Getting to the one: Prioritizing an idea set using preference-based decision-specific heuristics

ABSTRACT

We propose and test a process where potential entrepreneurs (PEs) prioritize a venture idea consideration set using preference-based decision-specific heuristics to assess idea feasibility and desirability. We test our hypotheses through two studies with PEs. The first experiment shows that prioritization occurs, with 113 of 122 PEs voluntarily changing a randomized list of their ideated ventures into a rank-ordered priority list of potential opportunities. Second, we employ a novel “equivocal forced-choice” conjoint design with 250 PEs. We find empirical support that PEs prioritize via relative preferences for experience-based knowledge, strong social ties, and low risk/low reward venture ideas. We contribute to the entrepreneurship literature by theorizing and providing evidence of a prioritization stage for multiple idea sets before evaluation. Further, we demonstrate the influence of individual and social network factors on prioritization and expand our understanding of how PEs conceptualize risk in venturing.

KEYWORDS:

• Cognition
• entrepreneurship
• prioritization process
• decision specific heuristics
• equivocal forced-choice conjoint analysis
• feasibility
• desirability

Acknowledgments

The authors would like to thank Dean Shepherd and Dave Williams for their invaluable assistance and input toward prior drafts. We would also like to thank Robert Pidduck and Daniel Lerner for their friendly reviews. Finally, we would like to thank the editors and reviewers at the Journal of Small Business Management.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Our model is not influenced directly by specific ideation inputs, or the preferences therein. We employ knowledge, social ties, and risk/reward profiles here as prototypical ideation inputs to test the model, however, theoretically, any ideation input would have preferences associated with it that could be employed by the PE to form decision-specific heuristics.

² Consideration sets and heuristics research in business has largely been focused on consumer marketing (for example, DeSarbo & Jedidi, 1995; Mehta et al., 2003). One exception is the internationalization decision, in which Clark et al. (2018) show that international entrepreneurs use the country familiarity heuristic to narrow down and prioritize international expansion targets. Similarly, Williams and Grégoire (2015) also find evidence of entrepreneurs using heuristics to evaluate international ventures’ attractiveness. However, outside of this niche, prioritization, especially of idea sets, has been investigated less.

³ Research by Kier and McMullen (2018) showed that by using a single technology prompt, one productive ideator can produce 10 business ideas in 15 minutes.

⁴ Hill and Dunbar (2003) analyze individuals’ Christmas-card sending behavior to assess their network size and control for salience, finding a mean network size of 124.9 individuals. This number is consistent with the findings from sociologists, who argue that based on neocortex development and humans’ cognitive ability to manage and maintain relationships, individuals should live in and maintain social groups of approximately 150 individuals (Dunbar, 1993).

⁵ There are four basic combinations of risk and reward: high-risk/low-reward (the “suckers” bet), low-risk/high-reward (the “no-brainer”), high-risk/high-reward (the “gamble”), and low-risk/low-reward (the “safe bet”). Given that the first two combinations result in clear and obvious choices, we focus on the remaining two scenarios as they are the most realistic and are likely to challenge an individual’s risk/reward preferences.