Although tolerating failure has been regarded as an essential part of the innovation process, much less is known about how failure normalization can drive innovation. We argue that failure normalization facilitates innovation by encouraging learning from failure, which, in turn, depends on individual motivation. Using survey data from new product development project (NPD) leaders, we find that learning from failure mediates the relationship between failure normalization and new product innovation. However, learning from failures following failure normalization is conditional on entrepreneurial passion. Our results suggest that the path from failure normalization to innovation in the NPD process requires a much more nuanced examination of not only the mediating role of learning from failure but also entrepreneurial passion, which functions as a motivational on-off switch for learning from failure.
