It is commonly accepted that entrepreneurs learn from experience (Cope, 2003; Rae & Carswell, 2001). While, much is known about the importance of knowledge to the entrepreneurship process (e.g. Shane, 2000); less is known about how that knowledge is accumulated (Politis, 2005; Unger et al., 2010). Failure in particular is often cited as an important catalyst for an entrepreneur’s learning (Corbett et al., 2007; Shepherd, 2003; Sitkin, 1996). Failure signals what was not working and adjustments to behaviour can be made (Minniti & Bygrave, 2001), and it can trigger double-loop learning where entrepreneurs fundamentally change their perception of business management (Cope, 2003).

However, for the benefits of learning to be realised the entrepreneur must be motivated to re-enter self-employment and apply the lessons learnt. As firm failure results in emotional and financial costs (Shepherd et al., 2009), it is not automatic that entrepreneur will be motivated to do this. Building on Weiner’s (1985) attributional theory, I develop and test a theoretical model that examines learning from failure and motivation to apply the lessons learnt.