Knowledge that Transforms

Abstract Research Summary Despite growing interest in how linguistic strategies shape audience responses to innovative ideas, prior evidence on the benefits of using emotional language remains mixed. Building on research on emotional ambivalence and social evaluation, we introduce the concept of emotionally ambivalent framing (i.e., the combination of positive and negative emotional language when presenting ideas) and investigate its effects on audience evaluation. Analyzing data from 3284 TED Talks, we find that emotionally ambivalent framing increases receptivity, but only for typical ideas. For atypical ideas, instead, such framing tends to undermine the audience's appreciation. However, we show that speakers' fame mitigates this effect, enabling emotionally ambivalent framing to serve as an effective communicative strategy for atypical ideas as well. These findings advance our understanding of the interplay between emotions and cognition in shaping the effectiveness of linguistic framing, contributing to research on entrepreneurship, ambivalence, and social evaluation. Managerial Summary It is still unclear whether and when using emotional language to frame ideas helps innovators and entrepreneurs overcome audience resistance. In this study, we find that combining both positive and negative emotional language when presenting an idea (a strategy we call emotionally ambivalent framing) improves audience receptivity to typical ideas. However, an emotionally ambivalent framing loses its effectiveness for atypical ideas. We also find that this effect depends on how well‐known entrepreneurs are: for famous ones, emotionally ambivalent framing becomes a powerful tool for increasing audience receptivity, particularly for atypical ideas. Overall, we show how innovators and entrepreneurs can strategically leverage emotional language and craft effective framing strategies that shape how audiences evaluate their ideas.

Abstract Research Summary The importance of entrepreneurial framing for legitimating novelty is well established, but the distinct challenges of legitimating radical novelty have received less attention. We articulate these challenges and propose fictional framing—the strategic and imaginative construction of a narrative world that blends the real and the imaginary using the practices of fictionalizing—as a means for addressing them. Drawing on literary theory, narratology, and the psychology of fiction, we theorize how fictional framing can engage stakeholders in co‐imagining through specific imaginative impacts. We further theorize how stakeholder co‐imagining fosters possibilistic thinking, changing their evaluative logic from focusing on likelihood and fit to what could be possible. Our framework extends the entrepreneurial framing toolkit by theorizing the distinct mechanisms for legitimating radical novelty through fictional framing. Managerial Summary When entrepreneurs pursue radically novel ventures, from space habitation to de‐extinction, conventional framing strategies that emphasize fit with existing knowledge and market categories are often ineffective. We propose that entrepreneurs can instead use fictional framing—the strategic and imaginative construction of a narrative world that blends the real and imaginary using fictionalizing practices. Unlike hype, which inflates expectations, fictional framing invites stakeholders to co‐imagine possibilities and evaluate radically novel projects based on their transformative potential rather than their probability of success. Leveraging the power of fiction to transport, support mental simulation, and prompt audiences to envision themselves acting within the imagined world, we propose how entrepreneurs can turn stakeholders into co‐explorers of the imaginary—active participants in co‐imagining and co‐creating consequential futures.

Abstract Endogeneity in entrepreneurship research is often treated as a statistical complication addressable through advanced econometric tools. This commentary argues that such an approach overlooks a deeper issue: endogeneity is conceptual before it is statistical. Because entrepreneurial phenomena involve reciprocal relationships, evolving mechanisms, and context‐dependent processes, biased estimates frequently stem from underspecified constructs and unclear causal logic. I contend that theory, sufficiently precise to specify constructs, articulate mechanisms, and establish temporal ordering and boundary conditions, is the primary tool for reducing endogeneity in empirical estimation. Integrating theory with structural causal modeling and rigorous empirical design strengthens identification while enhancing explanatory value. I conclude with practical recommendations for scholars, emphasizing theory's central role in producing credible, cumulative knowledge in entrepreneurship research. Managerial Summary Entrepreneurs and managers often rely on data to understand what drives venture success, but data alone can be misleading if the underlying assumptions about cause and effect are unclear. This article explains why strong theory—clear ideas about how and why things work—is essential for drawing reliable conclusions from evidence. Endogeneity, a common problem in business research, occurs when factors influence each other in ways that make results appear stronger or weaker than they are. By using theory to map out mechanisms and likely confounding factors, leaders can make better decisions about which actions truly create value. The article also shows how tools like causal modeling can combine conceptual clarity with rigorous analysis, helping organizations design strategies that are both evidence‐based and trustworthy.

Abstract Research Summary Using 14,108 Kickstarter crowdfunding campaigns, we examine three strategies to gather support from first‐time versus repeat backers: narrative distinctiveness aligning with backers' expectations of novelty, endorsement from Kickstarter staff, and campaign leadership's reciprocity of funding other campaigns. Staff endorsement is more strongly associated with support from first‐time backers, while campaign leadership's reciprocity is associated primarily with repeat backers. Differences between first‐time and repeat backers are evident in evaluating narrative distinctiveness: narratives distinct from past campaigns correlate positively with repeat backers and greater funding but negatively with first‐time backers. Narratives distinct from live campaigns correlate positively with first‐time backers but are associated with lower funding amounts. Our findings conceptualize differences between first‐time and repeat backers that shape the associations between campaign legitimization strategies and backer support. Managerial Summary This work examines how Kickstarter campaigns should be designed to attract both new people and get support from existing community members. We test whether differences between these two target groups exist in evaluating commonly established “success factors” of campaigns: An endorsement from Kickstarter, the involvement of the campaign founder on the platform, and a campaign text highlighting the campaign's novel contributions. We find differences in all three between both groups and conclude with insights on how managers should design crowdfunding campaigns based on long‐term goals and objectives. We also offer some implications for crowdfunding platforms, such as Kickstarter, in supporting content creators in attracting new backers, which aids with overall platform growth.

Abstract Research Summary The entrepreneurship literature has established the benefits of experimentation but has paid comparatively little attention to its costs. We develop a Bayesian model to illustrate the entrepreneurial choice between direct and experimental entry. We argue that performance depends on three mechanisms: information, adaptation, and appropriability. We show that experimental entry is not universally optimal and characterize the conditions under which each mechanism favors or undermines it. We further allow founders to hold biased prior beliefs, showing that greater bias increases the value of experimentation. Extending the baseline model to a multidimensional setting, we show that experimenting across different dimensions leads to a variety of counterintuitive insights. Our analysis produces a series of testable predictions and yields several implications for the broader entrepreneurship literature and practice. Managerial Summary Should every startup run experiments before launching? The lean startup movement says yes—but the answer depends on factors often overlooked by founders and investors. Experimentation creates value when the market is genuinely uncertain and founders' beliefs are far from what customers want. It can backfire when feedback is too noisy to interpret, when pivoting is prohibitively costly, or when releasing an early product may favor imitation. In settings where products have several significant features, which dimensions to experiment in matters as much as whether to experiment at all. Our findings offer guidance to entrepreneurs, investors, and policymakers designing the conditions that make experimentation feasible.

Abstract Research Summary This study develops an incentive‐based view to examine the internationalization pace of young entrepreneurial firms after they have completed an IPO and expanded abroad for the first time. Using a sample of U.S. young entrepreneurial post‐IPO firms that internationalized from 2005 to 2020, we find that the pace of internationalization increases when CEOs are compensated with more stock options and that this relationship is weakened when the stock option compensation of independent outside directors increases. By showing that incentives of different agents shape how fast young entrepreneurial firms internationalize, this study extends international entrepreneurship research by relaxing the implicit assumption that young entrepreneurial post‐IPO firms that can internationalize fast will do so. Managerial Summary What determines the internationalization pace of young entrepreneurial firms after they have already completed an IPO and expanded abroad for the first time? Our research finds that the internationalization pace of these firms increases when the CEO is compensated with more stock options. Absent CEO stock options, stock option compensation of independent outside directors provides a substitute through monitoring and advocacy for faster internationalization. Our research highlights that young post‐IPO firms that can internationalize fast will not necessarily do so, stressing the distinction between the firm resources needed for a strategic action and top management motivation to pursue that action.

Abstract Research Summary Corporate entrepreneurship (CE) requires firms to pursue both exploratory and exploitative innovation, yet limited research explains how intellectual capital (IC) is translated into these distinct outcomes. We develop a contingency model that specifies how and when IC drives exploration and exploitation. We theorize that a firm's capacity for learning and transformation (CLT) functions as a firm‐level learning and transformation capability through which IC can be translated into either exploratory or exploitative innovation. Knowledge breadth strengthens the indirect effect of IC on exploratory innovation via CLT, whereas knowledge depth amplifies the indirect effect on exploitative innovation. We test the model in two complementary field studies. Study 1 employs a time‐lagged design with objective archival data, and Study 2 replicates the findings using survey data. Results consistently support the proposed theoretical model. Managerial Summary Firms operating in fast‐changing and uncertain environments often struggle to balance developing new products with improving existing ones. Our study shows that simply having strong knowledge resources is not enough. What matters is how effectively firms learn from and use that knowledge. We find that firms perform better when they build strong learning capabilities that help them adapt, recombine, and apply knowledge over time. Importantly, the type of knowledge a firm holds shapes this process: broad knowledge supports new product development, while deep, specialized knowledge strengthens improvements to existing products. For managers, this means focusing not only on acquiring knowledge but also on building systems and practices that continuously translate knowledge into action and innovation.

Abstract Research summary We assess how personality alignment in investor–founder dyads is associated with the likelihood of follow‐on funding, a vital outcome for early‐stage ventures. Using machine learning to infer the Big Five personality traits from Twitter data for 9497 business angel–founder dyads, we find that similarity in conscientiousness and agreeableness is associated with a higher likelihood of follow‐on funding, while similarity in neuroticism is associated with a lower likelihood. We attribute these patterns to the trait‐specific benefits of supplementary (conscientiousness and agreeableness) and complementary (neuroticism) fit. Robustness checks and additional analyses support and nuance the conclusion that personality fit matters for venture outcomes, highlighting the strategic role of personality fit in the investor–founder relationship. Managerial summary We show that personality similarity between business angels and founders is associated with whether a venture secures follow‐on funding. Similarity in conscientiousness (being organized and reliable) and agreeableness (being cooperative and trusting) is linked to a higher likelihood of securing follow‐on funding, while similarity in neuroticism (emotional instability) is linked to a lower likelihood. We interpret these patterns as collaboration dynamics: similarity can help through supplementary fit (e.g., shared work style and cooperation), but differences can help through complementary fit (e.g., one partner's emotional stability offsets the other's emotional instability). Practically, founders and business angels should develop self‐awareness and consider personality fit alongside other characteristics when forming partnerships. Policymakers and incubators can support better matches and strengthen collaboration by promoting awareness of interpersonal dynamics.

Abstract Research Summary Financial resource acquisition is crucial for ventures but hindered by uncertainty. While signaling mitigates this uncertainty, its effectiveness hinges on venture novelty and the narratives used to clarify embedded information. Adopting a configurational lens, we examine the interplay among novelty, signals, and narratives in equity crowdfunding (ECF). Applying qualitative comparative analysis (QCA) to 98 ventures on a UK ECF platform, we reveal multiple equifinal pathways to fundraising success and demonstrate that novelty acts as a critical contingency factor: novel and less‐novel ventures require distinct configurations of signals and narratives, and narratives that clarify signals play a crucial role for novel ventures. Our findings extend research on signaling theory, entrepreneurial narratives, and entrepreneurial finance with a nuanced understanding of the interdependence among novelty, signals, and narratives. Managerial Summary Novel and less‐novel ventures face distinct challenges in convincing investors, and we show that there is no “one‐size‐fits‐all” strategy in fundraising. Our study demonstrates how entrepreneurs can convince investors using signals and/or narratives that align with the novelty of their ventures. For novel ventures, specific and coherent narratives are particularly helpful in clarifying signals that contain complex information. Conversely, less‐novel ventures that refine existing offerings may improve fundraising performance by simply emphasizing signals that demonstrate clear product‐market fit. We therefore suggest that entrepreneurs should view signals and narratives as complementary tools and tailor their fundraising strategies to match their ventures' novelty and achieve fundraising success.

Abstract Research Summary Government policy that aims to stimulate business activity often overlooks its indirect impacts on entrepreneurial entry. In particular, the role of free time, especially in concert with liquidity constraints, remains an underexplored factor. In this paper, we exploit two exogenous shocks to workers' free time to furnish plausibly causal effects on entrepreneurial activity: (random) injury and the 2011 amendments to the Illinois workers' compensation laws. Utilizing a two‐way fixed effects estimation, we find that as workers' compensation becomes less generous, that is, by limiting both financial resources and an employee's time away from work, entrepreneurial activity within a specific geographical region is significantly reduced. Thus, we provide evidence of an unintended and negative impact on entrepreneurial activity caused by an indirect policy change. Further, this result unduly affects the recently injured or otherwise disabled. Our results are robust to alternative specifications and data sources, suggesting an important incidence of compensatory insurance regulation on entrepreneurial activity and, as a result, important considerations for future policymaking. Managerial Summary Workers' compensation is a state‐level program that provides replacement wages to workers injured on the job. In 2011, amendments to Illinois' workers' compensation laws made this program less generous in terms of both financial benefits and time out of work. We study the impact of these amendments on entrepreneurial activity. We find that less generous workers' compensation has a large adverse effect on entrepreneurial activity because it constrains two important factors required for experimentation with entrepreneurship: financial resources and time. Our results hold up to several statistical models and controls, including local innovative and high‐tech firms, as well as alternative datasets. Our findings yield important insights for policymakers in other states drafting such regulations and for researchers studying the incidence of such policies.