Highlights

• Framework for how entrepreneurs’ poor mental health (PMH) shapes venture outcomes.
  
• Frames microfoundations perspective as useful for theorizing crossover effects of entrepreneur PMH on venture-level outcomes.
  
• Introduces concept of organizational inability to theorize PMH outcomes.
  
• Venture newness/smallness as vulnerabilities that foster organizational inability.
  
• Importance of BOD/TMTs to buffer venture against entrepreneurs with PMH.

The gist

How does entrepreneurs’ poor mental health affect their ventures? Research has shown how mental health challenges affect entrepreneurs personally, but we know little about how such challenges affect their entire ventures. Drawing on the microfoundations perspective, this paper presents theory and a framework for understanding how individual-level mental health challenges may spread throughout an organization to become an organizational inability. Specifically, we propose that entrepreneurs’ poor mental health may lead to dysfunctional leadership that generates organizational trauma, ultimately leading to firm-wide miasma that can hurt a venture’s ability to function. We also theorize the moderating roles that venture newness/smallness and a board of directors or top management team can have on these effects. Our theory contributes to research on mental health and capabilities in founder-run ventures by advancing research on the impact of entrepreneurs’ mental health on venture outcomes, proposing a generalizable framework for understanding the crossover effects of entrepreneurs’ mental health on their ventures, and extending organizational capability research to encompass firm-level inabilities.

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Download author version of paper here.