The Promise of Fuzzy Set Theory for Entrepreneurial Judgment

Abstract

We extend recent work on knowledge problems by observing that the complexity, ambiguity, and uncertainty of entrepreneurship pertain not only to action-outcome likelihoods but also to the very criteria of entrepreneurial judgment. Most judgment criteria—value, opportunity, options, outcomes, etc.—are “fuzzy,” rendering much of entrepreneurial judgment imperfectly suited for probabilistic analysis. Fuzzy sets and natural language accommodate partial category membership, thus offering a more approximate representation of the remarkable ability of the entrepreneurial mind to conceptualize ill-structured and abstract problems. We explain how entrepreneurs use linguistic variables to navigate and convey the complex, gradient nature of uncertainty.