Strategic Entrepreneurship Journal
Strat. Entrepreneurship J., 1: 167–182 (2007)
Published online 21 November 2007 in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/sej.12
BEHAVIORAL AND COGNITIVE FACTORS IN
ENTREPRENEURSHIP: ENTREPRENEURS AS THE
ACTIVE ELEMENT IN NEW VENTURE CREATION
ROBERT A. BARON*
Lally School of Management and Technology, Rensselear Polytechnic Institute,
Troy, New York, U.S.A.
Entrepreneurs play a central role in new venture creation. Because they do, careful attention
to relevant aspects of their behavior and cognition can offer useful insights into key aspects of
this complex process. Specifically, investigation of carefully selected behavioral and cognitive
factors can add appreciably to our understanding of the basic processes that underlie new
venture creation (e.g., how opportunity recognition or creation actually occurs, how and what
entrepreneurs learn from increasing experience in launching and operating new ventures).
Evidence is reviewed concerning the role of behavioral and cognitive factors in several key
activities performed by entrepreneurs. In addition, the potential role of a variable that has
not yet been systematically investigated in the context of new venture creation—affect—is
explored. Finally, suggestions are offered for future research designed to further explicate
the role of behavioral and cognitive factors in new venture creation (e.g., research on the
role in entrepreneurship of self-regulatory and metacognitive mechanisms; research on the
cognitive and foundations of entrepreneurial alertness). Copyright © 2007 Strategic Management Society.
‘We are born to action . . .’ (Charles Horton
Cooley, 1902)
While these words may not apply to everyone,
they certainly do ring true in the case of entrepreneurs. If they are nothing else, entrepreneurs are
persons who take action—they engage in vigorous,
persistent efforts to convert their ideas and visions
into profitable, operating companies. This proclivity
for action is, in a sense, crucial to the entrepreneurial
process; in the absence of action by individual entrepreneurs, there would simply be no entrepreneurship
and no new ventures. As Shane, Locke, and Collins
Keywords: entrepreneurship; affect; cognition; entrepreneurs;
new ventures
*Correspondence to: Robert A. Baron, Lally School of Management and Technology, Rensselaer Polytechnic Institute,
Troy, NY 12180-3590, U.S.A.
E-mail: [email protected]
Copyright © 2007 Strategic Management Society
(2003: 259) put it, ‘Entrepreneurship involves
human agency. The entrepreneurial process occurs
because people act to pursue opportunities . . .’ In
short, entrepreneurship happens because entrepreneurs conceive of new products or services and then
develop them through the launch and operation of
new ventures. In this sense, entrepreneurs truly are
the active element in new venture creation.
If entrepreneurs are indeed an essential part of the
process through which new ventures are created, it
is reasonable to suggest that at least some aspects of
their behavior and cognition play an important role in
this process. But which aspects of their behavior and
cognition are most relevant and hence most deserving
of careful attention? The answer offered here closely
reflects a perspective taken in several other branches
of management (e.g., Human Resource Management,
Organizational Behavior). In essence, it suggests that
we should focus on those aspects of entrepreneurs’
behavior and thought that are most closely linked to
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R. A. Baron
the activities they perform (e.g., Landy and Conte,
2006; Riggio, 2003). In other words, behavioral and
cognitive variables and/or processes are of interest
to entrepreneurship researchers only to the extent
that they are closely related to activities involved in
the conception, launch, development, and operation
of new ventures (e.g., Shane, 2003).
This basic point serves as a guiding principle
throughout this paper, which proceeds as follows.
First, an initial section briefly describes key tasks
and activities performed by entrepreneurs, tasks
and activities to which behavioral and cognitive
variables are relevant. Second, current knowledge
concerning behavioral and cognitive variables that
have been found to play a role in these tasks and
activities is reviewed. Third, the potential effects of
a variable that may strongly influence many of these
tasks and activities but has not yet been systematically investigated in the context of new venture creation—affect—are considered. A concluding section
proposes possible directions for future research.
KEY ACTIVITIES IN NEW VENTURE
CREATION
Robert Bresson (1975), a well-known French film
director, once described the creative process in
these words: ‘Make visible what, without you, might
perhaps never have been seen.’ Those words seem
applicable to entrepreneurship and to new venture
creation which does, indeed, bring into existence
something that might, without an entrepreneur,
never have existed. A competing view is that specific entrepreneurs are relatively unimportant; good
ideas will be recognized and put to use by someone,
so individuals themselves matter very little. While
this may be accurate up to a point, it does not explain
situations in which extremely valuable ideas exist in
a given culture, sometimes for many years, but are
not implemented. For instance, the Inca civilization,
although highly advanced in many respects, never
used the wheel for transportation. The idea of doing
so definitely existed in the culture because children
played with toys in the form of wheeled carts. Yet
no one ever put this idea to use in the way in which
it was applied in many other cultures. Could this
situation have changed if an appropriate entrepreneur were present? Since the wheel was not culturally prohibited, it seems quite possible. Instances
such as this suggest that individual entrepreneurs
do indeed matter, and do play an important role in
Copyright © 2007 Strategic Management Society
‘making visible what might (without them) have
never been.’
But given that entrepreneurs play an important
role in new venture creation, just what is it that they
do? What is their specific role in the overall process?
Answering this question is complex because entrepreneurs, unlike persons in many other occupations
or jobs, do not have clearly defined sets of duties,
activities, and responsibilities. Recent models of the
entrepreneurial process, however, provide frameworks for identifying several of the tasks that are
truly central (e.g., Ardichvili, Cardozo, and Ray,
2003; Baron, 2006a; Shane, 2003). Together, these
frameworks suggest that although entrepreneurs
engage in many different tasks, the following are,
perhaps, among the most essential: (1) generating
ideas for new products or services, (2) recognizing business opportunities related to these ideas, (3)
obtaining the resources needed for developing these
ideas through the launch of a new venture. These
are certainly not the only activities performed by
entrepreneurs (e.g., they also focus on making decisions and formulating appropriate business strategies), but these activities are among the ones most
fundamental to early phases of new venture creation.
Behavioral and cognitive variables continue to play
an important role in later phases of new venture
founding and operation (e.g., Greenberg and Baron,
2008), but the present discussion concentrates primarily on the role of these factors during the initial,
early phases of this process.
THE EFFECTS OF BEHAVIORAL
AND COGNITIVE FACTORS ON KEY
ENTREPRENEURIAL ACTIVITIES
What specific competencies (skills, abilities, etc.)
do entrepreneurs need to successfully create new
ventures? A basic answer to this question is:
‘Many . . . and these change in relative importance
and scope across various phases of the new venture
creation process.’ Thus, the review that follows is
not in any sense exhaustive; rather it focuses primarily on those cognitive and behavioral variables for
which strong and consistent evidence for significant
impact on key entrepreneurial activities currently
exists. Paralleling the models of entrepreneurship
cited earlier (e.g., Shane, 2003), discussion moves
from behavioral and cognitive factors that influence
the generation of ideas and recognition of opportunities to behavioral and cognitive factors that influence
Strat. Entrepreneurship J., 1: 167–182 (2007)
DOI: 10.1002/sej
Behavior and Cognitive Factors in Entrepreneurship
the acquisition of resources needed to exploit these
opportunities.
Generating new ideas
Many definitions of creativity exist, but most agree
that it involves the development of (1) something
new, that did not exist (at least in its present form)
before, and (2) something that is not merely new but
also appropriate or useful. The U.S. Patent Office
applies these criteria to patent applications: not only
must an idea be new (an advance on existing ‘art’
in legal terms), it must be potentially useful too. In
addition, it must also be nonobvious—something
that is not immediately apparent to anyone who is
familiar with existing, related products (known, in
legal terminology, as prior art). Creativity, in its
strongest forms, is easy to recognize: Einstein, da
Vinci, Edison, Shakespeare—the ideas, theories, or
products they offered to the world were certainly
new and, in important ways, useful. But identifying
the cognitive foundations of creativity is a much
more complex and difficult task. Where do such
ideas originate? How do they take form in the minds
of particular individuals? Revealing answers to these
questions have been provided by basic research on
creativity in the fields of cognitive science and cognitive psychology, and these findings serve as the
main foundation of the present discussion.
The key role of concepts
As a result of continuing experience with the world,
all individuals enter a vast amount of information
in long term memory. Basic research suggests that
such information is not stored randomly; rather,
it is organized into various cognitive structures or
frameworks. Among these, concepts are especially
relevant to creativity and the emergence of new
ideas. Concepts are categories for objects or events
that are somewhat similar. For instance, the words
airplane, automobile, elevator, and motor scooter all
relate to equipment for moving people and objects
from one place to another: all are included in the
concept for vehicle. Similarly, while the fields of
physics, geology, biology, and chemistry differ in
many ways, they are all included in the concept
science.
Concepts offer important benefits with respect to
creativity: they permit ready access to vast amounts
of previously stored information that can facilitate
processing such information in various ways. On the
other hand, they can act as a kind of ‘mental rut,’
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preventing individuals from relating information
across different concepts. For instance, in the mid
1970s, engineers and scientists at Sony Corporation were given the task of developing music CDs.
Initially, they produced CDs that could store up to
18 hours of music—a capacity deemed too long for
the market at that time by top executives at Sony.
Why did they do this? Being familiar with existing
technology, they made the early CDs 12 inches in
diameter—the same as existing LP records! In a
sense, they were trapped by their own concept of a
‘music storage device,’ and did not realize that CDs
could be any size that was convenient.
Generating ideas through the expansion and
combination of concepts
Given the powerful constraining effects of existing
concepts, how can individuals ever break through
them to create something truly new? Cognitive
research provides the following answer (e.g., Ward,
2004): this can be accomplished by stretching or
expanding concepts in several ways. For instance,
concepts can be combined, with the result that
something both new and useful is produced. For
instance when the concepts of ‘telephone’ and
‘camera’ were combined, the idea for cell phones
with built-in cameras emerged. Second, concepts
can be expanded. For instance, the concept ‘service
station’ or ‘gas station’ used to mean just that: a place
where fuel could be purchased and perhaps routine
service performed on automobiles and trucks. Now,
however, it has been expanded into places in which a
wide array of other products, from food to clothing,
can be obtained. Concepts can also be expanded by
analogy—by perceiving similarities between objects
or events that are otherwise dissimilar. For instance,
when one scientist observed how plant seeds and
burrs clung to his clothing with tiny hooks, he reasoned that this system would also work in other
contexts—and Velcro was born.
In short, creativity appears to stem from the operation of basic cognitive processes. Understanding
these processes, in turn, offers important insights
into the question: ‘Where do ideas for new products
and services originate?’ The answer, it appears, is:
‘From basic cognitive processes that allow individuals to operate on, and use, information in new ways.’
Certainly, concepts and related cognitive processes
are not the only ones that are important in generating new ideas and encouraging creativity. But
a large body of evidence suggests that these cognitive frameworks, and processes related to them,
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are indeed of key importance (e.g., Cianciola et al.,
2006; Sternberg, 2004).
Recognizing opportunities
Ideas for new products or services are, in a sense,
the raw material for entrepreneurship, for it is often
from these ideas that concrete business opportunities emerge. Before proceeding to examine the role
of behavioral and cognitive factors in this process,
however, it is important to note that there has been
continuing discussion in the field of entrepreneurship concerning the question of whether opportunities are recognized (they exist in the external world
and are somehow identified by specific persons), or
are instead created (they emerge in the minds of specific individuals who generate them from their own
cognitive resources and knowledge; e,g., Alvarez
and Barney, 2005). The present author believes that
both approaches are valid and are in no way incompatible, but given the focus of the present paper, the
discussion of opportunities will focus primarily on
factors influencing the identification of such opportunities rather than on their creation.
Whatever the specific origins of opportunities,
they are often the starting point for overt entrepreneurial action—for efforts by entrepreneurs to create
new ventures that will exploit these opportunities.
Indeed, the decision to proceed with such activities
often stems from entrepreneurs’ beliefs that they
have identified an opportunity no one else has yet
recognized, and can benefit from being first to bring
it to the marketplace (Durand and Coeruderoy, 2001).
Because opportunity recognition is indeed often the
start of the entrepreneurial process, it is not at all
surprising that it has long been a central concept
in the field of entrepreneurship. Until recently,
however, little effort was made to examine it as a
process. Rather, opportunities were defined largely
in terms of economic outcomes: only ideas for a new
product, service, raw material, market, or production
process that could be successfully exploited so as to
generate economic benefits for stakeholders were
viewed as constituting bona fide opportunities. This
approach, though valuable in several respects, overlooks several key questions.
First, it largely ignores the question of how opportunity recognition occurs; in other words, how do
specific persons actually identify opportunities that
have been generated by changes in economic, technological, and social conditions? Clearly, this is
an active process involving human cognition, and
Copyright © 2007 Strategic Management Society
understanding how it occurs might well suggest
ways of enhancing its occurrence—techniques for
helping current or future entrepreneurs identify
opportunities that will benefit not only them, but
large numbers of persons who ultimately use the
new products or services they develop. Second, and
closely related, it does not directly address the question of why some persons but not others recognize
specific opportunities. Often, opportunities are there
for anyone to notice; yet, thousands or even millions
of persons do not notice them. Why? And carrying
this a little further, how do individuals conclude that
an opportunity they have noticed is one they, rather
than others, can actually develop? This, too, appears
to be an important aspect of the process (McMullen
and Shepherd, 2006).
If we can understand why certain people
recognize opportunities that others don’t identify,
this can provide key insights into how this process
takes place and how it can be enhanced. Research
on this issue suggests that an important part of
the answer involves the central role of information. Specifically, it appears that some people are
more likely than others to recognize opportunities
for a variety of reasons including better access to
information and superior ability to utilize available
information effectively. Since the research pointing
to these conclusions has been reviewed in detail
elsewhere, it will not be described here (e.g., Shane,
2003). Rather, attention will be focused on a process
that may provide the basic cognitive foundations
for opportunity recognition—pattern recognition
(Matlin, 2004).
Before turning to that topic, however, it should
also be noted that access to and effective utilization
of information are not the only behavioral and cognitive factors that have been found to play a role in
opportunity recognition. In addition, four others have
received major attention: (1) engaging in an active
search for opportunities, (2) alertness to opportunities (the capacity to recognize them when they
emerge), (3) prior knowledge of a market, industry,
or customers as a basis for recognizing new opportunities in these areas, and (4) the extent, breadth,
and quality of entrepreneurs’ social networks—their
connections with others. Past research suggests that
all of these factors are important. (e.g., Fiet, Clouse,
and Norton, 2004; Gilad, Kaish and Ronen, 1989;
Hills and Shrader, 1998; Ozgen and Baron, 2007).
Since work, too, has been fully reviewed elsewhere
(e.g., Zacharakis and Spinelli, 2007), it will not be
considered in detail.
Strat. Entrepreneurship J., 1: 167–182 (2007)
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Behavior and Cognitive Factors in Entrepreneurship
The role of pattern recognition
Interest in the potential role of pattern recognition in opportunity identification derives primarily
from interest in the following, key question: What
is the basic nature of opportunity recognition?
In other words, how does opportunity recognition
actually occur in the minds of specific persons?
Theories and research findings in the field of
cognitive science may be very useful in addressing with
this basic issue. In particular, one cognitive process
long investigated by cognitive scientists—pattern recognition—appears to be closely related to opportunity
recognition in the domain of entrepreneurship (Baron,
2006b). This process involves noticing meaningful patterns in complex events, trends, or changes. In essence,
it includes (1) recognizing links between trends,
changes, and events that appear, at first glance, to be
unconnected, and (2) noticing that these connections
form an identifiable pattern. Both of these steps, in
turn, are strongly influenced by the cognitive frameworks individuals possess—frameworks they have
developed on the basis of past experience (e.g.,
their prototypes). The clearer and more fullydeveloped these frameworks, the more likely are
individuals who possess them to recognize opportunities in a specific domain, because these cognitive
frameworks serve as templates or guides, helping
these persons notice links between diverse events or
trends.
A concrete example of this process is provided by
Chester Carlson, the individual most often credited
with developing the modern copy machine. Efforts
to produce technology that would produce clear
copies on regular paper had continued for decades,
so a key question is ‘Why was Carlson able to solve
this problem—one that had baffled many other scientists and engineers?’ One possibility involves the
fact that Carlson held both a law degree and a technical degree. As a result, he possessed well-developed
cognitive frameworks for interpreting information
relating both to the needs of potential customers
(e.g., the need for clear copies of legal documents)
and several of the technical processes that might be
used to meet this need. In short, Carlson, possessed
the cognitive frameworks necessary for perceiving
connections between seemingly independent events
and trends (advances in several aspects of technology, changes in the needs of many businesses, etc.)
and for detecting an emergent pattern in these connections—a pattern suggestive of the opportunity he
then pursued.
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Research findings provide additional evidence
for the role of pattern recognition in the identification of new business opportunities. For instance,
Baron and Ensley (2006) found that the cognitive
frameworks for ‘business opportunity’ possessed
by highly experienced repeat entrepreneurs were
significantly richer and clearer (e.g., more focused)
than those of novice entrepreneurs. Further, the cognitive frameworks (prototypes) of the two groups
were found to differ in several respects, and these
differences, too, are consistent with a pattern recognition perspective. Specifically, the prototypes of
experienced entrepreneurs emphasized factors that
have been found to influence the success of new ventures (e.g., cash flow, meeting customers’ needs).
In contrast, those of novice entrepreneurs tended
to emphasize newness or novelty. These findings
suggest that opportunity recognition may indeed be
closely linked to pattern recognition, since prototypes, like other cognitive frameworks, are useful
in perceiving identifiable patterns in large arrays of
information.
A pattern recognition perspective also sheds
light on another important question raised earlier:
Why do some persons but not others recognize
specific opportunities? A pattern recognition perspective suggests that the answer to this key question involves, at least in part, the fact that individuals, because of contrasting life experiences,
differ greatly in terms of the cognitive frameworks
they possess. To the extent they possess frameworks useful in ‘connecting the dots’ between
seemingly unrelated events or trends, they are,
in a sense, cognitively equipped to recognize
emergent patterns—and hence, in some cases, new
business opportunities. Pattern recognition may
also play a role in entrepreneurial alertness. Specific persons may be more or less ‘alert’ to various
opportunities because they possess cognitive frameworks (cognitive equipment) that permit them to
notice emerging opportunities even when they are
not actively searching for them. These frameworks
serve as templates that assist such persons in recognizing emergent patterns and the opportunities
related to them.
Almost certainly, pattern recognition is not the
only cognitive process involved in opportunity recognition. However, attention to this and other basic
cognitive processes may offer important insights
into key aspects of this complex process and
may, for this reason, be worthy of further careful
investigation.
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Acquiring essential resources
Another important pre-launch activity for entrepreneurs is acquiring essential resources—financial,
human, and informational. These resources are the
assets necessary to convert ideas and strategies into
actual operating businesses, so entrepreneurs devote
a considerable portion of their time and energy to
securing them. Clearly, not all entrepreneurs are
equally successful in obtaining such resources, and
differences in their proficiency with respect to these
tasks can have powerful implications for their new
ventures. Indeed, a lack of sufficient resources is one
of the major reasons why so many new ventures fail
(Bygrave and Zacharakis, 2007).
This basic fact raises an important and complex
question: Why are some entrepreneurs so much more
successful than others in obtaining the resources
they need? While many variables have been found
to play a role (Shane, 2003), two that involve behavioral and cognitive factors are entrepreneurs’ social
skills—their ability to interact with others in an
effective manner (e.g., Baron and Markman, 2000),
and entrepreneurs’ social networks—the networks
of personal relationships they develop with others,
and which often help them to acquire the resources
they need (e.g., Aldrich, 1999).
The role of social skills in resource acquisition
A large body of research findings in several fields
(e.g., organizational behavior, human resource
management) indicates that social skills—a variety
of proficiencies that help individuals to interact
effectively with others—exert strong effects on
outcomes individuals experience in many contexts
(e.g., Riggio and Throckmorton, 1988; Ferris, Witt
and Hochwarter, 2001). Specific social skills that
have been found to exert significant effects in this
respect include social perception (the ability to
perceive others accurately), impression management (skill in making favorable first impressions
on others), expressiveness (the ability to express
emotions clearly and openly) and social adaptability (proficiency in adapting one’s actions to current
social contexts; e.g., Ferris et al., 2001; Wayne
et al., 1997).
In work settings, social skills have been found to
influence a wide range of important organizational
processes. To mention just a few of these findings,
persons high in social skills, as compared to persons
low in such skills, are more successful as job candidates (e.g., Riggio and Throckmorton, 1988),
Copyright © 2007 Strategic Management Society
tend to receive higher performance reviews from
supervisors (e.g., Robbins and DeNisi, 1994), attain
faster promotions, and receive higher salaries (e.g.,
Belliveau, O’Reilly, and Wade, 1995). Similarly,
individuals high in social skills generally achieve
greater success than persons low in such skills in
many occupations (e.g., medicine, law, sales; e.g.,
Wayne et al., 1997), achieve better results in negotiations (e.g., Lewicki et al., 2003), and often (although
not always) attain higher levels of task or job performance (e.g., , Hochwarter et al., 2006, 2007).
Taken together, these findings suggest that individuals high in social skills are able to interact
with others more effectively than persons low in
social skills across a wide range of settings and
contexts This ability, in turn, may often contribute to entrepreneurs’ success in securing essential
resources—both financial and human. For instance,
strong social skills help entrepreneurs to build broad
and informative social networks (e.g., Diener and
Seligman, 2002). Such networks, in turn, are often
an important source of many kinds of valuable
resources (e.g., Nahapiet and Ghosal, 1998). Similarly, several social skills (e.g., social perception,
expressiveness, impression management) have been
found to play a role in persuasion, and effectiveness
in influencing others—venture capitalists, potential
customers, prospective employees—is a valuable
ability for entrepreneurs in many different contexts
(e.g., Baron and Markman, 2000).
While the potential role of social skills in entrepreneurship has been recognized for several years
(e.g., Baron and Markman, 2000), relatively
little empirical data on this issue currently exist.
However, the few studies that have been performed
to investigate this question suggest (e.g., Baron
and Markman, 2003; Baron and Tang, 2007) that
social skills are related to the success of new ventures: the higher entrepreneurs are in such skills, the
greater the financial success attained by their businesses. In addition, and more directly relevant to the
present discussion, the impact of social skills on new
venture performance is mediated by entrepreneurs’
effectiveness in acquiring useful information and
in securing required human and financial resources
Specifically, the higher entrepreneurs are in terms of
several social skills (e.g., social perception, expressiveness, impression management), the more effective they are in obtaining essential resources (both
financial and human; Baron and Tang, 2007). As
shown by previous research (e.g., Shane, 2003),
the more adept entrepreneurs are in obtaining such
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Behavior and Cognitive Factors in Entrepreneurship
resources, the better the financial performance of
their new ventures.
In sum, it appears that entrepreneurs who possess
well-developed social skills gain important advantages over others who are lower on these skills–
advantages that contribute measurably to the success
of their new ventures. To the extent this is so, it seems
useful to take such skills carefully into account in
efforts to acquire full and accurate understanding of
the process of new venture creation.
Social networks, social capital,
and acquiring resources
As noted previously, Another important behavioral
component in the new venture process is entrepreneurs’ social networks—the number and quality of
their social ties to others. To some extent, these
networks are a reflection of entrepreneurs’ social
skills. Research findings indicate that persons high
in social skills generally have broader and higherquality social networks than persons low in such
skills (e.g., Diener and Seligman, 2002). But social
skills are not the only factor that influences entrepreneurs’ social networks. Entrepreneurs’ social
networks are also strongly affected by their social
capital, which is often defined either as (1) the ability
of individuals to extract benefits from their social
structures, networks, and memberships, or (2) these
benefits themselves—the advantages individuals
gain from their relationships with others (Nahapiet
and Ghoshal, 1998).
Social capital itself derives from being known to
others (either directly or indirectly through other
contacts), having a good reputation, and being in
established, continuing relationships with them.
These ties provide individuals with access to a wide
range of both tangible and intangible resources.
Included among the tangible benefits provided by
social ties are financial resources and enhanced
access to potentially valuable information. Included
among less tangible benefits are support, advice, and
encouragement from others, as well as increased
cooperation and trust from them. While the benefits
provided by these latter resources are less readily
measured in economic terms, they are still often
highly valuable to those who obtain them. Thus,
social capital is definitely worth possessing: it is
an asset that often yields beneficial outcomes to the
persons who possess them.
Research findings (e.g., Ozgen and Baron, 2007)
indicate that entrepreneurs often use their social networks as a source of information that contributes to
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recognizing opportunities and acquiring resources.
Moreover, in this regard, they utilize information
provided not only by personal contacts (informal
social networks), but also information gained in professional forums (conventions, meetings), and from
mentors—more experienced individuals who share
their knowledge and wisdom with them. Overall,
the use of such information by entrepreneurs is
closely related to the cognitive frameworks they
have acquired through experience (e.g., schemas),
such that the better developed these frameworks,
the more the entrepreneurs benefit from networkprovided information. This suggests close and continuous interactions between cognitive variables and
ones relating to social networks.
A large body of research evidence indicates that
both social networks and social capital play important roles in the creation of new ventures and in the
success of such businesses once they are launched.
Thus, understanding the behavioral and cognitive foundations of these variables may be useful
in terms of enhancing the breadth and accuracy
of current models of the entrepreneurial process.
Overall, existing evidence suggests that entrepreneurs’ social skills contribute to their social capital,
which then assist them in resource acquisition,
and contributes in important ways to new venture
success. Social skills, in short, may be one important
source of social capiltal, and in this respect, too, may
be worthy of careful research attention.
THE ROLE OF AFFECT IN NEW
VENTURE CREATION
So far, this discussion has focused primarily on
behavioral and cognitive factors—overt actions by
entrepreneurs and various aspects of their cognitive
processes. However, an extensive body of literature
in many fields—several branches of management
as well as in cognitive science and social psychology—suggests that another factor, too, should be
carefully considered. This factor is affect, and refers
to relatively temporary and mild moods or feelings
individuals experience throughout their daily lives
(event-induced or state affect) as well as to more
stable tendencies to experience positive or negative feelings (dispositional affect; Baron, in press;
Forgas, 2000). Although event-induced and dispositional affect stem from different sources, they have
been found to exert similar and parallel effects in
many situations; thus, in this discussion, the terms
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positive affect and negative affect will be used to
refer to such feelings regardless of whether they are
generated by specific events or by stable, underlying propensities toward such reactions. Both eventinduced and dispositional affect are distinguished,
however, from emotions, which involve complex
patterns of subjective cognitive states, physiological reactions, and expressive behaviors (e.g., Zajonc
and McIntosh, 1992)—reactions commonly labeled
with such terms of joy, sorrow, and anger. Emotions
tend to be more intense, longer lasting, and more
general in scope than affective reactions (e.g., they
involve strong physiological responses as well as
subjective cognitive states; Plutchik, 2002). Despite
their relatively mild intensity and short-lived existence, however, even relatively small shifts in
affect—small and temporary fluctuations in current
moods and feelings—have been found to exert powerful effects on both behavior and cognition (e.g.,
Lyubomirsky, King, and Diener, 2005). In view of
this evidence, it seems reasonable to suggest that
affect may also play an important role in new venture
creation. Several lines of reasoning offer support for
this proposal.
First, as noted earlier, the environments in which
entrepreneurs typically operate are often somewhat
chaotic—unpredictable and filled with rapid change.
Events that are unexpected often induce stronger
affective reactions than ones that are merely routine
(e.g., Forgas, 2000). Thus, entrepreneurs—by virtue
of the environments they confront—may be especially likely to experience frequent and relatively
intense changes in current affect (i.e., mood or feelings). Research findings offer indirect support for
these informal observations. For example, several
studies indicate that passion—entrepreneurs’ powerful commitment to their new ventures, a factor
that might predispose them to experience rapid and
intense changes in affect—plays an important role in
the success of these companies (e.g., Baum, Locke,
and Smith, 2001; Baum and Locke, 2004).
Despite these findings and logical grounds for
anticipating that entrepreneurs tend to experience
frequent and relatively intense shifts in affect, there
have been relatively few attempts to systematically
examine the potential role of affect in the entrepreneurial process. This is somewhat surprising for
several reasons. First, the importance of affect has
been increasingly recognized in other branches of
management. Research in organizational behavior
and human resource management, for example, indicates that affect plays an important role in key organiCopyright © 2007 Strategic Management Society
zational processes (e.g., Forgas, 1998, 2000; Weiss,
2002) such as employment interviews (e.g., Burger
and Caldwell, 2000) and performance appraisals
(Cropanzano and Wright, 1999). Specifically, interviewers and managers typically assign higher ratings
to the persons they evaluating when they (i.e., the
raters) are experiencing positive affect than when
they are experiencing negative affect. Further, affect
has also been found to influence the performance of
many work-related tasks, with persons experiencing
positive affect often showing higher performance
than those experiencing negative affect (e.g., Staw
and Barsade, 1993).
Other findings suggest that individuals’ current
moods or feelings also influence a wide range of
behaviors, both in work settings and other contexts
(e.g., Baron, Branscombe, and Byrne, in press).
For instance, affect has been found to strongly
influence willingness to help others (prosocial
behavior and organizational citizenship behavior;
e.g., Podsakoff and MacKenzie, 1997), aggression
(including aggression occurring in work settings;
e.g., Griffin and O’Leary-Kelly, 2004), and cooperation among work team members (e.g., Beersma et
al., 2003). Since high levels of cooperation and trust
among co-founders of new ventures are often important for the success of these ventures (e.g., Chandler,
2007), such direct effects of affect on behavior are
relevant to new venture creation.
It is important to note, however, that while a large
body of existing literature indicates that affect can
influence important processes occurring in organizational contexts, most of this research has been
conducted in large, existing companies rather than
new ventures. This fact raises the following question: Is affect also relevant to events and processes
occurring in new ventures? One reason for suggesting that it is involves, once again, the fact that
the environments in which entrepreneurs function
are often ones that change rapidly and are replete
with unpredictable events and outcomes (e.g.,
Lichtenstein, Dooley, and Lumpkin, 2006).
Research on the influence of affect suggests that it
is most likely to exert powerful effects on cognition and overt behavior in situations of precisely
this type—ones in which individuals cannot follow
well-rehearsed ‘scripts’ or clearly established rules
concerning behavioral options. In such situations,
affect can readily tip the balance toward specific
actions or decisions—effects it might not produce
in environments that are more certain and predictable (e.g., Forgas, 2000). In sum, because of the
Strat. Entrepreneurship J., 1: 167–182 (2007)
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Behavior and Cognitive Factors in Entrepreneurship
environments in which they operate, entrepreneurs
may be especially likely to experience rapid and
intense shifts in affect. Moreover, the unpredictable,
‘unscripted’ environments they confront are ones in
which shifts in affect are likely to produce especially
strong effects. The potential nature of such effects,
and their relevance to the process of new venture
creation, are now considered.
Specific influences of affect on the
entrepreneurial process
Given the very broad and pervasive influence of
affect across a wide range of contexts, it seems reasonable to suggest that it may also play an important
role in new venture creation. Consistent with previous findings concerning the influence of affect, such
effects may vary greatly in nature, being positive in
some respects but negative in others (e.g., Baron,
2008).
Potentially beneficial effects of affect
Examination of pertinent literature (e.g.,
Lyubomirsky et al., 2005) suggests that affect may
exert several beneficial effects on new venture creation. First, consider idea generation and opportunity
recognition. Research findings indicate that in many
instances, high levels of positive affect (either eventinduced or disposition) encourage cognitive flexibility and creativity (e.g., Staw, Sutton, and Pelled,
1994). More specifically, positive affect enhances
individuals’ ability to think in original and creative
ways. Such thinking can, of course, facilitate idea
generation. Moreover, there is growing evidence
that such thinking plays an important role in opportunity recognition. For instance Ward (2004) suggests that new products or services often derive from
the expansion or combination of existing concepts.
Similarly, as noted earlier, the process of pattern recognition may play an important role in the process of
recognizing new business opportunities (e.g., Baron,
2006a, b). Recognizing such patterns, in turn, often
involves thinking flexibly and the kind of expansion
or combination of concepts described earlier (Ward,
2004). Thus, to the extent positive affect enhances
such modes of thought, it may facilitate both idea
generation and opportunity recognition.
Another potentially beneficial influence of affect
on new venture creation involves the task of acquiring essential financial and human resources. Affect
(and especially positive affect) can have important beneficial effects with respect to this task.
Copyright © 2007 Strategic Management Society
175
Enthusiasm, marketing experts generally agree,
‘Sells.’ To the extent entrepreneurs are enthusiastic—which implies experiencing and expressing
positive affect—they are also likely to be persuasive.
Moreover, growing evidence suggests that affective
reactions are contagious—they tend to spread from
one individual to another (e.g., Hatfield, Cacioppo,
and Rapson, 1994). Thus, entrepreneurs who are
enthusiastic and positive about their ideas and new
ventures tend to be highly persuasive when making
presentations to potential investors, customers, or
employees. In this respect, strong positive affective
reactions can be beneficial.
A third way in which affect can play a beneficial role in entrepreneurship involves the process of
decision making–a process not examined in detail
in this discussion, but one that certainly plays a
key role throughout the new venture creation. Often,
entrepreneurs must perform this task under conditions of uncertainty and high time pressure. Affect
may be directly relevant to decision making because
it strongly influences the decision-making strategies
individuals adopt. High levels of positive affect seem
to tip the balance towards satisficing, a strategy in
which the first acceptable alternative is chosen. This
permits persons using this strategy to make decisions
both quickly and efficiently. In contrast, negative
affect seems to tip the balance toward maximizing—a strategy involving exhaustive examination of
all available alternatives in order to choose the best.
While maximizing often yields superior choices
(e.g., Iyengar, Wells, and Schwartzl, 2006), it is an
approach to decisions that may not be practical for
entrepreneurs, who must often make decisions under
stringent time constraints. Thus, overall, satisficing
may be a more useful strategy for entrepreneurs to
follow (although, as noted below, this is certainly
not always true). Positive affect may also encourage entrepreneurs to adopt other efficient strategies
for decision-making in which, for instance, they do
not review information they have already considered
and largely ignore information that is unimportant or
irrelevant (Isen and Means, 1983). Finally, individuals experiencing positive affect often show greater
flexibility in their approach to solving various problems and in their thinking generally (Frederickson,
2001).
In addition to these positive effects, all produced
through the impact of affective states on cognition,
affect can also influence important aspects of entrepreneurs’ behavior. For instance, positive affect
has been found to encourage helpful, cooperative
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176
R. A. Baron
actions—behaviors useful to entrepreneurs in establishing good relations with co-founders, employees,
venture capitalists, potential customers, and others.
In contrast, negative affect reduces such reactions
and may, in fact, encourage anger, intransigence,
and overt aggression—reactions that can interfere
with entrepreneurs’ efforts to establish broad and
helpful social networks. Thus, affect can influence
key aspects of new venture creation through its relatively direct effects on entrepreneurs’ behavior as
well as through its effects on cognitive processes.
Potentially negative effects of affect
Offsetting these potentially beneficial effects are
others in which affect may exert a negative impact
on new venture creation. First, it has often been suggested that entrepreneurs—especially novice entrepreneurs—tend to ‘fall in love’ with their own ideas
for new products or services (e.g., Baron and Ensley,
2006). In other words, they have such strong positive
feelings concerning these ideas, that they lose the
capacity to evaluate them carefully. These informal
observations suggest that affective reactions—especially when they are intense—can have detrimental
effects both on opportunity recognition and on the
preliminary feasibility analysis that often follows
such recognition (e.g., Ardichvili, Cardozo, and
Ray, 2003). Specifically, strong affective reactions
can lead entrepreneurs to prematurely accept, or
prematurely reject, potential business opportunities.
Positive affect may lead to premature acceptance
because entrepreneurs, using their own affective
states as a source of information, conclude that if
they react positively to an identified opportunity,
‘it must be very good.’ This may result in a premature closure of the search for suitable opportunities
(‘Why look further when something so outstanding
has already been identified?’). Since active search
has been found to be an important component of
successful opportunity recognition (e.g., Fiet et al.,
2004), this can have negative implications for entrepreneurs and their new ventures.
Conversely, strong negative affect in response to
potential business opportunities may lead entrepreneurs to reject these opportunities prematurely, in
the absence of careful feasibility analysis. In short,
strong affective reactions to ideas for new products or services may impede more careful and rational processes for choosing among these potential
opportunities.
Another way in which affect can have negative
implications for entrepreneurs and the entrepreneurCopyright © 2007 Strategic Management Society
ial process involves acceptance of high levels of risk.
While existing evidence concerning the question of
whether entrepreneurs are more or less accepting of
risk than other persons remains mixed (e.g., Miner
and Raju, 2004; Stewart and Roth, 2001), it seems
clear that acceptance of very high levels of risk
can often prove detrimental to the success of new
ventures. Affect enters the picture because research
findings indicate that positive affect often increases
individuals’ willingness to accept high levels of
risk (e.g., Forgas, 2000). Feeling happy leads individuals to also feel ‘lucky’ or relatively immune to
dangers and potential problems, and this encourages
relatively high-risk behaviors and actions. In short,
to the extent positive affect infuses entrepreneurs’
judgments and decisions, it may lead them to select
high-risk strategies or actions, with potentially devastating consequences for their new ventures.
Conversely, high levels of negative affect might
have the opposite effect, directing entrepreneurs
away from even moderate levels of risk and into
‘totally safe’ paths and strategies. Negative affect
is often a signal to the persons experiencing it that
something is seriously wrong or that the current situation poses considerable danger (e.g., Lyubomirsky
et al., 2005). To the extent such reactions occur,
they may lead entrepreneurs to reject opportunities
that are actually quite promising—to perceive such
opportunities, in the language of signal detection
theory (e.g., McMullen and Shepherd, 2006), as
‘false alarms’ when in fact, they are actually ‘hits’—
bona fide opportunities worth pursuing.
A third way in which affect can have negative
implications for entrepreneurs involves its impact on
various cognitive biases. A substantial body of evidence suggests that such biases are often strengthened, in their impact, by strong affective states. For
instance, high levels of positive affect have been
found to enhance the optimistic bias—a tendency to
expect positive outcomes and events (e.g., Busenitz
and Barney, 1997; Simon, Houghton, and Aquino,
2000). Further, positive affect also increases the
tendency to fall prey to the planning fallacy, an
offshoot of the optimistic bias. The planning fallacy
involves tendencies by individuals to assume that
they can accomplish more than they actually can
during a specific period of time, or that they can
complete tasks sooner than is actually feasible (e.g.,
Buehler, Griffin, and McDonald, 1997). When
experiencing positive affect, individuals are especially likely to show such tendencies, and this can
be potentially damaging both for entrepreneurs and
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Behavior and Cognitive Factors in Entrepreneurship
their new ventures. Overly optimistic predictions
about how rapidly and efficiently various tasks can
be accomplished may lead to situations in which, for
instance, new product development or the preparation of marketing or financial plans takes far longer
than anticipated, thus generating disappointment and
annoyance among investors, customers, and other
stakeholders.
Conversely, negative affect may induce other
forms of cognitive bias with different detrimental
implications. For instance, strong negative affect
may strengthen the negativity bias—a tendency to
overestimate the importance of negative information regarding some action or event (e.g., Kunda,
1999). To the extent such tendencies occur, entrepreneurs may, again, fail to exploit viable opportunities because the powerful impact of cognitive biases
distorts their evaluations of these opportunities.
Finally, research findings indicate that affect can
strongly influence memory. In general, individuals tend to remember information consistent with
their present moods or feelings. This tendency, too,
can pose a potential danger to entrepreneurs. When
experiencing positive affect, entrepreneurs tend
to recall positive information offering support for
specific courses of action, even if these actions are
not actually justified. Similarly, when experiencing
negative affect, they tend to recall negative information that may deter them from pursuing potentially
valuable courses of action. In other words, affect
may bias entrepreneurs’ recall of information in
ways that add error or ‘noise’ to their judgments or
decisions. These effects can play an important role
in opportunity recognition, since effective pattern
recognition (which may be one important foundation
of opportunity identification), involves processing
information previously stored in memory so as to
notice links or connections between this information
(e.g., Matlin, 2004).
It should also be noted that affect can negatively
impact the new venture creation process not merely
through its influence on cognitive processes, but also
through its more direct effects on a wide range of
overt behaviors, actions ranging from helpfulness
and cooperation on the one hand, through anger,
inflexibility, and overt aggression on the other. Such
effects, too, are worthy of careful consideration.
Links between affect and cognition:
evidence from neuroeconomics
While a wealth of research findings offer support for
the strong influence of affect on cognition, some of
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177
the most dramatic findings in this respect have been
reported by the new field of neuroeconomics, This
field draws upon the research methods and theoretical frameworks of neuroscience, cognitive science,
and economics, in an effort to understand the potential role of affect in decision making and other cognitive processes closely related to economic activity
(e.g., Cohen, 2005; Willingham and Dunn, 2003). A
key finding of research in this field is that two distinct systems for processing information exist within
the human brain (e.g., Cohen, 2005). One system
is concerned with what might be termed ‘reason’
(or logical thought) while the other deals primarily
with affect or emotion. Growing evidence suggests
that these two systems interact in complex ways
during problem solving, decision-making, and other
important cognitive processes. This interaction is
compellingly illustrated by research employing what
is known as the ‘ultimatum’ paradigm (e.g., Sanfey
et al., 2003).
In this situation, two persons are told that they can
divide a given sum (e.g., $10) between them. One
can suggest an initial division and the second can
accept or reject it. Since any division provides the
second person with positive payoffs, total rationality
suggests that this individual should accept any division offered; doing so will result in tangible gains. In
fact, however, most people reject divisions that offer
them less than $3, and many reject divisions that
offer them less than $5 (half the sum to be divided
between the two players). MRI scans reveal that
when individuals receive offers they view as unfair,
brain regions related both to reasoning (e.g., the
dorsolateral prefontal cortex) and to emotion (e.g.,
the limbic system) are activated. However—and this
is the crucial finding—the greater the amount of
activity in emotion-processing regions of the brain,
the greater the likelihood that individuals will reject
the offers—act in ways that are, in a sense, contrary
to their own economic interests (e.g., Sanfey et al.,
2003). These findings, and those of related research,
suggest that affect and cognition interact at very
basic levels within the brain. Further, it appears
that affect can sometimes outweigh rational considerations in decision making and other cognitive
processes (e.g., Cohen, 2005). In the light of such
findings, it seems essential that affect be included as
a variable of interest in ongoing research concerning the nature of complex processes through which
new ventures are conceived, launched, and become
profitable operating companies (e.g., Mitchell et al.,
2007).
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R. A. Baron
DISCUSSION, CONCLUSIONS,
AND DIRECTIONS FOR
FUTURE RESEARCH
A basic theme of this paper has been that because
entrepreneurs constitute the active element in new
venture creation, knowledge concerning relevant
aspects of their behavior and cognition can add
appreciably to our understanding of this complex
process. This suggestion, in itself, is far from new.
Researchers in the field of entrepreneurship have
devoted growing attention to investigating aspects
of entrepreneurs’ behavior and thought, as well as
other characteristics they possess or demonstrate
(e.g., Busenitz and Arthurs, 2006; Ling, Zhao, and
Baron, 2008; Mitchell, et al., 2007; Zhao, Seibert,
and Hills, 2005).
To date, however, many of the issues and topics
discussed in earlier sections of this paper have
received relatively little empirical attention. For
instance, no research known to the present author
has been conducted to examine the role of concepts
and other cognitive frameworks in the generation of
ideas for new products or services, although such
research is a logical extension of basic investigations
of creativity in cognitive science. Similarly, research
on the role of pattern recognition in the identification
of business opportunities has only just begun (e.g.,
Baron and Ensley, 2006), and much remains to be
done in order to determine the role of this basic
cognitive-perceptual process in opportunity recognition and new venture creation. Perhaps more surprisingly, we do not yet have a clear understanding of
the concept of entrepreneurial alertness, despite the
fact that it is included in many theoretical frameworks of entrepreneurship and in much ongoing
research (e.g., Kirzner, 1985).
What, specifically, does such ‘alertness’ involve?
As noted earlier, one possibility is that it can be
understood in terms of the cognitive frameworks
developed by individual entrepreneurs—frameworks
for storing and processing information relating to
industries, technologies, and many other factors;
the broader these frameworks, the more useful they
may be to entrepreneurs from the point of view of
helping them ‘connect the dots’ between seemingly
unrelated events or trends, and hence identifying
newly emerging opportunities. On the other hand,
alertness could also involve other aspects of perception: how broadly and efficiently individuals scan
the external world, where they set their criteria for
identifying ‘signal’ versus ‘noise’ (e.g., McMullen
Copyright © 2007 Strategic Management Society
and Shepherd, 2006), and the specific techniques
they use for processing various kinds of information.
Understanding the cognitive and behavioral foundations of entrepreneurial alertness appears to be a
crucial task, since this concept features prominently
in many extant theories and is included in much
ongoing research.
Additional avenues for future research are suggested by the fact research in cognitive science has
focused increasingly on the processing of information
that occurs below the level of conscious awareness
(e.g., Dijksterhuis and Nordgren, 2006)—processing
that occurs, but can’t be readily described or reported
by the individuals involved. This is often termed
automatic processing, a label reflecting the fact that
such processing, in contrast to careful, conscious
controlled processing, tends to be fast and relatively
effortless, in nature. The term ‘intuition’ is relevant
here, for it is often used in descriptions of decision
making by entrepreneurs and VCs. Researchers in
the field of cognitive science generally define intuition as a special kind of ‘off-line processing’—
information processing that occurs, and produces
measurable results, but that is often not open to
inspection by the persons who engage in it. Many
ingenious methods have been devised to investigate
such processing (e.g., Myers, 2002), but perhaps the
most revealing are those based on the methods of
neuroscience, including scans of activity in various
regions of the brain as individuals perform a wide
range of activities. Research using such methods
indicates that we possess two distinct neural systems
for processing social information—one that operates
in an automatic manner and another that operates
in a systematic and controlled manner. Moreover,
these two systems appear to be centered in different
regions of the brain (e.g., Cunningham et al., 2003;
Duncan and Owen, 2000).
Overall, the results of many studies employing
neuroscience methodology indicate that the distinction between automatic and controlled processing is
both real and basic. Because automatic processing
(e.g., intuitive judgments and decisions by entrepreneurs, VCs, and others) is often assumed to
play a role in key aspects of new venture creation,
it may prove useful to include this distinction in
future research on the cognitive foundations of new
venture creation.
Finally, as noted earlier, future research should
carefully examine the potential role of affect in key
aspects of new venture creation. Affect has been found
to exert powerful and pervasive effects on many cogStrat. Entrepreneurship J., 1: 167–182 (2007)
DOI: 10.1002/sej
Behavior and Cognitive Factors in Entrepreneurship
nitive processes and many aspects of behavior across
a wide range of situations (e.g., Forgas, 2000; Weiss,
2002). Thus, examining its effects with respect to idea
generation, opportunity recognition (or creation), and
resource attainment may yield valuable new insights
into the basic foundations of these activities. In this
respect, it seems useful to briefly consider one additional point relating to the overall role of affect in
human behavior and cognition—the suggestion that
affect (and especially positive affect), may constitute
an important strength or resource for entrepreneurs.
This perspective, which has emerged very recently in
several different fields (e.g., organizational behavior,
industrial/organizational psychology), fully recognizes that affect can be a source of error or bias in
many contexts—a factor that interferes with accuracy
and rationality in organizational processes such as
job interviews, performance appraisal, and in many
cognitive processes, such as decision-making (e.g.,
George and Brief, 1992; Weiss, 2002). However, it
also calls attention to potential benefits that derive
from the propensity to experience positive affect
often and in many different contexts. An extensive
body of research findings (reviewed in detail by
Lyubomirsky et al., 2005), indicate there may be
a direct causal link between experiencing positive
affect frequently and attaining successful outcomes
in many life domains—work and careers, personal
relationships, and even individual health. In other
words, a tendency to experience positive affect may
contribute to, rather than be a result of, favorable
life outcomes. One explanation for this relationship
(Lyubormirsky et al., 2005) is as follows: Positive
affect is interpreted by the persons who experience it
as a sign that ‘all is going well,’ and that current situations pose no threat or danger. As a result, people who
experience positive affect frequently are, as Lyubomirsky et al. (2005: 804) put it: ‘. . . ideally situated to broaden and build—to expand their resources
and friendships; . . . to build their repertoires of skills
for future use . . . or to rest and relax and to rebuild
their energy . . .’ In other words, the positive affect
experienced by these persons helps them to acquire
essential ingredients from which success is often constructed—specific task-related skills, social support,
extensive social networks, positive perceptions of
themselves and others (e.g., high self-esteem and
high self-efficacy), high likableness, effective means
of dealing with stress, and successful strategies for
resolving conflict with others. With these and other
tools at their disposal, they go on to attain success in
many domains of life.
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When this framework is extended to the field of
entrepreneurship, an intriguing possibility emerges:
perhaps the propensity to experience positive affect
often and across a wide range of situations contributes to entrepreneurs’ human and social capital—the
broad range of skills, knowledge, and capacities they
bring to their new ventures, and the number and
quality of relationships they have with others both
within the outside the new venture (e.g., Baron,
2005; Davidsson and Honig, 2003). This possibility, in turn, appears to have important implications
for the field of entrepreneurship. In particular, they
suggest that the optimism, enthusiasm, passion, and
energy that are the hallmarks of many entrepreneurs
(e.g., Simon et al., 2000) may provide them with
an important asset—one that assists them in performing many of the activities required for
launching and operating new ventures. Positive
affect can indeed yield detrimental outcomes in
some instances (e.g., it can induce entrepreneurs
to prematurely terminate their active search for
opportunities and can direct them toward excessive
levels of optimism and risk; e.g., Stewart and Roth,
2001). At the same time, however, it also confers
many important benefits, helping entrepreneurs to
expand their skills, knowledge, and social contacts
(e.g., Wright and Staw, 1999). In addition, it may
contribute to their personal health, (e.g., Sanfey
et al., 2003); and robust good health appears
to be one essential requirement for successfully
launching new ventures.
This reasoning, in turn, suggests further theoretical possibilities that can readily be investigated in
future research. Specifically, it suggests that one
difference between highly successful and less successful entrepreneurs may involve contrasting abilities to regulate one’s own positive affect—to reap
the benefits of such feelings while reigning them in
sufficiently to avoid the potential dangers they pose.
In other words, highly successful entrepreneurs
may possess or develop superior self-regulatory
and metacognitive mechanism (e.g., Ericsson et al.,
2006)—mechanisms that help them to monitor, regulate, and enhance their own performance, and that
provide them with increased awareness of their own
cognitive strengths and limitations (Kanfer, 1990;
Zimmerman, 2006). Together, such self-regulatory
and metacognitive skills may assist those entrepreneurs who acquire them to effectively regulate their
own affective reactions, and hence to maximize
the benefits of positive affect while minimizing its
potential costs. Although no direct evidence currently
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R. A. Baron
exists for these suggestions, they are consistent with
an extensive body of basic research suggesting that
self-regulatory and metacognitive skills are helpful
to individuals in many contexts—and especially in
adjusting to the kind of complex and rapidly changing environments entrepreneurs frequently face (e.g.,
Zimmerman, 2006).
In sum, it is suggested that entrepreneurship
researchers may benefit greatly from broadening
their working definition of ‘behavioral and cognitive’
factors. By doing so, they can tap into a large store of
information about such factors already acquired by
other fields and—more importantly—use this information and the concepts and theories it provides
to help answer questions about key aspects of the
new venture process. Crossing boundaries between
disciplines is always difficult, so the effort involved
will, necessarily, be high. But the rewards, too, may
be great and may contribute significantly to overall
understanding of the complex process through
which, to paraphrase a quotation cited earlier, entrepreneurs create or ‘make visible’ something that,
without them—the active principle in entrepreneurship—might truly ‘never have been.’
ACKNOWLEDGEMENTS
The author wishes to express his sincere appreciation to
Harry Sapienza, Lowell Busenitz, and Jaume Villanueva
for their invaluable comments and suggestions on earlier
versions of this paper—comments that helped improve
the paper in many different ways.
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