Taste Before Production: The Role of Judgment in Entrepreneurial Idea Generation

58 Pages Posted: 18 Jan 2023

See all articles by Aaron Chatterji

Aaron Chatterji

Duke University - Fuqua School of Business

Sharique Hasan

Duke University - Fuqua School of Business

Richard P. Larrick

Duke University - Fuqua School of Business

Roger Masclans

Duke University - Fuqua School of Business

Date Written: January 16, 2023

Abstract

Crafting high-quality ideas is crucial for entrepreneurs to succeed, yet evidence about the factors that shape the idea-generation process is scarce. A long-standing question is whether differences across entrepreneurs in market judgment—the ability to evaluate business ideas—explain differences in ideas’ quality and composition. We conduct an experiment with an intervention that improves subjects’ ability to evaluate an idea’s market potential, finding that improved judgment leads subjects to generate ideas 15% higher in quality and more complete, with stronger effects among initially poorly-calibrated subjects. Our results support a potential mechanism: individuals with developed judgment mentally test more ideas and better filter them before committing to one. Simple training can improve judgment and idea quality, complementing ex-post, experimental methods by reducing the costs of testing ideas.

Keywords: Entrepreneurship, Experiment, Innovation, Judgment, Training

Suggested Citation

Chatterji, Aaron and Hasan, Sharique and Larrick, Richard P. and Masclans, Roger, Taste Before Production: The Role of Judgment in Entrepreneurial Idea Generation (January 16, 2023). Available at SSRN: https://ssrn.com/abstract=4324964 or http://dx.doi.org/10.2139/ssrn.4324964

Aaron Chatterji

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Sharique Hasan

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Richard P. Larrick

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

HOME PAGE: http://www.fuqua.duke.edu/faculty/alpha/larrick.htm

Roger Masclans (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
203
Abstract Views
679
Rank
276,887
PlumX Metrics