Prediction- and Control-Based Strategies in Entrepreneurship: The Role of Information
Résumé
Prediction- and control-based strategies are the two main hypotheses
of how entrepreneurs deal with uncertainty in theories of entrepreneurship. Prediction-based
strategies focus on estimating unknowns via sampling methods, whereas control-based
strategies focus on shaping unknowns via proactive behavior. These strategies
may lead to different propensities to undertake uncertain prospects, as they differ in terms
of cognition and involvement. In an experimental test, we study the conditions under
which prediction- and control-based strategies lead subjects to accept bets in ambiguous
environments. Individuals who use control methods to mitigate uncertainty are more
likely to accept the bet after a favorable outcome compared to those who use predictive
methods. These results revert in the presence of unfavorable outcomes. We discuss the
implications for entrepreneurship theory and practice.