You are on page 1of 20


Rensselaer Polytechnic Institute

Because of their importance in creating wealthboth personal and societalentrepreneurs have long been the subject of intensive study. Past research has focused on important issues such as: Why do some people, but
not others, recognize or create new opportunities? Why do some, but not
others, try to convert their ideas and dreams into business ventures? And
why, ultimately, are some entrepreneurs successful and others not?
Efforts to answer these questions in terms of the personal characteristics of entrepreneurs generally
yielded disappointing results: contrary to what informal observation suggests, entrepreneurs do not appear to differ greatly from nonentrepreneurs with respect to various aspects of personality. As a result,
a growing number of researchers have recently adopted a different approachone emphasizing the role
of cognitive processes in entrepreneurship. This perspective suggests that valuable insights into the questions posed above may be obtained through careful comparison of the cognitive processes of entrepreneurs and other persons.
Whereas informative research has already been conducted within this framework, the present study
seeks to expand this developing perspective by building additional conceptual bridges between entrepreneurship research and the large, extant literature on human cognition. Basic research on human cognition
suggests that our cognitive processes are far from totally rational; in fact, our thinking is often influenced
by a number of sources of potential bias and error. It is suggested here that entrepreneurs often work
in situations and under conditions that would be expected to maximize the impact of such factors. Specifically, they face situations that tend to overload their information-processing capacity and are characterized by high levels of uncertainty, novelty, emotion, and time pressure. Together, these factors may increase entrepreneurs susceptibility to a number of cognitive biases.


Address correspondence to Robert A. Baron, Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, NY 12180-3590.
Journal of Business Venturing 13, 275294
1998 Elsevier Science Inc. All rights reserved.
655 Avenue of the Americas, New York, NY 10010

PII S0883-9026(97)00031-1



Several cognitive mechanisms that may exert such effects and that have not previously been considered in detail in the literature on entrepreneurship are examined. These include: counterfactual thinking
the effects of imagining what might have been; affect infusionthe influence of current affective states
on decisions and judgments; attributional styletendencies by individuals to attribute various outcomes
to either internal or external causes; the planning fallacystrong tendencies to underestimate the amount
of time needed to complete a given project or the amount of work that can be achieved in a given time;
and self-justificationthe tendency to justify previous decisions even if they result in negative outcomes.
Each mechanism is described, and specific hypotheses concerning its potential impact on the thinking
of entrepreneurs are proposed.
A final section of the article touches briefly on methods for testing hypotheses concerning these
mechanisms and explores the implications of this cognitive perspective for future entrepreneurship research. This section emphasizes the fact that a cognitive perspective can provide researchers in the field
with several new conceptual tools and may also facilitate the development of practical procedures for
assisting entrepreneurs. 1998 Elsevier Science Inc.

Much of our American progress has been the product of the individual who had
an idea; pursued it; fashioned it; tenaciously clung to it against all odds; and then
produced it, sold it, and profited from it.Hubert H. Humphrey

Few readers of the Journal of Business Venturing would disagree with these sentiments,
expressed so forcefully by a politician once known as The Happy Warrior. In fact,
it is widely recognized that entrepreneurspeople who formulate new ideas, recognize
opportunities, and translate these into added value to society by assuming the risk of
starting a businessare a major source of economic growth for many economies (Hatten 1997; Holt 1992).
Because of their importance in creating wealthpersonal and societalentrepreneurs have long been the subject of intensive study. Such research (Venkataraman, in
press) has focused on issues such as these: Why do some people, but not others, recognize or create new opportunities? Why do some decide to take the plunge and proceed, exerting vigorous efforts to convert their ideas and dreams into reality? Why are
some individuals able to secure the necessary capital and to forge the personal links
necessary to create a growing business, whereas others are notin other words, what
are the key differences between successful and unsuccessful entrepreneurs?
Initial efforts to answer these questions have focused largely on the personal characteristics of entrepreneurs (cf., Shaver and Scott 1991). The basic premise underlying
such research was simple: Entrepreneurs are different from other persons with respect
to certain traits, and it is these differences that lead them to recognize opportunities,
to pursue them, and so on. At first blush, this assumption seems to be eminently reasonable. Informal observation suggests that entrepreneurs are, indeed, different from other
people in terms of their personal traits. For instance, it has beenand still iswidely
assumed that entrepreneurs are far above average in their willingness to take risks, their
desire to excel, their personal optimism, their tolerance for ambiguity, and in their powerful preference for shaping their own destiny (e.g., Bygrave 1989; Hatten 1997).
Surprisingly, however, efforts to uncover differences between entrepreneurs and
others with respect to these and other aspects of personality met with only modest success. Try as they might, researchers could not pin down clear-cut differences between
entrepreneurs and other people with respect to what seemed to be the most relevant



dimensions of personality (e.g., Shaver and Scott 1991). Thus, as noted recently by Hatten (1997, p. 40): The conclusions of 30 years of research indicate that there are no
personality characteristics that predict who will be a successful entrepreneur. . . . Successful small business owners and entrepreneurs come in every shape, size, color, and
from all backgrounds.
Faced with these disappointing results, many researchers interested in studying entrepreneurs neither gave up in despair nor chose to sit idly by awaiting further events.
Rather, they turned to a distinctly different approach, which emphasized the potential
role of cognitive factors and processes in entrepreneurship. According to this perspective, important insights into such questions as Why do some people recognize opportunities whereas others do not? and Why do some try to develop such opportunities
whereas others do not? may be gained through careful study of the ways in which entrepreneurs and other persons thinkhow, in the terms of cognitive psychology, they attempt to make sense of the complex world around them. Such a cognitive perspective
has recently risen to prominence in psychology and other behavioral sciences and has
added greatly to our understanding of many important topics, including how we reason,
form judgments, and reach decisions (e.g., Barsalou 1992). Such knowledge, it is suggested here, can prove invaluable in the study of entrepreneurship.
But do entrepreneurs really differ from other people with respect to certain aspects
of cognition? And if they do, why is this the case? A small but growing body of research
has addressed the first of these questions and points to the conclusion that entrepreneurs
do indeed differ from other people with respect to some cognitive processes. For instance, a recent study by Palich and Bagby (1995) found that whereas entrepreneurs
and nonentrepreneurs did not differ in overall risk-taking propensity, they did differ in
terms of how they thought about business situations: entrepreneurs tended to categorize
such situations as having more strengths, opportunities, and potential for gain than did
Similarly, in a very thought-provoking article, Kahneman and Lovallo (1994) have
argued that one reason business managers generally, and entrepreneurs in particular,
make bold or unreasonably rosy forecasts about future business results is that they
tend to focus on the specific, current situation while largely ignoring the outcomes of
previous, related situations that might serve to inform their current judgments. As Kahneman and Lovallo (1994) put it, such persons tend to adopt an inside viewone
that focuses on the current situation and reflects their personal involvement in it rather
than an outside viewone that compares the current situation dispassionately to the
results of relevant past ones.
Do entrepreneurs and other people also differ with respect to additional aspects
of cognition? And do such differences play a role in entrepreneurs recognition of opportunities, decision to forge ahead, and ultimate success or failure? These questions
will serve as one major focus of the present study, which casts a wide net into the vast
literature on human cognition in an effort to identify mechanisms and processes relevant
to our understanding of entrepreneurship. In other words, it seeks to provide useful
conceptual bridges between research on entrepreneurship and the findings of current
research on human cognition. A number of such links are identified, and for each, the
process or mechanism in question is first described, followed by an explanation of its
potential relevance to entrepreneurship.
Before examining possible differences in the thinking of entrepreneurs and other
people, however, it seems crucial to address the why question posed above: Why



would such differences be expected to exist in the first place? Whyand whenwould
the thinking of entrepreneurs be expected to differ from that of other people? To answer
this question, it is necessary to take a brief look at some of the basic findings of research
on human cognitionfindings that appear to be directly relevant to entrepreneurship.


Systematic research on human cognition has continued for more than a century. However, progress has been especially rapid during the past two decades, as the growing
power of computers has placed new and highly sophisticated research tools into the
hands of cognitive scientists. As a result of this recent work, we now possess a relatively
clear picture of many aspects of human cognitionhow we think, reason, decide, use
language and symbols, store information for future use, and so on (see, e.g., Barsalou
1992). Whereas this scientific literature points to many conclusions, among the ones
most relevant to entrepreneurship are these:

Our capacity to process new information about the world around us is severely
limited and can readily be exceeded (an outcome cognitive psychologists describe
as overload). Anyone who has been unable to follow the arguments presented by
a speaker because they are offered too quickly is quite familiar with these limits.

As human beings, we seek to minimize cognitive effort, just as we seek to minimize

physical effort. As a result, we often use various short-cuts in our thinking, techniques that reduce mental effort. Whereas these are often effective in this respect,
they have an important downside as well: they sometimes lead to serious errors
in our efforts to understand the world around us.

Because of our limited information-processing capacity, our tendency to minimize

mental effort, and several other factors (e.g., the powerful impact of emotions on
thought), we are often less than totally rational in our thinking. In fact, various
aspects of human cognition are subject to a wide range of biases and errors.

Although these conclusions apply to all human beings, they seem to have special
relevance to entrepreneurs for the following reason: entrepreneurs may regularly find
themselves in situations that tend to maximize the potential impact of various biases
and errors. Research on this issue (the question of when we are most likely to fall short
of the goal of completely rational thought) suggests that cognitive processes are most
likely to be influenced by various forms of bias and error when:

overload occursindividuals are confronted with more information than they

can process at a given time (e.g., Gilbert et al. 1992)

individuals face situations that are new to them and involve high degrees of uncertaintysituations in which they cannot readily fall back upon existing mental
frameworks (known as schemas in cognitive psychology) (Fiske and Taylor 1991)

emotions run highthere is a complex interplay between feelings and thought,

and intense emotions can produce distortions in many aspects of cognition
(Oaksford et al. 1996)



FIGURE 1 Factors influencing differential susceptibility to cognitive errors by entrepreneurs

and others.

individuals face high time pressures and are in a less-than-optimal physical state;
time pressures increase the tendency to adopt mental short-cuts, and factors such
as physical fatigue or stress exert similar pressures (Wyer and Srull 1994).

It is suggested here that entrepreneurs are exposed to such conditions more frequently, and perhaps more intensely, than other people, because such conditions are
part-and-parcel of the entrepreneurial experience. By the very nature of their activities,
entrepreneurs often find themselves in situations that are new, unpredictable, complex,
and likely to produce information overload in many different ways. Similarly, the length
of their work-week is legendary, so they often meet these demands when fatigued or
while experiencing high levels of stress. Finally, entrepreneurs commitment to their
ideas and businesses is often intense, with the result that many opportunities exist for
the powerful emotions stemming from such commitment to influence their thinking.
Descriptions of entrepreneurship generally seem to paint a picture consistent with
these suggestions. For instance, writing more than 60 years ago, Schumpeter (1934,
p. 7; italics added) noted that: The entrepreneur seeks to reform or revolutionize the
pattern of production by exploiting an invention or, more generally, an untried technological possibility. . . . Entrepreneurship essentially consists in doing things that are not
generally done in the ordinary course of business routine. Similarly, in a more recent
description of entrepreneurs, Holt (1992, p. 11; italics added) proposed that Entrepreneurs are those who incubate new ideas, start enterprises based on those ideas . . . have
vision for growth, commitment to constructive change, persistence to gather necessary
resources, and energy to achieve unusual results. . . . Such descriptions suggest that
entrepreneurs, more than other people, are exposed regularly to situations that test the
limits of their cognitive capacities, and so, it is argued here, increase their susceptibility
to various forms of bias or error (see Figure 1 for an overview of this proposed model.)
What are these errors? Several will now be described along with their relevance
to the thinking of entrepreneurs. For each, specific hypotheses concerning possible differences between entrepreneurs and other people will be proposed. A final section of
the article will briefly describe methods for testing these predictions, as well as the implications of this cognitive perspective for future entrepreneurship research.




From time to time, everyone thinks about what might have been, imagining what
would have happened in specific situations if they had acted differently. Psychologists
refer to this process as counterfactual thinking and suggest that it is far more than an
exercise in imagination. In fact, growing evidence suggests that what we think about
when we engage in such mental simulations of events that never occurred can have important effects on our emotional states, our conclusions concerning the causes of various
events or outcomes, our subsequent decisions, and even our overt behavior (e.g., Mandel and Lehman 1996; Miller, Turnbull, and McFarland 1990). That such effects occur
is confirmed by the findings of many different studies (e.g., Gilovich and Medvec 1994;
Roese 1997). These investigations indicate, for instance, that when individuals imagine
being better off than they currently are, they experience intense dissatisfaction with
their current state of affairs. When they imagine being even worse off, however, they
feel much more satisfied with the status quo (Medvec, Madey, and Gilovich 1995). Perhaps the aspect of counterfactual thinking most directly relevant to entrepreneurship,
however, involves the relationship between counterfactual thinking and the experience
of regret. To gain first-hand experience with the nature of this relationship, readers
should perform the following simple exercise:
1. Looking back over your entire past life, list the three things you regret most.
2. Next, looking back over the past week, list the three things you regret most.
In response to the first question, an overwhelming majority of individuals list things
they didnt domissed opportunities of one sort or another (e.g., missed educational
opportunities, missed romantic encounters, failures to seize the moment; missed career
opportunities). Very few persons list things they didactions that turned out badly. In
contrast, in response to the second question, most people list things they did that turned
out badly (e.g., unwise actions, poor choices, wasted time, etc.; see Gilovich and Medvec 1994).
These findings point to two conclusions: First, the experience of regret is closely
linked to counterfactual thinkingimagining how things might have been if we had,
or had not, acted in specific ways. Second, the nature of this experience changes over
time, so that initially (i.e., with respect to recent events), we tend to regret things we
did that yielded disappointing results. Over longer periods of time, however, we come
to regret things we didnt domissed opportunities.
What is the basis for this shifting pattern? Gilovich and Medvec (1994) suggest that
it may stem from the fact that people are better at coping psychologically with the effects
of actions that turned out badly than they are at coping with missed opportunities or
failures to act. When actions we have performed turn out badly, we can sometimes reverse these actionswe can do something else. Failing that, we can convince ourselves
that we had strong reasons for acting as we did. In short, we can rationalize these actions
away by convincing ourselves that we had little choice: we had to act as we did. The
result is that over time, people cope more and more effectively with actions that turned
out badly and gradually come to experience less regret about them.
In contrast, consider what happens with respect to missed opportunities or failures
to act. Over time, the fears and concerns that kept us from taking action tend to fade
from view; as a result, it becomes harder for us to understand why we didnt take action.



Further, over time, we continue to contemplatesometimes with growing intensity

the costs of having failed to act or having failed to seize an opportunity. Whereas the
negative consequences of actions we took are apparentthey actually happenedthe
positive consequences of actions we failed to take are uncertain. In fact, in a sense, they
are infinite and are bounded only by imagination. Over time, therefore, individuals can
embellish the benefits that would have accrued from seizing a missed opportunity
from buying that business, asking that person for a date, and so on. In sum, there are
asymmetries in our counterfactual thinking about actions we took and actions we did
not take that tend to produce a pattern of decreasing regret for the former but increasing
regret for the latter over time.
What are the implications of these patterns of thought for comparisons between
entrepreneurs and nonentrepreneurs? One intriguing possibility is that entrepreneurs
are especially prone to regrets over failures to act or missed opportunities. Recent findings (Roese 1997) suggest that the tendency to engage in counterfactual thinking, and
to experience regret, is increased in situations where individuals encounter negative
outcomes. In such cases, many people try to imagine what would have happened if they
had acted differently, because this helps to reduce the disappointment and other negative feelings they are experiencing. Entrepreneurs, of course, often meet with many setbacks in the early days of their new ventures (e.g., Hatten 1997). Moreover, their commitment to their ideas, businesses, and products is frequently intense, thus magnifying
the negative emotions generated by these disappointments. For these reasons, entrepreneurs may be more likely than other persons to engage in counterfactual thinking and,
especially, to experience intense regret over past failures to act which they now view
as responsible for negative results. Consistent with this reasoning, the following hypotheses are proposed:
H1: Entrepreneurs are more likely than other persons to engage in if only . . .
patterns of thought, especially in situations where they experience negative outcomes. As a result, they are more likely than other persons to experience regret, or
to experience more intense regret, over past failures to act that they construe to be
missed opportunities.
H2: Entrepreneurs greater tendency to experience regret over missed opportunities
constitutes one reason why they are more likely than others to search for, identify,
and act upon perceived opportunities.


That our current moods or feelings influence our thoughts is readily apparent. Nearly
everyone has had the experience of seeing the world through rose-colored glasses
on days when they felt especially happy, with the result that they tended to evaluate
everything and everybody around them more favorably than might otherwise have been
true. Conversely, most persons can recall occasions on which, because they were feeling
unhappy or irritable, they tended to perceive everything and everybody they encountered negatively. A very large body of literature offers support for these informal observations (e.g., Forgas 1995; Isen and Baron 1991). In fact, research findings indicate that
even relatively mild shifts in our current moods can influence many aspects of cognition,



ranging from immediate reactions to stimuli we encounter (e.g., physical objects, specific
products), to complex judgments and decisions (e.g., Clore, Schwarz, and Conway 1994).
How important are such effects? Existing evidence indicates that they can be quite
significant. Indeed, current moods have been found to influence even such important
processes as evaluations of applicants during job interviews (e.g., Baron 1993; Robbins
and DeNisi 1994), and jurors judgments about guilt or innocence (Quigley, Johnson,
and Byrne 1995).
A key question concerning such effects is this: How do they arise? How, in short,
do current moods influence cognitive processes? Whereas many mechanisms have been
proposed, by far the most comprehensive theoretical account of such effectsand also
the one most relevant to entrepreneurshipis a model proposed by Forgas (1995). This
theory is known as the affect infusion model (AIM for short), and, as its title suggests,
it focuses especially on the process of affect infusionways in which affective states
elicited by one source or experience can influence (i.e., infuse) judgments about other,
unrelated events. Affect infusion occurs, for instance, when the current mood of a job
interviewer influences his or her evaluations of several job applicants, even though these
people are in no way responsible for the interviewers current mood (e.g., Sinclair and
Mark 1992). The AIM model suggests that such infusion of affective states into complex
judgments and decisions occurs through two basic mechanisms.
In one, known as affect priming, current moods influence judgments or decisions
by influencing the ease with which information consistent with these moods can be
brought to mind. Positive moods (referred to as positive affect) tend to prime (stimulate) happy thoughts and pleasant memories, whereas negative moods (negative affect)
tend to prime unhappy thoughts and unpleasant memories. Thus, one way in which current moods influence thought is by directing it into channels consistent with these
moods; and since what individuals think about and remember shapes their judgments,
moodwhatever its sourceexerts strong effects in this manner.
In a second mechanism, known as affect-as-information, affective states influence
judgments and decisions by serving as a heuristica convenient rule for inferring reactions to a specific person, event, or stimulus. When asked to make a judgment about
something in the external worldsome topic, some issue, another personindividuals
often begin by examining their current feelings. They ask themselves, How do I feel
about it? If they find that their feelings are positive, they may conclude I like it or
Im favorable about/toward it. Similarly, if they examine their current feelings and
find that these are negative, they may conclude: I dont like it, or Im unfavorable
toward/about it. This makes sense in situations where these feelings are, indeed, produced by the object or issue being evaluated. However, affect infusionand distortionenters the picture in cases where individuals current feelings are not generated
by the object, issue, or person in question. In such cases, affective states that are actually
irrelevant to the judgments or decisions being made can still influence them.
The findings of many different studies lend support to the view that affective states
can influence judgments and decisions through both of these mechanisms (e.g., Clore
et al. 1994; Forgas 1993). The key remaining question, therefore, is: precisely when do
such effects occur? When do our current moods strongly influence our thoughts, judgments, and decisions? The AIM model offers a surprising answer. Briefly, this theory
suggests that the likelihood of affect infusion is higher when individuals engage in careful, effortful thought about some issue or topic than when they engage in simpler and
relatively automatic modes of thought. Relatively simple modes of thought occur,
for example, in situations where individuals make judgments or decisions largely by



recalling previous evaluations (e.g., someone who has already formed the judgment I
dont like cheesecake can quickly eliminate it as a potential choice among an array
of desserts simply by bringing this judgment to mind). According to the AIM model,
current moods are unlikely to exert strong effects upon these kinds of thinking because
they are so rapid and lacking in effort that there is little opportunity for current moods
to enter the picture.
Careful, reasoned thought, however, presents a markedly different picture. Here,
individuals engage in active, effortful processing of information, often with the goal of
transforming this information (the raw materials of cognition) into something new (Forgas 1995). According to the AIM model, when individuals engage in such thought, affect
infusion has ample opportunity to occur. So, somewhat paradoxically, current moods
are more likely to influence judgments and decisions when individuals engage in active,
effortful thought about the issues in question than when they do not (e.g., Forgas 1995).
A growing body of empirical evidence offers support for this prediction (e.g., Forgas
and Fiedler 1996).
What is the relevance of this theory to entrepreneurship? Two potential links seem
most germane. First, consider the definitions of entrepreneurship offered earlier in this
article. These strongly suggest that what entrepreneurs do is often not routine; rather,
their behavior is often innovative and involves either creating something entirely new
or modifying what exists in unique ways. Such actions, it is argued here, are indicative
of, and often require, a high level of careful, constructive thought. Indeed, it is a classic
finding of cognitive research that it is precisely in situations where people cannot fall
back upon previous experience and operate in automatic ways that they engage in careful, constructive thought (e.g., Bless et al. 1996). It seems reasonable, then, to propose
that entrepreneurs, as a group, engage in such thought more frequently than do most
other people. To the extent they do, the AIM model suggests that they would be more
susceptible to affect infusion than others.
Second, for affect infusion to occur, individuals must experience some emotion or
mood in a given situation. Because of their deep commitment to their ideas, companies,
and vision, entrepreneurs may be more likely than other people to experience intense
emotions, more frequently, in relation to their work. For this reason, they may be more
susceptible to affect infusion: after all, they have stronger feelings available to infuse
(i.e., influence) their thinking and decisions. Together, these considerations point to the
following hypotheses:
H3: Because of the nature and requirements of their new ventures, entrepreneurs
engage in careful, constructive thought more often than do other people.
H4: Entrepreneurs also experience stronger levels of emotion or affect (mood) than
do other people in relation to their work.
H5: As a result of these tendencies, entrepreneurs are more prone to affect infusion
than are other individualsthat is, their thinking, judgments, and decisions are influenced to a greater extent by affective states unrelated to these thoughts, judgments, and decisions.


A key question people ask themselves over and over again during the course of daily
life is, very simply, Why? Most human beings are not content merely to react to the
events that befall them; rather, they want to understand why these events occurred, why



other people have behaved in various ways, why a particular product or business strategy failed (or succeeded), and so on. Efforts to answer the question Why are described
in the field of social psychology by the term attribution, the processes through which
an individual seeks to identify the causes of events, others behavior, or practically anything that is encompassed by their experience (e.g., Pittman 1993).
Existing evidence suggests that virtually all human beings engage in attribution on
a regular basis and that, to an impressive degree, it is an orderly and rational process:
individuals attempt to determine the cause or causes for any event of interest to them
through the careful observation of information that might shed light on this issue. For
instance, efforts to identify the causes behind others actions often involve observations
of information relating to: (1) consensusthe extent to which other people aside from
the individual who is the focus of attention also act in the same manner; (2)
consistencythe extent to which the person in question acts in the same manner in this
situation at other times; and (3) distinctivenessthe extent to which this person acts
in the same manner in other, related situations (distinctiveness is high if the person acts
differently in other situations, thus making his or her behavior in this situation distinctive). Information on these issues is useful in determining whether another persons
behavior derived primarily from internal factors (e.g., her or his personality, current
moods, motives, etc.), or because of external factors (e.g., some event in the external
world that impelled the person to act in this manner). Research findings indicate that
we tend to attribute some event or action by another person to external causes (i.e.,
ones outside the person) when consistency, consensus, and distinctiveness are all high,
but tend to attribute events or actions to internal causes (something about this person)
when consensus and distinctiveness are low, but consistency is high (e.g., Kenny 1994).
As noted above, attribution does often appear to be a reasonable and orderly process. However, it is important to note that it is also subject to important sources of bias
or error. Many of these exist, but this discussion will focus on one that seems especially
relevant to entrepreneurship, an error known as the self-serving bias (e.g., Miller and
Ross 1975; Brown and Rogers 1991). This bias actually consists of two distinct but related parts: (1) a strong tendency on the part of most persons to attribute positive outcomes to internal causesfor instance, their own skill, talent, good judgment, or hard
work, and (2) a corresponding tendency to attribute negative outcomes to external
causesfactors beyond their control, including the actions of other persons, faulty
equipment, a lack of needed resources, and so on. Most persons show the self-serving
bias, at least to a degree; indeed, growing evidence suggests that the only important
exception to this general rule is people suffering from depressionthey tend to show
the opposite pattern, blaming themselves for negative outcomes while attributing positive ones to external causes such as good luck or the efforts of others (Watkins et al.
1996). Many researchers refer to these contrasting patterns of attribution (the typical
self-serving pattern shown by most people and its opposite), as discrete attributional styles.
What is the relationship of attribution, and especially attributional style, to entrepreneurship? Close examination of these cognitive processes points to the existence of
important linksones that may help to increase our understanding of why entrepreneurs recognize opportunities and decide to pursue them, and may also have relevance
to the question Why are some entrepreneurs more successful than others?
First, it has often been suggested that entrepreneurs show an usually strong preference for exerting personal control over their outcomes (e.g., Shaver and Scott 1991).



In other words, they want to shape their own destinies or, at least, to believe that they
can do so, even more strongly than do other people. Second, it has also frequently been
noted that entrepreneurs tend to perceive their own abilities, dedication, and effort as
crucial to success: this is one reason why, when asked to estimate the likelihood that
their business will succeed, entrepreneurs vastly overestimate the odds (e.g., Cooper,
Dunkelberg, and Woo 1988; Kahneman and Lovallo 1994). When these tendencies are
combined, the following hypothesis is suggested:
H6: Entrepreneurs are more susceptible to the self-serving bias than other persons.
Specifically, they are more likely than others to attribute positive outcomes to internal causes but negative outcomes to external causes.

Although the self-serving bias may be beneficial from the point of view of bolstering
ones self-esteem, it has a downside as well. An extensive body of literature indicates
that the self-serving bias can be an important source of interpersonal friction (e.g.,
Baron 1990). The reason why is straightforward: when individuals work together, each
tends to take credit for positive outcomes, while assigning blame or responsibility for
negative results to the other person. This can result in interpersonal friction whenever
these contrasting views become apparent.
The existence of such patternsand of the self-serving biasmay be relevant to
differences between successful and unsuccessful entrepreneurs. As noted recently by
Venkataraman (in press), successful entrepreneurs are more adept than unsuccessful
ones at forging relationships with others that are necessary to the survival and growth
of their business. They generate trust among potential investors and commitment from
the persons with whom they work. It is suggested here that one factor in such success
is reduced susceptibility to the self-serving bias and the more effective interpersonal
relations this often produces. More specifically:
H7: The thinking of successful entrepreneurs is influenced to a smaller degree by
the self-serving bias than is the thinking of less successful entrepreneursthat is,
successful entrepreneurs show less tendency to overestimate their own responsibility
for positive outcomes and to underestimate their own responsibility for negative


That entrepreneurs often underestimate risks and overestimate the likelihood of success
are well-established facts. Why these tendencies occur, however, remains uncertain; indeed, a major focus of this article is identifying cognitive mechanisms that may play a
role in generating such tendencies. One possible explanation for the over-optimism
shown by many entrepreneurs has been suggested by Kahneman and Lovallo (1994).
They propose that entrepreneurs and others often take actions or adopt strategies involving very high levels of risk because, in reality, they dont truly recognize or accept
these risks. The reason for this cognitive blind spot, according to Kahneman and Lovallo (1994), is that they tend to treat the current situation or decision as unique, thus
isolating it from past experience. Their forecasts of future results are often anchored
not on the lessons of the past, but on plans and glowing images of the future. One result
is the overly bold forecasts that often get entrepreneurs, and other decision-makers,
into serious trouble.



Another cognitive mechanism that may enter into the picture is one that will be
quite familiar to most readers: the general tendency of all persons, not simply entrepreneurs, to overestimate how much they can accomplish in a given period of time or, turning the question around, to underestimate how long it will take them to complete a
specific project. Examples of this effect, which is known as the planning fallacy, abound
(Kahneman and Lovallo 1994). Large-scale public projects generally take much longer
to complete, and cost far more, than originally projected. Similarly, when asked to estimate how long it will take to complete a given endeavor, most people are overly optimistic. This fact is clearly illustrated by research conducted by Buehler, Griffin, and
Ross (1994).
These researchers asked college students to indicate how long it would take them
to complete a current term project. The same individuals were then contacted 1 week
after the completion dates they had specified and asked whether they had actually finished the projects. Results were clear: almost half had failed to meet the deadlines they
had previously predicted. Readers who have any doubts about these data should pause,
at this point, and consider a recent project of their own: Was it completed within the
time frame they originally envisioned? It seems safe to predict that many readers will
notice a sizable gap between their initial predictions and the actual completion date.
Why is the planning fallacy so common? Buehler, Griffin, and Ross (1994) suggest
that it occurs largely because of two factors. First, when formulating an estimate about
how long it will take to complete a given task, most individuals enter what they term
a planning mode of thought in which they focus primarily on the future: how they will
perform the task, what steps they will take, and so on. They do not consider their past
experiences in similar situations because there are important cognitive obstacles to doing so: predictions, by their very nature, induce a future orientation; it is difficult to
determine just what previous situations qualify as being similar to the present situation; and even if these are identified and considered, attributional processes may interfere with using such information in an accurate manner. Specifically, even if individuals
do consider past experiences in which tasks took longer than anticipated, they tend,
because of the self-serving bias discussed in the preceding section, to attribute such delays to external factors beyond their control.
As a result of these obstacles, individuals tend to ignore past situations and experiences when making predictions about future outcomes. That this is actually the case
is suggested by the results of a study conducted by Buehler, Griffin, and Ross (1994).
They asked participants in their research to explain why they did not get a particular
task done on schedule. Results indicated that fully 71% of the comments made were
related to future plans; fewer than 1% referred to problems in completing projects in
the past. Thus, as expected, individuals did focus on the present situation and on the
future in making their estimates, while largely ignoring past experience. Further, in the
few cases where they did mention past experiences, they attributed failures to meet previous deadlines as due to external, transitory, and unique causesfactors largely beyond their control.
What is the relationship of these findings to entrepreneurship? First, entrepreneurs
tend to focus primarily on the futureperhaps to a greater extent than do other people.
After all, they are enthusiastic about their ideas and are, as Holt (1992, p. 11) put it,
focused on a vision for growth. Moreover, as noted earlier, they may be even more
susceptible to the self-serving bias (i.e., the tendency to attribute past failures to external
causes) than are other people.



Second, the planning fallacy, like other cognitive biases, would tend to operate
more strongly in the kind of situations entrepreneurs generally faceespecially ones
that are filled with uncertainties and that are novel and unique. In making predictions
about how long various tasks will take or how much can be accomplished in a given
period of time, entrepreneurs have little relevant experience to draw upon: they are,
in a sense, making it up as they go along. Thus, the tendency to view the present situation as isolated or separate from past experiences may be increased. Together, these
considerations point to the following hypothesis:
H8: Entrepreneurs are more susceptible to the planning fallacy than are other people; this, in turn, contributes to the overly confident predictions they make about
future outcomes, and to their beliefs that they can do more, in less time, than is actually feasible.


Almost everyone has had the experience of finding themselves in a situation where they
felt that they had too much invested to quit. Such reactions can occur in a wide range
of contexts, from holding onto a stock that has few prospects of rising simply because
it was purchased in the past, through remaining in intimate personal relationships that
yield little but pain and suffering (e.g., Brockner 1992). Many readers will be familiar
with another instance of such effects: continuing to spend money on repairs for an aging
automobile because they have put too much into to it to give up on it now. In all
such situations, the individuals involved feel a strong pressure to continue investing
time, effort, or money in what they gradually come to realize is a losing proposition.
Such situationswhich are described as involving an escalation of commitment
present a puzzling picture. Why, after all, should individuals continue to sink resources
into a project, an object, an idea, a stock, or a relationship that has little prospect of
yielding anything but ever-mounting costs? From a rational perspective, it would be
best to cut ones losses and retreat. Yet, as most readers know from their own experience, escape from such situations is anything but easy. What accounts for this seemingly
irrational tendency to stick to a bad decision or a losing course of action?
Research on the escalation of commitment (e.g., Staw and Ross 1987; Bobocel and
Meyer 1994) indicates that although several factors are involved, the most important
are these: (1) feelings of responsibility for the initial decisiononce individuals make
a decision, they feel responsible for it, and view reversing the decision as backing away
from such responsibility; (2) the effort involved in making a decisiondecisions require
hard cognitive work, and most people are reluctant to begin the process all over again;
(3) concerns about the loss of face and image that may result from admitting that one
made a mistake; and (4) strong desires to justify ones initial choice to oneselfto convince oneself that the reasons for making this decision in the first place were good.
Together, these factors make it very difficult for individuals who have made a decision, and an initial commitment to it, to reverse this choice. Are these factors also relevant to decision-making by entrepreneurs? It seems reasonable to suggest that they are.
In fact, it seems possible that these factors operate more strongly among entrepreneurs



than among other groups of people, with the result that entrepreneurs are somewhat
more susceptible to escalation of commitment than others.
Consider, first, the depth of entrepreneurs initial commitment to the ideas that
they recognized as an opportunity, and to their plans to turn these ideas into viable
companies. Few people in any walk of life can match the intensity of this initial commitment. And this, in turn, makes it extremely difficult for entrepreneurs to disown their
ideas and the decision to act on them: doing so would almost be akin to disowning ones
childrenin this case, intellectual rather than biological offspring. Similarly, it may be
even more difficult for entrepreneurs than others to face the ridicule and loss of face
that can stem from admitting they were wrong in the first place; this would be especially
true with respect to bitter recriminations from friends, family, and early backers
people who bought into the entrepreneurs dreams and now find that these have crumbled. Finally, because of their deep commitment to their ideas and to their companies,
entrepreneurs may experience truly powerful pressures to justify their initial decisions,
and what followed upon these, to themselves. They have a great deal of their self-esteem
and self-concept tied to the enterprises they start, so the task of justifying a retreat from
these may be personally devastating, to say the least. Together, these considerations
point to the following hypothesis:
H9: Entrepreneurs are more susceptible to escalation of commitment effects than
are other people.

To the extent this prediction is verified in empirical research (see a later discussion
of this topic), it may provide a partial explanation for entrepreneurs legendary tenacity
in the face of adverse resultsa definite plus in many situations. But it may also help
explain why some entrepreneurs experience total disaster: they simply cant quit and
cut their losses even when doing so is clearly indicated.


The major themes of this article can be summarized as follows: (1) entrepreneurs thinking may differ, in important ways, from that of other persons; specifically, they may be
more susceptible to various kinds of cognitive errors or bias than other persons (see
Table 1 for an overview of these biases and errors); (2) such differences in cognition
do not stem primarily from differences between entrepreneurs and other people with
respect to personal traits (although such differences may well exist), but rather from
the fact that entrepreneurs operate in situations and under conditions that would be
expected to maximize such errors or biases.
These assertions represent logical extensions from the findings of basic research
on human cognition, tempered and enriched, insofar as possible, with the findings and
insights of research on entrepreneurship (e.g., Venkataraman, in press). But assuming
that these assertions are correct, at least to a degree, what are their value to the future
study of entrepreneurship? Two potential benefits seem worthy of comment. The first
centers around the possibility that drawing on the large body of findings about human
cognition may provide entrepreneurship researchers with several new and useful conceptual tools, which they can apply to the unique set of issues and questions addressed
by the field. How useful might such a perspective prove? Some hint is provided by the
fact that a cognitive perspective has already proven invaluable in psychology and related

Affective states produced by one source influence judgments and decisions about
other, unrelated sources (i.e., other objects, issues, or persons)

Most individuals tend to attribute positive

outcomes to internal causes (e.g., their
own talent or effort), but negative outcomes to external causes (the self-serving
The tendency of most people to underestimate the time required to complete various projects, or to overestimate how
much they can accomplish in a given period of time

The tendency to continue investing time, ef- Escalation of commitment can lead to a
fort, or money in losing courses of action
needless waste of precious
because of an initial commitment to this
resourcessomething no young comcourse of action
pany can afford
The desire to justify the initial choice or de- Self-justification is an important factor in
cision in an escalation of commitment situescalation of commitment

Affect infusion

Attributional styles

Planning fallacy

Escalation of commitment;


Entrepreneurs may be more prone to the

self-serving bias than are other people
Successful entrepreneurs are less susceptible to the self-serving bias than are unsuccessful entrepreneurs

Entrepreneurs engage in careful, effortful

thought more often than do other
Entrepreneurs typically experience
stronger emotions at work than do
other people
Together, these tendencies make them
more susceptible to affect infusion

Entrepreneurs are more susceptible to escalation of commitment effects and tendencies toward self-justification than are
other people

These tendencies lead to unrealistic time- Entrepreneurs are more prone to the plantables for the completion of various
ning fallacy than are other people; this
contributes to their tendency to make
overly optimistic predictions about future outcomes

Attributing positive outcomes to internal

causes can lead to overconfidence in
ones abilities
Blaming others for negative outcomes
can lead to interpersonal friction

Affect infusion can lead to serious errors

in judgments and decisions, including
ones concerning business situations

If only . . . thoughts cause indivudals to Entrepreneurs are more likely to have if

feel dissatisfied with current life outonly . . . thoughts than others and to excomes
perience regrets over missed opportuniMissed opportunities may lead to intense
ties than are other people
regrets and magnification of lost poten- This is one reason why they are more
tial benefits
likely than others to search for, identify,
and act upon perceived opportunities

The tendency to imagine what might have

been in a given situation

Counterfactual thinking

Relevance to Entrepreneurship


Overview of Cognitive Mechanisms Potentially Relevant to Entrepreneurship

Mechanism or Process






fields. Many readers are probably familiar with the contribution of this approach in efforts to understand such topics as memory, thinking, problem-solving, and decisionmaking. However, it is important to note that a cognitive perspective has also added
significantly to our understanding of many other aspects of behavior as well and has
been successfully applied to a wide range of topics in such fields as social psychology
(e.g., Bargh et al. 1995; Baron and Byrne 1997; Weber and Harvey 1994) and industrialorganizational psychology (Greenberg and Baron 1997). Indeed, to date, a cognitive
perspective has added greatly to our understanding of virtually every aspect of human
behavior to which it has been applied.
Given this fact, it seems reasonable to explore the value of such a perspective in
the study of entrepreneurship. Whereas entrepreneurship is certainly a unique field with
its own rich set of problems and issues (Venkataraman, in press), there seems no logical
reason why it could not benefit from drawing on what has proven to be a very useful
perspective on human behavior. Encouraging such exploration is the primary purpose
of this paper.
A second and more applied benefit relates to the possibility that a cognitive perspective might aid in the development of techniques designed to assist entrepreneurs
in various waysespecially, in avoiding the errors and pitfalls described earlier in this
article (e.g., the self-serving bias, the planning fallacy, escalation of commitment effects). Whereas personal traits and characteristics can be changed only with considerable difficulty, a large body of research findings suggest that patterns of thoughtand
errors stemming from themare often more amenable to change (e.g., ODonohue and
Krasner 1996). Thus, not only does a cognitive perspective offer entrepreneurship the
possibility of new conceptual tools useful in basic research; it may also contribute to
the development of effective interventions for assisting practicing entrepreneurs.
At this point, it is important to note that the goal of such techniques would certainly
not be that of making entrepreneurs entirely resistant to all cognitive sources of errorof turning them into totally rational beings like Mr. Spock of Star Trek fame.
Such a goal is clearly unattainable: decades of research on human cognition suggest that
our cognitive systems have too many limitations for this to ever be the case (e.g., Barsalou 1992). But even if it were possible to approach complete rationality, one could argue
that this, in itself, might have negative implications. Looking out at the world through
completely rational eyes, entrepreneurs might well never get startedthe odds would
appear, realistically, far too daunting. Such a conclusion on the part of large numbers
of potential entrepreneurs would have devastating effects on many economies, since
the activities of such people are clearly one of the true engines of economic growth
(Timmons 1990).
The goal of studying the role of cognitive mechanisms in entrepreneurship, therefore, is primarily that of formulating means for holding errors stemming from the cognitive mechanisms in check, so that the decisions reached by entrepreneurs, and the strategies they adopt, have increased chances of success. In essence, the current situation can
be described as follows: Entrepreneurs are creative individuals who generate a tremendous number of potentially valuable ideas; as such, they are a priceless human resource
for any society. All too frequently, however, entrepreneurs fail in their efforts to translate their ideas into going business concerns that could provide valuable products and
services for large numbers of people and add to the economic growth and well-being
of their societies. It is suggested here that these disappointing results stem, at least in
part, from the cognitive mechanisms and errors described in this article. Thus, calling



these to the attention of entrepreneurs, and training them in various techniques for reducing such tendencies, might well yield highly beneficial results. That such training
might well be feasible is suggested by the success of efforts to improve the accuracy
of performance appraisals by training raters in various error-reducing techniques (e.g.,
Day and Sulsky 1995). In a similar manner, entrepreneurs could be armed with tactics
that would assist them in resisting the impact of counterfactual thinking, affect infusion,
the self-serving bias, the planning fallacy, and tendencies toward self-justification. To
the extent the impact of such tendencies is moderated, entrepreneurs might then be
better able to accurately appraise the potential of specific opportunities, and strategies.
One final point: by now, some readers may be wondering whether it will be possible
to subject the hypotheses offered here to direct empirical test. Obviously, these hypotheses are of value only to the extent that this is possible. In fact, the methods for accomplishing this goal already exist. Each mechanism considered has already been the subject
of extensive research. Thus, adapting the methods used in this previous work to the
study of potential differences between entrepreneurs and other people should be readily
feasible. Specific suggestions regarding such adaptations are beyond the scope of this
study. However, it might be useful to briefly illustrate how this process might proceed
with respect to one mechanism examined herecounterfactual thinking.
H1 suggests that entrepreneurs are more likely than other people to engage in
counterfactual thinking, especially in situations where they have experienced negative
outcomes. This possibility can be readily assessed by adapting methods used in previous
studies of counterfactual thinking (e.g., Medvec et al. 1994). For instance, entrepreneurs
and others could be asked to describe and rate various aspects of their thinking in situations where they have experienced negative outcomes. If the reasoning on which this
hypothesis is based is accurate, then entrepreneurs would be more likely than others
people to report if only . . . thinking and more intense feelings of regret.
Corresponding adaptations of existing research methods should be possible for all
of the hypotheses proposed and all of the mechanisms considered. Thus, methods for
testing these hypotheses already largely exist and can readily be applied to future research on entrepreneurship conducted within a cognitive perspective.
In concluding, it seems important to emphasize, again, a point made previously:
the goal of a cognitive perspective is certainly not that of creating completely rational
entrepreneurs who are totally immune to all cognitive errors. In this respect, the present
author agrees with Bernard DeVoto, an historian, who stated (1941, p. 212 ): The trouble with reason is that it becomes meaningless at the exact point where it refuses to
act. What we want, ultimately, is not entrepreneurs who are paralyzed into inaction
by efforts to conduct totally logical assessments of all possible risks and benefits, but
rather ones who pause and reflect sufficiently to increase the chances that theyand
their societieswill prosper.

Bargh, J.A., Raymond, P., Pryor, J.B., and Strack, F. 1995. Attractiveness of the underling: An automatic power sex association and its consequences for sexual harassment and aggression. Journal of Personality and Social Psychology 68(5):768781.
Baron, R.A. 1990. Attributions and organizational conflict. In S. Graham and V. Folkes, eds., Attribution Theory Applications to Achievement, Mental Health, and Interpersonal Conflict. Hillsdale,
NJ: Erlbaum, pp. 185204.



Baron, R.A. 1993. Interviewers moods and evaluations of job applicants: The role of applicant qualifications. Journal of Applied Social Psychology 23(3):254271.
Baron, R.A., and Byrne, D. 1997. Social Psychology, 8th ed. Boston: Allyn and Bacon.
Baron, R.A., and Neuman, J.H. 1996. Workplace violence and workplace aggression: Evidence on their
relative frequency and potential causes. Aggressive Behavior 22(3):161173.
Barrick, M.R., and Mount, K. 1993. Autonomy as a moderator of the relationships between the Big
Five personality dimensions and job performance. Journal of Applied Psychology 78(1):111118.
Barsalou, L.W. 1992. Cognitive Psychology: An Overview for Cognitive Scientists. Hillsdale, NJ:
Bless, H., Clore, G.L., Schwarz, N., Golisano, V., Rabe, C., and Wolk, M. 1996. Mood and the use
of scripts: Does a happy mood really lead to mindlessness? Journal of Personality and Social
Psychology 71(4):665679.
Bobocel, D.R., and Meyer, JH.P. 1994. Escalating commitment to a failing course of action: Separating
the role of choice and justification. Journal of Applied Psychology 79(3):360363.
Brockhaus, R.H., Sr., and Horwitz, P.S. 1986. The psychology of the entrepreneur. In D.L. Sexton and
R.W. Smilor, eds., The Art and Science of Entrepreneurship. Cambridge, MA: Ballinger.
Brockner, J. 1992. The escalation of commitment to a failing course of action: Toward theoretical progress. Academy of Management Review 17(3):3961.
Brown, J.D., and Rogers, R.J. 1991. Self-serving attributions: The role of physiological arousal. Personality and Social Psychology Bulletin 17(3):501506.
Buehler, R., Griffin, D., and Ross, M. 1994. Exploring the planning fallacy: Why people underestimate their task completion times. Journal of Personality and Social Psychology 67(3):366381.
Burger, J.M. 1991. Changes in attribution over time: The ephemeral fundamental attribution error.
Social Cognition 9(2):182193.
Bygrave, W.D. 1989. The entrepreneurship paradigm (1): A philosophical look at its research methodologies. Entrepreneurship Theory and Practice 14(2):730.
Clore, G.L., Schwarz, N., and Conway, M. 1994. Affective causes and consequences of social information processing. In R.S. Wyer and T.K. Srull, eds., Handbook of Social Cognition, 2nd ed. Hillsdale, NJ: Erlbaum.
Cooper, A.C., Dunkelberg, W., and Woo, C. 1988. Enterepreneurs perceived chances for success. Journal of Business Venturing 3(2):97108.
Day, D.V., and Sulsky, L.M. 1995. Effects of frame-of-reference training and information configuration
on memory organization and rating accuracy. Journal of Applied Psychology 80(1):158167.
DeVoto, Bernard. 1941. The Easy Chair. New York: Harpers, pp. 210214.
Dunkelberg, W.C., and Cooper, A.C. 1982. Entrepreneurial typologies. In K.H. Vesper, ed., Frontiers
of Entrepreneurship Research. Wellsley, MA: Babson College.
Fiske, S.T., and Taylor, S. 1991. Social Cognition, 2nd ed. New York: Random House.
Forgas, J.P. 1993. On making sense of odd couples: Mood effects on the perception of mismatched
relationships. Personality and Social Psychology Bulletin 19(1):5971.
Forgas, J.P. 1995. Mood and judgment: The affect infusion model (AIM). Psychological Bulletin
Forgas, J.P., and Fiedler, K. 1996. Us and them: Mood effects on intergroup discrimination. Journal
of Personality and Social Psychology 70(1):2840.
Gilbert, D.T., McNulty, S.E., Giuliano, T.A., and Benson, J.E. 1992. Blurry words and fuzzy deeds:
The attribution of obscure behavior. Journal of Personality and Social Psychology 62(1):1825.
Gilovich, T., and Medvec, V.H. 1994. The temporal pattern of the experience or regret. Journal of
Personality and Social Psychology 67(3):357365.
Greenberg, J., and Baron, R.A. 1997. Behavior in Organizations, 6th ed. Englewood Cliffs, NJ: Prentice-Hall.
Hatten, T.S. 1997. Small Business: Entrepreneurship and Beyond. Upper Saddle River, NJ: Prentice-Hall.



Holt, D.H.1992. Entrepreneurship: New Venture Creation. Englewood Cliffs, NJ: Prentice-Hall.
Isen, A.M., and Baron, R.A. 1991. Positive affect as a factor in organizational behavior. In B.M. Staw
and L.L. Cummings, eds., Research in Organizational Behavior, Vol. 14. Greenwich, CT: JAI
Press, pp. 153.
Kahneman, D., and Lovallo, D. 1994. Timid choices and bold forecasts: A cognitive perspective on
risk taking. In R.P. Rumelt, D.E. Schendel, and D.J. Teece, eds., Fundamental Issues in Strategy:
A Research Agenda. pp. 71-96.
Kenny, D.A. 1994. Interpersonal Perception: A Social Relations Analysis. New York: Guilford.
Kubany, E.S. , Bauer, G.B., Muraoka, M.Y, Richard, D.C., and Read, P. 1995. Impact of labeled anger
and blame on intimate relationships. Journal of Social and Clinical Psychology 14(1):5360.
Mandel, D.R., and Lehman, D.R. 1996. Counterfactual thinking and ascriptions of cause and preventability. Journal of Personality and Social Psychology 71:450463.
Medvec, V.H., Madey, S.C., and Gilovich, T. 1995. When less is more: Counterfactual thinking and
satisfaction among Olympic medalists. Journal of Personality and Social Psychology 69(4):
Miller, D.T., and Ross, M. 1975. Self-serving biases in attribution of causality: Fact or fiction? Psychological Bulletin 82(3):313325.
Miller, D.T., Turnbull, W., and McFarland, C. 1990. Counterfactual thinking and social perception:
Thinking about what might have been. In M.P. Zanna, ed., Advances in Experimental Social
Psychology, Vol. 23. Orlando, Fl: Academic Press, pp. 305331.
Oaksford, M., Moreris, F., Grainger, B., and Wililiams, J.M.G. 1996. Mood, reasoning, and central
executive processes. Journal of Experimental Psychology: Learning, Memory, and Cognition
ODonohue, W., and Krasner, L. 1996. Handbook of Psychological Skills Training. Boston: Longwood.
Palich, L.E., and Bagby, D.R. 1995. Using cognitive theory to explain entrepreneurial risk-taking: Challenging conventional wisdom. Journal of Business Venturing 10(6):425438.
Pittman, T.S. 1993. Control motivation and attitude change. In G. Weary, F. Gleichner, and K.L. Marsh,
eds., Control Motivation and Social Cognition. New York: Springer-Verlag.
Quigley, B.M., Johnson, A.B., and Byrne, D. 1995, June. Mock jury sentencing decisions: A meta-analysis of the attractiveness-leniency effect. Paper presented at the meetings of the American Psychological Society, New York.
Robbins, T.L., and DeNisi, A.S. 1994. A closer look at interpersonal affect as a distinct influence on
cognitive processing in performance evaluations. Journal of Applied Psychology 79:341353.
Roese, N.J. 1997. Counterfactual thinking. Psychological Bulletin 121(1):133148.
Ross, J., and Staw, B.M. 1993. Organizational escalation and exit: Lessons from the Shoreham nuclear
power plant. Academy of Management Journal 36(3):701732.
Schumpeter, J.A. 1934. The Theory of Economic Development. Cambridge, MA: Harvard University Press.
Shaver, K.G., and Scott, L.R. 1991. Person, process, choice: The psychology of new venture creation.
Entrepreneurship Theory and Practice Winter:2342.
Shavitt, S., and Brock, T.C. 1994. Persuasion: Psychological Insights and Perspectives. Boston: Allyn
and Bacon.
Sinclair, R.C., and Mark, M.M. 1992. The influence of mood state on judgment and action. In L.L.
Martin and A. Tesser, eds., The Construction of Social Judgments. Hillsdale, NJ: Erlbaum.
Staw, B.M., and Barsade, S.G. 1993. Affect and managerial performance: A test of the sadder-butwiser vs. happier-and-smarter hypotheses. Administrative Science Quarterly 38(2):304331.
Staw, B.M., and Ross, J. 1987. Behavior in escalation situations: Antecedents, prototypes, and solutions.
In L.L. Cummings and B.M. Staw, eds., Research in Organizational Behavior, Vol. 9. Greenwich,
CT: JAI Press.
Timmons, J.A. 1990. New Venture Creation: Entrepreneurship in the 1990s. Homewood, IL: Irwin.
Timmons, J.A. 1994. The Entrepreneurial Mind.



Venkataraman, S. (in press) The distinctive domain of entrepreneurship research: An editors perspective. Working Paper, Troy, NY: Rensselaer Polytechnic Institute.
Watkins, P.C., Vache, K., Verney, S.P., Mathews, A., and Muller, S. 1996. Unconscious mood-congruent memory bias in depression. Journal of Abnormal Psychology 105(1):3441.
Weber, A.L., and Harvey, J.H. 1994. Perspectives on Close Relationships. Boston: Allyn and Bacon.
Wyer, R.S., Jr., and Srull, T.K. 1994. Handbook of Social Cognition. Hillsdale, NJ: Erlbaum.