Examining the Interactive Effects of Thinking Style and Optimism on Entrepreneurial Self-Efficacy

Entrepreneurial thinking and new venture development remain core drivers of economic growth and sustainability across the globe. Although entrepreneurial cognition research has long supported the notion that entrepreneurial optimism enables entrepreneurial success, recent research suggests that entrepreneurial over-optimism carries potential risks that obstruct effective decision-making and new venture development. This empirical study examines linear/nonlinear thinking style, which reflects one’s versatility in utilizing both linear (e.g., logic, rational analysis, deduction, etc.) and nonlinear (e.g., intuition, emotion, insight, etc.) forms of information processing, as a moderator of the relationship between entrepreneurial optimism and self-efficacy. Our empirical study of entrepreneurs provides support for the positive relationship between entrepreneurial optimism and self-efficacy, as well as the moderating role of linear/nonlinear thinking style balance. Entrepreneurs who demonstrated high optimism and linear/nonlinear thinking style balance were most likely to report high entrepreneurial self-efficacy. We conclude with a discussion of the implications for entrepreneurial cognition theory and research, practical recommendations for entrepreneurship education efforts across contexts, the study’s limitations, and our recommendations for future research.