Graduation Year

2017

Date of Submission

5-2017

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Manfred Keil

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© 2017 Pema D Donyo

Abstract

This thesis aims to investigate determinants of fear of failure in entrepreneurial activity that could inhibit starting a business. The study uses cross-sectional, pooled OLS, and panel regressions. The dependent variable is fear of failure regarding entrepreneurship, measured with the Global Entrepreneurship Monitor (GEM) survey question of whether fear of failure would prevent the responder from starting a firm. The unit of analysis is at country level. I categorize determinants into demographic, property rights, and procedural variables. A population of higher working age ratio (measured as the population aged 15-64 divided by the population aged 65 and over) correlates with a decreasing fear of failure. Additionally, stronger property rights appear to decrease fear of failure. I do not find a statistically significant relationship between fear of failure and procedural variables in my datasets. A binary variable for whether the country is in Asia appears to show a positive association with fear of failure, increasing it by ten percentage points. Since decreasing fear of failure is desirable to promote greater entrepreneurial activity, a better understanding of the determinants of fear of failure is essential to inform public policies to spur entrepreneurial growth. The findings from this study, while not conclusive, identify the importance of further research based on larger datasets and variables that are more robust.

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