QAQC Report 1

Selected Article: Camuffo et al. (2020)

Quote: “We have shown that entrepreneurial decision making can benefit from the use of a scientific
approach.”

Argument: The authors analysed 116 Italian start-ups and 16 data points over a 1-year time frame.
The start-ups were divided into two groups: A treatment group and a control group. They both
experienced the same amount of training. However, the treatment group was provided with
scientific decision criteria and the control group wasn’t, causing the use of heuristics in decision
making within the control group. That’s why the researchers have been able to distinguish different
types of decision making to determine the most effective: based on scientific knowledge or
heuristics.

The authors learned several different components to the treatment group, such as building a
business model canvas or setting up a good interview. This could cause significant differences in
decision making. For example, the treatment group asked open-ended questions instead of close-
ended, causing a much better data base for later decision making. The authors then created a
framework that analysed which group could best consider whether the start-up should develop,
pivot or exit a project. This is very important, because false positives or false negatives can cause the
start-up to fail miserably. Start-ups have to be sure that a project can succeed, but also need the
antenna to know when to pivot or exit.

After this research, the authors can conclude that start-ups using the scientific approach are more
likely to pivot or exit, because of the fact that entrepreneurs are more cautious about the
profitability of their ideas while using these methods. The intervention also increases expected
revenue, because of the more stringent conditions for developing an idea. Furthermore, the idea was
better developed after pivoting, because more conservative signals were obtained and there was
more organizational learning within the treatment group. In short, the scientific approach increases
firm performance because of the more easy recognition of low or high returns. The validated
theories help in the recognition of customer needs and market signals, reducing the likelihood of
incurring false positives or false negatives.

Question: The research is only done in a time span of 1 year, isn’t that to short to measure the
progression of a start-up? Only 17 start-ups made revenue, so how can you conclude that the
scientific approach barely incurs false negatives or positives? Is the treat of a group not very different
of a start-up naturally using scientific methods?

Connection: Agarwal et Al. (2021) also makes the connection about developing an idea and the
validation of the strategy in decision making behind it. They imply that a low connection between
these two factors can result in explorative behaviour and developing new ideas. That connects with
Camuffo et al., because they suggest that more understanding about the strategy can force to exit or
pivot. Exiting or pivoting can also be seen as explorative behaviour.