Objectives. Our study investigates the role of emotions and cognitions in the pre-entrepreneurial decision-making process, i.e., the process prior to the decision to exploit an entrepreneurial opportunity, which has only looked at by few researchers so far.
Methods. An online questionnaire experiment with three different samples, i.e., employees, students, and entrepreneurs (N = 578) using 16 different experimentally manipulated entrepreneurial scenarios was conducted.
Results. Findings indicate that the relationship between the characteristics of an entrepreneurial opportunity and the evaluation of it is mediated by cognitive appraisals. Moreover, negative and positive affects moderate the relationship between the evaluation of an entrepreneurial opportunity and the decision to exploit it.
Conclusion. This study confirms the central assumption of cognitive appraisal theories of emotion which state that the subjective representation of objective entrepreneurial opportunities better predicts the decision to exploit an entrepreneurial opportunity than the objective characteristics of the entrepreneurial situation

Michl, Theresa

Picot, Arnold

Spörrle, Matthias

Welpe, Isabell M.

English

Open Access LMU

Theresa Michl 1, Isabell M. Welpe 2, Matthias Spörrle 3, Arnold Picot 11 Ludwig-Maximilians-University Munich, 2 Technical University of Munich, 3 University of Applied Management ErdingAbstractObjectives. Our study investigates the role of emotions and cognitions in the pre-entrepreneurial decision-making process, i.e., the process prior to the decisionto exploit an entrepreneurial opportunity, which has only looked at by few researchers so far.Methods. An online questionnaire experiment with three different samples, i.e., employees, students, and entrepreneurs (N = 578) using 16 differentexperimentally manipulated entrepreneurial scenarios was conducted.Results. Findings indicate that the relationship between the characteristics of an entrepreneurial opportunity and the evaluation of it is mediated by cognitiveappraisals. Moreover, negative and positive affects moderate the relationship between the evaluation of an entrepreneurial opportunity and the decision toexploit it.Conclusion. This study confirms the central assumption of cognitive appraisal theories of emotion which state that the subjective representation of objectiveentrepreneurial opportunities better predicts the decision to exploit an entrepreneurial opportunity than the objective characteristics of the entrepreneurialsituation.IntroductionThe question why some individuals and not others exploit entrepreneurial opportunities is still not fully answered. There is consensus that the nature of opportunity plays a key role inthe pre-entrepreneurial decision-making process (Lang-von Wins, 2004; Phan, Wong, & Wang, 2002) which contains the recognition, the evaluation and the decision to exploit anentrepreneurial opportunity (Shane & Venkataraman, 2000). Some researchers (Busenitz & Lau, 1996; Mitchell, Smith, Seawright, & Morse, 2000) argue that the subjective, mentalprocesses in individuals play a crucial role in the pre-entrepreneurial process and for the decision to exploit an opportunity. Therefore, this study seeks to explore individuals’ differentperceptions of entrepreneurial opportunities and the role of cognitive appraisals as well as emotions in this perception-shaping process in order to fill the gap of the ‘Individual-Opportunity-Nexus’ (Shane, 2003; Spörrle, Breugst, & Welpe, 2009; Spörrle, Welpe, Breugst, & Scapin, 2008).The Pre-entrepreneurial ProcessAs most present studies look at entrepreneurial behavior after individuals have decided to exploit an entrepreneurial opportunity, we only know inadequately, who for what reasonrecognizes and evaluates entrepreneurial opportunities and decides for or against entrepreneurial activity. This work, therefore, examines the decision-making process beforeindividuals start exploiting an entrepreneurial opportunity.Richard Lazarus’ Cognitive Appraisal Theory of EmotionIn general, appraisal theories assume that the emotions elicited by an event depend on how the event is appraised by a person along a number of appraisal dimensions (Siemer &Cognitive and affective determinants of entrepreneurial decisions experimentally examinedResults 1:Findings indicated that the relation betweenprofit margin (and probability of success)and entrepreneurial evaluation, was mediatedBy primary appraisal. No mediation was foundfor time to profit and prior investment.Results 2:In addition to an inverse main effect(β = -.07, p < .05), fear (β = -.08, p < .05),but not joy (β = .04, p = .16), moderated therelationship between the evaluationof an entrepreneurial opportunity and thedecision to exploit it. Joy also had no positivemain effect (β = .05, p = .18).Reisenzein, 2007). There are two appraisal dimensions in Lazarus’ appraisal theory: primary and secondary appraisal (Lazarus, 1991; Smith & Lazarus, 1993). Primary appraisal isconcerned with whether and how an encounter is relevant for a person’s well-being, and consists of two components, namely motivational relevance and motivational congruence.Motivational relevance describes the extent to which the encounter is important for a person’s goals and concerns, whereas motivational congruence describes the extent to which theencounter is consistent or inconsistent with a person’s goals (i.e., a person’s desirability; Smith & Lazarus, 1993). Secondary appraisal is concerned with to what extent a person’savailable resources can be applied to cope with the encounter, and consists of four components, namely accountability, problem-focused coping potential, emotion-focused copingpotential, and future expectancy.ReferencesBusenitz, L. W., & Lau, C. (1996): A cross-cultural cognitive models of new venture creation. Entrepreneurship Theory and Practice, 20, 25-39. Lang-von Wins, T. (2004): Der Unternehmer. Arbeits- und organisationspsychologische Grundlagen [The entrepreneur. Work and organizational psychological foundations]. Berlin, Germany: Springer. Lazarus, R. S. (1991): Cognition and motivation in emotion. American Psychologist, 46, 352-367. Mitchell, R. K., Smith, B., Seawright, K. W., & Morse, E. A. (2000): Cross-cultural cognitions and the venture creation decision. Academy of Management Journal, 43, 974-993. Phan, P. H., Wong, P. K., & Wang, C. K. (2002): Antecedents to entrepreneurship among university students in Singapore: Beliefs, attitudes and background. Journal of Enterprising Culture, 10, 151-174.Shane, S. (2003): A general theory of entrepreneurship. The Individual-Opportunity Nexus. Cheltenham, UK: Edward Elgar. Shane, S., & Venkataraman, S. (2000): The promise of entrepreneurship as a field of research. Academy of Management Review, 25, 217-226. Siemer, M., & Reisenzein, R. (2007): The process of emotion inference, Emotion, 7, 1-20. Smith, C. A., & Lazarus, R. S. (1993): Appraisal components, core relational themes, and the emotions, Cognition and Emotion, 7, 233-269. Spörrle, M., Breugst, N., & Welpe, I. M. (2009). ‘That seems to be promising!’ – Predicting opportunity evaluation by means of situational characteristics and individual cognitions. International Journal of Entrepreneurial Venturing, 1, 41-56.Spörrle, M., Welpe, I., Breugst, N., & Scapin, K. (2008). Fear and primary appraisal in the entrepreneurship context [Abstract]. International Journal of Psychology, 43(3/4), 391.Vaish, A., Grossmann, T., & Woodward, A. (2008): Not all emotions are created equal: The negativity bias in early social-emotional development. Psychological Bulletin, 134, 383-403.Contact: michl@lmu.deResultsMethodWe applied a questionnaire experiment with a scenario technique commonly usedwithin the fields of psychological and entrepreneurship research.Overall, 16 different entrepreneurial scenarios resulting from four fully crossedindependent variables (2 × 2 × 2 × 2 design):• Profit margin (high: 350 000€ vs. low: 25 000€), Manipulation Check (MC) 3 itemswith α = .94• Time to profit (long: 7 years vs. short: 1 year), (MC 3 items with α = .93)• Prior investment (high: 90% equity share vs. low: 10% equity share), (MC 3 itemswith α = .94)• Probability of success (high: 90% vs. low: 10%), (MC 3 items with α = .95)Emotions: Fear (α = .88), joy (α = .93) (Both based on PANAS-X)Appraisals: Primary appraisal (3 items for motive relevance and 3 items for motivecongruence: 6 items with α = .97), Secondary Appraisal (3 items for emotion-focusedand 3 items for problem-focused coping potential: 6 items with α = .94)Dependent Variables: Entrepreneurial Evaluation (3 items with α = .89) and Likelihoodof Exploitation (3 items with α = .91) R² adj. = .57, F(13, 564) = 69.80, p < .001DiscussionPrimary appraisal but not secondary can be regarded as a central variable within the context of the evaluation and exploitation of an entrepreneurial opportunity. Primary appraisalmediates the relationship between profit margin and evaluation indicating the importance of this variable for entrepreneurial situation evaluation.The negative affective state of fear was found to have a direct negative effect on exploitation and to reduce the influence of evaluation on exploitation. Joy was no significant moderator.Thus, our results indicate that entrepreneurs are more concerned by the fear of failure than they are attracted by the prospects of success which is consistent which recent researchindicating a powerful negativity bias (cf. Vaish, Grossmann, & Woodward, 2008).R² adj. = .29, F(10, 567) = 24.92, p < .001.

A cross cultural cognitive models of new venture creation. Entrepreneurship Theory and Practice,

A general theory of entrepreneurship. The Individual Opportunity Nexus.

Antecedents to entrepreneurship among university students in Singapore: Beliefs, attitudes and background.

Appraisal components, core relational themes, and the emotions,

Cognition and motivation in emotion.

Cross cultural cognitions and the venture creation decision.

Der Unternehmer. Arbeits und organisationspsychologische Grundlagen [The entrepreneur. Work and organizational psychological foundations].

Fear and primary appraisal in the entrepreneurship context [Abstract].

That seems to be promising!’ – Predicting opportunity evaluation by means of situational characteristics and individual cognitions.

The process of emotion inference,

The promise of entrepreneurship as a field of research.

Cognitive and affective determinants of entrepreneurial decisions experimentally examined

Universität München: Elektronischen Publikationen

Theresa Michl 1, Isabell M. Welpe 2, Matthias Spörrle 3, Arnold Picot 1
1 Ludwig-Maximilians-University Munich, 2 Technical University of Munich, 3 University of Applied Management Erding
Abstract
Objectives. Our study investigates the role of emotions and cognitions in the pre-entrepreneurial decision-making process, i.e., the process prior to the decision
to exploit an entrepreneurial opportunity, which has only looked at by few researchers so far.
Methods. An online questionnaire experiment with three different samples, i.e., employees, students, and entrepreneurs (N = 578) using 16 different
experimentally manipulated entrepreneurial scenarios was conducted.
Results. Findings indicate that the relationship between the characteristics of an entrepreneurial opportunity and the evaluation of it is mediated by cognitive
appraisals. Moreover, negative and positive affects moderate the relationship between the evaluation of an entrepreneurial opportunity and the decision to
exploit it.
Conclusion. This study confirms the central assumption of cognitive appraisal theories of emotion which state that the subjective representation of objective
entrepreneurial opportunities better predicts the decision to exploit an entrepreneurial opportunity than the objective characteristics of the entrepreneurial
situation.
Introduction
The question why some individuals and not others exploit entrepreneurial opportunities is still not fully answered. There is consensus that the nature of opportunity plays a key role in
the pre-entrepreneurial decision-making process (Lang-von Wins, 2004; Phan, Wong, & Wang, 2002) which contains the recognition, the evaluation and the decision to exploit an
entrepreneurial opportunity (Shane & Venkataraman, 2000). Some researchers (Busenitz & Lau, 1996; Mitchell, Smith, Seawright, & Morse, 2000) argue that the subjective, mental
processes in individuals play a crucial role in the pre-entrepreneurial process and for the decision to exploit an opportunity. Therefore, this study seeks to explore individuals’ different
perceptions of entrepreneurial opportunities and the role of cognitive appraisals as well as emotions in this perception-shaping process in order to fill the gap of the ‘Individual-
Opportunity-Nexus’ (Shane, 2003; Spörrle, Breugst, & Welpe, 2009; Spörrle, Welpe, Breugst, & Scapin, 2008).
The Pre-entrepreneurial Process
As most present studies look at entrepreneurial behavior after individuals have decided to exploit an entrepreneurial opportunity, we only know inadequately, who for what reason
recognizes and evaluates entrepreneurial opportunities and decides for or against entrepreneurial activity. This work, therefore, examines the decision-making process before
individuals start exploiting an entrepreneurial opportunity.
Richard Lazarus’ Cognitive Appraisal Theory of Emotion
In general, appraisal theories assume that the emotions elicited by an event depend on how the event is appraised by a person along a number of appraisal dimensions (Siemer &
Cognitive and affective determinants of entrepreneurial decisions experimentally examined
Results 1:
Findings indicated that the relation between
profit margin (and probability of success)
and entrepreneurial evaluation, was mediated
By primary appraisal. No mediation was found
for time to profit and prior investment.
Results 2:
In addition to an inverse main effect
(β = -.07, p < .05), fear (β = -.08, p < .05),
but not joy (β = .04, p = .16), moderated the
relationship between the evaluation
of an entrepreneurial opportunity and the
decision to exploit it. Joy also had no positive
main effect (β = .05, p = .18).
Reisenzein, 2007). There are two appraisal dimensions in Lazarus’ appraisal theory: primary and secondary appraisal (Lazarus, 1991; Smith & Lazarus, 1993). Primary appraisal is
concerned with whether and how an encounter is relevant for a person’s well-being, and consists of two components, namely motivational relevance and motivational congruence.
Motivational relevance describes the extent to which the encounter is important for a person’s goals and concerns, whereas motivational congruence describes the extent to which the
encounter is consistent or inconsistent with a person’s goals (i.e., a person’s desirability; Smith & Lazarus, 1993). Secondary appraisal is concerned with to what extent a person’s
available resources can be applied to cope with the encounter, and consists of four components, namely accountability, problem-focused coping potential, emotion-focused coping
potential, and future expectancy.
References
Busenitz, L. W., & Lau, C. (1996): A cross-cultural cognitive models of new venture creation. Entrepreneurship Theory and 
Practice, 20, 25-39. 
Lang-von Wins, T. (2004): Der Unternehmer. Arbeits- und organisationspsychologische Grundlagen [The entrepreneur. Work 
and organizational psychological foundations]. Berlin, Germany: Springer. 
Lazarus, R. S. (1991): Cognition and motivation in emotion. American Psychologist, 46, 352-367. 
Mitchell, R. K., Smith, B., Seawright, K. W., & Morse, E. A. (2000): Cross-cultural cognitions and the venture creation decision. 
Academy of Management Journal, 43, 974-993. 
Phan, P. H., Wong, P. K., & Wang, C. K. (2002): Antecedents to entrepreneurship among university students in Singapore: 
Beliefs, attitudes and background. Journal of Enterprising Culture, 10, 151-174.
Shane, S. (2003): A general theory of entrepreneurship. The Individual-Opportunity Nexus. Cheltenham, UK: Edward Elgar. 
Shane, S., & Venkataraman, S. (2000): The promise of entrepreneurship as a field of research. Academy of Management Review, 25, 217-
226. 
Siemer, M., & Reisenzein, R. (2007): The process of emotion inference, Emotion, 7, 1-20. 
Smith, C. A., & Lazarus, R. S. (1993): Appraisal components, core relational themes, and the emotions, Cognition and Emotion, 
7, 233-269. 
Spörrle, M., Breugst, N., & Welpe, I. M. (2009). ‘That seems to be promising!’ – Predicting opportunity evaluation by means of situational 
characteristics and individual cognitions. International Journal of Entrepreneurial Venturing, 1, 41-56.
Spörrle, M., Welpe, I., Breugst, N., & Scapin, K. (2008). Fear and primary appraisal in the entrepreneurship context [Abstract]. International 
Journal of Psychology, 43(3/4), 391.
Vaish, A., Grossmann, T., & Woodward, A. (2008): Not all emotions are created equal: The negativity bias in early social-emotional 
development. Psychological Bulletin, 134, 383-403.
Contact: michl@lmu.de
ResultsMethod
We applied a questionnaire experiment with a scenario technique commonly used
within the fields of psychological and entrepreneurship research.
Overall, 16 different entrepreneurial scenarios resulting from four fully crossed
independent variables (2 × 2 × 2 × 2 design):
• Profit margin (high: 350 000€ vs. low: 25 000€), Manipulation Check (MC) 3 items
with α = .94
• Time to profit (long: 7 years vs. short: 1 year), (MC 3 items with α = .93)
• Prior investment (high: 90% equity share vs. low: 10% equity share), (MC 3 items
with α = .94)
• Probability of success (high: 90% vs. low: 10%), (MC 3 items with α = .95)
Emotions: Fear (α = .88), joy (α = .93) (Both based on PANAS-X)
Appraisals: Primary appraisal (3 items for motive relevance and 3 items for motive
congruence: 6 items with α = .97), Secondary Appraisal (3 items for emotion-focused
and 3 items for problem-focused coping potential: 6 items with α = .94)
Dependent Variables: Entrepreneurial Evaluation (3 items with α = .89) and Likelihood
of Exploitation (3 items with α = .91) R² adj. = .57, F(13, 564) = 69.80, p < .001
Discussion
Primary appraisal but not secondary can be regarded as a central variable within the context of the evaluation and exploitation of an entrepreneurial opportunity. Primary appraisal
mediates the relationship between profit margin and evaluation indicating the importance of this variable for entrepreneurial situation evaluation.
The negative affective state of fear was found to have a direct negative effect on exploitation and to reduce the influence of evaluation on exploitation. Joy was no significant moderator.
Thus, our results indicate that entrepreneurs are more concerned by the fear of failure than they are attracted by the prospects of success which is consistent which recent research
indicating a powerful negativity bias (cf. Vaish, Grossmann, & Woodward, 2008).
R² adj. = .29, F(10, 567) = 24.92, p < .001.


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Cognitive and affective determinants of entrepreneurial decisions experimentally examined

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