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Entrepreneurship, fear of failure, and economic policy

Author

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  • Dutta, Nabamita
  • Sobel, Russell S.

Abstract

The previous literature finds that self-reported ‘fear of failure’ has a significant negative effect on individuals’ choice to become entrepreneurs. We hypothesize this effect is lessened in economies with a larger number of additional, alternative, entrepreneurial opportunities to pursue if a failure occurs. Prior literature also concludes the number of entrepreneurial opportunities is enhanced significantly by having policies and institutions consistent with higher levels of economic freedom. We therefore test and confirm that fear of failure hurts the entrepreneurial process less when levels of economic freedom are higher as there are more additional chances for failed entrepreneurs to pursue.

Suggested Citation

  • Dutta, Nabamita & Sobel, Russell S., 2021. "Entrepreneurship, fear of failure, and economic policy," European Journal of Political Economy, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:poleco:v:66:y:2021:i:c:s0176268020301026
    DOI: 10.1016/j.ejpoleco.2020.101954
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    Citations

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    Cited by:

    1. Christopher J. Boudreaux & Daniel L. Bennett & David S. Lucas & Boris N. Nikolaev, 2023. "Taking mental models seriously: institutions, entrepreneurship, and the mediating role of socio-cognitive traits," Small Business Economics, Springer, vol. 61(2), pages 465-493, August.
    2. Ana Borges & Aldina Correia & Eliana Costa e Silva & Glória Carvalho, 2022. "The Dynamics between Structural Conditions and Entrepreneurship in Europe: Feature Extraction and System GMM Approaches," Mathematics, MDPI, vol. 10(8), pages 1-13, April.
    3. Dutta, Nabamita & Sobel, Russell S., 2023. "Trust and attitudes toward income inequality: Does individualism matter?," European Journal of Political Economy, Elsevier, vol. 78(C).
    4. Bjørnskov, Christian, 2024. "Economic freedom and the greenhouse gas Kuznets curve," European Journal of Political Economy, Elsevier, vol. 82(C).
    5. Dutta, Nabamita & Kar, Saibal & Ray, Shaswata, 2022. "Human Capital and Self-Employment in India: An Empirical Analysis for Different Cohorts," IZA Discussion Papers 15825, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Entrepreneurship; Fear of failure; Economic policy; Economic freedom; Business climate;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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