Does a Theory-of-Value Add Value? Evidence from a Randomized Control Trial with Tanzanian Entrepreneurs

45 Pages Posted: 20 Apr 2023 Last revised: 23 May 2024

See all articles by Rajshree Agarwal

Rajshree Agarwal

University of Maryland - Robert H. Smith School of Business

Francesca Bacco

Vrije Universiteit Amsterdam

Arnaldo Camuffo

Bocconi University

Andrea Coali

Bocconi University

Alfonso Gambardella

Bocconi University - Department of Management and Technology

Haji Msangi

Sokoine University of Agriculture

Steven T. Sonka

University of Illinois at Urbana-Champaign

Anna Temu

Sokoine University of Agriculture

Betty Waized

Sokoine University of Agriculture

Audra Wormald

University of North Carolina (UNC) at Chapel Hill

Date Written: April 6, 2023

Abstract

Entrepreneurs making decisions under uncertainty are encouraged to evaluate their initial ideas through hypothesis testing, but entrepreneurial approaches vary in their emphasis on ex-ante theory development prior to collecting evidence. In this paper, we examine whether and how entrepreneurs benefit from adopting an evidence-based approach or a theory-and-evidence-based approach to decision-making. We conducted a field experiment with Tanzanian agribusiness entrepreneurs by randomly assigning entrepreneurs to two different training conditions. We find that entrepreneurs in the theory-and-evidence-based condition have higher economic performance during the observation period following the intervention. We conjecture this result stems from differences in the types of changes enacted: entrepreneurs in the theory-and-evidence-based training make more coordinated changes that encompass both core and operational elements of their business models.

Keywords: entrepreneurship, experimentation, scientific approach, strategy formation, theory-based view, developing contexts

JEL Classification: L26, C93

Suggested Citation

Agarwal, Rajshree and Bacco, Francesca and Camuffo, Arnaldo and Coali, Andrea and Gambardella, Alfonso and Msangi, Haji and Sonka, Steven T. and Temu, Anna and Waized, Betty and Wormald, Audra, Does a Theory-of-Value Add Value? Evidence from a Randomized Control Trial with Tanzanian Entrepreneurs (April 6, 2023). Bocconi University Management Research Paper, Available at SSRN: https://ssrn.com/abstract=4412041 or http://dx.doi.org/10.2139/ssrn.4412041

Rajshree Agarwal

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Francesca Bacco

Vrije Universiteit Amsterdam ( email )

Arnaldo Camuffo

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Andrea Coali

Bocconi University ( email )

Alfonso Gambardella

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Haji Msangi

Sokoine University of Agriculture ( email )

Steven T. Sonka

University of Illinois at Urbana-Champaign ( email )

Champaign, IL 61820
United States

Anna Temu

Sokoine University of Agriculture ( email )

Betty Waized

Sokoine University of Agriculture ( email )

Audra Wormald (Contact Author)

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

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