Shaping Entrepreneurial Opportunities: Managing Uncertainty and Equivocality in the Entrepreneurial Process.

Abstract

This dissertation develops and tests a theory of how technology entrepreneurs shape their business opportunity and the organizing practices that facilitate that process. I suggest that entrepreneurial opportunities are not predetermined phenomena discovered by vigilant individuals but rather are emergent, created by founders as they manage the uncertainties of the entrepreneurial process. Study 1 is a case-based analysis of technology ventures. The findings suggest that opportunities emerge through a change process as founders shape their ventures to match their evolving knowledge and changing environmental realities. As founders learn from experience, receive feedback and advice and respond to unexpected events the opportunity takes form through a series of changes. However, because change can be disruptive and time-consuming, the process can be costly to the venture. I then develop a theoretical framework of organizational practices that facilitate the shaping process by reducing the disruptive effects of change. I suggest that because the shaping process occurs in a dynamic and uncertain context, ventures that develop vigilant awareness of changing conditions, through performance monitoring and environmental scanning, are more able to recognize the need for change before problems escalate. In addition, ventures that systematically learn from their experience can rapidly reduce equivocality and build knowledge. As a result, change efforts tend to be smaller, more incremental and based on more accurate information and result in less disruption. I test my hypotheses in Study 2 using a survey of technology entrepreneurs. The findings suggest that performance monitoring reduces overall change experienced by ventures and environmental scanning is associated with better perceived performance. Experiential learning strategies reduce the disruptiveness of change efforts and are associated better perceived performance. Mediation tests suggest that experiential learning strategies reduce disruption and improve performance in part because they improve certainty about the venture’s internal and external environment.

This dissertation contributes to the entrepreneurship and innovation literatures by providing a window into micro-level processes through which new opportunities are created, managed and shaped. Furthermore, by addressing the real-time organizing practices that allow entrepreneurs to manage their emerging opportunity, this research also contributes to literatures on managing uncertainty and unexpected events.