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A key question in entrepreneurship research has long been "Why do some persons choose to become entrepreneurs while others do not?" Initial efforts to answer this question focused largely on the personal characteristics of entrepreneurs (cf., Shaver & Scott, 1991). The basic premise underlying such research was simple:  Entrepreneurs are different from other persons with respect to certain traits, and it is these differences that lead them to say "Yes" so resoundingly when, in their view, opportunity arrives. At first blush, this assumption seems to be an eminently reasonable one. Informal observation suggests that entrepreneurs are, indeed, different from most other people in terms of their personal traits.  For instance, it has been-and still is-widely assumed that entrepreneurs are far above average in their willingness to take risks, their desire to excel (i.e., their achievement motivation), their personal optimism, and in their powerful preference for shaping their own destiny (e.g., Bygrave, 1989; Hatten, 1997).
Surprisingly, however, efforts to uncover differences between entrepreneurs and others with respect to these and other aspects of personality met with only modest success.  Try  as they might, researchers could not identify clear-cut differences between entrepreneurs and other persons with respect to what seemed to be the most relevant dimensions of personality.  The ultimate result, as described by Shaver and Scott (1991, p. 39) was that "Through the years, more and more of these personological [i.e., personality] characteristics have been discarded, debunked, or at the very least, found to have been measured ineffectively.." (italics added). In short, many researchers gradually concluded that finding clear-cut differences between entrepreneurs and other persons was a difficult task-just as difficult, it seemed, as the task of identifying clear-cut differences between leaders and followers (e.g., Yukl, 1994).

Faced with these disappointing results, researchers interested in the basic question "Why do entrepreneurs decide to take the plunge?" neither gave up in despair nor chose to sit idly by awaiting further developments.  Rather, some turned to a distinctly different approach-one which emphasized the potential role of cognitive factors and processes in entrepreneurship. According to this perspective, important insights into the question "Why do some people decide to become entrepreneurs while others do not?" may be gained through careful study of the ways in which entrepreneurs and other persons think-how, in the terms of cognitive psychology, they attempt to make sense out of the complex world around them.  This perspective suggests that some persons choose to become entrepreneurs not because they possess specific traits, but rather because they tend to think about many situations-including ones involving risk and opportunity-somewhat differently than other persons.  Such a cognitive perspective has recently risen to the fore (some would say "to dominance") in psychology and other behavioral sciences, and has added greatly to our understanding of many important topics, including how we reason, form judgments, and reach decisions (e.g., Barsalou, 1996).  Such knowledge, it is suggested here, can prove invaluable in understanding many aspects of entrepreneurship.

But do entrepreneurs really differ from other persons with respect to certain aspects of cognition?  A small but growing body of research suggests that they do (e.g., Baron, in press).  For instance, a recent study by Palich and Bagby (1995) found that while entrepreneurs and nonentrepreneurs did not differ in overall risk-taking propensity, they did differ in terms of how they thought about business situations:  entrepreneurs tended to categorize such situations as having more strengths, opportunities, and potential for gain than did nonentrepreneurs.  Similarly, in very thought-provoking paper, Kahneman and Lovallo (1994) have argued that one reason business managers generally, and entrepreneurs in particular, make bold or unreasonably "rosy" forecasts about future business results is that they tend to focus on the specific, current situation while largely ignoring the outcomes of previous, related situations which might serve to inform their current judgments.  As Kahneman and Lovallo (1994) put it, such persons tend to adopt an "inside view," one that focuses on the current situation and reflects their personal involvement in it rather than an "outside view," one that compares the current situation dispassionately to the results obtained in past, related situations.

Do other cognitive mechanisms play a role in entrepreneurs' decision to forge ahead, and, perhaps, in their renowned optimism, tenacity, and perseverance in the face of early setbacks?  This is the central question addressed in the present research.  Specifically, the study reported here was designed to examine one aspect of cognition which appears to be potentially relevant to entrepreneurship, but which has not yet been investigated-a mechanism known as counterfactual thinking (e.g., Mandel & Lehman, 1996; Miller, Turnbull, & McFarland, 1990).  This involves the tendency to imagine "what might have been" in a specific situation if the person in  question  had  acted  differently  in  it,  and  it  appears to be relevant to  entrepreneurship  for
several reasons.
First, counterfactual thinking is closely linked to the experience of regret over missed opportunities.  In fact, it appears that ruminating about what might have happened if these opportunities had not been missed is one important cause of the intense feelings of regret many persons experience in such situations.  It seemed possible that because of their concern with identifying and acting on opportunities, entrepreneurs might be more likely to experience such reactions than other persons and that this, coupled with a strong desire to avoid such feelings of regret,  would contribute to their initial decision to become an entrepreneur.

Second, recent findings (e.g., Roese, 1997) suggest that counterfactual thinking is especially likely in situations where individuals experience disappointing outcomes. Entrepreneurs, of course, often meet with such setbacks in the early days of their new ventures (e.g., Hatten, 1997).  Moreover, their commitment to their ideas, businesses, and products, is frequently intense, thus magnifying the negative emotions generated by these disappointments.  For these reasons, too, therefore, it seemed possible that entrepreneurs would be more likely than other persons to engage in counterfactual thinking.  Consistent with this reasoning the following hypotheses were formulated:

Hypothesis 1:  Entrepreneurs are more likely than other persons to engage in counterfactual thinking with respect to situations involving missed opportunities.

Hypothesis 2:  As a result, entrepreneurs experience more or stronger feelings of regret over missed opportunities than other persons.

To test these hypotheses, three groups of persons-actual entrepreneurs, would-be entrepreneurs, and persons with no interest in becoming entrepreneurs-were asked to rate the frequency with which they engaged in counterfactual thinking concerning missed opportunities, the degree of regret they experienced when they thought about missed opportunities, and the extent to which they actively sought new opportunities in their lives.



Three groups of individuals participated in the study.  One group (forty-four) were persons who were currently entrepreneurs.  These individuals owned their own companies, all of which were high technology firms located in a University Incubator Center.  A second group of participants (twenty-one individuals)  consisted of both students at a technological university (graduate and undergraduate) and of employed persons who expressed strong interest in becoming entrepreneurs in the future.  The third group of participants (twenty-one individuals) also consisted of students and employed persons, but individual in this group expressed little or no interest in becoming entrepreneurs.  Throughout the remainder of this paper these groups will be referred to as Entrepreneurs, Would-Be Entrepreneurs, and Non-Entrepreneurs.


Participants in all three groups completed a brief questionnaire.  An initial item asked these individuals to think of the three things they regretted most in their entire lives, and then for each, to indicate whether it was something they did do or did not do.  A similar item asked participants to think of the three things they regretted most during the past week and to indicate whether each was something they did do or did not do.  These items were scored in terms of the number of "Did Not Do" answers to each question (Range = 0 - 3). Additional items on the questionnaire asked individuals to rate, on seven-point scales:  (1)  the extent to which they engaged in counterfactual thinking (imagining the possibility that  things might have turned out differently in various situations if they had acted differently or circumstances had been different; "Rarely" to "Often"),  (2) the amount of regret they experienced as a result of thinking about missed opportunities ("Very Little" to "A Lot"), and  (3) their feelings when they thought about missed opportunities ("Unpleasant" to "Pleasant").

Participants completed the questionnaire individually and were informed that their answers would be completely confidential;  they were specifically instructed not to put their names anywhere on the form.

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