IMAGINING AND RATIONALIZING OPPORTUNITIES: INDUCTIVE REASONING AND THE CREATION AND JUSTIFICATION OF NEW VENTURES.

Abstract

We argue that creating novel ventures consists of inductive analogical or metaphor-ical reasoning, which generates a platform for the creation and commercialization of novel ventures and facilitates the comprehension and justification of a venture. We argue that such inductive reasoning is shaped by two determinants (the applicability of prior entrepreneurial experience and the motivation to resolve uncertainty and acquire legitimacy) that interrelate to predict and explain patterns of analogical and metaphorical reasoning by which novice and experienced entrepreneurs construct meaning for themselves as well as others in the early stages of creating a venture. The creation of new ventures is a process by which entrepreneurs come to imagine the oppor-tunity for novel ventures, refine their ideas, and, after an initial investment, justify their ventures to relevant others to gain much-needed support and legitimacy (e.g., Alvarez & Barney, 2007; Mc-Mullen & Shepherd, 2006). Yet how do entrepre-neurs come to create and justify new ventures in such a way that they acquire institutional legit-imacy and the necessary resources for venture growth? Despite an increase in conceptualizing and specifying the process of entrepreneurship (e.g., Zott & Huy, 2007), research has not fully addressed this question, with most accounts the-oretically or empirically equating the processwith antecedent cognitive scripts or characteristics of entrepreneurs (e.g., Baron & Ensley, 2006; Busen-itz & Barney, 1997; Shane, 2000) or with perfor-mance outcomes and the achievement of legiti-macy in an industry (Aldrich & Fiol, 1994; Starr &