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Learning is a complex action, with no single factor equating to guaranteed learning. Rather it requires such things as, an appropriate environment (Christenson, Reschly, & Wylie, 2012), attitude (Souitaris, Zerbinati, & Al-Laham, 2007), beliefs (Van Dinther, Dochy, & Segers, 2011), experience (Alderman, 2013) motivation (Singh, 2011) and intention (Valtonen et al., 2015). Motivation and gaining a sense of achievement is important in all aspects of learning (Boyd & Vozikis, 1994; Krueger & Carsrud, 1993; Peterman & Kennedy, 2003).
The constructivism learning theory posits that learning involves building schemata by contemplating or trying something new. In the process of learning, mistakes or errors generally occur. This theory postulates that a learner needs to proactively reflect on the experience and how “failures” occurred and what can be learned from the process (failure analysis) (Tawfik, Rong, & Choi, 2015). Multiple experiences of failure analysis can help develop skills, resilience, an understanding and a disposition which acknowledges the importance and value of this vital learning component (Atsan, 2016; Cope, 2011).
Failure analysis is particularly important in entrepreneurship education (Cotterill, 2011) where less than 1% of the business plans submitted to venture capital firms get funded (Lerner, 2009). Cope (2011) believes that entrepreneurs learn not only about themselves and the demise of their ventures but also about the nature of networks and relationships and the “pressure points” of venture management. Previous entrepreneurship failure has been shown to have a positive effect on interest levels in entrepreneurship in the future (Acheampong & Tweneboah-Koduah, 2018).
Experiencing entrepreneurial failure can negatively affect some entrepreneurs. Cardon, Stevens, and Potter (2011) suggested that failure has a large impact on the stigmatization of the entrepreneur and entrepreneurship within the local area, as well as on the individual entrepreneur's view of themselves following failure. Previous entrepreneurship failures can prevent a person from rebuilding their business and thus become an obstacle to their future entrepreneurial career (Newbery, Lean, Moizer, & Haddoud, 2018).
An emotional relationship exists between the self-employed and their business. Building a business is not only about making a profit but also establishing many aspects including loyalty to a product, loyalty to a market and customers’, personal growth, and the need to prove oneself (Shepherd, 2003). The negative emotional response to the loss of a business represents grief that can diminish an individuals' ability to learn from the experience. This grief could be classed as traumatic if the symptoms include avoidance, detachment, difficulty of acknowledgement, shock, emptiness, anger over the condition faced and purposelessness re-future (Regehr & Sussman, 2004).
Failure analysis is now considered a critical issue in order to reduce the percentage of business failures especially during the start-up phase. Olaison and Meier Sørensen (2014) identified a discursive shift from focusing on entrepreneurial success to embracing failure as a “learning experience”. They also traced the “fail better”-movement and identified a distinction between “good failure” from which the entrepreneur learnt, and “bad failure.” Furthermore, Minello, Alves Scherer, and da Costa Alves (2014) analyzed the relationship between entrepreneurial competencies and business failure. They concluded that prior to business failure, skills emerge as a form of personal and professional development; whilst during business failure, the skills emerged infrequently, or were absent; and after business failure, these skills resurfaced as a way to overcome adversity.