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Fear not, want not: Untangling the effects of social cost of failure on high-growth entrepreneurship

Author

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  • Chong Kyoon Lee

    (James Madison University)

  • Griffin W. Cottle

    (University of Missouri-Kansas City)

  • Sharon A. Simmons

    (University of Missouri-Kansas City)

  • Johan Wiklund

    (Syracuse University)

Abstract

Prior research on the effect that formal and informal institutions have on high-growth entrepreneurship has tended to propose policies aimed at either lowering the social cost of failure in society, or creating business-friendly entry environments aimed at increasing the rate of entrepreneurship. These policies have triggered a debate about whether policies that focus on stimulating high-growth entrepreneurship conflict with policy goals aimed at decreasing the social cost of failure in society. Using approach/avoidance as a lens, we examine the relationship between high social costs of failure and the odds of individuals engaging in growth-based entrepreneurship. Our unique dataset captures the entry decisions of 208,089 individuals in 29 OECD countries. We find that while countries with a higher social cost of failure experience lower total entrepreneurial activity, they have higher odds of entrepreneurs having high-growth aspirations and firms with export-led orientations.

Suggested Citation

  • Chong Kyoon Lee & Griffin W. Cottle & Sharon A. Simmons & Johan Wiklund, 2021. "Fear not, want not: Untangling the effects of social cost of failure on high-growth entrepreneurship," Small Business Economics, Springer, vol. 57(1), pages 531-553, June.
  • Handle: RePEc:kap:sbusec:v:57:y:2021:i:1:d:10.1007_s11187-020-00324-0
    DOI: 10.1007/s11187-020-00324-0
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    More about this item

    Keywords

    Entrepreneurship; Institutions; Stigma; Regulations; High growth; Social costs of failure;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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