Emotions and Opportunities: The Interplay of Opportunity Evaluation, Fear, Joy, and Anger as Antecedent of Entrepreneurial Exploitation

Abstract

This research examines the interplay of opportunity evaluation and emotions as determinants of entrepreneurial exploitation using affect-as-information theory and the affective processing principle as conceptual bases. Three central assumptions are confirmed across two studies. The first is that the effects of opportunity characteristics on exploitation are mediated by evaluation. The second is that emotions influence exploitation decisions in addition to evaluation. Fear reduces exploitation, whereas joy and anger increase it. The third is that fear, joy, and anger influence evaluation’s effect on exploitation with higher levels of fear reducing and higher levels of joy and anger increasing the positive impact of evaluation on exploitation.

Full text

etap_481 1..28
Emotions and
Opportunities:
The Interplay of
Opportunity Evaluation,
Fear, Joy, and Anger
as Antecedent of
Entrepreneurial
Exploitation
Isabell M. Welpe
Matthias Spörrle
Dietmar Grichnik
Theresa Michl
David B. Audretsch
This research examines the interplay of opportunity evaluation and emotions as determi-
nants of entrepreneurial exploitation using affect-as-information theory and the affective
processing principle as conceptual bases. Three central assumptions are confirmed across
two studies. The first is that the effects of opportunity characteristics on exploitation are
mediated by evaluation. The second is that emotions influence exploitation decisions in
addition to evaluation. Fear reduces exploitation, whereas joy and anger increase it. The
third is that fear, joy, and anger influence evaluation’s effect on exploitation with higher
levels of fear reducing and higher levels of joy and anger increasing the positive impact of
evaluation on exploitation.
Introduction
Understanding entrepreneurial opportunity exploitation is an important and fre-
quently investigated research issue with individual and economic relevance (e.g., Baron,
2004; Shane, 2000). A widely accepted framework for understanding entrepreneurial
Please send correspondence to: Theresa Michl, tel.: +49-89-2180-3862; e-mail: michl@lmu.de, to Isabell M.
Welpe at welpe@wi.tum.de, to Matthias Spörrle at matthias.spoerrle@fham.de, to Dietmar Grichnik at
dietmar.grichnik@unisg.ch, and to David B. Audretsch at daudrets@indiana.edu.
P
T
E
&
1042-2587
© 2011 Baylor University
1September, 2011
DOI: 10.1111/j.1540-6520.2011.00481.x

activity (cf. Endres & Woods, 2006; Goss, 2007; Markman & Baron, 2003) is the
individual-opportunity nexus paradigm (Shane, 2003, p. 9), which states that entrepre-
neurship is primarily about (1) the opportunity’s characteristics and (2) an individual’s
opportunity evaluation and exploitation (Shane & Venkataraman, 2000).
In this regard, examining the individual’s inner processes seems particularly impor-
tant as previous research, along with real-life observations, tells us that potential entre-
preneurs differ substantially in their tendency to pursue the same opportunity. Thus,
because opportunity characteristics are not sufficient per se to adequately predict entre-
preneurial exploitation, scientific attention should also be directed to the cognitive and
emotional processes of individuals confronted with entrepreneurial opportunities. Inter-
estingly, little is known about the exact cognitive and emotional1intraperson processes
and their interplay by which individuals decide to exploit entrepreneurial opportunities.
Hence, we conduct two studies addressing this research gap.
Empirical examinations of emotions’ influence on entrepreneurial decisions only
captured the interest of scholars midway through the first decade of the twenty-first century
(e.g., Brundin, Patzelt, & Shepherd, 2008; Chen, Yao, & Kotha, 2009; Foo, 2009; Foo, Uy,
& Baron, 2009; Shepherd, Wiklund, & Haynie, 2009). Consistent with this new approach
and on the basis of the affect-as-information theory (cf. Clore & Huntsinger, 2007) and the
affective processing principle (cf. Clore & Huntsinger, 2009), we simultaneously examine
the direct influence of emotions and their interactions with the cognitive evaluation of the
opportunity (cf. Grichnik, Smeja, & Welpe, 2010; Michl, Welpe, Spörrle, & Picot, 2009;
Tumasjan, Welpe, & Spörrle, 2011) on entrepreneurial opportunity exploitation.
The affect-as-information hypothesis assumes that “affective cues of mood and
emotion influence judgments directly by serving as experiential and bodily information
regarding how one feels about the object of judgment” (Schwarz & Clore, 2007, p. 393).
Based on this approach, we hypothesize that emotions, in addition to the characteristics of
an experimentally induced opportunity and cognitive evaluation, directly influence an
individual’s exploitation tendencies.
Moreover, according to the affective processing principle, emotions influence the
impact of cognitively processed information on subsequent behavioral tendencies. More
precisely, within the pre-exploitation processes, emotions shape the impact of the cogni-
tive evaluation of the opportunity on the tendency to exploit it. Thus, in addition to the
direct impact of emotions that is based on the affect-as-information theory, we hypoth-
esize a moderating effect of emotions on the association between entrepreneurial evalu-
ation and exploitation.
These direct effects and the moderating effects of emotions are effective within the
pre-exploitation process that has received substantially less empirical attention than
the processes after it (Shane & Venkataraman, 2000). Therefore, we develop a pre-
exploitation process model under which the influence of objective opportunity character-
istics on exploitation tendencies is mediated by the individual’s cognitive evaluation of the
1. There is no interdisciplinary accepted definition of emotion, but Meyer and colleagues provide a compre-
hensive working definition which we follow in this study. They regard emotions as a person’s current
psychological states. These states have a certain quality, intensity, and duration and are usually focused on a
target. Normally, the experience of the emotion is characteristic for the person in this state, and it often concurs
with certain physiological changes and behaviors. The difference between the terms emotion, affect, and mood
is not clear (Meyer, Schützwohl, & Reisenzein, 2001). Generally, moods are more global and more diffuse,
last longer, and are less intensive than emotions and do not necessarily result from a specific cause or stimulus
(Barsade & Gibson, 2007). Affect is considered to be superior to emotions and moods, but in the literature,
affect and emotion are often used synonymously (Meyer et al., 2001).
2ENTREPRENEURSHIP THEORY and PRACTICE

given opportunity. Further, we integrate both the direct and moderating influences of
emotions on subsequent exploitation tendencies within this model. To the best of our
knowledge, this research is the first to comprehensively examine the combined direct and
moderating effects of separate emotions on exploitation tendencies within a pre-
exploitation process model linking opportunity characteristics with exploitation tenden-
cies via cognitive evaluation. Such an approach is of crucial importance to the field of
entrepreneurship research as it allows for a comprehensive analysis of the interplay
between (1) the opportunity characteristics; (2) the cognitive evaluation of the opportu-
nity; (3) the direct effects of emotions; and (4) the moderating effects of emotions when
predicting entrepreneurial exploitation.
Based on our review of the opportunity characteristics, the affect-as-information
theory and the affective processing principle, we derive a theoretical framework and
propose specific hypotheses for two studies regarding the direct and moderating effects of
emotions in the relationship between entrepreneurial opportunities and exploitation ten-
dencies in the next section. This section is followed by an explanation of the research
methods and the results obtained for both studies. The paper concludes with a discussion
of the findings and a summary of the study’s contributions to the field.
Theoretical Foundations and Hypotheses
Characteristics of Entrepreneurial Opportunities
Shane and Venkataraman (2000) propose that the answers to the questions why, when,
and how people exploit an opportunity lie in the characteristics of the opportunity. Many
aspects of an entrepreneurial opportunity have the potential to increase or reduce the
probability that a potential entrepreneur will exploit it. In the existing literature, four
characteristics of entrepreneurial opportunities are consistently associated with opportu-
nity exploitation:
First, the probability of success plays a central role in the decision process whether or
not to exploit an opportunity. A high probability of success increases the likelihood of
engaging in entrepreneurial activity (e.g., Forlani & Mullins, 2000). Moreover, a high
probability that the investment can be harvested successfully encourages the decision to
exploit an opportunity (MacMillan, Siegel, & SubbaNarasimha, 1985). Correspondingly,
numerous studies show that lower probabilities of potential financial loss and lower levels
of perceived risk are crucial for the decision to exploit an entrepreneurial opportunity
(Keh, Foo, & Lim, 2002; McNamara & Bromiley, 1997; Palich & Bagby, 1995; Simon,
Houghton, & Aquino, 2000).
Second, potential entrepreneurs must be convinced that engaging in entrepreneurial
activity will be profitable enough to compensate for their opportunity costs, i.e., what they
lose when starting a business because they give up the alternatives (Busenitz & Barney,
1997; Shane, 2003, pp. 150–152). In other words, all potential entrepreneurs involved in
the decision whether to exploit the entrepreneurial opportunity or not weigh the value of
the opportunity with the costs to generate that value and with the costs to generate that
value in other ways (Amit, Mueller, & Cockburn, 1995; Shane & Venkataraman, 2000).
Previous research showed that the transferability of information from the prior experience
to the opportunity (Cooper, Woo, & Dunkelberg, 1989; Shane, 2000) and prior entrepre-
neurial experience (Carroll & Mosakowski, 1987) increase the probability of exploiting an
entrepreneurial opportunity because learning reduces the opportunity cost and, thus,
increases profits. “For most entrepreneurs, opportunity exploitation is a necessary step to
generate revenues and thus create a successful business (Block & MacMillan, 1985;
3September, 2011

Schoonhoven, Eisenhardt, & Lyman, 1990)” (Choi, Lévesque & Shepherd, 2008, p. 335).
Consequently, an entrepreneurial opportunity is more likely to be exploited if expected
profits are high (Companys & McMullen, 2007; Dunne, Roberts, & Samuelson, 1989;
Shane & Venkataraman, 2000).
In sum, the better these two opportunity characteristics, high chances of success and
high profit, the higher the opportunity evaluation, i.e., the subjective mental valuation of
the opportunity based on the individual appraisal of its opportunity characteristics. The
evaluation criteria used by entrepreneurs reflect values that influence expectations of the
venture, personal goals, and effort exerted (e.g., Kanfer, 1990). Thus, we assume a positive
association between cognitive evaluation and subsequent more behavior-oriented exploi-
tation tendencies. Hence, entrepreneurial evaluation should have direct effects on entre-
preneurial exploitation (Sarason, Dean, & Dillard, 2006; Shane & Venkataraman, 2000).
To sum up, the literature provides compelling evidence that opportunity characteris-
tics are associated with entrepreneurial evaluation and exploitation. Moreover, evaluation
is shown to be a direct antecedent of exploitation. Hence, we hypothesize a mediation
model in which two opportunity characteristics determine the evaluation of this opportu-
nity that, in turn, influences the exploitation tendency.
Hypothesis 1a: The positive association between probability of success and the
tendency to exploit this entrepreneurial opportunity is mediated by evaluation.
Hypothesis 1b: The positive association between profit and the tendency to exploit
this entrepreneurial opportunity is mediated by evaluation.
In addition to these two opportunity characteristics, i.e., probability of success and
profit, we examine two other opportunity characteristics, i.e., personal investment and
time to profit, that are less frequently mentioned in literature, but, nevertheless, are
considered important for exploitation tendencies.
Personal investment is a third central aspect when evaluating entrepreneurial oppor-
tunities as entrepreneurs include “the ratio of investment size to total assets in their
evaluation processes (Busenitz & Barney, 1997)” (Michl et al., 2009, p. 180). Shane and
Venkataraman (2000) outline that entrepreneurial opportunities with low capital costs are
more likely to be exploited. Studies by Evans and Leighton (1989) and Timmons (1997)
show that individuals are more likely to exploit an entrepreneurial opportunity when the
availability of financial capital is higher. In addition, acquiring capital has been described
as one of the most frustrating and difficult challenges faced by new ventures (cf. Shepherd,
1999; Van Auken, 2004).
Fourth, the time to profit is critical when evaluating entrepreneurial opportunities as
entrepreneurs are shown to focus on the expected break-even point when profits will be
realized (Busenitz & Barney, 1997). The earlier the break-even point is expected, the more
likely the opportunity will be exploited (Timmons, 1997). Correspondingly, the later the
break-even point is expected, the less likely it is that an entrepreneur will be willing and
capable to sustained intense effort (MacMillan et al., 1985). Thus, an increased time to
profit should reduce an individual’s opportunity exploitation tendencies.
In sum, the better these two opportunity characteristics, i.e., low personal investment
and short time to profit, the higher the opportunity evaluation. Hence, we state a mediation
model in which these two opportunity characteristics determine the evaluation of this
opportunity which, in turn, influences the individual exploitation tendency.
Hypothesis 1c: The negative association between personal investment and the ten-
dency to exploit this entrepreneurial opportunity is mediated by evaluation.
4ENTREPRENEURSHIP THEORY and PRACTICE

Hypothesis 1d: The negative association between time to profit and the tendency to
exploit this entrepreneurial opportunity is mediated by evaluation.
Affect-as-Information Theory
Within the affect-as-information theory (Clore, Gasper, & Garvin, 2001), emotions
reflect an underlying appraisal (e.g., Ellsworth & Scherer, 2003; Ortony, Clore, &
Collings, 1988) and evaluation of a specific object which in this case is the given
opportunity. Thus, emotions provide the person experiencing these emotions with com-
pelling information about the personal value assigned to the object (cf. Schwarz, 1990,
2001). This information influences the individual’s reactions toward this object. Note that
this influence is assumed to operate independently from the effects of accompanying
cognitions as emotions serve as the provider of distinct information. Therefore, we
hypothesize that potential entrepreneurs’ opportunity-related emotions should directly
affect their decision whether or not to exploit the opportunity, which is distinct from the
influence of the cognitive evaluation of the opportunity.
The direction of this hypothesized direct and incremental effect of emotions on the
opportunity exploitation depends on the motivational tendency of the emotion: Previous
research strongly suggests that fear as an avoidance-oriented emotion indicates threat
(cf. Gray, 1987, p. 27; Krause, 2004; Lazarus, Kanner, & Folkman, 1980) and should,
therefore, decrease exploitation tendencies. Higgins (2005) and Brockner, Higgins, and
Low (2004) refer to this as prevention focus. This is consistent with the findings of Foo
(2009) and Lerner and Keltner (2001) who show that fear is associated with higher risk
perception, thus, indicating that fear might result in decreased founding tendencies.
In this research, we choose fear as the typical negative emotion, which, unlike, for
example, guilt or sadness, is operative even when an event is anticipated, and which closely
corresponds to the examined situation of deciding whether or not to exploit an opportunity,
i.e., the pre-exploitation phase. In sum, we hypothesize a direct effect of fear on the
tendency to exploit entrepreneurial opportunities in the following. Note that we assume that
this direct effect of fear becomes operative not only independently from the experimentally
induced opportunity characteristics and the cognitive evaluation of the opportunity but also
independent from other emotions, thus, hypothesizing a distinct predictive value of fear.
Hypothesis 2a: Fear negatively predicts the tendency to exploit an entrepreneurial
opportunity.
Moreover, we hypothesize another direction of the direct effect of emotions on the
opportunity exploitation depending on the motivational tendency of the emotion: Joy as an
approach-oriented emotion (cf. Baron, 2000; Brundin et al., 2008; Lyubomirsky, Kennon,
& Schkade, 2005; Weiss, 2002) should lead to increased exploitation tendencies. This
assumption is further corroborated by emotion research indicating that one of the func-
tions of positive feelings such as joy is to detect new chances and opportunities (see for
review: Carver, 2003).
However, the motivational tendency of the emotion is not necessarily identical with its
valence: For instance, anger is a negatively valenced emotion such as fear but is consid-
ered an approach-related emotion such as joy (Carver & Harmon-Jones, 2009; Harmon-
Jones, 2003). Thus, anger, like joy, should have a positive effect on exploitation
tendencies. This assumption is supported by findings of Foo (2009) and Lerner and
Keltner (2000, 2001) who show that anger is significantly related with lower risk percep-
tion and more optimistic judgments, thus indicating that anger and joy might result in
increased founding tendencies.
5September, 2011

To conclude, we hypothesize the following direct effects of joy and anger on the
tendency to exploit an entrepreneurial opportunity.
Hypothesis 2b: Joy positively predicts the tendency to exploit an entrepreneurial
opportunity.
Hypothesis 2c: Anger positively predicts the tendency to exploit an entrepreneurial
opportunity.
Affective Processing Principle
Besides the direct effects of emotions, we follow the conclusions of Storbeck and Clore
(2007) and propose an additional moderating effect of emotions on cognitive operations.
Based on the affective processing principle we assume approach-oriented emotions to
foster the use of and reliance on currently available cognitive content, whereas avoidance-
oriented emotions reduce the impact of this cognitive content (cf. Clore & Huntsinger,
2009). We argue that, within the pre-exploitation process, the information most currently
available and dominant for the potential entrepreneur is her cognitive evaluation of the
given opportunity. Thus, in this case, emotion might also serve as a cue about (not) using
cognitive evaluation judgments when deciding on the opportunity exploitation.
Consequently, we state the moderation hypotheses that the positive impact of the given
opportunity’s cognitive evaluation on exploitation tendencies increases with higher levels
of approach-oriented emotions, i.e., joy and anger, and decreases with higher levels of av-
oidance-oriented emotions, i.e., fear (cf. Smith & Ellsworth, 1985). These assumptions are
supported by cognitive research confirming the facilitating and motivating effects of joy
(e.g., Isen, 2000) and anger (e.g., Ford et al., 2010) as well as the avoidance effects of fear
(e.g., Marsh, Ambady, & Kleck, 2005). Again, since this process is believed to be operative
in addition to the other processes described above, each moderation, i.e., for positive and for
negative emotions, is believed to exert its influence incrementally on the opportunity chara-
cteristics, cognitive evaluation, and the other affect-related main and interaction effects.
Hypothesis 3a: The association between opportunity evaluation and the tendency to
exploit this opportunity is moderated by fear: increased levels of fear weaken the
association.
Hypothesis 3b: The association between opportunity evaluation and the tendency to
exploit this opportunity is moderated by joy: increased levels of joy strengthen the
association.
Hypothesis 3c: The association between opportunity evaluation and the tendency to
exploit this opportunity is moderated by anger: increased levels of anger strengthen
the association.
Study 1
Data and Method
Experimental Design. A questionnaire-based experiment was implemented using a 3
(probability of success: high vs. low vs. uncertain) ¥2 (profit if it were to succeed: high
vs. low) design with independent measures. We used the experimental condition of an
uncertain probability of success since one could argue that the influence of emotions
might be particularly pronounced under conditions of high uncertainty (Hsu, Bhatt,
Adolphs, Tranel, & Camerer, 2005).
6ENTREPRENEURSHIP THEORY and PRACTICE

Material and Measures. The questionnaire employed an experimental scenario tech-
nique (cf. Parrott & Hertel, 1999) with two independent variables, i.e., probability of
success and profit. After indicating their biological sex and age, participants were
instructed to vividly imagine a concrete entrepreneurial situation in the country’s current
economic situation. In this situation, the probability of success was introduced as being
either high (a rating by experts of 90%) or low (a rating by experts of 10%) or uncertain
(experts could not provide an estimate), and the profit in the specified situation as being
either high (annual earnings of €350,000) or low (annual earnings of €25,000). This
resulted in a total of six scenario frameworks, each characterized by a specific constella-
tion of the two experimentally induced opportunity characteristics, i.e., probability of
success and profit. Each participant was randomly assigned to one of these scenarios.
Based on these scenario parameters, participants were instructed to imagine a business
idea that would personally be realistic and meaningful to them. Participants were asked to
provide a short description of the details of their developed scenario, e.g., regarding
industrial sector and business concept, in an open-response format to elaborate their
mental representation of the opportunity. Overall, this procedure ensured that the business
ideas developed by the participants were realistic to them and that they had sufficiently
immersed themselves in the given scenario prior to answering questions about it. Subse-
quently, participants completed the following scales defining the relevant constructs.
Fear. We used the six items from the PANAS-X (Watson & Clark, 1994) fear
subscale, e.g., afraid, following the instructions of the authors—this applies to all estab-
lished scales used in this research—to assess the individual’s level of fear when deciding
whether or not to become entrepreneurially active in this specific scenario with the two
experimentally induced opportunity characteristics (Cronbach’s alpha [a]=.86).
Joy. We used seven items from the PANAS-X joviality subscale, e.g., happy, to assess
the individual’s level of joy when deciding whether or not to become entrepreneurially
active in this specific scenario (a=.82). We refrained from using one item in this scale,
i.e., lively, since this item does not necessarily have a positive connotation in German, i.e.,
lebhaft.
Evaluation. Participants answered three questions on 11-point rating scales ranging
from 0 (not at all) to 10 (extremely) on (1) how positive and (2) how promising they
judged the situation to be, and (3) to what extent this scenario would be a realistic
alternative to wage employment (a=.85). These items were developed based on expert
interviews building on Shane’s (2000) understanding of opportunity evaluation to repre-
sent a general evaluation of the situation, not a specific, e.g., financial, one and had been
successfully used in previous research to assess opportunity evaluations (Spörrle, Breugst,
& Welpe, 2009).
Exploitation Tendency. Participants were asked to answer three questions using
11-point rating scales ranging from 0 (impossible) to 10 (completely certain) on how
probable it was that they would use this self-chosen opportunity to become an entrepre-
neur (1) in the near future; (2) after completion of their studies; and (3) sometime later in
life. As structural equation modeling literature might consider this operationalization to
be a formative index, i.e., direction of causality is from items to the construct, and not
a reflective construct, i.e., direction of causality is from the construct to the items (cf.
Bollen, 1989; Churchill, 1979; Edwards & Bagozzi, 2000), reporting the internal consis-
tency of this measure is inadequate, even though we obtained high inter-item correlations.
Nevertheless, this formative approach seems legitimate as the three indicators are defining
characteristics of the exploitation construct (cf. Jarvis, MacKenzie, & Podsakoff, 2003).
Manipulation Checks. As a manipulation check, the subjects rated the probability of
success and the extent of future profits in the specific opportunity scenario by answering
7September, 2011

three questions using 11-point rating scales. Specifically, they provided information on (1)
how probable they judged financial success, (2) how high the chances of future financial
profits were, and (3) how likely it was that the business would be an economic success
(a=.91). The mean value of these three manipulation check items is the participant’s
perceived probability of success score since the mean value represents the participants’
subjective representation of the independent variable, i.e., probability of success defining
the situation.
The extent of future profits was assessed by estimating (1) the returns, (2) the profits,
and (3) the financial gains of the business if it were to succeed (a=.90). The mean value
of these three manipulation check items is the participant’s perceived profit score.
Participants and Procedure. We asked 245 MBA and entrepreneurship students to par-
ticipate in our survey in exchange for course credits. One hundred thirty-eight agreed
comprising 86 men and 52 women, which resulted in a response rate of 56%. Respondents
were approached individually or during their courses and asked to fill out the question-
naire anonymously. Participants’ mean age was 24.98 years (SD =2.76) for men and
26.50 years (SD =4.99) for women. Participants were asked to fill out the questionnaire
without consulting others. Upon completion, they were debriefed and thanked.
Results
Descriptive Analyses and Correlations. Correlation analyses (cf. Table 1) supported our
hypotheses since the experimentally induced opportunity characteristics, i.e., perceived
probability of success and perceived profit, were significantly associated with evaluation
and exploitation tendencies (rs>.30, ps<.01). Moreover, fear was inversely correlated
with evaluation (r=-.25, p<.01) and with exploitation (r=-.31, p<.01), whereas there
were positive correlations between joy and evaluation (r=.40, p<.01) and exploitation
(r=.36, p<.01).
Manipulation Checks. We performed a one-factorial ANOVA with perceived probability
of success as the dependent variable and the three levels of probability induction as the
independent variables. The results indicated a significant difference between the three
means, F(2, 134) =17.41, p<.001. Post-hoc Games–Howell tests indicated a significant
difference (p<.001) between the high-probability version (M =6.79, SD =2.99) and the
low-probability version (M=4.48, SD =2.31). The results of the uncertain-probability
(M =6.40, SD =1.61) version fell between these two groups but only differed signifi-
cantly from the low-probability (p<.001) version not from the high-probability one
(p>.55). This indicates that the high-probability and the low-probability versions were
successfully induced and that the uncertain-probability condition was perceived as more
similar to the high-probability scenario than to the low-probability one. As a result of this
insignificant difference, we did not examine this uncertainty scenario version separately in
subsequent analyses and did not attempt to induce it in the following study. Moreover, our
subsequent analyses indicate that high uncertainty is not a necessary prerequisite for
emotions to have an impact on exploitation tendencies.
Confirming the successful manipulation of the second independent variable, a t-test
indicates that participants indeed regarded earnings in the high-profit condition (M =7.17,
SD =1.57) as higher than those in the low-profit condition (M =4.82, SD =2.27),
t(106) =6.90, p<.001. Thus, for both independent variables, low and high levels were
induced successfully.
8ENTREPRENEURSHIP THEORY and PRACTICE

Predicting Opportunity Exploitation Tendencies. First, we describe exploitation tenden-
cies’ incremental prediction by sociodemographic variables, the experimentally induced
opportunity characteristics, i.e., perceived probability of success and perceived profit, and
the cognitive, i.e., evaluation, and emotional, i.e., main and interaction effects of fear and
joy, variables. We performed a hierarchical regression analysis, using the variables men-
tioned before as predictors and exploitation tendencies as the criterion (see Table 2). All
regression-based analyses were performed using standardized values.
Using age and sex as predictors in the first step resulted in a significant prediction of
exploitation tendencies, F(2, 128) =3.77, p<.05, R2adj =.04, indicating that women were
generally slightly less inclined to exploit a given opportunity; however, this effect disap-
peared in later steps.
In the second step of the regression analysis, we included the experimentally induced
opportunity characteristics, which both significantly and incrementally predicted entre-
preneurial exploitation, DR2adj =.23, p<.001, thus indicating that perceived probability of
success (b=.38, p<.001) and perceived profit (b=.22, p<.01) independently predicted
exploitation tendencies. In this step, age was significant as well, indicating that older
participants were less likely to exploit a given situation; again this effect disappeared in
later steps.
In the third step, evaluation was included, which not only explained a significant
amount of incremental variance, b=.58, p<.001, DR2adj =.18, p<.001, but also resulted
in the loss of the experimentally induced opportunity characteristics’, i.e., perceived
probability of success and perceived profit, predictive value. This indicates that the
cognitive evaluation of an opportunity is more important for the exploitation decision than
the experimentally induced economic characteristics of the opportunity are. This also
Table 1
Descriptive Statistics, Intercorrelations, and Reliabilities of the Assessed
Variables (Study 1)
M SD SK KU (1) (2) (3) (4) (5) (6) (7) (8)
(1) Age 25.55 3.82 1.75 3.72 — .19 -.02 -.08 -.10 .13 .06 .10
(2) Sex (1 =female) 0.38 — — — .08 — -.11 -.16 .22 -.06 -.21 -.19
(3) Perceived probability 5.87 2.21 -0.55 -0.36 .03 -.13 (.91) .28 -.09 .23 .55 .46
(4) Perceived profit 6.09 2.25 -0.62 -0.01 -.04 -.21 .30 (.90) -.05 .26 .52 .34
(5) Fear 2.42 0.82 0.71 -0.04 -.10 .21 -.12 -.08 (.86) .01 -.25 -.31
(6) Joy 3.63 0.70 -0.85 1.12 .13 -.08 .19 .24 -.03 (.82) .40 .36
(7) Evaluation 6.14 2.23 -0.55 -0.13 .08 -.27 .52 .51 -.25 .33 (.85) .67
(8) Exploitation 3.71 2.53 0.39 -0.77 .12 -.18 .42 .32 -.26 .35 .68 —
Notes: For descriptive statistics 133 <n<139, for correlations n =131 (list-wise deletion). Since most skewness and
kurtosis values are within the range of -1.00 and +1.00 suggested by Muthén & Kaplan (1985), parametric analyses seem
justified. However, as there were some (slight) deviations from normality regarding age and joy, we additionally computed
Spearman’s nonparametric rank correlations, which were overall very similar to Pearson’s correlation, thus indicating that
the parametric indicators of association are not severely influenced by these deviations. For Pearson’s correlation (above
main diagonal): |r|>.17, p<.05 (two-tailed), |r|>.23, p<.01 (two-tailed). For Spearman’s rank correlation (below main
diagonal): |r|>.17, p<.05 (two-tailed), |r|>.22, p<.01 (two-tailed). Within the main diagonal: Reliabilities (Cronbach’s
alpha).
M, mean; SD, standard deviation; SK, skewness; KU, kurtosis.
9September, 2011

supports our assumption that evaluation mediates opportunity characteristics’ influence on
exploitation tendencies, which is also tested in the subsequent mediation analysis.
In the final step of the regression analysis, all emotion-related predictors were entered,
which resulted in an overall significant increase in predicted variance in addition to all the
variables already included in the model, DR2adj =.05, p<.01. More specifically, the fear and
joy main effects were significant, indicating that both fear (b=-.16, p<.05) and joy
(b=.15, p<.05) directly and independently predicted exploitation tendencies, which
supports hypotheses 2a and 2b. Additionally, confirming hypotheses 3a and 3b, both the
emotions’ interactions with cognitive evaluation were significant indicating that, simulta-
neously, fear decreases (b=-.14, p<.05, see Figure 1) and joy increases (b=.17, p<.05,
see Figure 2) the positive impact of cognitive evaluation on behavior-oriented exploitation
tendencies. Almost none of cognitive evaluation’s predictive power was lost when the
emotion-related variables were entered, denoting the relative independence and incremen-
tality of cognitive and emotional variables when predicting exploitation tendencies.
Mediation of Opportunity Characteristics’ Influence on Exploitation Through
Evaluation. Consistent with our assumptions, the regression analysis revealed that the
predictive power of the experimentally induced opportunity characteristics on exploitation
tendencies, i.e., the criterion, disappeared when the cognitive evaluation, i.e., the media-
tor, was entered. Consequently, this indicated the potential mediation of the opportunity
characteristics’ influence on exploitation tendencies through evaluation. Moreover, the
regression analysis confirmed emotions’ hypothesized moderation of the relation between
evaluation and exploitation. To adequately represent this pattern, we performed mediation
(Preacher & Hayes, 2008) and moderated mediation analyses (Preacher, Rucker, & Hayes,
2007).
To test hypotheses 1a and 1b, we applied mediation analyses (cf. Preacher & Hayes,
2008) using 1,000 bootstrap samples and age, sex, and the other opportunity character-
istic, i.e., perceived probability of success or perceived profit, as covariates. Our analyses
Table 2
Multiple Regression Models Predicting Entrepreneurial Exploitation (Study 1)
Predictors: Beta Sig. Beta Sig. Beta Sig. Beta Sig.
Age -0.14 -0.16 * -0.08 -0.05
Sex (1 =female) -0.22 * -0.14 -0.07 -0.02
Perceived probability 0.38 *** 0.13 0.13
Perceived profit 0.22 ** -0.01 0.00
Evaluation 0.58 *** 0.54 ***
Fear -0.16 *
Joy 0.15 *
Evaluation ¥Fear -0.14 *
Evaluation ¥Joy 0.17 *
R2adj 0.04 * 0.27 *** 0.45 *** 0.50 ***
DR2adj 0.23 *** 0.18 *** 0.05 **
*p<.05, ** p<.01, *** p<.001
One-tailed tests for hypotheses, two-tailed tests for others; no collinearities were detected, residuals suggest
homoscedasticity.
10 ENTREPRENEURSHIP THEORY and PRACTICE

demonstrated a significant indirect effect on exploitation tendencies via evaluation for
perceived probability of success (indirect effect =.25, bias corrected and accelerated 95%
confidence interval [BCa 95% CI] =.15 to .38) and for perceived profit (indirect
effect =.23, BCa 95% CI =.11 to .40). Indicating a complete mediation in both cases, the
experimentally induced opportunity characteristic lost its significant influence on exploi-
tation when evaluation was included as mediator.2
This overall pattern, i.e., the mediation effects of evaluation on the impact of the
opportunity characteristics on exploitation and the moderating effects of emotions on
2. As our analyses are based on cross-sectional data sharing common method the obtained relations might at
least to some extent be a result of common method variance, but not of associations between the underlying
constructs themselves (see for review: Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). Therefore, within
each of the reported mediation analyses we tested each path, i.e., from predictor to criterion, from predictor
to mediator, from mediator to criterion, by using the correlational marker technique (see Richardson, Sim-
mering, & Sturman, 2009) developed by Lindell and Whitney (2001) and recommended by Grant and
Campbell (2007) and Sendjaya, Sarros, and Santora (2008). In no cases was a regression weight substantially
influenced in its size or significance, i.e., in no cases did we observe that a previously significant association
was no longer significant or vice versa, thus indicating that our mediation findings are very unlikely to be
explained by methodological artifacts instead of associations between the constructs observed.
Figure 1
Simple Slopes for the Interaction of Fear and Evaluation of Entrepreneurial
Opportunity When Predicting Exploitation of Entrepreneurial Opportunity
(Study 1)
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
High
Med
Low
Evaluation
Exploitation
Moderation of Evaluation's Influence on Exploitation by Fear
Fear
High
Med
Low
11September, 2011

the impact of evaluation on exploitation, is summarized in a moderated mediation model
(cf. Preacher et al., 2007) in Figure 3. Altogether, four moderated mediations were com-
puted to assess the mediation of the two experimentally induced opportunity character-
istics separately using both emotions separately as moderators.
Using 1,000 bootstrap samples, the results of these analyses confirmed the simulta-
neous presence of the mediation via evaluation and the moderation via emotions of the
path of the mediator, i.e., evaluation, on the criterion, i.e., exploitation, as all four
moderations reached significance (ps<.05) within the mediation models. Thus, these
findings indicate that evaluation completely mediates the association between experimen-
tally induced opportunity characteristics and exploitation and that this mediation effect
varies as a function of both emotions.
Study 2
Data and Method
Experimental Design. Study 2 was designed to replicate and extend the findings of study
1 by experimentally inducing additional opportunity characteristics and including an
Figure 2
Simple Slopes for the Interaction of Joy and Evaluation of Entrepreneurial
Opportunity When Predicting Exploitation of Entrepreneurial Opportunity
(Study 1)
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
HighMedLow
Evaluation
Exploitation
Moderation of Evaluation's Influence on Exploitation by Joy
Joy
High
Med
Low
12 ENTREPRENEURSHIP THEORY and PRACTICE

additional emotion. Examining four independent variables, study 2 was based on a 2
(probability of success: high vs. low) ¥2 (profit if it were to succeed: high vs. low) ¥2
(share of personal investment: high vs. low) ¥2 (time to profit: high vs. low) design with
independent measures thus resulting in 16 experimental scenario frameworks.
Material and Measures. The entrepreneurial scenario in study 2 was introduced with the
probability of success as being either high (a rating by experts of 90%) or low (a rating by
experts of 10%), the profit as being either high (annual earnings of €350,000) or low
(annual earnings of €25,000), the time to profit being either long (if successful, 7 years)
or short (if successful, 1 year), and the personal investment being either high (equity ratio
90%) or low (equity ratio 10%). As in study 1, participants were instructed to use these
experimentally induced opportunity characteristics as a framework to develop and briefly
describe an entrepreneurial opportunity with personal meaning. After imagining them-
selves in this scenario participants answered the following self-assessment scales:
Fear. We used three items of the PANAS-X fear subscale, e.g., afraid, in the same
procedure as in study 1 (a=.89).
Joy. We used three items of the PANAS-X joviality subscale, e.g., happy, in the same
procedure as in study 1 (a=.88).
Anger. In addition, we used three items of the PANAS-X hostility subscale, e.g.,
angry, to assess the individual’s level of anger, e.g., about the specific characteristics of
their developed opportunity, when deciding whether or not to become entrepreneurially
active in this specific scenario (a=.71).
Evaluation. The same three items as in study 1 formed a scale with high internal
consistency (a=.86).
Exploitation Tendency. We used the same three items as in study 1.
Manipulation Checks. The same three items as in study 1 were used to rate the
probability of success (a=.95) and the extent of future profits (a=.91) in the specific
scenario.
Figure 3
Moderated Mediation of the Association Between Opportunity Characteristics
and Exploitation (Study 1)
Probability
p
rofit
Exploitation
Excluding mediator:
Bs = 0.22 – 0.38, ps < .01
Including mediat or:
Bs = -0.01 – 0.15, ns
Evaluation
Fear
Joy
13September, 2011

In a similar way, participants additionally rated personal investment and time to profit
in the specific scenario by answering three questions using 11-point rating scales. Spe-
cifically, they provided answers to (1) how high the required personal investment from
their point of view is;(2) if they decide themselves to found this venture, how much equity
share they themselves might have to invest from their point of view; and (3) how much
money they themselves would have to invest, if they decide to found this venture
(a=.95). The mean value of these three manipulation check items is the participant’s
perceived investment score.
The time to profit (a=.93) was assessed by rating (1) how long the time from their
point of view is until their founded venture is profitable, thus focusing on the time between
foundation and profitability; (2) if they decide to found this venture, how long it would
take from their point of view until they generate profit, thus focusing on the time between
the decision to found and profitability; and (3) how long the time to profitability of their
venture is from their point of view, thus not being very specific about the exact period of
time. The mean value of these three manipulation check items is the participant’s per-
ceived duration score.
Participants and Procedure. The sample in study 2 consisted of 78 male and 100 female
students with mean age of 25.79 (SD =2.43) for men and 26.28 (SD =4.74) for women.
The procedure was the same as in study 1, except that this time the assessment was
computer-based, and participants were recruited via university mailing lists.
In addition to biological sex and age, we also assessed whether participants had ever
founded their own business (founder: yes/no) and used the software code for the rank of
participation (i.e., rank 1 for the first participant, rank 178 for the last participant) to
examine potential response biases as a function of time of participation.
Results
Descriptive Analyses and Correlations. As shown in Table 3, perceived probability of
success and perceived profit were significantly associated with evaluation and exploitation
tendencies (rs>.22, ps<.05), whereas perceived investment and perceived duration were
not (rs>-0.03, ns). As in study 1, fear was inversely correlated with evaluation (r=-.20,
p<.05) and with exploitation (r=-.20, p<.05), whereas there were positive correlations
between joy and evaluation (r=.38, p<.01) and with exploitation (r=.42, p<.01).
Anger was inversely associated with evaluation (r=-.19, p<.05) but not with exploita-
tion (r=-.09, ns).
Manipulation Checks. Analyses indicated that all four independent variables, i.e., the
opportunity characteristics, were successfully induced, ps<.001. As in study 1, these
manipulation checks were used in subsequent analyses as indicators of the experimentally
induced opportunity characteristics.
Predicting Opportunity Exploitation Tendencies. As in study 1, exploitation tendencies
were predicted by sociodemographic variables, the experimentally induced opportunity
characteristics, i.e., perceived probability, profit, investment, and duration, and
the cognitive as well as emotional variables in a hierarchical regression analysis (see
Table 4).
Using founder (yes/no), rank of participation (cf. Conover & Iman, 1981) as an
indicator of potential nonresponse bias, age, and sex as predictors in the first step
14 ENTREPRENEURSHIP THEORY and PRACTICE

Table 3
Descriptive Statistics, Intercorrelations, and Reliabilities of the Assessed Variables (Study 2)
M SD SK KU (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
(1) Age 26.08 3.90 2.90 13.66 — 0.06 -0.15 -0.03 -0.10 -0.24 -0.07 -0.02 -0.05 -0.06 -0.03
(2) Sex (1 =female) 0.56 — — — -0.04 — 0.13 0.05 0.22 0.22 0.21 0.05 -0.01 0.03 -0.14
(3) Perceived probability 6.44 2.36 -0.37 -0.86 -0.10 0.11 (.95) 0.31 0.14 0.18 -0.14 -0.02 0.24 0.55 0.34
(4) Perceived profit 7.09 2.09 -0.47 -0.49 0.03 0.03 0.27 (.91) 0.19 0.05 -0.06 -0.05 0.11 0.36 0.27
(5) Perceived investment 6.70 2.56 -0.18 -1.17 -0.17 0.21 0.14 0.18 (.95) 0.43 0.11 0.04 -0.05 0.04 -0.03
(6) Perceived duration 6.22 2.33 -0.04 -1.01 -0.24 0.22 0.16 0.03 0.41 (.93) 0.18 0.09 0.00 0.09 0.02
(7) Fear 2.73 1.10 0.32 -1.04 -0.10 0.21 -0.13 -0.09 0.13 0.21 (.89) 0.36 -0.18 -0.24 -0.25
(8) Joy 3.09 0.99 -0.29 -0.55 0.05 0.00 0.23 0.12 -0.05 -0.01 -0.17 (.88) -0.16 0.43 0.40
(9) Anger 1.54 0.66 1.89 4.00 0.04 0.07 -0.07 -0.10 0.05 0.13 0.38 -0.14 (.71) -0.19 -0.09
(10) Evaluation 6.11 2.28 -0.42 -0.69 0.09 0.02 0.54 0.34 0.02 0.06 -0.20 -0.11 0.38 (.86) 0.63
(11) Exploitation 3.78 2.53 0.95 0.17 0.07 -0.11 0.31 0.22 -0.03 0.01 -0.20 -0.08 0.42 0.65 —
Notes: For descriptive statistics n =178. Since most skewness and kurtosis values are within the range of -1.00 and +1.00 suggested by Muthén & Kaplan (1985), parametric analyses
seem justified. However, as there were some (slight) deviations from normality for age and joy, we additionally computed Spearman’s nonparametric rank correlations which overall were
very similar to Pearson’s correlation, thus indicating that the parametric indicators of association are not severely influenced by these deviations. For Pearson correlation (above main
diagonal): |r|>.19, p<.05 (two-tailed), |r|>.24, p<.01 (two-tailed). For Spearman rank correlation (below main diagonal): |r|>.18, p<.05 (two-tailed), |r|>.23, p<.01 (two-tailed).
Within main diagonal: Reliabilities (Cronbach’s alpha).
M, mean; SD, standard deviation; SK, skewness; KU, kurtosis.
15September, 2011

resulted in a nonsignificant prediction of exploitation tendencies, F(4, 173) =1.97, ns,
R2adj =.02.
In the second step of the regression analysis, we included the experimentally induced
opportunity characteristics which significantly and incrementally predicted entrepreneur-
ial exploitation, DR2adj =.15, p<.001, thus indicating that perceived probability of success
(b=.30, p<.001) and perceived profit (b=.19, p<.01) independently predicted exploi-
tation tendencies. Share of investment and duration did not emerge as significant predic-
tors. In this step, sex was significant as well indicating that women were generally slightly
less inclined to exploit a given opportunity.
In the third step, evaluation was entered, which again not only explained a significant
amount of incremental variance, b=.60, p<.001, DR2adj =.23, p<.001, but also resulted
in the loss of the opportunity characteristics’ predictive value, thus again supporting the
mediation hypothesis.
In the final step of the regression analysis, all emotion-related main and interaction
terms were entered, which resulted in an overall significant increase in predicted variance
in addition to all the variables already included in the model, DR2adj =.07, p<.001. More
specifically, the main effects of fear (b=-.11, p<.05), joy (b=.17, p<.01), and anger
(b=.13, p<.05) were significant indicating that these emotions directly and indepen-
dently predicted exploitation tendencies thereby supporting hypotheses 2a, 2b, and 2c.
Moreover, confirming hypotheses 3a, 3b, and 3c, the emotions’ interactions with evalu-
ation were significant. This indicates that fear decreases (b=-.14, p<.05, see Figure 4),
joy increases (b=.17, p<.01, see Figure 5), and anger increases (b=.16, p<.05, see
Figure 6) simultaneously the positive association between cognitive evaluation and
behavior-oriented exploitation tendencies. Almost none of evaluation’s predictive power
Table 4
Multiple Regression Models Predicting Entrepreneurial Exploitation (Study 2)
Predictors: Beta Sig. Beta Sig. Beta Sig. Beta Sig.
Founder (1 =yes) 0.05 0.03 0.03 0.04
Rank of participation 0.15 0.09 0.07 0.11
Age -0.03 0.03 0.02 -0.01
Sex (1 =female) -0.12 -0.17 * -0.15 ** -0.13 *
Perceived probability 0.30 *** 0.01 0.01
Perceived profit 0.19 ** 0.05 0.04
Perceived investment -0.08 -0.04 -0.01
Perceived duration 0.05 0.03 0.03
Evaluation 0.60 *** 0.54 ***
Fear -0.11 *
Joy 0.17 **
Anger 0.13 *
Evaluation ¥Fear -0.14 *
Evaluation ¥Joy 0.17 **
Evaluation ¥Anger 0.16 *
R2adj 0.02 0.16 *** 0.40 *** 0.45 ***
DR2adj 0.04 0.15 *** 0.23 *** 0.07 ***
*p<.05, ** p<.01, *** p<.001
One-tailed tests for hypotheses, two-tailed tests for others; no collinearities were detected, residuals suggest
homoscedasticity.
16 ENTREPRENEURSHIP THEORY and PRACTICE

was lost when the emotion-related variables were entered, denoting the relative indepen-
dence of cognitive and emotional variables when predicting exploitation tendencies.
Mediation of Opportunity Characteristics’ Influence on Exploitation Through Evalu-
ation. To test hypotheses 1a and 1b, we applied mediation analyses (cf. Preacher &
Hayes, 2008) using 1,000 bootstrap samples, the same covariates as the regression model
and the other three opportunity characteristics as covariates. Our analyses demonstrated a
significant indirect effect via evaluation for probability (indirect effect =.13, BCa 95%
CI =.07 to .18) and profit (indirect effect =.06, BCa 95% CI =.02 to .11) but not for
perceived investment and perceived duration, thus not supporting hypotheses 1c and 1d.
The findings of moderated mediation analyses are shown in Figure 7. These analyses
confirmed the moderating effects of all three emotions (ps<.05) on the impact of evalu-
ation on exploitation for the only two supported mediations, i.e., when using perceived
probability of success and perceived profit as predictors.
Discussion and Conclusion
This research set out to examine the direct and the moderating effects of emotions
on exploitation tendencies. Within a mediation model, we predicted entrepreneurial
Figure 4
Simple Slopes for the Interaction of Fear and Evaluation of Entrepreneurial
Opportunity When Predicting Exploitation of Entrepreneurial Opportunity
(Study 2)
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
HighMedLow
Evaluation
Exploitation
Moderation of Evaluation's Influence on Exploitation by Fear
Fear
High
Med
Low
17September, 2011

exploitation tendencies by experimentally induced opportunity characteristics, i.e., per-
ceived probability of success, profit, investment, and time to profit, via cognitive evalua-
tion. In addition to the indirect effects of opportunity characteristics on exploitation via
evaluation, we hypothesized direct negative effects of an avoidance-oriented emotion, i.e.,
fear, and direct positive effects for approach-oriented emotions, i.e., joy and anger, on
exploitation. Moreover, based on the affective processing principle, we predicted incre-
mental moderating effects of these emotions on the positive association between oppor-
tunity evaluation and exploitation. We assumed approach-oriented emotions to increase
and avoidance-oriented emotions to decrease the positive predictive value of evaluation on
exploitation.
Overall, our hypotheses were supported. The influence of opportunity’s characteristics,
at least of those significantly predicting exploitation decisions, i.e., perceived probability of
success and perceived profit, was mediated by the cognitive evaluation of the opportunity.
Across both studies, findings show that probability of success and profit are central
determinants of evaluation, which, in turn, emerged as a pivotal determinant of exploitation.
Evaluation was demonstrated to completely mediate the positive impact of perceived
probability of success and of perceived profit on exploitation. Despite their theoretical
relevance and successful induction, the opportunity characteristics of personal investment
Figure 5
Simple Slopes for the Interaction of Joy and Evaluation of Entrepreneurial
Opportunity When Predicting Exploitation of Entrepreneurial Opportunity
(Study 2)
18 ENTREPRENEURSHIP THEORY and PRACTICE

and time to profit did not emerge as significant predictors of opportunity exploitation when
evaluation was included in the model.
More importantly, all opportunity-evoked emotions directly influenced opportunity
exploitation. In accordance with the affect-as-information theory, fear decreased entre-
preneurial exploitation, whereas joy and anger were associated with increased exploitation
tendencies. Furthermore, in agreement with the affective processing principle, fear, joy,
and anger moderated the mediation of the association between opportunity characteristics
and exploitation by evaluation, indicating a moderated mediation higher levels of fear
reduced, and higher levels of joy and anger increased the positive impact of evaluation on
exploitation.
Theoretical Implications
We think that these findings contribute to our understanding of entrepreneurial decision
making in four ways. First, our results consistently indicate that the objective characteristics
of a given opportunity’s probability of success and profit are closely connected with the
subjective cognitive evaluation which, in turn, is associated with exploitation tendencies.
Hence, the opportunity characteristics are only a distant predictor of entrepreneurial
Figure 6
Simple Slopes for the Interaction of Anger and Evaluation of Entrepreneurial
Opportunity When Predicting Exploitation of Entrepreneurial Opportunity
(Study 2)
-0.60
-0.40
-0.20
0.00
0.20
0.40
0.60
0.80
1.00
HighMedLow
Evaluation
Exploitation
Moderation of Evaluation's Influence on Exploitation by Anger
Anger
High
Med
Low
19September, 2011

exploitation. The influence of these opportunity characteristics on exploitation tendency is
mediated by the subjective cognitive evaluation of the opportunity. Whereas prior literature
has largely focused on objective characteristics of entrepreneurial opportunities, these
findings indicate that the subjective evaluations might be even more important and more
closely connected to exploitation tendencies than opportunity specifics. Therefore, evalu-
ative processes are of special interest for entrepreneurship scholars. This is in accordance
with findings of entrepreneurship scholars examining the individual’s decision to start a
new venture (Simon et al., 2000) strongly indicating the relevance of cognitive-evaluative
processes within entrepreneurial decision making (cf. Keh et al., 2002). Thus, our study
contributes to the literature on the opportunity–individual nexus (Shane, 2003, p. 9): Our
findings point out that objective opportunity characteristics do not directly influence
entrepreneurial opportunity exploitation. Instead, it is an evaluative process that determines
if individuals will become entrepreneurs in a specific situation.
Second, our study addresses the calls of Cardon, Wincent, Singh, and Drnovsek
(2009), Goss (2007), and Shepherd (2004) for empirical investigations on the role of
emotions in the entrepreneurial process. Our findings emphasize the simultaneous and
distinct role of different emotions for the exploitation of entrepreneurial opportunities,
which is not only independent from the effects of the other emotions examined but also
from the effects of opportunity characteristics and cognitive evaluation. Thus, this study
strongly argues for a unique predictive value of discrete emotions within the pre-
exploitation decision process which cannot be accounted for by the cognitive evaluation
of the opportunity. Furthermore, the findings of this study are highly consistent with
conceptual work by Baron (2008) whose propositions accentuate the motivational tone of
emotional states, i.e., approach vs. avoidance, instead of their valence, i.e., positive vs.
negative. Our results provide clear support that the influence of anger as an approach-
oriented emotion with negative valence on exploitation tendencies is more similar to the
influence of joy, i.e., an approach-oriented emotion with positive valence than to the effect
Figure 7
Moderated Mediation of the Association Between Opportunity Characteristics
and Exploitation (Study 2)
Probability
profit
Exploitation
Excluding me diator:
Bs = 0.19 – 0.30, ps < .01
Including mediat or:
Bs = 0.01 – 0.05, ns
Evaluation
Anger
Joy
Fear
Investment
duration
Excluding media tor:
Bs = -0.08 – 0.05, ns
Including mediat or:
Bs = -0.04 – 0.03, ns
20 ENTREPRENEURSHIP THEORY and PRACTICE

of fear, i.e., an avoidance-oriented emotion with negative valence. This differentiation is
consistent with emotion theories (cf. Clore & Palmer, 2009), existing empirical evidence
in the field of psychology (Bodenhausen, Sheppard, & Kramer, 1994), and empirical
evidence in the field of entrepreneurship (Foo, 2009). The study by Foo confirms that
emotions of similar valence could exhibit a different influence due to different underlying
appraisal tendencies: Fear-experiencing entrepreneurs could evaluate a specific opportu-
nity differently, e.g., in terms of its riskiness, compared to entrepreneurs experiencing
anger. Summarizing these findings, it seems necessary for future entrepreneurship
research to differentiate emotions in terms of their valence, their motivational tone, and
their underlying appraisals although this distinction has so far not been consistently
considered in entrepreneurship research.
Third, in addition to these main effects, we confirmed the existence of incremental
moderation effects for each emotion for the first time within entrepreneurial research. The
positive impact of evaluation on exploitation varied as a function of lingering emotions.
This finding provides important implications for entrepreneurship research because it
points to the necessity of addressing the direct and the moderating effects of emotions:
Emotions do not merely provide stop or go signals, i.e., main effects, when predicting
exploitation. Positive/negative emotions also increase/decrease the impact of central cog-
nitive evaluations on exploitation judgments. Interestingly, these direct and moderating
effects occur independently from each other and independently from opportunity charac-
teristics and cognitive aspects. Thus, as much as other fields of economic research
consider these two effects of emotions (cf. Smith & Bolton, 2002), entrepreneurship
research is well advised to study both direct and moderating effects of emotions on
entrepreneurial exploitation tendencies.
Fourth, several scholars (cf. Sarason et al., 2006) argued for the development of a
dynamic model integrating the characteristics of the potential entrepreneur as well as of
the entrepreneurial situation. Based on an integrative process model, this study confirms
that entrepreneurial behavior is a result of the interplay between (1) objective opportunity
characteristics, (2) subjective evaluations of these objectives by entrepreneurs, and (3)
their emotional interference. Thus, we address the call by Casson (2005) who argues that
the nature of an opportunity and cognitive opportunity-related aspects should be consid-
ered in future research. We addressed this research gap by additionally considering
distinct emotions and their complex impact.
Practical Implications
Turning to the practical implications of our findings, entrepreneurs should be aware
that they always have a subjective view for entrepreneurial opportunities. Even opportu-
nities with highly positive characteristics might not result in increased exploitation ten-
dencies. If an individual’s current emotion configuration is characterized, for instance, by
high levels of fear and low levels of anger and joy, a decreased exploitation tendency
results. Thus, entrepreneurs should know and consider that emotions systematically influ-
ence their decisions in addition to their individual cognitive evaluations. For entrepre-
neurship educators, our study indicates that it might be wise to supplement standard
business planning and entrepreneurship courses with material that addresses emotion and
cognition awareness.
Moreover, entrepreneurs should be informed that, for instance, fear does not only
decrease exploitation tendencies directly but also reduces the impact of positive oppor-
tunity evaluations. Therefore, potential entrepreneurs should judge an opportunity under
various emotional states that can be easily induced by external factors as the object to be
21September, 2011

evaluated does not need to be the affect-inducing stimulus (Clore & Huntsinger, 2009).
Furthermore, making entrepreneurs reattribute their emotions originally related to the
opportunity, e.g., fear of failure (Shepherd, 2003), or to other objects, e.g., an irritating
experience right before making the judgments, should reduce the influence of emotions on
exploitation judgments (Schwarz & Clore, 1983).
Limitations
Several limitations should be taken into consideration when interpreting the results of
this study and extending its generalizability. Since we employed a questionnaire, we were
only able to record data related to participants’ attitudes and could not obtain any direct
behavioral measures. As self-reported data are not necessarily the same as actual behavior,
these data only allow us to infer with caution how people would actually react. Never-
theless, Krueger and colleagues (Krueger & Carsrud, 1993; Krueger, Reilly, & Carsrud,
2000) point out that entrepreneurial intentions are the best predictors of venture formation
and, thus, indicate the validity of our dependent variable. This is consistent with previous
empirical work analyzing the antecedents of entrepreneurial activities that also use the
likelihood or the intention of starting a business as a good proxy for entrepreneurial
behavior (e.g., Lee, Wong, Foo, & Leung, 2011; Phan, Wong, & Wang, 2002).
It is sometimes argued that students are not an appropriate sample for entrepreneur-
ship research (Davidsson, 2005, p. 72) since they merely comprise a subsection of society
with a certain level of education (Crant, 1996). However, we assume that the mechanisms
and phenomena that we study, such as emotions and cognitive evaluation, are fundamental
by nature. Consequently, we do not expect a student sample and a sample of the general
population to show differences in the relationships between variables. Furthermore, our
study aims at understanding the antecedents of entrepreneurship, not established entre-
preneurs, and addresses the question why some people decide to exploit entrepreneurial
opportunities while others do not. Regarding the antecedents of entrepreneurship, students
make a good sample as higher educated people have a higher probability of becoming
entrepreneurs (Shane, 2003, pp. 267–270).
Suggestions for Future Research
Future research should investigate the influence of a greater variety of emotions in
addition to fear, joy, and anger. It would be particularly interesting to examine the
influence of positive emotions on entrepreneurial activity including those emotions con-
nected to passion and enthusiasm which have already received some academic attention
(e.g., Baum & Locke, 2004; Cardon et al., 2009; Cardon, Zietsma, Saparito, Matherne, &
Davis, 2005; Smilor, 1997). When examining the influence of these affective states, future
research should additionally account for the individual’s ability to regulate and control for
emotions (Spörrle & Welpe, 2006; Spörrle, Welpe, & Försterling, 2006).
Another interesting line of inquiry is the exploration of additional psychological
phenomena further differentiating the association between evaluation and exploitation. In
general, the likelihood of exploitation is higher when the situation is evaluated as more
positive. Since we did not find this relationship to be deterministic but to be moderated by
emotions, future research should elaborate further causes why some people deny the
exploitation of opportunities they evaluate positively. For instance, low self-efficacy might
result in reduced exploitation tendencies even if opportunity evaluation is high (cf.
Bandura, 2001; Strobel, Tumasjan, & Spörrle, 2011). Correspondingly, future research
22 ENTREPRENEURSHIP THEORY and PRACTICE

should examine why some people exhibit a high likelihood that they will exploit an
opportunity even if they evaluate it as not very positive. General entrepreneurial attitude
(Douglas & Shepherd, 2000, 2002), irrational cognitions (cf. Spörrle, Strobel, & Tumas-
jan, 2010), or positive cognitive illusions such as overconfidence (Keh et al., 2002) might
affect the association between evaluation and exploitation.
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Isabell M. Welpe is Chaired Professor for Strategy and Organization, Technical Universiy Munich, Leopold-
street 139, Munich, Germany.
Matthias Spörrle is Professor for Statistics and Research Methodology at the University of Applied Manage-
ment (UAM), Am Bahnhof 2, Erding, Germany.
Dietmar Grichnik is Chaired Professor for Entrepreneurship and Technology Management, University of St.
Gallen, Dufourstreet 40a, St. Gallen, Switzerland.
Theresa Michl is a Ph.D. student of economics, Ludwig Maximilian University of Munich, Munich School of
Management, Ludwigstreet 28, Munich, Germany.
David B. Audretsch is Distinguished Professor, Indiana University, 1315 East 10th Street, Bloomington, IN,
USA.
28 ENTREPRENEURSHIP THEORY and PRACTICE