Thomas Zellweger

Building on pragmatism, we advance an entrepreneur-as-scientist perspective and depict entrepreneurs as engaging in causally inferential action by forming beliefs, testing these beliefs, and responding to the feedback received. However, this sequence of entrepreneurial actions arrives with a set of companion doubts: namely, doubt about productmarket fit, because the entrepreneurs' beliefs are self-chosen; doubt about feedback validity from false positives or false negatives; and doubt about over-and under-fitting in responses to feedback. We discuss the rationality of heuristics deployed by the entrepreneur to overcome these doubts. Our insights contribute to the microfoundations of entrepreneurial action and strategy by explaining how entrepreneurs generate the information to produce value out of uncertainty.

In a thoughtful comment on our paper (Zellweger & Zenger, 2022), Sergeeva, Bhardwaj, and Dimov (2022) join us in advocating for a pragmatist perspective on entrepreneurship. The authors however offer two closely related critiques of our pragmatist perspective. They suggest entrepreneurs are more than scientists seeking to understand their world, but rather engineers, designers, and artists who act to produce value within it. They also situate our pragmatist perspective within the epistemological creation vs. discovery debate, and cast us into the discovery camp where entrepreneurs merely seek to discover a future that already objectively exists in the present. In our comments below, we develop two responses. First, while we wholeheartedly agree that entrepreneurs act to create value as they solve problems, in doing so, all humans, including entrepreneurs, engineers, and artists act as scientists. Second, while we reject the placement of our perspective in the discovery camp, we argue that our entrepreneur as scientist perspective and pragmatism more generally find little use for the made vs. found distinction.

We study insider trading in family firms and compare the profitability of insider purchases and sales of family insiders, i.e. insiders who are related to the founding family, to those of nonfamily insiders, i.e. insiders without such family ties. Probing a sample of 37,012 insider trades from 241 family firms, we find that family insiders generate higher abnormal returns compared to nonfamily insiders for insider purchases. For insider sales, transactions that imply significant litigation and reputational risks, the profitability is significantly lower for family insiders compared to nonfamily insiders. We also distinguish between family insiders who are actively involved in the firm and family insiders who are significant shareholders but not otherwise involved in the firm. The profitability of insider sales is significantly higher for family insiders without management involvement, who are thereby under less regulatory scrutiny, compared to insider sales by family insiders with an active management role.

Incumbents typically seek a highly committed and at the same time highly competent child as a successor, yet such a candidate is often not available. Extant literature is unable to predict which desired attribute—commitment (i.e., willingness) or competence (i.e., ability)—is most important in this dilemma. Drawing from institutional logics literature, we suggest that the incumbent’s personal experiences, education, and cultural embeddedness, as much as firm-level situational stimuli, direct incumbent attention to either corporate logic, favoring competence, or family logic, favoring commitment, to guide decision-making about which family member to choose as a successor. We test our hypotheses using policy capturing with responses of 1,060 family firm owner-managers, and contribute to research on succession, family firms, and institutional logics.

Integrating relational embeddedness arguments with Penrosean growth theory, we compare the growth of firms run by spousal entrepreneurs with firms run by sibling entrepreneurs. We theorize that trust, identification, and mutual obligations—the three facets of relational embeddedness—are more pronounced in spousal teams than in sibling teams, which provides spousal teams with advantages over sibling teams in generating firm growth. Probing a sample of all private firms in Sweden over a three-year period, we find support for this conjecture. Exploring boundary conditions to this baseline relationship, we also find that firm age weakens the growth advantages of spousal teams over sibling teams and that industry experience heterogeneity within the entrepreneurial team reinforces these growth advantages. These results provide important contributions for research on firm growth, the social embeddedness of firms, entrepreneurship, and family business.