Strategic Entrepreneurship Journal

Strat. Entrepreneurship J., 1: 167182 (2007) Published online 21 November 2007 in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/sej.12

BEHAVIORAL AND COGNITIVE FACTORS IN ENTREPRENEURSHIP: ENTREPRENEURS AS THE ACTIVE ELEMENT IN NEW VENTURE CREATION
ROBERT A. BARON*
Lally School of Management and Technology, Rensselear Polytechnic Institute, Troy, New York, U.S.A.

Entrepreneurs play a central role in new venture creation. Because they do, careful attention to relevant aspects of their behavior and cognition can offer useful insights into key aspects of this complex process. Specically, investigation of carefully selected behavioral and cognitive factors can add appreciably to our understanding of the basic processes that underlie new venture creation (e.g., how opportunity recognition or creation actually occurs, how and what entrepreneurs learn from increasing experience in launching and operating new ventures). Evidence is reviewed concerning the role of behavioral and cognitive factors in several key activities performed by entrepreneurs. In addition, the potential role of a variable that has not yet been systematically investigated in the context of new venture creationaffectis explored. Finally, suggestions are offered for future research designed to further explicate the role of behavioral and cognitive factors in new venture creation (e.g., research on the role in entrepreneurship of self-regulatory and metacognitive mechanisms; research on the cognitive and foundations of entrepreneurial alertness). Copyright 2007 Strategic Management Society.

We are born to action . . . (Charles Horton Cooley, 1902) While these words may not apply to everyone, they certainly do ring true in the case of entrepreneurs. If they are nothing else, entrepreneurs are persons who take actionthey engage in vigorous, persistent efforts to convert their ideas and visions into protable, operating companies. This proclivity for action is, in a sense, crucial to the entrepreneurial process; in the absence of action by individual entrepreneurs, there would simply be no entrepreneurship and no new ventures. As Shane, Locke, and Collins

Keywords: entrepreneurship; affect; cognition; entrepreneurs; new ventures *Correspondence to: Robert A. Baron, Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, U.S.A. E-mail: baronr@rpi.edu

(2003: 259) put it, Entrepreneurship involves human agency. The entrepreneurial process occurs because people act to pursue opportunities . . . In short, entrepreneurship happens because entrepreneurs conceive of new products or services and then develop them through the launch and operation of new ventures. In this sense, entrepreneurs truly are the active element in new venture creation. If entrepreneurs are indeed an essential part of the process through which new ventures are created, it is reasonable to suggest that at least some aspects of their behavior and cognition play an important role in this process. But which aspects of their behavior and cognition are most relevant and hence most deserving of careful attention? The answer offered here closely reects a perspective taken in several other branches of management (e.g., Human Resource Management, Organizational Behavior). In essence, it suggests that we should focus on those aspects of entrepreneurs behavior and thought that are most closely linked to

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making visible what might (without them) have never been. But given that entrepreneurs play an important role in new venture creation, just what is it that they do? What is their specic role in the overall process? Answering this question is complex because entrepreneurs, unlike persons in many other occupations or jobs, do not have clearly dened sets of duties, activities, and responsibilities. Recent models of the entrepreneurial process, however, provide frameworks for identifying several of the tasks that are truly central (e.g., Ardichvili, Cardozo, and Ray, 2003; Baron, 2006a; Shane, 2003). Together, these frameworks suggest that although entrepreneurs engage in many different tasks, the following are, perhaps, among the most essential: (1) generating ideas for new products or services, (2) recognizing business opportunities related to these ideas, (3) obtaining the resources needed for developing these ideas through the launch of a new venture. These are certainly not the only activities performed by entrepreneurs (e.g., they also focus on making decisions and formulating appropriate business strategies), but these activities are among the ones most fundamental to early phases of new venture creation. Behavioral and cognitive variables continue to play an important role in later phases of new venture founding and operation (e.g., Greenberg and Baron, 2008), but the present discussion concentrates primarily on the role of these factors during the initial, early phases of this process.

the activities they perform (e.g., Landy and Conte, 2006; Riggio, 2003). In other words, behavioral and cognitive variables and/or processes are of interest to entrepreneurship researchers only to the extent that they are closely related to activities involved in the conception, launch, development, and operation of new ventures (e.g., Shane, 2003). This basic point serves as a guiding principle throughout this paper, which proceeds as follows. First, an initial section briey describes key tasks and activities performed by entrepreneurs, tasks and activities to which behavioral and cognitive variables are relevant. Second, current knowledge concerning behavioral and cognitive variables that have been found to play a role in these tasks and activities is reviewed. Third, the potential effects of a variable that may strongly inuence many of these tasks and activities but has not yet been systematically investigated in the context of new venture creationaffectare considered. A concluding section proposes possible directions for future research.

KEY ACTIVITIES IN NEW VENTURE CREATION

Robert Bresson (1975), a well-known French lm director, once described the creative process in these words: Make visible what, without you, might perhaps never have been seen. Those words seem applicable to entrepreneurship and to new venture creation which does, indeed, bring into existence something that might, without an entrepreneur, never have existed. A competing view is that specic entrepreneurs are relatively unimportant; good ideas will be recognized and put to use by someone, so individuals themselves matter very little. While this may be accurate up to a point, it does not explain situations in which extremely valuable ideas exist in a given culture, sometimes for many years, but are not implemented. For instance, the Inca civilization, although highly advanced in many respects, never used the wheel for transportation. The idea of doing so denitely existed in the culture because children played with toys in the form of wheeled carts. Yet no one ever put this idea to use in the way in which it was applied in many other cultures. Could this situation have changed if an appropriate entrepreneur were present? Since the wheel was not culturally prohibited, it seems quite possible. Instances such as this suggest that individual entrepreneurs do indeed matter, and do play an important role in
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THE EFFECTS OF BEHAVIORAL AND COGNITIVE FACTORS ON KEY ENTREPRENEURIAL ACTIVITIES

What specic competencies (skills, abilities, etc.) do entrepreneurs need to successfully create new ventures? A basic answer to this question is: Many . . . and these change in relative importance and scope across various phases of the new venture creation process. Thus, the review that follows is not in any sense exhaustive; rather it focuses primarily on those cognitive and behavioral variables for which strong and consistent evidence for signicant impact on key entrepreneurial activities currently exists. Paralleling the models of entrepreneurship cited earlier (e.g., Shane, 2003), discussion moves from behavioral and cognitive factors that inuence the generation of ideas and recognition of opportunities to behavioral and cognitive factors that inuence
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the acquisition of resources needed to exploit these opportunities. Generating new ideas Many denitions of creativity exist, but most agree that it involves the development of (1) something new, that did not exist (at least in its present form) before, and (2) something that is not merely new but also appropriate or useful. The U.S. Patent Ofce applies these criteria to patent applications: not only must an idea be new (an advance on existing art in legal terms), it must be potentially useful too. In addition, it must also be nonobvioussomething that is not immediately apparent to anyone who is familiar with existing, related products (known, in legal terminology, as prior art). Creativity, in its strongest forms, is easy to recognize: Einstein, da Vinci, Edison, Shakespearethe ideas, theories, or products they offered to the world were certainly new and, in important ways, useful. But identifying the cognitive foundations of creativity is a much more complex and difcult task. Where do such ideas originate? How do they take form in the minds of particular individuals? Revealing answers to these questions have been provided by basic research on creativity in the elds of cognitive science and cognitive psychology, and these ndings serve as the main foundation of the present discussion.
The key role of concepts

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preventing individuals from relating information across different concepts. For instance, in the mid 1970s, engineers and scientists at Sony Corporation were given the task of developing music CDs. Initially, they produced CDs that could store up to 18 hours of musica capacity deemed too long for the market at that time by top executives at Sony. Why did they do this? Being familiar with existing technology, they made the early CDs 12 inches in diameterthe same as existing LP records! In a sense, they were trapped by their own concept of a music storage device, and did not realize that CDs could be any size that was convenient.
Generating ideas through the expansion and combination of concepts

As a result of continuing experience with the world, all individuals enter a vast amount of information in long term memory. Basic research suggests that such information is not stored randomly; rather, it is organized into various cognitive structures or frameworks. Among these, concepts are especially relevant to creativity and the emergence of new ideas. Concepts are categories for objects or events that are somewhat similar. For instance, the words airplane, automobile, elevator, and motor scooter all relate to equipment for moving people and objects from one place to another: all are included in the concept for vehicle. Similarly, while the elds of physics, geology, biology, and chemistry differ in many ways, they are all included in the concept science. Concepts offer important benets with respect to creativity: they permit ready access to vast amounts of previously stored information that can facilitate processing such information in various ways. On the other hand, they can act as a kind of mental rut,
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Given the powerful constraining effects of existing concepts, how can individuals ever break through them to create something truly new? Cognitive research provides the following answer (e.g., Ward, 2004): this can be accomplished by stretching or expanding concepts in several ways. For instance, concepts can be combined, with the result that something both new and useful is produced. For instance when the concepts of telephone and camera were combined, the idea for cell phones with built-in cameras emerged. Second, concepts can be expanded. For instance, the concept service station or gas station used to mean just that: a place where fuel could be purchased and perhaps routine service performed on automobiles and trucks. Now, however, it has been expanded into places in which a wide array of other products, from food to clothing, can be obtained. Concepts can also be expanded by analogyby perceiving similarities between objects or events that are otherwise dissimilar. For instance, when one scientist observed how plant seeds and burrs clung to his clothing with tiny hooks, he reasoned that this system would also work in other contextsand Velcro was born. In short, creativity appears to stem from the operation of basic cognitive processes. Understanding these processes, in turn, offers important insights into the question: Where do ideas for new products and services originate? The answer, it appears, is: From basic cognitive processes that allow individuals to operate on, and use, information in new ways. Certainly, concepts and related cognitive processes are not the only ones that are important in generating new ideas and encouraging creativity. But a large body of evidence suggests that these cognitive frameworks, and processes related to them,
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understanding how it occurs might well suggest ways of enhancing its occurrencetechniques for helping current or future entrepreneurs identify opportunities that will benet not only them, but large numbers of persons who ultimately use the new products or services they develop. Second, and closely related, it does not directly address the question of why some persons but not others recognize specic opportunities. Often, opportunities are there for anyone to notice; yet, thousands or even millions of persons do not notice them. Why? And carrying this a little further, how do individuals conclude that an opportunity they have noticed is one they, rather than others, can actually develop? This, too, appears to be an important aspect of the process (McMullen and Shepherd, 2006). If we can understand why certain people recognize opportunities that others dont identify, this can provide key insights into how this process takes place and how it can be enhanced. Research on this issue suggests that an important part of the answer involves the central role of information. Specically, it appears that some people are more likely than others to recognize opportunities for a variety of reasons including better access to information and superior ability to utilize available information effectively. Since the research pointing to these conclusions has been reviewed in detail elsewhere, it will not be described here (e.g., Shane, 2003). Rather, attention will be focused on a process that may provide the basic cognitive foundations for opportunity recognitionpattern recognition (Matlin, 2004). Before turning to that topic, however, it should also be noted that access to and effective utilization of information are not the only behavioral and cognitive factors that have been found to play a role in opportunity recognition. In addition, four others have received major attention: (1) engaging in an active search for opportunities, (2) alertness to opportunities (the capacity to recognize them when they emerge), (3) prior knowledge of a market, industry, or customers as a basis for recognizing new opportunities in these areas, and (4) the extent, breadth, and quality of entrepreneurs social networkstheir connections with others. Past research suggests that all of these factors are important. (e.g., Fiet, Clouse, and Norton, 2004; Gilad, Kaish and Ronen, 1989; Hills and Shrader, 1998; Ozgen and Baron, 2007). Since work, too, has been fully reviewed elsewhere (e.g., Zacharakis and Spinelli, 2007), it will not be considered in detail.
Strat. Entrepreneurship J., 1: 167182 (2007) DOI: 10.1002/sej

are indeed of key importance (e.g., Cianciola et al., 2006; Sternberg, 2004). Recognizing opportunities Ideas for new products or services are, in a sense, the raw material for entrepreneurship, for it is often from these ideas that concrete business opportunities emerge. Before proceeding to examine the role of behavioral and cognitive factors in this process, however, it is important to note that there has been continuing discussion in the eld of entrepreneurship concerning the question of whether opportunities are recognized (they exist in the external world and are somehow identied by specic persons), or are instead created (they emerge in the minds of specic individuals who generate them from their own cognitive resources and knowledge; e,g., Alvarez and Barney, 2005). The present author believes that both approaches are valid and are in no way incompatible, but given the focus of the present paper, the discussion of opportunities will focus primarily on factors inuencing the identication of such opportunities rather than on their creation. Whatever the specic origins of opportunities, they are often the starting point for overt entrepreneurial actionfor efforts by entrepreneurs to create new ventures that will exploit these opportunities. Indeed, the decision to proceed with such activities often stems from entrepreneurs beliefs that they have identied an opportunity no one else has yet recognized, and can benet from being rst to bring it to the marketplace (Durand and Coeruderoy, 2001). Because opportunity recognition is indeed often the start of the entrepreneurial process, it is not at all surprising that it has long been a central concept in the eld of entrepreneurship. Until recently, however, little effort was made to examine it as a process. Rather, opportunities were dened largely in terms of economic outcomes: only ideas for a new product, service, raw material, market, or production process that could be successfully exploited so as to generate economic benets for stakeholders were viewed as constituting bona de opportunities. This approach, though valuable in several respects, overlooks several key questions. First, it largely ignores the question of how opportunity recognition occurs; in other words, how do specic persons actually identify opportunities that have been generated by changes in economic, technological, and social conditions? Clearly, this is an active process involving human cognition, and
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The role of pattern recognition

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Interest in the potential role of pattern recognition in opportunity identication derives primarily from interest in the following, key question: What is the basic nature of opportunity recognition? In other words, how does opportunity recognition actually occur in the minds of specic persons? Theories and research ndings in the eld of cognitive science may be very useful in addressing with this basic issue. In particular, one cognitive process long investigated by cognitive scientistspattern recognitionappears to be closely related to opportunity recognition in the domain of entrepreneurship (Baron, 2006b). This process involves noticing meaningful patterns in complex events, trends, or changes. In essence, it includes (1) recognizing links between trends, changes, and events that appear, at rst glance, to be unconnected, and (2) noticing that these connections form an identiable pattern. Both of these steps, in turn, are strongly inuenced by the cognitive frameworks individuals possessframeworks they have developed on the basis of past experience (e.g., their prototypes). The clearer and more fullydeveloped these frameworks, the more likely are individuals who possess them to recognize opportunities in a specic domain, because these cognitive frameworks serve as templates or guides, helping these persons notice links between diverse events or trends. A concrete example of this process is provided by Chester Carlson, the individual most often credited with developing the modern copy machine. Efforts to produce technology that would produce clear copies on regular paper had continued for decades, so a key question is Why was Carlson able to solve this problemone that had bafed many other scientists and engineers? One possibility involves the fact that Carlson held both a law degree and a technical degree. As a result, he possessed well-developed cognitive frameworks for interpreting information relating both to the needs of potential customers (e.g., the need for clear copies of legal documents) and several of the technical processes that might be used to meet this need. In short, Carlson, possessed the cognitive frameworks necessary for perceiving connections between seemingly independent events and trends (advances in several aspects of technology, changes in the needs of many businesses, etc.) and for detecting an emergent pattern in these connectionsa pattern suggestive of the opportunity he then pursued.
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Research ndings provide additional evidence for the role of pattern recognition in the identication of new business opportunities. For instance, Baron and Ensley (2006) found that the cognitive frameworks for business opportunity possessed by highly experienced repeat entrepreneurs were signicantly richer and clearer (e.g., more focused) than those of novice entrepreneurs. Further, the cognitive frameworks (prototypes) of the two groups were found to differ in several respects, and these differences, too, are consistent with a pattern recognition perspective. Specically, the prototypes of experienced entrepreneurs emphasized factors that have been found to inuence the success of new ventures (e.g., cash ow, meeting customers needs). In contrast, those of novice entrepreneurs tended to emphasize newness or novelty. These ndings suggest that opportunity recognition may indeed be closely linked to pattern recognition, since prototypes, like other cognitive frameworks, are useful in perceiving identiable patterns in large arrays of information. A pattern recognition perspective also sheds light on another important question raised earlier: Why do some persons but not others recognize specic opportunities? A pattern recognition perspective suggests that the answer to this key question involves, at least in part, the fact that individuals, because of contrasting life experiences, differ greatly in terms of the cognitive frameworks they possess. To the extent they possess frameworks useful in connecting the dots between seemingly unrelated events or trends, they are, in a sense, cognitively equipped to recognize emergent patternsand hence, in some cases, new business opportunities. Pattern recognition may also play a role in entrepreneurial alertness. Specic persons may be more or less alert to various opportunities because they possess cognitive frameworks (cognitive equipment) that permit them to notice emerging opportunities even when they are not actively searching for them. These frameworks serve as templates that assist such persons in recognizing emergent patterns and the opportunities related to them. Almost certainly, pattern recognition is not the only cognitive process involved in opportunity recognition. However, attention to this and other basic cognitive processes may offer important insights into key aspects of this complex process and may, for this reason, be worthy of further careful investigation.
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tend to receive higher performance reviews from supervisors (e.g., Robbins and DeNisi, 1994), attain faster promotions, and receive higher salaries (e.g., Belliveau, OReilly, and Wade, 1995). Similarly, individuals high in social skills generally achieve greater success than persons low in such skills in many occupations (e.g., medicine, law, sales; e.g., Wayne et al., 1997), achieve better results in negotiations (e.g., Lewicki et al., 2003), and often (although not always) attain higher levels of task or job performance (e.g., , Hochwarter et al., 2006, 2007). Taken together, these ndings suggest that individuals high in social skills are able to interact with others more effectively than persons low in social skills across a wide range of settings and contexts This ability, in turn, may often contribute to entrepreneurs success in securing essential resourcesboth nancial and human. For instance, strong social skills help entrepreneurs to build broad and informative social networks (e.g., Diener and Seligman, 2002). Such networks, in turn, are often an important source of many kinds of valuable resources (e.g., Nahapiet and Ghosal, 1998). Similarly, several social skills (e.g., social perception, expressiveness, impression management) have been found to play a role in persuasion, and effectiveness in inuencing othersventure capitalists, potential customers, prospective employeesis a valuable ability for entrepreneurs in many different contexts (e.g., Baron and Markman, 2000). While the potential role of social skills in entrepreneurship has been recognized for several years (e.g., Baron and Markman, 2000), relatively little empirical data on this issue currently exist. However, the few studies that have been performed to investigate this question suggest (e.g., Baron and Markman, 2003; Baron and Tang, 2007) that social skills are related to the success of new ventures: the higher entrepreneurs are in such skills, the greater the nancial success attained by their businesses. In addition, and more directly relevant to the present discussion, the impact of social skills on new venture performance is mediated by entrepreneurs effectiveness in acquiring useful information and in securing required human and nancial resources Specically, the higher entrepreneurs are in terms of several social skills (e.g., social perception, expressiveness, impression management), the more effective they are in obtaining essential resources (both nancial and human; Baron and Tang, 2007). As shown by previous research (e.g., Shane, 2003), the more adept entrepreneurs are in obtaining such
Strat. Entrepreneurship J., 1: 167182 (2007) DOI: 10.1002/sej

Acquiring essential resources Another important pre-launch activity for entrepreneurs is acquiring essential resourcesnancial, human, and informational. These resources are the assets necessary to convert ideas and strategies into actual operating businesses, so entrepreneurs devote a considerable portion of their time and energy to securing them. Clearly, not all entrepreneurs are equally successful in obtaining such resources, and differences in their prociency with respect to these tasks can have powerful implications for their new ventures. Indeed, a lack of sufcient resources is one of the major reasons why so many new ventures fail (Bygrave and Zacharakis, 2007). This basic fact raises an important and complex question: Why are some entrepreneurs so much more successful than others in obtaining the resources they need? While many variables have been found to play a role (Shane, 2003), two that involve behavioral and cognitive factors are entrepreneurs social skillstheir ability to interact with others in an effective manner (e.g., Baron and Markman, 2000), and entrepreneurs social networksthe networks of personal relationships they develop with others, and which often help them to acquire the resources they need (e.g., Aldrich, 1999).
The role of social skills in resource acquisition

A large body of research ndings in several elds (e.g., organizational behavior, human resource management) indicates that social skillsa variety of prociencies that help individuals to interact effectively with othersexert strong effects on outcomes individuals experience in many contexts (e.g., Riggio and Throckmorton, 1988; Ferris, Witt and Hochwarter, 2001). Specic social skills that have been found to exert signicant effects in this respect include social perception (the ability to perceive others accurately), impression management (skill in making favorable rst impressions on others), expressiveness (the ability to express emotions clearly and openly) and social adaptability (prociency in adapting ones actions to current social contexts; e.g., Ferris et al., 2001; Wayne et al., 1997). In work settings, social skills have been found to inuence a wide range of important organizational processes. To mention just a few of these ndings, persons high in social skills, as compared to persons low in such skills, are more successful as job candidates (e.g., Riggio and Throckmorton, 1988),
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Behavior and Cognitive Factors in Entrepreneurship

resources, the better the nancial performance of their new ventures. In sum, it appears that entrepreneurs who possess well-developed social skills gain important advantages over others who are lower on these skills advantages that contribute measurably to the success of their new ventures. To the extent this is so, it seems useful to take such skills carefully into account in efforts to acquire full and accurate understanding of the process of new venture creation.
Social networks, social capital, and acquiring resources

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As noted previously, Another important behavioral component in the new venture process is entrepreneurs social networksthe number and quality of their social ties to others. To some extent, these networks are a reection of entrepreneurs social skills. Research ndings indicate that persons high in social skills generally have broader and higherquality social networks than persons low in such skills (e.g., Diener and Seligman, 2002). But social skills are not the only factor that inuences entrepreneurs social networks. Entrepreneurs social networks are also strongly affected by their social capital, which is often dened either as (1) the ability of individuals to extract benets from their social structures, networks, and memberships, or (2) these benets themselvesthe advantages individuals gain from their relationships with others (Nahapiet and Ghoshal, 1998). Social capital itself derives from being known to others (either directly or indirectly through other contacts), having a good reputation, and being in established, continuing relationships with them. These ties provide individuals with access to a wide range of both tangible and intangible resources. Included among the tangible benets provided by social ties are nancial resources and enhanced access to potentially valuable information. Included among less tangible benets are support, advice, and encouragement from others, as well as increased cooperation and trust from them. While the benets provided by these latter resources are less readily measured in economic terms, they are still often highly valuable to those who obtain them. Thus, social capital is denitely worth possessing: it is an asset that often yields benecial outcomes to the persons who possess them. Research ndings (e.g., Ozgen and Baron, 2007) indicate that entrepreneurs often use their social networks as a source of information that contributes to
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recognizing opportunities and acquiring resources. Moreover, in this regard, they utilize information provided not only by personal contacts (informal social networks), but also information gained in professional forums (conventions, meetings), and from mentorsmore experienced individuals who share their knowledge and wisdom with them. Overall, the use of such information by entrepreneurs is closely related to the cognitive frameworks they have acquired through experience (e.g., schemas), such that the better developed these frameworks, the more the entrepreneurs benet from networkprovided information. This suggests close and continuous interactions between cognitive variables and ones relating to social networks. A large body of research evidence indicates that both social networks and social capital play important roles in the creation of new ventures and in the success of such businesses once they are launched. Thus, understanding the behavioral and cognitive foundations of these variables may be useful in terms of enhancing the breadth and accuracy of current models of the entrepreneurial process. Overall, existing evidence suggests that entrepreneurs social skills contribute to their social capital, which then assist them in resource acquisition, and contributes in important ways to new venture success. Social skills, in short, may be one important source of social capiltal, and in this respect, too, may be worthy of careful research attention.

THE ROLE OF AFFECT IN NEW VENTURE CREATION

So far, this discussion has focused primarily on behavioral and cognitive factorsovert actions by entrepreneurs and various aspects of their cognitive processes. However, an extensive body of literature in many eldsseveral branches of management as well as in cognitive science and social psychologysuggests that another factor, too, should be carefully considered. This factor is affect, and refers to relatively temporary and mild moods or feelings individuals experience throughout their daily lives (event-induced or state affect) as well as to more stable tendencies to experience positive or negative feelings (dispositional affect; Baron, in press; Forgas, 2000). Although event-induced and dispositional affect stem from different sources, they have been found to exert similar and parallel effects in many situations; thus, in this discussion, the terms
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zational processes (e.g., Forgas, 1998, 2000; Weiss, 2002) such as employment interviews (e.g., Burger and Caldwell, 2000) and performance appraisals (Cropanzano and Wright, 1999). Specically, interviewers and managers typically assign higher ratings to the persons they evaluating when they (i.e., the raters) are experiencing positive affect than when they are experiencing negative affect. Further, affect has also been found to inuence the performance of many work-related tasks, with persons experiencing positive affect often showing higher performance than those experiencing negative affect (e.g., Staw and Barsade, 1993). Other ndings suggest that individuals current moods or feelings also inuence a wide range of behaviors, both in work settings and other contexts (e.g., Baron, Branscombe, and Byrne, in press). For instance, affect has been found to strongly inuence willingness to help others (prosocial behavior and organizational citizenship behavior; e.g., Podsakoff and MacKenzie, 1997), aggression (including aggression occurring in work settings; e.g., Grifn and OLeary-Kelly, 2004), and cooperation among work team members (e.g., Beersma et al., 2003). Since high levels of cooperation and trust among co-founders of new ventures are often important for the success of these ventures (e.g., Chandler, 2007), such direct effects of affect on behavior are relevant to new venture creation. It is important to note, however, that while a large body of existing literature indicates that affect can inuence important processes occurring in organizational contexts, most of this research has been conducted in large, existing companies rather than new ventures. This fact raises the following question: Is affect also relevant to events and processes occurring in new ventures? One reason for suggesting that it is involves, once again, the fact that the environments in which entrepreneurs function are often ones that change rapidly and are replete with unpredictable events and outcomes (e.g., Lichtenstein, Dooley, and Lumpkin, 2006). Research on the inuence of affect suggests that it is most likely to exert powerful effects on cognition and overt behavior in situations of precisely this typeones in which individuals cannot follow well-rehearsed scripts or clearly established rules concerning behavioral options. In such situations, affect can readily tip the balance toward specic actions or decisionseffects it might not produce in environments that are more certain and predictable (e.g., Forgas, 2000). In sum, because of the
Strat. Entrepreneurship J., 1: 167182 (2007) DOI: 10.1002/sej

positive affect and negative affect will be used to refer to such feelings regardless of whether they are generated by specic events or by stable, underlying propensities toward such reactions. Both eventinduced and dispositional affect are distinguished, however, from emotions, which involve complex patterns of subjective cognitive states, physiological reactions, and expressive behaviors (e.g., Zajonc and McIntosh, 1992)reactions commonly labeled with such terms of joy, sorrow, and anger. Emotions tend to be more intense, longer lasting, and more general in scope than affective reactions (e.g., they involve strong physiological responses as well as subjective cognitive states; Plutchik, 2002). Despite their relatively mild intensity and short-lived existence, however, even relatively small shifts in affectsmall and temporary uctuations in current moods and feelingshave been found to exert powerful effects on both behavior and cognition (e.g., Lyubomirsky, King, and Diener, 2005). In view of this evidence, it seems reasonable to suggest that affect may also play an important role in new venture creation. Several lines of reasoning offer support for this proposal. First, as noted earlier, the environments in which entrepreneurs typically operate are often somewhat chaoticunpredictable and lled with rapid change. Events that are unexpected often induce stronger affective reactions than ones that are merely routine (e.g., Forgas, 2000). Thus, entrepreneursby virtue of the environments they confrontmay be especially likely to experience frequent and relatively intense changes in current affect (i.e., mood or feelings). Research ndings offer indirect support for these informal observations. For example, several studies indicate that passionentrepreneurs powerful commitment to their new ventures, a factor that might predispose them to experience rapid and intense changes in affectplays an important role in the success of these companies (e.g., Baum, Locke, and Smith, 2001; Baum and Locke, 2004). Despite these ndings and logical grounds for anticipating that entrepreneurs tend to experience frequent and relatively intense shifts in affect, there have been relatively few attempts to systematically examine the potential role of affect in the entrepreneurial process. This is somewhat surprising for several reasons. First, the importance of affect has been increasingly recognized in other branches of management. Research in organizational behavior and human resource management, for example, indicates that affect plays an important role in key organiCopyright 2007 Strategic Management Society

Behavior and Cognitive Factors in Entrepreneurship

environments in which they operate, entrepreneurs may be especially likely to experience rapid and intense shifts in affect. Moreover, the unpredictable, unscripted environments they confront are ones in which shifts in affect are likely to produce especially strong effects. The potential nature of such effects, and their relevance to the process of new venture creation, are now considered. Specic inuences of affect on the entrepreneurial process Given the very broad and pervasive inuence of affect across a wide range of contexts, it seems reasonable to suggest that it may also play an important role in new venture creation. Consistent with previous ndings concerning the inuence of affect, such effects may vary greatly in nature, being positive in some respects but negative in others (e.g., Baron, 2008).
Potentially benecial effects of affect

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Examination of pertinent literature (e.g., Lyubomirsky et al., 2005) suggests that affect may exert several benecial effects on new venture creation. First, consider idea generation and opportunity recognition. Research ndings indicate that in many instances, high levels of positive affect (either eventinduced or disposition) encourage cognitive exibility and creativity (e.g., Staw, Sutton, and Pelled, 1994). More specically, positive affect enhances individuals ability to think in original and creative ways. Such thinking can, of course, facilitate idea generation. Moreover, there is growing evidence that such thinking plays an important role in opportunity recognition. For instance Ward (2004) suggests that new products or services often derive from the expansion or combination of existing concepts. Similarly, as noted earlier, the process of pattern recognition may play an important role in the process of recognizing new business opportunities (e.g., Baron, 2006a, b). Recognizing such patterns, in turn, often involves thinking exibly and the kind of expansion or combination of concepts described earlier (Ward, 2004). Thus, to the extent positive affect enhances such modes of thought, it may facilitate both idea generation and opportunity recognition. Another potentially benecial inuence of affect on new venture creation involves the task of acquiring essential nancial and human resources. Affect (and especially positive affect) can have important benecial effects with respect to this task.
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Enthusiasm, marketing experts generally agree, Sells. To the extent entrepreneurs are enthusiasticwhich implies experiencing and expressing positive affectthey are also likely to be persuasive. Moreover, growing evidence suggests that affective reactions are contagiousthey tend to spread from one individual to another (e.g., Hateld, Cacioppo, and Rapson, 1994). Thus, entrepreneurs who are enthusiastic and positive about their ideas and new ventures tend to be highly persuasive when making presentations to potential investors, customers, or employees. In this respect, strong positive affective reactions can be benecial. A third way in which affect can play a benecial role in entrepreneurship involves the process of decision makinga process not examined in detail in this discussion, but one that certainly plays a key role throughout the new venture creation. Often, entrepreneurs must perform this task under conditions of uncertainty and high time pressure. Affect may be directly relevant to decision making because it strongly inuences the decision-making strategies individuals adopt. High levels of positive affect seem to tip the balance towards satiscing, a strategy in which the rst acceptable alternative is chosen. This permits persons using this strategy to make decisions both quickly and efciently. In contrast, negative affect seems to tip the balance toward maximizinga strategy involving exhaustive examination of all available alternatives in order to choose the best. While maximizing often yields superior choices (e.g., Iyengar, Wells, and Schwartzl, 2006), it is an approach to decisions that may not be practical for entrepreneurs, who must often make decisions under stringent time constraints. Thus, overall, satiscing may be a more useful strategy for entrepreneurs to follow (although, as noted below, this is certainly not always true). Positive affect may also encourage entrepreneurs to adopt other efcient 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 and Means, 1983). Finally, individuals experiencing positive affect often show greater exibility in their approach to solving various problems and in their thinking generally (Frederickson, 2001). In addition to these positive effects, all produced through the impact of affective states on cognition, affect can also inuence important aspects of entrepreneurs behavior. For instance, positive affect has been found to encourage helpful, cooperative
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ial process involves acceptance of high levels of risk. While existing evidence concerning the question of whether entrepreneurs are more or less accepting of risk than other persons remains mixed (e.g., Miner and Raju, 2004; Stewart and Roth, 2001), it seems clear that acceptance of very high levels of risk can often prove detrimental to the success of new ventures. Affect enters the picture because research ndings indicate that positive affect often increases individuals willingness to accept high levels of risk (e.g., Forgas, 2000). Feeling happy leads individuals to also feel lucky or relatively immune to dangers and potential problems, and this encourages relatively high-risk behaviors and actions. In short, to the extent positive affect infuses entrepreneurs judgments and decisions, it may lead them to select high-risk strategies or actions, with potentially devastating consequences for their new ventures. Conversely, high levels of negative affect might have the opposite effect, directing entrepreneurs away from even moderate levels of risk and into totally safe paths and strategies. Negative affect is often a signal to the persons experiencing it that something is seriously wrong or that the current situation poses considerable danger (e.g., Lyubomirsky et al., 2005). To the extent such reactions occur, they may lead entrepreneurs to reject opportunities that are actually quite promisingto perceive such opportunities, in the language of signal detection theory (e.g., McMullen and Shepherd, 2006), as false alarms when in fact, they are actually hits bona de opportunities worth pursuing. A third way in which affect can have negative implications for entrepreneurs involves its impact on various cognitive biases. A substantial body of evidence suggests that such biases are often strengthened, in their impact, by strong affective states. For instance, high levels of positive affect have been found to enhance the optimistic biasa tendency to expect positive outcomes and events (e.g., Busenitz and Barney, 1997; Simon, Houghton, and Aquino, 2000). Further, positive affect also increases the tendency to fall prey to the planning fallacy, an offshoot of the optimistic bias. The planning fallacy involves tendencies by individuals to assume that they can accomplish more than they actually can during a specic period of time, or that they can complete tasks sooner than is actually feasible (e.g., Buehler, Grifn, and McDonald, 1997). When experiencing positive affect, individuals are especially likely to show such tendencies, and this can be potentially damaging both for entrepreneurs and
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actionsbehaviors useful to entrepreneurs in establishing good relations with co-founders, employees, venture capitalists, potential customers, and others. In contrast, negative affect reduces such reactions and may, in fact, encourage anger, intransigence, and overt aggressionreactions that can interfere with entrepreneurs efforts to establish broad and helpful social networks. Thus, affect can inuence key aspects of new venture creation through its relatively direct effects on entrepreneurs behavior as well as through its effects on cognitive processes.
Potentially negative effects of affect

Offsetting these potentially benecial effects are others in which affect may exert a negative impact on new venture creation. First, it has often been suggested that entrepreneursespecially novice entrepreneurstend to fall in love with their own ideas for new products or services (e.g., Baron and Ensley, 2006). In other words, they have such strong positive feelings concerning these ideas, that they lose the capacity to evaluate them carefully. These informal observations suggest that affective reactionsespecially when they are intensecan have detrimental effects both on opportunity recognition and on the preliminary feasibility analysis that often follows such recognition (e.g., Ardichvili, Cardozo, and Ray, 2003). Specically, strong affective reactions can lead entrepreneurs to prematurely accept, or prematurely reject, potential business opportunities. Positive affect may lead to premature acceptance because entrepreneurs, using their own affective states as a source of information, conclude that if they react positively to an identied opportunity, it must be very good. This may result in a premature closure of the search for suitable opportunities (Why look further when something so outstanding has already been identied?). Since active search has been found to be an important component of successful opportunity recognition (e.g., Fiet et al., 2004), this can have negative implications for entrepreneurs and their new ventures. Conversely, strong negative affect in response to potential business opportunities may lead entrepreneurs to reject these opportunities prematurely, in the absence of careful feasibility analysis. In short, strong affective reactions to ideas for new products or services may impede more careful and rational processes for choosing among these potential opportunities. Another way in which affect can have negative implications for entrepreneurs and the entrepreneurCopyright 2007 Strategic Management Society

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their new ventures. Overly optimistic predictions about how rapidly and efciently various tasks can be accomplished may lead to situations in which, for instance, new product development or the preparation of marketing or nancial plans takes far longer than anticipated, thus generating disappointment and annoyance among investors, customers, and other stakeholders. Conversely, negative affect may induce other forms of cognitive bias with different detrimental implications. For instance, strong negative affect may strengthen the negativity biasa tendency to overestimate the importance of negative information regarding some action or event (e.g., Kunda, 1999). To the extent such tendencies occur, entrepreneurs may, again, fail to exploit viable opportunities because the powerful impact of cognitive biases distorts their evaluations of these opportunities. Finally, research ndings indicate that affect can strongly inuence memory. In general, individuals tend to remember information consistent with their present moods or feelings. This tendency, too, can pose a potential danger to entrepreneurs. When experiencing positive affect, entrepreneurs tend to recall positive information offering support for specic courses of action, even if these actions are not actually justied. Similarly, when experiencing negative affect, they tend to recall negative information that may deter them from pursuing potentially valuable courses of action. In other words, affect may bias entrepreneurs recall of information in ways that add error or noise to their judgments or decisions. These effects can play an important role in opportunity recognition, since effective pattern recognition (which may be one important foundation of opportunity identication), involves processing information previously stored in memory so as to notice links or connections between this information (e.g., Matlin, 2004). It should also be noted that affect can negatively impact the new venture creation process not merely through its inuence on cognitive processes, but also through its more direct effects on a wide range of overt behaviors, actions ranging from helpfulness and cooperation on the one hand, through anger, inexibility, and overt aggression on the other. Such effects, too, are worthy of careful consideration.
Links between affect and cognition: evidence from neuroeconomics

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While a wealth of research ndings offer support for the strong inuence of affect on cognition, some of
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the most dramatic ndings in this respect have been reported by the new eld of neuroeconomics, This eld draws upon the research methods and theoretical frameworks of neuroscience, cognitive science, and economics, in an effort to understand the potential role of affect in decision making and other cognitive processes closely related to economic activity (e.g., Cohen, 2005; Willingham and Dunn, 2003). A key nding of research in this eld is that two distinct systems for processing information 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 cognitive processes. This interaction is compellingly illustrated by research employing what is known as the ultimatum paradigm (e.g., Sanfey et al., 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 (half the sum to be divided between the two players). 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. Howeverand this is the crucial ndingthe greater the amount of activity in emotion-processing regions of the brain, the greater the likelihood that individuals will reject the offersact in ways that are, in a sense, contrary to their own economic interests (e.g., Sanfey et al., 2003). These ndings, 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 the light of such ndings, it seems essential that affect be included as a variable of interest in ongoing research concerning the nature of complex processes through which new ventures are conceived, launched, and become protable operating companies (e.g., Mitchell et al., 2007).
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and Shepherd, 2006), and the specic techniques they use for processing various kinds of information. Understanding the cognitive and behavioral foundations of entrepreneurial alertness appears to be a crucial task, since this concept features prominently in many extant theories and is included in much ongoing research. Additional avenues for future research are suggested by the fact research in cognitive science has focused increasingly on the processing of information that occurs below the level of conscious awareness (e.g., Dijksterhuis and Nordgren, 2006)processing that occurs, but cant be readily described or reported by the individuals involved. This is often termed automatic processing, a label reecting the fact that such processing, in contrast to careful, conscious controlled processing, tends to be fast and relatively effortless, in nature. The term intuition is relevant here, for it is often used in descriptions of decision making by entrepreneurs and VCs. Researchers in the eld of cognitive science generally dene intuition as a special kind of off-line processing information processing that occurs, and produces measurable results, but that is often not open to inspection by the persons who engage in it. Many ingenious methods have been devised to investigate such processing (e.g., Myers, 2002), but perhaps the most revealing are those based on the methods of neuroscience, including scans of activity in various regions of the brain as individuals perform a wide range of activities. Research using such methods indicates that we possess two distinct neural systems for processing social informationone that operates in an automatic manner and another that operates in a systematic and controlled manner. Moreover, these two systems appear to be centered in different regions of the brain (e.g., Cunningham et al., 2003; Duncan and Owen, 2000). Overall, the results of many studies employing neuroscience methodology indicate that the distinction between automatic and controlled processing is both real and basic. Because automatic processing (e.g., intuitive judgments and decisions by entrepreneurs, VCs, and others) is often assumed to play a role in key aspects of new venture creation, it may prove useful to include this distinction in future research on the cognitive foundations of new venture creation. Finally, as noted earlier, future research should carefully examine the potential role of affect in key aspects of new venture creation. Affect has been found to exert powerful and pervasive effects on many cogStrat. Entrepreneurship J., 1: 167182 (2007) DOI: 10.1002/sej

DISCUSSION, CONCLUSIONS, AND DIRECTIONS FOR FUTURE RESEARCH

A basic theme of this paper has been that because entrepreneurs constitute the active element in new venture creation, knowledge concerning relevant aspects of their behavior and cognition can add appreciably to our understanding of this complex process. This suggestion, in itself, is far from new. Researchers in the eld of entrepreneurship have devoted growing attention to investigating aspects of entrepreneurs behavior and thought, as well as other characteristics they possess or demonstrate (e.g., Busenitz and Arthurs, 2006; Ling, Zhao, and Baron, 2008; Mitchell, et al., 2007; Zhao, Seibert, and Hills, 2005). To date, however, many of the issues and topics discussed in earlier sections of this paper have received relatively little empirical attention. For instance, no research known to the present author has been conducted to examine the role of concepts and other cognitive frameworks in the generation of ideas for new products or services, although such research is a logical extension of basic investigations of creativity in cognitive science. Similarly, research on the role of pattern recognition in the identication of business opportunities has only just begun (e.g., Baron and Ensley, 2006), and much remains to be done in order to determine the role of this basic cognitive-perceptual process in opportunity recognition and new venture creation. Perhaps more surprisingly, we do not yet have a clear understanding of the concept of entrepreneurial alertness, despite the fact that it is included in many theoretical frameworks of entrepreneurship and in much ongoing research (e.g., Kirzner, 1985). What, specically, does such alertness involve? As noted earlier, one possibility is that it can be understood in terms of the cognitive frameworks developed by individual entrepreneursframeworks for storing and processing information relating to industries, technologies, and many other factors; the broader these frameworks, the more useful they may be to entrepreneurs from the point of view of helping them connect the dots between seemingly unrelated events or trends, and hence identifying newly emerging opportunities. On the other hand, alertness could also involve other aspects of perception: how broadly and efciently individuals scan the external world, where they set their criteria for identifying signal versus noise (e.g., McMullen
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nitive processes and many aspects of behavior across a wide range of situations (e.g., Forgas, 2000; Weiss, 2002). Thus, examining its effects with respect to idea generation, opportunity recognition (or creation), and resource attainment may yield valuable new insights into the basic foundations of these activities. In this respect, it seems useful to briey consider one additional point relating to the overall role of affect in human behavior and cognitionthe suggestion that affect (and especially positive affect), may constitute an important strength or resource for entrepreneurs. This perspective, which has emerged very recently in several different elds (e.g., organizational behavior, industrial/organizational psychology), fully recognizes that affect can be a source of error or bias in many contextsa factor that interferes with accuracy and rationality in organizational processes such as job interviews, performance appraisal, and in many cognitive processes, such as decision-making (e.g., George and Brief, 1992; Weiss, 2002). However, it also calls attention to potential benets that derive from the propensity to experience positive affect often and in many different contexts. An extensive body of research ndings (reviewed in detail by Lyubomirsky et al., 2005), indicate there may be a direct causal link between experiencing positive affect frequently and attaining successful outcomes in many life domainswork and careers, personal relationships, and even individual health. In other words, a tendency to experience positive affect may contribute to, rather than be a result of, favorable life outcomes. One explanation for this relationship (Lyubormirsky et al., 2005) is as follows: Positive affect is interpreted by the persons who experience it as a sign that all is going well, and that current situations pose no threat or danger. As a result, people who experience positive affect frequently are, as Lyubomirsky et al. (2005: 804) put it: . . . ideally situated to broaden and buildto expand their resources and friendships; . . . to build their repertoires of skills for future use . . . or to rest and relax and to rebuild their energy . . . In other words, the positive affect experienced by these persons helps them to acquire essential ingredients from which success is often constructedspecic task-related skills, social support, extensive social networks, positive perceptions of themselves and others (e.g., high self-esteem and high self-efcacy), high likableness, effective means of dealing with stress, and successful strategies for resolving conict with others. With these and other tools at their disposal, they go on to attain success in many domains of life.
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When this framework is extended to the eld of entrepreneurship, an intriguing possibility emerges: perhaps the propensity to experience positive affect often and across a wide range of situations contributes to entrepreneurs human and social capitalthe broad range of skills, knowledge, and capacities they bring to their new ventures, and the number and quality of relationships they have with others both within the outside the new venture (e.g., Baron, 2005; Davidsson and Honig, 2003). This possibility, in turn, appears to have important implications for the eld of entrepreneurship. In particular, they suggest that the optimism, enthusiasm, passion, and energy that are the hallmarks of many entrepreneurs (e.g., Simon et al., 2000) may provide them with an important assetone that assists them in performing many of the activities required for launching and operating new ventures. Positive affect can indeed yield detrimental outcomes in some instances (e.g., it can induce entrepreneurs to prematurely terminate their active search for opportunities and can direct them toward excessive levels of optimism and risk; e.g., Stewart and Roth, 2001). At the same time, however, it also confers many important benets, helping entrepreneurs to expand their skills, knowledge, and social contacts (e.g., Wright and Staw, 1999). In addition, it may contribute to their personal health, (e.g., Sanfey et al., 2003); and robust good health appears to be one essential requirement for successfully launching new ventures. This reasoning, in turn, suggests further theoretical possibilities that can readily be investigated in future research. Specically, it suggests that one difference between highly successful and less successful entrepreneurs may involve contrasting abilities to regulate ones own positive affectto reap the benets of such feelings while reigning them in sufciently to avoid the potential dangers they pose. In other words, highly successful entrepreneurs may possess or develop superior self-regulatory and metacognitive mechanism (e.g., Ericsson et al., 2006)mechanisms that help them to monitor, regulate, and enhance their own performance, and that provide them with increased awareness of their own cognitive strengths and limitations (Kanfer, 1990; Zimmerman, 2006). Together, such self-regulatory and metacognitive skills may assist those entrepreneurs who acquire them to effectively regulate their own affective reactions, and hence to maximize the benets of positive affect while minimizing its potential costs. Although no direct evidence currently
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Baron RA. 2006b. Opportunity recognition as pattern recognition: how entrepreneurs connect the dots to recognize new business opportunities. Academy of Management Perspectives 20: 104119. Baron RA. 2008. The role of affect in the entrepreneurial process. Academy of Management Review (forthcoming). Baron RA, Branscombe N, Byrne D. 2008. Social Psychology (12th edn). Allyn and Bacon: Boston, MA. Baron RA, Ensley MD. 2006. Opportunity recognition as the detection of meaningful patterns: evidence from comparisons of novice and experienced entrepreneurs. Management Science 52: 13311344. Baron RA, Markman GD. 2000. Beyond social capital: the role of social skills in entrepreneurs success. Academy of Management Executive 14: 106116. Baron RA, Markman GD. 2003. Beyond social capital: the role of entrepreneurs social competence in their nancial success. Journal of Business Venturing 18: 4160. Baron RA, Tang J. 2007. Entrepreneurs social skills and new venture performance: mediating mechanisms and cultural generality. Journal of Management (in press). Baum JR, Locke EA. 2004. The relationship of entrepreneurial traits, skill, and motivation to subsequent venture growth. Journal of Applied Psychology 89: 587598. Baum JR, Locke EA, Smith KG. 2001. A multidimensional model of venture growth. Academy of Management Journal 44: 292303. Beersma B, Hollenbeck R, Humphrey SE, Moon E, Conlon DE, Ilgen DR. 2003. Cooperation, competition, and team performance: toward a contingency approach. Academy of Management Journal 46: 572590. Belliveau MA, OReilly CA III, Wade B. 1995. Social capital at the top: effects of social similarity and status on CEO compensation. Academy of Management Journal 39: 15681593. Bresson R. 1975. Notes on the Cinematrographer, 1950 1958: The Real. Green Integer: Paris. Buehler R, Grifn D, MacDonald H. 1997. The role of motivated reasoning in optimistic time predictions. Personality and Social Psychology Bulletin 23: 238247. Burger JM, Caldwell DF. 2000. Personality, social activities, job search behavior and interview success: distinguishing between PANAS trait positive affect and NEO extraversion. Motivation and Emotion 24: 5162. Busenitz LW, Arthurs JD. 2006. Cognition and capabilities in entrepreneurial ventures. In The Psychology of Entrepreneurship, Baum R, Frese M, Baron RA (eds). Erlbaum: Mahwah, NJ; 3150. Busenitz LW, Barney JB. 1997. Differences between entrepreneurs and managers in large organizations: biases and heuristics in strategic decision-making. Journal of Business Venturing 12: 930. Bygrave W, Zacharakis A. 2007. Entrepreneurship. New York: Wiley.
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exists for these suggestions, they are consistent with an extensive body of basic research suggesting that self-regulatory and metacognitive skills are helpful to individuals in many contextsand especially in adjusting to the kind of complex and rapidly changing environments entrepreneurs frequently face (e.g., Zimmerman, 2006). In sum, it is suggested that entrepreneurship researchers may benet greatly from broadening their working denition of behavioral and cognitive factors. By doing so, they can tap into a large store of information about such factors already acquired by other elds andmore importantlyuse this information and the concepts and theories it provides to help answer questions about key aspects of the new venture process. Crossing boundaries between disciplines is always difcult, so the effort involved will, necessarily, be high. But the rewards, too, may be great and may contribute signicantly to overall understanding of the complex process through which, to paraphrase a quotation cited earlier, entrepreneurs create or make visible something that, without themthe active principle in entrepreneurshipmight truly never have been.

ACKNOWLEDGEMENTS
The author wishes to express his sincere appreciation to Harry Sapienza, Lowell Busenitz, and Jaume Villanueva for their invaluable comments and suggestions on earlier versions of this papercomments that helped improve the paper in many different ways.

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Strat. Entrepreneurship J., 1: 167182 (2007) DOI: 10.1002/sej