The Relationship between Dispositional Optimism and Business Recovery during the COVID-19 Pandemic

24 Pages Posted: 22 Nov 2020 Last revised: 28 Nov 2020

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

King's College London

Date Written: November 19, 2020

Abstract

The spread of COVID-19 creates unprecedented challenges for the business sector. What affects the ability of entrepreneurs to face these challenges? In this paper, we study how dispositional optimism shaped entrepreneurs’ actions and beliefs during the first wave of the COVID-19 outbreak. Survey evidence from 1,632 UK firms shows that entrepreneurs who score high on dispositional optimism were more likely to innovate and make organizational changes to their firms. This finding is robust to controlling for differences in business revenues during COVID-19 and for a large set of firm- and individual-level controls. Next, our data show that optimistic entrepreneurs hold more positive expectations about their ability to withstand the COVID-19 shock, and expect a more generous rebound for the whole UK economy. Expanding to the entrepreneurship setting a large literature on personality and individual health, our study suggests that dispositional optimism helps explain which firms will prosper and which others will struggle in the wake of the COVID-19 pandemic.

Keywords: Dispositional Optimism, Entrepreneurship, COVID-19, Expectations

JEL Classification: L25, L26

Suggested Citation

Amore, Mario Daniele and Garofalo, Orsola and Martin-Sanchez, Victor, The Relationship between Dispositional Optimism and Business Recovery during the COVID-19 Pandemic (November 19, 2020). 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

King's College London

Bush House
30 Aldwych
London, England WC2B 4BG
United Kingdom

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