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The stigma of failure: An international comparison of failure tolerance and second chancing

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  • Brendan Burchell
  • Alan Hughes

Abstract

It is commonly asserted that high rates of entrepreneurship and superior economic performance in the United States is linked to a higher cultural tolerance of business failure. After reviewing cross country patterns of entrepreneurship we develop in this paper a measure of cultural attitudes towards failure which has two components. We term these failure tolerance which captures attitudes towards the risk of a business failing and second chancing which measures the degree of agreement with the proposition that those who have failed should be given a second chance. Using a unique dataset on attitudes to failure for a sample of 9,500 individuals drawn from 19 economies for the year 2002 we show that respondents in the USA appear to have relatively high levels of failure tolerance. However, they are less willing to grant a second chance to those who have tried and failed. We find that having relatively high levels of failure tolerance is not positively correlated with GDP growth. Having a relatively positive attitude towards second chancing across countries is positively related to GDP growth. Taken together these results suggest there is a link between attitudes to failure and economic growth, but it is not the one conventionally assumed in current policy rhetoric which argues that relatively favourable attitudes towards second chancing in the USA explains its more entrepreneurial activity.

Suggested Citation

  • Brendan Burchell & Alan Hughes, 2006. "The stigma of failure: An international comparison of failure tolerance and second chancing," Working Papers wp334, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp334
    Note: PRO-1
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    References listed on IDEAS

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    Cited by:

    1. Helen Bollaert & Gaël Leboeuf & Armin Schwienbacher, 2020. "The narcissism of crowdfunding entrepreneurs," Small Business Economics, Springer, vol. 55(1), pages 57-76, June.
    2. Schumacher Heiner & Gerling Kerstin & Kowalik Michal, 2015. "Entrepreneurial Risk Choice and Credit Market Equilibria," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 1455-1480, July.
    3. Eling, Martin & Jia, Ruo, 2018. "Business failure, efficiency, and volatility: Evidence from the European insurance industry," International Review of Financial Analysis, Elsevier, vol. 59(C), pages 58-76.
    4. Cope, Jason, 2011. "Entrepreneurial learning from failure: An interpretative phenomenological analysis," Journal of Business Venturing, Elsevier, vol. 26(6), pages 604-623.
    5. Hellmann, Thomas & Montag, Alexander & Tåg, Joacim, 2024. "Tolerating Losses for Growth: J-Curves in Venture Capital Investing," Working Paper Series 1500, Research Institute of Industrial Economics.
    6. Etgar, Michael & Rachman-Moore, Dalia, 2011. "The relationship between national cultural dimensions and retail format strategies," Journal of Retailing and Consumer Services, Elsevier, vol. 18(5), pages 397-404.

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    More about this item

    Keywords

    Attitudes to failure; Entrepreneurship; Cross-country comparisons;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • Z1 - Other Special Topics - - Cultural Economics

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