The Theory-Based View and Strategic Pivots: The Effects of Theorization and Experimentation on the Type and Nature of Pivots

Abstract

We examine how formalization in cognitive processes (theorization) and evidence evaluation (experimentation) influence the type (frequency and radicalness) and nature (impetus, clarity, and coherence) of entrepreneurial pivots. We use a mixed-method research design to analyze rich data from over 1,600 interviews with 261 entrepreneurs within a randomized control trial in London. A quantitative analysis that complements human-coded and machine learning-coded measures reveals that conditional on pivoting, theorization and experimentation are complementary in their association with making single radical pivots. The extensive qualitative-case comparison further elucidates interactions between theorization and experimentation that generate differences in the nature of pivots that range from purposeful (clear and coherent rationale deriving from articulated theory and experimentation), postulatory (informed by articulated theory but not incorporating nuances or surprises generated from experimentation), and remedial (stemming from adjustments to preformed theories that drew on prior experiences) to reactive (driven by environmental stimuli absent a clear theory of value). These insights contribute to the theory-driven strategic decision-making literature and offer practical insights for entrepreneurs, incubators, and policymakers on the benefits of a scientific approach to entrepreneurship. History: This paper has been accepted for the Strategy Science Special Issue on Theory-Based View. Funding: The authors acknowledge financial support from the UK Government Department of Business Energy and Industrial Strategy—Innovate UK [Project 104754, “A Scientific Approach to SMEs Productivity”]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/stsc.2024.0183 .

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