Entrepreneurial Sensemaking: Building Novel Businesses In New Market Space

Abstract

The research question that motivates this dissertation is: How do firms build new-to-the-world kinds of businesses that serve markets that do not yet exist? To answer it, I begin by drawing on theories of inductive entrepreneurial processes such as improvisation, bricolage, effectuation, interpretive processes, and reflective practice to develop an integrative framework for examining how opportunities are constructed. The framework‟s components - flexible goals, network transformation, leveraging of contingencies, and resource reenactment - help distinguish when entrepreneurs act to construct opportunities rather than discover and exploit them. Using this synthetic framework as a lens, and contrasting it to an opportunity discovery mindset, I then examine the cases of the two western firms that deployed field teams to create and launch novel businesses in undeveloped markets - the base of the economic pyramid (BOP). These businesses were intended to provide innovative products and services for which no there were no extant markets; they were also intended to produce social and environmental benefits while creating value for their shareholders. I term the grounded theory that emerges from these ethnographic studies: entrepreneurial sensemaking. In this process, the enactment of an opportunity discovery mindset in the firms‟ upper echelons contrasts with the opportunity construction logic used by the field team. The interaction of these distinct outlooks leads to the development of a hybrid logic that meshes some of the firms‟ initial goals with the artifacts and opportunities that are constructed nonlinearly in the field and embeds them in the new venture. The dissertation contributes to our understanding of: firms‟ innovation strategies for serving the BOP, the conditions that induce opportunity construction, entrepreneurship as a social process that stretches beyond the single entrepreneur or entrepreneurial team, a category of bottom -up meets top-down strategy making process, and how innovation processes that require isolation from existing networks can be combined with those that call for the leveraging of established relationships.