Reflection on failure and the performance of subsequent ventures: application of reflective learning theory

Learning does not occur automatically and immediately; not every entrepreneur is skilled in this process. Based on the sample of 173 restarting venture firms after failure in Korea, this paper shows that entrepreneurs' reflection as a specific learning behavior in the event of business failure is critical for a better understanding of the relationship between failure experience and the performance of the subsequent firm. Further, this study shows that organizational vision change and industry change negatively moderate the positive relationship between the reflection of prior failure and subsequent venture performance. The findings in this paper highlight that individual learning behavior determines the effectiveness of transferring prior experience into new knowledge. At the same time, it extends behavioral research on the effects of failure experience on subsequent venture performance, demonstrating that entrepreneur learning behavior is an essential and additional unit of analysis for the research on entrepreneurial failure. The findings also demonstrate that the contexts of organizational vision change and industry change can affect the transfer of knowledge from the reflective analysis.