The Role of Cognitive Appraisal in Opportunity Evaluation and Exploitation
Speaker
Abstract
| Principle Topic |
Using cognitive theories of emotion, we investigated cognitive appraisals (i.e., primary appraisal, rationality, irrationality, and coping potential) in entrepreneurial situations in order to examine the impact of cognitive and emotional processes on the evaluation and exploitation of entrepreneurial opportunities. |
| Method |
| We utilized a questionnaire experiment in order to analyze the impact of profit margin (high vs. low), personal investment (high vs. low), time to profit (long vs. short), and probability of success (high vs. low) on entrepreneurial evaluation and exploitation. Hence, 2 x 2 x 2 x 2 = 16 scenarios were presented in a between subjects design to 344 student respondents, who also provided information about their appraisals and emotions within the context of this situation. |
| Major Findings |
| Manipulation checks indicated successful induction of independent variables, and correlation analyses revealed significant interrelation between evaluation and exploitation. The ANOVA analysis for evaluation resulted in significant primary effects for profit margin and probability of success, whereas the ANOVA analysis for exploitation showed no interpretable significant effects. This indicates that exploitation and evaluation are associated, yet separable concepts, that personal investment and time to profit were cognitively discounted, and that exploitation is not determined by situational characteristics. Results were further analysed using multiple regression analyses: utilizing evaluation and exploitation as dependent variables, we applied manipulation checks and measures of appraisal as predictors while controlling for socio-demographic variables (sex, age, expertise and knowledge in the field of entrepreneurial activity). For evaluation, the independent variables explained 62% of the variance with perceived profit margin (β = .18), perceived probability of success (β = .39), perceived time to profit (β = -.08), situation-specific primary appraisal (β = .41), rationality (β = .14), irrationality (β = .12), and coping potential (β = .08) as significant predictors. For exploitation, the regression explained 51% of the variance with expertise (β = .13), age (β = .10), general (β = .20) and situation-specific (β = .45) primary appraisal, rationality (β = .15), and coping potential (β = .09) as significant predictors. Furthermore, the relationships between perceived profit margin and exploitation, and between perceived probability of success and exploitation, were fully mediated by situation-specific primary appraisal. Moreover, irrationality significantly correlated with measures of maladaptive negative emotions (e.g., anxiety, depression), but not with adaptive negative emotions (e.g., fear, sadness). |
| Implications |
| Overall, our findings indicate that appraisal should be regarded as a central and as more significant determinant of entrepreneurial activity than situational characteristics (especially with regard to exploitation), and that irrational entrepreneurial appraisals are associated with maladaptive emotions. |
| Contact information: |
| Prof. dr. W. Hulsink |
