“Fear of Failure in Entrepreneurial Settings ”

Name : Waheed Shahmir

Dilawar Abbas
Malik Raheel
Khawar Bhatti
Annamullah

Registration No : 1925128
1925126
1925113

Course : ARM

Class : MBA-DAY-1

Submitted To : Madam Faryal

Department of Management Sciences

Szabist, Islamabad
 Fear of Failure in Entrepreneurial Settings

Summary

The last few decades has seen great pomp and show surrounding “success” that has been put

forward as the ultimate goal of life. Failure has been undervalued and less understood by our

society. It has been long known in literary circles, that failure too has its utility of instilling

success inducing mindset. In order to develop success mentality one has to learn how to

successfully cope with failure which is inevitable by all means. Most people do not come across

failure stories as much as success stories, hence the less appreciation of its utility. It is because

Success is nice and positive, but failure is unpleasant and most of the time is not welcomed by

the society and close relations. Therefore, managing failure is critical and is not taught or

mentioned anywhere.

Fear of failure is a learned tendency to avoid evaluative and competitive situations where

there is a potential of failure that is because failure brings with it perceived negative

consequences as per the person's mind set (Birney et al., 1969). As fear of failure is perceived as

threat, that person would try his best to avoid encountering situations that have any potential of

failure. With fear of failure the individual would refuse to partake in new or existing challenge.

He or she will only partake in activities where they are absolutely sure of win or else they would

get discouraged and resort to quitting instead of risking future failure (Wood, 1983). This fear of

failure can inhibit performance, induce negative behaviors and result in self-doubt, and a lack of

confidence in one’s own abilities (DeCastella, Byrne, & Covington, 2013).

According to (Conroy et al, 2001), Fear of failure is a multidimensional construct that is

hierarchical in nature, motivating failure avoidance due to fear of its many unpleasant

consequences. (Conroy et al, 2002) reported in their findings that there are five reasons for

people to avoid failure: First is experiencing shame or embarrassment resulting from failure.

Second, failure results in negative self-evaluation. Third, Failure may disrupt the future

aspirations making future look uncertain and gloomy. Fourth, that the failure would upset

significant others. The last reason is that failure would result in important others losing interest.

By defining fear of failure as the process of appraisal of threats in evaluative situations with the

potential for failure, Conroy and colleagues also suggested that environmental circumstances

play a central role in shaping the experience of fear of failure (Conroy et al., 2001). The person–

environment relationship is fundamental in understanding the experience of fear of failure,

especially in entrepreneurship.

Fear of failure in entrepreneurship

Fear of failure stalks the world of the entrepreneur, from losing key clients to running out of

money. For entrepreneurs, courage is not the absence of fear, but the ability to persist in spite of

it. These fears are well-founded: Studies suggest that roughly 75% of ventures fail in 10

years (U.S. Bureau of Labor Statistics data on firm survival rates). While “fail fast and often” is

the constant refrain of the startup movements, no one really wants to fail. Failure has many

ramifications that it would be foolish to overlook or downplay, including potential bankruptcy,

repossession of workers’ home, social stigma, and people losing their livelihoods. Most existing

research has thus focused on failure as an inhibitor of entrepreneurship.

Fear of failure in entrepreneurship is that fear of failure perceptions negatively influence

entrepreneurship as an occupational choice (e.g., Arenius and Minniti, 2005; Kihlstrom and

Laffont, 1979). Several studies suggest that a reduction of these perceptions will increase the

probability of starting a business (e.g., Arenius and Minniti, 2005; Langowitz and Minniti, 2007;

Minniti and Nardone, 2007; Morales-Gualdron and Roig, 2005; Wagner, 2007). From this

perspective, researchers have heavily relied upon the Global Entrepreneurship Monitor (GEM)

database where fear of failure is measured by a single item: “fear of failure would prevent me

from starting a business” (Bosma et al., 2007: 11). The wording of this item assumes a static

relationship in the nature of the behaviors associated with the fear of failure, specifically that

avoidance is the only behavioral outcome.

Second, the social psychological view of fear of failure in entrepreneurship is that fear of

failure is a socio-cultural trait that influences attention to rewards in the social environment (e.g.,

Gómez-Araujo et al., 2015; Vaillant and Lafuente, 2007). This research suggests that people's

attitude toward failure is influenced by the presence of social norms that see failing as a shameful

experience (Tezuka, 1997; Hessels et al., 2011). This research also assumes that fear of failure is

equivalent to risk aversion. As such, fear of failure reduces the likelihood that individuals expose

themselves to situations characterized by the risk of failure (e.g. entrepreneurship) (Clark et al.,

1956; Hancock and Teevan, 1964).

Third, the purely psychological view of fear of failure in entrepreneurship is that fear of

failure is a negative feeling that results from the anticipation of the possibility of failure and is

associated with psychological and behavioral outcomes (e.g., Chua and Bedford, 2015; Li, 2011;

Mitchell and Shepherd, 2010, 2011; Welpe et al., 2012; Wood and Pearson, 2009; Wood and

Rowe, 2011; Wood et al., 2013, 2014). Although prior research has made progress in
understanding the role of fear of failure in entrepreneurship, important questions remain

regarding the nature of this concept and its relationship with the entrepreneurial process

(Cacciotti and Hayton, 2015).

An exclusive emphasis on the negative relationship between fear of failure and the decision to

start a business also limits understanding of this construct vis-à-vis the dynamism of the

entrepreneurial process. As a result, existing research does not explain much about the

experience of fear of failure in entrepreneurship as it relates to an interaction between the person

and the environment over time (Lazarus, 1991).

Given the dynamic- and process-based nature of entrepreneurship (McMullen and Dimov,

2013), a more complicated person–environment relationship is expected than the one described

in the cognitive appraisal theory (e.g., Lazarus, 1991). In relatively static situations, such as

taking of tests in an educational setting, or the performance of a sport, it might be reasonable to

conceptualize the environment, as in cognitive appraisal theory, solely as a trigger of an inner

process that leads to behavior. In highly dynamic situations, such as entrepreneurship, it is

anticipated that fear of failure will also be dynamic and based in a more nuanced moment-to-

moment interaction (cf. Randolph-Seng et al., 2014) among the cognitive evaluations and

affective experiences of the person and the external situated social cues.

The importance of understanding the dualistic effect of fear of failure on behavior (cf. Elliot,

1999; Elliot and Church, 1997), especially as it relates to fear of failure in specific situations,

leads to conceptualizing of fear of failure as a socially situated construct (Smith and Semin,

2004). Furthermore, the connection between fear and failure becomes extremely relevant in the

entrepreneurship context, where failure is still one of the most stigmatized business outcomes
(Shepherd and Haynie, 2011). By examining the phenomenon as entrepreneurs experience it at

different stages of the entrepreneurial process, researchers go beyond the current psychological

models and develop a deeper understanding of the factors that lead entrepreneurs to experience

fear of failure in an attempt to provide a unified perspective on this topic.

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