Abstract

This chapter sets out to explore the issue of the perception of business failure from the perspective of institutional theory. The statistics show that only 50 percent of businesses survive 5 years after they were created (Credireform 2002– 06). Even though business deaths are normal for dynamic economic processes, the perception of failure is negative, especially on the European continent. While in the United States it is worthwhile, during a job interview, to admit to failure in business as it increases the value of potential employee, Europeans would rather remain silent about any lack of success in business. What can bring about a change related to a negative perception of business failure? To answer this question, institutional theory is used in the present study, especially the model of phases of institutional change. The chapter presents theoretical considerations as well as empirical evidence based on the research conducted during the realization of the Value of Failure project and in- depth interviews with entrepreneurs. As numerous scholars have shown that business failure is good for the economy and for society overall— due to the release of knowledge and resources from defunct businesses— the changed perception of failure will have a positive impact on the economy. The findings of the research show that lack of discussion about business failure in social life is one of the obstacles to recognizing its value. Media hype, engaging universities, business advisors and regional and local authorities in such discourses could be first steps in destabilization negative approaches.

Introduction

As the chapter investigates how to change the perception of business failure, the use of institutional theory, especially institutional change, seems to be a reasonable approach. Associated with incompetence and often hidden, such an approach to business failure does not encourage starting over. Greenwood's (Greenwood et al. 2002) theoretical concept of the process of institutional change is used in the study to propose change in the perception of business failure which, in fact, which, in fact, increased the knowledge and experience of entrepreneurs.

There is considerable business churn in the European Union and in the world. Many new enterprises are born and many vanish from the market. In the United States more than 80 percent of new firms end up failing, and about 10 percent of all American companies fold each year (DeGroat 2006).