Starting and growing a business creates many challenges. One mechanism for facing these obstacles explored previously is the use of dispositional optimism. This general tendency toward believing positive outcomes will happen has been associated with positive (when realistic), and more often, negative (when unrealistic) business outcomes (Himeleski & Barron, 2009). Underexplored to date is the role of optimism in developing economies where entrepreneurs face unique pressures such as institutional instability. Do entrepreneurs have optimism in these contexts, and if so, how does it facilitate business growth? To address this gap, we move away from the traditional dispositional view and focus instead on situated optimism - a mood or attitude associated with a specific goal or expectation where an individual may have greater resources and information at their disposal to more accurately predict specific outcomes (Armor & Taylor, 1998). We theorize that situated optimism has a direct effect on business growth and mediates the relationship between business ideas and growth. Therefore, we reason that an entrepreneur could be generally pessimistic about the broader context, but have situated optimism about a particular business idea and this optimism is a potential benefit.