Entrepreneurial Action Theory Research Articles

Chance, probability, and uncertainty at the edge of human reasoning: What is Knightian uncertainty?

AbstractResearch SummaryFor more than a century, Frank Knight's Risk, Uncertainty, and Profit has significantly influenced entrepreneurship theory development by exploring the nature of uncertainty and the epistemic limits of entrepreneurial action. Knight's work highlights how economic actors cannot fully predict the consequences of their actions. Despite its broad influence, debates persist regarding the nature of Knightian uncertainty. This study addresses these debates through a comprehensive analysis of RUP and Knight's other published and unpublished writings to offer new insights into the nature and meaning of Knightian uncertainty, revealing Knight's holistic theory that integrates “real indeterminism,” “partial knowledge,” and “subjective beliefs.” This analysis provides much needed construct clarity to advance contemporary theories of entrepreneurial action and the role of uncertainty in business venturing processes.Managerial SummaryThis article revisits Frank Knight's foundational work, Risk, Uncertainty, and Profit, a cornerstone in entrepreneurship research for over a century. We highlight Knight's holistic approach to uncertainty, which integrates the concepts of real indeterminism (the inherent unpredictability of future events), partial knowledge (the incomplete understanding of the present and future), and subjective beliefs (individual perceptions and interpretations). The study offers new perspectives on how Knightian uncertainty influences entrepreneurial decision‐making and action, highlighting how this unique type of uncertainty plays a critical role in the business venturing process. These insights provide valuable contributions to contemporary theories of entrepreneurship, emphasizing the complexity and multifaceted nature of navigating uncertainty in business.

Similar but yet different: individual cognitive traits and family contingencies as antecedents of intrapreneurship and self-employment

Entrepreneurship is of great significance to individuals, families and society. Recently, intrapreneurship, i.e., business ventures within established organisations, has also attracted widespread interest among individuals and organisations. However, we still know little about how individuals make decisions when they face diverse types of entrepreneurial activities. Based on theories of entrepreneurial action and conservation of resources and the literature on family embeddedness, this paper proposes an integrated framework for entrepreneurial choice—including intrapreneurship, self-employment and non-entrepreneurship, and examines the roles of socio-cognitive traits and family contingency factors in the entrepreneurial choice process. By using secondary and survey data, the empirical results show that (a) entrepreneurial alertness (EA) and self-efficacy (ESE) both positively affect individuals’ choice towards intrapreneurship and self-employment, with a stronger effect on the latter; (b) the interaction between EA and ESE has a negative effect on intrapreneurship but a positive effect on self-employment; (c) family-to-work conflict weakens the aforementioned interactive effect on both intrapreneurship and self-employment, whereas work-to-family conflict strengthens its effect on self-employment; (d) household income strengthens the interactive effect on both intrapreneurship and self-employment. Overall, these findings contribute to a nuanced understanding of the relationship among individual cognitive traits, family contingencies and entrepreneurial choice. The theoretical and practical implications are discussed.

Pivot, persist or perish? Knowledge problems and the extraordinarily tight boundary conditions of entrepreneurs as scientists

The characterization of entrepreneurs as scientists (EaS) has become increasingly popular among management scholars because it fits neatly with existing theories of entrepreneurial action grounded in the assumption that entrepreneurs form and test beliefs in an intendedly rational fashion, under conditions of uncertainty, while continually seeking to obtain and process new information. Recent scholarship breathes new life into the EaS paradigm by proposing a framework that builds upon pragmatism in developing a microfoundational perspective concerning causally inferential action and rationality-based heuristics. Yet, the drift towards EaS is not without controversy. Business venturing is rarely analyzable through the lens of natural laws and orderly structures. Moreover, uncertainty is not the only knowledge problem (KP) that entrepreneurs confront. As such, EaS may be ineffective in bringing resolution to these other challenging KPs – ambiguity, complexity, and equivocality – especially when entrepreneurs are entertaining decisions to pivot or persist. In this sense, our work underscores the importance of EaS while also asserting the need for clear boundary conditions.

Becoming Entrepreneurs of Connection: How community partnerships shape engagement across difference and anti-poverty commitments

This article contributes to the civic identity development literature by exploring how a scholarship program emphasizing entrepreneurship and economic revitalization can facilitate engagement across difference in pursuit of shared anti-poverty commitments. Drawing on theories of entrepreneurial action, civic identity development literature, and a mixed methods approach, we propose a framework for how students conceptualize identity, race, and poverty as entrepreneurs of connection. The role of uncertainty is central to entrepreneurial action and a hallmark of community engagement. Combining an inquiry into their own sense of identity in relationship to their peers and community partners, students contribute to the development of the entrepreneurial ecosystem by making connections at the interpersonal, organizational, and systems levels. Students merge an understanding of their personal identities and situational context to build trust with diverse peers and community partners. Entrepreneurs of connection take action with community partners to pursue innovative solutions with a focus on social change.

The Strategic Advantage of Impulsivity in Entrepreneurial Action: An Agent-Based Modeling Approach

Our study extends and enhances entrepreneurial action theory (EAT) by considering the strategic advantage or disadvantage of impulsive action. To date, EAT has largely sidestepped the role of dispositional impulsivity, limiting its veridicality and inclusivity. Popularized notions of celebrity entrepreneurs and an increasingly large body of empirical research on the prevalence of impulsivity have inspired a reassessment of what drives entrepreneurs. Looking beyond both the anecdotes and well-established prevalence of impulsivity, we develop and illustrate a novel theory concerning the fate of impulsive nascent entrepreneurs who are wired for nondeliberative, less-calculative action. We use an agent-based model and conduct simulation-based experiments involving 2.7 million virtual entrepreneurs to identify and explicate the specific conditions under which impulsivity does or does not generate strategic advantage. Accordingly, we contribute a broader and deeper theorization of EAT, taking notable steps toward the inclusion of nontraditional entrepreneurs and the varied impacts of impulsive action in this domain’s evolving conception of new venture emergence.

Applying Method To The Madness: A Multidimensional Approach to Entrepreneurial Action

Entrepreneurship can be viewed as a chain of intertwined events that unfold over time. By nature, these activities are continuous, episodic, and creative, and occur under conditions of uncertainty. However, scholars have been unable to agree on which activities are essential to the entrepreneurial process and/or whether patterns of these activities even exist, concluding that the process itself is intractably complex and inherently unpredictable. Across a harmonized dataset (N = 2,044), we apply an advanced mixed methods approach in order to map the dimensionality of the entrepreneurial process and subsequent configurations of activity sets. We discover that entrepreneurial action exists in a limited number of distinct and recognizable configurations that span two distinct underlying dimensions – a temporal dimension and a reasoning dimension. Based on the patterns of venture creation activities identified in our research, we contribute empirical evidence to three separate theories of entrepreneurial action. Our research indicates that action may be far less uncertain than the literature currently suggests, as it exists within a feedback loop that illuminates the dynamic properties of both time and reasoning. We contend that path dependencies and variations among configurations of venture creation activities offer promising implications for both theory and practice.

Distinguishing unpredictability from uncertainty in entrepreneurial action theory

Distinguishing unpredictability from uncertainty in entrepreneurial action theory

Decide to Take Entrepreneurial Action: Role of Entrepreneurial Cognitive Schema on Cognitive Process of Exploiting Entrepreneurial Opportunity

Given its impact on preference for different information, the cognitive schema is recognized as a critical mechanism for people to make up their minds on willingness to act. However, how entrepreneurial cognitive schema influences cognitive processes remains unclear. Based on entrepreneurial action theory and information processing theory, we delineate the relationship between entrepreneurial cognitive schema and decision of entrepreneurial action by decomposing the cognitive process of comprehending external information related to entrepreneurial opportunity. We randomized 123 participants into different priming groups and collected their decision policies with a conjoint analysis experiment. Firstly, we found the individuated cognitive process, since the positive effect of founding rates is strengthened, and dissolution rates are reduced by positive knowledge-relatedness. Further, we partly validated the moderating role of entrepreneurial cognitive schema, with a more positive relationship between founding rates and willingness to act, and between knowledge-relatedness and willingness to act when participants are primed with this future-focused schema. This paper proves one critical cognitive unit while making a decision to act on entrepreneurial opportunity and indicated an active role of entrepreneurial cognitive schema in enabling people to emphasize and make better use of relevant information.

Cracks in the wall: Entrepreneurial action theory and the weakening presumption of intended rationality

Entrepreneurship scholarship finds itself in something of a quandary concerning rationality. While an increasingly large body of empirical work has found evidence of less-deliberative and even impulsive drivers of business venturing, the dominant theories of entrepreneurial action remain anchored to the assumption that intended rationality is a defining attribute of entrepreneurship. The growing schism between entrepreneurial action theory (EAT) on the one hand, and empirics and practice on the other hand, represents a consequential and exciting opportunity for the field to revisit its core assumptions regarding rationality, particularly the presence, role, and function of rational intentionality. In this study, we undertake a review and exploratory investigation of the assertion that without reasoned intentionality there is no entrepreneurship. Our work generates three important insights that contribute to rethinking key facets of the most prominent and influential EATs: alternative, non-rational pathways to business venturing exist with a non-ignorable prevalence; a proclivity towards reasoned intentionality is not invariably prescriptive; and, less-reasoned, less-deliberative tendencies do not constitute an entrepreneurial death sentence. Rather, entrepreneurs (including highly successful ones) embody a shifting blend of rational and non-rational proclivities, motivations, decisions, and actions.

From homo economicus to homo agens: Toward a subjective rationality for entrepreneurship

The aim of this article is to expound the subjectivist position on the concept of ‘rationality.’ To begin, we review the longstanding and still ongoing debate in philosophy over the differences (or not) between the natural and social sciences. While positivism, which supposes no difference between the sciences, has been the tradition whence the economic rationality construct (homo economicus and its modern variants) has derived, a longstanding interpretivist tradition holds that social science is innately distinct from, and should be studied differently than, the natural sciences. From this interpretivist vantage, we assess and critique the positivist conception of rationality and put forth a subjectivist account of rationality as a process in its stead. Rationality here emerges as an intentional process of betterment over time. Because entrepreneurship is definitionally such a process, we explore the implications of this process rationality for entrepreneurial action theory.

Manipulating Time: Temporal Agency and Entrepreneurial Action

In recent work, scholars have taken important steps to explicate the role of time in theories of entrepreneurial action. Our research builds on these approaches in a number of important ways by further theorizing the inextricable bond and ongoing interplay between entrepreneurs and their respective temporal contexts. First, we identify and develop distinctions between the enabling and constraining influences of two different temporal forms: time-as-interval and time-as-emergence. Second, we build new theory to account for the temporal agency of entrepreneurship in order to address the constraining and enabling influences of time. Central to our approach is a re-conceptualization of time not simply as the medium of entrepreneurial agency, but as the target or object of entrepreneurial agency, which entrepreneurs attempt to manipulate through six types of action: conversion, inversion, subversion, diversion, perversion, and reversion. We ground our framework in common business venturing practices, discussing the wide-ranging implications of how the manipulation of time provides novel means for entrepreneurs to mitigate uncertainty in their attempt to achieve desired outcomes.

Is internationalisation really an available choice for micro firms producing cava and Prosecco Superiore? A cross-country, entrepreneurial action perspective

PurposeThe purpose of this study was to examine pathways towards, and the rationale behind internationalisation from the perspectives of micro firms' operators involved in the globally competitive wine industry. Moreover, drawing from entrepreneurial action theory, the study developed a theoretical framework to help understanding micro approaches and rationale for internationalisation.Design/methodology/approachData were collected through interviews with 19 micro winery owners and managers operating in the Prosecco Superiore (Italy) and cava industry (Spain).FindingsAligned with entrepreneurial action theory, uncertainty in participants' environment, coupled with the associated need to diversify through exports, were predominant drivers of internationalisation. However, internationalisation also emerged through non-deliberate channels, including through growth of wine tourism and increasing foreign wine enthusiasts. Thus, while entrepreneurial action through deliberate means triggered a stronger focus on internationalisation, other passive interventions beyond the control or influence of micro firms, but rather emerge serendipitously, can similarly spur direct action.Originality/valueThe study demonstrated its originality and value in various ways, fundamentally, addressing three knowledge gaps, thereby contributing to practical and theoretical discourses with corresponding value, including managerially. First, it extended literature focussing on micro firms, which as compared to small and medium enterprise research is much more limited. Second, it provided a comparative component, which is much rarer in contemporary research discussing internationalisation amongst micro firms. Third, the study proposed a theoretical framework stemming from the chosen inductive approach, thus, addressing concerns regarding the lack of theoretical rigour or depth in internationalisation activities amongst micro firms.

Understanding critical success factors and perceived future among micro and small firms through entrepreneurial action theory

Purpose This study aims to examine how owners and managers of micro and small enterprises perceive firm success and the future of their businesses. Entrepreneurial action theory is adopted in the analysis and a modified theoretical framework is proposed. Design/methodology/approach Semi-structured, face-to-face interviews were conducted with 34 owners and managers representing 32 Italian and Spanish wine businesses; qualitative content analysis was used. Findings Eight dimensions common to both groups of participants emerged, with the most prevalent themes revealing strong links with opportunity maximisation. In particular, the importance of perceived critical success factors was manifested by continuous improvements, building relationships, and being perceived highly are in line with perceptions of wineries’ future, including entering demanding markets, becoming a referent for the region, or attaining global recognition. Originality/value In investigating critical success factors and the perceived future of businesses from two of the world’s largest wine producers and exporters, this study provides a theoretical, practical and international perspective concerning these dimensions. In addition, this study focuses on Europe’s largest business sector, namely, small and medium enterprises. Furthermore, this study proposes a theoretical framework, which brings together the findings and the insights of entrepreneurial action theory.

Sense of place and certainty in uncertain socioeconomic conditions: contributions of local cuisine to culinary tourism

ABSTRACT This study examines the extent to which local cuisine helps shape a sense of place and its contribution to adapting to uncertain socioeconomic conditions. By adopting entrepreneurial action theory, and through its associations with the findings, the study proposes a framework illustrating the significance of the above themes in the context of Peru's gastronomy. The data are based on interviews with 14 restaurant owners-managers operating in the city of Lima, Peru. This approach was further complemented by on-site observations, and by archival data of businesses (company websites, printed information). The findings reveal alignment with both stages of entrepreneurial action, predominantly through opportunity attention, which emphasises recognising and acting upon opportunities in general. This stage became apparent through comments underlining the significance of local gastronomy in contributing to sense of place. Similarly, opportunity attention arose in comments highlighting the potential of local gastronomy as a tool for socioeconomic development.

Understanding entrepreneurial deviance through social learning and entrepreneurial action theory: an empirical study

PurposeThe purpose of this exploratory study is to examine entrepreneurial deviance from the perspective of New Zealand's commercial honey producers. The study adopts entrepreneurial action and social learning theories and proposes a theoretical framework in the context of entrepreneurial deviance.Design/methodology/approachData were collected through online surveys from 52 professional beekeepers.FindingsOverstocking of beehives, encroachment, biosecurity threats and unfair competition were most common forms of deviance affecting participants. While these predominantly responded through investing in disease prevention, security equipment or by reporting deviant incidents, finding proper solutions remains elusive. The findings revealed robust alignments with both theories. Overall, offenders’ perceived incentives to act illustrate alignment with social learning theory’s four key constructs. Entrepreneurial action emerged through individual perpetrators’ evaluation and subsequent maximisation of potentially lucrative opportunities.Originality/valueThe study addresses an important and under-researched dimension, notably, the negative or “dark” side of entrepreneurs, in this case, illustrated through greed and disregard for fair and proper ways of conducting business. This knowledge gap is even more obvious among small and medium business, which is also the focus of the research.

Sense of place and certainty in uncertain conditions: The contribution of local cuisine through the lens of entrepreneurial action theory

This study examines the extent to which local cuisine helps shape a sense of place and its contribution to adapting to uncertain conditions. By adopting entrepreneurial action theory, and through its associations with the findings, the study proposes a framework to facilitate the understanding of the significance of the above themes in the context of Peru’s gastronomy. The data are based on interviews with 14 restaurant owners- managers operating in the city of Lima, Peru. This approach was further complemented by on-site observations, and by archival data of businesses (company websites, printed information). The findings reveal alignment with both stages of entrepreneurial action, predominantly through opportunity attention, which emphasises recognising and acting upon opportunities in general. This stage became apparent through comments underlining the significance of local gastronomy in contributing to sense of place. Similarly, opportunity attention arose in comments highlighting the potential of local gastronomy as a socioeconomic development tool.

Uncertainty and adaptation in the context of Brexit

PurposeThe purpose of this study is to propose a framework to understand firms’ adaptation to uncertainty and change, specifically, in regards to the perceived impacts of the Brexit phenomenon. In doing so, the study considers entrepreneurial action theory (EAT) and the dynamic capabilities approach (DCA).Design/methodology/approachFace-to-face interviews were conducted with owners and managers of 34 family-run firms operating in Italy’s Prosecco Superiore and Spain’s Cava industries.FindingsThe element of uncertainty because of the imminent Brexit decision clearly emerged and was demonstrated through various effects on firms including the falling British Pound. The findings revealed that combining the EAT and the DCA provides a stronger explanation in understanding adaptation to uncertainty. For example, sensing (DCA) was suggested to be a precursor of opportunity attention and evaluation (EAT) or recognising opportunities and was subsequently manifested by operators’ action or seizing (DCA), including through more involvement in exports and wine tourism.Originality/valueThe study is one of the few efforts to date to examine the potential impacts of an uncontrollable contemporary phenomenon, and ways to adapt from the perspective of entrepreneurs involved in a traditional and socioeconomically significant industry. The different adaptive strategies that emerged from the findings can provide practical insights. The proposed framework emphasises the theoretical and practical value of understanding adaptation through the lens of the adopted theoretical foundations.

Back to the Future: A Time-Calibrated Theory of Entrepreneurial Action

Time is a defining feature of human activity, but has been underexamined in theories of entrepreneurial action. This is perplexing given that entrepreneurial action is oriented toward novel creatio...

The Why and How of Entrepreneurial Action: An Integrative Model Based on Individual Values and Action Theory.

Although individual values have been scarcely studied in the entrepreneurship literature, existing research provides evidence that they are relevant for understanding entrepreneurial behavior. Values, however, do not necessarily influence action in a direct way. Instead, they may indirectly predict behavior via more proximal psychological processes. We build upon previous research in entrepreneurship values using Schwartz (1992) individual-values theory and Frese's (2007) entrepreneurial action theory, and propose a theoretical model in which individual values have an indirect effect on entrepreneurial behavior through a series of four ulterior cognitive processes: Goal setting and intentions, mapping of information about the environment, planning and monitoring of the execution, and feedback processing. In doing so we integrate the theory of individual values with entrepreneurial cognition research. Despite their complementarity, these two theoretical approaches have not been studied together before. In this way, we offer new insights on the way individual values can explain entrepreneurial action. Based on these two lines of research we additionally propose a research agenda.

Blended Colors or Black and White? Avoiding Dichotomous Thinking in Identity and Entrepreneurship

Academy of Management ReviewVol. 44, No. 1 DialogueBlended Colors or Black and White? Avoiding Dichotomous Thinking in Identity and EntrepreneurshipTyler Wry and Jeffrey G. YorkTyler Wry() University of Pennsylvania and Jeffrey G. York() University of Colorado BoulderPublished Online:3 Jan 2019https://doi.org/10.5465/amr.2018.0111AboutSectionsView articleView Full TextPDF/EPUB ToolsDownload CitationsAdd to favoritesTrack Citations ShareShare onFacebookTwitterLinkedInRedditEmail View articleREFERENCESAlvarez, S. A., & Barney, J. B. 2007. Discovery and creation: Alternative theories of entrepreneurial action. Strategic Entrepreneurship Journal, 1: 11–26. Google ScholarBattilana, J., & Dorado, S. 2010. Building sustainable hybrid organizations: The case of commercial microfinance organizations. Academy of Management Journal, 53: 1419–1440.Link , Google ScholarBrewer, M. B., & Gardner, W. 1996. Who is this “we”? Levels of collective identity and self representations. Journal of Personality and Social Psychology, 71: 83–93. Google ScholarBurke, P. J. 2007. Identity control theory. In G. Ritzer (Ed.), The Blackwell encyclopedia of sociology: 1–5. Malden, MA: Blackwell. Google ScholarCardon, M. S., Wincent, J., Singh, J., & Drnovsek, M. 2009. The nature and experience of entrepreneurial passion. Academy of Management Review, 34: 511–532.Link , Google ScholarConger, M., McMullen, J. S., Bergman, B. J., & York, J. G. 2018. Category membership, identity control, and the reevaluation of prosocial opportunities. Journal of Business Venturing, 33: 179–206. Google ScholarFarmer, S. M., Yao, X., & Kung-McIntyre, K. 2011. The behavioral impact of entrepreneur identity aspiration and prior entrepreneurial experience. Entrepreneurship Theory and Practice, 35: 245–273. Google ScholarFauchart, E., & Gruber, M. 2011. Darwinians, communitarians, and missionaries: The role of founder identity in entrepreneurship. Academy of Management Journal, 54: 935–957.Link , Google ScholarGruber, M., & MacMillan, I. C. 2017. Entrepreneurial behavior: A reconceptualization and extension based on identity theory. Strategic Entrepreneurship Journal, 11: 271–286. Google ScholarHitlin, S. 2003. Values as the core of personal identity: Drawing links between two theories of self. Social Psychology Quarterly, 66: 118–137. Google ScholarHitlin, S. 2011. Values, personal identity, and the moral self. In S. J. SchwartzK. LuyckxV. L. Vignoles (Eds.), Handbook of identity theory and research: 515–529: New York: Springer. Google ScholarHoang, H., & Gimeno, J. 2010. Becoming a founder: How founder role identity affects entrepreneurial transitions and persistence in founding. Journal of Business Venturing, 25: 41–53. Google ScholarIbarra, H. 1999. Provisional selves: Experimenting with image and identity in professional adaptation. Administrative Science Quarterly, 44: 764–791. Google ScholarMiller, T. L., Grimes, M. G., McMullen, J. S., & Vogus, T. J. 2012. Venturing for others with heart and head: How compassion encourages social entrepreneurship. Academy of Management Review, 37: 616–640.Link , Google ScholarO’Neil, I., & Ucbasaran, D. 2016. Balancing “what matters to me” with “what matters to them”: Exploring the legitimation process of environmental entrepreneurs. Journal of Business Venturing, 31: 133–152. Google ScholarPan, N. D., Gruber, M., & Binder, J. 2018. Painting with all the colors: The value of social identity theory for understanding social entrepreneurship. Academy of Management Review, 44:213–215. Google ScholarPowell, E. E., & Baker, T. 2014. It’s what you make of it: Founder identity and enacting strategic responses to adversity. Academy of Management Journal, 57: 1406–1433.Link , Google ScholarStets, J. E., & Biga, C. F. 2003. Bringing identity theory into environmental sociology. Sociological Theory, 21: 398–423. Google ScholarStets, J. E., & Burke, P. J. 2000. Identity theory and social identity theory. Social Psychology Quarterly, 63: 224–237. Google ScholarStets, J. E., & Carter, M. J. 2012. A theory of the self for the sociology of morality. American Sociological Review, 77: 120–140. Google ScholarStryker, S., & Burke, P. J. 2000. The past, present, and future of an identity theory. Social Psychology Quarterly, 63: 284–297. Google ScholarThornton, P. H., Ocasio, W., & Lounsbury, M. 2012. The institutional logics perspective: A new approach to culture, structure, and process. Oxford: Oxford University Press. Google ScholarWry, T., & York, J. G. 2017. An identity-based approach to social enterprise. Academy of Management Review, 42: 437–460.Link , Google ScholarZott, C., & Amit, R. 2007. Business model design and the performance of entrepreneurial firms. Organization Science, 18: 181–199. Google ScholarFiguresReferencesRelatedDetails Vol. 44, No. 1 Permissions Metrics in the past 12 months History Published online 3 January 2019 Published in print 1 January 2019 Information© Academy of Management ReviewDownload PDF