The Effect of Negative Knowledge on Starting an Additional Firm: A Regulatory Focus Perspective

Abstract

Based on the theories of regulatory focus and negative knowledge, I hypothesize that an entrepreneur's regulatory focus affects his/her intention to start an additional firm, and that this effect is moderated by the amount of negative knowledge an entrepreneur has. In my analyses of survey responses from entrepreneurs, I found that an entrepreneur’s level of promotion focus positively affects their intention to start an additional firm. I also found that negative knowledge moderates the relationship between entrepreneurs’ levels of prevention focus and additional firm creation. High levels of prevention focus are associated with high levels of entrepreneurial intentions when an entrepreneur has large amounts of negative knowledge. However, for individuals with low levels of negative knowledge the relationship is negative (high levels of prevention focus are associated with low levels of entrepreneurial intent).