Back to work? How employers perceive applicants’ experience of entrepreneurial failure

ABSTRACT Recent research on entrepreneurial failure has started to investigate the impact of failure on entrepreneurs and how this influences their motivation and willingness to engage in subsequent entrepreneurial ventures. We approach this topic from an alternative perspective, focusing on former entrepreneurs seeking to return to paid work and exploring how their experience of venture failure is perceived and appraised by employers in the recruitment process. Such perceptions matter because employers are gatekeepers to the employment market and thus their appraisals influence how easily former entrepreneurs can re-integrate themselves in the paid workforce. We conducted 30 interviews with employers in growing human-capital intensive companies in Sweden, asking these recruiters about their perceptions of former entrepreneurs and how their evaluations affected their hiring decisions. Conceptually, we frame our study using a process model of stigmatization by nuancing this model with fine-grained analyses of employers’ perceptions and appraisals of applicants’ entrepreneurial failure experiences in the recruitment process. This analysis identifies some of the key conditions that lead employers either to value or devalue an applicant’s experience of entrepreneurial failure, further indicating the implications of this finding for entrepreneurs’ careers and prospects of gaining paid employment.


Introduction
It is widely assumed that entrepreneurs who have experienced the failure of their venture are free to choose whether to persist with self-employment or seek paid employment (Douglas and Shepherd 2000;Eisenhauer 1995;Lévesque, Shepherd, and Douglas 2002).Framed within utility theory, this assumption partly rests on the premise that entrepreneurs will maximize the present value of their utility throughout their career (Campbell 2013;Douglas and Shepherd 2000).It further assumes that entrepreneurs are able to easily access the labour market after experiencing venture failure (Kacperczyk and Younkin 2022;Waddingham, Zachary, and Walker 2022).However, although popular media accounts typically focus on the benefits of learning from failure for subsequent entrepreneurial attempts (Cope 2011), experience of venture failure is frequently stigmatized, with research showing that such devaluation can significantly reduce the employment options available to former entrepreneurs (Shepherd and Haynie 2011;Simmons, Wiklund, and Levie 2014;Wiesenfeld, Wurthmann, and Hambrick 2008).
Although previous research has documented the implications of social stigma for entrepreneurial activity at the macro level, including the impacts of more or less lenient bankruptcy laws on entry barriers for start-ups (Armour and Cumming 2005;Landier 2005;Peng, Yamakawa, and Lee 2010), cultural and institutional differences (Wennberg, Saurav, and Autio 2013), as well as different modes of re-entry (Lee et al. 2021;Simmons, Wiklund, and Levie 2014), or geographic differences (Vaillant and Lafuente 2007), we know little about the micro-processes of stigmatization and how an entrepreneur's experience of failure is valued on the labour market.This is surprising given that recruitment processes are highly susceptible to the influence of stereotyping, bias, and stigmatization (Ren et al. 2008) associated with a broad range of highly as well as less visible characteristics and experiences, such as obesity (van Amsterdam et al. 2023), mental and physical disabilities (Ren et al. 2008), sexual orientation (Tilcsik 2011), and prior criminal records (Mobasseri 2019).Relatedly, research has shown that executives of corporate failures face difficulties when seeking paid employment (Semadeni et al. 2008) as their talent and human capital are ultimately judged by the performance of the firms they have led (Fama 1980).
In this study, we focus on how HR professionals and employers value or devalue applicants' experience of entrepreneurial failure and how such appraisals influence the recruitment process and hence the career prospects of entrepreneurs seeking paid employment.To attain a micro-level understanding of how entrepreneurial failure experiences are appraised, our study focuses on the perceptions of employers as the main gatekeepers to paid labour (Waddingham, Zachary, and Walker 2022).In determining how easily entrepreneurs can access the labour market after failure, employers' perceptions play an important role in the level of stigmatization attached to failed entrepreneurs and in the concomitant devaluation of their human capital (Wiesenfeld, Wurthmann, and Hambrick 2008).Understanding the perceptions of these gatekeepers is crucial, as recruitment and employability serve as essential avenues for promoting inclusion and destigmatization (Pescosolido and Martin 2015).
To gain insights into how employers appraise the value of applicants' entrepreneurial experience in the recruitment process, and in particular how they perceive experience of venture failure, we conducted 30 interviews with employers in growing, human capital-intensive SMEs, eliciting their perceptions of applicants with experience of entrepreneurial failure and asking them about their willingness to hire such individuals.In analysing our interview data to capture how employers appraised applicants' experience of entrepreneurial failure, including their perceptions about what such experience signals about applicants, we conceptually frame our findings with reference to Wiesenfeld's et al. (2008) process model of 'the stigmatization and devaluation of elites associated with corporate failure', hereafter referred to as 'the Wiesenfeld model'.This model explains the stigmatization process in which executives of corporations that fail are eventually devalued by different stakeholders, such as recruiters, on the labour market.Their model builds on the premise that the failure of a well-known corporation is covered in public debates and media outlets.For small and medium-sized firms, this is rarely the case.Instead, the stigmatization and devaluation processes are likely to be intertwined.Therefore, understanding the micro-processes of how recruiters perceive and appraise failure experiences are important for understanding how such experiences affect longterm career prospects of former entrepreneurs.
Our empirical study makes three main contributions to scholarship.First, we contribute to the emerging literature on how entrepreneurial experience, and especially experience of venture failure, is valued and/or devalued by employers.Most previous studies on this topic have either compared the salaries of individuals who remain in wage work with those of peers transitioning into wage work after periods of self-employment (e.g.Kaiser and Malchow-Møller 2011) or compared how recruiters value self-employment in the screening process (Kacperczyk and Younkin 2022;Waddingham, Zachary, and Walker 2022).We build upon and contribute to this scholarship by shedding light on the decision-making processes of employers when evaluating candidates' experience of entrepreneurial failure and the rationales they advance for their perceptions and decisions.From our data analysis, we develop a typology of employer perceptions based on their negative, positive or ambivalent assumptions and biases regarding applicants' venture failure experience, including whether they perceive such experience as signalling a lack of competence or valuable learning on the part of the applicant.In elucidating these assumptions, we reveal the significant role played by personal biases in determining the extent to which employers value or devalue the experience of entrepreneurial failure, including cases of employers who see value in such experience but who still prefer candidates without such failure in their résumés.These findings highlight some of the key potential barriers faced by entrepreneurs seeking employment in the labour market.As such, we expand the scope of failure research from a prevalent focus on entrepreneurs to include those with whom they interact (Byrne 2021).
Second, we extend the scope of research on the career implications of entrepreneurial failure.Whereas previous research has focused primarily on entrepreneurs seeking to start new firms and reenter self-employment (Shepherd, Wiklund, and Haynie 2009;Ucbasaran et al. 2010;Yamakawa, Peng, and Deeds 2013), our focus is on how entrepreneurs seeking paid employment after experiencing a venture failure are perceived by employers.Thereby, we contribute to the entrepreneurship literature more generally by providing insights not only into an important alternative career option for entrepreneurs to recover financially from venture failure but also by highlighting some of the under-explored risks involved in entrepreneurial careers, i.e. in how their experiences of failure might be perceived by future employers.
As a third and closely related contribution, our study shows how a research focus on the professional devaluation of entrepreneurs after failure, in addition to their stigmatization more generally, can be a useful approach for exploring the negative implications of venture failure, providing a more nuanced understanding of the potential challenges entrepreneurs face when reentering the paid workforce.

Theoretical framework
To summarize current scholarship on how entrepreneurial experience is valued in the labour market in general, we first present a review of the relevant literature on entrepreneurs returning to wage work before introducing the conceptual model of the stigmatization and devaluation of elites associated with failure developed by Wiesenfeld et al. (2008).

The value of self-employment experience in wage work
Historically, entrepreneurship research has distinguished between entrepreneurs and nonentrepreneurs.However, individuals commonly transition between paid employment and entrepreneurship (Mahieu et al. 2021), or a hybrid of the two (Folta, Delmar, and Wennberg 2010), which indicates that there is considerable fluidity in careers.In addition, many entrepreneurs return to paid work after experiencing failure (Hessels et al. 2011).Based on a representative sample of entrepreneurs who had experienced firm-level bankruptcy, Jenkins and McKelvie (2017) found that nearly half returned to wage work within nine months of filing for bankruptcy, but the value of the failure experience is unclear.
The prevailing assumption is that the experience gained from entrepreneurship is likely to be less applicable in the context of wage work and therefore will be valued less by employers (Campbell 2013).This is because the knowledge and skills developed by individuals through self-employment, including expertise in running an independent business, are often specific to entrepreneurship (Wright, Robbie, and Ennew 1997), whereas employers place more value on an employee's ability to improve the efficiency and effectiveness of their firm's performance (Barney 1991;Lepak and Snell 2002).As we elaborate below, this relates to the perceived competitive advantage of firm-specific knowledge over more general experiences and skills.
In the case of general and transferable human capital of the kind that individuals acquire through investing in formal education and training, firms are typically willing to pay no more than the market wage (Lepak and Snell 2002).Unlike such general human capital, the knowledge and skills developed through a certain job experience are most productive for a specific occupation and are often only transferable to other occupations valuing similar skillsets (Gathmann and Schönberg 2010).Given the evidence that firm-specific human capital can be a source of competitive advantage (Snell, Youndt, and Wright 1996), firms typically invest in their employees to accumulate such capital (Becker 1964) and are thus more likely to recruit internally.On the same basis, firms are prepared to pay above the market wage for firm-specific skills, especially in the case of specialized, knowledgeintensive positions.
Building on the assumptions above, several studies have investigated the existence of wage penalties to assess whether entrepreneurial experiences are valued on the labour market.Comparing earnings of individuals returning to wage work from entrepreneurship to peers who never left wage work, these studies have produced mixed findings.While a general wage gap has been shown to exist (Luzzi and Sasson 2016), some studies only find that it exists for certain groups, such as women (Williams 2000) or for individuals entering wage work in a, for them, new industry (Kaiser and Malchow-Møller 2011).Differences have also been observed concerning the type of business where employment is sought.For example, Baptista, Lima and Preto (2012) found that individuals with entrepreneurship experience typically entered wage work in smaller firms at a higher level and progressed faster than their peers who had never left paid work, yet earned comparatively less.Overall, in these studies, there is some agreement that 'the return to business ownership experience is lower than the return to wage employee experience, thus suggesting that the labour market imposes a penalty for business ownership experience (Baptista, Lima, and Preto 2012, 263).
In contrast, Evans and Leighton (1989) did not find a wage gap, while some studies have found positive effects of prior entrepreneurship experiences.For example, Hamilton (2000) showed that individuals transitioning to wage work from self-employment actually earnt more than their wage-only earning counterparts, albeit with diminishing returns relative to the time spent in self-employment.Similarly, Campbell (2013, 286) found that in the Californian semiconductor industry a person's start-up experience 'has a persistent positive effect on earnings that extend outside the entrepreneurial environment'.In a longitudinal study conducted in Norway, Luzzi and Sasson (2016) found evidence of a wage premium for individuals transitioning from self-employment into wage work -provided they were 'hired in highly innovative sectors' and that their firms had performed well.
Taken together, there is some support to the notion that there is a general wage gap between individuals with prior self-employment experiences and those without such experience.However, whether the wage gap exists, or is reversed, hinges on contextual aspects such as industry, type of firm, and individual skills.The fact that findings are not consistent across studies bolsters the case for adopting a micro-level approach when aiming to understand the perceptions and appraisals of potential employers and HR professionals.
Recently, research on post-entrepreneurial careers has shifted focus to the role of HR professionals as gatekeepers in the recruitment process and how they evaluate the desirability of hiring individuals with self-employment experience (Kacperczyk and Younkin 2022;Waddingham, Zachary, and Walker 2022).In a résumé experiment conducted as part of a recent study by Waddingham et al. (2022), for example, CVs were submitted to companies with different kinds of previous experience (i.e.'wage work', 'self-employment, sold the business' and 'self-employment, closed the business').From this experiment, the authors found that résumés indicating previous entrepreneurship experience were less likely to elicit calls for an interview than those with no periods of self-employment and that the probability of this negative outcome was greatly increased if the CV indicated the former business had been closed rather than sold.Further exploring this finding through an open-ended question in follow-up interviews with employers, the authors identified key concerns among employers about the organizational fit and long-term intentions of former entrepreneurs seeking paid work, as well as their potential for insubordinate behaviour.As confirmed in another résumébased study by Kacperczyk and Younkin (2022), such negative evaluations reflect common stereotypes about entrepreneurs among recruiters.Interestingly and contrary to these studies, Botelho and Chang (2023) found that entrepreneurs with failure experiences were valued higher than those with successful entrepreneurial experiences.It thus appears that failure experience does not have a clear positive or negative effect on former entrepreneurs' career prospects.Instead, it is important to understand the micro processes of how such experiences are perceived and appraised by recruiters on the labour market.What remains underexplored, therefore, are the appraisal processes of recruiters in their evaluations of entrepreneurial failure and how these evaluations influence their willingness to interview and hire applicants with experience of such failure.

Stigmatization after failure
To understand how recruiters appraise failure in the recruitment process, we consider the role of stigma and how this influences the appraisal process.Stigma is the outcome of having an attribute or reputation that is socially discrediting, causing an individual to be classified by others as undesirable (Goffman 1963).What is stigmatized is thus based on what society as a collective whole value and judge.This judgement is reflected in the regulatory framework, such as the leniency of bankruptcy laws and the ease at which failed entrepreneurs can gain a fresh start (Simmons, Wiklund, and Levie 2014).
Firm failure has long been associated with shame, dishonesty and fraudulent conduct (Efrat 2006) with stigmatization taking place when an entrepreneur is perceived as causing the failure (Wiesenfeld, Wurthmann, and Hambrick 2008).Outcomes of such stigma include decreases in the willingness of business stakeholders to interact with failed entrepreneurs (Sutton and Callahan 1987;Wiesenfeld, Wurthmann, and Hambrick 2008) and decreases in the entrepreneurs' psychological well-being (Jenkins, Wiklund, and Brundin 2014;Shepherd and Haynie 2011).
To understand the process through which societal-level judgements manifest in individual decisions to stigmatize individuals involved in the management and running of failed businesses, Wiesenfeld et al. (2008) developed a process model considering the different roles individuals play in the stigmatization process.Individuals who have legitimate platforms to influence public opinion about what should be stigmatized -social arbiters, for example, individuals in the media who report on business failure (Cardon, Stevens, and Potter 2011), and legal arbiters, influencing the legal ramifications of firm failure, such as lawmakers, regulatory officials, judges and prosecutors (Armour and Cumming 2005;Landier 2005), together influence the commonly accepted norms around the stigmatization of failure.These norms materialize when individuals who have experienced failure start to engage in economic exchange with employers, HR managers and funderseconomic artbiters (Kacperczyk and Younkin 2022;Roccapriore, Imhof, and Cardon 2021;Waddingham, Zachary, and Walker 2022).While social and legal arbiters influence what is stigmatized at a sociateal level, it is when individuals who have experienced failure attempt to engage with economic arbiters that they feel the direct impact of stigma on their economic opportunities.
Economic arbiters reach their consequential judgements through a combination of rational analysis, reference to the professional standards prevailing in their industries and organizations, their own personal biases, as well as their anticipations of how other stakeholders will judge the failure.Underpinning their judgements is the influence and pressure stemming from social and legal arbiters as to the behaviour and actions that should be stigmatized.Economic arbiters' judgements are consequential in that stigmatization leads to the reduction or loss of future professional and economic opportunities for entrepreneurs whose ventures have failed, i.e. to the tangible devaluation of their human capital.Arbiters are not only under social pressure to shun stigmatized individuals by rejecting their invitations for interaction but also may fear incurring private risks if they engage with such individuals, including the perceived risk that the same behaviour which led to the person's initial stigmatization could be repeated (Cannella, Fraser, and Lee 1995;Furuya 2002).
While Wiesenfeld et al. (2008) emphasize that it is social and legal arbiters who influence social-level perceptions of the behaviours and actions that should be stigmatized, and it is the perceptions and actions of employers and other economic arbiters who have a direct influence on professional devaluation of failed entrepreneurs, they provide limited insight into how economic arbiters reach their decisions.Thus, while they suggest that arbiters' decision-making rests on their professional standards, rational decision-making, personal biases and their sense of their constituents biases, they leave it to empirical research to ascertain how stigma translates into professional devaluation in practice.
To date, scant research has been undertaken to inform our understanding of how employers reason about and perceive former entrepreneurs and the value of their experience when appraising such individuals as applicants for recruitment.We address this research gap by exploring the perceptions and appraisal processes of employers as the key economic arbiters likely to be encountered by failed entrepreneurs.More specifically, we set out to address the following research question: How do employers (de)value failure experience and which signals do they perceive such experience as sending about the human capital of the individual applying for paid employment?

Study design and data collection
We adopt a qualitative research design to explore how entrepreneurial failure is perceived by employers in growing SMEs.Employers are an important group of economic arbiters, contributing to stigmatization and devaluation that adversely affect a failed entrepreneur's attempt to return to the labour market.

Research context
We conducted our study in Sweden where there is still a relatively high level of stigma directed towards failed entrepreneurs (Falkenhall and Wennberg 2010).In a Eurobarometer survey asking respondents whether they would order goods from a merchant who had previously failed, over 65% of respondents in Sweden stated they would not do so, the highest percentage in any of the countries surveyed (Armour and Cumming 2005).Sweden has a legacy of stigma and mistrust towards bankrupted individuals, as reflected in its having some of the strictest insolvency laws of any countries in the OECD (Falkenhall and Wennberg 2010).Whenever a bankruptcy application is made, for instance, the board of a Swedish firm no longer has control over its assets or the possibility of continuing to operate, since this responsibility is transferred to the bankruptcy trustee.
Collectivistic societies in general, and especially those with harsher bankruptcy laws, have been found to display lower levels of entrepreneurship (Lee et al. 2011).Consistent with this tendency, Sweden scores relatively low in terms of start-up activities in surveys of the Global Entrepreneurship Monitor.Paradoxically, however, the same survey in 2011 found that Sweden had the highest level of 'entrepreneurial employee activity', i.e. in the form of corporate entrepreneurship rather than selfemployment (Bosma et al. 2013).These results indicate that Sweden's unusually high number of entrepreneurial individuals prefer to act in the relative safety of corporate settings rather than incurring the risks associated with independent start-ups.This preference could be a direct effect of Sweden's strict insolvency laws and/or the fact that the safety net in Sweden is better developed for employees than for entrepreneurs.
Another factor making Sweden an ideal context for investigating the stigmatization and devaluation of former entrepreneurs is that data are publicly available on firms' performance and bankruptcies, including information about the board members of these firms.This access makes it easy for employers in Sweden to fact-check the explanations of entrepreneurial failure offered by applicants in the recruitment process.

Sampling
Our selection of 30 SMEs that are experiencing firm growth for our sample was based partly on their likelihood to hire on a regular basis, and partly on their likelihood of not yet having established formal recruitment policies and procedures on account of their current size.The informality of small businesses makes them more likely to be driven by unconscious discriminatory beliefs which in turn may limit social inclusion on the labour market (Blackburn and Ram 2006).Mindful that qualitative research has often been criticized for carelessness in sampling (Aldrich 1991) and conscious of the particular difficulties of identifying relevant populations in entrepreneurial research (Neergaard 2007), we took several steps to ensure a carefully constructed sample.Searching the Swedish 'allabolag.se'online database, which includes information about all incorporated companies operating in the country, we applied three selection criteria to identify a population for our sample: geographical location; growth/profitability; and human capital-intensiveness.Location was relevant in our research context due to major regional disparities in Sweden in levels of entrepreneurship and in attitudes towards entrepreneurship and venture failure (Braunerhjelm and Borgman 2004).To avoid locationbased variations in hiring decisions, we selected only firms located in the mid-south region of Sweden.From within this region, we selected only firms from human capital-intensive industries, including service companies within ICT, management and other forms of consultancy, since we expected stigmatization and devaluation processes to be especially pronounced in such firms.As a second criterion, we selected only companies with at least 10 employees and a turnover of between 50 and 499.9 million Swedish krona (or circa 5.5-55.5 million USD, as of 01/01/2022) in order to ensure the firms in our sample were of sufficient size for recruitment processes to take place on a regular basis.From the list of firms generated by these filtering criteria, we selected only those that had been profitable over the previous five years and had grown in terms of turnover and employees.To refine our sample still further, we consulted the webpages of these filtered companies, selecting only those whose corporate messages explicitly communicated a growth strategy, emphasized the value of human capital-e.g.through a focus on employees' competences and development, and had a pronounced entrepreneurial spirit.This third criterion was based on our hypothesis that growing and human capital-intensive entrepreneurial companies are more likely to value entrepreneurial drive in their employees, thereby affording us an opportunity to investigate the stigmatization and devaluation of failed entrepreneurs in an environment familiar with entrepreneurial behaviour.
When arranging interviews with employers from the firms selected for our sample, we specifically requested interviews with individuals in charge of recruitment, i.e. typically, the owner-manager or the head of sales, though in some cases a specific head of HR.Data saturation (Morse et al. 2002) was reached by the time we had conducted 30 interviews.The characteristics of our sample are summarized in Table 1.
To our interviewees, we framed our study as a research project on recruitment processes in SMEs with a special focus on the role of entrepreneurship and as part of that, the impact of failure experience.Our semi-structured interviews began with general questions regarding each firm's recruitment process, followed by questions about which competences they valued in applicants.We then moved on to ask about the relevance of entrepreneurial experiences and entrepreneurial attitudes before turning to questions about the recruiters' experiences of interviewing and hiring applicants who had previously experienced entrepreneurial failure.Further questions were asked about any issues that emerged during the interviews.
All interviews were either recorded and transcribed or documented with detailed notes.All of the employers in our sample had some experience of reviewing the job applications of failed entrepreneurs.(Any such failure is inevitably revealed in the recruitment process, not least because applicants must detail their work history in their résumés.)Importantly, all but two of the recruiters had made the decision to hire a failed entrepreneur on at least one occasion.Also, worth noting is that when asked to provide their own definitions of entrepreneurial failure, many employers emphasized economic aspects such as bankruptcy.Although this financial criterion increases the general visibility of business failure and thereby the likelihood of stigmatization and devaluation, many of our interviewees evinced the perception that all applicants with previous entrepreneurial experience were failed entrepreneurs insofar as they would not otherwise attempt to return to paid employment.As such, these employers had as a starting assumption that the very act of applying for wage work was a signal that the applicant had not been able to grow and maintain a profitable business (Shepherd and Haynie 2011).

Data analysis
As the first step in our data analysis, all three authors independently read and interpreted all the interview transcripts to conduct within-case analyses.Once we had familiarized ourselves with the data, our analysis was increasingly informed by theoretical perspectives (Eisenhardt 1989), with our first-order coding guided in particular by the process model of stigmatization and devaluation developed by Wiesenfeld et al. (2008).We relied on their suggestion that economic arbiters rely on rational analysis, reference to the professional standards prevailing in their industries and organizations, their own personal biases, as well as their anticipations of how other stakeholders will judge the failure to guide our analysis with the aim of bringing empirical nuance and insight into the process of stigmatization.
Our analysis uncovered significant disparities and nuances in our informants' perceptions and appraisals about the value of an applicant's experience of entrepreneurial failure and in their rationalizations of their perceptions and hiring decisions, revealing how personal biases influenced the employers' evaluations of such experience.To capture these differences, we developed secondorder codes, specifically noting instances in which the respondents talked about applicants with experience of entrepreneurial failure and how they rationalized their perceptions and decisions regarding the hiring of applicants with such experience (see Table 2 for exemplary quotes from our interviews).
In conducting rigorous cross-case analysis of the 30 interviews, we applied a method inspired by Ragin (1987) that combines the advantage of a large amount of information gathered through case study research with the additional advantage of examining a larger number of cases (Ragin and Zaret 1983).Through this cross-case analysis, we identified patterns in our respondents' rationalizations NB: In order to maintain the anonymity of the companies participating in our study, we only provide ranges of the number of employees and turnover.'Before we hired one person who had closed down his business, we contacted a number of references.One of our employees came from the same village and so it was easy to find out how he had behaved there'.(R22) 'We want to confirm whether it was incompetence that led to the failure or other factors, such as customers not paying their invoices or a disruption of the market.So we talk to several people from the vicinity of that venture to find out'.(R24) and the influence of their personal biases.Based on these patterns, we developed a typology of employer perceptions.While we do not claim our findings are statistically generalizable, our aim in this explorative study was to attain a set of results of sufficient analytical generalizability to contribute to the existing literature on entrepreneurial failure (Yin 1989, 43-44).

Results and analysis
We present and analyse our results following the four different types of 'constituent-minded sensemaking modes' proposed in the model developed by Wiesenfeld et al. (2008).According to this model, although such perceptions and appraisals primarily depend on professional norms and rational analysis, arbiters are also susceptible to personal biases, including not only their own but also the biases they anticipate among their constituents.Below we first present our results and analysis in relation to each component of the Wiesenfeld model before analysing our findings across the model.We then provide our typology of three types of employer perceptions of the experience of entrepreneurial failure.

Professional standards
With regard to the role of professional standards in employers' perceptions and appraisals about the recruitment of former entrepreneurs, our data analysis yielded two key findings: one related to fraudulent behaviour and the other to professional standards prevailing in their respective knowledge-intensive industries.When discussing the professional standards of applicants, all the employers we interviewed described undertaking a two-step process in which they first established that the applicant had not participated in any fraudulent behaviour in relation to their failed venture before proceeding to any further professional evaluation.Our interviewees emphasized that any such link to fraudulent behaviour was a 'deal-breaker' as far as recruitment was concerned: I would never continue with the recruitment process if I knew that the reason for the bankruptcy was himself and that he has done illegal things like fraud.(Respondent 7) But if the business owner had cheated or committed some kind of fraud, for example to avoid bankruptcy, I would never hire that failed entrepreneur.(Respondent 3) The initial need to establish that the failure was not associated with any fraud reflects the strong association that venture failure has with fraudulent behaviour and the initial backfoot that applicants start from if they have experienced failure.Once the employer has established the failure is not associated with fraudulent behaviour, employers look for signals that can off-set their negative valuation of failure experience.Our interview data show that the stigma of venture failure can be partly offset if applicants provide evidence of professional standards relevant to the industry and company.From our informants' accounts of this second stage in their evaluation of applicants' professional standards, we identified a clear pattern in their perceptions and appraisals of how an applicants' 'objective' proof of desired competences and adherence to professional standards can counteract some aspects of stigmatization and open the way for possible economic transactions, in this case greatly increasing the chances of recruitment.The certification of professional skills is especially highly valued in human-capital-intensive industries such as auditing, management and IT consultancies and this strong demand by SMEs for proof of competences such as proficiency in certain computer programming languages can lead recruiters to overlook or downplay some of the negative associations they may have or anticipate on the part their constituents regarding an applicant's experience of entrepreneurial failure.This prioritization of skills in high demand was evident throughout our data: If someone has been certified in a programming language important to our business activities, this signals a type of competence relevant for us that is not devalued by failing once with entrepreneurial activities.(Respondent 11) If someone is certified, for example in programming Java and.NET, and we are in high need of that type of competence, this will be a more important factor in the recruitment process than the entrepreneurial failure.(Respondent 14) Formal qualifications thus appear to maintain their value in the eyes of employers despite an applicant's experience of business failure.This is because employers appear to value such certification as signalling an applicant's competence and adherence to professional standards that are perceived as unrelated to entrepreneurial failure, especially when such competences could increase the firm's competitive advantage.

Rational decision-making
In describing their decision-making vis-à-vis the recruitment of former entrepreneurs, our informants commonly evinced a readiness to listen to and take account of the explanations offered by applicants for their entrepreneurial failure: It actually depends on why the failure happened . . .After the failure, you have to understand the reason for it -'Was it the market, the product, or your lack of skills at that time?' I would never blame the entrepreneur before I understood the reasons behind the failure.(Respondent 7) We live in harsh economic times right now, and most of the time when a company goes bankrupt it is not the entrepreneur's fault but the circumstances.Sometimes it's the market, and sometimes the legislation just pushes you down. . . .Therefore, you have to find out the reasons for the failure before judging the entrepreneur.(Respondent 16) These efforts by employers to enhance the rationality of decision-making in the recruitment process are consistent with Wiesenfeld et al. (2008) thesis that economic arbiters will typically attempt to apply rational analysis and decision-making in their constituent-minded sensemaking when dealing with individuals associated with corporate failure.As the following quote illustrates, the willingness of employers to explore the causes of applicants' entrepreneurial failure was evident throughout our data as an important factor from early on in the recruitment process: For me it's important how entrepreneurs present the cause-and-effect of the failure process, and why they want to be employed again.It can be very negative to have been an entrepreneur if this has not worked out.How the entrepreneurs explain this failure makes a huge difference as to whether I will consider employing them.(Respondent 12) Notwithstanding this prevailing openness to explanations of entrepreneurial failure, however, marked differences were apparent in how different employers interpreted the explanations of failure offered by applicants.These differences in perception are consistent with findings from earlier research that stigma is strongly associated with causality and blame (Cardon, Stevens, and Potter 2011) and that constituent-minded sensemaking in this context thus involves considerations of attribution.In particular, we found disparities in the value placed by our interviewees' on internal versus external attributions regarding the causes of entrepreneurial failure (Zacharakis, Meyer, and DeCastro 1999).For example, some employers expressed a clear preference for applicants' explanations that attributed failure to external causes and downplayed the role of the applicant and their decision-making: I always want to know why an entrepreneur has failed.Maybe the business idea was not good enough or the market wasn't ready for it. . .But if the entrepreneur has done everything he or she could possibly do to make it work, I see the experience as very positive.(Respondent 13) If the candidate is ambitious and smart but failed as an entrepreneur in a tough industry or due to the type of business, I tend to be positive about the entrepreneurial experience.(Respondent 11) Other employers strongly preferred explanations that attributed failure to internal causes and thus were seen as reflecting the applicant's sense of accountability for the experience: I hired a women whose company had gone bankrupt. . . .She is very competent and skilled in our business field. . . .She showed signs of depression and guilt about the failure.And she was in the difficult situation of applying for a job with a former competitor.(Respondent 3) Since it is widely agreed in the entrepreneurship literature that individual (internal) and environmental (external) factors alike can contribute to venture failure (Zacharakis, Meyer, and DeCastro 1999), it is also generally assumed that the judgements of economic arbiters are based largely on their rational consideration of the extent to which the failure of a venture was within or beyond the entrepreneur's control (Weiner, Perry, and Magnusson 1988).Problematizing this assumption, our employers' accounts of decision-making did not refer to the actual reasons for venture failure but rather to the applicant's cognitive level as perceived in their attribution of failure to internal or external causes.
For all the evident efforts of our informants to adhere to rational analysis and decisionmaking throughout the recruitment process, our data indicate that the links between causality and stigmatization and the devaluation of entrepreneurial experience of failure are more complex than suggested in the Wiesenfeld model.Unlike Cardon et al. (2011), for example, we cannot say with any certainty whether employers ascribe more blame and stigmatization to applicants who attribute their venture failures to external factors than applicants who attribute failure to internal factors.This suggests that even the attempts of economic arbiters to exercise rational decision-making in the recruitment process show signs of personal bias.Before elaborating further on our analysis of how applicants' attributions influence different employers' perceptions of the human capital of former entrepreneurs in section 4.2, we first turn to turn to the role of employers' personal biases and their anticipation of biases among their constituents.

Personal biases
The Wiesenfeld model proposes four modes of constituent-minded sensemaking among economic arbiters, highlighting how such perceptions and appraisals are guided not only by professional standards and rational analysis but also by employers' own personal biases and the biases they assume to be held by their constituents.This is because, in spite of their intent to follow professional standards and apply rational decision-making to maintain consistency and fairness in recruitment, employers inevitably operate in conditions of ambiguity and complexity, meaning their sensemaking invariably reflects a bounded rationality (Simon 1979).As our data further confirm, this renders employers vulnerable to their own and to a lesser extent to others' biases when making judgements on recruiting failed entrepreneurs (Kahneman 2003).
Most of our interviewees claimed to view applicants' experience of entrepreneurial failure in a positive light.In particular, many emphasized that entrepreneurs were likely to have gained relevant business and industry experience from venture failure and that this experience could directly benefit the recruiting SME.Potential benefits cited by these employers included the possibility that failed entrepreneurs could help the firm avoid making similar mistakes, while more generally contributing to business growth and success through their action-oriented entrepreneurial mindset: He can help me with his experience of bankruptcy, he has already gone through the process so he should be familiar with the reasons and mistakes he made.This makes him a more valuable asset to the company.(Respondent 26) Having been an entrepreneur is a clear sign that this person has entrepreneurial drive.For lower-level positions this is less important, but the higher up the job, the more important this action orientation becomes.The entrepreneurial attitude is really important.(Respondent 2) I am impressed by people who have dared to become entrepreneurs, even if they failed.For me this is a clear sign of their curiosity.People with entrepreneurial experience tend to be able to work more independently and are more confident in what they do.(Respondent 6) Rather than demanding proof from applicants of having learned from their experience of failure, however, some employers with positive views of such experience rather assumed that valuable learning must have taken place and that the entrepreneur's business-related and industry-specific knowledge could benefit the company: I find that people who have experienced entrepreneurial failure are more aware of the unexpected conditions that may affect the work of an enterprise, and they are likely to be better at risk-management.( Respondent Contrariwise, a number of employers expressed predominantly negative perceptions of entrepreneurial failure, arguing that any such failure constitutes a blemish on a person's résumé which it is the jobseeker's responsibility to remove in the course of the recruitment process.Even when they conceded that a wide variety of factors can contribute to venture failure, these employers viewed entrepreneurial failure as a consequence of poor decision-making and management: Although such biased views of entrepreneurial failure were only expressed by a minority of the respondents in our sample, they do indicate a clear instance of professional devaluation of failed entrepreneurs in substantially diminishing their career prospects.When applying for work with employers holding such views, failed entrepreneurs can only hope to progress in the recruitment process if they can persuade the employer that they have learned from their experiences and are ready to move on and apply this learning in a new context.As the following quotations confirm, such 'learning' was highly valued by the employers in our study: Somewhat paradoxically, for these employers the most persuasive evidence of an entrepreneur having learnt from venture failure appeared to be the creation of a successful new start-up either directly after the initial failure or after several years in paid employment.This demonstrates that the perceptions and appraisals of economic arbiters are not stable or consistent over time insofar as successful career steps taken after a failure could serve in the views of employers to restore the value of an entrepreneur's human capital.By contrast, repeated entrepreneurial failures were perceived as leading to a professional devaluation difficult to reverse: We have some employees who have previously experienced entrepreneurial failure, but they have failed only once and then they have worked successfully in several companies.It is much harder to get employment after you have failed the first time, as the reason for the failure is closely connected to your performance.

(Respondent 20)
There can be good explanations why you failed as an entrepreneur once.But to have failed several times is not a track record that we would value.(Respondent 11) It helps if a failed entrepreneur has held an employed position after the failure before applying here.That clearly signals that the person has managed a comeback to working productively.(Respondent 12) The struggle of economic arbiters to come to terms with their personal biases during the recruitment process was evident in a number of seemingly mutually contradictory statements they made during the course of our interviews.One of the clear patterns that emerged from such statements was a dissonance between the conscious efforts of employers not to stigmatize entrepreneurial failure and their underlying wariness regarding the risks they associated with hiring a failed entrepreneur (Furuya 2002): In my opinion if you have experienced entrepreneurial failure and I hire you, you will be a silent competitor in the company. . . .I will give the applicant the benefit of the doubt when it comes to entrepreneurial failure.(Respondent 4) A person without entrepreneurial failure experience is easier to fit into a team, as this person is more likely to be able to work under a boss. . . .Entrepreneurs who did not make it have at least tried, which is what many people want but never dare to do.(Respondent 10) Some interviewees showed a keen awareness of this ambivalence in their treatment of failed entrepreneurs.Several employers even acknowledged the lack of basis in reason or evidence for such dissonant views, as evident in the following statement: Experience and skills are the most important factors in our recruitment decisions. . . .If I could choose between two equally qualified candidates, I would always choose the one who hadn't failed.I don't have an explanation for that -it's just a feeling. . . .But the choice always depends on the personality of the applicant.(Respondent 3) Studies of other forms of social stigma have found similarly contradictory results.For example, research by Furuya (2002) on the re-integration of ex-prisoners in the workforce has shown that while employers often feel such applicants should be given a second chance, they do not want that second chance to be in their own firm.Likewise, our results indicate that although many employers evinced a generally positive view of the lessons that could be learned from the experience of venture failure, they were hesitant to hire applicants with such experience, further highlighting the complexities and ambivalences involved in personal biases.

Employers' sense of their constituents' biases
Our data further provide evidence regarding the fourth mode of constituent-minded sensemaking proposed in the Wiesenfeld model, i.e. employers' anticipation of the expectations of stakeholders such as competitors and customers when arriving at judgements about entrepreneurial failure.Specifically, we found that employers with a positive view of entrepreneurial failure who expressed the default position that applicants could learn from such experience would often turn to their networks to seek confirmation of this view.In doing so, they felt it especially important to confirm that the failure had not been associated with fraud, though also to find out about the applicant's attitudes and practices towards customers: Another factor in my opinion is the entrepreneur's ethics while managing his or her company.Competitors in the same industry or related industries usually know each other, especially in smaller cities, so if you've treated others badly then I doubt that anybody would hire you later on, even if your experience makes you a perfect applicant.(Respondent 16) I also ask my colleagues if they know more about the failure.Our industry is characterized by a friendly environment, so the probability that someone knows something is high.(Respondent 8) Rather than anticipating the expectations and biases of stakeholders, therefore, our data suggest that several employers in our sample directly turned to their networks to find out more about the failed entrepreneur as important inputs for their judgement.

Typology of employer perceptions
Our analysis clearly showed that failure experiences were not viewed as purely negative or purely positive in the recruitment process.Based on our cross-case analysis of the four components of the Wiesenfeld model, we identified three processes through which recruiters perceived and appraised a failure experience.These processes help explain the inconclusive results of prior studies as they show how personal rational decision-making and biases lead to different views of the failure experience.Through this process analysis, we were able to distinguish three types of employers with relatively consistent perceptions of job applicants who had experienced business failure, i.e. sceptical, ambivalent, and accommodating recruiters (see Figure 1).These types were distinctive in their rational decision-making about an applicant's entrepreneurial failure (e.g. in their evaluations of the internal or external reasons for an applicant's entrepreneurial failure) and in their personal biases (e.g. as to whether such failure indicated poor decision-making or positive learning).The other two dimensions of the Wiesenfeld model, i.e. professional standards and the anticipated biases of constituents, proved more instrumental, primarily serving to help the accommodating recruiters validate their rational decisions and personal biases.
Sceptical recruiters were distinguishable in their common premise that entrepreneurial failure was at least partly the responsibility of the applicant.On this basis, such employers viewed failed entrepreneurs as likely to be poor decision-makers with potential difficulties in handling stressful situations.Accordingly, these employers were adamant that they would not usually hire such applicants.As such, it was the perceptions of sceptical recruiters that manifested the strongest professional devaluation and stigmatization of the human capital of failed entrepreneurs, effectively barring them from paid employment opportunities.
Ambivalent recruiters evinced contradictory views of applicants with experiences of venture failure while commonly expressing a concern to find out why such applicants' firms had failed.Rather than expressing an absolute preference either for candidates who attributed their failure to external factors or for candidates who cited internal factors, however, their preferences regarding blame attribution were related to how they perceived the applicants' human capital in the context of the attribution.For example, some employers expressed a preference for external attributions since they perceived this as indicating that the applicant was not to blame for the failure and hence that there was no connection between their decision-making and the failure.In the view of these employers, such external attribution helped to preserve the applicant's human capital.Other employers in this group expressed a preference for internal attribution as evidence that the entrepreneur had learned from the experience.Although these employers acknowledged that the applicant probably had unique and valuable knowledge to offer, they were still cautious about hiring them.Again, these empirical findings indicate that the perception and appraisal processes of economic arbiters are more complex than conceptualized in the Wiesenfeld model.
Accommodating recruiters evinced a clear preference for candidates attributing failure to internal causes, implicitly assuming that valuable experience and knowledge would have been gained from this failure.Accordingly, these employers were willing to hire former entrepreneurs on account of the unique knowledge they expected them to have acquired.This group of employers typically turned to their networks to find out more about such applicants, further evidencing their willingness to hire failed entrepreneurs insofar as such background-checking indicates progression in the recruitment process.

Contributions to the literature on entrepreneurial failure
Our investigation of the potential stigma and professional devaluation faced by failed entrepreneurs when seeking paid employment has focused on employers' perceptions of the value of an applicant's experience of entrepreneurial failure and the impacts of such appraisals on their hiring decisions.Most research has explored stigmatization from the point-of-view of the stigmatized rather than the potential stigmatizer (Miller and Kaiser 2001) including valuable research on the stigma surrounding bankruptcy (Shepherd and Haynie 2011;Sutton and Callahan 1987;Wiesenfeld, Wurthmann, and Hambrick 2008).By elucidating the factors that influence employers' decisions as to whether or not to hire failed entrepreneurs, we contribute to and extend this literature, specifically in shedding light on how employers, as economic arbiters and potential stigmatizers of entrepreneurial failure, perceive and appraise the experience of failed entrepreneurs in the recruitment process.
Although the employers in our study were relatively unanimous in their need to establish that no fraud had been involved in an applicant's entrepreneurial failure, and though most declared a desire to understand the causes of entrepreneurial failure, they differed in how they perceived the value of different attributions for the failure, in their personal biases and how these influenced their perception and valuation of an applicant's experience of entrepreneurial failure.Thus, whereas most employers expressed the view that entrepreneurial failure was unlikely to be the sole responsibility of any one entrepreneur, we uncovered that they interpreted the value of attributions for the failure differently.While some saw the benefit in internal attributions as it signalled taking responsibility and learning; others interpreted this same attribution as not having the knowledge and skill to successfully run the business.The employers most likely to hire failed entrepreneurs were those who assumed both that applicants had learned and that their experience and lessons learned could benefit the company.By contrast, those who expressed more mixed views regarding their willingness to hire such applicants perceived the experience of venture failure as a potential learning experience but did not assume that the entrepreneur had learned from their failure.
In contrast with the conclusion reached by Waddingham et al. (2022)  although we found evidence that employers are concerned about failed entrepreneurs regarding turnover intentions, insubordinate behaviour and organizational fit, the employers we interviewed were more focused on the benefits and drawbacks of failure and what this signalled about the entrepreneur's human capital in relation to the needs of their respective firms.Consistent with this finding, we conclude that entrepreneurial failure per se neither automatically triggers rejection by recruiters nor necessarily leads to stigmatization and professional devaluation.How such experience is perceived by an employer rather depends, we argue, on a combination of factors, including the entrepreneur's explanation for the failure, the personal biases held by the employer as to what the attribution signals and the value placed by recruiting firms on any industry-specific knowledge and skills the applicant is seen to have acquired through their experience of venture failure.
Our fine-grained empirical analysis of employers' constituent-minded sensemaking about failed entrepreneurs in the recruitment process adds important nuance to Wiesenfeld et al'.s (2008) conceptual model of stigmatization.In particular, we show that the hiring decisions of these economic arbiters are driven in part by societal values regarding entrepreneurial failure, i.e. in their decisions not to hire applicants in any way associated with fraudulent behaviour in relation to the venture failure, and in part by personal biases.These biases include employers' different assumptions about the experience of venture failure and culpability for such failure, with decisionmaking further driven by estimations of the benefits that applicants might bring with their industryspecific skills.
In sum, our findings contribute to the emerging field of entrepreneurial failure by investigating the conditions under which failed entrepreneurs can reintegrate themselves in the paid labour force and thus enable recovery from failure.Our findings also shed light on how prior self-employment is appraised and valued by employers and under what conditions the specific human capital that entrepreneurs develop in self-employment is valued in paid employment.

Contributions to the general entrepreneurship field
Our study also contributes to an emerging discussion in the entrepreneurship field on the importance of social evaluations and perceptions of entrepreneurs (e.g.Cunningham and Fraser 2022;Prochotta, Berger, and Kuckertz 2022).Here, we elucidate how the forms of human capital that employers value in entrepreneurs influence their perceptions of an applicant's experience of entrepreneurial failure, showing how the demand for certain forms of capital can outweigh other considerations in the recruitment process and thus mitigate the stigma of failure.
Given the assumption that entrepreneurs are free to choose whether to persist with selfemployment or seek paid employment after a failure experience, based on their human capital, we point at how recruiters perceive failure in relation to the human capital of former entrepreneurs with a failure experience (cf.Marvel, Davis, and Sprout 2016).We found that employers value three main types of human capital when assessing the applications of entrepreneurs and their experience of venture failure.Confirming that formal and certified training is especially highly valued by employers in knowledge-intensive industries (Hipp 1999), our data indicate that this form of general human capital holds its value despite an applicant having experienced venture failure, especially if the formal qualifications evidence skills needed by the company.A second form of human capital frequently alluded to by our informants, albeit both positively and negatively, related to the entrepreneurial mindset (Ramadani et al. 2020).On the one hand, informants would often stress the high value they placed on a potential employee's experience of self-employment as a clear demonstration of an applicant's ability to 'take the initiative' and 'act entrepreneurially'.On the other hand, employers also expressed doubts about the aptitude of former entrepreneurs to fit into a team or feel comfortable working for others.Our data show that a decisive factor for recruiters in weighing up the benefits and risks of recruiting failed entrepreneurs was how highly employers valued the unique knowledge that such applicants had developed through the process of running a firm in the same industry.
An implicit assumption in our interviews with recruiters was that the venture failure of any former entrepreneurs applying for work would have occurred within the same industry as the firms from which they were now seeking employment.This emphasis placed by our informants on the value of unique industry-specific knowledge acquired through such experience has implications for entrepreneurs in any industry.For example, it indicates that nascent entrepreneurs should carefully consider the industry in which they wish to start a firm and how that industry relates to their existing skills and prior experience, since this choice can influence their attractiveness on the labour market (cf.Stam, Audretsch, and Meijaard 2008).Second, it confirms that entrepreneurs seeking to return to paid employment should prioritize firms within the same industry as their failed ventures.In sum, these findings highlight the importance of building on a stock of human capital when transitioning in and out of self-employment and paid employment.
Last but not least, our study confirms that venture failure in and of itself does indeed devalue an entrepreneur's human capital in the context we explored.As the most direct example of such professional devaluation, some employers explicitly stated they would not hire a failed entrepreneur because they perceived such failure as evidence of poor management and decision-making skills.Even when employers did not evince devaluation so explicitly, many did so implicitly in stating their preference for hiring applicants who had not experienced failure.

Limitations and future research
Although our study has focused on one region in the single-country context of Sweden, we would expect similar findings to emerge in other countries characterized by a relatively high level of stigmatization of entrepreneurial failure.Future research should explore variations between countries and across regions.The possibility that important cultural variations in the perceptions and appraisal of economic arbiters about entrepreneurial failure may exist has been indicated in a study by Cardon, Stevens, and Potter (2011), who found significant regional differences in the extent to which US newspapers held entrepreneurs accountable for their failures.Large-scale quantitative research could not only operationalize and test the findings of our study across all Swedish regions but apply our research approach to international comparative analysis.
We conducted our study in growing SMEs as it is an ideal context to uncover stigmatization faced by entrepreneurs who have experienced failure as they seek employment.Understanding if entrepreneurs face a similar decision-making environment when seeking employment in large established firms where recruitment is more formalized with routines in place and dedicated HR departments enables boundary testing of our findings.Large firms might be less prone to make recruitment decisions based on stereotypes and biases in general.They are also more scrutinized in terms of diversity and inclusion.
We focused on the evaluations and perceptions of HR managers in the recruitment process, i.e. an outside view (Prochotta, Berger, and Kuckertz 2022).Understanding the other side to the story -the perceptions of entrepreneurs who have failed as they seek wage work as an inside view -would further enhance our understanding of the stigma they face and importantly how they attempt to explain their experience and influence HR managers in the hiring process.

Practical implications
One of the key practical implications of our study follows from our finding that employers tend to turn to their networks to obtain information about former entrepreneurs applying for work.For entrepreneurs, this finding suggests that entrepreneurs at risk of failure should be especially wary of burning bridges within the particular industries in which they operate, since this not only risks their firm's reputation but can lead to the devaluation of their human capital by employers in the industry, directly reducing their employment opportunities.
For employers, we found that they tend to value general human capital, especially if certified, and that they evaluated entrepreneurial failure more positively if stemming from the same field as that in which former entrepreneurs were applying for wage work.From a career perspective, this suggests that entrepreneurs who wish to keep their future career options open should carefully consider the nature of the human capital they are accumulating in self-employment and how this is valued in the labour market.
Finally, our study highlights the role of employers' biases when assessing the applications of failed entrepreneurs.While general attitudes towards entrepreneurial failure may obviously differ, our findings indicate that employers tend to value applicants who offer reflective explanations of what went wrong with their ventures and persuasive accounts of how they have learned valuable lessons from their experience of failure and are ready to move on.
23) Someone who has experienced bankruptcy has a completely different view on business now, which helps that person make better decisions.(Respondent 6) Maybe other employers think like I do, that failed entrepreneurs have gained significant work experience and know what to expect if they do not take the right decision.(Respondent 5) For me, entrepreneurial failure signals big question-marks regarding the personality of the applicant.(Respondent 12) Entrepreneurial failure leaves its mark on the person, which is not positive.(Respondent 15) Between two similar candidates, I would always hire the one who has not experienced entrepreneurial failure.Because the one who failed could not manage a critical situation.(Respondent 7) Entrepreneurial failure is always a lesson.It depends on the person whether it is a lesson learned.(Respondent 4) Entrepreneurial failure can throw a negative light on the applicant.How the failure is dealt with both in the CV and during the interview is very important for the further recruitment process.The attitude displayed here towards what went wrong and what the applicant has learned from it is crucial.The how of addressing these issues makes a big difference.(Respondent 11) Persuasively explaining the cause-and-effect of the failure and in what way they are now ready to move on and leave this failure behind them is very important for the recruitment process.(Respondent 12)

I
will go through my networks of colleagues in the industry and ask them if they know what happened and what the reasons were for the failure.(Respondent 26)In cases where I like an applicant with a history of failure experience, I also ask my colleagues if they know more about this failure.(Respondent 9)

Figure 1 .
Figure 1.A typology of employer perceptions and evaluations of a failure experience.

Table 2 .
Data table of exemplary quotes.In the interview, I find it very important that candidates do not attribute the failure to others, but that they take the blame for it on themselves.Sometimes candidates choose to blame others for it, to make themselves appear in a better light.For me the most important thing is to acknowledge one's own role in this.Then it is important to also explain what you have learned from this process'.(R25)Causes of failure -externally attributed 'For me it is very important why the applicant has failed.Sometimes there are simple explanations for that -for example, if a close family member died and the applicant no longer had the energy to drive the company forward.In such cases the failure does not impact the recruitment process'.(R21) that entrepreneurial experience in general is valued by employers, our data indicate that employers hone in on what failure signals about a candidate rather than what having entrepreneurial experience signals in itself.More specifically,