Finally, fear of upsetting important others refers to an individual’s fear of disapproval from people critical to his or her well-being. For individuals who have this fear, large financial costs are often especially worrisome because a costly failure is likely to upset important others. For instance, the financial costs of failure not only affect the entrepreneur but can also negatively impact the firm’s stakeholders and even the entrepreneur’s family . Indeed, stakeholders are generally people who are important to the entrepreneur and his or her venture (Mitchell et al. 1997; Seldon and Fletcher 2015; Vandekerckhove and Dentchev 2005), friends and family often make equity investments in the business (Kotha and George 2012), and entrepreneurs frequently develop close relationships with their employees (Breugst et al. 2012). Thus, financially costly failures are likely to upset investors who could potentially lose more money (Amit et al. 1990; Mason and Harrison 2002), employees who could lose their jobs (or have to end relationships with people who are let go) (Fineman 1999; Jordan et al. 2002), and other stakeholders who could potentially lose their reputation and/or social standing (Sutton and Callahan 1987). For instance, referencing an entrepreneur whose venture failed, the Scottish Star newspaper (April 23, 2011) reported that “Chief executive Sam said he ‘had been left with no alternative’ but to pull the plug. He added: ‘Making all the employees redundant is genuinely heart breaking’” (cited in Byrne and Shepherd 2015: 382). As with the other four types of fear, the more afraid an entrepreneur is of letting important stakeholders down, the more he or she is likely to emphasize the financial costs of failure when making entrepreneurial decisions.
If the Japanese proverb’s argument that “fear is only as deep as the mind allows” is true, then individuals may be motivated enough to overcome their fears when making entrepreneurial decisions. Thus, a key question arises: why can some individuals overcome their fear of failure and choose to act on potential opportunities whereas others succumb to their fear and do not?
As mentioned earlier, individuals who have high obsessive passion for an activity are more likely to choose to adamantly continue their pursuit of the beloved activity (Curran et al. 2015; Houlfort et al. 2015) and to remain engaged in the activity even when presented with information suggesting the imprudence of this course of action (Stephan et al. 2009). In the context of entrepreneurship, such behavior includes disregarding (or putting minimal emphasis on) information about the high financial costs associated with failure when choosing whether to pursue potential opportunities.
Fears, Passion, and Entrepreneurial Action
One particular point of interest to theorizing about fear of failure is that obsessive passion seems to affect the way individuals make decisions under threat and can lead to maladaptive outcomes (Curran et al. 2015; Donahue et al. 2009; Hodgins and Knee 2002; Vallerand et al. 2008, 2010). Because people who “cannot help but engage in their professional activities” (Houlfort et al. 2015: 85) tend to have obsessive passion, they continue with a particular response even when they encounter signals suggesting that the response is unsuitable (i.e., they have a rigid response), which can ultimately result in negative outcomes. For example, obsessively passionate workers will continue with projects irrespective of information indicating that persisting unchanged will cause undesirable consequences (Stephan et al. 2009). They feel obligated to take on tasks for reasons besides the tasks’ outcomes, so their engagement in such tasks is compulsive and rigid (Curran et al. 2015).
Additionally, obsessive passion has been linked to risky behaviors (Rip et al. 2006). Researchers have found, for instance, that obsessively passionate athletes’ rigid persistence can lead to risky training, thereby increasing their vulnerability to injury (Stephan et al. 2009; Vallerand et al. 2003), and the rigid persistence of individuals who have high obsessive passion for the Internet and for soccer (Vallerand et al. 2008) is associated with poor relationship quality. Overall, obsessive passion is linked to a variety of negative outcomes at the individual level, including conflict with other life spheres (Vallerand et al. 2010), aggressive behavior (Donahue et al. 2009), and difficulties in partner relationships (Vallerand et al. 2008). For numerous other activities—such as sports, gaming, and shopping—obsessive passion often leads to unproductive outcomes, thus creating conditions that would make it difficult to continue engagement or to be successful in the long term. Thus, obsessive passion appears to overpower individuals’ appraisal of threats (e.g., the threat of injury, relationship loss, etc.) associated with certain activities (i.e., activities the individual is passionate about).
People who are obsessively passionate believe they cannot live without engaging in the activity they are passionate about (Vallerand et al. 2003), and they will give that activity top priority when making decisions regarding the investment of their time and energy. As Vallerand et al. (2003: 757) fittingly remarked, obsessively passionate individuals “cannot help but to engage in the passionate activity. The passion must run its course as it controls the person.” On the other hand, individuals who have low obsessive passion about a potential entrepreneurial opportunity are not as dedicated to such activity and are thus more likely to think about how investing in the focal activity will affect other aspects of their lives (Shah et al. 2002). That is, their fear of failure is associated with elements of life domains outside the focal activity. For less obsessively passionate individuals, fear of failure may motivate them to prioritize their life domains and psychological needs such that large financial opportunity costs are likely to lessen the attractiveness of acting upon potential opportunities. However, individuals who are very obsessively passionate are likely to emphasize life domains less and concentrate on the possible upsides of acting on potential opportunities. For such individuals, the entrepreneurial activity at hand is their main focus—it “commands” how they invest their time and energy. Consequently, they are less likely to become preoccupied with fears about the potential undesirable outcomes of their actions. Indeed, my (Dean) colleagues and I (Shepherd et al. 2018) showed that the negative emphasis individuals place on the financial costs of failure when making entrepreneurial decisions increases with fear of failure for those with low obsessive passion but less so for those with high obsessive passion.
Entrepreneurial Motivation for Sustaining Nature and/or Communities
Aside from knowledge (see Chap. 2), the motivation to focus attention is a key factor in opportunity recognition (Baron 2006; Kirzner 1979; McMullen and Shepherd 2006). Motivation to direct one’s attention to preserving natural and communal environments likely develops when people or organizations sense that their psychological and/or physical health is at risk.
First, people are frequently motivated to take action on sustainable development opportunities that increase or preserve their personal health. For instance, damage to the natural environment from pollution jeopardizes many peoples’ lives, and the overuse of natural resources decreases life support by reducing the availability of food (Sala 2006). Furthermore, research has shown that a deteriorating communal environment, including the loss of cultural identity, is associated with alcoholism (Spicer 2001) and diminished expectancy of life (McDermott et al. 1998) among members of disabled ethnic minorities. As such, individuals who face these threats are likely to be highly motivated to direct their attention to and exploit opportunities that improve practices associated with the exploitation of natural resources, diminish pollution, and eliminate oppression of ethnic groups.
In terms of psychological threats, self-determination theory attempts to explain the psychological processes underlying optimal psychological functioning and health (Ryan and Deci 2000). More specifically, the aspects of life that fulfill people’s needs for competence, relatedness, and autonomy also improve psychological well-being (Ryan and Deci 2000). When something threatens these aspects of an individual’s life, his or her psychological well-being is also threatened, which causes the person to dedicate more attention to the threatening part of the environment. The mo
re attention the individual places on this threat, the more likely he or she will recognize an opportunity associated with that part of the environment.
Additionally, deteriorating natural and communal environments can jeopardize individuals’ need for competence, thus motivating them to pay more attention to relevant aspects of the environment. When people begin to believe that nature is on the decline, they may start to feel that they—as part of society—are not competently managing the natural environment in a way that ensures suitable living conditions for the generations to come. For example, the negative outcomes of climate change and ozone-layer depletion will become more substantial for the next generations (Dentener et al. 2006), and the extinction of species as well as the decline of certain natural habitats including forests and oceans cannot be fully rectified in the future. In a similar vein, a deteriorating communal environment may hinder individuals from meeting their need for competence due to its impact on the next generation’s well-being. As an example, family disruption harms the well-being of children and grandchildren in impacted families (Amato 2005). To the degree that individuals ascribe such negative outcomes to their own or their society’s failure to preserve natural and communal environments, their need for competence will be unsatisfied and their sensitivity to opportunities that maintain the environment will increase.
Deteriorating natural and communal environments also negatively affect people’s need for relatedness (i.e., their need to connect with others) (Ryan and Deci 2000). First, declining environmental conditions that will primarily harm the subsequent generation are likely to make it more challenging for individuals to develop relationships with people in that generation. For instance, children may blame their parents (or the generation of their grandparents) for leading self-centered and egoistical lives that exploited and damaged nature and for causing problems that the children and their generation will have to endure.
Second, a deteriorating natural environment generally causes unequal suffering among the earth’s population; often, the individuals who suffer most did not cause the decline, thus making it challenging for both groups of people to connect. Ozone-layer depletion, global warming, and overfishing, for instance, can largely be attributed to industrial activities and use in developed regions and countries, yet the numerous and often significant costs of these activities in the form of destroyed ecosystems are forced on developing countries (Srinivasan et al. 2008). In turn, individuals from these developing countries may reproach the developed countries for their self-centeredness and irresponsibility, thus harming interpersonal relationship building across different societies.
Third, weakened communal environments can disturb salient social relationships, for example, between parents and their children when families are disrupted. With more struggles and relationship issues, people’s need for relatedness is unmet. In this case, they are likely to focus on opportunities to preserve natural and communal environments to avoid harm to others in the society and the next generation.
Finally, changes to natural and communal environments could also put individuals’ needs for autonomy at risk. In order to experience autonomy, individuals need to have a set of available options (Ryan and Deci 2000). However, with deteriorating environmental conditions, people’s options usually decrease. For instance, global warming has killed (or is killing) coral reefs (Tourtellot 2007), and climate change has also hindered the growth of crops and other nutritious plants in many areas, thus limiting the amount and diversity of food available throughout the world. Furthermore, when social groups are disturbed, people’s options for developing social ties with other individuals, especially other group members, are decreased. Thus, as these examples illustrate, the more natural and communal environmental changes lessen the options individuals have, the more their need for autonomy will remain unmet, and the more they will be inspired to focus on opportunities that preserve the environment.
People’s motivation to act on sustainable opportunities seems to increase as their physical and psychological health becomes progressively threatened. That is, the more threatened people feel, the more they tend to direct their attention toward the causes of that threat, and the less attention they tend to direct toward non-threat-related information (McMullen et al. 2009). Thus, when the threat to natural and communal environments is high, individuals are highly likely to act on opportunities to preserve those environments. The threat individuals sense from declining natural and communal environments likely affects the degree to which they combine their knowledge about entrepreneurship and their environmental knowledge to identify a sustainability opportunity. Generally, after individuals perceive a threat and overcome their initial fear response, they thoughtfully search for opportunities to deal with the threat (Beck and Clark 1997). While “elaborative strategic processing of threat,” people process information slowly and a “secondary appraisal process occurs in which anxious individuals evaluate the availability and effectiveness of their coping resources to deal with the perceived threat” (Beck and Clark 1997: 53). In other words, individuals whose psychological and physical health is endangered by environmental (natural or communal) deterioration will seek and assess opportunities to handle that threat and, in doing so, will be driven to utilize their prior environmental/communal knowledge as well as their entrepreneurial knowledge. As an individual undertakes assessment activities to deal with a threat, it becomes increasingly likely that he or she will uncover a complementary relationship between his or her environmental and entrepreneurial knowledge such that both forms of knowledge can be joined to help the person identify an opportunity. On the other hand, if the individual senses a lower threat from environmental decline and engages in fewer assessment activities to deal with the threat, while he or she may possess both types of knowledge (i.e., of the natural/communal environment and of entrepreneurship), he or she is unlikely to be motivated to connect the two forms of knowledge to identify an opportunity.
Entrepreneurial Motivation Toward Developing Society
Individuals and organizations vary in terms of their motivation to focus attention on generating economic and non-economic gains for disadvantaged others. We concentrate on two sources that likely explain some of this variance: the degree to which individuals feel physically and psychologically threatened by the (expected) condition of society and their altruism.
People will be more motivated to exploit opportunities to improve society when they believe that their physical well-being is at risk due to the present or expected state of society. Before 1983, for example, the institutional environment in the United States offered pharmaceutical companies few incentives to create drugs to treat rare diseases because demand for such drugs was low. As a result, many patients with rare diseases had significant difficulty obtaining much-needed medical treatment. This threat to their own health drove some of these patients to act on opportunities to change the institutional environment such that it incentivizes pharmaceutical firms to create drugs for rare diseases. Some of these patients founded the National Organization for Rare Disorders and began the Orphan Drug Act. The Orphan Drug Act is a legal framework providing marketing exclusivity for rare disease drugs to pharmaceutical companies. In turn, these actions considerably improved the medical situation not only for the patients themselves but also for others in society (Austin et al. 2006).
Furthermore, the attention individuals pay to opportunities that develop society will grow with increasing threats to their psychological needs for competence, relatedness, and autonomy (Ryan and Deci 2000). For instance, some countries’ legal frameworks are incapable of dealing with corruption and violence (Paldam 2002; Karstedt 2006), so people living in these countries may believe that they (and the society they live in) are incapable of developing an institutional setting that provides them and their children peace and safety. In addition, identifying a sustainable development opportunity may enable individuals to handle a threat to their need for relatedness. For example, identifying an opportunity
to prompt institutional change and improve minority rights enables individuals to develop relationships with minority groups as well as with philanthropic and volunteer supporters of the cause (Austin et al. 2006). Finally, individuals may focus their attention on entrepreneurial opportunities that develop society to meet their need for autonomy. For example, members of minority and ethnic groups often do not have equal opportunities or rights compared to the majority population in a country, which hinders their (and their children’s) ability to improve their socioeconomic status and personal development. Such people are thus likely to be motivated to pursue opportunities that enhance their situation and the options available to them because these types of opportunities can help satisfy their psychological need for autonomy.
A rising threat to individuals’ physical or psychological health due to the (anticipated) state of society will affect the association between their knowledge of the natural/communal environment, their entrepreneurial knowledge, and the probability that they will identify a sustainable development opportunity. As explained above, increased physical and psychological threat prompts careful consideration and the identification of opportunities to overcome that threat (Beck and Clark 1997), which in turn likely leads individuals to uncover complementarities between their environmental and entrepreneurial knowledge. For example, an individual with knowledge about both pollution-reduction technologies and auto markets may not identify opportunities to lessen air pollution by introducing new technologies into cars because he or she does not perceive air pollution caused by cars to be an issue for his or her society. However, if that same person lives in a country where many people suffer with serious health problems caused by traffic-induced air pollution, his or her need for competence may go unmet because he or she (and others) is unable to help preserve a healthy society. In turn, this psychological threat is likely to drive the individual to seek opportunities that will create a healthier society, and the individual is more likely to identify an opportunity to develop cars that put out fewer emissions based on complementarities between his or her prior knowledge of air pollution and the auto market.
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