A Scientific Approach to Entrepreneurial Decision Making: Evidence Form a Randomized Control Trial

Bocconi University Management Research Paper No. 6

Forthcoming in Management Science

Posted: 4 Dec 2018 Last revised: 12 Dec 2018

See all articles by Alfonso Gambardella

Alfonso Gambardella

Bocconi University - Department of Management and Technology

Arnaldo Camuffo

Bocconi University - Department of Management and Technology

Alessandro Cordova

Bocconi University

Chiara Spina

Bocconi University, Department of Management and Technology, Students

Date Written: October 16, 2018

Abstract

A classical approach to collecting and elaborating information to make entrepreneurial decisions combines search heuristics such as trial and error, effectuation, and confirmatory search. This paper develops a framework for exploring the implications of a more scientific approach to entrepreneurial decision making. The panel sample of our randomized control trial includes 116 Italian startups and 16 data points over a period of about one year. Both the treatment and control groups receive 10 sessions of general training on how to obtain feedback from the market and to gauge the feasibility of their idea. We teach the treated startups to develop frameworks for predicting the performance of their idea and to conduct rigorous tests of their hypotheses, very much as scientists do in their research. We let the firms in the control group, instead, follow their intuitions about how to assess their idea, which has typically produced fairly standard search heuristics. We find that entrepreneurs who behave like scientists perform better, pivot to a greater extent to a different idea, and do not drop out less than the control group in the early stages of the startup. These results are consistent with the main prediction of our theory: a scientific approach improves precision – it reduces the odds of pursuing projects with false negative returns.

Keywords: entrepreneurship, decision making, scientific method, startup, randomized control trial

Suggested Citation

Gambardella, Alfonso and Camuffo, Arnaldo and Cordova, Alessandro and Spina, Chiara, A Scientific Approach to Entrepreneurial Decision Making: Evidence Form a Randomized Control Trial (October 16, 2018). Bocconi University Management Research Paper No. 6, Forthcoming in Management Science , Available at SSRN: https://ssrn.com/abstract=3295625

Alfonso Gambardella (Contact Author)

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Arnaldo Camuffo

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy
390258362630 (Phone)
390258362634 (Fax)

Alessandro Cordova

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Chiara Spina

Bocconi University, Department of Management and Technology, Students ( email )

Via Roentgen 1
Milan, 20136
Italy

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