Role of emotions in the entrepreneur's opportunity recognition process
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Authors
Sundararajan, Malavika
Issue Date
2008-05
Type
Electronic thesis
Thesis
Thesis
Language
ENG
Keywords
Management and technology
Alternative Title
Abstract
Creation of ventures only follows a successful recognition of an opportunity and decision to
develop the opportunity. The Opportunity Recognition (OR) process is said to be based on the
entrepreneur’s cognitive processes comprised of stages like perception, evaluation and
elaboration. While cognitive factors explain why and what causes the OR process, no study has
explained exactly how this process takes place. From the psychology literature we understand
that all cognitive mechanisms are interlinked with emotional pathways and that emotions act as
feedback mechanisms in cognitive processes. This study thus puts forth a model to show how
emotions provide the missing link in cognitive studies that may help explain how the OR process
takes place. In doing so along with the key cognitive factors like prior knowledge, prior
experience and entrepreneurial self-efficacy four distinct types of emotional responses are
studied. The emotional responses are physiological responses, secondary appraisal-based
emotions, secondarily induced associated emotions and background emotions. The manner in
which the above cognitive and emotional factors impact individuals’ abilities to recognize
opportunities every time they encounter a scenario are measured. This study took a three-fold
approach in order to investigate the role of emotions in the OR process. Interview case studies
were conducted to ensure the design of the theoretical model. A scenario-based experimental
study was carried out in a lab setting with 90 participants who were primarily university students.
The lab study measured blood-pressure and heart rate and obtained information concerning all
other variables in the model using a web-based survey. In addition to the lab study the same web-based survey was sent out to entrepreneurs (N=34) to test the reliability of the model. Using
structural equation modeling, the models and their paths were tested. The model was found to fit
the data very well across both the experiment and survey studies. It was found that secondary positive emotions play a very significant role in individuals’ decision to develop an opportunity.
The relation between positive emotions and decision to develop was significant in the presence
and absence of all other cognitive factors and background emotions. Another significant finding
was that decreased systolic blood pressure was related to increased ability to recognize better
quality opportunities. The experiments also demonstrated a relationship between activated
background emotions and secondary emotions that impact decisions made by entrepreneurs. A
distinct difference between entrepreneurs and student participants was noticed. There was a
greater influence of prior knowledge and experience and no influence of entrepreneurial self-efficacy on secondary emotions among entrepreneurs. However among student participants only
higher entrepreneurial self-efficacy had a significant impact on the individuals’ secondary
emotions while prior knowledge and experience had no impact. A revised model of the
opportunity recognition process is put forth along with the implications and conclusion of the
findings of this study.
Description
May 2008
School of Management
School of Management
Full Citation
Publisher
Rensselaer Polytechnic Institute, Troy, NY