Emergent design

This paper reports on a field study of the founding of a new company in a nascent industry. We examine how the company's founders, facing the high ambiguity inherent in very early phases of a new industry, developed an idea for a new venture. Our qualitative data reveal the company's founding as a social, integrative process that unfolded through a series of collaborative, ad-hoc interactions. By aggregating previously identified problems in several existing industries, the founders articulated an innovative idea for a new venture in a nascent industry. The seeds of the new venture existed in the company's founders' disparate beliefs about actionable problems, but the idea that formed the venture was an innovative integration of these problems. We develop a process model that explains how, under conditions of ambiguity, new businesses can take shape through emergent design: a collaborative social exchange that resembles the innovation process. We identify three factors-psychological safety, cognitive flexibility, and psychological ownership - that enable the three steps that comprise this process. By illuminating the formation process of an entrepreneurial organization, we contribute to organizational literatures on entrepreneurship, collective decision-making, and innovation.