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This paper focuses on the strategic decisions nascent entrepreneurs make under conditions of uncertainty. The key agreement in the literature is that when uncertainty is high, non-predictive strategies result in superior outcomes. We introduce an adaptive type of predictive strategy – labelled a scientific approach to decision making - and show that this approach can fare well under conditions on uncertainty if the cost of articulating a prediction is low. When entrepreneurs use a scientific approach, they develop theories and hypotheses about the implications of their actions, and test these theories. In using this predictive yet adaptive approach, they can make better decisions even in conditions of high uncertainty. We articulate a series of testable propositions on the implications of this approach.
Learning from External Advice: How do Entrepreneurial Firms Pursue a Broad or Focused Strategy?
Boston University Susan Cohen,
University of Georgia
Some scholars view entrepreneurial firms as adaptable, while others find entrepreneurial firms hew closely to their planned strategies, even in the face of advice that identifies alternative courses of action. Recent studies on entrepreneurial training suggest that firms can be prompted to consider a broader range of strategies, yet little research examines the process by which entrepreneurs make sense of and act on external advice. In a ten-month field study, we traced twelve entrepreneurial firms in a training program. Leveraging the program’s cyclical design, we examined firms’ external advice interactions, the assumptions tested through experimentation and changes in strategies. We offer a grounded process model to explain how mutually produced advice prompts more varied experimentation, which can open entrepreneurs’ aperture to broaden firms’ strategic scope.
Steal, Tinker and Tailor: How Coordination Emerges in Start-ups
Norwegian School of Economics Peter Schou,
Norwegian School of Economics
Successful start-ups are often launched and developed by teams. However, little is known about the processes that these teams undertake to achieve coordination. Relying on a longitudinal multiple-case study of 5 start-ups, where we combine interviews and observations, we present an emergent theoretical framework of how start-ups achieve effective coordination by mixing vicarious (stealing) and experimental learning (tinkering and tailoring). In doing so, our study aims to contribute to (1) the literature start-up teams, which until now has suffered from a lack of knowledge about how coordination emerges in start-ups ; (2) the organizational learning literature on how start-ups learn from peers; (3) the emergent coordination literature, where we uncover learning processes that enable coordination
Learning Dynamics in Schumpeterian Environments: New Entrants' Role in Spurring Innovations in New Technological Domains
Francisco Polidoro Junior,
University of Texas at Austin Charlotte Jacobs,
Existing literature portrays new entrants as important sources of innovations that build on new technologies and spur subsequent innovations. But, without accounting for the fact that established firms, despite their tendency to build on existing technologies, sometimes do diversify into new technologies, this broad characterization of new entrants as sources of learning remains a conjecture. This study directly probes that conjecture and shows that the innovation that a new entrant creates in a new technological domain will spur more subsequent innovations than a similar innovation created by a diversifying entrant in that same domain. This study advances current understanding of Schumpeterian environments by highlighting the differential role that new entrants and established firms play in driving learning in new technological domains