Do different institutional frameworks condition the influence of local fear of failure and entrepreneurial examples over entrepreneurial activity?

Abstract

This paper analyses how different institutional frameworks condition the influence of selected social traits: the social stigma to entrepreneurial failure and the presence of entrepreneurial role models, over entrepreneurial activity levels in a rural area with strong industrial and entrepreneurial history versus those that are not necessarily characterized by such a tradition. To attain this objective we undertake a rare events logit model using a robust Spanish dataset from 2003. The main contribution of the study indicates that there is a significant difference between entrepreneurial activity levels in rural Catalonia as compared to rural areas in the rest of Spain. This difference is in large part explained by the distinct impact of the observed social traits, where the presence of entrepreneurial role models is a prominent explanatory factor favouring entrepreneurial activity in rural (Catalonia) areas with strong industrial tradition. The findings of the paper back the growing call for territorial specificity in the formulation and application of entrepreneurship support measures, distinguishing between rural and urban areas. Hence, and in accordance with the new rural paradigm, entrepreneurship promotion should take a more holistic character and become an integral part of any rural development plan. The paper's results imply that fostering business creation in rural areas is more often than not a generational process, where the search for short-term benefits can result in the mistaken impression that in rural areas entrepreneurship support policy does not work.

Entrepreneurial role models, fear of failure, and institutional approval of entrepreneurship: a tale of two regions

“…The GEM fear of failure question is, to the best of our knowledge, the only available measure of fear of failure in large-scale datasets and has already been successfully used in previous studies. For example, Arenius and Minniti (2005) and Vaillant and Lafuente (2007) find that those individuals who reveal fear of failure are much less likely to be engaged in entrepreneurship.…”

“…Firstly, the individual perception of entrepreneurship is an important determinant for subsequent entrepreneurial activity. In particular, fear of failure has a strong negative relationship with entrepreneurial entry (e.g., Arenius and Minniti, 2005;Vaillant and Lafuente, 2007;Stuetzer et al, 2014). One explanation for this negative relationship comes from research on achievement orientation showing that avoiding failure is a strong human motivation (e.g., Conroy and Elliot, 2004;Elliot and Harackiewicz, 1996).…”

Failed, not finished: A narrative approach to understanding venture failure stigmatization

“…However, Cardon et al (2011) showed that even within the US, entrepreneurs in certain regions still experience stigmatization due to venture failure. Vaillant and Lafuente (2007) concluded that belief in the social stigma of entrepreneurial failure is a significant deterrent to entrepreneurial activity in Spain. Damaraju et al (2010) compared collectivist and individualistic cultures and found collectivist cultures were less tolerant and more stigmatizing of failure thereby discouraging entrepreneurial risk taking.…”

Untitled

“…It is therefore necessary to take into account that some socio-cultural practices, values and norms lead more to encourage entrepreneurship and others to inhibit it (Krueger, Liñán, & Nabi, 2013). According to Vaillant and Lafuente (2007) the formal factors (rules and regulations) are practically equivalent in all the Spanish regions. Therefore, following the idea of North (1990) the differences could be found rather in the informal factors (attitudes, beliefs and values) than in the formal ones.…”