Prescriptive Entrepreneurship

Prescriptive Entrepreneurship

James O. Fiet

In the only known programme of prescriptive entrepreneurship, James Fiet provides a marked contrast to the standard descriptive focus of entrepreneurship studies. Instead of the anecdotally based pedagogies that have dominated the teaching of entrepreneurship (and which do not control for luck-based success), the author lays out a programme of research to develop and test theoretically derived guidelines for how to improve the success rate and performance of aspiring entrepreneurs. Rather than describing what entrepreneurs do, he prescribes and tests what they ought to do.

Chapter 7: Systematic Search and its Relationship to Firm Founding

James O. Fiet

Subjects: business and management, entrepreneurship


7. Systematic search and its relationship to firm founding Key ideas In this chapter, I discuss how systematic search and exploitation are both informational problems and what this fortunate similarity means for entrepreneurs trying to launch new ventures. Exploitation by entrepreneurs is a relatively unexplored field, partly because researchers have separated the discovery process from the exploitation process. Thus, it is really not surprising to find that systematic search not only improves discovery effectiveness but also appears to enhance the profitability of exploitation. I argue that if an entrepreneur knows enough to identify a discovery, he or she already has an advantage in knowing how to exploit it successfully. I test this argument in a representative sample of US entrepreneurs and find that systematic search leads to more profitable exploitation than otherwise. This, of course, though not unexpected, is a remarkable finding. In addition, among others, I control for two mediating variable: (1) an adaptive decision-making style and (2) social capital. I find that each of these serves a catalyst for promoting the founding of firms. Systematic search also appears to reduce environmental uncertainty, which has additional important implications for aspiring entrepreneurs. Finally, this research suggests possible lines of future inquiry. INTRODUCTION Finding the discoveries used by entrepreneurs represents an important milestone in the process of founding a firm. We know that there are two explanations or modes suggested for how entrepreneurs make discoveries. As discussed in Chapter 2, one explanation is based on surprise and relies...

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