CAPABILITIES AND FAILURE: CAN SUPPORT A PERSON TO START A BUSINESS?

Abstract

The first step for a person to become an entrepreneur is to have entrepreneurial intention. Entrepreneurial intention is an individual manifestation of their intention to start their business and become entrepreneur. Fear of failure is considered as a psychological factor that act as a barrier in entrepreneurial intention. Another factor that affected entrepreneurial intention is perceived capability. If fear of failure is suspect as barrier, then perceived capability is suspect as supporting variable. Understanding the effect of fail of failure toward entrepreneurial intention can help to reduce the fear in entrepreneur’ candidates, also we need to understand the role of perceived capability toward entrepreneurial intention too. Hence, the aim of this study is to examine the impact of fear of failure level and perceived capability level toward the entrepreneurial intention. The data in this study is based on the GEM report from 2017 until 2019. This study was conducted using the cross-section and time series data, therefore this study analysed using panel data regression in Stata. The examination is conducted in stages, starting from examining the impact of fear of failure on entrepreneurial intention, followed by examine perceived capabilities which allows to control the impact of fear of failure on entrepreneurial intention. Result of this study shows that first of all, fear of failure does not have a significant impact to entrepreneurial intention. Second, fear of failure processed together with the perceived capability toward entrepreneurial intention, the result showed that fear of failure and perceived capability have a positive and significant impact toward entrepreneurial intention. When entrepreneurs’ candidates have fears that they may fail in the process of start-up business, using their capabilities to decrease the future risk and make their dream come true. This finding provides a warning that although fear of failure and perceived ability have a positive effect on entrepreneurial intentions, it is necessary to be careful to control the fear of failure because the higher the fear of failure can have a negative impact on perceived abilities.