Negative emotional reactions to project failures

We turn to the psychology literature for theorizing on possible answers to these questions. Specifically, by building on self-determination theory (Deci and Ryan, Reference Deci and Ryan2000; Shepherd and Cardon, Reference Shepherd and Cardon2009), we gain new insights into the generation of grief over project failure. Self-determination theory is concerned with explaining an individual's psychological well-being. Individuals have three fundamental psychological needs (i.e., nutrients), and these provide a basis for understanding why some projects are more important than others and why some people find one project more important than another. Given that grief is the negative emotional reaction to something lost, by understanding the importance of a project, we gain some insights into the level of grief generated by its loss through failure. The three fundamental psychological needs are for competence, relatedness, and autonomy. As illustrated in Figure 2.1, the more an entrepreneurial venture satisfies an individual's needs for competence, relatedness, and autonomy, the more it contributes to that individual's psychological well-being, but it also generates more grief when these needs are thwarted by failure.

Figure 2.1: A self-determination model of grief over entrepreneurial failure

Project failure thwarting the need for competence

The more a project satisfies an individual's need for competence, the more grief he or she will feel when the project fails. The need for competence is satisfied when feedback provides information that the individual is performing well at a particular task (Deci and Ryan, Reference Deci and Ryan2000). Some projects satisfy the need for competence by providing the opportunity to learn new skills (Dweck, Reference 34Dweck1986), demonstrate mastery of the project's tasks (Butler, Reference Butler1992), successfully compete against other groups (Tjosvold, Johnson, Johnson, and Sun, Reference Tjosvold, Johnson, Johnson and Sun2003), and thus be a member of a competent team (Lindsley, Brass, and Thomas, Reference Lindsley, Brass and Thomas1995).

Various managers and employees who we interviewed in our studies and were involved in innovation and new product development projects emphasized that project work can contribute to fulfilling their need for competence. For example, we conducted a study with 257 research scientists working on highly uncertain projects in different academic disciplines (Shepherd and Patzelt, Reference Shepherd and Patzelt2011). Before we used a questionnaire to explore the emotional and learning consequences of project failure, we interviewed seven scientists in the areas of chemistry, biochemistry, mechanical engineering, behavioral economics, theoretical physics, aerospace engineering, and biology. These scientists had considerable project experience, including past project failures. The aim of the interviews was to gain a deeper understanding of how scientists and engineers perceive their projects and how they emotionally react to project failure. On various occasions during the interviews, these scientists emphasized the importance of their projects for their self-image as a competent scientist and how failure can threaten this self-image. For instance, an aerospace engineer reported, “The view (of others on us) is they do clean work, it is well documented, it keeps costs and time… . So you must deliver. I personally experience it as substantial pressure, which I generated myself but which is important and for me part of defining myself.”

Similarly, a biologist reported that being successful at work for her is “very important, without any question … without work, well, it defines me. I am happy [when I can prove myself]. This is very important for me.”

However, if a project fails and the subsequent project does not satisfy the need for competence to the same degree, the deficit between the two likely contributes to the grief generated by the project's failure. The greater the deficit, the greater the generation of negative emotions. In our interviews with engineers and scientists (Shepherd, Patzelt, and Wolfe, Reference Shepherd, Patzelt and Wolfe2011), the leader of the aerospace engineering project continued by describing his reaction to a failure as follows:

Obviously, the fact that this project leader could not deliver the desired outcome in time thwarted his self-image as a competent engineer. Similarly, in the same study, the leader of a mechanical engineering project reported that the project's failure “hurt me as an engineer … because, it was simply the case that we failed with a technological challenge.” This engineer's project employed about 200 people and was highly visible within his organization and beyond.

We found similar results in another study on project terminations in a large German technology company (Shepherd, Patzelt, Williams, and Warnecke, Reference Shepherd, Patzelt, Williams and Warnecke2014). In this company, we explored eight engineering projects from four subsidiaries in the fields of energy and electricity. These projects differed substantially in scope, their budgets ranged $750,000 to $140 million, and they had been between 3 and 200 employees working on the projects. All together, we conducted 28 interviews with top managers, project leaders, and project team members about the failed projects. Specifically, these interviews covered topics like the project termination process, emotional reactions to these terminations, and learning from the experience. The interviews provided evidence for how project failure can thwart the need for competence for those involved. For example, a project team member described the reaction of the project's chief technology developer as follows, “He was very frustrated because he thought that what he had designed aerodynamically was the best. He was going to have serious discussions [with other team members] about the engine because he thought that they must have built it wrong. He continuously asked, ‘Have you checked this, have you checked that?’”

Another manager of a failed project explained his emotional reaction to project failure as follows:

Obviously, this manager perceived that others would no longer view him and his team members as competent managers and engineers, leading to feelings of embarrassment and shame.

The need for competence is important as it contributes to an individual's psychological well-being. Project failure can thwart this psychological need by providing negative feedback about competence, sending a signal to important others about one's competence and perhaps also resulting in deployment to a subsequent project that does not provide positive feedback on competence and/or does not provide the same opportunity to develop skills and knowledge. To the extent that project failure thwarts the psychological need for competence, the individual will have a negative emotional reaction to the loss of that project.

Project failure thwarting the need for autonomy

A similar effect likely occurs for individuals’ psychological need for autonomy (Shepherd and Cardon, Reference Shepherd and Cardon2009). Autonomy in a work-related context refers to “volition, to having the experience of choice, to endorsing one's actions at the highest level of reflection” (Deci and Ryan, Reference Deci and Ryan2008). A project can satisfy the need for autonomy through structures and processes (Bennis and Nanus, Reference 33Bennis and Nanus1985) that empower (Logan and Ganster, Reference Logan and Ganster2007), facilitate participative decision making (Liden and Tewksbury, Reference Liden, Tewksbury, Ferris, Rosen and Barnum1995), and delegate decision-making authority to the team (Blanchard, Carlos, and Randolph, Reference Blanchard, Carlos and Randolph1995).

In our interviews, several participants indicated the need for autonomy as an important motivating factor. For example, in one study, Behrens and colleagues (Reference Behrens, Ernst and Shepherd2014) explored how large firms organize when developing radical innovations and then bringing them to market quickly. In this study, we conducted 55 interviews with leaders and team members of 16 innovation departments in mid-sized and large German firms in innovation-driven industries. These industries included, for example, automotive, telecommunications, consumer goods, industrial goods, and medical technology, and size of the companies ranged from 600 to 400,000 employees. While the research project's primary goal was to explore how firms organize their innovation departments in terms of incentives, resource provisions, and organizational structures, the interviews also provided insights into what the project leaders and team members perceive as important drivers of their motivation. For example, we interviewed the top manager who was responsible for the strategy of a large firm. This manager told us about a successful project in his firm, and in his view, autonomy was one of the key motivational factors for team leaders and members:

In another firm captured by the same study, an employee in the R&D department described the importance of autonomously developing new ideas:

Again, to the extent that termination of a project creates a deficit in perceived autonomy, the individual will experience grief from the project failure. For example, in our study on eight failed projects of a large German technology corporation (Shepherd et al., Reference Shepherd, Patzelt, Williams and Warnecke2014), a manager experienced top management's decision to abandon his engineering project prematurely as a personal lack of freedom to make decisions autonomously:

The need for autonomy is important as it contributes to an individual's psychological well-being. Project failure can thwart this psychological need by revealing a lack of autonomy over the decisions necessary to make the project successful and/or a lack of autonomy over the decision of whether to terminate and persist with the project. After project failure, the individual may be reassigned to a project in which he or she has less autonomy over how the project tasks are to be completed. To the extent that project failure thwarts the psychological need for autonomy, the individual will have a negative emotional reaction to the loss of that project.

Project failure thwarting the need for relatedness

The final psychological nutrient is relatedness. Relatedness refers to “feeling connected to others, to caring for by those others, to having a sense of belongingness both with other individuals and with one's community” (Deci and Ryan, Reference Deci and Ryan2002: 7). A project can satisfy this need for relatedness by providing access to supportive supervision and/or coworkers (Thompson and Prottas, Reference Thompson and Prottas2006), a group with which to identify (Richter, West, Van Dick, and Dawson, Reference Richter, West, Van Dick and Dawson2006), and a basis for interactions and friendships. For example, in our interviews with engineers at a large German company (Shepherd et al., Reference Shepherd, Patzelt, Williams and Warnecke2014), one interviewee reported about a past project team experience:

Similarly, another project team member in our study on 55 members of 16 innovation departments of large German firms reported, “The everyday interaction within the team is really important… . We have ties of friendship in the team; trust each other; and once in a while, enjoy a drink together after work.”

If a project that satisfies managers’ and employees’ need for relatedness fails, this can lead to the experience of grief. For example, in one study (Shepherd et al., Reference Shepherd, Patzelt, Williams and Warnecke2014), we found that after project failure, a team member reported that he feared the loss of important relationships with both his colleagues and external stakeholders:

Similarly, his colleague on the same project feared that he might lose standing in and connection with the scientific community and reported, “I mean, let's be clear about it: a year ago, we were the pioneers, and everyone in the community around the world knew it… . The fact is we have not gotten that far… . That hurt me personally.”

An engineer leading another failed project in the same company described the eroding social structures of the team when the failure became obvious:

Further, one of our interviewees (Shepherd et al., Reference Shepherd and Patzelt2011) was a leader of a mechanical engineering project that had been running for years, cost millions of euros, and had a high level of public visibility. He reported that immediately after his project had failed, there were “considerable tensions” among team members. One year later, almost all the team members had left the firm “just due to frustration,” and “from the team, which we used to have, one is retired, and I am the only one left.” When a project fails and team members are relocated within or leave the organization, the replacement project might not provide the same level of (perceived) relatedness than the failed project. In this case, the individual is likely to experience grief over the losses caused by project failure (Shepherd and Cardon, Reference Shepherd and Cardon2009).

In sum, our interviews with leaders and members of entrepreneurial projects provided multiple examples of how these projects can help satisfy individuals’ needs for competence, autonomy, and relatedness and how project failure can thwart the fulfillment of these needs and lead to the generation of negative emotions – namely, grief over the loss of the valued project.

Motivational consequences of negative emotional reaction to project failures

The generation of grief over failed projects creates a problem for organizations. The organization often needs to be entrepreneurial to succeed (for a review see Rauch, Wiklund, Lumpkin, and Frese, Reference 35Rauch, Wiklund, Lumpkin and Frese2009; Wiklund and Shepherd, Reference Wiklund and Shepherd2005), and this means using projects as experiments to reveal opportunity (Brown and Eisenhardt, Reference Brown and Eisenhardt1997; McGrath, Reference McGrath1999). Many of these projects will fail (Boulding et al., Reference Boulding, Morgan and Staelin1997; Campbell et al., Reference Campbell, Birkinshaw, Morrison and van Basten Batenburg2003). As illustrated in the previous section, when project failure thwarts an individual's psychological needs, it generates grief, and these negative emotions diminish the individual's motivation to move on and invest energy and effort into subsequent projects (Shepherd and Cardon, Reference Shepherd and Cardon2009), that is, unless the organization can consistently provide replacement projects of equal or greater psychological value to the project lost. Therefore, the organization is faced with the challenge of somehow overcoming this emotional downside to maintain employees’ motivation after project failure.

Indeed, there is evidence that negative emotional reactions to project failure impact project team members’ motivation. For example, in his article “When IT Projects Flounder, Emotions Run High,” Fitzgerald (Reference Fitzgerald2010) described the case of Dana B. Harris, who had worked on sonar acoustics software for Arleigh Burke guided missile destroyers in the 1980s. When developing this highly sophisticated software, Harris “was really into it, really excited about it.” However, after the end of the Cold War in 1990, the project was abandoned due to budgetary cuts, and Harris and his team experienced substantial emotional troubles, as he recalled 20 years later: “Not having the excitement of developing that kind of software, it was like I'd lost something. I remember that feeling very, very clearly.” Obviously, Harris and his team lost something they found very important to them, which generated grief. As a consequence, Harris found it difficult to motivate himself for subsequent projects and decided to leave the defense industry.

Similarly, in interviewing research scientists in Germany, we (Shepherd et al., Reference Shepherd and Patzelt2011) found strong evidence of how grief over project failure impacts motivation. For example, one behavioral economist reported on a project in which she had invested more than one-and-a-half years together with two co-authors. The team had developed a theory about economic decision making and had enrolled participants in an experimental task to collect data for testing the hypotheses. Based on the results obtained, the team had even drafted a working paper for later publication; however, disagreements within the team about the future development of the manuscript dampened the motivation of each team member to invest further resources into the project, which was ultimately terminated before the results had been published. The scientist reported the following, “[The project failure] was a really unpleasant situation. In a sense, of course, you start a project and would like to have results that warrant publication, but you are not able to lead it to a good outcome. To see that you and the team were not able to lead it to successful completion was altogether disappointing.”

In another example, as project leader, an aerospace engineer had been awarded a project from a famous airplane manufacturer by winning a competition against several other research groups. The project's aim was to develop an airplane with autonomous navigation that would pass a defined number of defined spots in the landscape within a certain timeframe. However, the project was interrupted and delayed several times because the team failed to deliver the necessary technical solution at the proposed milestones. The project leader noted that the project failure was “frustrating…. You state you can do everything and others cannot… . [And] if we do not deliver, I experience it as personal disappointment and personal failure, which depresses my soul.” The project leader was also in fear of losing his reputation as a reliable partner for industry and was thus uncertain about future funding opportunities for his group and the entire research institute.

Similarly, a research scientist in theoretical physics reported on a project for which he and others tried to perform some theoretical calculations on crystalline elastomers. However, the project faced problems because the experimental data did not fit with the team's theoretical calculations, which hindered any project progress. Reflecting on the failure, the scientist noted that he “worked as much as before, but the motivation was not as high… . You do not really have the full drive anymore. In terms of working hours, it was certainly not different, but it was really frustrating. I was quite furious.” He went on and emphasized that “You indeed think twice whether it all makes sense what you are doing… . It is indeed that you start doubting more.” This emotional reaction is particularly remarkable because describing his work environment, the scientist also found it “pretty normal that some things do not work out.” However, the perceptions of normality of project failure did not eliminate his negative emotional reaction to the failure nor the demotivate effect of those negative emotions.

Similarly, a research scientist in biology found it “not surprising” that some projects he had worked on did not work out but also mentioned considerable negative emotional reactions when they occurred. In describing a project on insect–plant interactions for which he “tried to find out how a particular gene influences this interaction, how cankers eating the plant are affected, and how the defense mechanisms of the plant can be regulated anew,” he experienced a series of failures and setbacks:

We found similar demotivational aspects of project failure in our study on failed projects in a large technology firm. For example, one project manager reported the following, “I personally really fell into a hole. This project, these two-and-a-half years,… I had never worked so intensely for the company as during this time. Regarding work effort, regarding responsibility, but also cost responsibility, responsibility for resources. For me, it was the biggest [project] I had done so far… I really fell into a true hole.”

Indeed, for this manager, the emotional reaction was extreme as he went on to report about physical consequences toward the end of the project:

In sum, our interviews together with existing studies provided considerable evidence of team leaders’ and members’ negative emotional reactions to project failures. In line with self-determination theory, these individuals perceive projects as important when they fulfill their basic psychological needs, specifically their needs for competence, autonomy, and relatedness. In the case of project failure, these needs are thwarted, leading to negative emotional experiences. One important consequence of these negative emotions is that leaders and members of failed project teams lose their work motivation to a considerable extent, thus depleting organizations of one of their most important resources – a motivated work force.

Negative emotional reaction to business failures

While the examples provided so far show that social judgment theory is a useful framework to understand how the failure of entrepreneurial projects can thwart team leaders’ and members’ basic psychological needs for competence, autonomy, and relatedness and thereby generate negative emotions, there is considerable evidence that firm failure can lead to similar outcomes for independent entrepreneurs.

Entrepreneurial firm failure thwarting the need for competence

Several studies have emphasized the important role of learning for entrepreneurs (Cope, Reference Cope2003; Politis, Reference Politis2005), both in the classroom (Honig, Reference Honig2004; Kuratko, Reference Kuratko2005) and in practice (e.g., Corbett, Reference Corbett2007; Harrison and Leitch, Reference Harrison and Leitch2005). These learning experiences can lead to feelings of mastery (Butler, Reference Butler1992), which in turn signal to the entrepreneur that he or she has developed competence (Rawsthorne and Elliot, Reference Rawsthorne and Elliot1999). Indeed, the desire to learn can be an important motivation for founding and growing a new business. For example, a learning goal orientation refers to individuals’ focus on the development of skill, knowledge, and competence, which are associated with more task-focused, adaptive, and mastery-oriented behaviors (Bunderson and Sutcliffe, Reference Bunderson and Sutcliffe2003), and a study with 158 college students found that a learning goal orientation is related to entrepreneurial career motivations (Culbertson, Smith, and Leiva, Reference Culbertson, Smith and Leiva2010). Further, in a large study, we interviewed 154 founders from 64 ventures about their motivations to start and run their businesses (among other topics) (Breugst, Patzelt, and Rathgeber, Reference Breugst, Patzelt and Rathgeber2015). For this study, we sampled entrepreneurs of incubator ventures in the Munich area, and we followed the ventures and the founders for about eight months. The accumulated interview material amounted to more than 3,000 single-spaced pages of transcripts from 278 interviews and more than 224 of audio material. In this material, there was considerable evidence of a strong learning motivation among the founders. For example, one founder reported, “The variety … of course we have topics that we focus on, but they are so broad that I have a great bandwidth…. There are always different fields, and one deals with so many interesting people.” Another founder stated the following, “About my job, I especially like … that it covers various topics. I am not only doing development, but I am also some kind of a trainer for employees, which is certainly an interesting role. I do also have contact with customers, and I have the possibility to immediately get customer feedback on what we are doing.”

Finally, a third entrepreneur described his learning motivation as follows: “I like to face challenges and to master these challenges… . It is very important to me that the task … the challenge is motivating.”

If their firm fails, entrepreneurs may not be able to sufficiently fulfill their need for competence; the failure might actually signal to them that they are incompetent when it comes to founding and running a business. For example, one of the founders we interviewed was the CEO of a medical technology venture, but due to bad performance, he was forced to leave the firm by his cofounder and the investor. Reflecting on the time when his exit came near, he noted the following:

Interestingly, the cofounder's description of his former partner strongly connected to his reactions to the need for competence: “I believe that he [the partner] is convinced that what he says makes sense and that he can help the firm. It hurts his ego if someone now says it would be best if he does not say anything.”

To entrepreneurs, their business is a way to satisfy their need for competence – they can demonstrate their skills and knowledge, and the challenging task gives them the opportunity to further develop their competences. However, business failure (or failure as an entrepreneur resulting from being kicked out of the business) represents negative feedback about one's competence, and the replacement role (including unemployment) may not satisfy the need for competence as much as running a business. To the extent that the entrepreneurial failure thwarts entrepreneurs’ psychological need for competence, it will generate negative emotional reactions when the business is lost to them.

Entrepreneurial firm failure thwarting the need for autonomy

The need for autonomy is a major source of motivation to start a business. For example, in a study of 300 alumni of an Australian university, Douglas and Shepherd (Reference Douglas and Shepherd2002) analyzed 4,800 assessments of hypothetical career scenarios and found that individuals vary in their desire for independence and that those who value independence more will have stronger intentions to pursue entrepreneurial careers. Our interviews with 154 firm founders confirmed that running their venture can significantly contribute to fulfilling the psychological need for autonomy. For example, when asked about what she likes most about being an entrepreneur, one founder answered, “I can make many decisions – basically make all decisions – myself.” Another entrepreneur reported, “In any case, I want to work in a [team] constellation where I have the say! I want to have a clear superiority in terms of influence.”

Despite these studies and interview quotes supporting the importance of autonomy for the motivation to start a business, there is less evidence on how (and to what effect) firm failure has on thwarting individuals’ needs for autonomy. For example, in our interviews with entrepreneurs of failed businesses, we found little support for an experience of a loss of autonomy. Similarly, although a recent study by Jenkins, Wiklund, and Brundin (Reference Jenkins, Wiklund and Brundin2014) hypothesized that the loss of independence would cause grief for failed entrepreneurs, their empirical results did not provide evidence for the hypothesis. Specifically, these authors surveyed 120 entrepreneurs in Sweden who had filed for bankruptcy with a venture they had actively been running and in which they held an ownership stake. Contrary to the hypothesis, regression models showed no statistically significant association between loss of independence and grief, and there was also no statistical difference between entrepreneurs who had experienced failures previous to the focal failure and those who had not. It appears that while the need for autonomy is a driver for starting a venture, once the venture has failed, either (1) the fulfillment of this need becomes less important or (2) failed entrepreneurs fulfill this need by other means, such as starting another business. Indeed, Jenkins et al., (Reference Jenkins, Wiklund and Brundin2014) found that portfolio entrepreneurs (i.e., those who run several businesses at a time) and to a certain extent also hybrid entrepreneurs (i.e., those who are in salaried employment in addition to running their own business) experience less loss of independence from business failure (but similar levels of grief) than others.

Therefore, perhaps either running ventures other than the failed business (for portfolio entrepreneurs) or enjoying autonomy in a salaried job (for hybrid entrepreneurs) might be sufficient for fulfilling entrepreneurs’ psychological need for autonomy. Future research can make important contributions by further exploring how and when business failure impacts entrepreneurs’ need for autonomy.

Entrepreneurial firm failure thwarting the need for belongingness

Entrepreneurship is a social endeavor, and founders must entertain multiple relationships with team members, employees, investors, customers, and other stakeholders (Aldrich and Zimmer, Reference Aldrich, Zimmer and Aldrich1986; Birley, Reference Birley1986). Internal to the venture, perhaps the most important and intense social relationships built are those with other members of the entrepreneurial team. For example, one founder we interviewed reported, “We spent together 12 to 13 hours every day over three years. One does indeed get to know each other.” When asked about the most important factors for running a successful venture, another founder emphasized the following: “From my point of view, the most important issue is the trust in the team and the belief in the team and that these are maintained over time. The moment these get broken, I am convinced that it is a very dangerous moment for the venture.” Finally, reflecting on her experiences in the past, one founder of an e-commerce startup reported, “2011 was our best year. And we had confidence. We had 10 employees altogether… . It was a great team, and it was really fun.”

While these quotes provide evidence for the notion that being part of an entrepreneurial team can contribute to fulfilling one's need for relatedness, our interviews also demonstrated that either the failure of the firm or the disbanding of the entrepreneurial team (i.e., the exit of one team member) can thwart the fulfillment of this need. For example, the remaining team member of a medical technology venture described his feelings after the cofounder had left the firm as follows:

When asked about how the relationship with this cofounder had developed after the firm had failed, an entrepreneur of an Internet firm explained, “Before [the failure], we had a deep and daily relationship which was very intense. After that [the failure], we had difficulties talking even about the most marginal issues.”

Of course, not all entrepreneurs must satisfy their need for belongingness through work. The founder of a medical technology venture reported that after exiting the firm, he was able to satisfy his psychological need for relatedness by turning to individuals from outside the venture:

Although some entrepreneurs are able to satisfy their need to belong by looking to non-work-related relationships, others lose a sense of belonging when a business fails (or they are forced to exit). To the extent that their psychological need for belongingness is thwarted by failure, they will have a negative emotional reaction. We now turn to the impact of such a negative emotional reaction on motivation.

Motivational consequences of a negative emotional reaction to firm failure

Similar to the motivational effect of grief in the context of entrepreneurial projects, the experience of negative emotions from firm failure can have a profound impact on the motivation of independent entrepreneurs (Shepherd, Reference Shepherd2003). For example, one of our interviewees of a failed venture reported the following:

When we interviewed that person several months after the venture had failed, he had still not moved on to another job. Similarly, when we heard of the failure of another entrepreneurial venture in our sample, we tried to contact one of the founders for a follow-up interview. We were, however, not able to make contact with that person – he had cut all his social ties, including removing his mobile and home phone number and deleting all his e-mail addresses and profiles on Facebook and other social networks. As we heard from his cofounder, this individual had left the city and shut down all contacts. Six months later, we found him back in town and willing to give us an interview. He conceded that the grief from failure was so strong that he could not stay in the same place and in the same social environment anymore but had to travel to another part of the world to recover and sort himself out. He only returned when he felt that he had the motivation to move on with his life and look for work again.

These examples are only a few cases providing evidence of the strong motivational effects that negative emotions from venture failure can have on entrepreneurs – effects that are similar to those of members and leaders of project teams. Importantly, however, there is obviously variance in individuals’ intensity of negative emotions generated after failure, and how these negative emotions impact motivation.

Discussion

In this chapter, we explored the emotional and motivational consequences of project team members and independent entrepreneurs who experience failure. Using self-determination theory as a theoretical framework and interview data from both independent entrepreneurs whose businesses failed and members of project teams whose projects failed, we provided evidence that the consequences of failure are substantial because the loss of a project or firm thwarts individuals’ needs for competence, relatedness, and autonomy. These findings have a number of implications for scholars and open up interesting avenues for future research.

First, our interview data illustrate that self-determination theory is a useful theoretical angle to study the emotional and motivational consequences of failure for entrepreneurs and members of entrepreneurial project teams. Typically, self-determination theory has been used to study the sources of intrinsic motivation in work environments and how such environments should be designed to trigger employees’ motivation (Deci and Ryan, Reference Deci and Ryan2000). Further, self-determination theory has been used to explain individuals’ psychological well-being, arguing that thwarting basic needs diminishes well-being and generates negative emotions (La Guardia, Ryan, Couchman, and Deci, Reference La Guardia, Ryan, Couchman and Deci2000). However, self-determination theory has rarely been applied in project settings (an exception is Shepherd and Cardon, Reference Shepherd and Cardon2009), and few studies have used it to explain entrepreneurial emotions and motivation (Schröder and Schmitt-Rodermund, Reference Schröder and Schmitt-Rodermund2013; Shepherd and Cardon, Reference Shepherd and Cardon2009). Based on our earlier discussion and the fact that the self-determination theory is consistent with our interview data, we encourage scholars to draw on this theoretical foundation to further advance our understanding of failure's emotional and motivational (and perhaps other) consequences for those involved (and others in their environment).

Second, a noteworthy finding relates to differences between the failures of entrepreneurial projects and entrepreneurial firms with respect to thwarting the three basic needs. Specifically, our interview data demonstrate that both types of failures can thwart individuals’ needs for competence and relatedness. Interestingly, however, while we provide evidence that project failure also thwarts individuals’ need for autonomy, we did not find similarly strong evidence for business failure thwarting this need. This is somewhat surprising given that becoming an independent entrepreneur seems to be ideal to fulfill individuals’ autonomy needs (Shane, Locke, and Collins, Reference Shane, Locke and Collins2003). A possible explanation for this finding might be that in a corporate environment, project failure usually leads to individuals’ involvement in other activities within the organization, activities for which management might grant those who failed less autonomy than before (perhaps as a consequence of/punishment for the failure). Independent entrepreneurs who fail, in contrast, often do not enter into salaried employment but rather try to start anew (after overcoming some period of recovery) or face a period of unemployment. That is, even in the case of failure, there is no corporate environment that imposes rules and structures upon independent entrepreneurs. Future research can test these propositions and explore in more detail when failure (project or business) leads to thwarting individuals’ need for autonomy.

Third, although our interview data suggest that the three basic needs do indeed play a role in explaining emotional reactions to entrepreneurial failures, it is also noteworthy that not all individuals experience the loss of a project or a firm in the same manner. That is, while some interviewees indicated that their needs for competence, relatedness, and/or autonomy were thwarted, there was also considerable variance between individuals. Indeed, while self-determination theory posits that all individuals have the three basic needs, it also states that there is variance in “the consequences of the extent to which individuals are able to satisfy the needs within social environments” (Gagné and Deci, Reference Gagné and Deci2005: 337). That is, some social environments (within or outside corporations) are more likely to buffer against the negative consequences of failure when individuals’ experience of negative emotions and grief. In the chapters that follow, we introduce studies showing how differences between individuals and their environments impact negative emotions from failure. However, as we outline later, we also believe that future research can still make important contributions by continuing to explore the characteristics of individuals’ social environments that determine to what extent thwarting the needs for competence, relatedness, and autonomy from project and business failure translates into negative emotions for subsequent entrepreneurial endeavors.

Finally, in addition to the negative implications for individuals’ emotional well-being, our discussion and interview data illustrate the detrimental effects of project and business failure on the motivations of those involved. One of the central arguments of self-determination theory is that in environments where individuals perceive that their three basic needs have been thwarted, intrinsic motivation diminishes. Again, however, our interview data indicate that the manifestation of how failure impacts entrepreneurs’ motivation varies across individuals and situations. Indeed, Deci and Ryan (Reference Deci and Ryan2000) argued that there are situational differences that impact how central each of the three basic needs is in triggering motivation. It appears that there is variance between situations in corporate environments and those typically experienced by independent entrepreneurs with respect to the centrality of individual needs and that there is variance within corporate and independent entrepreneurial environments with respect to this centrality. It is an open yet important research question as to how these variances can be explained. Answers to this question might have substantial influence on how entrepreneurial environments (e.g., entrepreneurial project settings, the networks independent entrepreneurs operate in) should be designed to accommodate the possibility of project and business failure with respect to minimizing their negative effects on the motivation of those who failed and to maximize the learning opportunities arising from that experience.