Academy of Management Review
2008, Vol. 33, No. 2, 328–340.
THE ROLE OF AFFECT IN THE
ROBERT A. BARON
Rensselaer Polytechnic Institute
Research findings indicate that the feelings and moods individuals experience (i.e.,
their affect) influence many aspects of cognition and behavior. Extending these
findings to entrepreneurship, I suggest that affect influences several aspects of entrepreneurs’ cognition and, hence, important elements of the entrepreneurial process.
I propose a theoretical framework for understanding the role of affect in key aspects
of entrepreneurship (e.g., opportunity recognition, resource acquisition).
An extensive body of research indicates that
affect—feelings and emotions— exerts strong effects on cognition—the processes through which
information is entered into memory, processed,
and retrieved for later use (e.g., Forgas, 1995,
2000; Isen, 2002). Taken as a whole, this literature indicates that the interface between affect
and cognition is both continuous and pervasive.
In addition, it is reciprocal in nature so that, as
suggested by several authors, feelings shape
thought and thought shapes feelings (e.g., Isen
& Baron, 1991). The influence of affect on cognition has been observed in a wide of range business contexts, where it has been found to influence several individual, interpersonal, and
organizational processes (e.g., George & Brief,
1992; Weiss, Nicholas, & Daus, 1999). For instance, affect has been shown to influence decision making (e.g., Isen, 1993; Isen & Labroo,
2003), many kinds of judgments and evaluations
(e.g., performance appraisals, ratings of job applicants; Cropanzano & Wright, 1999), job satisfaction (e.g., Weiss, 2002), and performance on
many cognitive tasks (e.g., Staw & Barsade,
1993). Affect has also been shown to influence
several important forms of organizational behavior, ranging from willingness to engage in
citizenship behavior (e.g., George & Brief, 1996;
Podsakoff & MacKenzie, 1997) and cooperation
among work team members (e.g., Beersma et al.,
2003) to workplace aggression (e.g., Griffin &
In this paper I seek to extend this previous
work by developing a theoretical framework for
understanding the potential role of affect in entrepreneurship. In order to progress toward this
goal, I proceed as follows. First, I examine reasons why affect may be directly relevant to entrepreneurship. Second, I briefly review major
findings concerning the interface between affect
and cognition. In a third section I then use the
information presented in these initial discussions to develop a theoretical framework concerning the role of affect in several key aspects
of the entrepreneurial process (e.g., opportunity
recognition, resource acquisition). In a final section I examine implications and potential contributions of the present framework.
Before beginning, two basic points should be
clarified. First, for the purpose of the present
discussion, I define entrepreneurs as individuals who recognize and exploit new business opportunities by founding new ventures (Shane &
Venkataraman, 2000). Further, since this paper
focuses on the influence of affect on the cognition and behavior of individuals, I further limit
attention to entrepreneurs who found new ventures and who, therefore, make decisions, take
actions, and identify opportunities individually
rather than as part of a team or group (e.g.,
within a department of a large organization).
Second, the distinction between state affect
and dispositional (trait) affect should be briefly
addressed. State (or event-generated) affect refers to shifts in current moods produced primarily by external events. In contrast, trait (dispositional) affect refers to stable tendencies to
experience specific affective reactions across
I express my sincere thanks to Rebecca A. Henry for her
invaluable comments on earlier versions of this paper and
for her many excellent suggestions concerning the theoretical proposals presented here. In addition, I thank the editor
and anonymous reviewers for their exceptionally constructive, informative, and thoughtful comments on several previous versions of the paper.
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many situations (e.g., Isen, 1999). While dispositional affect and state affect clearly derive from
different sources (biological processes and perhaps genetic influences on the one hand versus
discrete external events on the other), a substantial body of research indicates that both produce
parallel effects in many situations (see Lyubomirsky, King, & Diener, 2005, for a detailed
review). In view of this evidence, I assume here
that both forms of affect exert parallel and similar effects. Throughout this paper, therefore, I
use the terms positive affect and negative affect
to refer to such feelings, regardless of whether
they are generated by specific events or by stable, underlying propensities toward such reactions.
WHY AFFECT IS RELEVANT TO
While the findings of previous research
clearly indicate that affect influences several
aspects of cognition in work settings (e.g., Borman, Penne, Allen, & Motowidlo, 2001; Staw, Sutton, & Pelled, 1994), the great majority of this
research was conducted in large, established
organizations and with employees rather than
company founders. This raises the following
question: Do such effects also occur in new ventures and among entrepreneurs? Although very
little direct evidence on this issue is currently
available, there appear to be two major reasons
for suggesting that affect may indeed be relevant to processes occurring during the creation
of new ventures.
First, the environments in which entrepreneurs function are often highly unpredictable
and filled with rapid change (e.g., Lichtenstein,
Dooley, & Lumpkin, 2006). As a result, such environments are not ones in which individuals
can follow well-learned scripts or prescribed
sets of procedures. Rather, as many entrepreneurs put it, they must often “make it up as they
go along.” Research on the influence of affect
suggests that it is most likely to exert powerful
effects on cognition and behavior in precisely
this type of situation. In contexts involving high
uncertainty and unpredictability, affect can
readily tip the balance toward specific actions
or decisions— effects it might not produce in environments that are more certain and predictable (e.g., Forgas, 1995, 2000; Forgas & George,
2001). For this reason, affect may have espe-
cially important consequences for entrepreneurship.
A second reason why affect may often exert
strong effects in the domain of entrepreneurship
relates to the specific tasks entrepreneurs perform in starting new ventures. These tasks are
highly varied in nature and change significantly as the process unfolds (e.g., Baron, 2006b;
Shane, 2003). However, many of these activities
are ones that have previously been shown to be
strongly influenced by affect (e.g., see Forgas,
2000, and Lyubomirsky et al., 2005). For instance,
as discussed in greater detail in a later section,
affect has been shown to exert strong effects on
creativity (which may play an important role in
opportunity recognition; e.g., Isen, 1993), on persuasion (which may influence entrepreneurs’
success in acquiring essential resources), on decision making and judgments (which play a key
role in the formation of effective business models and strategies; e.g., Ireland, Hitt, & Sirmon,
2003), and on the formation of productive working relationships with others (e.g., Diener & Seligman, 2002; Harker & Keltner, 2001). Since affect has been found to exert strong effects on all
these activities, it is directly relevant to entrepreneurship.
HOW AFFECT INFLUENCES COGNITION: AN
OVERVIEW OF RESEARCH FINDINGS
Previous research suggests several ways in
which affect influences cognition. Since these
findings provide the foundation for the theoretical framework offered in a later section, I
briefly review them here. This review is not in
any sense comprehensive; rather, it emphasizes
findings most germane to the field of entrepreneurship.
One way in which affect influences cognition
is through its impact on perceptions of the external world. Persons experiencing positive affect tend to perceive objects, other persons,
ideas, and almost anything else more favorably
than individuals experiencing neutral or negative affect (e.g., Bower, 1991; Garcia-Marques,
Mackie, Claypool, & Garcia-Marques, 2004).
Such effects have been observed in many business contexts. For instance, interviewers experiencing positive affect tend to evaluate applicants more favorably than those experiencing
negative affect (Burger & Caldwell, 2000), and
raters (i.e., managers) experiencing positive af-
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fect tend to assign higher performance appraisals to subordinates than those experiencing
negative affect (e.g., Wright & Staw, 1999). In
addition, positive affect seems to enhance individuals’ alertness to the external environment
generally (e.g., Isen, 2002) so that persons experiencing positive affect tend to perceive a
broader array of events and stimuli than persons experiencing negative affect (e.g., Schiffman, 2005). Implications of these effects for entrepreneurship are described below.
A second way in which affect influences cognition involves creativity. While many complexities exist with respect to this relationship, extant evidence suggests that, in general,
individuals experiencing positive affect tend to
be more creative than those experiencing neutral or negative affect (e.g., Estrada, Isen, &
Young, 1997; Isen, 2000). It is important to note,
however, that under specific conditions (e.g.,
when creative performance is clearly linked to
recognition and organizational rewards), negative affect, too, can enhance creativity, perhaps
by increasing individuals’ efforts to attain creative outcomes (George & Zhou, 2002). Since a
clear link between creativity and reward is often
lacking in new ventures (many creative products or services fail to gain market acceptance),
I suggest that, in general, positive affect is more
likely than negative affect to facilitate creativity. This, finding, too, has important implications for the entrepreneurial process.
A third way in which affect influences cognition involves the tendency to engage in heuristic
processing—thinking that relies heavily on
mental “shortcuts” (heuristics) and knowledge
acquired through past experience. This, in turn,
has important implications for decision making
and problem solving—activities performed by
entrepreneurs on a regular basis and that can
strongly influence the success of new ventures.
Research findings indicate that persons experiencing positive affect are more likely than persons experiencing negative affect to engage in
heuristic thought (i.e., to rely on previously acquired “rules of thumb” and previously gathered
information) in dealing with current problems or
decisions (e.g., Mackie & Worth, 1989; Park &
Banaji, 2000; Wegner & Petty, 1994). This tendency, in turn, offers a mixed pattern of advantages and disadvantages. Potential benefits include the capacity to make decisions faster and
a release of cognitive resources for use in other
tasks (Erez & Isen, 2002).
An enhanced tendency to engage in heuristic
thought, however, can interfere with effective
decision making and problem solving when individuals face novel tasks to which previous
knowledge is not applicable or relevant (Isen,
2000). In such cases detailed, analytical thinking
is required, and heuristic processing may prove
Additional and especially important effects of
affect on cognition involve memory. Basically,
affect has been found to influence memory in
two ways. First, current moods strongly determine which information in a given situation is
noticed and entered into memory—an effect
known as mood congruence. In other words, current moods serve as a kind of filter, permitting
primarily information consistent with such
moods to enter into long-term storage. Second,
affect also influences what specific information
is retrieved from memory—an effect known as
mood-dependent memory (e.g., Baddeley, 1990;
Eich, 1995). When experiencing a particular
mood, individuals are more likely to remember
information they acquired in the past while in a
similar mood than information they acquired
while in a different mood. Current moods, in
other words, serve as a kind of retrieval cue,
prompting recall of information consistent with
these moods. Together, mood congruence and
mood-dependent retrieval effects strongly influence the information individuals store in memory and retrieve for later use. Since the information individuals can bring to mind in any given
situation provides the basis for judgments and
decisions, the impact of affect on memory has
important implications for key aspects of new
venture creation; I describe these effects in a
Affect has also been found to influence the
cognitive strategies individuals use in coping
with intense and persistent stress (e.g., Carver &
Scheier, 2001). Positive affect enhances preferences for relatively effective strategies for dealing with stress, such as direct efforts to address
and solve problems, whereas negative affect
tends to enhance preferences for less effective
strategies, such as avoidance, denial, or reliance on alcohol and other drugs. Since effective
coping has important implications for personal
health (e.g., Cohen, Doyle, Turner, Alper, &
Skoner, 2003) and since entrepreneurs’ health
can have important effects on their new ventures, these findings, too, appear to be relevant
Finally, affect influences interpretations of
others’ motives. Positive affect tends to promote
attributions of positive motives, whereas negative affect tends to encourage attributions of
negative motives (e.g., Forgas, 2000). One consequence of this tendency is that positive affect
may tend to reduce conflict between individuals
who work together, such as cofounders of a new
venture (e.g., Barsade, 2002). In addition, it also
enhances attaining optimal outcomes in negotiations (e.g., Baron, Daniels, & Rea, 1992; Forgas,
1998). Since conflict between founders has been
found to adversely influence the survival of new
ventures (e.g., Ensley, Pearson, & Amason, 2002),
and since entrepreneurs must engage in negotiations on a regular basis, these effects have
important implications for entrepreneurship.
Neuroscience Evidence for the Interface
Between Affect and Cognition
Together, the research findings summarized
above suggest that affect does indeed influence
many aspects of cognition. The importance and
very basic nature of the interface between affect
and cognition are, perhaps, most clearly illustrated by the findings of yet another body of
research— one employing modern techniques
for observing activity in the human brain during
the performance of cognitive tasks (e.g., Willingham & Dunn, 2003). This research suggests that
affect and cognition interact even at very basic
levels of neural functioning (Cohen, 2005) and
that, moreover, two distinct systems for processing information may exist within the human
brain (e.g., Cohen, 2005). One system is concerned with what might be termed reason (or
logical thought), while the other deals primarily
with affect or emotion. Growing evidence suggests that these two systems interact in complex
ways during problem solving, decision making,
and other important forms of cognition.
For instance, consider research using what is
known as an “ultimatum” paradigm (e.g., Sanfey, Rilling, Aronson, Nystrom, & Cohen, 2003). In
this situation, two persons are told that they can
divide a given sum (e.g., $10) between them. One
can suggest an initial division and the second
can accept or reject it. Since any division provides the second person with positive payoffs,
total rationality suggests that this individual
should accept any division offered; doing so will
result in tangible gains. In fact, however, most
people reject divisions that offer them less than
$3, and many reject divisions that offer them less
than $5. MRI scans reveal that when individuals
receive offers they view as unfair, brain regions
related both to reasoning (e.g., the dorsolateral
prefontal cortex) and to emotion (e.g., the limbic
system) are activated. However—and this is the
crucial finding—the greater the amount of activity in emotion processing regions of the brain,
the greater the likelihood that individuals will
reject the offers—act in ways that are, in a
sense, contrary to their own economic interests
(e.g., Sanfey et al., 2003).
These findings, and those of related research,
suggest that affect and cognition interact at very
basic levels within the brain. Further, it appears
that affect can sometimes outweigh rational
considerations in decision making and other
cognitive processes (e.g., Cohen, 2005). In light of
such findings, it seems essential that affect be
included as a variable of interest in future efforts to investigate entrepreneurial cognition. To
the extent the framework presented here encourages such inclusion, it may offer useful contributions to ongoing research.
In sum, affect has been found to influence
many aspects of cognition. Moreover, several of
these effects appear to be directly related to
activities entrepreneurs perform in starting new
ventures. In the remainder of this paper, I develop specific propositions concerning the potential role of affect in key aspects of the entrepreneurial process. Before turning to these
proposals, however, I briefly describe two mechanisms through which affect influences cognition—and hence key aspects of entrepreneurship.
The Influence of Affect on Cognition:
Although the interface between affect and
cognition is complex, two basic mechanisms appear to play an important role in this relationship (e.g., Forgas, 1995; Forgas & George, 2001).
The first relates to the mood-dependent retrieval
effects described above. Briefly, current moods
or feelings serve to prime (elicit) specific memories and associations— ones linked, cognitively, to such feelings. For instance, when indi-
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viduals experience positive affect, positive
associations or memories are brought to mind.
When they experience negative affect, in contrast, negative associations and memories are
activated (i.e., are primed; Bower, 1991).
Second, affect influences cognition by serving
as a heuristic cue—an efficient basis for inferring reactions to a specific person, event, or
stimulus. According to this affect-as-information
mechanism (Clore, Schwarz, & Conway, 1993;
Martin & Stoner, 1996), when making judgments
about objects, events, or persons, individuals
examine their feelings and respond accordingly.
When experiencing positive affect, they are
likely to make favorable judgments or evaluations; when experiencing negative affect, in contrast, they will tend to form negative evaluations
or judgments. Importantly, this process appears
to operate even when current moods or feelings
are unrelated to the object, person, or event being considered. In essence, affect can influence
judgments and decisions even when the affect
does not stem in any way from the objects, persons, or events being evaluated (Forgas, 2000).
This suggests that the influence of affect on
judgments and decisions is indeed pervasive.
A large body of evidence lends support to the
role of both of these mechanisms, so I assume
here that they provide a useful basis for understanding how affect influences many aspects of
cognition (e.g., Forgas, 1998; Martin & Stoner,
AFFECT AND KEY ASPECTS OF THE
Given the breadth of the effects described
above, it seems clear that affect can potentially
influence entrepreneurship in many ways. I focus my attention here, however, primarily on the
potential role of affect in several key aspects of
the entrepreneurial process—aspects that have
been found to strongly influence the success of
new ventures: opportunity recognition, acquisition of essential resources (financial and human), and the capacity to respond quickly and
effectively to rapid change in highly dynamic
environments (Shane, 2003). In addition, I briefly
examine the role of affect in entrepreneurs’ capacity to tolerate intense levels of stress.
Affect and Opportunity Recognition
Opportunity recognition has long been
viewed in the field of entrepreneurship as a
central aspect of new venture creation (e.g.,
Ardichvili, Cardozo, & Ray, 2003; Baron, 2006a;
Shane, 2003), and although there continues to be
considerable debate over its essential nature
(e.g., Krueger, 2003), scholars widely assume
that opportunity recognition involves cognitive
events or processes occurring within the minds
of specific individuals (e.g., Bhave, 1994; Herron
& Sapienza, 1992). Since affect influences several important aspects of cognition and since
opportunity recognition is, at least in part, a
cognitive process, it seems reasonable to suggest that affect influences this aspect of entrepreneurship. I propose here that such effects
may occur in two distinct ways: (1) through the
influence of affect on creativity and (2) through
possible moderating effects of affect with respect to factors previously shown to strongly
influence opportunity recognition.
As noted earlier, there is considerable empirical evidence suggesting that affect influences
creativity (e.g., Isen, 2000). In general, the findings of previous research suggest that positive
affect tends to enhance creativity.1 Creativity, in
turn, has been found to be significantly related
to opportunity recognition (e.g., Hills, Shrader, &
Lumpkin, 1999). Basic research in cognitive science provides further insight into the mechanisms through which positive affect can enhance creativity and, hence, opportunity
recognition. Briefly, positive affect encourages
what is known as creative cognition—a process
in which existing cognitive frameworks (concepts, prototypes, schemas) are expanded or
combined so as to suggest new ideas not previously available (e.g., Ward, 2004). The ideas for
many new products or services appear to derive
from this process. For instance, the idea of cell
phones with built-in cameras derives from combining two previously existing concepts (cell
phone and camera). In a similar manner, many
other new products appear to derive from the
expansion or combination of existing cognitive
frameworks (Ward, 2004). Taken together, previous research on the role of affect in creativity
As stated previously, negative affect, too, can sometimes
increase creativity, but only, it appears, under highly specific circumstances (George & Zhou, 2002).
and in creative cognition suggests the following
Proposition 1: Positive affect enhances
creativity, thus contributing to the process of opportunity recognition.
A second way in which affect may influence
opportunity recognition is by acting as a moderator of factors known to influence opportunity
recognition. Two such factors are alertness and
active search for opportunities. Alertness refers
to “unique preparedness to recognize opportunities” when they appear (Gilad, Kaish, & Ronen,
1989: 48; see also Kirzner, 1979). Active search, in
contrast, refers to active efforts to identify potential opportunities— untapped sources of potential profit (Hills & Shrader, 1998). Both of these
factors have been found to be related to opportunity recognition, and affect may serve as a
moderator of each.
In essence, alertness involves important aspects of perception— being attentive to and able
to identify potential opportunities for new ventures when they appear (Kirzner, 1979). Since
affect has strong effects on perception, it seems
possible that it moderates the impact of alertness on opportunity recognition. Specifically,
positive affect, by broadening individuals’ perceptual fields and increasing their capacity to
notice a wide range of events or stimuli (e.g.,
Matlin & Foley, 2001), may strengthen the influence of alertness on opportunity recognition. In
contrast, negative affect, by narrowing individuals’ perceptual fields and reducing their capacity to notice external events, may reduce the
impact of alertness on opportunity recognition.
Correspondingly, affect may also serve as a
moderator of the impact of active search on opportunity recognition. Research findings indicate that positive affect is often an “activator” or
“energizer” of behavior, whereas negative affect
has opposite effects (e.g., Forgas, 2000). Thus,
positive affect may intensify the vigor or scope
of active searches for opportunities, thus enhancing the impact of such searches on opportunity recognition. In contrast, negative affect,
by reducing the vigor or scope of active
searches, may produce opposite effects—a
weakening of the impact of this variable (active
search) on opportunity recognition. Overall, the
reasoning described above suggests the following proposition.
Proposition 2: Affect moderates the impact of factors previously shown to influence opportunity recognition (alertness, active search), with positive
affect enhancing, and negative affect
reducing, the influence of each of
Affect and Acquisition of Financial and Human
Affect may also influence the entrepreneurial
process through its impact on activities involved
in the acquisition of essential financial and human resources. Obtaining such resources is often a crucial step in the launch of new ventures,
and the more effectively this step is performed,
the more successful such ventures tend to be
(e.g., Shane, 2003). Affect (and, in particular, positive affect) may play a role in acquisition of
essential resources in two ways.
First, positive affect is closely related to demonstrating enthusiasm, and a large body of findings indicate that enthusiasm, in turn, is closely
related to persuasiveness (e.g., Terry & Hogg,
2000). In addition, other evidence suggests that
emotions are contagious—they tend to spread
from one individual to another (e.g., Hatfield,
Cacioppo, & Rapson, 1994). Thus, entrepreneurs
who express a high degree of positive emotion
concerning their ideas and new ventures may
be more effective in generating similar positive
reactions in investors, customers, potential employees, and others. Because obtaining essential financial and human resources often involves persuading others of the value or
potential of a new venture, positive affect may
contribute to entrepreneurs’ success in their efforts to secure such resources.
Second, positive affect may also contribute to
the breadth and quality of entrepreneurs’ social
networks—the range and nature of the relationships they have established with other persons
(e.g., Nahapiet & Ghoshal, 1998). In general, the
more extensive entrepreneurs’ social networks,
the more successful their new ventures will be
(e.g., Singh, 2000). Recent research (e.g., Ozgen &
Baron, 2007; Walter, Auer, & Ritter, 2006) indicates that such networks are the source of many
important resources for entrepreneurs—financial, human, and informational (e.g., Adler &
Kwon, 2002). Research on the influence of affect
supplements these findings by suggesting that
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positive affect enhances individuals’ tendency
to seek social contacts with others and that persons who frequently demonstrate positive affect
have more extensive social networks than those
who frequently experience negative affect (e.g.,
Lucas & Diener, 2003; Staw et al., 1994). As a
result, affect may also influence the acquisition
of essential resources by entrepreneurs through
this mechanism (e.g., Ireland et al., 2003). Negative affect, by reducing the frequency or quality
of social contacts entrepreneurs have with others, may produce opposite effects, reducing entrepreneurs’ access to essential financial and
human resources. Combining these considerations suggests the following proposition.
Proposition 3: Positive affect may enhance entrepreneurs’ capacity for acquiring essential financial and human resources by contributing to their
persuasiveness and by increasing the
breadth of their social networks. Negative affect, in contrast, may produce
Affect and the Ability to Respond Effectively in
Highly Dynamic Environments
Typically, entrepreneurs face rapidly changing and highly uncertain environments. As a
result, they must be able to respond quickly and
effectively to extensive changes in a wide range
of external conditions. Affect may play a role in
the capacity to respond effectively to such dynamic environments, in several ways. First, research on the influence of positive affect indicates that such feelings are often interpreted by
individuals as a sign that “all is going well” and
that current situations pose no serious threat or
danger. These reactions, in turn, encourage the
persons experiencing them to engage in what is
known as “broadening and building”—active efforts to expand their repertoires of useful skills
and the range of their social networks (e.g.,
Fredrickson, 2001). These strengthened skills
and enhanced social networks may then provide
entrepreneurs with an increased capacity for
responding effectively to rapidly changing conditions in dynamic environments by arming
them with a broader range of functional “tools.”
Second, affect strongly influences the decision-making strategies individuals adopt. Making decisions effectively is a crucial task in
many settings, but it takes on added importance
under the conditions of high uncertainty, unpredictability, and intense time pressure that entrepreneurs frequently face. Previous research indicates that affect can influence the specific
decision-making strategies adopted (e.g., Forgas & George, 2001). Positive affect encourages
the use of satisficing—a strategy in which the
first acceptable alternative is chosen. This strategy permits the persons using it to make decisions both quickly and efficiently. In contrast,
negative affect seems to encourage adoption of
a very different strategy, known as maximizing—a strategy involving exhaustive examination of all available alternatives in order to
choose the best. Although maximizing often
yields superior choices (e.g., Iyengar, Wells, &
Schwartz, 2006), it is an approach that may not
be feasible for entrepreneurs, who must often
make decisions and judgments very quickly.
Thus, satisficing may generally be a more appropriate strategy for entrepreneurs to follow.
Positive affect may also encourage entrepreneurs to adopt other efficient strategies for decision making in which, for instance, they do not
review information they have already considered and largely ignore information that is unimportant or irrelevant (Isen & Means, 1983).
Finally, it should also be noted that positive
affect tends to encourage flexibility in solving
various problems and in thinking generally (Lyubomirsky et al., 2005). This, too, may contribute
to entrepreneurs’ capacity for responding effectively in dynamic environments. Together, the
findings and considerations summarized above
suggest the following propositions.
Proposition 4: Affect influences entrepreneurs’ capacity for responding effectively to the highly dynamic environments they face, with positive
affect enhancing the ability to respond effectively and negative affect
reducing this ability.
Proposition 4a: Positive affect enhances individuals’ tendencies to expand both their skills and social network, whereas negative affect reduces
or impedes such tendencies.
Proposition 4b: Positive affect enhances the adoption of relatively efficient strategies for making decisions
(e.g., satisficing), whereas negative affect enhances the adoption of slower,
more thorough strategies (e.g., maximizing).
Affect and Entrepreneurs’ Capacity to Tolerate
Intense Levels of Stress
Entrepreneurs frequently experience intense
levels of stress; they work long hours, face intense competition, operate in highly dynamic
environments, and often lack sufficient resources to implement their plans and strategies.
The findings of basic research on the influence
of affect suggest that, in this respect, too, a tendency to experience positive affect may prove
beneficial. A large body of evidence indicates
that persons who frequently experience positive
affect tend to enjoy better personal health than
persons who frequently experience negative affect (Lyubomirsky et al., 2005). Further, such research suggests that these benefits derive at
least in part from an enhanced capacity to cope
with intense and persistent stress (e.g., Carver &
Scheier, 2001). Specifically, a propensity to experience positive affect encourages the adoption
of effective techniques for coping with high levels of stress, such as attempting to deal with
problems directly, rather than seeking to avoid
them or to reduce their “sting” through the use of
alcohol and other drugs (e.g., Fredrickson &
Joiner, 2002). Adoption of effective coping strategies, in turn, enhances the capacity to tolerate
even very high levels of stress.
In addition, positive affect adds to individuals’ capacity to tolerate stress by promoting efficient functioning of the immune system (Booth
& Pennebaker, 2000). While the capacity to tolerate and resist high levels of stress is important in many contexts, it may be especially crucial for entrepreneurs who often work to the
point of exhaustion and frequently stretch their
own resources to the limit. These considerations
point to the following proposition.
Proposition 5: Positive affect enhances
the capacity to tolerate high levels of
stress, and this, in turn, may have beneficial effects on the health and wellbeing of entrepreneurs.
It should be noted again that this discussion
is in no sense exhaustive. Rather, it is intended
to be indicative of the broad range of effects
affect may have on the cognition and behavior
of entrepreneurs. Figure 1 presents an overview
of the effects described.
CONCLUSIONS AND IMPLICATIONS
The logic underlying the framework presented
in this paper can be summarized as follows: (1)
affect influences many aspects of cognition and
behavior; (2) such effects may be especially
likely to occur in the domain of entrepreneurship, because the environments in which entrepreneurs operate are unpredictable and uncertain and because affect influences many of the
tasks entrepreneurs perform in launching new
ventures; and (3) through its influence on cognition, affect may have important effects on key
aspects of the entrepreneurial process—for instance, opportunity recognition, success in acquiring needed resources, and the capacity to
respond effectively in highly dynamic environ-
Theoretical Model of the Role of Affect in Entrepreneurship
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ments. The framework developed in this paper
reflects this reasoning and is based on a large
body of research in several branches of management and cognitive science (e.g., George &
Brief, 1996; Lyubomirsky et al., 2005). This framework and the propositions it suggests offer several potential contributions to the field of entrepreneurship.
First, the present framework has implications
for efforts to investigate entrepreneurial cognition—a very active area in the field of entrepreneurship (e.g., Busenitz & Arthurs, 2006; Mitchell
et al., 2004; Krueger, 2003). As noted earlier, affect and cognition interact in an intimate and
continuous manner (e.g., Forgas, 2000; Isen,
2002), and this interaction is visible even at basic levels of brain functioning (e.g., Cohen, 2005).
As a result, it seems essential to include affect
and its interface with cognition in ongoing efforts to investigate entrepreneurial cognition.
The framework I present here, by encouraging
attention to affect and its interaction with cognition, may facilitate progress toward this goal.
Another potential contribution of this framework involves its value in addressing a basic
issue in the field of entrepreneurship: the question of how variables pertaining to the characteristics, skills, motives, and actions of individual entrepreneurs (i.e., microlevel variables)
ultimately influence various aspects of new venture financial performance (e.g., firm growth in
sales, profits, employment). As noted by Baum
and Locke (2004), microlevel variables related to
the motives and characteristics of individual entrepreneurs are distal from macrolevel measures of firm performance, yet there is growing
evidence that microlevel variables are related
to these outcomes (e.g., Ciavarella, Bucholtz,
Riordan, Gatewood, & Stokes, 2004). The present
framework helps to resolve this complex issue
by suggesting that affect may be one potential
mediator between individual-level and macrolevel variables. Specifically, several microlevel
variables that have been the focus of much recent research in entrepreneurship (e.g., optimism, extraversion, self-efficacy, passion; Zhao,
Seibert, & Hills, 2005) may influence entrepreneurs’ propensity to experience positive affect.
Since positive affect can facilitate opportunity
recognition, acquisition of required resources,
and entrepreneurs’ capacity to respond effectively in highly dynamic environments, constru-
ing affect as a potential mediating variable may
help to bridge the gap between the characteristics, skills, motives, and abilities of individual
entrepreneurs and measures of new venture financial performance. The framework presented
here suggests such a mediating role for affect,
and if this suggestion is confirmed in future
research, this, too, would constitute a useful contribution to the field of entrepreneurship.
Having noted the potential benefits of positive
affect for several aspects of the entrepreneurial
process, it is important to call attention to the
potential downside of positive affect and to
strongly counter any suggestion—perhaps implicit in previous discussions in this paper—that
the effects of positive affect are uniformly beneficial. Previous research, in fact, suggests that
positive affect may prove detrimental to entrepreneurs and their efforts to launch new ventures, in several different ways.
First, strong affective reactions can lead entrepreneurs to prematurely accept potential
business opportunities and to proceed with the
development of these apparent opportunities
even in the absence of a systematic feasibility
analysis. Briefly, the affect-as-information
mechanism described above can lead entrepreneurs to conclude that any opportunity to which
they respond very favorably (i.e., with intense
positive affect) must be very good. This, in turn,
may lead to premature closure with respect to
the search for suitable opportunities and to acceptance of opportunities that are, in fact, not
optimal for particular entrepreneurs (given their
particular array of skills, experience, and motives) to develop (e.g., McMullen & Shepherd,
Second, positive affect has been shown to increase susceptibility to various cognitive errors
or biases— errors that can prove quite costly to
entrepreneurs and their new ventures (e.g.,
Baron, 2004; Busenitz & Arthurs, 2006). Such errors include the optimistic bias—a tendency to
expect positive outcomes and events (e.g.,
Busenitz & Barney, 1997; Simon, Houghton, &
Aquino, 2000)—and the planning fallacy—a tendency to assume that more can be accomplished
in a given period of time or that tasks can be
completed sooner than they actually can (e.g.,
Buehler, Griffin, & Ross, 1994). Increased susceptibility to these and other cognitive errors can be
potentially damaging for new ventures.
Third, positive affect, by strongly influencing
memory through the mechanisms described earlier, may lead entrepreneurs to recall primarily
information consistent with such favorable reactions. This biased sample of recalled information, in turn, may lead to serious errors in judgments and decisions. In sum, although a
propensity to experience positive affect provides several important benefits, it also poses
significant risks that should be recognized and
carefully weighed in the balance.
Having clarified this important point, it
seems appropriate to emphasize the following
thought: neither positive nor negative affect
plays a uniformly beneficial or detrimental
role in the entrepreneurial process. The effects
of both are far too complex to afford the luxury
of simple or straightforward conclusions. However, it is a central premise of this paper that
affect, because of its pervasive effects on
many aspects of cognition and behavior, does
indeed influence key aspects of the entrepreneurial process. Consequently, careful attention to the potential influence of affect may
assist scholars in the field of entrepreneurship
in addressing several important questions
(e.g., the nature of entrepreneurial cognition,
how microlevel variables can influence macrolevel measures of new venture success). Since
affect has been a topic of growing interest in
other branches of management, increased attention to it may also encourage closer conceptual ties between entrepreneurship and
these fields (George & Brief, 1992; Isen & Labroo, 2003; Weiss et al., 1999).
In sum, including affect as a variable of interest in ongoing entrepreneurship research may
contribute to the development of the comprehensive theoretical frameworks that entrepreneurship scholars, like scholars in all other branches
of management science, actively seek. In this
respect, the words of British novelist Arnold Bennett seem applicable and may, in fact, offer
sound advice for researchers seeking to understand the complex process through which new
ventures are conceived, launched, and developed: “There can be no knowledge without emotion. We may be aware of a truth, yet until we
have felt its force, it is not ours. To the cognition
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Robert A. Baron (firstname.lastname@example.org) is Wellington Professor of Management at Rensselaer Polytechnic Institute. He received his Ph.D. from the University of Iowa. His
research focuses on cognitive and social factors in entrepreneurship; he holds three
U.S. patents and started and ran two companies.