Entrepreneurial Cognition

by Dean A Shepherd

  Aside from threat, altruism can direct people’s attention toward opportunities that develop society. This altruistic motivation to assist others generally occurs when people experience empathy and sympathy for those who are disadvantaged (Batson and Shaw 1991; Davis 1996). People who are high in empathy think and feel themselves into disadvantaged others’ lives and experience emotions themselves that are similar to the others’ emotions (Eisenberg 2000). Individuals who can empathize with people in very poor societies may personally experience (at least to some extent) those people’s grief over providing life support for their children. It follows, then, that the more individuals empathize with the poor, the higher their motivation to pay attention to opportunities that could offset poor individuals’ negative emotional experiences and distress since they are partially their own emotions. Such individuals are very likely to be motivated to act on opportunities for sustainable development that can transform poorer individuals’ situation—in doing so they can also better their own emotional state. For instance, these types of individuals are likely to notice opportunities that improve poor children’s health while also protecting the natural environment, such as developing inexpensive processes to convert polluted water into drinking water (Prahalad 2007).

  Like empathetic individuals, sympathetic people can think and feel themselves into disadvantaged others’ situations; however, unlike their empathetic counterparts, sympathetic people experience emotions that differ from these others’ emotions (Eisenberg 2000). For example, those who sympathize with people who are very poor understand these people’s sorrows regarding their children’s health and nutrition. However, they will not personally feel this sadness, instead pitying the people for their difficult situation. Pity is an altruistic emotion that drives people to help ease the suffering of others even when giving assistance leads to significant individual costs (Dijker 2001). Overall, people who sympathize with the poor will be driven to help them and be motivated to exploit opportunities that can enhance their life.

  How much empathy and sympathy motivate individuals to act on opportunities that develop people and society seems to hinge on the level of personal distress that empathy and sympathy cause them. Personal distress can stem from empathetic or sympathetic overarousal (Hoffman 1982), which occurs in highly negative emotional situations that threaten an individual’s psychological well-being (Eisenberg 2000). For instance, people who empathize with those who are poor and worry about their children’s nutrition personally experience that worry, which can generate personal distress. To avoid this distress, people sometimes become less altruistic. Instead, these people concentrate more on themselves (e.g., Wood et al. 1990), thus decreasing their motivation to act on entrepreneurial opportunities that aid others. In other words, highly distressed empathetic individuals are likely to pay less attention to the poor and their suffering to avoid personally experiencing this negative emotional state. However, those who are better able to regulate their own emotions and handle their own distress will be better able to empathize and sympathize with disadvantaged others without becoming overly distressed (Eisenberg 2000). These people’s psychological health is threatened less when they feel empathy and sympathy, thus making them more motivated to help others with their problems and act on potential opportunities to develop society.

  Individuals’ altruism, empathy, and sympathy are also likely to affect the degree to which entrepreneurial knowledge improves the positive association between prior knowledge about natural/communal environments and the likelihood of identifying sustainable development opportunities. People may have both environmental and entrepreneurial knowledge but may not be motivated to uncover complementarities between the two or combine them to identify opportunities that preserve the environment and develop society. However, altruism, empathy, and sympathy can provide such motivation.

  Health and Entrepreneurial Motivation

  Research has shown that people with health-related limitations often freely choose entrepreneurial careers. For instance, people who perceive barriers to advancement in more customary employment roles (e.g., individuals with disabilities) are likely to be attracted to entrepreneurial careers (Kendall et al. 2006; Callahan et al. 2002). More specifically, people with disabilities often prefer entrepreneurial careers because such careers tend to offer better accommodations for disability-related issues (Arnold and Seekins 2002; Hagner and Davies 2002). Although most organizations have made physical-access accommodations for employees in the workplace (Batavia and Schriner 2001), those with disabilities often need additional accommodations, such as flexibility to arrange their schedule around health issues and treatment. These individuals tend to highly value autonomy (Arnold and Seekins 2002; Hagner and Davies 2002). My (Dean) colleague and I (Haynie and Shepherd 2011), for example, found that soldiers and marines who were injured in Iraq and Afghanistan were driven to become entrepreneurs partially because they needed autonomy. They needed autonomy because following orders from someone else almost led to their death, and when handling their health problems, they were often forced to follow doctors’ and nurses’ orders. Similarly, my (Holger) colleagues and I (Wiklund et al. 2016) showed that individuals suffering from ADHD find entrepreneurship to be an attractive career path because it allows for an adjustment of the work environment to ADHD-related symptoms (e.g., varying energy levels, changing attentional foci, problems with routine activities). Indeed, statistics reveal that those who are disabled are more than twice as likely to choose self-employment than people without disabilities (US Census Bureau 2002). Thus, it appears that limitations stemming from health issues motivate such individuals to choose entrepreneurial careers. These careers offer the flexibility that enables them to take care of their health-related needs and obtain treatment.

  The findings and gaps associated with this topic offer a variety of research opportunities. First, while entrepreneurial careers typically offer higher flexibility than salaried employment, the amount and type of flexibility provided across entrepreneurial careers varies. For example, venture founders who want to utilize outside capital to develop their business usually find that they must relinquish more responsibility for running the business than individuals who limit business growth to what they can finance using internal capital sources (Wasserman 2008). Along these lines, different health issues may necessitate different work-related flexibility . It is unclear what are the various flexibility needs associated with major health problems that motivate individuals to become entrepreneurs. How do these entrepreneurs take advantage of this flexibility to improve their health or lessen their health problems? Why are some entrepreneurs able to draw on flexibility more effectively to lessen their health problems than other entrepreneurs? The discussion above focused on people who are drawn to an entrepreneurial career’s flexibility to deal with health problems; yet, other entrepreneurs (driven by other motives) are also likely to use the flexibility of their career to improve their health. For instance, an entrepreneurial career’s flexibility could allow some to engage in recreational or sporting activities.

  Second, entrepreneurial ventures are likely to differ in the autonomy they provide, and entrepreneurs are also likely to desire varying autonomy levels. Researchers can in more detail investigate the association between individuals’ health problems and their desire for autonomy. For example, they can explore why some health-related problems are associated with the desire for more autonomy than other problems. How are these differences embodied in the new firms created? As detailed above, my (Dean) colleague and I (Haynie and Shepherd 2011) offered some preliminary insights about marines and soldiers who were injured in combat and their desire for autonomy; their findings imply that when a person’s health-related problem is connected to loss of control (lack of control causing health-related problems or health-related problems causing lack of control), he or she is likely to strongly desire the autonomy found in an entrepreneurial career.

  Third, in addition to autonomy, flexibility, and physic
al accommodations, what other factors do individuals with health-related problems consider when choosing the career of an entrepreneur or when choosing between different types and paths of entrepreneurial careers? As mentioned earlier, self-determination theory posits that people must also satisfy their psychological needs for competence and belonging (Ryan and Deci 2000; Deci and Ryan 1985). When poor health stops individuals from undertaking particular tasks, it appears they have an even stronger desire to decide for an entrepreneurial career through which they can develop and use new competencies (Haynie and Shepherd 2011). Thus, when becoming an entrepreneur helps individuals who have lost confidence in their competence (or the capability to display their competence) to regain that confidence, health benefits may follow (especially benefits related to psychological health).

  Fourth, poor health may result in loneliness (Molloy et al. 2010). Loneliness is an emotional state that occurs when an individual feels estranged from and/or misunderstood by others and thus feels a lack of social integration (Rook 1984; Donaldson and Watson 1996). (This is different from being alone, which people sometimes seek for pleasure.) Research has shown that loneliness can worsen health-related problems (Hawkley and Cacioppo 2010; Sugisawa et al. 1994; Thurston and Kubzansky 2009). Indeed, one study showed that lonely people have a 45% higher mortality rate than people who are not lonely (Holt-Lunstad et al. 2010). How does the pursuit of an entrepreneurial career influence health-related loneliness? Entrepreneurs are frequently referred to as “lone wolfs,” and “being the boss” typically separates the entrepreneur from his or her subordinates. This separation may cause feelings of isolation and loneliness (Akande 1994; Gumpert and Boyd 1984; Hannafey 2003). Yet, entrepreneurs can usually choose with whom they wish to work (Forbes et al. 2006). Additionally, some new firms are created by a founding team (Ucbasaran et al. 2003), which enables team members to form friendships that can counteract loneliness.

  Fifth, while people suffering health problems may decide to become an entrepreneur for the reasons discussed above, the costs stemming from health problems sometimes make an entrepreneurial career infeasible. Poor health can be financially costly, frequently causing many out-of-pocket expenses, lost earnings, and depleted household assets (Poterba et al. 2010). These costs can diminish one’s financial resources for starting a new venture. Yet, in line with the definition of entrepreneurship as the pursuit of opportunities beyond the resources one presently has (Baker and Nelson 2005; Brown et al. 2001; Stevenson 1983) as well as work on effectual reasoning highlighting entrepreneurs’ current resources as a starting point (Sarasvathy 2001), entrepreneurship is still viable with limited resources.

  Finally, other resources aside from financial resources can be exhausted by health-related problems; poor health can also take time (Stewart et al. 2003; Weiss et al. 2000) and energy away from activities related to work (or perhaps the opposite is true in some situations—viz., an entrepreneurial venture creates energy that transforms the health issue).

  Entrepreneurial Motivation and Others’ Health

  As discussed above, people who directly experience health problems are often motivated to recognize and act on opportunities to overcome their poor health. However, individuals do not need to experience health problems directly to be driven to identify and exploit opportunities to help with others’ health problems. First, some individuals have prosocial motivation—namely, “the desire to expend effort based on a concern for helping or contributing to other people” (Grant and Berry 2011: 77). Prosocial motivation influences cognitive processing (Kunda 1990; Nickerson 1998). Grant and Berry (2011) found that prosocial motivation can lead to perspective taking, which enables people to generalize valuable ideas in more creative ways. Perspective taking is “a cognitive process in which individuals adopt others’ viewpoints in an attempt to understand their preferences, values, and needs”. This process can give individuals insight into the nature of others’ health problems, which is essential for them to recognize opportunities that help solve these problems. While prosocial motivation does not necessarily eliminate self-interested actions, to at least some degree, the “rubber meets the road” with how one manages their intellectual property. For example, when reporting why he did not patent the Solar Ear (an inexpensive, durable, and solar-powered hearing aid), Howard Weinstein noted that the cost of intellectual property protection would increase the overall product price, which went against his goal of helping as many people as possible with the technology. Further, he stated, “I actually want one of the Big 5 to copy us and use their distribution power to get more low cost hearing aids and batteries to developing countries” (kopernik.​info/​en-us/​story/​howard-weinstein-solar-ear). Thus, prosocial motivation not only shapes people’s cognitions to offer insight into potentially beneficial health solutions, but it also motivates them to act on these opportunities.

  Second, research has shown that prosocial motivation can result in perspective taking and eventually innovations among employees (Grant and Berry 2011). Again, prosocial motivation does not necessarily exclude benefits for the actor, but prosocially motivated individuals have a desire to aid others (Grant 2007; Grant and Berry 2011). Similarly, we (Shepherd and Patzelt 2015) proposed that although health entrepreneurship may create profit for entrepreneurs, it is also highly likely to improve others’ health. Researchers have the opportunity to explore phenomena that can “make a difference” (health being the dependent variable) while simultaneously furthering their careers by publishing high-quality research with a deep impact. Thus, we hope scholars are prosocially motivated when choosing their research topics.

  Third, entrepreneurs are likely to vary widely in their prosocial motivation (although this remains an empirical question). What influence does such variance in prosocial motivation have on health entrepreneurship? It could be that only highly prosocially motivated people recognize and act on health-related opportunities. However, because of the high possibility of generating profit, it is more likely that “all sorts” of entrepreneurs decide to enter this industry. A more fruitful line of research could be exploring differences in exploited opportunities in relation to entrepreneurs’ level of prosocial motivation. For instance, do more prosocially motivated entrepreneurs act on more radical health opportunities compared to those who are less prosocially motivated? If so, is the reason for such action because these entrepreneurs engage in more perspective taking to isolate opportunities that would be more suitable for solving health problems (consistent with Grant and Berry 2011)? Alternatively, is an entrepreneur’s willingness to accept uncertainty to act on a more radical opportunity bolstered by his or her prosocial motivation? Perhaps individuals with higher prosocial motivation are more prone to exploiting opportunities that have a higher likelihood of greatly reducing others’ suffering. In addition, scholars can investigate why some entrepreneurs who are prosocially motivated exploit opportunities that solve others’ health problems, whereas other prosocially motivated entrepreneurs are focused on opportunities that aid others in ways unrelated to health issues.

  Finally, there can be a dark side to pursuing entrepreneurial opportunities that improve others’ health: (1) The process of exploiting opportunities to improve others’ health may have adverse health implications for the entrepreneur, which deplete energy (and therefore motivation) from the entrepreneurial effort. (2) Potential health opportunities (as all entrepreneurial opportunities) are inherently uncertain, and their pursuit could result in failure. When failure occurs, it could come with health repercussions that negatively affect subsequent entrepreneurial motivation. Entrepreneurial grief (Shepherd 2003), for instance, is likely greater when a business failure leads to the continuation of others’ suffering that was going to be improved through the venture. Further, when entrepreneurs are a key source of health benefits for others, the implications to their own health from their entrepreneurial efforts increase in importance.

  Entrepreneurial Motivation and the Destruction of Nature

/>   As detailed in Chap. 2 (and more briefly above), harm to the natural environment refers to damaging the inherent worth of the physical world (Muehlebach 2001)—namely, the earth, biodiversity, and ecosystems (Parris and Kates 2003)—and reducing a source of resources and services to support present populations and future generations (Daily 1997). There are many reasons why an opportunity’s specific harm to the natural environment could adversely affect entrepreneurs’ evaluations of its appeal. For instance, entrepreneurs may foresee harm to their personal and/or their venture’s reputation as a result of pursuing an opportunity that damages the environment (which is in line with findings related to the relationship between illegal activity and damage to a manager’s and an organization’s reputation [Karpoff et al. 2008; Karpoff and Lott 1993; Wiesenfeld et al. 2008]). However, entrepreneurs are likely to judge the significance of expected losses differently because personal values are likely to influence such judgments. For example, Agle et al. (1999) showed that other-regarding values affect the importance CEOs ascribe to employees when making decisions that influence corporate performance. Values are “an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence” (Rokeach 1973: 5). Thus, values are guiding beliefs (Schwartz and Bilsky 1990) for decision making and ensuing action (Fishbein and Ajzen 1972; Spash 2002; Thøgersen and Olander 2002).