10-Role of Mixed Emotion in Risk Perception

1042-2587
2011 Baylor University
E T&P
The Role of Mixed

Emotions in the
Risk Perception of
Novice and Serial
Entrepreneurs
Ksenia Podoynitsyna
Hans Van der Bij
Michael Song
This study examines the role of mixed emotions in the risk perception of entrepreneurs, an
important determinant of entrepreneurial decision making. We extend the literature on mixed
emotions by applying the cognitive appraisal tendency approach and contrasting it with
ambivalence stemming from the valence-based approach. We test our hypotheses on a data
set of 253 entrepreneurs from the United States. We show that mixed and conflicting
emotions are an important predictor of the risk perception of entrepreneurs. At the same
time, we find that emotional reactions of entrepreneurs on strategic issues change substantially as they found more ventures and become habitual entrepreneurs.
Introduction
Imagine how much easier life would be if we felt only one emotionpositive or
negativeat a time. Luckily and unfortunately, this is often not the case. Entrepreneurs,
in particular, are people who are likely to experience mixed rather than single basic
emotions in their decision making, including their evaluation of opportunities and assessment of risks. In this study, we focus on the relationship between mixed emotions and the
risk perception of entrepreneurs.
We define entrepreneurs as individuals who recognize and exploit new business
opportunities by founding new ventures (Baron, 2008; Shane & Venkataraman, 2000).
Because opportunity recognition and evaluation are key phenomena of entrepreneurship
(Alvarez & Barney, 2007; Shane & Venkataraman), it is important to understand what
makes entrepreneurs pursue opportunities. Risk perception plays an important role in this
context. Empirical research has demonstrated that risk perception strongly influences risk
behavior in general (Sitkin & Pablo, 1992; Sitkin & Weingart, 1995), and opportunity
evaluation and the decision to start a venture in particular (Keh, Foo, & Lim, 2002; Simon,
Houghton, & Aquino, 2000). However, recent literature reviews have called for more
Please send correspondence to: Ksenia Podoynitsyna, tel.: (40) 247-3640; e-mail: k.s.podoynitsyna@tue.nl.
January, 2012
DOI: 10.1111/j.1540-6520.2011.00476.x
etap_476
115..140
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research to refine our understanding of the role of entrepreneurial risk taking (Ireland &
Webb, 2007). Until now, empirical research has emphasized risk-taking propensity
(Forlani & Mullins, 2000; Mullins & Forlani, 2005) and cognitive biases (Keh et al.;
Simon et al.) as determinants of entrepreneurial risk perception. A recent study by Foo
(2011) finds that certain background emotions can also influence risk perception. Indeed,
because entrepreneurs tend to rely heavily on their intuition in making decisions (e.g.,
Simon et al.) and emotions are one of the main drivers of intuitive thinking (Epstein, 1994;
Kahneman, 2003), emotions are meant to play a key role in entrepreneurial decision
making.
Entrepreneurs likely experience mixed rather than single basic emotions in their
decision making. Similar to the executives of established firms, entrepreneurs often deal
with ambiguous situations (Eisenhardt & Sull, 2001; Walsh, Meyer, & Schoonhoven,
2006). They operate in environments that are highly unpredictable and filled with rapid
change (Lichtenstein, Dooley, & Lumpkin, 2006), while entrepreneurial tasks are highly
varied in nature and change significantly as the entrepreneurial process unfolds (Baron,
2006). When performing variable tasks in highly uncertain and unpredictable environments, an entrepreneurs affect may play an important role in judgment and decision
making (Baron, 2008). Moreover, the greater the ambiguity in their working environment,
the more likely that entrepreneurs will experience different emotions at the same time
(Folkman & Lazarus, 1985; Larsen, McGraw, Mellers, & Cacioppo, 2004). Thus, studying the relationship between mixed emotions and risk perception can provide valuable
insights for entrepreneurs.
The extant research on mixed emotions has concentrated on the simultaneous experience of positive and negative affect (Folkman & Lazarus, 1985; Fong, 2006; Fong &
Tiedens, 2002; Larsen, McGraw, & Cacioppo, 2001; Larsen et al., 2004; Priester & Petty,
1996, 2001; Schwarz & Weinberger, 1980). We will build on research examining the
cognitive appraisal tendency approach to emotions and contrast it with the valence-based
approach. The former approach focuses on the differences between emotions of the same
valence, which can be attributed to various cognitive appraisal patterns associated with
these emotions, such as uncertainty and controllability, among others (Keltner, Ellsworth,
& Edwards, 1993; Lerner & Keltner, 2000, 2001; Smith & Ellsworth, 1985, 1987). For
example, happiness and hope are two positive emotions, but happiness tends to be
appraised as certain and controllable while hope tends to be appraised as uncertain and
uncontrollable. Following the logic of these two approaches to affect, mixed emotions
may emanate from the simultaneous experience of positive and negative emotions
(ambivalence) or from the coexistence of emotions with different associated cognitive
appraisal patterns.
In this study, we examine 16 emotion adjectives, half of which have a positive valence
(related to the basic emotions of happiness and hope) and half of which have a negative
valence (related to the basic emotions of anger and fear). The emotion adjectives were
selected in such a way that half of them also have a positive association with certainty and
controllability cognitive appraisal dimensions (related to the happiness and anger basic
emotions), and the other half have a negative association with these dimensions (related to
the hope and fear basic emotions). These dimensions are shown to mediate the relationship between emotions and risk estimates (Lerner & Keltner, 2001).
This study contributes to the literature by (1) conceptualizing mixed emotions using
the cognitive appraisal tendency approach, (2) contrasting this approach with the mixed
emotions conceptualization based on the valence-based approach on the example of risk
perception of entrepreneurs, and (3) exploring the moderating effect of experience in
founding ventures on these relationships.
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ENTREPRENEURSHIP THEORY and PRACTICE
Theoretical Framework and Hypotheses

Entrepreneurial Risk Perception and its Drivers
Entrepreneurial risk perception is defined as the entrepreneurs assessment of the risk
inherent in a situation. This definition is consistent with previous work of Dutton and
Jackson (1987), Jackson and Dutton (1988), Sitkin and Pablo (1992), and Sitkin and
Weingart (1995). A situation is considered risky when it is more negative than positive,
there is more potential for loss than for gain, and it is seen more as a threat than as an
opportunity (Highhouse, Paese, & Leatherberry, 1996; MacGrimmon & Wehrung, 1985;
Sitkin & Weingart).
In the entrepreneurship and management literatures, several individual and organizational drivers of risk perception have been proposed and tested. Sitkin and Pablo (1992)
suggest that individuals risk propensity will mediate the relationship between their risk
preference, inertia, and outcome history and their risk perception. Moreover, these
researchers suggest that organizational characteristics like control systems, problem
domain familiarity, social influence, top management team homogeneity, and problem
framing can all influence an individuals risk perception. Sitkin and Weingart (1995) also
find empirical support for the mediation effect of risk propensity on the outcome history
risk perception relationship and the direct effect of problem framing on risk perception.
Forlani and Mullins (2000) also find an effect of risk propensity on risk perception. At the
same time, Mullins and Forlani (2005) find that risk propensity influenced entrepreneurs
choices related to the probability of gain and loss, while risk perception influenced
entrepreneurs choices related to the magnitude of gains and losses. Simon et al. (2000)
and Keh et al. (2002) examine the role of cognitive biases in entrepreneurial risk perception. Illusion of control and belief in the law of small numbers were found to be negatively
associated with risk perception.
In considering affect as another antecedent of risk perception, Johnson and Tversky
(1983) find that the experience of negative affect equally inflated individuals estimates
for all types of negative events. Mayer, Gaschke, Braverman, and Evans (1992) find
similar results. We refer to the review of Blanchette and Richards (2010) for an in-depth
discussion of these two and related studies. Finally, Foo (2011) finds that the experience
of four induced emotions (anger, fear, happiness, and hope) unrelated to the venture
decision had a differential influence on students risk perceptions of entrepreneurial
venture scenarios. Foo also finds a positive relationship between dispositional happiness
and anger (i.e., happiness and anger as traits) and the risk-taking propensity of entrepreneurs. However, despite the likelihood that entrepreneurs experience mixed emotions due
to the variable and uncertain nature of their environment (e.g., Lichtenstein et al., 2006),
to date, no study has examined the relationship between mixed emotions and risk perception of entrepreneurs. In our study we will focus on this link.
Valence-Based and Cognitive Appraisal Tendency Approaches

Most studies on entrepreneurship that focus on emotions and affect follow the
valence-based approach by distinguishing between positive and negative affect. For
instance, Baron (1998, 2008) conceptually clarifies the role of positive and negative
affect in basic cognitive processes of entrepreneurs and the potential influences on key
aspects of the entrepreneurial process. Foo, Uy, and Baron (2009) examine consequences of positive and negative affect and find that they both impact venture effort.
Brundin, Patzelt, and Shepherd (2008) show that entrepreneurs displays of positive
and negative emotions influence their employees willingness to act entrepreneurially.
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Shepherd and Cardon (2009) propose that negative emotional reactions due to project
failure impact learning from the failure and the motivation to try again. Cardon,
Zietsma, Saparito, Matherne, and Davis (2005) and Cardon, Wincent, Singh, and
Drnovsek (2009) explain the concept of entrepreneurial passion by using a parenthood
metaphor in the entrepreneurial process and by linking entrepreneurial passion to three
role identities (inventing, founding, and developing) and conceptually exploring the
effects of entrepreneurial passion on goal-related cognitions, entrepreneurial behavior,
and entrepreneurial effectiveness.
The cognitive appraisal tendency approach represents a viable and promising alternative to the valence-based approach. It focuses on the differences between the emotions of the same valence due to dissimilar cognitive appraisals. Smith and Ellsworth
(1985) summarize the patterns of appraisal for a range of emotions. Keltner et al.
(1993) confirm that not only the valence of an affect, but also its associated cognitive
appraisal patterns have an important influence on causal judgments. In particular, they
find a dissimilar impact of sadness and anger. Lerner and Keltner (2000, 2001) elaborate on these results and present an appraisal tendency framework, in which each
emotion is defined by a tendency to perceive new events and objects in ways that are
consistent with the original cognitive appraisal dimensions of the emotion. They find
that fearful people made risk-averse choices, while angry people made risk-seeking
choices. Moreover, risk judgments of angry people more closely resemble those of
happy people than those of fearful people. Lerner and Tiedens (2006) elaborate further
on the differences between anger and other emotions and depict the anticipatory pleasure of anger that triggers the positive subjective sense. Foos (2011) research also
supports the appraisal tendency approach.
Both the valence-based approach and the cognitive appraisal tendency approach can
be used to study mixed emotions, which are the focus of this study. We build further on
these two streams of research by examining mixed emotions as a potential antecedent of
entrepreneurial risk perception. In order to build our hypotheses, we use the affect
infusion model (AIM; Forgas, 1995, 1998) describing the mechanisms of how affect may
infuse judgments.
Mechanisms Explaining the Role of Affect in Judgment and

Decision Making
In this study, we define affect as a generic label to refer to both moods and emotions.
Moods are low-intensity, diffuse, and relatively enduring affective states without a clear
antecedent cause and therefore little cognitive content. Emotions are more intense, short
lived, and usually have a definite cause and a clear cognitive content (Forgas, 1995).
Researchers on basic (as opposed to mixed) emotions have embraced the AIM depicting
a set of mechanisms explaining the influence of moods and emotions on judgment and
decision making (e.g., Baron, 1998, 2008; Forgas, 1995, 1998). The AIM distinguishes
between judgment processes where a relatively closed information search is required and
processes where a much more open information search is needed. In general, entrepreneurs are involved in the latter processes. These processes have a higher probability of
affect infusion, that is, affectively loaded information exerts an influence on and becomes
incorporated into the judgment process, entering into the judgmental deliberations and
eventually coloring the judgment outcome (Forgas, 1995). The affect infusion works
through two different, but complementary mechanisms: affect as information and affect
priming.
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The affect-as-information mechanism describes direct affect infusion: Instead of

making a judgment on the basis of recalling features of a target, the individual asks
himself how he feels about it. So, in fact the affect itself is the information. In doing so,
individuals may mistake feelings due to a preexisting state for a reaction to the target
(Forgas, 1995). DeSteno, Petty, Wegener, and Rucker (2000) find empirical support for the
affect-as-information mechanism in making likelihood estimates of future events. Loewenstein, Weber, Hsee, and Welch (2001) show that emotional reactions to risky situations
often diverge from cognitive assessments of those risks.
The affect-priming mechanism suggests that affect can indirectly inform social judgments by priming the encoding, retrieval, and selective use of information in the judgment
process. Affect priming can be enacted through four submechanisms. The first one is
selective attention, which means that given the overload of information in a judgment
process and the necessity of making selections, particular information is selected that is
congruent with the current affect. Second, in the process of encoding new information,
more attention may be given to the affect-congruent information. Third, most judgment
processes involve the retrieval and use of prior knowledge structures to interpret incoming
information. Affect can selectively influence these retrieval processes, because affectcongruent information may have a greater likelihood of being retrieved (Forgas, 1995).
Forgas also finds empirical support for the affect-priming mechanism in complex bargaining tasks (Forgas, 1998).
Hypotheses
We first focus on mixed emotions with dissimilar valences. In general, emotion
adjectives that are associated with the basic emotions of happiness and hope are considered to be positive, while emotion adjectives associated with the basic emotions of
anger and fear are considered to be negative (see, e.g., Lerner & Keltner, 2000, 2001).
Following the literature on attitudinal ambivalence (Fong, 2006; Fong & Tiedens, 2002;
Priester & Petty, 1996, 2001), we distinguish between dominant emotions and conflicting emotions for each entrepreneur. Dominant emotions are those positive or negative
emotions that are experienced in greater numbers, while conflicting emotions are those
that are experienced in lesser numbers. For example, when an entrepreneur experiences
five positive and two negative emotions, the five positive emotions are dominant and the
two negative emotions are conflicting. Another entrepreneur, experiencing three positive
and four negative emotions, has four dominant (negative) emotions and three conflicting
(positive) emotions.
A prominent argument in the mixed emotions literature (Priester & Petty, 1996, 2001)
is that the conflicting (rather than dominant) emotions make the difference in cases of
mixed emotions. Priester and Petty (1996) and Priester, Petty, and Park (2007) suggest the
gradual threshold model (GTM) as the most appropriate formula to calculate mixed
emotions (i.e., ambivalence) on the basis of particular reactions of the respondents. Below
a certain threshold, ambivalence is a function of both dominant and conflicting reactions.
Above that threshold, ambivalence is a positive and negatively accelerating function of the
conflicting reactions. That is, although feelings of ambivalence generally increase as
conflicting reactions increase, the initial conflicting reactions produce a greater increase in
ambivalence than subsequent conflicting reactions. In the GTM, the threshold gradually
emerges as conflicting reactions become more numerous (Priester & Petty, 1996; Priester
et al.). Furthermore, it does not matter whether conflicting reactions are positive or
negative (Priester et al.)thus, for some entrepreneurs the conflicting reactions (i.e.,
emotions) will be positive, for others negative.
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We also consider emotions based on different associated cognitive appraisal patterns, in accord with the cognitive appraisal tendency approach (Keltner et al., 1993;
Lerner & Keltner, 2000, 2001; Smith & Ellsworth, 1985). We assume that each emotion
activates a cognitive predisposition appraising future events in line with the central
appraisal dimensions that triggered the emotion (Lerner & Keltner, 2000). In this view,
there is a strong relation between how a person interprets a situation along certain
emotion-relevant dimensions and what the person feels and how the person appraises
future events (Smith & Ellsworth, 1987). These dimensions include (1) pleasantness
the extent to which the situation is perceived as being pleasant or unpleasant; (2) anticipated effortthe extent to which the person feels a need to expend effort (either
physical or mental) in the situation; (3) attentional activitythe extent to which the
person wants to attend to or shut out the situation; (4) certaintythe extent to which the
person understands or is sure of what is happening or going to happen in the situation;
(5) responsibilitywho or what the person perceives as having brought about the situation, either oneself or someone or something else; (6) controlwho or what the person
perceives as currently being in control of the situation, either oneself, some other person
or persons, or uncontrollable circumstances; (7) legitimacythe extent to which the
situation is perceived as fair or unfair; and (8) perceived obstaclethe extent to which
the person perceives problems or obstacles in the situation that are hampering the attainment of an desired goal. In line with Lerner and Keltner (2000, 2001) and Foo (2011),
we focus on two of these dimensions, certainty and control, which mediate the relationship between emotions and risk perception (Lerner & Keltner, 2001) and are thus of
great importance in the entrepreneurial setting (Baron, 1998). In general, emotion adjectives that are associated with the basic emotions of happiness and anger score high on
the control and certainty dimension, while adjectives associated with hope and fear have
a low score on control and certainty (Smith & Ellsworth). For instance, fear is triggered
by the perception that negative events are unpredictable and uncontrollable (Foo; Lerner
& Keltner, 2000, 2001).
The ambivalence literature is quite neutral to what constitutes conflicting and dominant reactions to the researched issues (Priester & Petty, 1996, 2001). Although the
valence-based approach to emotions can be more easily fit into the ambivalence conceptualization (e.g., Fong, 2006; Fong & Tiedens, 2002), one can also distinguish dominant
and conflicting reactions on the basis of the cognitive appraisal approach. If, for an
entrepreneur, the number of experienced emotional adjectives that score highly on certainty and controllability exceeds the number of experienced adjectives that have a low
score on certainty and controllability, we call the former emotions dominant and the latter
conflicting (and vice versa). The arguments from the ambivalence literature regarding the
prominence of conflicting emotions influence should also hold in case of cognitive
appraisals approach (Priester & Petty, 1996, 2001).
Following the AIM, the effect of conflicting emotions on judgments in general and
risk perception in particular works through two complementary mechanisms. First, with
direct affect-as-information mechanism, where feelings are used as if it was information
about the issue in question, as the level of conflicting emotions regarding a certain issue
increases, entrepreneurs will experience this odd mixture of emotions more strongly and
therefore recognize it more easily. As a result, entrepreneurs will more likely experience
the focal issue as unusual and feel uncomfortable about it (Fong, 2006). Feeling uncomfortable will lead to a cautious, conservative judgment on the issue, resulting in a higher
perception of risk.
With the indirect affect-priming mechanism, where feelings determine the type
of information used to assess a certain issue, the more entrepreneurs experience and
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recognize conflicting emotions, the more they will be sensitive to unusual associations
(Fong, 2006). Facing an overload of information in the judgment process, entrepreneurs
implicitly or explicitly have to make choices regarding what information to retrieve,
encode, and use. This may lead to overly simplistic analyses of complex situations,
directing attention to a limited set of variables and exclusion of other important variables
(Simon & Houghton, 2002). Moreover, it often leads to the retrieval of success stories and
positive information, neglecting failures and negative information (Golder & Tellis, 1993;
Simon et al., 2000). Normally, such selection will result in too-optimistic judgments and
a lower perception of risk. However, when entrepreneurs become more sensitive to
unusual associations, they are more likely to take more variables into account and access
the less-obvious knowledge structures, thus enriching the information search process
(Fong). This will lead to a richer set of associations and interpretations including both
positive/success stories and negative/failure stories. Therefore, mixed emotions are likely
to be associated with a higher perception of risk.
Both mechanisms indicate that an increase in the level of conflicting emotions will
lead to a higher perception of entrepreneurial risk. Moreover, experiencing conflicting
emotions is associated with a feeling of indecisiveness (Priester & Petty, 1996, 2001). The
higher the level of indecisiveness, the greater the level of risk entrepreneurs are likely to
perceive. Therefore, we hypothesize:
Hypothesis 1a: Conflicting emotions in terms of valences (i.e., positive vs. negative
emotions) will have a stronger association with the risk perception of entrepreneurs
than dominant emotions in terms of valences will.
Hypothesis 1b: Conflicting emotions in terms of cognitive appraisal tendencies (i.e.,
certain and controllable vs. uncertain and uncontrollable) will have a stronger association with the risk perception of entrepreneurs than dominant emotions in terms of
cognitive appraisals will.
Although the concepts of dominant and conflicting emotions can be applied to both
valence-based and cognitive appraisal tendency approaches, there are numerous arguments suggesting the superiority of the latter approach in explaining the connection
between emotions and risk perception. First, researchers note that the mere ability of
feeling distinct emotions should result in their differential influence on many cognitive
and motivational processes (cf. DeSteno, Petty, Rucker, Wegener, & Braverman, 2004).
Second, because the occurrence of a certain type of event roughly predicts the occurrence
of other events of the same type and because particular specific emotions mark such
categories of events, the impact of affect is likely to be emotion specific rather than
valence specific (DeSteno et al., 2000; Fessler, Pillsworth, & Flamson, 2004). It is
unlikely that emotions sharing the same valence would necessarily have the same effect on
risk taking because valence is not uniformly associated with different classes of functional
goals (Fessler et al.). Studies show that different emotions of the same valence can have
completely opposite effects in a variety of decision-making situations and that emotions
with the same cognitive appraisal tendency are more alike than emotions of the same
valence (e.g., DeSteno et al.; Fessler et al.; Lerner & Keltner, 2000, 2001; Raghunathan &
Pham, 1999). Likewise, dissimilarity in terms of cognitive appraisal tendency should be
more influential than dissimilarity in terms of valence. For risk judgments, certainty and
controllability appraisals are shown to be most essential (Lerner & Keltner, 2000, 2001).
Because these two appraisal tendencies produce opposing effects on risk judgments (e.g.,
Foo, 2011), conflicting emotions with contrasting certainty and controllability should also
produce a greater feeling of discomfort and irregularity than conflicting emotions based
on contrasting valences. Once again, feelinguncomfortable will lead to a cautious,
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conservative judgment on the issue, resulting in a higher perception of risk. Therefore, we

hypothesize:
Hypothesis 2: Conflicting emotions in terms of cognitive appraisal tendencies (i.e.,
certain and controllable vs. uncertain and uncontrollable) will have a stronger association with the risk perception of entrepreneurs than conflicting emotions in terms of
valences (i.e., positive vs. negative emotions) will.
Promoting entrepreneurship as the driver of economic growth aims to increase the
number of entrepreneurs founding new ventures. Having past experience as an entrepreneur can increase the probability of actually transitioning from paid employment to
entrepreneurship by 12%, while serial entrepreneurs can account for as many as 30% of
such transitions (Hyytinen and Ilmakunnas, 2007). Serial (also referred to as habitual)
entrepreneurs therefore represent a very valuable population from a policy perspective
(Wiklund & Shepherd, 2008). Moreover, serial entrepreneurs can play an important role
in promoting economic growth as they can potentially build upon their experience and
start more successful ventures. One of the executive forums of the Journal of Business
Venturing (1986) was called To really learn about entrepreneurship, lets study habitual
entrepreneurs, which accurately reflects the relevance of the study of serial entrepreneurs
to practitioners and the popularity of success stories of serial entrepreneurs.
As entrepreneurs found more new ventures and gain more experience in creating and
running new businesses, their intuition develops as well (Mitchell, Friga, & Mitchell,
2005). Although entrepreneurs newly accumulated insights and expert knowledge structures are pillars supporting intuition (Mitchell et al.; Shane, 2000), emotions are also one
of the characteristic features of intuition (Epstein, 1994; Kahneman, 2003). Moreover,
intuition is often depicted as being primarily nonverbal and intimately associated with
affect (Denes-Raj & Epstein, 1994). Consequently, as serial entrepreneurs tend to rely
more on intuition in their judgments, they are also more likely to engage emotions in their
judgments. Accordingly, both valence-based and cognitive appraisal tendency perspectives on emotions should play greater roles in the judgment processes of more experienced, serial entrepreneurs. Thus, we hypothesize:
Hypothesis 3a: Conflicting emotions in terms of valences (i.e., positive vs. negative
emotions) will play a greater role in risk judgments of serial entrepreneurs than in risk
judgments of novice entrepreneurs.
Hypothesis 3b: Conflicting emotions in terms of cognitive appraisal tendencies (i.e.,
certain and controllable vs. uncertain and uncontrollable) will play a greater role in
risk judgments of serial entrepreneurs than in risk judgments of novice entrepreneurs.
Control Variables
In this study, we use the basic emotions of anger, fear, happiness, and hope as control
variables. On the basis of past research, we expect these emotions to be associated with
entrepreneurial risk perception. However, the direction of the associations is not clear. The
valence-based approach would predict a positive association of anger and fear with
entrepreneurial risk perception and a negative association of happiness and hope
with entrepreneurial risk perception (Johnson & Tversky, 1983). The cognitive appraisal
tendency approach would generally predict a positive association of fear and hope with
entrepreneurial risk perception and a negative association of anger and happiness
with entrepreneurial risk perception (Lerner & Keltner, 2000, 2001). At the same time, not
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all of the cognitive appraisal dimensions show a stable link between emotions and their
appraisal tendencies, making these predictions preliminary (Smith & Ellsworth, 1987;
Tong et al., 2009). Another factor making these predictions more difficult is the nature of
our sample. We also control for entrepreneurs who are familiar with the case we present
in the study and their entrepreneurial experience.
Method
Sample and Data Collection
The participants for this study were drawn from the list of 6,359 founders of venturebacked firms provided by VentureOne, a leading venture capital (VC) research company
based in San Francisco. VentureOne began tracking equity investment in 1992. It collects
data by surveying VC firms for recent funding activities and portfolio updates, gathering
information through direct contacts at venture-backed companies, and investigating
various secondary resources such as company press releases and initial public offering
prospectuses from VentureOne 2001. We randomly selected 1,100 entrepreneurs with
complete contact information for the study.
In administering the scenario and the related questionnaire, we followed the total
design method for survey research (Dillman, 1978). The first mailing packet included a
personalized letter, a project fact sheet, the survey, a priority postage-paid envelope with
an individually typed return-address label, and a list of research reports available to
participants. The package was sent by priority mail to each randomly selected entrepreneur. As a result of some packages being undeliverable for name or address reasons, the
adjusted sample comprised 776 entrepreneurs.
To increase the response rate, we sent four follow-up mailings to the companies. One
week after the mailing, we sent a follow-up letter. Two weeks after the first follow-up, we
sent a second package with the same content as the first package to all nonresponding
companies. After two additional follow-up letters, we received completed questionnaires
from 255 entrepreneurs, representing a response rate of 32.9%. Two respondents indicated
that they had no active experience as venture founders and were omitted from the analysis.
In our final sample, 181 were male and 72 were female. The highest degree obtained for
46 of the entrepreneurs was high school; for 124, bachelor degree; for 74, masters degree;
and for 9, doctoral degree. The mean age of the respondents was 42.4 years. On average,
they founded 4.4 ventures, were currently involved in 2.1 ventures, and had 14.5 years of
entrepreneurial experience.
Measurements
In our study, we used existing cases and scales from the literature. We conducted a
pretest by extensively interviewing 12 entrepreneurs. At the beginning of each interview,
entrepreneurs told us about the background of their ventures, how they started, how they
discovered the opportunity, and how the business idea developed over time. This allowed
us to get the conversation started and better interpret their answers on the questionnaire.
In the last part of the interview, we used the protocol method and asked the entrepreneurs
to think aloud as they filled out the questionnaire (Hunt, Sparkman, & Wilcox, 1982).
The interviews were recorded and two researchers made careful notes of the verbalizations and the thinking process of the entrepreneurs. The analysis of interviews led to minor
changes in the wording of the instructions and cases description.
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For the sake of ecological validity of our results, we chose to center measures of all
the variables in our study around a strategic issue, signifying an important environmental
event, trend, or development for which future resolution will be sought (Dutton &
Jackson, 1987). The selected issue was extensively pretested in earlier studies to be sure
that it represents an ambiguous event that could be interpreted both as a positive and as a
negative change in the competitive environment (Highhouse et al., 1996). As a result, the
meaning of the strategic issue is not inherent in the external environment and it is up to
firms decision makers to interpret the event (Dutton & Jackson). Meanings attached to
strategic issues color the subsequent affective and cognitive decision processes of the
decision makers. This ambiguity allowed us to maximize the chance that entrepreneurs in
our sample will experience mixed emotions, the focus of our study (Folkman & Lazarus,
1985; Larsen et al., 2004).
The strategic issue we chose was originally used by Dutton and Jackson (1987) as an
anecdotal example that everybody can easily relate to. Considering the potential differences in the backgrounds of entrepreneurs, this seems to be the most appropriate choice.
Highhouse et al. (1996) adapted the issue in their study of strategic-issue framing. In our
study, we used the version found in Highhouse et al. It reads as follows:
Imagine that you are the owner of a retail clothing store. You have historically
prospered by occupying a choice downtown location. You have just found out that
plans are underway to construct a large suburban shopping mall ten miles from your
current place of business. (p. 97)
Highhouse et al. (1996) found that the description above is a neutral description of the
strategic issue; it is neither representing a positive situation nor a negative one. Thus,
positive or negative assessments of this situation are interpretations of the decision
makers.
Dependent Variable. To measure risk perception, we asked the respondents to characterize on 7-point scales whether they saw the strategic issue as an opportunity or as a threat
and as having a potential for loss or a potential for gain. We also asked whether they
characterized the issue as a positive or a negative situation (Jackson & Dutton, 1988;
MacGrimmon & Wehrung, 1985; Sitkin & Weingart, 1995). Cronbachs a for the risk
perception construct is 0.81.
Independent Variables. To objectively assess mixed emotions (Priester & Petty, 1996),
respondents were asked to rate on 7-point scales the extent to which each of 16 emotion
adjectives described how they were feeling about the strategic issue, allowing for naturally
occurring emotions. This approach differs from the priming technique to make the participants feel a certain emotion that is unrelated to the specific issue involved (e.g., Foo,
2011; Lerner & Keltner, 2001). Sixteen emotion descriptors were selected from a list of
25 adjectives presented by Smith and Ellsworth (1987); eight positive and eight negative
feelings were selected to allow for contrasting the valence-based and cognitive appraisal
tendency approaches. Also, eight of the 16 adjectives were associated with high certainty
and controllability appraisals and eight were associated with relatively low certainty and
controllability appraisals (Lerner & Keltner, 2000, 2001; Smith & Ellsworth, 1985, 1987).
Table 1 summarizes the valences and dimensions for each emotion adjective.
By employing a mean split, we determined whether a particular emotion adjective was
experienced (1) or not (0). This served as the basis for calculating the mixed emotions
measures for both the valence-based and cognitive appraisal tendency approaches.
Because the ambivalence literature shows that conflicting emotions drive ambivalence, we
124
Table 1
Characteristics of 16 Emotional Adjectives
Emotional
adjective
Afraid
Amused
Angry
Anxious
Challenged
Elated
Expectant
Happy
Hopeful
Interested
Nervous
Proud
Resentful
Restless
Scornful
Surprised
Valence
Certainty
appraisal
Controllability
appraisal
Negative
Positive
Negative
Negative
Positive
Positive
Positive
Positive
Positive
Positive
Negative
Positive
Negative
Negative
Negative
Negative
Low
High
High
Low
Low
High
Low
High
Low
Low
Low
High
High
Low
High
High
Low
High
High
Low
Low
High
Low
High
Low
Low
Low
High
High
Low
High
High
first computed the separate dominant and conflicting emotions scores in order to test their
relative importance for entrepreneurs. For the valence-based approach, we calculated the
dominant emotions for each respondent on the basis of positive and negative valence by
taking the greater of either the sum of experienced positive adjectives or the sum of
experienced negative adjectives (Priester & Petty, 1996, 2001). For the cognitive appraisal
tendency approach, we calculated dominant emotions associated with dissimilar cognitive
appraisals by taking the greater of either the sum of experienced emotions with high
certainty and controllability appraisals or the sum of experienced emotions with low
certainty and controllability appraisals. For conflicting emotions, we followed the same
procedure, but took the lesser instead of the greater of the sums of experienced emotions
(Priester & Petty, 1996, 2001).
In order to calculate mixed emotions for both approaches, we used the GTM formula
suggested by Priester and Petty (1996) as the most appropriate measure of ambivalence:
5Cp D1/C
where C is equal to the magnitude of conflicting reactions, D is equal to the magnitude of
dominant reactions, p is less than 1 (0.5 in the present instance), and a constant of 1 is
added to C and D (Priester & Petty, 2001).
Control Variables. The findings of Smith and Ellsworth (1987) demonstrate that the 16
emotion adjectives correspond to four basic emotions: anger, fear, happiness, and hope.
Anger was depicted by such adjectives as resentful, angry, surprised, and scornful; fear
by nervous, afraid, restless, and anxious; happiness by elated, happy, amused, and proud;
and hope by expectant, hopeful, challenged, and interested. After the exploratory factor
analysis we dropped the adjective anxious from the fear construct and the adjective
interested from the hope construct due to their cross loadings. On the basis of the
January, 2012
125
remaining adjectives, Cronbachs a for anger, fear, happiness, and hope were 0.83, 0.83,
0.79, and 0.78, respectively, suggesting good reliabilities (Nunnally, 1978). Finally,
although emotions are one of the characteristic features of intuition (Epstein, 1994;
Kahneman, 2003), entrepreneurial intuition can also be based on prior knowledge and
expert knowledge structures (Mitchell et al., 2005; Shane, 2000). We thus added the
entrepreneurs familiarity with the strategic issue and number of ventures founded as
controls to our model in order to distinguish knowledge-based effects from our findings.
We measured familiarity by the extent to which entrepreneurs could relate the strategic
issue to one of the decisions they had made in the past. Number of ventures founded was
measured by the number of ventures in which the entrepreneurs were actively involved as
a founder. Finally, we added the common control variables of age, gender, type, and level
of education.
Analysis and Results

Prior to testing the hypotheses, we examined the correlation matrix, shown in
Table 2. The measures of mixed, conflicting, and dominant emotions appear to be
highly correlated (0.740.96), so we do not include any two of these variables in the
same regression model. The correlations between these types of emotions and basic
emotions are also quite large, although lower (i.e., ranging between 0.47 and 0.70 with
the majority around 0.60). In models combining basic and mixed emotions, we meancentered all emotion variables in order to eliminate the nonessential multicollinearity
due to the computation formula of mixed emotions components (Aiken & West, 1991;
Cohen, Cohen, West, & Aiken, 2003; Kenny & Judd, 1984). An application of Belsley,
Kuh, and Welsch (1980) diagnostic tests indicated no serious multicollinearity problems
in the mean-centered regression models (maximum variance inflation factor was
5.5 < 0; maximum condition index was 22.3 < 30, while the proportion of variance
inflated for emotions did not exceed 0.05 < 0.50). However, because the maximum variance inflation factor does not exceed 1.83 in other models, caution is necessary when
interpreting the results when both basic emotions and mixed emotions are entered into
the same models.
To test the hypothesized relationships, we performed hierarchical regression analysis
(Cohen & Cohen, 1983; Cohen et al., 2003). This method examines the effects of additional variables above and beyond the effects of the variables in the previous model. In
Table 3, we present a summary of the results of eight regression models.
All the regression models were highly significant, with F-values ranging between 4.29
and 8.71 (p < .001). In the first baseline model, we only examined the effects of the control
variables on entrepreneurial risk perception. In model 2, we added the basic emotions
based on positive and negative valence. In model 3, we added the mixed emotions based
on positive and negative valence. In models 4 and 5, we split the mixed emotions from
model 2 into dominant and conflicting emotions in order to determine their relative effect
on mixed emotions. In model 6, we added the mixed emotions associated with different
cognitive appraisals. Finally, in models 7 and 8, we split the mixed emotions from model
6 into dominant and conflicting emotions in order to determine their relative effect on
mixed emotions. The results from the hierarchical regressions suggest that all models
represent significant improvements over model 1.
We also conducted regressions by adding the basic emotions to models 3 to 8 (not
reported in Table 3). Only mixed and conflicting emotions in terms of cognitive appraisal
tendencies remained significant with a coefficient (standard error) of 0.065 (0.035),
126
January, 2012
127
Risk perception
Mixed (Val.)
Conflicting (Val.)
Dominant (Val.)
Mixed (Cogn. Appr.)
Conflicting (Cogn. Appr.)
Dominant (Cogn. Appr.)
Anger
Fear
Happy
Hope
Age
Business degree
Degree level
Familiarity with issue
Female entrepreneur
Number of ventures
4.22
7.87
3.11
4.89
7.93
3.13
4.87
4.33
4.53
3.68
4.93
42.38
0.60
2.18
5.22
1.28
4.40
Mean
1.33
3.60
2.32
2.30
3.53
2.33
2.35
1.25
1.39
1.48
1.14
12.76
0.49
0.77
1.57
0.45
2.82
SD
0.26
0.33
0.35
0.37
0.41
0.26
0.22
0.26
0.43
0.07
0.02
0.06
-0.02
0.07
-0.11
0.26
0.96
0.74
0.78
0.83
0.85
0.65
0.69
0.47
0.61
0.02
0.24
0.12
0.14
0.09
0.47
0.82
0.84
0.91
0.89
0.67
0.70
0.56
0.65
0.04
0.29
0.15
0.18
0.10
0.54
0.82
0.88
0.91
0.64
0.64
0.57
0.61
0.01
0.30
0.14
0.21
0.03
0.51
0.96
0.68
0.60
0.62
0.56
0.51
0.01
0.23
0.09
0.15
0.02
0.45
0.77
0.65
0.65
0.61
0.59
0.04
0.27
0.12
0.19
0.06
0.52
0.64
0.67
0.50
0.66
0.02
0.31
0.16
0.19
0.07
0.51
0.49
0.32
0.43
0.05
0.13
0.09
0.08
0.00
0.38
0.32
0.41
0.02
0.16
0.12
0.15
0.02
0.46
Note: Correlations of |0.13| and above are significant at p < .05; correlations of |0.17| and above are significant at p < .01.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Constructs
Descriptive Statistics (N = 253)
Table 2
0.21
0.07
0.08
0.00
-0.07
0.03
0.24
10
0.03
0.35
0.20
0.20
-0.02
0.47
11
0.01
0.09
-0.06
0.05
0.04
12
0.20
0.27
0.02
0.48
13
0.01
0.01
0.24
14
0.10
0.29
15
0.07
16
Table 3
Hierarchical Regression Results for Entrepreneurial Risk Perception (N = 253)a
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8
Intercept
4.317***
(0.486)
Anger
Fear
Happiness
Hope
Age
Business degree
Education level
Familiarity
Female entrepreneur
Number of ventures
founded
Mixed emotionsb
(Valence)
Conflictingb
(Valence)
Dominantb
(Valence)
Mixed emotionsc
(Cogn. Appr.)
Conflictingd
(Cogn. Appr.)
Dominantb
(Cogn. Appr.)
2
R
D R2
Adj. R2
0.002
(0.006)
-0.203
(0.190)
-0.139
(0.110)
0.011
(0.055)
-0.373*
(0.180)
0.151***
(0.034)
3.229***
(0.562)
0.048
(0.072)
0.084
(0.067)
0.350***
(0.055)
-0.181*
(0.080)
-0.000
(0.006)
-0.110
(0.176)
-0.066
(0.101)
0.066
(0.051)
-0.418*
(0.164)
0.094**
(0.035)
3.993***
(0.493)
4.257***
(0.473)
3.875***
(0.479)
3.676***
(0.485)
4.183***
(0.459)
4.072***
(0.488)
0.002
(0.006)
-0.214
(0.187)
-0.142
(0.108)
0.012
(0.054)
-0.409*
(0.178)
0.110**
(0.036)
0.071**
(0.025)
0.001
(0.006)
-0.232
(0.185)
-0.145
(0.107)
0.007
(0.053)
-0.421*
(0.175)
0.084*
(0.037)
0.002
(0.006)
-0.253
(0.183)
-0.150
(0.106)
-0.005
(0.053)
-0.368*
(0.173)
0.085*
(0.036)
0.002
(0.006)
-0.213
(0.182)
-0.128
(0.105)
0.004
(0.053)
-0.359*
(0.172)
0.085*
(0.035)
0.001
(0.006)
-0.223
(0.179)
-0.139
(0.103)
-0.003
(0.052)
-0.397*
(0.169)
0.061
(0.035)
0.002
(0.006)
-0.244
(0.188)
-0.150
(0.108)
0.006
(0.054)
-0.391*
(0.177)
0.110**
(0.037)
0.159***
(0.040)
0.175***
(0.039)
0.118***
(0.025)
0.216***
(0.038)
0.095***
0.073
0.260***
0.165**
0.230
0.123***
0.028**
0.098
0.149***
0.054**
0.125
0.163***
0.068**
0.139
0.172***
0.077**
0.149
0.199***
0.104**
0.176
0.107**
(0.040)
0.121***
0.026**
0.096
p < 0.10; * p < 0.05; ** p < 0.01; *** p < 0.001

Parameter estimates are reported with standard errors in parentheses; significance levels for R2 correspond to the
respective F statistics.
b
These variables become insignificant after adding the basic emotions to the model.
c
The coefficient (standard error) was 0.065 (0.035), p = 0.0643 after controlling for the basic emotions.
d
The coefficient (standard error) was 0.199 (0.065), p = 0.0026 after controlling for the basic emotions.
p = 0.0643, for mixed emotions and a coefficient (standard error) of 0.199 (0.065),
p = 0.0026, for conflicting emotions. Mixed and conflicting emotions in terms of valence
became insignificant after adding the basic emotions. As a result, hypotheses 1b and 2
were supported while hypothesis 1a was not.
In all models, familiarity with the strategic issue is insignificant, while number of
ventures founded was positive and significant. Being a female entrepreneur has a negative
128
significant relationship with risk perception. Among the basic emotions, both anger and
fear are insignificant, while hope has a significant negative association with entrepreneurial risk perception, as predicted by the valence-based approach. Happiness is strongly
positively associated with entrepreneurial risk perception. Remarkably, this positive association is predicted by neither the valence-based approach nor the cognitive appraisal
tendency approach as formulated for the emotions unrelated to the issue in question
(Lerner & Keltner, 2001).
In order to test hypothesis 3a and b, we conducted a subgroup moderating analysis
because entering an interaction term into models with both basic and mixed/conflicting
emotions would raise the variance inflation factor beyond the acceptable level of 10 (Hair,
Black, Babin, Anderson, & Tatham, 2005). Because our goal was to distinguish novice
entrepreneurs from more experienced counterparts, we first examined the scatter plot and
the fitted regression line between risk perception and number of ventures founded. The
plot indicated that there is a negative relationship between the two variables that turns
positive between two and three ventures founded. This supported the idea that launching
only one venture does not make an entrepreneur experienced. Therefore, we chose to split
the sample for the subgroup moderator analysis so that novice entrepreneurs would have
a maximum of two ventures of active founding experience. Further supporting this split,
the number of ventures founded was not significant in the regression models (although the
coefficients were negative) for novice entrepreneurs and was significantly positive for
serial entrepreneurs. To be sure, we ran the same regression sets while drawing the line
between three and four ventures founded. In this scenario, the number of ventures founded
became significantly positive for the novice entrepreneurs as well, indicating learning
effects. Thus, we decided to form the subsample of novice entrepreneurs by focusing on
entrepreneurs with a maximum of two ventures of active launching experience. Thereby,
we defined serial entrepreneurs as entrepreneurs that founded three or more ventures.
The moderator analysis (see Tables 4 and 5) showed that conflicting emotions are only
significant for serial entrepreneurs, supporting hypothesis 3a and 3b. At the same time,
only the effect of conflicting emotions in terms of cognitive appraisals remains significant
after entering the basic emotions into the same regressions. The moderator analysis also
revealed why anger had an insignificant effect in the full sample analysis: Anger is the
only significant emotion in the novice entrepreneurs group with a negative association
with risk perception, while it has a significantly positive association with the risk perception of serial entrepreneurs, although it fades away when we add the conflicting emotions.
In fact, the overall transition from novice to serial entrepreneur can be characterized as a
case of anger management and starting to pay more attention to conflicting emotions and
positive emotions. Interestingly, familiarity with the strategic issue is only significant for
novice entrepreneurs. Gender effects have the same pattern, suggesting that founding
experience equalizes the way entrepreneurs perceive the riskiness of strategic issues. We
now further discuss the most intriguing findings.
Discussion
In this study, we conceptualized mixed emotions using the ideas from the cognitive
appraisal tendency approach and contrasted this with the more traditional conceptualization from the valence-based approach (i.e., ambivalence). To ensure that we examined a
true entrepreneurial phenomenon, we distinguished between novice entrepreneurs who
had founded one or two new ventures and experienced serial entrepreneurs who had
founded more than two new ventures. The central argument of the mixed emotions
January, 2012
129
Table 4
Hierarchical Regression Results for Entrepreneurial Risk Perceptiona N = 75,
Novice Entrepreneurs (Entrepreneurs with One or Two Ventures Where They
Actively Served as a Founder)
Intercept
Anger
Fear
Happiness
Hope
Age
Business degree
Education level
Female entrepreneur
Number of ventures founded
Model 1
Model 2
Model 3
4.223***
(1.055)
-0.256*
(0.120)
0.199
(0.129)
0.182
(0.107)
0.049
(0.126)
-0.010
(0.010)
-0.354
(0.322)
-0.039
(0.175)
0.181*
(0.086)
-0.553
(0.287)
0.237
(0.264)
4.919***
(0.901)
-0.309*
(0.139)
0.118
(0.166)
0.128
(0.128)
-0.004
(0.144)
-0.008
(0.010)
-0.351
(0.323)
-0.037
(0.176)
0.173*
(0.086)
-0.572
(0.289)
-0.229
(0.265)
0.120
(0.156)
5.007***
(0.893)
-0.299*
(0.123)
0.099
(0.146)
0.065
(0.134)
-0.039
(0.140)
-0.007
(0.010)
-0.268
(0.326)
-0.029
(0.174)
0.163
(0.086)
-0.550*
(0.285)
-0.286
(0.264)
Conflicting (Valence)
R2
D R2
Adj. R2
0.260***
0.144
0.267***
0.007
0.139
0.200b
(0.141)
0.282***
0.022*
0.157
p < 0.10; * p < 0.05; ** p < 0.01; *** p < 0.001

b
Conflicting emotions were significant at p < 0.05 before adding the basic emotions to the model.
literature is that when individuals feel a blend of different emotions, it is important to

distinguish which types of emotions are dominant and which are conflicting with them.
The counterintuitive of the findings in this literature is that the conflicting emotions have
a profound effect on judgments rather than dominant ones (Fong, 2006; Priester & Petty,
1996, 2001). Therefore, we also explicitly examined the role of dominant versus conflicting emotions using both the cognitive appraisal tendency approach and the valence-based
approach. Our results show that mixed emotions under each approach taken alone show
a strong positive relationship with the risk perception of entrepreneurs and thus are likely
to lead to conservative and cautious behavior. However, after controlling for the effect
of basic emotions (anger, fear, happiness, and hope), only the effects of the mixed and
conflicting emotions in terms of cognitive appraisals remain significant, with conflicting
emotions tending to have the strongest effect. These results are applicable to experienced,
130
Table 5
Hierarchical Regression Results for Entrepreneurial Risk Perceptiona N = 178,
Serial Entrepreneurs (Entrepreneurs with Three and More Ventures Where They
Actively Served as a Founder)
Model 1
Model 2
Model 3
Intercept
2.975***
(0.753)
4.195***
(0.612)
4.349***
(0.597)
Anger
0.165
(0.091)
0.070
(0.079)
0.382***
(0.064)
-0.267*
(0.105)
0.000
(0.007)
0.111
(0.224)
-0.095
(0.126)
0.029
(0.064)
-0.295
(0.202)
0.099*
(0.041)
0.137
(0.103)
0.046
(0.089)
0.360***
(0.075)
-0.307*
(0.126)
0.000
(0.007)
0.085
(0.229)
-0.096
(0.126)
0.027
(0.064)
-0.318
(0.207)
0.095*
(0.042)
0.051b
(0.086)
0.053
(0.105)
0.007
(0.083)
0.287***
(0.078)
-0.361*
(0.113)
0.000
(0.007)
0.035
(0.225)
-0.092
(0.124)
0.010
(0.064)
-0.356
(0.202)
0.094*
(0.041)
Fear
Happiness
Hope
Age
Business degree
Education level
Female entrepreneur
Number of ventures founded
Conflicting (Valence)
R2
D R2
Adj. R2
0.315***
0.274
0.317***
0.002
0.271
0.164*,b
(0.078)
0.333***
0.018*
0.289
p < 0.10; * p < 0.05; ** p < 0.01; *** p < 0.001

b
These variables were significant at p < 0.001 before adding the basic emotions to the model.
serial entrepreneurs. For novice entrepreneurs, the results reveal a substantially different
picture where only the emotion of anger has a significant relationship to risk perception.
Theoretical Implications
These findings have several theoretical implications. First, we extended the list of
antecedents of entrepreneurial risk perception. Besides basic emotions (Foo, 2011), risktaking propensity (Mullins & Forlani, 2005), and cognitive biases (Simon et al., 2000),
conflicting emotions in terms of cognitive appraisals are an important antecedent of
entrepreneurs risk perception. Since the decision-making context of new venture
January, 2012
131
founders and chief executive officers of established firms become increasingly similar
(Eisenhardt & Sull, 2001; Walsh et al., 2006), mixed and conflicting emotions are likely
to play a substantial role in decisions of the latter group as well.
Second, we found that mixed and conflicting emotions associated with different
cognitive appraisals have a much stronger relationship with the risk perception of entrepreneurs than mixed and conflicting emotions based on differences in positive and negative valence (traditional ambivalence). Apparently, the former mixed and conflicting
emotions are considered as more atypical by entrepreneurs. At the same time, taken
together with findings of Fong (2006), these results suggest an interesting implication for
the opportunity recognition and evaluation research. In particular, Fong finds that individuals who are feeling emotionally ambivalent in the traditional sense demonstrate an
increased sensitivity to associations and creativity. She also calls for more research on the
consequences of ambivalence, which do not necessarily have to be beneficial. Our study
answers this call by showing that, although traditional ambivalence may trigger better
opportunity recognition, mixed emotions in terms of different appraisals may trigger
opportunity refusal by increasing risk perception. All in all, our findings support Foo
(2011) in that, in the entrepreneurial field, a further exploration of the cognitive appraisal
tendency approach to emotions is a very promising direction.
Third, our findings indicate that there is a qualitative change in the way entrepreneurs
engage emotions in their risk judgments of strategic issues after they found their third
venture. In particular, the sign of the association of anger with risk perception is negative for
novice entrepreneurs, consistent with the predictions and findings of cognitive appraisal
studies (e.g., Foo, 2011; Lerner & Keltner, 2000, 2001). Interestingly, anger is the only
significant emotion in judgments of novice entrepreneurs. However, the sign flips over to be
positive and neutral when we consider the relationship between anger and the risk
perception of serial entrepreneurs. Moreover, conflicting emotions and both positive
emotions (happiness and hope) become significant. This moderating effect of the number of
founded ventures, together with its relatively high correlations with all types of both basic
and mixed emotions, suggests that emotional reactions of entrepreneurs on strategic issues
change substantially as they found more ventures and become serial entrepreneurs.
However, the relationship between entrepreneurs cognitive appraisals and their emotions is still not clear. There are two possible theoretical explanations for this finding: one
is personality related and the other context related. On one hand, entrepreneurs as a
population may have different scores on the cognitive appraisal dimensions compared to
psychology students typically used for calibrating the appraisals (Smith & Ellsworth,
1987). As we argued earlier, the certainty and control dimensions of emotions are essential
for judgments of risk. These dimensions are likely to be evaluated differently by entrepreneurs because entrepreneurs score low on uncertainty avoidance and tend to have an
internal locus of control that may even become an illusion of control (Busenitz & Barney,
1997; McGrath, MacMillan and Scheinberg, 1992; Mueller and Thomas, 2001). For
entrepreneurs, scores on cognitive appraisal dimensions could shift across emotions and
become more certain and more self-controlled. On the other hand, appraisals of some
emotions could change from one situation to another (for a review, see Tong et al., 2009).
For example, although typically, instances of anger are associated with an appraisal of
certainty, this appraisal is not essential to the experience of this emotion (Smith &
Ellsworth), which could also explain the insignificant effect of anger (for serial entrepreneurs) and fear in our study. Moreover, entrepreneurship is often characterized as a
phenomenon centering around opportunity discovery/creation and exploitation (e.g.,
Ireland & Webb, 2007; Shane & Venkataraman, 2000; Sorenson & Stuart, 2008). Thus,
the setting itself where opportunities are being recognized and evaluated may shift the
132
cognitive appraisals of emotions associated with it. Especially, recognition of opportunities arising due to the differences and incongruences in perception represent an interesting
focus for such research as they are the most subjective and perception-dependent among
the different sources of opportunities known (Drucker, 1985; Eckhardt & Shane, 2003;
Ireland & Webb). According to appraisal theorists, information conveyed by a particular
affective state can be traced back to the meaning structure underlying the typical elicitation of that affect (Raghunathan & Pham, 1999). Because success (or failure) in contemporary society is one of the common metrics of emotionally loaded outcomes that shape
cognitive appraisals (Fessler et al., 2004), gaining entrepreneurial experience is also likely
to change cognitive appraisals. In fact, this argument should also apply to executives of the
more established firms who find themselves in increasingly similar situations (Walsh
et al., 2006). The interplay of experience and emotional responses is therefore an interesting alley of research.
Fourth, an intriguing question is whether conflicting emotions lead to higher entrepreneurial risk perception or whether it is the other way around: A higher entrepreneurial risk
perception leads to a higher level of conflicting emotions. We base our study on the
valence-based and cognitive appraisal tendency approaches, proposing that the
former assumption is true. But regulatory focus theory (Higgins, 2002; Higgins, Shah, &
Friedman, 1997) has recently been applied in the entrepreneurial field (Hmieleski & Baron,
2008; Wu, McMullen, Neubert, &Yi, 2008), proposing that the latter assumption is correct.
Regulatory focus theory assumes that self-regulation operates differently when serving
fundamentally different needs, such as distinct survival needs of nurturance or security.
Nurturant social regulation engenders a promotion focus; self-regulation is concerned with
the presence or absence of positive outcomes, with advancement, aspirations, and accomplishments. Security social regulation leads to a prevention focus; self-regulation is
concerned with the absence or presence of negative outcomes, with protection, safety, and
responsibilities (Higgins, 2002). Higgins finds that self-regulatory success or failure in a
promotion focus produces emotions along the cheerfulnessdejection dimension (e.g.,
happiness). Self-regulatory success or failure in a prevention focus produces emotions
along the quiescenceagitation dimension (e.g., fear). On the basis of regulatory focus
theory, one may, for instance, argue that when experienced, serial entrepreneurs with a
predominant promotion focus are faced with an ambiguous strategic issue, they will mainly
see it as an opportunity to maximize returns. As a result, the emotions that are based on
certainty and controllability are activated and dominant. However, when the risks increase,
protection and safety will become more important as part of a prevention focus. This will
lead to additional emotions based on uncertainty and uncontrollability. In this way, a higher
risk perception may lead to a higher level of conflicting emotions. Future research is
required to more closely examine these types of associations.
Fifth, we also controlled for basic emotions in our study. In line with the cognitive
appraisal tendency approach generally predicting opposite effects for some emotions of
the same valence (Foo, 2011; Lerner & Keltner, 2000, 2001; Smith & Ellsworth, 1985,
1987), we found a strikingly different effect of two emotions of the same positive
valencehappiness and hopeon the risk perception of serial entrepreneurs. In particular, we found that feeling hopeful about the focal issue has a negative relationship with risk
perception of the issue, while feeling happy about the same issue has a strong positive
relationship with risk perception. However, this does not apply to the negative emotions
of anger and fear, both of which remained largely insignificant. This implies that experienced, serial entrepreneurs tend to use positive emotions, but not negative ones, as a
heuristic for their judgments (Slovic, Finucane, Peters, & MacGregor, 2002). This may be
explained by the relatively greater optimism of entrepreneurs. Alternatively, it may be that
January, 2012
133
entrepreneurs dominant regulatory focus shifts to the promotion focus as they gain more
experience, because individuals high in promotion focus direct their primary attention
toward attaining positive outcomes and gains (Hmieleski & Baron, 2008).1 Future
research comparing these findings with the judgments of managers in traditional organizations could verify whether this explanation will hold.
Finally, our study shows that validating laboratory findings with field research is a
useful methodological alteration (Simon & Houghton, 2003), raising intriguing new
research questions. For instance, based on laboratory findings following both valencebased (Johnson & Tversky, 1983; Mayer et al., 1992) and cognitive appraisal tendency
approaches (Lerner & Keltner, 2001), we would predict a negative impact of happiness on
entrepreneurial risk perception. However, we found a strong positive impact. This result
may be explained by prospect theory. In the past, researchers in this field have concentrated on semantic framing, where the same issue is formulated either in negative or
positive terms. A vivid example of such framing is the widely used Asian disease
problem (Tversky & Kahneman, 1981). However, more recently, researchers started
shifting the focus to contextual and personal framing (e.g., Fiegenbaum, Hart, & Schendel, 1996; Highhouse et al., 1996). From the perspective of personal framing, one might
argue that happiness would lead to cautious behavior in order to keep the pleasant feeling,
which in turn would lead to a positive impact on risk perception. More field research is
needed to confirm and explain this finding.
Managerial Implications
What can entrepreneurs learn from our study? First, entrepreneurs should realize that
their emotions play an important role in their judgments and decision making. They also
should realize that the situations they face are often ambiguous. Under these circumstances, conflicting emotions are important drivers of their risk perception. This holds
especially for conflicting emotions associated with different cognitive appraisals, like
differences in how certain the entrepreneur is about the situation and in the controllability
of the situation. Whenever entrepreneurs feel that a certain event is both certain and
uncertain, or both controllable and uncontrollable, such feelings make the entrepreneurs
perception of risk greater than it would be otherwise resulting in more conservative risk
taking (e.g., Sitkin & Weingart, 1995).
Second, as entrepreneurs found more ventures, they learn to ignore their anger and
engage their positive emotionssuch as happiness and hopeas well as their conflicting
emotions in their risk judgments. To the extent these emotions are grounded in entrepreneurs experience in running ventures they are likely to convey relevant information. Thus,
novice entrepreneurs may find it useful to pay more attention to the positive and conflicting emotions, as modeled by their more experienced counterparts.
At the same time, entrepreneurs should become aware of the emotional influences on
their risk-taking behavior. After all, emotions influencing their decision making are not
necessarily based on relevant information. For example, entrepreneurs moods can change
their judgments (Forgas, 1995). Also, not all positive emotions are the same: While feeling
hope about a certain issue makes entrepreneur decisions more risk seeking, feeling
happiness about the same issue makes them more risk averse.
All in all, learning to handle their emotions is essential for entrepreneurs. After all, the
more experienced the entrepreneur, the more influence emotions will have on risk-taking
behavior.
1. We thank an anonymous reviewer for this comment.
134
Limitations and Future Research

This study has several limitations. First, studies on affect differentiate between moods
and emotions, which have different characteristics as described above. Even more substantial is the difference between the relatively enduring feeling of passion and the current
emotions we studied (Cardon et al., 2009), the interactions of which would be interesting
to explore. Future research may also include affective reactions of entrepreneurs to
different strategic events, for example, those related to decisions about new product
development stages, marketing strategy, or financing strategy. Second, the novice entrepreneurs in our sample founded one or two ventures. Still, some of these entrepreneurs
may be more successful than the others and as a result of that may decide not to found new
ventures. A related yet distinct aspect is the number of years the entrepreneurs are actively
involved in these ventures. Thus, more refined research that would also take these aspects
into account seems valuable.
Third, in applying the cognitive appraisal tendency approach, we followed Lerner and
Keltner (2000, 2001) and Foo (2011) and only focused on the certainty and controllability
dimensions due to their links with risk perceptions. Although these appraisals emotions
are very likely to be felt by entrepreneurs in the various decisions they have to make, it
would be worthwhile to study a richer set of emotions in future research (for an overview
of dimensions, we refer to Smith & Ellsworth, 1985, 1987). For example, other positive
and negative emotions besides the ones we studied could trigger a more profound relationship between ambivalence and risk perception, which could serve as an alternative
explanation for the weak performance of the valence-based approach to mixed emotions
in our study. The first candidate would be the emotion of sadness as a more direct opposite
for happiness besides the hope and fear juxtaposition we studied.2
Finally, in our study, we were neutral to the normative interpretation of the identified
relationships between emotions and risk perception, because the underlying scenario was
an ambiguous strategic issue that could be seen both as a positive or a negative event
(Highhouse et al., 1996). An interesting direction for future research would be to focus on
normatively good or bad decision situations and to explore the role of affect in those
situations. This would allow for the exploration of the moods and emotions that have a
polluting effect on entrepreneurial decision making. For example, emotions serve to
motivate and guide individuals with respect to salient objects in their environments, and
consequently, may increase adaptive responding to specific environmental challenges
quickly through heuristic or reflexive processes. However, when the informational value
of emotions is misapplied to stimuli not relevant to the current situation, nonoptimal (i.e.,
biased) judgments may result (DeSteno et al., 2000). Emotional reactions can diverge
from cognitive ones and produce behavioral responses that depart from what individuals
view as the best course of action (Blanchette & Richards, 2010; Loewenstein et al., 2001).
This promising line of thinking runs parallel to the research on cognitive biases, which
focuses on deviations from a certain normative reaction or judgment in a given situation
(e.g., Keh et al., 2002; Simon & Houghton, 2002, 2003; Simon et al., 2000).
Conclusion
This study identified mixed and conflicting emotions in terms of cognitive appraisals
as a predictor of entrepreneurs risk perceptions. However, we also found that the
2. We thank an anonymous reviewer for this comment.
January, 2012
135
relationship between both mixed and basic emotions and risk perception changes substantially as entrepreneurs gain more experience in founding new ventures. Finally, we
found that traditional cognitive appraisal tendencies calibrated with student samples do
not fully explain the observed relationships.
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Ksenia Podoynitsyna is an Assistant Professor of Entrepreneurship in the Innovation, Technology Entrepreneurship, and Marketing Group at the School of Industrial Engineering, Eindhoven University of Technology.
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1042-2587

2011 Baylor University

The Role of Mixed

ENTREPRENEURSHIP THEORY and PRACTICE

Theoretical Framework and Hypotheses

Valence-Based and Cognitive Appraisal Tendency Approaches

Mechanisms Explaining the Role of Affect in Judgment and

ENTREPRENEURSHIP THEORY and PRACTICE

The affect-as-information mechanism describes direct affect infusion: Instead of

ENTREPRENEURSHIP THEORY and PRACTICE

conservative judgment on the issue, resulting in a higher perception of risk. Therefore, we

ENTREPRENEURSHIP THEORY and PRACTICE

ENTREPRENEURSHIP THEORY and PRACTICE

Analysis and Results

ENTREPRENEURSHIP THEORY and PRACTICE

Descriptive Statistics (N = 253)

p < 0.10; * p < 0.05; ** p < 0.01; *** p < 0.001

ENTREPRENEURSHIP THEORY and PRACTICE

p < 0.10; * p < 0.05; ** p < 0.01; *** p < 0.001

literature is that when individuals feel a blend of different emotions, it is important to

ENTREPRENEURSHIP THEORY and PRACTICE

p < 0.10; * p < 0.05; ** p < 0.01; *** p < 0.001

ENTREPRENEURSHIP THEORY and PRACTICE

ENTREPRENEURSHIP THEORY and PRACTICE

Limitations and Future Research

ENTREPRENEURSHIP THEORY and PRACTICE

ENTREPRENEURSHIP THEORY and PRACTICE

ENTREPRENEURSHIP THEORY and PRACTICE

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p < 0.10; * p < 0.05; p < 0.01; * p < 0.001

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