Impact of Shame on Entrepreneurial Decision Making

Abstract

Entrepreneurs often experience rejection, criticism, and failure as partof the entrepreneurial journey - which can cause shame. Entrepreneurs have toreach out to multiple stakeholders like investors, bankers, family and friends,potential employees, and potential customers for acquiring resources. Sinceentrepreneurs have to convince them about both the potential of the businessidea and their own capability to establish the firm successfully, there is apossibility of facing rejections or criticisms or failure, which can cause shame.Hence, it is vital to understand the role of shame in entrepreneurial decisionmakingsince emotions influence decision-making. Existing research on shamein entrepreneurship is limited, less than three studies; hence this research is bothtimely and necessary. I use the appraisal tendency framework (ATF) as thetheoretical framework to understand the impact of shame in different contexts.In this study, I examine three decision-making scenarios. First, Iexamine the influence of shame on opportunity evaluation and exploitationdecisions. I look at the influence shame has on the assessment of desirabilityand feasibility of an opportunity. Additionally, I also look at the influence ofshame on the decision to exploit the opportunity. I study whether shameinfluences the relative importance between feasibility and desirability whendeciding on entrepreneurial action. Second, I examine the influence of shameon the decision of the entrepreneur whether to seek advice and to use the advicewhile making decisions. Since advice is known to influence firm performanceand entrepreneurs rely on the advice of mentors, advisors, and investors,understanding the role of shame in influencing advice-seeking and advicetakingis essential. Third, I examine the influence of shame on the tendency tomake unethical decisions. Existing research has identified that motivation forbecoming an entrepreneur affects moral disengagement, which subsequentlyinfluences the tendency to make unethical decisions.