IDEAS home Printed from https://ideas.repec.org/a/kap/jinten/v21y2023i1d10.1007_s10843-022-00325-y.html
   My bibliography  Save this article

The perils of acting rashly: Risk-taking propensity impeding emotion-based learning in entrepreneurs
[Les dangers de l’audace: La propension à prendre des risques entrave l’apprentissage basé sur les émotions chez les entrepreneurs]

Author

Listed:
  • Gian Seloni

    (Universitas Gadjah Mada)

  • Sri Kusrohmaniah

    (Universitas Gadjah Mada)

  • Galang Lufityanto

    (Universitas Gadjah Mada)

Abstract

Errors are common in the entrepreneurial world, but the ability to learn from past mistakes can separate successful entrepreneurs from the rest. On the other hand, it has been demonstrated that the average population can anticipate future problems based on emotional signals elicited from past experience—a capacity known as emotion-based learning. The present research was aimed at examining emotion-based learning while also incorporating risk-taking predisposition (RTP) as an additional measurement among entrepreneurs using Iowa gambling task (IGT). Participants were instructed to pick cards from a deck, and each card either awarded or subtracted points. While performing this task, participants’ skin conductance response (SCR) was recorded to examine subtle emotional signals. The sample of entrepreneurs involved in our study showed worse IGT performances than those in the control group. This was similar to findings in a previous study (Muehlfeld et al., Entrep Theory Pract 41:533–565, 2017) that surmised that the typical behavior was simply due to exploring all opportunities that eventually had significant cost to participants. Here, we extend the explanation that the SCR measurement supported emotion-based learning, indicating that our participants were aware of the potential risks of the IGT. Furthermore, entrepreneurs’ RTP could explain the incompatibility between physiological and behavioral outcomes. Entrepreneurs seemed to ignore the bodily-emotional signals, perhaps tempted by a particular card deck’s gain/loss ratio, which eventually led to significant losses. This study illuminates the interplay between risk-taking propensity, physiological markers of emotion, and performance in a game scenario that simulates decision-making in an ambiguous environment.

Suggested Citation

  • Gian Seloni & Sri Kusrohmaniah & Galang Lufityanto, 2023. "The perils of acting rashly: Risk-taking propensity impeding emotion-based learning in entrepreneurs [Les dangers de l’audace: La propension à prendre des risques entrave l’apprentissage basé sur l," Journal of International Entrepreneurship, Springer, vol. 21(1), pages 89-110, March.
    • Handle: RePEc:kap:jinten:v:21:y:2023:i:1:d:10.1007_s10843-022-00325-y
    DOI: 10.1007/s10843-022-00325-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10843-022-00325-y
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10843-022-00325-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Frank Martin Belz & Julia Katharina Binder, 2017. "Sustainable Entrepreneurship: A Convergent Process Model," Business Strategy and the Environment, Wiley Blackwell, vol. 26(1), pages 1-17, January.
    2. Mathew L. A. Hayward & Dean A. Shepherd & Dale Griffin, 2006. "A Hubris Theory of Entrepreneurship," Management Science, INFORMS, vol. 52(2), pages 160-172, February.
    3. Noel Campbell & David T. Mitchell, 2012. "A (partial) review of entrepreneurship literature across disciplines," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 1(2), pages 183-199, October.
    4. C. Praag & Peter Versloot, 2007. "What is the value of entrepreneurship? A review of recent research," Small Business Economics, Springer, vol. 29(4), pages 351-382, December.
    5. Diamanto Politis, 2005. "The Process of Entrepreneurial Learning: A Conceptual Framework," Entrepreneurship Theory and Practice, , vol. 29(4), pages 399-424, July.
    6. Nigel Nicholson & Emma Soane & Mark Fenton-O'Creevy & Paul Willman, 2005. "Personality and domain-specific risk taking," Journal of Risk Research, Taylor & Francis Journals, vol. 8(2), pages 157-176, March.
    7. Singh, Smita & Corner, Patricia & Pavlovich, Kathryn, 2007. "Coping with entrepreneurial failure," Journal of Management & Organization, Cambridge University Press, vol. 13(4), pages 331-344, November.
    8. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    9. Maria Minniti & William Bygrave, 2001. "A Dynamic Model of Entrepreneurial Learning," Entrepreneurship Theory and Practice, , vol. 25(3), pages 5-16, April.
    10. Hai Yap Teoh & See Liang Foo, 1997. "Moderating effects of tolerance for ambiguity and risktaking propensity on the role conflict-perceived performance relationship: Evidence from singaporean entrepreneurs," Journal of Business Venturing, Elsevier, vol. 12(1), pages 67-81, January.
    11. Dew, Nicholas & Read, Stuart & Sarasvathy, Saras D. & Wiltbank, Robert, 2009. "Effectual versus predictive logics in entrepreneurial decision-making: Differences between experts and novices," Journal of Business Venturing, Elsevier, vol. 24(4), pages 287-309, July.
    12. Kenneth L. Simons & Thomas Åstebro, 2010. "Entrepreneurs Seeking Gains: Profit Motives and Risk Aversion in Inventors’ Commercialization Decisions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(4), pages 863-888, December.
    13. Jean S. Clarke & Robin Holt, 2010. "The Mature Entrepreneur : A Narrative Approach to Entrepreneurial Goals," Post-Print hal-02312344, HAL.
    14. Honjo, Yuji, 2000. "Business failure of new firms: an empirical analysis using a multiplicative hazards model," International Journal of Industrial Organization, Elsevier, vol. 18(4), pages 557-574, May.
    15. Angel L. Meroño-Cerdán & Carolina López-Nicolás & Francisco J. Molina-Castillo, 2018. "Risk aversion, innovation and performance in family firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 27(2), pages 189-203, February.
    16. Noel Campbell & David T. Mitchell, 2012. "A (partial) review of entrepreneurship literature across disciplines," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 1(2), pages 183-199, October.
    17. Lucarelli, Caterina & Uberti, Pierpaolo & Brighetti, Gianni & Maggi, Mario, 2015. "Risky choices and emotion-based learning," Journal of Economic Psychology, Elsevier, vol. 49(C), pages 59-73.
    18. Dehaene-Lambertz, G. & Hertz-Pannier, L. & Dubois, J. & Dehaene, S., 2008. "How Does Early Brain Organization Promote Language Acquisition in Humans?," European Review, Cambridge University Press, vol. 16(4), pages 399-411, October.
    19. Patrick Kreiser & Louis Marino & Donald Kuratko & K. Weaver, 2013. "Disaggregating entrepreneurial orientation: the non-linear impact of innovativeness, proactiveness and risk-taking on SME performance," Small Business Economics, Springer, vol. 40(2), pages 273-291, February.
    20. Katrin Muehlfeld & Diemo Urbig & Utz Weitzel, 2017. "Entrepreneurs’ Exploratory Perseverance in Learning Settings," Entrepreneurship Theory and Practice, , vol. 41(4), pages 533-565, July.
    21. Shepherd, Dean A. & Covin, Jeffrey G. & Kuratko, Donald F., 2009. "Project failure from corporate entrepreneurship: Managing the grief process," Journal of Business Venturing, Elsevier, vol. 24(6), pages 588-600, November.
    22. Palich, Leslie E. & Ray Bagby, D., 1995. "Using cognitive theory to explain entrepreneurial risk-taking: Challenging conventional wisdom," Journal of Business Venturing, Elsevier, vol. 10(6), pages 425-438, November.
    23. Reimann, Martin & Bechara, Antoine, 2010. "The somatic marker framework as a neurological theory of decision-making: Review, conceptual comparisons, and future neuroeconomics research," Journal of Economic Psychology, Elsevier, vol. 31(5), pages 767-776, October.
    24. Stewart Thornhill & Raphael Amit, 2003. "Learning About Failure: Bankruptcy, Firm Age, and the Resource-Based View," Organization Science, INFORMS, vol. 14(5), pages 497-509, October.
    25. Hamid Etemad & Ian Wilkinson & Leo Dana, 2010. "Internetization as the necessary condition for internationalization in the newly emerging economy," Journal of International Entrepreneurship, Springer, vol. 8(4), pages 319-342, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hamid Etemad, 2023. "The increasing prevalence of multi-sided online platforms and their influence on international entrepreneurship: The rapid transformation of entrepreneurial digital ecosystems," Journal of International Entrepreneurship, Springer, vol. 21(1), pages 1-30, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Parker, Simon C., 2013. "Do serial entrepreneurs run successively better-performing businesses?," Journal of Business Venturing, Elsevier, vol. 28(5), pages 652-666.
    2. Gottschalk, Sandra & Greene, Francis J. & Höwer, Daniel & Müller, Bettina, 2014. "If you don't succeed, should you try again? The role of entrepreneurial experience in venture survival," ZEW Discussion Papers 14-009, ZEW - Leibniz Centre for European Economic Research.
    3. Vivianna Fang He & Charlotta Sirén & Sheetal Singh & George Solomon & Georg von Krogh, 2018. "Keep Calm and Carry On: Emotion Regulation in Entrepreneurs’ Learning from Failure," Entrepreneurship Theory and Practice, , vol. 42(4), pages 605-630, July.
    4. Cope, Jason, 2011. "Entrepreneurial learning from failure: An interpretative phenomenological analysis," Journal of Business Venturing, Elsevier, vol. 26(6), pages 604-623.
    5. Tali Hadasa Blank & Abraham Carmeli, 2021. "Does founding team composition influence external investment? The role of founding team prior experience and founder CEO," The Journal of Technology Transfer, Springer, vol. 46(6), pages 1869-1888, December.
    6. Joseph McManus, 2018. "Hubris and Unethical Decision Making: The Tragedy of the Uncommon," Journal of Business Ethics, Springer, vol. 149(1), pages 169-185, April.
    7. Dubard Barbosa, Saulo & Fayolle, Alain & Smith, Brett R., 2019. "Biased and overconfident, unbiased but going for it: How framing and anchoring affect the decision to start a new venture," Journal of Business Venturing, Elsevier, vol. 34(3), pages 528-557.
    8. Patel, Pankaj C. & Tsionas, Mike & Oghazi, Pejvak & Izquierdo, Vanessa, 2022. "No entrepreneur steps in the same river twice: Limited learning advantage for serial entrepreneurs," Journal of Business Research, Elsevier, vol. 142(C), pages 1038-1052.
    9. Ali E. Ahmed & Deniz Ucbasaran & Gabriella Cacciotti & Trenton A. Williams, 2022. "Integrating Psychological Resilience, Stress, and Coping in Entrepreneurship: A Critical Review and Research Agenda," Entrepreneurship Theory and Practice, , vol. 46(3), pages 497-538, May.
    10. Mark D. Packard & Brent B. Clark & Peter G. Klein, 2017. "Uncertainty Types and Transitions in the Entrepreneurial Process," Organization Science, INFORMS, vol. 28(5), pages 840-856, October.
    11. Cassar, Gavin & Craig, Justin, 2009. "An investigation of hindsight bias in nascent venture activity," Journal of Business Venturing, Elsevier, vol. 24(2), pages 149-164, March.
    12. Jiang, Yi & Tornikoski, Erno T., 2019. "Perceived uncertainty and behavioral logic: Temporality and unanticipated consequences in the new venture creation process," Journal of Business Venturing, Elsevier, vol. 34(1), pages 23-40.
    13. Hönl, Andreas & Meissner, Philip & Wulf, Torsten, 2017. "Risk attribution theory: An exploratory conceptualization of individual choice under uncertainty," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 67(C), pages 20-27.
    14. Jasna Auer Antoncic & Bostjan Antoncic & Matjaz Gantar & Robert D. Hisrich & Lawrence J. Marks & Alexandre A. Bachkirov & Zhaoyang Li & Pierre Polzin & Jose L. Borges & Antonio Coelho & Marja-Liisa Ka, 2018. "Risk-Taking Propensity and Entrepreneurship: The Role of Power Distance," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 26(01), pages 1-26, March.
    15. Nizar Mtibaa & Sami Boudabbous, 2023. "The Realities of Learning through Failure in Entrepreneurship: Results of Qualitative Research," International Review of Management and Marketing, Econjournals, vol. 13(2), pages 19-27, March.
    16. Wenting Chen & Chunjia Han & Lei Wang & Petros Ieromonachou & Xiaochen Lu, 2021. "Recognition of entrepreneur’s social ties and firm innovation in emerging markets: explanation from the industrial institutional environment and survival pressure," Asia Pacific Journal of Management, Springer, vol. 38(2), pages 491-518, June.
    17. Aticus Peterson & Andy Wu, 2021. "Entrepreneurial learning and strategic foresight," Strategic Management Journal, Wiley Blackwell, vol. 42(13), pages 2357-2388, December.
    18. Jonas Gabrielsson & Diamanto Politis, 2011. "Career motives and entrepreneurial decision-making: examining preferences for causal and effectual logics in the early stage of new ventures," Small Business Economics, Springer, vol. 36(3), pages 281-298, April.
    19. Shepherd, Dean A. & Wiklund, Johan & Haynie, J. Michael, 2009. "Moving forward: Balancing the financial and emotional costs of business failure," Journal of Business Venturing, Elsevier, vol. 24(2), pages 134-148, March.
    20. Najoua Dali & Sana Harbi, 2016. "The Effect of Risk Perception and Cognitive Biases on the Evaluation of Opportunity in Family and Non-Family Entrepreneurs: The Case of Tunisian Entrepreneurs," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 281-312, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jinten:v:21:y:2023:i:1:d:10.1007_s10843-022-00325-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.