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Recognition of potentially valuable business opportunities is often the start of entrepreneurship. The present research focused on entrepreneurial alertness, which has been found to play a role in this process. Previous research has highlighted the effects of alertness; we seek to extend this research regarding alertness by investigating its antecedents. Drawing upon psychological capital literature, we focus on two potential contributors to alertness: self-efficacy and optimism. We also seek to clarify the relationship between alertness and firm outcomes. Data collected from CEOs of public firms in China were first used to validate the alertness scale, and data collected with entrepreneurs of private small and medium-sized enterprises in Taiwan were used to test our theoretical model. Results indicated that both entrepreneurs’ self-efficacy and optimism are positively related to alertness. Findings also clarify the effects of alertness by indicating that it is positively related to firm innovation which, in turn, is positively related to financial performance.

Entrepreneurial alertness: Exploring its psychological antecedents and effects on firm outcomes