Entrepreneurial Judgment, Uncertainty, and Resource Mobilization

Enrolling investors is often critical to new venture success. Complementing previous entrepreneurial finance studies, we highlight problems that relate to differences in beliefs and cognition—rather than incentives—among potential stakeholders in an entrepreneurial venture. Building on Austrian theories of uncertainty, subjective judgment, and exemplary goods, we focus on the challenges of communicating novel and complex projects under Knightian uncertainty. Examining the process of forming intersubjective agreements between entrepreneurs and financiers regarding the value of entrepreneurial projects, we describe two approaches—what we call an “opportunity discovery path” and an “effectuation/bricolage path”—that entrepreneurs and financiers can use to resolve alternative sources of uncertainty sequentially rather than simultaneously.