Uncertainty and Entrepreneurship: Acknowledging Non-Optimization and Remedying Mismodeling

There has been recent proliferation of entrepreneurship theorizing involving the true uncertainty of a system—most often labeled as Knightian. This has been noted in both individual papers and in the main partial theories that attempt to explain entrepreneurial activity more holistically. We detect a danger in this work involving such true uncertainty—defined by the condition that decisions plagued by it are non-optimizable by every interested party. It is that all the recent theorizing misinterprets that uncertainty in one of two ways: with a logical contradiction (i.e., that the non-optimizable is actually optimizable); or with a misrepresentation (i.e., that an uncertainty consisting of a knowable unknown that can be made known through known means by the time the decision must be made is true). Our concern is that such misinterpretations create unnecessary costs to academics and practitioners who are struggling to define the system they are managing. We explain this concern and its costs, detail the underlying premises, illustrate it with several examples, and then offer various specific directions to improve the theorizing over such uncertainty in entrepreneurship.