Entrepreneurship as a method: Lessons from the decision-making logic of small business owners and managers

Margarietha J Scheepers

Small business owners and managers use specific methods to exploit opportunities and create value. Worldwide the role of the small business sector is vital in economies for job creation, innovation and the creation of social value. Sarasvathy and Venkataraman (2011) provocatively arguethat like the scientific method taught at school, an entrepreneurial method exists. They recommend studying decisions and behaviour of entrepreneurs to distil the principles behind this entrepreneurial method. The purpose of this paper is to determine how decisions of small business owners and managers are shaped by rational, scientific driven methods as well as emergent, entrepreneurial decision-making approaches. A protocol analysis of eight firms in the information and communication technology, tourism and retail sectors was performed, where background information was obtained and each subject was asked to talk aloud about the start-up decisions they would make, given the same new venture decision experiment. Selective coding was used to extract relevant themes from the protocols. The findings show that small firm owner/managers were more likely Small business owners and managers use specific methods to exploit opportunities and create value. Worldwide the role of the small business sector is vital in economies for job creation, innovation and the creation of social value. Sarasvathy and Venkataraman (2011) provocatively argue that like the scientific method taught at school, an entrepreneurial method exists. They recommend studying decisions and behaviour of entrepreneurs to distil the principles behind this entrepreneurial method. The purpose of this paper is to determine how decisions of small business owners and managers are shaped by rational, scientific driven methods as well as emergent, entrepreneurial decision-making approaches. A protocol analysis of eight firms in the information and communication technology, tourism and retail sectors was performed, where background information was obtained and each subject was asked to talk aloud about the start-up decisions they would make, given the same new venture decision experiment. Selective coding was used to extract relevant themes from the protocols. The findings show that small firm owner/managers were more likely to use improvisational cognitive strategies in their entrepreneurial reasoning to create new means-ends relationships during the venture start-up process. Furthermore the decision-making processes used reflected elements from rational, improvisational and effectual logic. This paper contributes to the literature informing the debate of an entrepreneurial method. Findings confirm that most small business owners use improvisational decision-making styles, where they draw from experiential reference points under uncertain conditions. The entrepreneurial method not only incorporates emergent, effectual logic, but also draws on rational, scientific reasoning. Smalls business owner/ managers should take note that both predictive, linear decision-making as well as non-predictive, nonlinear processes is the norm in this sector. Drawing from both these types of reasoning enables entrepreneurs to exploit opportunities, create new ventures and additional value in society. Educators should take note of these findings and incorporate the entrepreneurial method into their teaching.

Entrepreneurship as a method: Lessons from the decision-making logic of small business owners and managers

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