Abstract: In the domain of organizational research, firm growth—specifically the expansion of scale—remains a central proposition. The rapid ascent of China's economy has created a unique historical context for private entrepreneurs, reinforcing their expectations and motivations for aggressive expansion. This environment has notably exacerbated the phenomenon of entrepreneurial hubris. However, as evidenced by cases such as Evergrande and Zhongzhi, breaching the boundaries of moderate scale can precipitate severe adverse consequences. Despite the extensive body of literature on firm growth, existing studies predominantly focus on dimensions such as transaction structures, resource endowments, or cognitive constraints. Transaction Cost Theory provides a foundational analytical framework, positing that firms internalize transactions when the marginal cost of internal production is lower than that of external market procurement. Conversely, Penrose emphasizes the determinant role of managerial capability and resource slack in driving firm growth. Subsequently, Behavioral Decision Theory incorporated the assumption of bounded rationality, revealing how cognitive limitations profoundly influence opportunity identification and problem definition. From this perspective, the spatiotemporal allocation of decision-makers' attention is viewed as a critical mechanism shaping growth strategies. However, these theoretical perspectives largely overlook the systemic distortions exerted by entrepreneurial hubris on firm growth. Upper Echelons Theory suggests that executives possess distinct characteristics that shape divergent strategic decision-making logics. Among these traits, hubris is considered one of the most influential and is particularly prevalent among entrepreneurs. Initially utilized to explain excessive acquisition premiums, the concept of hubris has been subsequently linked to corporate risk-taking behaviors. While recent reviews call for a holistic examination of the psychological drivers of entrepreneurial behavior, the specific impact of hubris on firm scale expansion—particularly amidst complex strategic contexts like digital transformation—remains under-explored. To address this gap, this study investigates the interactive mechanisms among entrepreneurial hubris, firm scale expansion, and firm performance, proposing three core research objectives:① To explore why hubristic entrepreneurs tend to overstate their capabilities and resource endowments while underestimating external uncertainties and constraints, thereby inflating their expectations of returns from scale expansion. ② To examine the existence of an inverted U-shaped relationship between scale expansion and performance. While early-stage growth enhances performance through bargaining power, economies of scale, and scope, exceeding a “moderate boundary” leads to managerial loss of control and resource mismatch. Consequently, this study defines “moderate firm scale” and hypothesizes that entrepreneurial hubris influences performance in an inverted U-shaped manner, mediated by scale expansion. ③ To investigate the moderating role of managerial discretion, proxied by firm age and industry munificence. Specifically, organizational inertia in older firms restricts discretion, attenuating the relationship, whereas industry munificence amplifies discretion, strengthening it. Utilizing a sample of Chinese private listed firms from 2010 to 2019, this study empirically validates the theoretical model using panel data analysis with fixed effects (firm, year, industry, and province) and extensive robustness checks. The contributions of this study are fourfold:① revealing the positive correlation between entrepreneurial hubris and scale expansion, enriching the understanding of growth drivers; ② proposing the concept of “moderate scale” to reconcile theoretical conflicts regarding the growth-performance relationship;③ demonstrating the double-edged nature of hubris through its inverted U-shaped impact on performance; ④ clarifying the boundary effects of firm age and industry munificence. Overall, this paper constructs an integrated theoretical framework linking entrepreneurial hubris, scale expansion, and performance, offering practical implications for strategic decision-making regarding firm growth.