Locus of control refers to how a person perceives the cause of life events. Someone with an internal locus of control would generally perceive herself as responsible for certain occurrences (his actions would have a direct bearing on the result), while a person with an external locus of control would most often blame (or thank) fate, destiny, luck, society or some other force beyond her control.
Different people credit different forces for such life events as personal successes and failures. For example, if a struggling actor does audition after audition only to be rejected time and time again, he might blame his own lack of ability ("I'm a terrible actor" or "Nobody likes my acting"). In this case, his locus of control for his failures would be internal. But if one day, this same actor were actually offered an acting job, he might place this success on circumstances beyond his control. He might not believe that his own performance, talent, hard work, or exceptional efforts got him the job, but would rather make rationalizations against his own effort ("I was probably the only audition" or "Gosh, that was a stroke of luck"). When it comes to success, he believes that he has no say in what happens-he is merely a helpless participant in a fate determined by random circumstances. Evidently, one can have a different locus of control for personal successes than for personal failures.
There is a certain tried and true recipe for coping with the challenges and stresses of life. In fact, research has shown that in academics, athletics, and other competitive fields, a particular locus of control is most likely to encourage success. In terms of success, it is best to attribute it to stable internal forces. For example, a public speaker who concludes his first speech to uproarious applause would do best to thank his own orating abilities, writing skills, and sense of humor. He would also benefit by believing that he could do it again if he had to.
When it comes to failures, however, it is wisest to adopt another strategy. Those who are best off feel that they fell on their face (figuratively speaking) due to unstable and even external forces. For example, it is healthiest for an athlete to blame a slight headache or tension (both are unstable internal forces), poor weather conditions, or bad shoes (both are unstable external forces) for coming up short of the mark. By doing so, the athlete is maintaining a fundamental confidence in her own abilities, since presumably the headache will go away, she can relax, or wear different shoes, and the conditions will be better next time. With a basic faith in her capability, she will feel motivated to try again. In short, it is important to internalize success, but NOT failure.
However, there are limitations. While it is best to thank your own talent and abilities for success and to blame failure on something out of your control, it is also important to remain firmly grounded. It is of no benefit to miss out on learning from your mistakes because you consistently blame society for your failures. Nor is it useful to be totally blind to your own limitations (we all have them) or lack of effort. There are obvious advantages to realizing where YOU might have come up short in an instance of failure. Then you can go about fixing the problem in order to heighten the probability of success the next time. To find this balance, one needs a healthy sense of self and a reasonable grasp on reality.