For Immediate Release
A new study finds entrepreneurs become more committed to their business ventures when they are told they will fail, increasing their efforts to make those businesses successful.
“Most entrepreneurs – people who start their own businesses – actually identify with the business they’re running,” says Tim Michaelis, corresponding author of a paper on the work and an assistant professor of psychology at North Carolina State University. “So being told that your business, your idea that you are committed to, will be a failure can almost seem like a personal attack.
“We wanted to see if being told that their business will fail actually gets entrepreneurs to commit even more deeply,” Michaelis says. “We were somewhat surprised that researchers had not already examined this. Most of the literature in this area is from the field of developmental psychology and hadn’t explored potential business implications. Fundamentally, we wanted to know if having an underdog mentality can motivate entrepreneurs.”
To explore the subject, the researchers conducted three studies.
For the first study, the researchers recruited 423 entrepreneurs; of those, 213 were in a control group that was not asked about a time they had been told they would fail. One hundred and seven participants were asked about, but could not recall, a time they were told they would fail. The remaining 103 participants did recall a time they were told they would fail. The researchers then asked all study participants questions designed to capture how committed they were to persisting with their new businesses.
“We found that entrepreneurs who could recall being told their business would fail displayed a deeper commitment to persisting with their business ventures,” Michaelis says.
For the second study, the researchers worked with 579 entrepreneurs. In this study, the control group consisted of 289 participants; 234 participants couldn’t remember being told they would fail; and 56 could recall a time they were told they would fail.
This time the researchers essentially replicated the first study, but rather than asking questions designed to measure persistence, they asked questions designed to measure the extent to which study participants were motivated to prove someone wrong. The 56 participants who could recall being told they would fail were asked about their motivation to prove that specific naysayer wrong – the so-called “underdog effect.” The remaining study participants were simply asked about their motivation to prove something to general stakeholders.
“The results here were consistent with the first study – recalling a time when someone told them they would fail led to increased motivation to persist with their business venture,” says Michaelis.
For study three, the researchers recruited 417 entrepreneurs. The study participants were surveyed once per month for three months. The first month’s survey served to establish a baseline, measuring the extent to which each study participant was motivated to persist with their venture by the underdog effect – a desire to prove any doubters wrong.
The second and third surveys varied slightly, but were essentially designed to assess the extent to which motivation and persistence were driven by the underdog effect. The surveys also accounted for other variables associated with motivation and persistence, such as confidence, past experience, financial benefit and passion for the work.
“The third study reinforced what we found in studies one and two – the underdog effect is a powerful motivator that increases an entrepreneur’s motivation and persistence regarding their venture,” says Michaelis. “In other words, the underdog effect leads to people working harder, focusing on their venture, and really committing to the success of their business.”
But the studies also revealed something unexpected.
“There were a surprisingly large number of study participants who had never been told that they would fail – they had only ever received positive feedback, or possibly no feedback, about their business ideas,” says Michaelis. “And we found that those study participants were less committed to their business ideas and had lower levels of persistence.
“This work offers real insight into what motivates entrepreneurs, and it raises some interesting questions,” says Michaelis.
“How do you give entrepreneurs enough support to encourage their initiative, but enough resistance to help them develop the drive they need to succeed? How can we train entrepreneurs to distinguish between doubts that can serve as motivational fuel and constructive criticism that highlights real flaws in a business plan? These are issues we can explore moving forward.”
The paper, “I’ll prove you wrong! The underdog effect as an antecedent to entrepreneurial action and venture persistence,” is published in the Journal of Business Venturing. The paper was co-authored by Jeffrey Pollack, the Lynn T. Clark II Distinguished Professor of Entrepreneurship in NC State’s Poole College of Management; Jon Carr, the Jenkins Distinguished Professor of Entrepreneurship in NC State’s Poole College of Management; April Spivack of the Hanken School of Economics in Finland; Nicholas Smith of Northern Illinois University; and Alexander McKelvie of Syracuse University.
-shipman-
Note to Editors: The study abstract follows.
“I’ll prove you wrong! The underdog effect as an antecedent to entrepreneurial action and venture persistence”
Authors: Timothy L. Michaelis, Jeffrey M. Pollack and Jon C. Carr, North Carolina State University; April J. Spivack, Hanken School of Economics; Nicholas A. Smith, Northern Illinois University; and Alexander McKelvie, Syracuse University
Published: Feb. 5, Journal of Business Venturing
DOI: 10.1016/j.jbusvent.2026.106581
Abstract: We highlight the role that psychological reactance via the underdog effect (i.e., the need to prove others wrong) plays in eliciting direct and indirect entrepreneurial action. Drawing on psychological reactance theory (PRT), we examine how negative socio-emotional stimuli can result in a strong individual motivation for entrepreneurs to persist with their ventures. Further, we highlight entrepreneurial hustle (direct action), entrepreneurship-related media engagement (indirect action), and obsessive thinking (indirect action) as mediating mechanisms linking the underdog effect to venture persistence. We test our theory-driven model across three studies. Findings from two quasi-experiments (Study 1, N = 424; Study 2, N = 579) which include 15 post-hoc interviews with entrepreneurs as part of Study 2, as well as a time-lagged mediation model (Study 3, N = 417), provide strong evidence consistent with the inference that venture persistence is closely linked to the underdog effect. We discuss multiple theoretical and practical implications that our work illustrates, and we offer numerous future research directions.
