The Role of Emotions in Entrepreneurial Decision-Making under Failure: Effectual versus Causal Reasoning Across Emotional States.

Sammanfattning

Entrepreneurial decision-making unfolds under conditions of intense uncertainty, limited resources, and intense emotional pressure, yet how specific emotions and emotional states shape the decision-making that entrepreneurs draw on in real time remains poorly understood. This study investigates how emotions influence whether entrepreneurs draw on causal or effectual reasoning in the moment of decision, specifically within the context of venture failure scenarios. Using a think-aloud verbal protocol design adapted from Muñoz et al. (2020), 29 entrepreneurs were exposed to two venture failure scenarios and asked to verbalise their thoughts and feelings concurrently. Transcripts were coded for nine specific emotional states and for causal versus effectual reasoning following Sarasvathy (2001), with sequences constructed to test the concrete emotion–reasoning relationship. A statistically significant association was found between emotional valence and reasoning mode: positive emotions preceded effectual reasoning relatively more often than negative emotions did (χ² = 5.00, p = .025), though causal reasoning predominated under both valences. The pattern is therefore one of relative likelihood, not a one-to-one mapping of valence onto logic. At the specific-emotion level, only Relief reached individual significance (z = ±2.52, p = .012) and is tentatively read as a possible transition mechanism that may open forward-looking, means-based reasoning once a perceived threat is removed. The remaining specific-emotion patterns rest on smaller counts and are presented as directional tendencies. The findings position emotions as proximate antecedents of reasoning logic in failure-related decisions, a specific contribution to effectuation theory, with implications for how entrepreneurship can be taught within educational settings. To conclude, this thesis lays the groundwork for future research into the role of specific emotions in entrepreneurial reasoning, inviting larger-scale studies to test whether the directional patterns observed here sustain across broader and more diverse entrepreneurial populations.