ENTREPRENEURIAL DISCOVERY IN PROMISING START-UPS: A COGNITIVE ANALYSIS OF PRINCIPLES OF BEHAVIOR

Although entrepreneurs of promising start-ups (Bhide, 2000) usually started their venture without novel ideas, deep experience, high credentials, or ample resources, the companies they eventually built represent the majority of fast-growing, privately held businesses (e.g. Inc. 500 companies) in the United States, which have significantly contributed to job creation and the growth of the economy. Instead of conducting extensive prior planning and research, promising start-ups depend on the lead entrepreneurs capabilities of making good decisions as it goes. Meanwhile, the start-up process and the cognitive studies of entrepreneurial rationality have been increasingly recognized as holding the central place in entrepreneurship research. Despite their clear practical and theoretical importance, current literature does not provide a comprehensive framework of the start-up process of promising start-ups, which can explain the ongoing interactions between entrepreneurs and the market, and the role played by the entrepreneurs rationality in this process. To pursue this objective, this dissertation proposes that entrepreneurial discovery is the process of promising start-ups adaptation and learning, where entrepreneurs through their actions influence how the market will react and what they will learn from it, dynamically shaping the market process. It makes two major methodological improvements on existing research: 1) it uses lead entrepreneurs close observation of the entirety of actual start-up process as data; 2) it borrows analytical methods from cognitive science to study entrepreneurial discovery as a knowledge-based problem solving process where entrepreneurs knowledge base becomes the most critical factor in determining their behavioral outputs and influencing their sensory inputs. The results indicate that behavior for effective entrepreneurial discovery is compelled by multiple principles, whose applications converge to a common underlying pattern among promising start-ups. Besides breaking new ground in its methodology, this dissertation contributes to the entrepreneurship literature by being the first to explicate the many facets of the rationality of entrepreneurial discovery as principles of behavior that can not only give the most complete and detailed explanation currently available of the unfolding of entrepreneurial discovery, but serve as the basis to guide practicing entrepreneurs behavior and to evaluate and improve entrepreneurship education and learning.