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Anticipated emotions and their effects on risk and opportunity evaluations

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Abstract

Despite the empirical and anecdotal evidence of the role of anticipated emotions in people’s deliberations, little is known about their role in entrepreneurial business opportunity evaluations. This study investigated the role of anticipated emotions as a predictor of risk perception and of business opportunity evaluations. One hundred and eight entrepreneurs selected from the Kuwait Chamber of Commerce provided data that were analyzed using SmartPLS. This research confirms the importance of anticipated emotions about an outcome when evaluating a business opportunity. The study also explains the mediating role of risk between anticipated emotions and business opportunity evaluations. This research contributes to the development of a more comprehensive theoretical framework of business opportunity evaluations by extending the role of affect and including anticipated emotions, and by explaining the role of risk as a mediator of anticipated emotions and judgments of a business opportunity.

Resumen

No obstante la evidencia empírica y anecdótica respecto al rol que juegan las emociones en las deliberaciones de las personas, se sabe muy poco sobre el rol que juegan en las evaluaciones de las oportunidades de negocios empresariales. Este estudio investigo el rol de las emociones anticipadas como indicador de la percepción de riesgo y las evaluaciones de la oportunidad de negocio empresarial. 108 empresarios seleccionados de la Cámara de Comercio de Kuwait previeron los datos que luego fueron analizados usando SmartPLS. Esta investigación confirma la importancia de las emociones anticipadas de los resultados cuando empresarios evalúan una oportunidad de negocio. El estudio también explica el rol mediador del riesgo entre las emociones anticipadas y la evaluación del negocio. Esta investigación contribuye al desarrollo de un marco conceptual más completo del proceso de evaluación de negocio llevado a cabo por empresarios al extender el rol del afecto e incluir las emociones anticipadas de un resultado. También mejora el marco conceptual al explicar el rol mediador del riesgo y las emociones que se anticipan en el juicio de una oportunidad de negocio.

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Acknowledgments

The authors acknowledge the valuable comments of the anonymous reviewers and Dr. Hamid Etemad, editor of the journal, on improving the manuscript.

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Authors and Affiliations

  1. Entrepreneurship and Marketing, College of Business Administration, Gulf University for Science and Technology, Mubarak Al-Abdullah, Kuwait

    Hernan E. Riquelme

  2. Kuwait-Maastricht Business School, P.O. Box 9678, 22097, Salmiya, Kuwait

    Abdulaziz Alqallaf

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Correspondence to Hernan E. Riquelme.

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Appendices

Appendix 1

Table 2 Measurement model loadings (t values)
Full size table

Appendix 2

Construct, measures, and sources

figure a

Scenario

(adapted from Keh et al. (2002)

Please answer the following questions after reading the scenario. Please put yourself in the place of Ahmad.

Ahmad is a successful manager with four years of experience at a Multi-National Corporation (MNC). Before that Ahmad worked in a medium-sized local company for five years. The idea of owning and operating a company, taking calculated risks, and making a fortune all appeal to him. Hence, Ahmad is thinking of starting a business.

Ahmad has an idea for a new business and decides to ask around to see if it is a good idea. He has some very positive feedback from some potential customers and some associates who know the industry well. Ahmad does not have the resources to do an in-depth market research to find out whether the business is going to work and published data are too general to be useful. However, he feels that there is money to be made based on the positive feedback from potential customers and his associates. Ahmad is enthusiastic about starting the business even though he has no experience in this industry or in starting a business.

There are a few MNC companies in the same industry but they have not targeted the market segment that Ahmad is aiming for. He feels that the MNCs are likely to move into the market as long as the business is profitable (successful) and he will not be able to defend against this major threat. He is unsure whether the market has matured or is still growing. If the market has reached maturity, it is likely for the new business to be squeezed out of the market. If the market has reached maturity, it is likely for a new business to be squeezed out of the market. If the market is still growing, the new business will be able to survive the entry of MNCs into this market segment. Ahmad finds out that there are only a few small businesses that are still surviving in the industry.

Ahmad estimates he will need at least 120,000 KD to finance the new business. As he has only 30,000 KD in savings, he has to borrow from the bank and find partners to get the rest of the investment funds needed.

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Riquelme, H.E., Alqallaf, A. Anticipated emotions and their effects on risk and opportunity evaluations. J Int Entrep 18, 312–335 (2020). https://doi.org/10.1007/s10843-019-00262-3

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