The effect of formalization in high-growth firms' performance is still unclear. We propose that formal commitment-based human resource practices contribute positively to the financial performance of established high-growth firms but have little effect on emergent ones. Using a sample of 101 Portuguese high-growth firms (2006-2009 period), we tested the effect of formal HR practices during the high-growth period in their financial results two years later (2011). Our results suggest that adopting a formal performance appraisal and a formal R&D function contributed positively for the performance of only established firms, while adopting a formal training activity negatively affected the performance of only emergent firms.

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Combining the transactional ideas of cognitive appraisals and the affective events theory, we explore the subjective nature of entrepreneurial constraints and its consequences for nascent entrepreneurial action. In Study 1, we developed a measure of entrepreneurial constraint appraisal (opportunity and threat). In Study 2, using a cross‐lagged panel design, we found that entrepreneurial passion mediates the positive relationship between opportunity appraisal and taking action. In Study 3, findings provided support for the long‐term effects of this relationship (3 and 9 months after). Our study provides empirical evidence on how constraints evaluated as opportunities ignite entrepreneurial passion and lead to nascent entrepreneurship activity.

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