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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
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    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.

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    File URL: http://www.cbr.cam.ac.uk/pdf/WP334.pdf
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    Bibliographic Info

    Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp334.

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    Date of creation: Dec 2006
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    Handle: RePEc:cbr:cbrwps:wp334

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    Web page: http://www.cbr.cam.ac.uk/

    Related research

    Keywords: Attitudes to failure; Entrepreneurship; Cross-country comparisons;

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    1. David G. Blanchflower, 2000. "Self-Employment in OECD Countries," NBER Working Papers 7486, National Bureau of Economic Research, Inc.
    2. Bartelsman, Eric & Haltiwanger, John & Scarpetta1, Stefano, 2004. "Microeconomic evidence of creative destruction in industrial and developing countries," Policy Research Working Paper Series 3464, The World Bank.
    3. Michele Cincera & Olivia Galgau, 2005. "Impact of market entry and exit on EU productivity and growth performance," European Economy - Economic Papers 222, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
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    6. Niels G. Noorderhaven & Sander Wennekers & Geert Hofstede & A. Roy Thurik & Ralph E. Wildeman, 1999. "Self-Employment out of Dissatisfaction: An International Study," Tinbergen Institute Discussion Papers 99-089/3, Tinbergen Institute.
    7. John Armour & Douglas Cumming, 2008. "Bankruptcy Law and Entrepreneurship," American Law and Economics Review, Oxford University Press, vol. 10(2), pages 303-350.
    8. David de Meza, 2002. "Overlending?," Economic Journal, Royal Economic Society, vol. 112(477), pages F17-F31, February.
    9. Nicola Brandt, 2004. "Business Dynamics and Policies," OECD Economic Studies, OECD Publishing, vol. 2004(1), pages 9-36.
    10. André van Stel, 2003. "COMPENDIA 2000.2: a harmonized data set of business ownership rates in 23 OECD countries," Scales Research Reports H200302, EIM Business and Policy Research.
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    Cited by:
    1. Cope, Jason, 2011. "Entrepreneurial learning from failure: An interpretative phenomenological analysis," Journal of Business Venturing, Elsevier, vol. 26(6), pages 604-623.

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