Failed ventures and an Entrepreneur’s Digital Identity.
Research Paper Title:
“How does entrepreneurial failure change an entrepreneur’s digital identity? Evidence from Twitter data”
Authors:
Cristian Fisch (Trier University)
Joern H. Block (Erasmus University Rotterdam)
Background:
An entrepreneur’s digital identity (online self-representation) influences how the entrepreneur is perceived by and interacts with stakeholders. Therefore, an entrepreneur’s conduct on social media platforms is increasingly important for the venture’s success. While identities are generally stable over time, critical events such as the failure of an entrepreneur’s venture can lead to identity changes. This research explores entrepreneurial failure and how it influences the digital identity of an entrepreneur.
Methodology:
Sample: Crunchbase (www.crunchbase.com) database to identify sample of entrepreneurs who experienced failure.
Sample Size: 760 entrepreneurs who experienced venture failure and used Twitter before, during, and after the failure. The three time periods are defined as follows: (i) >90 days before failure (before failure), (ii) 90 days or less before failure and 90 days or less after failure (during failure), (iii) >90 days after the failure (after failure). On average 7066 words before failure, 675 words during failure, and 5523 words after failure per entrepreneur were analyzed.
Analytical Approach:
1- Computerized text analysis with Linguistic Inquiry and Word Count (LIWC)
2- Multivariate regression analysis
Results:
1. Financial consequences: Failure in venture results in a reduction of personal income and accumulation of debt. Entrepreneurs use more words associated with money and talk less of leisure suggesting an increase in the importance of these personal concerns.
2. Social consequences: Reputation loss, breakdown of marriage, and distancing from family and friends are some of the social consequences of a failed venture. Unsuccessful entrepreneurs talk less about friends and leisure, indicating lesser interest in social activities which further damage social relations.
3. Psychological consequences: There is a decrease in entrepreneurs’ emotional tone and in their effectiveness post-failure of the venture. They tend to blame themselves for the failure, become more apathetic, and tend to be less future-oriented after failure.
Conclusion:
Failure in venture results in financial, social, and psychological consequences for the entrepreneur. Failed venture does change the digital identity of an entrepreneur and the consequence of failed venture can be positive or negative.
