Failures of Entrepreneurial Learning in Knowledge-Based Startups

Entrepreneurial learning can occur when young firms learn from social networks, from failure events, and from real-time improvisation. This inductive paper explores three learning challenges young firms face in effective entrepreneurial learning. We draw on data from in-depth interviews in sixty young knowledge based firms. The data revealed striking patterns between the types of knowledge shaping the behavior of the firms in our sample and their patterns of entrepreneurial learning. First, we found a pattern of absorptive inertia - some new firms developed the capacity to absorb knowledge from outside the firm, but at the same time developed an unwillingness to absorb external knowledge. Second, we uncovered a rich pattern through firms succeeded or failed to learn from their own failure experience. Firms relying only on procedural knowledge about an activity seemed much more likely to fail to learn from failure than were firms with declarative knowledge about an activity. Third, our findings show that effective learning from improvisation may depend on the accumulation of declarative knowledge. Our propositions advance theories of organizational learning and entrepreneurship