Abstract
The purpose of this paper is to analyze the psychological factors that affect small business managers' ability to predict their future performance. A theory of motivation and emotion is proposed in which causal attribution plays a central role. It is assumed that the perceived causes of success and failure affect motivated behavior. Results from this study are exploratory, but indicate that the successful and failing small business managers differed in their ability to predict performance. This was mainly due to changes in the situation and not to personality, since these differences decreased when the general economy improved. Independent of small business managers' level of success, they were unable to predict negative outcomes. Results also show that failing small business managers attributed their situation to external causes (i.e., not depending on their behavior). It is argued that this incapacity to accurately assess future performance is not an information processing flaw but in part a valuable human resource.