Which matters more? Group fear versus hope in entrepreneurial escalation of commitment

Tori Y. Huang, Vangelis Souitaris and Sigal G. Barsade

Strategic Management Journal, 2019, vol. 40, issue 11, 1852-1881

Abstract: Research Summary We examine the influence of two conflicting emotions—group fear and group hope—in entrepreneurial team decision‐making. We are interested in which emotion will be more strongly related to whether entrepreneurial teams escalate their commitment to a currently failing venture versus terminating that venture. Using a longitudinal start‐up simulation and based on data from 66 teams across 569 decision‐making rounds, we find that group “hope trumps fear.” That is, the relationship between group hope and escalating commitment to a failing venture is stronger than the relationship between group fear and terminating that venture. We predict and find that team engagement mediates these relationships. We find partial support for a predicted moderation effect of group friendship strength. Theoretical implications are discussed. Managerial Summary Emotions are a critical but often unacknowledged part of entrepreneurial decision‐making. We tested whether group fear or group hope will most strongly influence teams' decisions to escalate their commitment, versus terminating a currently failing venture. Using a longitudinal entrepreneurial simulation, based on data from 66 teams across 569 decision‐making rounds, we find that “hope trumps fear.” That is, the relationship between group hope and escalating commitment to a failing venture is stronger than the relationship between group fear and terminating that venture. Group engagement versus disengagement helps to explain this finding. Our results indicate the importance of entrepreneurs understanding and managing their team emotions for the best decision‐making. It also helps explain the continued engagement of entrepreneurial teams who even, when fearful, have hope.

Date: 2019
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