices that result in future success (Cope, 2003; Cope & Watts, 2000; Deakins & Freel, 1998). Min- niti and Bygrave (2001) asserted that entrepreneurs learn from their experiences by updating a subjective stock of accumulated knowledge. According to the MOA framework, learning from failure is considered the ability to reconstruct mental reasoning. If entrepre- neurs are capable of learning from failure, their new knowledge may promote the intention to start a new business. Hypothesis 3. Learning from entrepreneurial failure positively affects the intention of entrepreneurs to start a new business. People are motivated to become entrepreneurs for many reasons. They may select an entrepreneurial ca- reer path because of negative external forces, as indi- cated in “push” theory, or the desire for independence, self-fulfillment, and wealth, as indicated by “pull” the- ory (Segal, Borgia, & Schoenfeld, 2005). High entre- preneurial ability corresponds to ease of confronting difficult situations and learning valuable lessons from failure. Relevant studies have recognized that learn- ing from failure is a pivotal aspect of the experience of failed entrepreneurs (Cardon & McGrath, 1999; Minniti & Bygrave, 2001). The strain on relationships that results from the social costs of failure can provide entrepreneurs with an opportunity to learn to manage social networks more effectively. Moreover, failure is beneficial for learning because it provides an opportu- nity to understand the causes of failure (Sitkin, 1992). Similarly, McGrath (1999) suggested that business failures increase knowledge and can help reduce un- certainty, increase variety, and strengthen the ability to search for market opportunities. These conditions are crucial for the increase in entrepreneurial intention to establish a new business. Politis (2008) discovered that habitual entrepreneurs seem to possess more experi- ence than nascent entrepreneurs in terms of starting new ventures. This experience is acquired by learning from numerous entrepreneurial setbacks and failures. With such useful experience, habitual entrepreneurs continue to pursue an entrepreneurial career path be- cause they can use what they have learned to overcome their natural tendency to view failure as strictly neg- ative. Based on the MOA framework, entrepreneurs with the ability to transform costs into lessons also ex- hibit high potential to establish a new business. Hypothesis 4. Learning from entrepreneurial failure positively mediates the relationship between the social costs of entrepreneurial failure and entrepreneurial in- tention to start a new business. Hypothesis 5. Learning from entrepreneurial failure positively mediates the relationship between the psy- chological costs of entrepreneurial failure and entre- preneurial intention to start a new business. According to Kim, Aldrich, and Keister (2006), Klepper (2002), Lazear (2004), Phillips (2002), and Sonfield and Lussier (2014), human capital is a crit- ical internal factor influencing the decision to start a venture. Kim, Aldrich, & Keister (2003) argued that acquired skills and credentials are critical measure- ments of human capital and may create more attractive opportunities for individuals to work for others rather than pursue their own businesses. Butler and Herring (1991), and Van Auken (1999) have concluded that ed- ucation is negatively correlated to entrepreneurship. We assumed that entrepreneurs who learn from failure may realize their future capabilities and exhibit a de- creased intention to start a new venture. Social capital is crucial to the intention to estab- lish a new business (Bosma, Van Praag, Thurik, & Wit, 2004; Stam & Elfring, 2008). However, social capital in the form of a specific network of entrepreneurs can be affected by social attitudes toward failure. Kirk- wood (2007) described the “tall poppy syndrome,” in 34 D. J. F. Jeng, & T. H. Hung Journal of Small Business Strategy / Vol. 29, No. 1 (2019) / 30-42 which high achievers are glorified and individuals with experiences of business failure are discouraged from starting a new venture by potentially negative public reactions. Thus, social capital, as an external factor that comprises formal and informal relationships, can have a negative effect on the intention to start a new venture. According to the MOA framework, residual resources from business failure are negative motiva- tions that moderate the intention to start a business. Hypothesis 6. Human capital negatively moderates the relationship between learning from entrepreneur- ial failure and entrepreneurial intention to start a new business. Hypothesis 7. Entrepreneurial social capital negative- ly moderates the relationship between learning from entrepreneurial failure and entrepreneurial intention to start a new business. Method The questionnaire used in this study comprised 38 items measured on a seven-point Likert scale. These items measured costs of entrepreneurial failure (10 items), as adapted from Blau (2007) and Harris and Sutton (1986); learning from entrepreneurial failure (7 items), as adapted from Shepherd, Patzelt, and Wolfe (2011); entrepreneurial intention to restart business (9 items), as adapted from Douglas and Shepherd (2002), Krueger (1993), and Segal et al. (2005); and entrepre- neurial resources (13 items), as adapted from Baron and Markman (2003), Riggio (1986), Subramaniam and Youndt (2005), and Youndt, Subramaniam, and Snell (2004). The sample comprised businesses that had been registered by the e-Tax portal of the Ministry of Fi- nance, Vietnam but had ceased business operations within 12 months. A total of 11,210 companies were identified, and their registered phone number was re- trieved and called. If the phone number was valid and the founder could be reached, they were invited to par- ticipate in this study. If the response was positive, a phone interview was conducted. A total of 5,000 phone calls were made, yielding a valid survey of 216 sam- ples and return rate of 4.32%. Table 1 presents the re- sults of the descriptive analysis. Figure 1. Research framework 35 D. J. F. Jeng, & T. H. Hung Journal of Small Business Strategy / Vol. 29, No. 1 (2019) / 30-42 Analysis and Results Factor analysis, correlation analysis, and reliabil- ity tests (Cronbach’s α) were conducted to confirm the reliability and consistency of the factors. The Kai- ser–Meyer–Olkin (KMO) measure was used to assess sampling adequacy, and confirmatory factor analysis was conducted to evaluate the reliability and con- struct validity. The hypothesized measurement model demonstrated good fit with the data (X2 [N = 216] = 276.785; degrees of freedom [df] = 186; X2/df = 1.488; root mean square error of approximation (RMSEA) = .048; goodness of fit index (GFI) = .895). Table 2 lists the descriptive statistics for our scales along with their intercorrelations and coefficient alphas for reliability. Table 3 represents the results of structural equa- tion modeling analysis to test Hypotheses 1, 2, and 3. The mediating effect of learning from entrepreneurial failure (H4 and H5) was examined through regression analysis (Tables 4 and 5, respectively). Moderating effects were analyzed through hierarchical regression (Table 6). Conclusion and Recommendations Although other studies have focused on entrepre- neurial success, little is known regarding the ability of entrepreneurs to cope with and learn from failure. Learning from failure is a prominent influence on sub- sequent entrepreneurial initiatives. This study may provide a resource for mitigating entrepreneurial fail- ure, which reduces the motivation to undertake sub- sequent entrepreneurial projects. Following failure, entrepreneurs re-evaluate their resources (i.e., human and social capital) and reconsider their capability of managing the venture. To achieve a learning outcome, entrepreneurs re- Table 1 Descriptive analysis of samples (N = 216) Variable Category Frequency Percentage Gender Male 129 60 Female 87 40 Age 0-20 years old 0 0 21-30 years old 150 69.40 31-45 years old 55 25.46 46-60 years old 11 5.09 More than 60 years old 0 0 Education PhD 1 0.46 Master 35 16.20 Bachelor 170 78.70 High School 7 3.24 Primary School 1 0.46 Other 2 0.93 Number of household 1-3 people 88 40.74 4-5 people 102 47.22 More than 5 people 26 12.04 Firm Age of Last Failure 1-5 years 179 82.87 6-10 years 31 14.35 More than 10 years 6 2.77 36 D. J. F. Jeng, & T. H. Hung Journal of Small Business Strategy / Vol. 29, No. 1 (2019) / 30-42 Table 2 Results for Pearson correlation coefficient (N = 216) Mean S.D CR 1 2 3 4 5 6 7 8 9 1 Failure Social Costs 4.2685 0.85884 .788 (.744) 2 Failure Psycho. Costs 4.5009 1.05071 .740 .487** (.647) 3 Learning from failure 5.7415 0.97834 .709 0.096 0.066 (.742) 4 Restart Intention 4.9514 1.06389 .696 0.103 0.06 .370** (.709) 5 Human Capital 5.088 1.1755 .851 0.128 .136* .489** .469** (.737) 6 Social Capital 5.0856 1.09012 .726 0.123 0.105 .608** .454** .685** (.698) 7 Gender 0.4306 0.4963 -0.052 -0.039 .147* 0.009 -0.032 0.043 8 Age 2.3889 0.60745 0.011 -0.078 -0.093 -0.094 -0.009 -.136* -.280** 9 Education 3.1111 0.61506 .169* .148* -0.13 0.001 -0.014 -0.086 -0.112 0.095 10 Firm age on failure 3.4769 2.64477 0.045 -0.047 0.013 -0.091 0.105 0.008 -.263** .645** 0.024 Note: **p < .01; *p < .05. The number in parentheses is the square root of AVE. CR and AVE are calculated based on values obtained in the full measurement model Table 3 Results of structural equation modeling Variable Standardized Coefficients C.R. Social Costs  Learning from failure 0.19** 1.790 Psychological Costs  Learning from failure -0.07 -0.637 Learning from failure  Restart Intention 0.53*** 5.271 Fit Index X2 = 59.096 df = 49.996 X2/df = 1.182 GFI = 0.956 AGFI = 0.932 RMSEA=0.029 37 D. J. F. Jeng, & T. H. Hung Journal of Small Business Strategy / Vol. 29, No. 1 (2019) / 30-42 Table 4 Regression results of learning from entrepreneurial failure as mediator between socialcosts of entrepreneurial failure and intention to restart business Independent Dependent Variable Restart Intention Learning from Failure Restart Intention Model 1 Model 2 Model 3 Model 4 Step 1: Control Variable Gender -0.021 0.0135 -0.075 -0.072 Age -0.058 -0.119 -0.015 -0.012 Education -0.013 -0.130 0.048 0.036 Firm age before last failure -0.063 0.033 -0.107 -0.111 Step 2: Predictor ESC 0.108 0.106 0.069 Step 3: Mediator EFL 0.383*** 0.376*** R2 -0.012 0.041 0.151 0.156 ΔR2 -0.002 0.023 0.135 0.136 F-value 2.410 2.444 35.451 33.722*** P-value (sig.) 0.122 0.119 0.000 0.000 Note: ESC = social costs of entrepreneurial failure; EFL = learning from entrepreneurial failure. Table 5 Regression results of learning from entrepreneurial failure as mediator between psychological costs of entre- preneurial failure and intention to restart business Independent Dependent Variable Restart Intention Learning from Failure Restart Intention Model 1 Model 2 Model 3 Model 4 Step 1: Control Variable Gender -0.021 0.135 -0.075 -0.073 Age -0.059 -0.117 -0.015 -0.013 Education -0.003 -0.122 0.048 0.045 Firm age before last failure -0.056 0.132 -0.107 -0.107 Step 2: Predictor ESC 0.053 0.086 0.019 Step 3: Mediator EFL 0.388*** 0.386*** R2 0.014 0.060 0.154 0.156 ΔR2 -0.014 0.033 0.129 0.126 F-value 0.568 1.597 35.183*** 34.459*** P-value (sig.) 0.452 0.208 0.000 0.000 Note: ESC = social costs of entrepreneurial failure; EFL = learning from entrepreneurial failure. 38 D. J. F. Jeng, & T. H. Hung Journal of Small Business Strategy / Vol. 29, No. 1 (2019) / 30-42 quire a process for overcoming the grief of failure. Three such processes are recovery, cognitive reflection, and behavioral modification. Shepherd et al. (2009) ac- knowledged that an entrepreneur’s recovery from fail- ure occurs when grief subsides and business losses are overcome. Entrepreneurs recover from failure when the events surrounding their business losses no longer generate a negative emotional response (Shepherd, 2003). After negative emotions have been overcome, cognitive constructs such as confidence or optimism replace grief. Hayward et al. (2010) suggested that al- though optimism explains the high rate of failures, it also constitutes an opportunity for failed entrepreneurs to recover. This study determined no significant correlation between the psychological costs of entrepreneurs and learning from entrepreneurial failure (Hypothesis 2). One possible reason for this is that even learning from failure can be viewed as a recovery outcome; if the psy- chological cost is excessively high, then learning per- formance can be inhibited. Wolfe and Shepherd (2015) used college football teams as a sample to investigate how failure influences their subsequent performance. They discovered that negative emotional content and subsequent performance exhibited a U-shaped rela- tionship, indicating a threshold for the psychological costs incurred by team players. Exceed this threshold for entrepreneurs, negative emotions may trigger pos- itive learning processes and increase the intention to start a new venture. However, if negative emotions ex- ceed this threshold, entrepreneurial intentions may be diminished. This study demonstrated that learning from failure has a mediating effect on failure costs and restart in- tention. Learning is often viewed as a pivotal outcome of entrepreneurial failure (Cope, 2003; Corbett, Neck, & DeTienne, 2007; Shepherd, 2003). Business failures can be a rich source of feedback for entrepreneurs re- garding the effectiveness of their decision-making pro- Table 6 Hierarchical regression of entrepreneurial resources as moderators between learning from entrepreneurial failure and intention to start a new business Dependence Restart Intention Variable Model 1 Model 2 Model 3 Model 4 Control Gender -0.007 -0.002 -0.033 -0.030 Age -0.010 0.009 0.023 0.030 Education -0.088 0.053 0.083 0.070 Firm age on failure -0.147 -0.144 -0.146 -0.135 Independent Oneself 0.099 0.016 Networks & Relationship 0.073 0.026 Moderator Human Capital 0.361*** 0.360*** Social Capital 0.396*** 0.356*** Interaction Oneself x Human Capital -0.241*** Networks&Relationship x Human Capital -0.206*** Oneself x Social Capital -0.256*** Networks&Relationship x Social Capital -0.228** R2 0.305 0.284 0.276 0.264 ΔR2 0.278 0.257 0.248 0.235 F-value 11.371*** 10.287*** 9.883*** 9.258*** F change 12.707*** 8.105** 12.657*** 9.719** 39 D. J. F. Jeng, & T. H. Hung Journal of Small Business Strategy / Vol. 29, No. 1 (2019) / 30-42 cess (Corbett et al., 2007; Minniti & Bygrave, 2001), management skills, and social networking and rela- tionships. Minniti and Bygrave (2001) recognized that knowledge gained from failure could be applied during subsequent entrepreneurial endeavors to enable entre- preneurs to achieve greater success in the future. Ev- idence indicates that highly successful entrepreneurs attribute their success to learning from past failures. The ability to learn is a prominent factor that affects behavior after failure. Although failure is a remarkably beneficial learning experience, entrepreneurs fail to learn if they lack the ability to confront the reasons for failure effectively. Entrepreneurs may only learn lessons that correspond to their existing beliefs (Bau- mard & Starbuck, 2005). As a result, they may repli- cate their mistakes in future entrepreneurial endeavors (Shepherd, 2003). Failure does not automatically lead to valuable learning outcomes (Cope, 2011; Cannon & Edmondson, 2001), and entrepreneurs must be capable of learning to acquire knowledge that will benefit their future ventures. This study has several limitations that constitute opportunities for further research. First, this study ap- plied cross-sectional data, which limited our ability to evaluate real outcomes for failure recovery and learn- ing processes as well as resource mitigation following failure. Future studies can address these limitations by analyzing longitudinal data consisting of informa- tion of failed entrepreneurs who have been monitored over time. Second, our study did not consider the skills required for different entrepreneurial ventures. Inno- vation-driven entrepreneurship requires greater skill and more resources and involves higher levels of un- certainty when compared with necessity-driven entre- preneurial ventures (Liao, Welsch, & Moutary, 2008). Furthermore, this study did not explore the timing and sequence of failure experiences reported by various types of entrepreneurs, which may influence how en- trepreneurs comprehend their failure. The strength of emotional response (e.g., grief) may be mitigated by time (Cannon, 1999). Future studies should explore the timing of failure and consider the difficulties of busi- ness ventures. Finally, the sample used in this study was reflective of a specific culture, and we did not con- sider how different cultural perceptions of failure may affect the learning behaviors of entrepreneurs. We en- courage researchers to explore how cultural contexts influence entrepreneurial behavior outcomes following business failure. Acknowledgments The authors would like to thank the anonymous re- viewers for their valuable comments and suggestions that helped improve the quality of this manuscript. 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