When Markets are Grue

47 Pages Posted: 2 Aug 2004

See all articles by Saras D. Sarasvathy

Saras D. Sarasvathy

University of Virginia - Darden School of Business

Nicholas Dew

Naval Postgraduate School

Date Written: June 25, 2004


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

Suggested Citation

Sarasvathy, Saras D. and Dew, Nicholas, When Markets are Grue (June 25, 2004). Darden Business School Working Paper No. 04-06, Available at SSRN: https://ssrn.com/abstract=571922 or http://dx.doi.org/10.2139/ssrn.571922

Saras D. Sarasvathy (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.effectuation.org

Nicholas Dew

Naval Postgraduate School ( email )

1522 Cunningham Road
Monterey, CA 93943-5201
United States

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