Information Ambiguity in Entrepreneurial Experimentation

Jason Lee, PhD Candidate, The Wharton School

Abstract: Pursuing entrepreneurial opportunities is characterized by high uncertainty because entrepreneurs look to find unsatisfied demand with their new products or services. In an attempt to reduce uncertainty, entrepreneurs experiment with potential customers, seeking feedback through interviews or prototypes. It allows the entrepreneurs to learn about the targeted market and whether their idea can satisfy that demand. Studies emphasize a scientific execution of experimentation; a process of hypothesizing, experimenting, and evaluating (Camuffo et al., 2020; Felin et al., 2020). This process is also advocated by the practitioners in the concept of lean startup, which highlights testing the product early on with a minimal viable product. However, experimentation inherently produces noisy, ambiguous results and requires a sensemaking process of the entrepreneur. I define this noise as information ambiguity and examine its effect on the entrepreneurs’ decisions. First, I hypothesize that information ambiguity is associated with a tendency to select positive feedback over the negative. Second, I will test how the tendency to select positive feedback is related to the ultimate success of an entrepreneur. In a major video gaming platform, I plan to observe and investigate the entrepreneurs’ iteration of strategic decisions in relation to information ambiguity and their outcomes.