Limited Influence of Prior Knowledge on Entrepreneurial Action, in the Midst of Knightian Uncertainty

Abstract

We extend the boundary conditions of the seminal work of McMullen and Shepherd (2006) by exploring entrepreneurial action that proceeds without prior knowledge related to the opportunity being pursued or when the importance of such knowledge is dismissed or discounted. We explain how some entrepreneurs pursue entrepreneurial endeavors because they possess, in one way or another, a disregard for prior knowledge and/or a motivational paradigm that eschews or at least discounts the importance of such knowledge. We do so by examining and tracing numerous possible paths to entrepreneurial action under uncertainty back to Frank Knight's (1921) six "methods for meeting uncertainty." We then empirically test one specific path, investigating the mechanisms by which extremely self-focused individuals pursue entrepreneurial action; in particular, we investigate their willingness to pursue entrepreneurial action in light of their self-focus, their sentiments about the importance of prior knowledge, and their perceptions of risk and uncertainty.