When Markets are Grue

Abstract

Is new market creation a search and selection process within the theoretical space of all possible markets? Or is it the outcome of a process of transformation of extant realities into new possibilities? We draw upon Goodman's (1983) Grue paradox to explain the dynamics of a new network of stakeholders. The network is initiated through an effectual commitment that sets in motion two concurrent cycles of expanding resources and converging constraints that result in the new market. The dynamic model was induced from two empirical investigations, a cognitive science-based investigation of entrepreneurial expertise, and a real time history of the RFID industry.

Keywords: New market creation, exploration and exploitation, effectuation, social networks, entrepreneurship, opportunism, opportunity costs, decision making, pragmatism

JEL Classification: M13, M31, D4, D52, D71, D72, L1, L2, P42