Emotions and Entrepreneurial Opportunity Evaluation

By Foo, Maw-Der | Entrepreneurship: Theory and Practice, March 2011 | Go to article overview

Emotions and Entrepreneurial Opportunity Evaluation


Foo, Maw-Der, Entrepreneurship: Theory and Practice


Emotions may affect opportunity evaluation yet emotions' influence in entrepreneurship research has been neglected. Findings from the two studies in this paper indicate that appraisal dimensions of emotions influence risk perceptions and preferences. In Study 1 (n = 187), the participants' scores on risk perception for a venture scenario were significantly lower for anger and happiness-induced participants (emotions associated with outcome certainty and control) than for fear- and hope-induced participants (emotions associated with outcome uncertainty and a lack of outcome control). In Study 2 (n = 66), the entrepreneurs' preference for the higher value but uncertain outcome related positively to their scores on trait anger and trait happiness.

Emotions and Entrepreneurial Opportunity Evaluation

Cognition plays a central role in entrepreneurship research with several special issues in entrepreneurship journals devoted to the entrepreneurs' cognitive processes. This cognition focus advances our understanding of how entrepreneurs evaluate business opportunities (Keh, Foo, & Lim, 2002; West, 2007), but the influence of emotions on how entrepreneurs evaluate business opportunities is rare. The role of emotions, however, has started to make inroads into entrepreneurship research. For instance, Cardon, Zietsma, Saparito, Matherne, and Davis (2005) used a parenthood metaphor to illustrate that emotion is a critical factor in the entrepreneurial process. In a special issue of Entrepreneurship Theory and Practice, Mitchell et al. (2007) called for affect (i.e., feelings and emotions) to be included in entrepreneurship research.

Emotions, both trait and state emotions, may shape evaluations because they influence how individuals process information (Beal, Weiss, Barros, & Macdermid, 2005; Isen & Labroo, 2003; Lyubomirsky, King, & Deiner, 2005; Oaksford, Morris, Grainger, & Williams, 1996). Trait emotions are individual tendencies to feel particular emotions. State emotions result from events eliciting particular emotions. The impact of emotion should especially be significant in circumstances characterized by high uncertainty and high engagement. In these circumstances, individuals may use feelings as cues on preferred courses of actions (Baron, 2008; Forgas, 1995). The environment in which entrepreneurs operate is frequently unpredictable with rapid changes. In this environment, emotions may tip the balance toward certain decisions (Baron).

Although there is disagreement among researchers about the definition of emotion (for a brief review, see Seo, Barrett, & Bartunek, 2004), many researchers outside the field of entrepreneurship who study emotions on evaluations usually employ a valence-based approach. Valence is defined as the extent to which an experience is pleasurable (for reviews, see Elster, 1998; Forgas, 1995; Higgins, 1997). This approach is incomplete because emotions of the same valence can result in different risk assessments (Lerner & Keltner, 2000, 2001). Therefore, in this study, emotions are defined as feelings of pleasure or displeasure together with the appraisal tendencies linked to these feelings (Lerner & Keltner, 2000; Smith & Ellsworth, 1985; Tiedens & Linton, 2001). For example, two emotions of different valence, fear and hope, are defined by the appraisal tendencies of a lack of individual control and uncertainty, and by the fact that individuals experiencing these emotions are predisposed to perceive risk. Anger and happiness, again emotions of different valence, are defined by appraisal tendencies of individual control and certainty (Lerner & Keltner, 2001; Smith & Ellsworth). Individuals experiencing these emotions are predisposed to perceive less risk.

This paper used the appraisal tendency framework to examine how emotions influence opportunity evaluation as represented by risk perceptions and risk preferences. …

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