ABSTRACT
This study investigates the relationship between managerial optimism and the three-year operating performance of start-ups postinitial public offerings (IPOs). The result of the data of 1320 US young start-ups over the 2010–2020 period shows a contingent effect of managerial optimism, where the effect of managerial optimism significantly interacts with the effect of uncertainties from different sources in distinct ways. Specifically, uncertainties due to external environmental factors negatively interact with the effect of managerial optimism such that under a higher external uncertainty environment managerial optimism negatively affects the three-year operating performance of start-ups. On the other hand, uncertainties due to internal organizational factors generate a positive interaction effect with managerial optimism such that under a higher organizational uncertainty context managerial optimism enhances the three-year operating performance of start-ups. The factors of external environmental uncertainty are measured by the level of international diversification, and the level of industrial diversification, respectively. The factors of internal organizational uncertainty are measured by the levels of a firm's internal growth opportunity, and the level of R&D intensity, respectively. The findings of the present study suggest that managerial optimism can be a double-edged sword, where the net effect of managerial optimism is contingent upon the source of uncertainties in quite different ways.
