The present experiment examined the relative impacts of implicit theories and the social construal of ability as either a fixed entity or an incremental skill on self-efficacy, affective reactions, self-set goals, and performance on a complex group-management task. It was also a novel task for participants. Participants who had an implicit theory that group-management ability is an incremental skill that can be acquired with experience developed stronger self-efficacy, maintained more positive affect, and set themselves more challenging goals across multiple trials. They also outperformed participants with a fixed-entity theory of group-management ability. Some of the motivational benefits of an incremental-skill conception were lost when the social construal of managerial ability emphasized a fixed-entity conception. However, the negative motivational effects of a fixed-entity theory of ability were not ameliorated by the social construal of managerial ability as an incremental skill. The effects of conceptions of ability were fully mediated by the self-regulatory responses of participants. The hypothesis that self-efficacy moderates the impact of ability conceptions on self-set goal challenges was not supported. Copyright 1999 Academic Press.