Success, Failure, and Entrepreneurial Reentry: An Experimental Assessment of the Veracity of Self-Efficacy and Prospect Theory Dan K. Hsu Johan Wiklund Richard D. Cotton This paper develops and tests a model of an individual’s intention to reenter entrepreneur- ship following business exit. Two long-standing theories, prospect theory and self-efficacy, seem to develop opposite predictions in this context. To reconcile these conflicting predic- tions, we theorize a moderating model and test the boundary conditions of both theories. Relying on two experimental studies, we find that prospect theory explains reentry inten- tions of entrepreneurs who have lost money when their self-efficacy is moderate or low. Thereby, we provide an explanation for the puzzling empirical finding that so many failed entrepreneurs reenter entrepreneurship even if failure has undermined their self-efficacy. Introduction Serial entrepreneurship, that is, exit from entrepreneurship followed by subsequent reentry, appears common (Wright, Robbie, & Ennew, 1997). But who are more likely to reenter: successful entrepreneurs who have the skills and confidence to pursue yet another profitable venture or those who failed and reenter to regain their losses? Unfortunately, the question of how entrepreneurs’ prior success or failure influences the attractiveness of reentry has received scant attention in the literature. This omission is critical because serial entrepreneurs are an important driver of economic growth (Gompers, Kovner, Lerner, & Scharfstein, 2006) and are highly valued by venture capitalists (Wright et al.). Please send correspondence to: Dan K. Hsu, tel.: +1 (828) 262-8122; e-mail: hsudk@appstate.edu, to Johan Wiklund at jwiklund@syr.edu, and to Richard D. Cotton at rcotton@uvic.ca. P T E & 1042-2587 © 2015 Baylor University 1 April, 2015 DOI: 10.1111/etap.12166