An entrepreneur's dilemma : An optimal stopping rule in pivoting

Tsionas, Mike G. and Patel, Pankaj C. (2022) An entrepreneur's dilemma : An optimal stopping rule in pivoting. Managerial and Decision Economics, 43 (8). pp. 3498-3515. ISSN 0143-6570

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Abstract

Though pivoting is widely practiced by entrepreneurs, an optimal stopping rule in pivoting remains unexplored. Proposing an optimal foraging model and accounting for competition in exploiting an opportunity, we identify an optimal stopping rule of 30% gain-to-loss ratio. That is, additional gains are less feasible when 70% of the pivoting across future plausible versions of opportunities are traversed to. The findings have practical implications for entrepreneurs.