Growing levels of education, increasing availability of capital,
diversification and specialization of economic activities, and the
numerous support options available to start a business has led to the
creation of more and more micro and small businesses across Europe. But
while the process of setting up a business is increasingly
straightforward, keeping it going is much tougher. In normal times,
business entry and business exit are natural processes, inherent to
economic life. Yet, the number of bankruptcies peaked during the recent
financial crisis. The Lisbon Partnership had identified the key role of
overcoming the stigma of business failure as a strategy for growth and
jobs.
There is a clear economic and social rationale in providing a second
chance to failed entrepreneurs and helping them derive positive
experiences from negative situations. First, businesses set up by
restarters grow faster than those of first timers in terms of turnover
and jobs created. The case studies of Ford, Hershey and Disney are
instructive for young entrepreneurs in this matter.
Second, most of the time, the cause of a business failure is not the
incompetence but external circumstances such as a slump in demand,
financial crisis or rise of a new competitor. However, this professional
failure is often confused with personal failure, and low self-esteem
causes individuals to withdraw and retreat to safer employment options.
Third, it is accepted that a society does not generate innovation and
productivity by steadfastly avoiding mistakes but rather by learning
from them. Yet the culture of and incentive system in Europe does not
reflect this.
Value of Failure is a comprehensive attempt to understand the various
aspects of the phenomenon of business failure. It enables readers to
understand business failure from the perspective of institutional
theory; economic failure in the process of small business growth in the
context of the shadow economy; Schumpeter's theory of 'creative
destruction' and the fear of failure; sustainable economic growth and
development and system approach to failures and their impact on the
enterprise operation.
