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Prediction- and Control-Based Strategies in Entrepreneurship: The Role of Information

Author

Listed:
  • Kuechle Graciela

    (Heilbroon University)

  • Béatrice Boulu-Reshef

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Sean D. Carr

    (University of Virginia - University of Virginia)

Abstract

Prediction- and control-based strategies are the two main hypotheses of how entrepreneurs deal with uncertainty in theories of entrepreneurship. Prediction-based strategies focus on estimating unknowns via sampling methods, whereas control-based strategies focus on shaping unknowns via proactive behavior. These strategies may lead to different propensities to undertake uncertain prospects, as they differ in terms of cognition and involvement. In an experimental test, we study the conditions under which prediction- and control-based strategies lead subjects to accept bets in ambiguous environments. Individuals who use control methods to mitigate uncertainty are more likely to accept the bet after a favorable outcome compared to those who use predictive methods. These results revert in the presence of unfavorable outcomes. We discuss the implications for entrepreneurship theory and practice.

Suggested Citation

  • Kuechle Graciela & Béatrice Boulu-Reshef & Sean D. Carr, 2016. "Prediction- and Control-Based Strategies in Entrepreneurship: The Role of Information," Post-Print hal-01296948, HAL.
    • Handle: RePEc:hal:journl:hal-01296948
    DOI: 10.1002/sej
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    Cited by:

    1. Willem Smit, 2023. "Top Manager Heuristics Under Knightian Uncertainty: Control Versus Prediction and the Moderating Impact of Framing," Journal of Management Studies, Wiley Blackwell, vol. 60(5), pages 1302-1340, July.
    2. Sebastian Markus Szambelan & Yi Dragon Jiang, 2020. "Effectual control orientation and innovation performance: clarifying implications in the corporate context," Small Business Economics, Springer, vol. 54(3), pages 865-882, March.
    3. Sarath Tomy & Eric Pardede, 2018. "From Uncertainties to Successful Start Ups: A Data Analytic Approach to Predict Success in Technological Entrepreneurship," Sustainability, MDPI, vol. 10(3), pages 1-24, February.
    4. Ari Hyytinen & Petri Rouvinen & Mika Pajarinen & Joosua Virtanen, 2023. "Ex Ante Predictability of Rapid Growth: A Design Science Approach," Entrepreneurship Theory and Practice, , vol. 47(6), pages 2465-2493, November.
    5. Sara Sassetti & Giacomo Marzi & Vincenzo Cavaliere & Cristiano Ciappei, 2018. "Entrepreneurial cognition and socially situated approach: a systematic and bibliometric analysis," Scientometrics, Springer;Akadémiai Kiadó, vol. 116(3), pages 1675-1718, September.
    6. Richard J. Arend, 2022. "The Costs of Ambiguity in Strategic Contexts," Administrative Sciences, MDPI, vol. 12(3), pages 1-19, August.
    7. Grégoire, Denis A. & Binder, Julia K. & Rauch, Andreas, 2019. "Navigating the validity tradeoffs of entrepreneurship research experiments: A systematic review and best-practice suggestions," Journal of Business Venturing, Elsevier, vol. 34(2), pages 284-310.
    8. Nobari, Niloofar & Dehkordi, Ali Mobini, 2023. "Innovation intelligence in managing co-creation process between tech-enabled corporations and startups," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).
    9. João J. M. Ferreira & Cristina I. Fernandes & Sascha Kraus, 2019. "Entrepreneurship research: mapping intellectual structures and research trends," Review of Managerial Science, Springer, vol. 13(1), pages 181-205, February.
    10. J. Robert Mitchell & Ronald K. Mitchell & Richard A. Hunt & David M. Townsend & Jae H. Lee, 2022. "Stakeholder Engagement, Knowledge Problems and Ethical Challenges," Journal of Business Ethics, Springer, vol. 175(1), pages 75-94, January.
    11. Engel, Yuval & Kaandorp, Mariëtte & Elfring, Tom, 2017. "Toward a dynamic process model of entrepreneurial networking under uncertainty," Journal of Business Venturing, Elsevier, vol. 32(1), pages 35-51.
    12. Adrian Hauser & Fabian Eggers & Stefan Güldenberg, 2020. "Strategic decision-making in SMEs: effectuation, causation, and the absence of strategy," Small Business Economics, Springer, vol. 54(3), pages 775-790, March.

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