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

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  • Yancy Vaillant
  • Esteban Lafuente

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.

Suggested Citation

  • Yancy Vaillant & Esteban Lafuente, 2007. "Do different institutional frameworks condition the influence of local fear of failure and entrepreneurial examples over entrepreneurial activity?," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 19(4), pages 313-337, July.
  • Handle: RePEc:taf:entreg:v:19:y:2007:i:4:p:313-337
    DOI: 10.1080/08985620701440007
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    1. Veblen, Thorstein, 1904. "Theory of Business Enterprise," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1904.
    2. Dirk Fornahl & Thomas Brenner (ed.), 2003. "Cooperation, Networks and Institutions in Regional Innovation Systems," Books, Edward Elgar Publishing, number 2713.
    3. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change," Introductory Chapters, in: Understanding the Process of Economic Change, Princeton University Press.
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