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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. Nguyen, Thanh Cong & Nguyen, Thai Vu Hong & Schinckus, Christophe & Chu, Thanh Tuan, 2025. "Excess liquidity and risk: How economic policy uncertainty shapes corporate decisions post-crisis?," Finance Research Letters, Elsevier, vol. 83(C).
    3. Kun Zhang, 2024. "Social Entrepreneurs, Market Dynamics, and Social Enterprise Innovation: An Empirical Study Based on the Global Entrepreneurship Monitor," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8815-8841, June.
    4. 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.
    5. Dutta, Nabamita & Sobel, Russell S., 2023. "Trust and attitudes toward income inequality: Does individualism matter?," European Journal of Political Economy, Elsevier, vol. 78(C).
    6. Callais, Justin T. & Geloso, Vincent J. & Plemmons, Alicia M. & Wagner, Gary A., 2025. "Institutions Matter: Economic freedom and income mobility," Economic Modelling, Elsevier, vol. 153(C).
    7. Nabamita Dutta & Russell S. Sobel & Adam Stivers & Thor Lienhard, 2025. "Opportunity and necessity entrepreneurship: do linguistic structures matter?," Small Business Economics, Springer, vol. 64(4), pages 1981-2012, April.
    8. Saunoris, James W. & Payne, James E. & Sobel, Russell S., 2025. "Identifying the ‘deep roots’ of economic freedom with implications for policy and economic reform," Journal of Policy Modeling, Elsevier, vol. 47(1), pages 211-227.
    9. Bjørnskov, Christian, 2024. "Economic freedom and the greenhouse gas Kuznets curve," European Journal of Political Economy, Elsevier, vol. 82(C).
    10. Dutta, Nabamita & Kar, Saibal & Ray, Shaswata, 2022. "Human Capital and Self-Employment in India: An Empirical Analysis for Different Cohorts," IZA Discussion Papers 15825, IZA Network @ LISER.
    11. Cheikh T. Ndour & Simplice A. Asongu, 2025. "Fear to fail and entrepreneurship intent: examining linkages and potential pathways in Senegal," Quality & Quantity: International Journal of Methodology, Springer, vol. 59(1), pages 207-229, February.

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    Keywords

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    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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