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Harmonious passion, effectuation and firm performance: The moderated

mediation effect of entrepreneurial experience

Article  in  Management Decision · June 2022

DOI: 10.1108/MD-11-2020-1569

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Harmonious passion, effectuation Passion and

performance
and firm performance:
the moderated mediation effect
of entrepreneurial experience 2331
Anastasiia Laskovaia Received 29 November 2020
Revised 26 July 2021
Graduate School of Management, St. Petersburg University, 10 February 2022
St. Petersburg, Russia 9 April 2022
Accepted 10 May 2022
Younggeun Lee
College of Business and Economics, California State University,
Los Angeles, California, USA
Karina Bogatyreva
Graduate School of Management, St. Petersburg University,
St. Petersburg, Russia, and
Pol Herrmann
Ivy College of Business, Iowa State University, Ames, Iowa, USA

Abstract
Purpose – Entrepreneurial passion lies at the foundation of the business development process, yet the
available evidence is ambiguous regarding its effects on firm performance. In this study, we examine the
entrepreneurial passion puzzle by looking into decision-making mechanisms underlying its potential to
increase business performance outcomes. Based on the literature on passion and effectuation theory, we link
harmonious passion to firm performance through effectual behavioral logic.
Design/methodology/approach – To empirically test the theoretical model, we performed bootstrapping-
based mediation, ordinary least squares moderated regression and moderated mediation analysis based on
survey data collected from 105 executives of US firms.
Findings – We found that harmonious passion indirectly increases firm performance through effectuation.
The direct link between harmonious passion and firm performance is insignificant. Moreover, the proposed
mediation model is strengthened when the executives attain high levels of entrepreneurial experience.
Research limitations/implications – This study is not without limitations. First, a cross-sectional data set
was adopted as the empirical setting of our research. Hence, further studies could benefit from applying
longitudinal research designs. Second, a self-reported survey was utilized to measure firm performance.
Although such operationalization is widely accepted in management and entrepreneurship studies, objective
measures can produce additional insights into focal relationships.
Practical implications – This study provides practical implications for educators, consultants and
managers. First, educators should encourage harmonious passion and teach effectual decision-making through
various educational programs. Consultants and business practitioners should take similar orientations when
organizing training for employees and executives. Finally, managers need to comprehend the motivational
types of their employees and promote harmonious passion through appraisal systems and organizational
culture.
Originality/value – This research uncovers a mechanism and a boundary condition on the relationship
between harmonious passion and performance. The results show the critical moderating role of human capital
and the mediating role of effectual decision-making on the passion and performance relationship. The current
study contributes to the passion literature by providing a more nuanced understanding of the dynamics
between entrepreneurial passion and firm performance.
Keywords Harmonious passion, Effectuation, Human capital, Entrepreneurial experience
Paper type Research paper Management Decision
Vol. 60 No. 8, 2022
pp. 2331-2348
© Emerald Publishing Limited
0025-1747
This research received financial support from St. Petersburg University (Project No. 48952678). DOI 10.1108/MD-11-2020-1569
MD Introduction
60,8 Entrepreneurship scholars have identified various factors influencing venture success, such
as personal traits and motives (Cacciotti et al., 2019; Zhao et al., 2010), organizational
behaviors (Hughes et al., 2021) and institutional aspects (Estrin et al., 2013). Among them,
entrepreneurial passion was found to be one of the key components of successful business
venturing due to its significance in shaping goal commitment (Baum and Locke, 2004;
Drnovsek et al., 2016), innovative behavior (Kang et al., 2016), creativity, persistence (Cardon
2332 et al., 2013) and self-efficacy (Biraglia and Kadile, 2017; Murnieks et al., 2014). Passion refers to
“a strong inclination toward an activity that people like, that they find important and in which
they invest time and energy” (Vallerand et al., 2003, p. 757). Passion motivates one’s
engagement in an activity and when people continuously engage in a specific activity with
flexibility and autonomously internalize that activity, they become harmoniously passionate
(Vallerand et al., 2003). In other words, harmoniously passionate people willingly get involved
in an activity as a free choice that does not force out other sides of their life and identity. In this
study, we focus on harmonious passion, as this aspect is sustainable by nature (Vallerand,
2012) and hence can be expected to have a profound and long-lasting potential impact on
different outcomes.
Various studies linked passion to individual and organizational outcomes (e.g. De Mol
et al., 2018; Murnieks et al., 2014; Stroe et al., 2018). However, research has yielded
contradictory results regarding the link between harmonious passion and firm performance.
Namely, a positive relationship between harmonious passion and business income (Ho and
Pollack, 2014) and project performance (Patel et al., 2015) was revealed. However, research
also showed that harmonious passion does not influence sales and profit growth (Sir
en et al.,
2016). Such a contradiction in the literature may be due to specific boundary conditions that
underlie the translation of entrepreneurial passion into performance outcomes. In the current
study, we examine a potential boundary condition that could explain the mixed findings
regarding the role of harmonious passion in shaping firm performance. Moreover, a recent
review paper highlights the gap in understanding distinct mechanisms that govern the
process of how different types of entrepreneurial passion attain firm performance (Lee and
Herrmann, 2021). To fill the gap in the literature, we study the relationship between
harmonious passion and performance through effectual behavioral logic by shedding light on
the potential conduit of their dynamics.
We draw on effectuation theory to explain the relationship between harmonious passion,
effectual behavioral logic and firm performance. Effectuation theory brings critical insights
into the entrepreneurship phenomenon (Arend et al., 2015). As part of entrepreneurial
behavioral logic, effectuation is a dynamic and iterative process of applying specific means to
achieve diverse goals (Sarasvathy, 2001). In other words, effectuation is the creative and
flexible implementation of particular behavioral principles and attainment of unexpected
outcomes, specifically under high uncertainty. By observing how executives make their
decisions, we can identify particular behavioral patterns. Effectuation is influenced by
individual traits and characteristics of entrepreneurs (Sarasvathy, 2001). As a central feature
of one’s identity, passion directly impacts related decision-making processes, shaping
relevant heuristics patterns that lead to behavioral strategies and influence overall firm-level
outcomes (Baron, 2008; Brundin and Gustafsson, 2013; De Mol et al., 2020). Therefore, it can be
inferred that entrepreneurial passion can be linked to business performance through the
dynamics of effectual decision-making (Stroe et al., 2018).
Effectuation provides important implications for understanding the link between passion
and performance; however, it is not sufficient to explain the contradictory findings in the
passion-performance literature. As experience has been continuously emphasized in both
passion and effectuation literature (Arend et al., 2015; Lewis and Cardon, 2020; Sarasvathy,
2001), we apply human capital (i.e. entrepreneurial experience) as a boundary condition to
understand the dynamics between passion and effectuation. Based on Becker (1964), we Passion and
define entrepreneurial experience as aggregated knowledge related to general management performance
or specific entrepreneurial process gained from past firm founding experience. Experienced
executives develop higher human capital and thus have better chances of acquiring expertise
and competencies related to the entrepreneurship process. Based on human capital theory
(Becker, 1964; Mincer, 1958), we argue that the entrepreneurial experience of executives
strengthens the passion-behavioral logic relationship through providing well-established
frameworks on decision-making (Westhead et al., 2005), promoting learning-by-doing and 2333
applying accumulated know-how on specific issues and experience on diverse situations.
In this paper, we attempt to answer the following research question: what mechanism and
boundary condition shapes the relationship between harmonious passion and firm
performance? To answer this question, we root our theorizing into entrepreneurial passion,
effectuation theory and human capital literature and test the proposed hypotheses based on
the survey data collected from 105 executives of US firms. Specifically, we find that
harmoniously passionate executives achieve high firm performance through effectuation,
especially when they have a great deal of entrepreneurial experience.
Our contribution stems from the primary motivations of this paper. We push forward the
development of entrepreneurial passion research by suggesting a specific mediator that links
harmonious passion and firm performance. We found that harmoniously passionate
executives adopt effectual behavioral logic to increase firm performance. We also found that
entrepreneurial experience is a critical boundary condition of the entrepreneurial passion-
behavioral logic-performance relationship. Empirical findings showed that harmonious
passion does not lead to increased firm performance. However, for executives with more
profound previous entrepreneurial experience, the harmonious passion-performance
relationship is positive and significant. Based on the human capital theory (Becker, 1964;
Mincer, 1958), we explain the positive magnifying impact of previous entrepreneurial
experience on the relationship between passion, behavioral logic and performance.
The practical value of this study originates from establishing and justifying the link
between individual-level attributes and firm-level outcomes. Such an approach allows
underlining aspects of corporate culture to be developed and training priorities for executives
to be identified. Moreover, the focus on human capital has relevant practical implications, as it
is one of the organizational resources that significantly contributes to creating sustained
competitive advantage (Barney, 1991; Coff, 1997). Highlighting its role in the dynamics
between passion, effectuation and firm performance enables more managerial attention to
human capital development.

Literature review and hypotheses development

Harmonious passion
Social psychologists introduced harmonious passion and defined it as a flexible engagement
in a specific activity with an autonomous decision (Vallerand et al., 2003). Harmoniously
passionate people engage in such an activity based on their own choices and stabilize the level
of participation well with other activities (Vallerand et al., 2007). Flexibility to engage in a
particular activity driven by harmonious passion leads to a positive experience (Hodgins and
Knee, 2002) and facilitates better concentration on a task (Vallerand et al., 2007). Due to these
characteristics, passion is perceived as a source of energy that helps people concentrate better
on a particular activity and attain high-performance results. One of the major aspects of
harmonious passion is the resilience toward a particular activity where individuals
vigorously practice to do well. For instance, scholars found that harmoniously passionate
musicians (Bonneville-Roussy et al., 2011) and sports players (Mageau et al., 2009) persist in
their domain of focus to become proficient at their moves and perform better.
MD Scholars applied the concept of harmonious passion in entrepreneurship research and
60,8 found that entrepreneurs’ harmonious passion for entrepreneurial activities is positively
associated with self-efficacy (Murnieks et al., 2014) and negatively related to burnout (De Mol
et al., 2018). Moreover, various agents’ harmonious passion for entrepreneurial activities has
been examined; Schenkel et al. (2019) examined how employee-level passion for
entrepreneurial activities influences innovation and Obschonka et al. (2019) studied the
relationship between researchers’ harmonious passion for entrepreneurial activities and
2334 entrepreneurial behavior.
Scholars also examined the impact of harmonious passion on various types of
performance, but the findings are mixed. Specifically, studies show a positive
relationship between harmonious passion and project performance (Patel et al., 2015)
and business income (Ho and Pollack, 2014), but harmonious passion is not linked to
sales and profit growth (Sir
en et al., 2016). These contradictory findings emphasize
investigating this relationship’s mechanisms and boundary conditions. Prior studies
examined various mediators in the relationship between passion and performance, such
as individual goals, cognitive engagement, deliberate practice and network centrality
(e.g. Baum and Locke, 2004; Ho and Pollack, 2014; Vallerand et al., 2007). In this regard,
we apply a mediator (i.e. effectuation) and a moderator (i.e. entrepreneurial experience) to
further explore the factors affecting the relationship between harmonious passion and
firm performance.

Effectuation
Effectuation is an entrepreneurial process in which “current means are transformed into
co-created goals with others who commit to building a possible future” (Wiltbank et al.,
2006, p. 983). Effectuation combines cognition and interactive behavior as connected
elements of business venturing (Fischer and Reuber, 2011). Unlike the traditional goal-
driven and prediction-oriented approaches (i.e. causation), effectuation rests on existing
theories that prescribe a partial deviation from rational choice (Dew and Sarasvathy,
2002). Effectuation focuses on a controllable aspect of future offering techniques to
leverage contingencies by implementing a flexible approach to decision-making and
collaborating with different stakeholders (Johansson and McKelvie, 2012;
Sarasvathy, 2008).
The effectuation literature has advanced with various empirical and theoretical studies
(Matalam€aki, 2017). Scholars studied the relationship between effectual behavioral logic and
expertise (Dew et al., 2009), opportunity recognition (Johansson and McKelvie, 2012) and
performance (Read et al., 2009). Research has also examined the outcomes of effectuation,
such as innovation and product development, internationalization and improvisation
(Matalam€aki, 2017). Effectuation has been employed to conceptualize the creation of new
markets (Dew et al., 2011). Moreover, scholars empirically tested various links between
effectuation and individual-level factors, such as social identity (Alsos et al., 2016),
entrepreneurial meta-cognition (Zivdar and Imanipour, 2017), resilience (D’Andria et al.,
2018), self-efficacy (Stroe et al., 2018) and personality (Hensel and Visser, 2019). Effectual
behavioral logic has also been adopted as a mediator in relationships between national
culture and performance (Laskovaia et al., 2017), resources and new venture performance
(Pacho and Mushi, 2021) and entrepreneurial cognition and growth of entrepreneurial firms
(Masroor and Alam, 2019). In this regard, effectuation may be considered a behavioral
mechanism that translates personal inclinations and cognitive characteristics toward specific
outcomes for firms. The relationship between harmonious passion and effectuation fully
embraces the multi-faceted nature of executives’ entrepreneurial behavioral and cognitive
processes (Emami et al., 2021).
Harmonious passion, effectuation and firm performance Passion and
Emotions have been identified as significant drivers of certain decision-making, behaviors, performance
preferences and information processing systems (Cardon et al., 2012; Foo et al., 2014; Zollo,
2021). Specifically, scholars found that passion is a significant predictor of human behaviors
(e.g. Vallerand et al., 2007) and entrepreneurial behaviors (Murnieks et al., 2014; Zollo et al.,
2021). Considering effectuation as a mode of entrepreneurial behavior (Jiang and Ruling,
2019), we argue that passion may drive effectuation through its influence on effectual facets.
Passion inspires individuals to persist in a particular activity despite possible difficulties 2335
that may be overcome by adopting an experimental approach (Murnieks et al., 2014).
Moreover, harmoniously passionate individuals pursue their goals flexibly and
autonomously by embracing contingencies on the way. Harmonious passion motivates
executives to continuously propel in a certain area and such motivational force is likely to
predetermine the executives’ behavioral mode to attempt desired outcomes (Stroe et al., 2018).
Specifically, harmonious passion drives executives to engage in venture development by
focusing on the process rather than the outcome (Stroe et al., 2018). Executives derive pleasure
from their activity if they are harmoniously passionate (Vallerand et al., 2007). Thus, they are
open to new experiences, flexible in goal pursuing and feel very comfortable with unexpected
outcomes as they have a feeling of control over organizational operations (Hodgins and Knee,
2002; Vallerand et al., 2003). Hence, harmoniously passionate executives accept diverse
feedback, utilize resources efficiently and make flexible changes in the goal-setting process
(Sir
en et al., 2016). They also make heuristic decisions throughout the process and build
partnerships for venture development (Stroe et al., 2018). Altogether, experimentation,
flexibility and partnerships are essential parts of effectual reasoning and behavior.
Therefore, we suggest a positive influence of harmonious passion on effectuation as such
passion fosters the development of effectual behavioral patterns.
There is much evidence in the literature on the influence of effectuation on firm
performance. Empirical works on effectuation identified several principles of effectual
behavioral logic (Alsos et al., 2016; Chandler et al., 2011) that might increase firm performance.
First, the experimentation facet of effectual logic allows executives to identify business
models that work faster and are low-costly (Chandler et al., 2011). By following the trial-and-
error approach, executives test many different business concepts in the marketplace to find a
feasible one (Sarasvathy, 2001). In established organizations, executives may identify the
available resources such as knowledge, skills and networks they have at hand and try to
experiment with different combinations to contribute to organizational development. Second,
the affordable loss principle of effectual logic relates to the “upper bound on what they are
willing and able to lose” (Werhahn et al., 2015, p. 307). In established firms, this principle may
help to pursue only those initiatives that are “manageable” in terms of loss-gain ratio and not
focus on non-achievable expected returns. When it is hard to calculate potential returns,
executives make decisions based on assessing what they can afford to lose so that they could
risk nothing more. Such decisions help to gain more stable outcomes in the long term.
The third principle relates to the flexibility aspect of effectual logic, where “the need for
prediction is greatly reduced” (Sarasvathy, 2001, p. 252). Effectuators embrace contingencies
and foster change in their organizations. This characteristic helps firms be proactive and
align with new, unexpected situations. Firms that adapt well to environmental changes can
find new opportunities for further business development. Lastly, effectuation promotes
partnerships and pre-commitments as a key principle of business development. Sarasvathy
(2001) presented this focus on developing alliances and getting pre-commitments to control
the unpredictable future, as it “helps to reduce the uncertainty associated with the venture
and spreads responsibility to other stakeholders” (Chandler et al., 2011, p. 381). In essence, the
pre-commitments principle is similar to risk diversification, but in the effectuation case,
decision-makers diversify the potential losses through cooperation with customers, suppliers,
MD strategic partners and other stakeholders. Hence, all the mentioned principles of effectuation
60,8 can serve as separate heuristics in the behavioral logic of decision-makers and the literature
often considers them not only as components of effectual behavior but as standalone
principles.
Scholars examined these principles to account for the contingent role of effectual
logic in enhancing firm performance in various contexts. Scholars found that
effectuation positively impacts performance in different countries (Laskovaia et al.,
2336 2017; Smolka et al., 2018) and increases innovation in large corporations (Futterer et al.,
2018; Szambelan and Jiang, 2020). Entrepreneurs use effectual logic to enhance the
probability of new venture success (Villani et al., 2018) and to develop new innovative
products (Ortega et al., 2017). Established companies that apply effectuation can
stimulate and revitalize their growth (Matalam€aki et al., 2017). Therefore, we can infer
that effectuation helps achieve better performance outcomes for newly created ventures
and established companies.
Putting together the arguments on the relationships between harmonious passion,
effectual behavior and firm performance, we claim that passion, as an unobservable personal
characteristic, translates into better performance outcomes through the effectual behavioral
logic of executives. Formally, we hypothesize:
H1. Effectuation mediates the relationship between harmonious passion and firm
performance.

The moderated mediation effect of entrepreneurial experience

The notion of available means and resources is central to the effectuation theory (Sarasvathy,
2001; Shirokova et al., 2017; Tryba and Fletcher, 2020). Human capital has been regarded as
one of the most critical resources for economic actors (Corbett, 2007; Hitt et al., 2001). Human
capital covers knowledge, skills and competencies that individuals have acquired from
relevant experience (Serneels, 2008). In other words, executives accumulate specific
management knowledge and venture task-related competencies through their prior
founding experience. Human capital has profound implications for individual cognitive
processes and provides frameworks for decision-making (Westhead et al., 2005). Therefore,
we argue that having a decision-making plan based on previous experience may invigorate
harmonious passion toward effectual entrepreneurial behavior.
Executives with high human capital stemming from prior founding activities enact
learning-by-doing and implement diverse know-how gained from exposure to a similar
experience. Accumulated venturing expertise facilitates learning from current business,
which, coupled with harmonious passion, may strengthen reliance on flexible and process-
oriented effectual behavioral logic (Stroe et al., 2018). Moreover, the flexibility associated with
harmonious passion encourages executives to embrace unexpected contingencies. At the
same time, prior entrepreneurial experience helps better navigate uncertainty (Dimov, 2010),
thus facilitating the link between harmonious passion and non-predictive effectual
behavioral logic.
Further, one of the sources of entrepreneurial experience is experiments in the
marketplace (Andersson et al., 2010). Harmonious passion may also foster proclivity to
experimentation (Cardon et al., 2013). As experimentation is one of the essential effectuation
facets (Chandler et al., 2011; Read and Sarasvathy, 2005), passion for entrepreneurial
activities supported by prior founding experience constitutes a solid basis for effectual
behavior to unleash. Finally, stronger harmonious passion is associated with the focus on the
business activity itself, treated as a process, rather than on predetermined goals and
outcomes (Stroe et al., 2018; Vallerand et al., 2007). As a component of effectuation, such
process orientation may become even more prominent with greater entrepreneurial
experience, as with growing expertise, more attention to the right details is being paid. Passion and
Therefore, we suggest that: performance
H2. Entrepreneurial experience positively moderates the relationship between
harmonious passion and effectuation, such that the relationship is stronger when
executives have a higher number of entrepreneurial experience than a lower level.
Integrating the previous mediation and moderation hypotheses, we expect a moderated
mediation model (Figure 1; Preacher et al., 2007). Specifically, we expect that entrepreneurial 2337
experience will act as a moderator of the proposed mediation relationship, such that the
magnitude of the mediating effect of entrepreneurial behavioral logic on the passion-
performance link would be contingent on the levels of executives’ prior experience in
entrepreneurship. In this respect, we hypothesize that:
H3. Entrepreneurial experience positively moderates the mediating effect of effectuation
on the relationship between harmonious passion and firm performance, such that the
indirect effect of harmonious passion on firm performance through effectuation is
stronger when executives have a higher number of entrepreneurial experience than a
lower level.

Methods
Sample and data collection
To test the proposed theoretical model, we utilized survey data from 105 executives of US firms.
A private marketing company conducted an online survey targeting senior-level executives (i.e.
CEOs and vice-presidents). Specifically, the marketing company sent the online survey to 429
executives and collected data from 120 executives, attaining a response rate of 28%. We chose
executives as the respondents because they are knowledgeable about organizational
performance and make decisions on macro-level strategies (Hambrick and Mason, 1984).
Consistent with our theoretical arguments, we designed the survey to examine executives’
individual-level passion, entrepreneurial behaviors and previous entrepreneurial experience on
firm-level performance outcomes. We did not restrict the firm’s size, age, or industry; our sample
covers diverse forms of firms (e.g. small- and medium-sized enterprises and large firms) affiliated
in various industries based on standard industrial classification (SIC). After excluding missing
responses, the final sample size was 105 executives (24.5% response rate).

Measures
Harmonious passion was operationalized through six items adapted from Vallerand et al.
(2003). Considering passion as a domain-specific concept, we framed the survey questions to
ask about executives’ passion for entrepreneurial activities. For instance, we asked to indicate
the level of agreement on this item; “my entrepreneurial activities are in harmony with other

Figure 1.
Theoretical model
MD things that are part of me”. The Cronbach’s alpha for this measure is 0.94. To measure
60,8 effectuation, we adopted a 13-item scale from Chandler et al. (2011) [1]. For instance, we
included items such as “we adapted what we were doing to the resources we had” and “we
were flexible and took advantage of opportunities as they arose”. The Cronbach’s alpha for
this measure is 0.87. Entrepreneurial experience was captured by the number of times
executives have been involved in starting a firm as a founder or as a founding team member.
Firm performance was measured following the subjective assessment developed by
2338 Gupta and Govindarajan (1984), which has been constantly adopted in the entrepreneurship
literature (e.g. Covin and Slevin, 1989; Lee et al., 2019a). We used a total of 18 items covering
nine types of firm performance (i.e. total sales, sales growth, profit to sales ratio, operating
profits, gross profit, return on equity (ROE), return on investment (ROI), cash flow and ability
to fund growth from profits). First, we measured the importance and satisfaction of the
presented performance indicators. Second, we multiplied the importance and satisfaction
scores to measure each criterion. Lastly, we computed the average of those criteria to
calculate overall firm performance. The Cronbach’s alpha for this measure is 0.95.
In addition, we utilized seven control variables that might add variances in our
dependent variable. Environmental dynamism and two industry types are controlled for
environment-level influences. We used five items established by Miller and Friesen (1982)
to capture environmental dynamism and the Cronbach’s alpha for this measure is 0.77. We
divided each firm’s industry into two types based on SIC: service industry or
manufacturing industry. Firm age (i.e. establishment year), firm size (i.e. number of
employees) and entrepreneurial orientation are controlled for firm-level influences. In the
entrepreneurship literature, scholars have continuously emphasized entrepreneurial
orientation as one of the major firm-level factors that influence both effectuation (Mthanti
and Urban, 2014) and performance (Rauch et al., 2009; Wales et al., 2021). We used a nine-
item developed by Covin and Slevin (1989) to measure a firm’s entrepreneurial orientation
and the Cronbach’s alpha for this measure is 0.87. Lastly, entrepreneurial self-efficacy is
controlled for individual-level influences. Self-efficacy stands for an individual’s belief in
their capacity to perform certain behavior and attain desired results (Bandura, 1977). We
utilized four items from Zhao et al. (2005) and the Cronbach’s alpha for this measure is 0.91.
All survey items were provided in a seven-point Likert scale, except for industry, firm age,
firm size and entrepreneurial experience.
We conducted confirmatory factor analysis (CFA) to assess whether our measures load
onto specified latent variables. As a result, the factor loadings of each item were significant
(p < 0.001). Moreover, CFA results showed that our current model demonstrates a
satisfactory fit (χ 2[209] 5 370.46; CFI 5 0.93; RMSEA 5 0.08; SRMR 5 0.08) compared to
one-factor model (χ 2[324] 5 1621.48; CFI 5 0.42; RMSEA 5 0.20; SRMR 5 0.18). The chi-
square testing showed significant differences (Δχ 2[115] 5 1,251, p < 0.001), implying that the
current model has a better fit than a one-factor model. To test for common method variance
(CMV), we implemented the Harman’s one-factor test. The result indicated that 32.4% of the
total variance was explained, relieving the CMV concerns (Podsakoff et al., 2003).

Results
Table 1 displays the summary of statistics and correlations matrix of all the variables. Our
sample’s average firm size is 587.67 employees and the average firm age is 36.74 years.
Correlations between focal variables are positive and significant as we expected; for instance,
harmonious passion and effectuation (r 5 0.33, p < 0.01) and effectuation and firm
performance (r 5 0.42, p < 0.01) are positively and significantly correlated. In addition, the
highest value of variance inflation factors is 1.6, which alleviates concerns for
multicollinearity.
Variables Mean SD 1 2 3 4 5 6 7 8 9 10

1. Environmental Dynamism 5.45 0.76

2. Service Industry 0.66 0.48
0.08
3. Manufacturing Industry 0.08 0.27
0.03
0.40**
4. Firm Age 36.74 32.85
0.11
0.29** 0.10
5. Firm Size 587.67 1208.55
0.05
0.14 0.22* 0.33**
6. Entrepreneurial Orientation 3.94 1.29 0.14
0.08 0.21*
0.09 0.16
7. Entrepreneurial Self-efficacy 5.15 1.47 0.14 0.09 0.12
0.19* 0.11 0.49**
8. Entrepreneurial Experience 0.87 1.79 0.28** 0.07 0.06
0.14
0.00 0.21* 0.23*
9. Effectuation 4.51 0.89 0.06
0.08 0.04
0.03
0.01 0.30** 0.24**
0.05
10. Harmonious Passion 5.28 1.36 0.13
0.07 0.04
0.10
0.09 0.24* 0.33** 0.02 0.33**
11. Firm Performance 28.47 11.02 0.06
0.02 0.17
0.10 0.07 0.40** 0.30** 0.30** 0.42** 0.33**
Note(s): N 5 105; *p < 0.05; **p < 0.01
2339
performance
Passion and

and correlations matrix

Table 1.
Summary statistics
MD We utilized the bootstrapping-based mediation, ordinary least squares (OLS) moderated
60,8 regression and moderated mediation approach (Hayes, 2013). Hypothesis 1 suggested the
mediation influence of effectuation on the harmonious passion-performance relationship. We
found harmonious passion indirectly influences firm performance through effectuation and this
effect is positive and significant (indirect effect 5 0.56, SE 5 0.38, 95% CI 5 0.02 to 1.58). Thus,
Hypothesis 1 is supported. The results of the mediation influence are displayed in Table 2.
Hypothesis 2 suggested the moderating influence of entrepreneurial experience on the
2340 relationship between harmonious passion and effectuation. Table 3 depicts specific results
for the regression. We inserted different variables in each step; control variables (Model 1),
independent and moderating variables (Model 2) and an interaction variable (Model 3). We
found that the interaction term between harmonious passion and entrepreneurial experience
is positively associated with effectuation (Model 3, Table 3; B 5 0.10, p < 0.01). Thus,
Hypothesis 2 is supported. Figure 2 displays the pattern of the moderation relationship.
Moreover, the simple slope testing showed that the relationship between harmonious passion
and effectuation is significant when the value of entrepreneurial experience is high (B 5 0.25,
p < 0.001), but the relationship is not significant when the values are moderate (B 5 0.12,
p 5 ns) or low (B 5 0.05, p 5 ns).
Hypothesis 3 suggested the moderated mediation influence of entrepreneurial experience on
the relationship between harmonious passion and firm performance via effectuation. The
moderated mediation testing results are presented in Table 4. We found that the indirect influence

B SE LLCI ULCI
Table 2.
Indirect Effect 0.56 0.38 0.02 1.58
Mediation results:
Indirect effect of Direct Effect (Unmediated) 1.43 0.77
0.11 2.96
harmonious passion on Total Effect 1.99 0.78 0.44 3.54
firm performance (via Note(s): N 5 105; Unstandardized coefficients reported; Bootstrap sample size 5 10,000. SE 5 standard error;
effectuation) LLCI 5 lower limit confidence interval; ULCI 5 upper limit confidence interval

Effectuation
Model 1 Model 2 Model 3

Control Variables
Environmental Dynamism
0.00 (0.12) 0.02 (0.12) 0.00 (0.11)
Service Industry
0.20 (0.21)
0.12 (0.20)
0.17 (0.19)
Manufacturing Industry
0.21 (0.36)
0.15 (0.35)
0.24 (0.34)
Firm Age 0.00 (0.00) 0.00 (0.00) 0.00 (0.00)
Firm Size
0.00 (0.00)
0.00 (0.00)
0.00 (0.00)
Entrepreneurial Orientation 0.17 (0.08)* 0.16 (0.08)* 0.18 (0.07)*
Entrepreneurial Self-efficacy 0.09 (0.07) 0.06 (0.07) 0.05 (0.07)
Independent Variable
Harmonious Passion 0.15 (0.07)* 0.05 (0.07)
Moderating Variables
Entrepreneurial Experience
0.06 (0.05)
0.00 (0.05)
Harmonious 0.10 (0.03)**
Passion 3 Entrepreneurial Experience
Constant 3.57 (0.73)*** 2.85 (0.76)*** 3.39 (0.75)***
R2 0.11 0.18 0.26
F 1.76 2.27* 3.22**
Table 3. Note(s) N 5 105; *p < 0.05; **p < 0.01; ***p < 0.001. Unstandardized coefficients reported; Standard errors in
Regression results parentheses
 8 Passion and
7
performance
Low
Entrepreneurial
Effectuation

6 Experience

4
High 2341
Entrepreneurial
Experience
3 Figure 2.
Moderation effect of
2 entrepreneurial
experience on the
relationship between
1 harmonious passion
Low Harmonious High Harmonious and effectuation
Passion Passion

Table 4.
Moderated mediation
results: Conditional
Values of entrepreneurial experience Indirect effect SE LLCI ULCI indirect effect of
harmonious passion on

1 SD (0) 0.18 0.37
0.44 1.01
firm performance (via
M (0.87) 0.41 0.39
0.09 1.55 effectuation) at
þ1 SD (2.66) 0.87 0.69 0.10 3.76 different values of
Note(s): N 5 105; Unstandardized coefficients reported; Bootstrap sample size 5 10,000. SE 5 standard error; entrepreneurial
LLCI 5 lower limit confidence interval; ULCI 5 upper limit confidence interval experience

of harmonious passion on firm performance through effectuation is significant when the values of
entrepreneurial experience are high (conditional indirect effect 5 0.87, SE 5 0.69, 95% CI 5 0.10 to
3.76), but is not significant when the values are moderate (conditional indirect effect 5 0.41,
SE 5 0.39, 95% CI 5
0.09 to 1.55) or low (conditional indirect effect 5 0.18, SE 5 0.37, 95%
CI 5
0.44 to 1.01). Most importantly, the index for the moderated mediation effect is significant
(index 5 0.26, SE 5 0.24, 95% CI 5 0.01 to 1.30). Thus, Hypothesis 3 is supported.

Discussion
In the past decade, scholars started to pay attention to passion (Cardon et al., 2009) which was
described as “the most observed phenomenon in the entrepreneurial process” (Smilor, 1997,
p. 342). In line with Vallerand et al. (2007), this individual characteristic (i.e. harmonious
passion) can drive a particular type of behavior (i.e. effectuation) that subsequently boosts
firm performance. Our study was primarily motivated by the necessity to expand our
understanding of the hidden mechanism and boundary condition behind the translation of
passion into performance outcomes (Lee and Herrmann, 2021).
Based on the emerging stream of research that linked passion to various performance
indicators through individual-level mediators (Ho and Pollack, 2014; Mueller et al., 2017; Patel
et al., 2015), we looked into individual behavioral logic as a translator of ardor into results.
Particularly, we hypothesized effectuation as a behavioral action that serves as an
explanatory mechanism for the particular process of how the passion of an executive could
influence organizational outcomes. The empirical results showed the significant mediation
effect of effectuation on the harmonious passion-performance link. Harmonious passion
significantly relates to effectuation, showing that executives with an inclination toward
MD harmonious passion display effectual behavior. This result confirms previous findings on the
60,8 significant role that harmonious passion plays in forming particular types of entrepreneurial
behavior (e.g. Murnieks et al., 2014). For instance, Stroe et al. (2018) identified that the
combination of harmonious passion with perceived environmental risk promotes the usage of
effectual logic by entrepreneurs. Our study showed that passion as a sole feature of an
executive leads to displaying patterns of effectuation.
Moreover, we applied entrepreneurial experience as a boundary condition of the passion-
2342 effectuation-performance relationship and found its significant moderated mediation effect. We
considered the experience of being a founder as an important resource for passionate executives
who apply behavioral principles of effectuation during their managerial decision-making. Most
importantly, the harmonious passion-effectuation-performance relationship was significant only
when executives had high levels of entrepreneurial experience, not when they had moderate or low
levels of experience. Thus, it implies the critical role of multiple founding experiences for
harmoniously passionate executives to promote firm performance through effectuation.
We contribute to the entrepreneurial passion literature in several ways. First, we extend
our knowledge of internal mechanisms that explain the relationship between passion and
firm performance by introducing effectuation as a mediator. Particularly, effectuation acts as
a significant translator of harmonious passion towards specific behaviors and outcomes of a
firm. This finding supports our argument on the existence of a link between an individual’s
motivation and identity and their behavior that may positively affect firm performance.
Therefore, we uncovered the hidden mechanism of how executives’ entrepreneurial passion
results in performance differences. Additionally, we found the important role of individual-
level characteristics as antecedents of effectual behavior that moves further passion literature
and effectuation research.
Second, as the literature demonstrates both the positive (Ho and Pollack, 2014; Patel et al., 2015)
and non-significant relationships (Sir
en et al., 2016) between harmonious passion and performance
indicators, we attempted to resolve the contradiction by looking at the moderating role of
entrepreneurial experience. We argued that a mechanism of passion-performance translation
through effectuation could work differently depending on the number of founding experiences. We
found that harmonious passion does not directly increase firm performance, meaning the
significant role of the boundary condition. Interestingly, passionate executives with moderate or
low founding experiences could not increase performance using effectual decision-making. This
finding implies that high levels of human capital in the form of experience matter for harmoniously
passionate executives to develop performance. Executives with numerous firm establishment
experiences can utilize frameworks on venture decisions (Westhead et al., 2005), advance learning-
by-doing and apply collected management knowledge and skills to business. This result helps
explain prior ambiguous findings, providing possible boundary conditions that influence the
passion-performance relationship.
The results of this study provide implications for educators, consultants and business
practitioners. First, educators should foster entrepreneurial passion and teach decision-
making styles through educational programs in business schools (Lee et al., 2021). Moreover,
educators should encourage students to participate in various entrepreneurship activities
(e.g. pitch competitions, conferences and networking events) to learn about venture
establishment processes. Second, managers should identify the motivational types of their
employees and try to encourage harmonious passion through appraisal systems and
organizational culture. Also, consultants and business practitioners may organize training
for employees and executives to develop facets of effectual behavior, such as experiential
approaches and partnerships.
The results of this study should be considered in the context of its limitations. First, the
empirical setting of our research is built upon a cross-sectional data set, which limits our ability to
consider the temporal dynamics of the relationship between entrepreneurial passion, behavioral
logic and firm performance. Hence, further studies should examine the long-term impact of Passion and
entrepreneurial passion on performance outcomes through reliance on effectual behavioral logic, performance
applying longitudinal research designs. Moreover, it would be interesting to see other behavioral
approaches as mediators in the link between passion and performance, such as causation,
bricolage and entrepreneurial orientation. Second, we relied on a self-reported measure of firm
performance. Even though such a measurement approach is widely used in management and
entrepreneurship studies (e.g. Beliaeva et al., 2020; Lee et al., 2019b), we encourage future research
to employ objective performance measures to explore similar relationships. 2343
Future studies are encouraged to look into the influence of alternative types of passion
peculiar to entrepreneurs (e.g. obsessive passion (Vallerand et al., 2003) or passion for inventing,
founding and developing (Cardon et al., 2009)) on performance. Capturing the multi-faceted
nature of the entrepreneurial passion can further enrich our understanding of its capacity to
shape the heuristics and cognition patterns of entrepreneurs and its potential performance
implications. Moreover, further studies can extend the field by taking a qualitative approach to
comprehensively examine the interplay between passion and effectuation at different stages of
the dynamic entrepreneurial process. Future research may also dimensionalize effectuation and
evaluate the relationship between passion and experimentation, affordable loss, flexibility and
pre-commitments taken as separate sub-dimensions and evaluate performance implications of
their combination with passion. Finally, scholars are encouraged to take a broader perspective
on human capital, considering entrepreneurial experience and other relevant respects in which
executives are different, such as educational background and industry experience (Baron, 2009).

Conclusion
How do passionate executives influence performance? We tried to answer this question by
examining the unobservable translation of passion into observable behavior that results in
performance differences. This study revealed that executives’ harmonious passion is a
significant predictor of their effectual behavior, further enhancing firm performance. We also
highlight that entrepreneurial experience is an important contingency in this process.
Therefore, our results help explain the tacit connections between individual-level
motivational and behavioral phenomena, personal attributes and firm-level outcomes.

Note
1. We excluded two items (i.e. “we experimented with different products and/or business models” and “the
product/service that we now provide is essentially the same as originally conceptualized”) due to cross-
loadings.

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Further reading
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innovations in SMEs: the moderating effect of shared vision”, Journal of Small Business
Management, Vol. 56 No. 3, pp. 435-452.

Corresponding author
Younggeun Lee can be contacted at: ylee16@calstatela.edu

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