Uncertainty Types and Transitions in the Entrepreneurial Process

Packard, Mark D.; Clark, Brent B.; Klein, Peter G.

doi:10.2139/ssrn.2952581

Cited by 35 publications

(73 citation statements)

References 89 publications

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“…How can this best be done? Packard et al (2017) note that entrepreneurs face a double-sided uncertainty problem. First, there is uncertainty about ends.…”

Section: The Task Environmentmentioning

confidence: 99%

The Context of Entrepreneurial Judgment: Organizations, Markets, and Institutions

Foss

Klein

Bjørnskov

2019

J Management Studies

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141

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The economics and management literatures pay increasing attention to the technological, competitive, and institutional environment for entrepreneurship. However, less is known about how context influences the judgment of entrepreneurs. Focusing on the emerging judgment‐based approach to entrepreneurship, we argue that economics can say much about how the organizational, market, and institutional context shapes entrepreneurial judgment. We describe entrepreneurs as individuals who deploy scarce, heterogeneous resources to service customer preferences at a profit. Because of uncertainty, this process is essentially experimental, and context influences the experimental process. Thus, entrepreneurs will seek to design the internal organization of the firm so that it facilitates internal experimentation. Moreover, the market or task environment determines the need for experimentation (e.g., how fast do consumer preferences change, how does technology evolve, which assets are available at which terms, etc.). Finally, the institutional environment influences, for example, the transaction costs of acquiring and divesting assets as firms adjust their boundaries through ongoing commercial experimentation.

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“…How can this best be done? Packard et al (2017) note that entrepreneurs face a double-sided uncertainty problem. First, there is uncertainty about ends.…”

Section: The Task Environmentmentioning

confidence: 99%

The Context of Entrepreneurial Judgment: Organizations, Markets, and Institutions

Foss

Klein

Bjørnskov

2019

J Management Studies

Self Cite

141

157

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“…Having considered both ex post information asymmetries and externalities, we next turn to consider other forms of market friction, which, we contend, do not directly give rise to social issues (as we have defined them), but may exacerbate social issues resulting from these other frictions. We begin by considering the market frictions of uncertainty; specifically, we focus on creative and absolute uncertainty (Packard, Clark, & Klein, 2017). The defining characteristic of such uncertainty is that the set of possible courses of action is open-ended (Packard et al, 2017), so that the uncertainty can only be resolved through the deliberate actions of those facing the uncertainty.…”

Section: Uncertainty Innovation and For-profit Firmsmentioning

confidence: 99%

“…We begin by considering the market frictions of uncertainty; specifically, we focus on creative and absolute uncertainty (Packard, Clark, & Klein, 2017). The defining characteristic of such uncertainty is that the set of possible courses of action is open-ended (Packard et al, 2017), so that the uncertainty can only be resolved through the deliberate actions of those facing the uncertainty. In this way, creative or absolute uncertainty is distinct from environmental uncertainty; while environmental uncertainty is largely exogenous to the actor and may be dealt with by maintaining flexibility and keeping one's options open, creative or absolute uncertainty require active learning and innovation by the actor to resolve the uncertainty (Folta, 1998;Packard et al, 2017).…”

Section: Uncertainty Innovation and For-profit Firmsmentioning

confidence: 99%

“…The defining characteristic of such uncertainty is that the set of possible courses of action is open-ended (Packard et al, 2017), so that the uncertainty can only be resolved through the deliberate actions of those facing the uncertainty. In this way, creative or absolute uncertainty is distinct from environmental uncertainty; while environmental uncertainty is largely exogenous to the actor and may be dealt with by maintaining flexibility and keeping one's options open, creative or absolute uncertainty require active learning and innovation by the actor to resolve the uncertainty (Folta, 1998;Packard et al, 2017). This need for entrepreneurial action based on subjective judgments in the face of uncertainties that cannot be resolved either analytically or statistically (Foss, Klein, Kor, & Mahoney, 2008;Klein, 2008;Knight, 1921;Langlois, 1992) may apply not only to business opportunities but also to many social issues.…”

Section: Uncertainty Innovation and For-profit Firmsmentioning

confidence: 99%

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Private action in public interest: The comparative governance of social issues

Luo

Kaul

2018

Strategic Management Journal

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Research Summary We develop a theoretical framework to define the comparatively efficient organizational form for dealing with a social issue, based on the market frictions associated with it. Specifically, we argue that for‐profits have an advantage in undertaking innovation and coordinating production economies, nonprofits in playing a fiduciary role given ex post information asymmetry, self‐governing collectives in dealing with bounded externalities through private ordering, and state bureaucracies in governing general externalities. We build on these arguments to develop a mapping between combinations of these market frictions and the comparatively efficient arrangements to govern them, including a variety of hybrid arrangements such as private‐public partnerships, social enterprises, corporate social responsibility, and so on. Our framework thus contributes to research in strategy, organizations, and public policy. Managerial Summary What is the best way to deal with a social problem? While some believe such problems are best left to the state, others argue that business should take the lead in solving them, or favor nonprofit solutions. In this article, we move beyond such one‐size‐fits‐all approaches, highlighting the different strengths of different organizational forms. We argue that for‐profits' strong incentives make them more innovative; nonprofits are more trustworthy in representing the best interests of others; collectives enable actors to self‐organize around a common interest; and the state is best for issues that impact the entire population. We thus develop a mapping between the nature of the social problem and the organizational form—or combination of organizational forms—that may deal with it most efficiently.

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“…Furthermore, we note that the linear sequence of transitions from problem to solution and opportunity identification is a schematic depiction of the process. The process of opportunity identification oftentimes involves iteratively and recursively refining the opportunity before it matches the needs of the customers (McMullen & Dimov, 2013;Packard, Clark, & Klein, 2017;von Hippel & von Krogh, 2016).…”

mentioning

confidence: 99%

Identifying business opportunities for sustainable development: Longitudinal and experimental evidence contributing to the field of sustainable entrepreneurship

et al. 2020

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Which factors facilitate the identification of business opportunities for sustainable development? To answer this question, we develop a process model of sustainable opportunity identification. We argue that sustainable opportunity identification is a process with transitions from problem to solution identification and from solution to sustainable opportunity identification. Moreover, the transitions are facilitated by two factors—awareness of adverse consequences and entrepreneurial attitude—providing motivation and direction in the process. We tested our model in a field study (N = 107) and two experiments (N = 53 and N = 69). Our findings show that awareness of adverse consequences and entrepreneurial attitude influence the process of sustainable opportunity identification, explaining under which conditions people are more likely to identify business opportunities for sustainable development. Our study thus contributes to the field of sustainable entrepreneurship.

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Uncertainty Types and Transitions in the Entrepreneurial Process

Cited by 35 publications

References 89 publications

The Context of Entrepreneurial Judgment: Organizations, Markets, and Institutions

The Context of Entrepreneurial Judgment: Organizations, Markets, and Institutions

Private action in public interest: The comparative governance of social issues

Identifying business opportunities for sustainable development: Longitudinal and experimental evidence contributing to the field of sustainable entrepreneurship

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