Purpose: This study aims to identify and analyze the key failure factors among female entrepreneurs in the cultural handicraft sector in Arak, Iran, with a specific focus on structural, institutional, social, and psychological dimensions.

Methodology: Adopting an exploratory mixed-methods approach (qualitative–quantitative–quantitative), the research began with semi-structured interviews with 17 female entrepreneurs, identifying 14 primary failure factors. These factors were then prioritized using the Best-Worst Method (BWM) by 12 of the same participants. Subsequently, 9 key factors were further analyzed through Fuzzy Cognitive Mapping (FCM) to explore their causal relationships.

Findings: The results revealed that “cognitive weakness” stands as the central and most influential factor in entrepreneurial failure. Other critical factors include lack of knowledge and skills, weak social capital, institutional constraints, and identity-related challenges. These elements are causally interlinked, forming a systemic pattern of failure.

Conclusion: The findings suggest that many entrepreneurial failures stem from internal and intangible aspects such as cognition, identity, and social capital. The study underscores the need for context-sensitive educational interventions, local cultural policies, and institutional support systems to enhance female entrepreneurial resilience.