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Abstract
Although the entrepreneurial community celebrates and endorses the importance of learning from failure, little systematically developed and maintained data, information, or narratives about root causes of failure exist. Other industries and communities, such as the airline industry, share failure information in order to improve performance. We review the startup failure literature and develop a taxonomy of failure root causes, with emphasis on endogenous causes. We then use a set of 105 entrepreneur narratives for failed startup firms to test the application of these root causes of failure. The research reveals some insights regarding frequency of causes of failure. However, the principal objective and most important outcome is a start developing a shared knowledge base and structured taxonomy of failure causes for better understanding of entrepreneurial failure, shared entrepreneur learning, and improved entrepreneurship education.
Introduction
The Importance of Learning from Failure
Popular entrepreneurship literature contains hundreds of mentions of the importance of learning from failure. A few examples include: "failure is a prerequisite to learning" (Ries, 2011, p.); "there is nothing wrong with failure as long as it happens early and becomes a source of learning" (Brown, 2009, p.); Fail Fast, Fail OftenjBabineaux & Krumboltz 2013); and learning through failure at the Stanford School and in the US Army (Sutton, 2007).
Scholarly entrepreneurship research also supports the importance of failure. Mueller and Shepherd (2012) found that, "Entrepreneurial failure can serve as a powerful cognitive agent in helping to develop expertise in the form of structural alignment processes" (p.). Their finding supports the belief that failure experience can be beneficial to the entrepreneur in the long run, helping to equip him or her for success in subsequent ventures. Sitkin (1992) and Edmondson (2011) make but two additional arguments. Yamakawa and Cordon (2015) argue that entrepreneurship is not only about success but also failure and explore, citing others, how entrepreneurs can benefit and learn from failure. Most of the research refers to learning by individuals, not shared learning by the community of current or nascent entrepreneurs.
Learning organizations and communities, as promoted by Senge (1990) and Kofman and Senge (1993), depend on shared learning from successes and failures. Taleb (2012) classifies the airline industry as "antifragile," gaining from failure, because lessons learned from each airline tragedy...