Prediction and control under uncertainty: Outcomes in angel investing

The article of record as published may be found at http://dx.doi.org/10.1016/j.jbusvent.2007.11.004Venture investing plays an important role in entrepreneurship not only because financial resources are important to new ventures, but also because early investors help shape the ventures' managerial and strategic destiny. In this study of 121 angel investors who had made 1038 new venture investments, we empirically investigate angel investors' differential use of predictive versus non-predictive control strategies. We show how the use of these strategies affects the outcomes of angel investors. Results show that angels who emphasize prediction make significantly larger venture investments, while those who emphasize nonpredictive control experience a reduction in investment failures without a reduction in their number of successes

Effectual versus predictive logics in entrepreneurial decision-making: Differences between experts and novices

The article of record as published may be found at http://dx.doi.org/10.1016/j.jbusvent.2008.02.002In support of theory, this study demonstrates that entrepreneurial experts frame decisions using an “effectual” logic (identify more potential markets, focus more on building the venture as a whole, pay less attention to predictive information, worry more about making do with resources on hand to invest only what they could afford to lose, and emphasize stitching together networks of partnerships); while novices use a “predictive frame” and tend to “go by the textbook.”We asked 27 expert entrepreneurs and 37MBAstudents to think aloud continuously as they solved typical decision-making problems in creating a new venture. Transcriptions were analyzed using methods from cognitive science. Results showed that expert entrepreneurs framed problems in a dramatically different way than MBA students

Toward a Theory of Marginalized Stakeholder-centric Entrepreneurship

The neglect of marginalized stakeholders is a colossal problem in both stakeholder and entrepreneurship streams of literature. To address this problem, we offer a theory of marginalized stakeholder-centric entrepreneurship. We conceptualize how firms can utilize marginalized stakeholder input actualization through which firms should process a variety of ideas, resources, and interactions with marginalized stakeholders and then filter, internalize and finally realize important elements that improve a variety of related socio-economic, ethical, racial, contextual, political and identity issues. This input actualization process enables firms to innovate with marginalized stakeholders and develop marginalized stakeholder capabilities. To this end, firms fulfil both of their moral and entrepreneurial claims to marginalized stakeholders

Resource bricolage and growth of product and market scope in social enterprises

This research aims to understand how resource bricolage strategy plays a role in the growth of social enterprises in terms of their product and market. Based on interviews with nine social enterprises, our exploratory finding suggests that social enterprises often employ both internal and network resources in the process of making do. We further explore the relationship between the form of resource utilisation and the nature and scope of activities that the social enterprises embark upon, and find that only those relying on both internal and network bricolage are able to expand into new markets utilising newly developed products. We also find that social enterprises relying on only internal resources can reach the same point through incremental improvisation, by first moving towards either product extension or market expansion, before then embarking on the other. This research contributes to the social entrepreneurship literature by enhancing our understanding of the relationship between resource bricolage strategy and growth of social enterprises through product/ market scope in a penurious environment. The findings of this research also have implications for social enterprise managers and policy makers in utilising their resources and responding to environmental opportunities and challenges

Exaptation and niche construction: behavioral insights for an evolutionary theory

The article of record as published may be found at http://dx.doi.org/10.1093/icc/dtv051There is increasing interest in the study of exaptation as a key evolutionary force that generates novelty in economic systems. This article contributes to this growing literature by showing how entrepreneurial behavior may effectually construct new market niches enabled by exapted innovations. Put differently, new technologies-whatever their source-may not spontaneously create new market niches. Instead, exaptation and niche construction-two unconventional forces in evolutionary theorizing-challenge conventional conceptualizations of markets as independent selection mechanisms

When Markets Are Grue

The article of record as published may be located at http://dx.doi.org/10.2139/ssrn.571922Is new market creation a search and selection process within the theoretical space of all possible markets? Or is it the outcome of a process of transformation of extant realities into new possibilities? We draw upon Goodman’s (1983) Grue paradox to explain the dynamics of a new network of stakeholders. The network is initiated through an effectual commitment that sets in motion two concurrent cycles of expanding resources and converging constraints that result in the new market. The dynamic model was induced from two empirical investigations, a cognitive science-based investigation of entrepreneurial expertise, and a real time history of the RFID industry