Impression Management Strategy After Entrepreneurial Failure And Its Effectiveness

Entrepreneurship is a process of exploring uncertainty,and most entrepreneurial ventures fail.Prior research about entrepreneurial failure focus on the key question“Why do some entrepreneurs become more active,while others become more negative after entrepreneurial failure”? These studies agree that entrepreneurs may largely experience negative emotions,and mainly utilize psychological theories and institutional theories to explain why some entrepreneurs can recover more quickly from the negative emotions,and thus learn from failure,and prepare for re-entry.This line of studies has two limitations.First,these studies are based on the assumption that the entrepreneur is the only important subject in entrepreneurial failure management,and regards failure management as a process of negative emotion regulation.Second,these studies regard failure management as a process of entrepreneurs' self-healing.However,these studies ignore the role of organizational audiences in entrepreneurial failure management.Entrepreneurship failure is a process of social construction.Entrepreneurial failure may cause social cost and bring stigma to entrepreneurs.The blows from other organizational audiences,such as investor' asset divestment and media criticism,may be fatal to entrepreneurs.Therefore,most entrepreneurs have to take the initiative to manage their image in the eyes of the organizational audience,to eliminate or avoid the severe consequences of failure stigma.Previous studies have shown that investors' evaluation of legitimacy includes investors' active judgment and further scrutiny of entrepreneurial failure.Evaluative legitimacy is an critical criterion to measure investors' evaluation of entrepreneurial failure events,and thus is an important indicator for the effectiveness of impression management strategies.This research holds the view that that the effectiveness of the entrepreneur's impression management strategy depends on whether the impression management strategy can shape the evaluation legitimacy of entrepreneurial failure(ie,failure legitimacy).To solve above puzzle,this study focuses on the core question of “how do entrepreneurs use impression management strategies to eliminate the negative effect of failure stigma?” This study unfolder the significant role of investors in failure management process,mainly addressing the following two questions:First,what impression management strategies do entrepreneurs take after entrepreneurial failure? How to measure these strategies? The connotation and classification of impression management strategies are largely rooted in the research context.Prior studies about impression management are mainly from organization and strategy field.Recently,few research started to give attention to the context of entrepreneurial failure.However,these studies are contextual or qualitative studies,or just based on attribution theory to measure impression management strategies.The measurement of impression management strategy after entrepreneurial failure is lack,which largely limit the development of related research.Thus,this study aimed to develop a specific measurement of impression management strategies after entrepreneurial failure.In the paper,we first reviewed the impression management strategies for stigma and entrepreneurial failure,to provide a theoretical basis for further scale development.Then,this study used inductive method to extracted a new concept of impression management strategies after entrepreneurial failures,and concluded four strategies: accepting responsibility,denying responsibility,defining in a positive light,and supplication,and then extracted 23 items to measure these for strategies.Finally,this study conducted a survey and use exploratory factor analysis and confirmative factor analysis to test the validation of the scale.The empirical results showed a five-dimension formative scale of impression management strategies after entrepreneurial failure,including 3 items measuring accepting responsibility,6items measuring denying responsibility(3 items for responsibility of environment,3items for responsibility of others),3 items measuring defining in a positive light,and4 items measuring supplication,respectively.Second,what is the influence mechanism of impression management strategy on the evaluative legitimacy? How does the effectiveness of impression management strategies vary? Prior research on impression management strategies after entrepreneurial failure is limited,thus,this study first reviewed the relevant research on impression management strategies in entrepreneurship,and to provides theoretical base for our theoretical model construction.This study focused on the critical role of investors' evaluation of entrepreneurial failure and their subsequent decision-making.This paper included three main parts:(1)this study combined signal theory and linguistics literatures and explored the mechanism of impression management strategies of entrepreneurial failure's effect on investors' evaluative legitimacy(failure legitimacy);(2)using role congruity theory to explore the moderating effect of entrepreneur characteristics(entrepreneurs' gender)on the relationship between impression management strategies and legitimacy;(3)using information diagnosticity theory to explore how investor characteristics(investors' failure attribution)moderates the relationship between the entrepreneur's impression management strategies and legitimacy.Based on 137 pairs of matching data from entrepreneurs and investors,this study finds that:(1)accepting responsibility can acquire evaluative legitimacy;denying responsibility to others hinders evaluative legitimacy;(2)compared with male entrepreneurs,female entrepreneurs use strategies of accepting responsibility and denying responsibility to environment can be more beneficial to acquire legitimacy;(3)denying responsibility to others are more effective in acquiring legitimacy for those who are faced with severe competence threat;accepting responsibility and supplication are more effective in acquiring legitimacy for those who are faced with severe integrity threat.This study contributes to impression management theories and entrepreneurial failure literatures from three aspects:(1)developed a scale for impression management strategy after entrepreneurial failure,and provided a measurement base for the development of further empirical studies;(2)reveals how entrepreneur's impression management strategies affects investors' legitimacy evaluation;(3)exploring the moderating role of impression management strategies' subjective(entrepreneurs)and objects(investors),to extend our knowledge that under what conditions impression management strategies could be effective.This study has four innovations.(1)Innovation to entrepreneurial failure researchPrior research mainly regards entrepreneurial failure as a process of negative emotion management.Related researches are based on the theory of grief recovery to explore the question of “after entrepreneurial failure,why some people can restart,but others fail”.This line of research ignore the social nature of entrepreneurial failure.Thus,this study suggests that entrepreneurial failure is a process of social construction,and regards entrepreneurial failure management as a process of stigma management.This study focuses on the crucial role of the organizational audience in the management of entrepreneurial failure.Specifically,this research believes that entrepreneurial failure will cause stigma to entrepreneurs.This study provides a new perspective for understanding the process of entrepreneurial failure management.(2)Innovation to impression management theoryThis study have two main innovations to impression management theory.First,this research utilizes grounded theory and develop an scale for impression management strategy for entrepreneurial failure scenarios,which has made important contributions to the research and development of impression management theory.Second,Existing studies either did not evaluate the effectiveness of impression management strategies,or just proposed hypotheses without testing,this research empirically explores the effectiveness of the impression management strategy and the boundary conditions,that is,how and when does entrepreneurs' impression management strategy can acquire evaluative legitimacy.(3)Innovation to attubition theoryThere are two main innovations to attubition theory.On one hand,this study focuses on the critical role of investors' attribution of entrepreneurial failure,and pioneers to explore the important role of failure attrubtion from the perspective of organizational audiences.On the other hand,this study distinguishes two types of failure attributions(integrity vs.compentence),and thus enriches the connotation of attribution from the perspective of attribution content.Thus this study provides new perspective for further research in different types of failure attributions.(4)Innovation to research context and research objectsThis study pioneers to extend the effectiveness of the impression management strategy of entrepreneurial failure to the entrepreneur-investor binary relationship.This study focuses on how investors,a specific organizational audience,evaluate and understand entrepreneurs' behavior after entrepreneurial failure.The research results confirm the view that “social failure is a process of social construction”,and reveals the process and mechanism of stigma management for entrepreneurial failure from the perspective of investors.This study further proves that the failure of entrepreneurial ventures is not the failure of entrepreneurs.Entrepreneurs can contingently manage failure through using of impression management strategies.This study provides theoretical evidence for entrepreneurs to manage failure stigma,and for policy-makers to cultivate a tolerant failure environment for entrepreneurs.Lastly,limitations and further research directions are discussed.