Listening to Individual, Social, and Cultural Signals Can Lead to a Novel and Successful Business

Children in Ghana playing game with one wearing a blindfold
Even if they don’t have all possible information before them, entrepreneurs make selections from the thoughts and knowledge available at the point of decision. (Photo: Pambelle12/CC BY-SA 4.0/Wikimedia Commons)

Laura Niemi, a development specialist at the University of Turku, reflects on a recent research article, “Immanent sensemaking by entrepreneurs and the interpretation of consumer context,” she and her co-authors Pekka Stenholm, Henri Hakala, and Jenni Kantola published in the International Small Business Journal.

Once upon a time, a person who lived an ordinary life encountered an everyday problem from which he got an idea. He truly believed in his idea and decided to turn it into a product. Without any previous experience, he decided to start from scratch even though he had all the odds against him. At first, the product that he had in mind barely even worked. It was a complete disaster. However, the failures that he encountered did not hold him back. He was passionate about his idea and worked hard to bring to the market a product he had in mind. In the end, he overcame several obstacles and succeeded to create a new value in form of a product that solved the original everyday problem. In this way, he became a successful entrepreneur, a hero, who offered us a product that we can now love and cherish. The end.

This story reminds us of the many stories that today are presented widely in the media, told in classrooms, and viewed in entrepreneurship research. This is the story that we want to hear, a story about a heroic person doing transformational things from which we others can be inspired. This story tells us how a single person, by himself, overcame several obstacles and created a new value in a form of a product that was introduced profitably to the markets.

headshots of Laura Niemi, Pekka Stenholm, Henri Hakala and Jenni Kantola
Clockwise from top left, Laura Niemi, Pekka Stenholm, Henri Hakala and Jenni Kantola

However, this is not the whole story of entrepreneurship. This kind of story is a one-sided, opportunity-oriented, and individual-centered story about output-based value creation. It does not pay attention to the specific task environment from which the new value truly emerges. Therefore, it leads to a limited understanding of the essence of entrepreneurship and new value creation.

Our recent research shows that the new value-creating activity demands creativity and judgment in the face of unclear goals, open-endedness, and uncertainty. The existence of uncertainty does not mean that the decision-making is hopeless or that its results are random. When making decisions, entrepreneurs make selections from the thoughts and knowledge available at the point of decision.

With our study, we demonstrate that immanent sensemaking and framing, actually work as mechanisms that offer entrepreneurs methods of meeting the uncertainty and through which entrepreneurs capture relevant knowledge from the specific environment for their judgments. Hence, immanent sensemaking highlights the everyday practices through which entrepreneurs interact with, interpret, and account for their experience of reality. Most importantly, our study reveals that entrepreneurs absorb individual, social, and cultural signals from consumers to support their judgment and action. The findings indicate that entrepreneurs can improve their decision-making and reduce the risk of wasting resources caused by incorrect assumptions about consumers and their consumption behavior by making sense of the consumer environment.

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Laura Niemi

Laura Niemi is a Development Specialist at the Research Development Unit at the University of Turku, Finland.

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