Emotional Maturity

The second dynamic illustrates the emotional maturity of entrepreneurs. Entrepreneur’s passion commits him/her to pursue untapped opportunities and search for new ones. Yet, over time, the entrepreneur can lose his/her passion due to diminishing marginal benefit of each new opportunity. This creates tension between the focus on the existing opportunity and the newly perceived opportunity.

 

  • Figure 2 illustrates the evolution of entrepreneur’s emotional states, by examining the three interdependent dynamics of 1) passion building, 2) passion regulation, 3) interest regulation. Passion enhances entrepreneurial performance through enhancing the entrepreneurial skills (for instance by encouraging genuine thinking and efficient decision-making style), as well as  increasing the entrepreneurs’ commitment to pursue untapped opportunities. Therefore, sustaining healthy level of passion can support sustaining firm’s growth. Entrepreneur’s passion has a re-enforcing effect, when passionate entrepreneurs successfully attain their goals, they are encouraged more, and they increase their ambitions, which arouses even more passion.

Arousing too much passion can cause entrepreneurs to have optimism bias where they overlook risk and overestimate their abilities. Optimism bias affects their entrepreneurial performance negatively and consequently hinders firm’s growth. Yet, the drop in entrepreneurial performance can have a healthy effect as it brings down the entrepreneur’s optimism under a controllable level. In other words, failure to meet growth expectations acts as a self-regulatory mechanism for entrepreneur’s passion.

On the longer term, an entrepreneur can lose passion for growth due to losing interest in pursuing new opportunities. Overtime, firm size keeps growing and marginal benefit of each new opportunity keeps decreasing. Until it reaches a point where the expected benefit of exploring new opportunities may not justify the risk and/or the efforts. At this point, the entrepreneur loses interest to pursue new opportunities. In other words ,the perceived marginal benefit of the opportunity regulates the entrepreneur’s interest for growth.