The Stigma of Failure in Organizations

Abstract

This paper presents a formal model of the (dis)incentives for entrepreneurial behavior in organizations. The model extends research on the stigma of failure into organizations by examining the implications of more conservative and more experimental organizational cultures on the incentives for entrepreneurial action by the corporate-funded employee. The discussion also derives implications for why organizations may chose to incubate new businesses in separate divisions, suggests why the stigma of failure may not always apply in public-sector organizations, and suggests why the development of entrepreneurship within organizations may be path-dependent.