Abstract

Why are some people more likely to become an entrepreneur? A great deal of research dealing with this question focuses on the influence of entrepreneurial role models (peers) on the decision to start a firm (e.g., Sorenson and Audia, 2000). These studies argue that observing entrepreneurs in the local environment provides opportunities to learn about entrepreneurial tasks and signal that entrepreneurship is a favorable career option (see Fornahl, 2003). We add to this literature by asking the questions whether observing failing entrepreneurs triggers an entrepreneurship-deterring feedback on others. Based on a simple sender-receiver model we argue that observing successful entrepreneurs reduces other people fear to fail (H1) while observing failing entrepreneurs should increase other people fear of failure (H2). In a second step we extend the sender-receiver model with the concept of shared mental models (Denzau and North, 1994). In this respect, we argue that the social approval of entrepreneurship is a shared mental model and thus determines the perception and interpretation of role models. We hypothesize that the cushioning effect of knowing an entrepreneur on fear of failure is weaker in regions with low approval of entrepreneurship than in high approval regions (H3). Contrariwise, the amplifying effect of failing role models is stronger in low approval regions than in regions with high approval of entrepreneurship (H4).

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