Abstract
We use the bilingual Italian province of South Tyrol as a natural laboratory to investigate the impact of cultural origin on entrepreneurs’ decision to start a new venture after the previous one failed. Our results indicate that entrepreneurs of Italian cultural origin do so more prevalently compared to entrepreneurs of Austrian cultural origin. This divergence in entrepreneurial reentering can be explained by different cultural perceptions on whether a failed entrepreneur should be given a second chance. In essence, national perceptions of failure stigma translates into real economic decisions. This finding is also highly policy relevant. For more than two decades, a range of policy institutions around the world have emphasized the importance of facilitating second chancing by for example simplifying bankruptcy proceedings. Our findings show that if the goal is to spur growth performance by encouraging innovative entrepreneurial activity, it may not be enough to focus only on formal rules and structures but also on informal ones such as cultural perception of failure.