Opening the Aperture: Explaining the Complementary Roles of Advice and Testing When Forming Entrepreneurial Strategy

Abstract

Forming entrepreneurial strategy is difficult, as the future value of strategy alternatives is uncertain. To create and capture value, firms are advised to consider and test multiple alternative strategy elements. Yet, how firms generate and test alternatives remains understudied. As entrepreneurial firms lack resources for broad search, they often draw upon advisory resources from outside the firm. However, advice can be difficult to extract, absorb, and apply. Although scholars have examined static attributes of the entrepreneur or advisor to explain whether advice is used, a dynamic explanation of how advice is produced and informs strategy testing and formation is missing. In an 11-month field study, we observed 25 founders of 12 food and agriculture firms interacting with a common pool of 34 advisors in an entrepreneurship training program. Leveraging the program’s structured design, we observed 165 advice interactions over three phases. No firm took advice and applied it directly to firm strategy. When entrepreneurs engaged literally with advice, they later discounted it—distancing advice from strategy. In contrast, entrepreneurs that coproduced advice challenged advisors to craft novel advice relevant to their strategy, translated it to make it actionable, and tested it—integrating advice into strategy. Firms that distanced advice from strategy did not test strategy alternatives, whereas firms that integrated advice into strategy tested multiple alternatives, explored broader markets, and adapted their strategies. We contribute a grounded process model that explains how coproducing advice opens firms’ apertures to consider strategy alternatives, whereas testing informs the strategy elements chosen. Funding: This research was funded in part by the Ewing Marion Kauffman Foundation grant to Susan Cohen. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2023.1656 .