An emerging stream of research concerns the powerful role emotion plays in enhancing the success potential of would-be entrepreneurs. Yet entrepreneurs do not act alone; successful recruitment and management of employees are critical factors influencing the success of emerging ventures. A growing body of literature on alternative models of human resource management in such firms has emerged.

Interestingly, we have only anecdotal evidence concerning the role that emotions of non-founders, or recruited employees of entrepreneurial firms, play in influencing firm survival and success. It is a theoretical puzzle whether strong emotions of entrepreneurs themselves, perhaps combined with effective HRM, are enough to lead to firm success, or whether in small firms the emotions of the employees are also important. Work by Dean Shephard (2003) suggests that employees feel the grief of failed ventures along with founders, so it seems likely that employees may also feel more positive emotions similar to those of the founder.

Drawing from the psychological literature on emotions and emotional contagion, as well as literature on transformational leadership, we build a model of emotional transference within the entrepreneurial context, and discuss the potential implications of such transference on employee persistence, commitment, and creativity, and ultimately on venture survival and success.