Quinlan professors published in top journal for entrepreneurial business
Assistant professor Ugur Uygur and professor Sung Min Kim are set to publish their latest paper in the Strategic Entrepreneurship Journal, one of the top journals for entrepreneurial business.
The research looks at the cognitive behavior and judgment of entrepreneurs, and seeks to understand how and why an entrepreneur chooses to focus on certain factors.
In his own words, Uygur discusses the findings and what they mean for the business world.
What question did the study answer?
This study is about how entrepreneurs make judgments and how those judgments evolve over time. In an entrepreneurial situation, the environment is so uncertain. When you have a new business idea—the company doesn’t exist. The customers don’t exist. The product or the service doesn’t exist. You have to make so many decisions, and it can become a little overwhelming.
It’s too uncertain. And in this uncertainty, entrepreneurs have to decide on a smaller set of questions to answer. Out of the hundreds of decisions they have to make, how do they decide which to focus on? We looked at how they make that decision. And then asked, “Does that change over time?”
What did you discover?
We found that people who have been working on their idea for a while have a very sharp, narrow subset they focus on.
They build a causal map—a map that represents causal relationships such as the actions connected to expected outcomes—in their minds about what factors will influence the success of the company. For instance, will it be price? Or the quality of the product? Or having an innovative business model? Out of these potential factors that might make a difference, they form a causal map of what’s important.
What was another interesting finding?
We observed entrepreneurs with high uncertainty toward their customers or other factors. In those situations, the causal map is stronger. So the conviction is stronger when there’s high uncertainty.
And that was our theory, because we believe that in a new business situation, the entrepreneur will make up for this uncertainty by focusing on their own judgment. In this environment, they believe their judgment will be a good guide. So they strongly believe in their own thinking.
What are the implications of the results?
If an entrepreneur believes location is important, they will allocate their limited resources toward location, instead of, say price. It will guide their financial allocations. And it will guide most of their decisions. They will spend their time on finding a good location. They will spend less time on securing intellectual property, because they think location is more important.
So having a narrow subset of success factors will help them focus their efforts and time on these factors. If they don’t have that, then their resources will also be randomly or equally dispersed among different things they need to do. Their effort and time will not be focused.