1. ICSB 2007 The role of emotions in entrepreneurial actions and imagination: A subjectivist perspective Sanjay Goel University of Minnesota Duluth Ranjan Karri University of Illinois Springfield

2. ICSB 2007 Research Question What do emotions have to do with entrepreneurial imagination and entrepreneurial action?

3. ICSB 2007 Key premises Emotions are the basis for action (e.g.Barbalet, 1998). Entrepreneurial actions are based on expectations of the future, i.e. imagining future possibilities rather than extrapolating the past (e.g. Shackle, 1972). Entrepreneurs create opportunities with an active interaction with other actors (potential stakeholders).

4. ICSB 2007 Domain of entrepreneurship Characterized by fundamental (Knightian) uncertainty. Entrepreneurial vision is evolving in nature. Imagination and action are fundamental to opportunity creation and exploitation. Entrepreneurial imagination and action helps build entrepreneurial resources in shaping the entrepreneur’s vision.

5. ICSB 2007 Subjectivist approach Entrepreneurial actions (or decisions) are best understood as “the focal, creative, psychic event where knowledge, thought, feeling and imagination are fused into action” (Shackle, 1962, p.105). Entrepreneurial action theory from a subjectivist lens as opposed to rational choice models.

6. ICSB 2007 Conceptual origins Subjectivity of entrepreneurial action in dealing with fundamental uncertainty and the unpredictability of the future. (In contrast to rational choice models that deal with estimating probabilities and forecasting) “Unknowledge” about the future. Thus future can only be imagined as rival courses of action, and expectations comprise ‘hope and imagination’ (Shackle, 1972). Imperfect and uncertain applicability of previously learned scripts of action or established procedures to deal with future contingencies.

7. ICSB 2007 Emotions - Overview Emotions are specific action tendencies. e.g. Anger – urge to attack; Fear – urge to escape etc. Whether the action tendencies result in actions depends on a combination of intents, control, coping, cultural norms as well as the nature of particular contexts (e.g. Frederickson, 1998).

8. ICSB 2007 Emotions - categories Two categories: Negative and Positive emotions. Negative emotions are associated with specific action tendencies (mainly physical). Narrow a course of action to cope with the threat perceived from a negative emotion. Positive emotions are associated with nonspecific action tendencies (primarily cognitive). In contrast to negative emotions, positive emotions broaden the thought-action repertoire.

9. ICSB 2007 Emotions – Relevant Types When action is inhibited under conditions of rationality (due to uncertainty), positive emotions such as confidence and optimism provide a feeling of certainty that is necessary for action to occur. On the contrary negative emotions such as fear and pessimism increase anxiety towards the uncertain future and thus inhibit action.

10. ICSB 2007 Emotions - Overview Positive emotions broaden the scope of action. Negative emotions narrow the scope of action. Positive emotions that are concerned with future (anticipatory) are confidence and optimism. Other types of positive emotions – joy, interest, contentment and love (e.g. Fredrickson, 1998).

11. ICSB 2007 Emotions and Entrepreneurship Emotions as inputs to entrepreneurial imagination. Shaping the entrepreneurial aspiration and vision Emotions as inputs to entrepreneurial action. Creation and exploitation of opportunities.

12. ICSB 2007 Emotions and Entrepreneurship (Contd..) Expectations represent the underlying perception of uncertainty (product of the probability of the event and the payoff associated with the event). Given that probability distribution is unknown, emotions play a role in forming expectations. Expectations are associated with “anticipatory emotions” (Kemper, 1978) such as confidence, optimism and pessimism. Optimism and pessimism are anticipatory emotions when considering the past. Confidence is the anticipatory emotion when considering the present.

13. ICSB 2007 Emotion of Optimism It is an emotion when considering the past in anticipating the future (e.g. Kemper, 1978). Previous knowledge is the basis for forming expectations about the future in emotional terms. Optimism forms the basis for entrepreneurial aspirations and imagination. Optimism assists in action via its effect on imagination (and therefore opportunity creation).

14. ICSB 2007 Optimism and entrepreneurial imagination It reframes the past in terms that protect (in case of negative historic events) and enhances (in case of positive historic events) the capacity for entrepreneurial imagination. It increases the domain of positive expectations from status quo in the latitude of imagination. It increases the scale and scope of entrepreneurial imagination. Pessimism has the opposite effects on entrepreneurial imagination.

15. ICSB 2007 Emotion of Confidence Confidence is a “projected assured expectation” that is brought back and felt in the present to get a sense of certainty about the future (Barbalet, 1998). When facing fundamental uncertainty, confidence allows projecting one’s imagination about the future. Thus giving a preparedness to act by emotionally reducing uncertainty.

16. ICSB 2007 Confidence and Entrepreneurial Action It provides the affective basis for action that substitutes for analytical rigor in a Weickian sense, and is cognitively parsimonious in an effectual sense. It makes action possible where inaction would be institutionally accepted and even rewarded by inputting entrepreneurial expertise to substitute for real or imagined information gaps. It reduces the cost of entrepreneurial action, and increases the opportunity cost of inaction, which forms the basis for persistence. It increases the scale and scope of entrepreneurial action.

17. ICSB 2007 Implications: Broaden and build Broaden scope of entrepreneurial thought-action or imagination. Enlarges the cognitive context. Broadens the range of possibilities. Enhances creative thinking. Build resources

18. ICSB 2007 Other Implications Building networks Shaping the future through pre-commitments. Contractual linkages at the micro level Serial and global entrepreneurship at the macro level Structure and content of entrepreneurial vision Innovation and risk-taking.