Does a Theory-of-Value Add Value? Evidence from a Randomized Control Trial with Tanzanian Entrepreneurs

Entrepreneurs making decisions under uncertainty are encouraged to evaluate their initial ideas through hypothesis testing, but entrepreneurial approaches vary in their emphasis on ex-ante theory development prior to collecting evidence. In this paper, we examine whether and how entrepreneurs benefit from adopting an evidence-based approach or a theory-and-evidence-based approach to decision making. We conducted a field experiment with Tanzanian agribusiness entrepreneurs by randomly assigning entrepreneurs to two different training conditions. We find that entrepreneurs in the theory-and-evidence–based condition have higher economic performance during the observation period following the intervention. We conjecture this result stems from differences in the types of changes enacted: entrepreneurs in the theory-and-evidence–based training make more coordinated changes that encompass both core and operational elements of their business models. Funding: This work was supported by the Foundation for Food and Agriculture Research [Grant DFs-18-0000000008], the Rockefeller Foundation [Grant 2018 FOD 004], and Ed Snider Center for Enterprise and Markets. The study was conducted in accordance with the Declaration of Helsinki and approved by the Institutional Review Board of the University of Maryland, College Park [Project 1634929; original approval February 26, 2021]. A. Camuffo and A. Gambardella acknowledge support from the European Research Council under the European Union’s Horizon 2020 Research and Innovation Programme [Grant 101021061]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2023.17590 .