Entrepreneurship – When Novices Can Beat Experts

Why does entrepreneurship work? Why can novice entrants to an industry sometimes beat the experts who have been around for so long? A new research paper out of Europe offers one good reason.

Furthermore we use information theory to show that when environment changes suddenly, novice entrants as the entrepreneurs are, actually perform better than experts whose prior knowledge often cause severe biases in prediction, in terms of recognizing and acting upon opportunities.

In other words, expertise is important, unless your environment is changing so rapidly that it makes your expertise irrelevant. This is one of the reasons entrepreneurial strategies like disintermediation are successful.

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