Prior research suggests that firms in entrepreneurial settings benefit from a scientific approach to decision making that combines cognitive and evidence-based components. But to what extent and under what conditions is the scientific approach to decision-making associated with superior performance? To address this question, a field experiment with 261 UK entrepreneurs is conducted at different stages of business development, training half of them on a scientific approach to decision making. The results show that firms make the most of scientific decision-making when they are at a more advanced stage of development, as they generate higher revenues and productivity.
Firm’s decision making process, key changes in the firm in terms of value proposition and performance.
Firms receiving the scientific approach version of the training are more likely to terminate all activities related to their business within the nine months following the start of the training. Being taught the scientific approach to decision making makes firms more likely to pivot only once, as opposed to not pivoting or pivoting several times.Adding the scientific approach component to the training does not have an effect on revenue, costs and value added for participant firms within the eight months after the training, on average. However, the training raises the revenue, costs and value added of firms that were already more established to start with (USD 27,000, USD 23,000 and USD 3,000 respectively for a firm with an initial annual revenue of about USD 83,000). Entrepreneurs at a more advanced stage of development pivot more but engage in less radical pivots - changes to the value proposition or customer segment. This suggests that more established businesses benefit more from the scientific approach training given that they are able to apply it in a more focused and contextualised way. The scientific approach leads to increases in employment for firms at all developmental stages within the first eight months, leaving open the possibility of further effects on business performance showing beyond the observation window.