Dispositional Optimism and Business Recovery During a Pandemic

29 Pages Posted: 22 Nov 2020 Last revised: 5 May 2022

See all articles by Mario Daniele Amore

Mario Daniele Amore

Bocconi University - Department of Management and Technology

Orsola Garofalo

Copenhagen Business School

Victor Martin-Sanchez

University of Southern Denmark

Date Written: October 8, 2021

Abstract

A large literature at the crossroads of biology and cognitive psychology has shown that individuals hold generally positive expectations about future events. Despite this evidence, to date it remains unclear whether optimism has positive or negative implications for entrepreneurial activities. We examine this question in the context of the COVID-19 pandemic, which provide a unique way to study the role of optimism on (in)ability of firms to overcome exogenous shocks. Using a large-scale longitudinal survey covering 1,632 UK firms, we find that entrepreneurs who score high on optimism were more likely to innovate and make organizational changes to their firms during the COVID-19 outbreak. Moreover, optimistic entrepreneurs experienced higher revenue growth during the pandemic. Collectively, our study sheds light on one of the psychological factors explaining why some firms can prosper and some others struggle in the wake of an external shock.

Keywords: Entrepreneurship; Dispositional Optimism; Business recovery; Expectations; Innovation

JEL Classification: L25, L26

Suggested Citation

Amore, Mario Daniele and Garofalo, Orsola and Martin-Sanchez, Victor, Dispositional Optimism and Business Recovery During a Pandemic (October 8, 2021). Available at SSRN: https://ssrn.com/abstract=3733757 or http://dx.doi.org/10.2139/ssrn.3733757

Mario Daniele Amore (Contact Author)

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Orsola Garofalo

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Victor Martin-Sanchez

University of Southern Denmark ( email )

Campusvej 55
DK-5230 Odense, 5000
Denmark

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