Failing to Learn from Failure: How Optimism Impedes Entrepreneurial Innovation

Mario Daniele Amore, Orsola Garofalo, Victor Martin-Sanchez

Research output: Contribution to journalJournal articleResearchpeer-review


Extant research shows that entrepreneurs are typically overly optimistic about their ventures’ prospects, and that such optimism hampers performance. We analyze how dispositional optimism affects the adjustments to entrepreneurs’ expectations after they receive negative feedback on their task performance. We then explore the relationship between optimism and the effectiveness of innovation. Exploiting unique firm-level data and a laboratory experiment involving 205 entrepreneurs, we find that dispositional optimism is negatively associated with both the likelihood and extent of belief updating in response to negative feedback. Furthermore, dispositional optimism triggers a discrepancy – between innovation inputs and outputs – that reduces a firm’s innovation effectiveness.
Original languageEnglish
JournalOrganization Science
Issue number4
Pages (from-to)940-964
Publication statusPublished - Jul 2021
Externally publishedYes


  • Belief updating
  • Dispositional optimism
  • Entrepreneurship
  • Innovation
  • Negative feedback


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