Addressing the CBI conference in Birmingham, Mr Mandelson said: "We want a society that celebrates and values its business heroes as much as it does pop stars and footballers."
Mr Mandelson said it was vital to tackle the "stigma of failure" that deterred so many entrepreneurs. "In the US some of the most successful entrepreneurs are those who have failed once or twice. Banks and societies as a whole don't write people off as failures. They see them as people who have learned. People who are worth backing again."
The Trade and Industry Secretary went on to flesh-out plans first outlined on a visit to the US last month to give entrepreneurs more protection.
The Government is now carrying out a review of corporate rescue procedures, including the Crown's privileged position as a creditor when firms go bust owing tax or VAT revenues.
A second review has been launched to see whether the law can be changed to reduce the stigma of financial failure.
Mr Mandelson emphasised that this was not a "rogue's charter". Rather it would ensure that undue obstacles were not placed in the way of those who had tried but failed.
He said that New Labour had no "guilt-ridden hang-ups about people making themselves rich as a result of genuine entrepreneurial success".
But he took a side-swipe at fat cats saying people at every level of society had to take responsibility for "the pay increases they demand and, in some cases, award themselves".
Mr Mandelson also appeared to hint that he could yet set tougher thresholds for automatic recognition of unions in the workplace.
The Government's White Paper on Fairness at Work says that where 50 per cent of a workforce is in union membership there will be an automatic right to recognition.
But in his speech yesterday he said that the fairness at work proposals would provide trade unions with enforceable recognition rights "where this is supported by a clear majority of the workforce".
Elsewhere, Mr Mandelson said the Government would use its increasing influence in Europe to push for greater labour market flexibility, more competition and increased capital market liberalisation.
He also pledged that Britain would maintain its position as a reliable base for inward investment.
There would be no reversion to Labour's "interventionist instincts of the past", he promised. The emphasis would be on helping markets work more efficiently, not planning the economy.
"Businesses' overriding responsibilities are to win markets and make profits. Government's is to concentrate on getting the environment right."
Mr Mandelson also took a side-swipe at the Stock Exchange, saying it needed to take a good look at itself because there was an "enormous amount of self-satisfaction" about the place.
He promised that the Government would ensure that the regulatory framework promoted, not impeded, the development of enterprise and improve access to venture capital for growing high-tech companies.
He also pledged to make Britain "the most business friendly environment in the world" for the development of electronic commerce and knowledge- based industries.