Rita McGrath

Falling Forward: Real Options Reasoning and Entrepreneurial Failure

Abstract:
Although failure in entrepreneurship is pervasive, theory often reflects an equally pervasive anti-failure bias. Real options reasoning is used to develop a more balanced perspective on the role of entrepreneurial failure in wealth creation. It emphasizes managing uncertainty by pursuing high-variance outcomes, but investing only if conditions are favorable. This can increase profit potential while containing costs. Propositions are offered that suggest how gains from entrepreneurship may be maximized and losses mitigated.

Source: Academy of Management Review
Exact Citation:
McGrath, Rita. "Falling Forward: Real Options Reasoning and Entrepreneurial Failure." Academy of Management Review 24, no. 1 (January 1999): 13-30.
Volume: 24
Number: 1
Pages: 13-30
Date: 1 1999
Descriptors: Business Administration and Business