Studies focused on the role of counterfactual thinking (CFT) in entrepreneurship have produced equivocal results (Baron, 1999; Markman, 2002), and the equivocal nature of the findings in entrepreneurship mirrors those in other domains (Roese, 1997). Roese (1997) says that “popular wisdom typically equates thoughts of what might have been to negative emotional consequences,” but he also suggests that it is quite likely that “thoughts of what might have been, may suggest paths of what may yet be.” The role of CFT in defining ‘what yet may be’ has profound - but unclear - implications for understanding entrepreneurship.

We focus on the role that CFT may play in propelling entrepreneurial thought processes and action; scholars suggest that the next step in unraveling the relationship between CFT and subsequent outcomes (actions, feelings, thoughts), is to test conceptual models that allow for the interaction between CFT and person variables (emotions, cognitions, etc). As such, we propose, develop, and test a contingency model of counterfactual thinking focused on the moderating influences that ones affect and self-esteem may have on the relationship between regretful thinking, and levels of entrepreneurial self-efficacy. Put simply, we hypothesize that the implications of CFT will matter differently, depending on the attributes of the person doing the ‘thinking.’