Honeymoons and the Entrepreneurial Process: A Real Options Perspective

YOUNG ROK CHOI* School of Business

Singapore Management University 469 Bukit Timah Road

Singapore 259756 Tel: +65 6822 0728; Fax: +65 6822 0777

e-mail: yrchoi@smu.edu.sg

DEAN A. SHEPHERD College of Business and Administration

University of Colorado at Boulder Boulder, CO 80309-0419

Tel:(303) 735-5423 e-mail: dean.shepherd@colorado.edu

* Corresponding author

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Honeymoons and the Entrepreneurial Process: A Real Options Perspective

Abstract

This article investigates the entrepreneurial process using a “decision making under

uncertainty” lens and offers a conceptual model proposing that entrepreneurs are motivated to

devise a honeymoon period to manage the corresponding uncertainty embedded in an

entrepreneurial opportunity. We propose that the entrepreneurial process of starting, exiting, and

growing a business forms a chain of real options (i.e., honeymoon periods) and thus a path

dependent evolution of a new firm. This model complements the currently dominant

organizational life cycle perspective by offering an explanation for how entrepreneurs create

new wealth (new assets). Theoretical implications for both the entrepreneurship and real options

literatures are discussed.

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INTRODUCTION

The entrepreneurial process - - starting, exiting, and growing a business - - is complex

and our understanding of it is limited (Aldrich, 1999; Bhidé, 2000; Shane & Venkataraman,

2000). To increase our understanding of how entrepreneurs create new wealth scholars must

focus more attention on the entrepreneurial process itself. It is commonly recognized that the

entrepreneurial process involves uncertainty (Knight, 1921; Rumelt, 1987). Yet previous studies

have primarily used a deterministic life cycle perspective which does not sufficiently consider

the role of uncertainty and decision making and leaves unanswered questions of how new

ventures change and arrive at a specific stage of firm development (Mintzberg & Waters, 1982);

what and how internal and external environmental factors influence the decision to transition

from one stage to the next (Alchian & Demsetz, 1972; Knight, 1921; Penrose, 1952); and what

value is created (Rumelt, 1987).

This article investigates the entrepreneurial process using a “decision making under

uncertainty” lens and offers a conceptual model proposing that entrepreneurs are motivated to

devise a series of honeymoon periods to manage the uncertainties embedded in an

entrepreneurial opportunity (as defined in Kirzner [1997] and Shane & Venkataraman [2000]).

This type of organizing is necessary for entrepreneurs to both minimize the downside risk and

maximize the upside potential of the new opportunity. This process resembles real options

reasoning, a managerial logic dealing with uncertainty (Bowman & Hurry, 1993; Hurry, 1994;

McGrath, 1996, 1997, 1999; McGrath & McMillan, 2000; Sanchez, 1993). In the proposed

model, we explicitly consider different types of uncertainty and relate them to different types of

learning and new asset creation. By adopting real options reasoning, we can gain greater insight

into entrepreneurs’ decisions on firm transition and value creation. Therefore, we view the

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entrepreneurial process of starting, exiting, and growing a business as a chain of real options

(i.e., honeymoon periods), resulting in a path dependent evolution of a new firm (c.f., Bowman

& Hurry, 1993; McGrath, 1996).

This paper proceeds as follows: First, we review the literatures on the entrepreneurial

process and real options reasoning, and propose our view of the entrepreneurial process, in

which uncertainty, and its reduction through learning, represent the underlying logic of the

process. Second, we articulate the nature of the entrepreneurial opportunity and conceptualize

the entrepreneurial process in terms of uncertainty, learning, and new asset creation. We discuss

the honeymoon period and its involvement in the entrepreneurial process as well as the

effectiveness of different learning methods in resolving a specific types of uncertainty. Drawn on

the resource-based view in strategic management, we propose relationships between the

resolution of uncertainties and the creation of new assets. Third, in each section, using real

options reasoning, we propose how entrepreneurs make firm transition decisions and how returns

are achieved. The proposed model sheds a new light on why there are different paths of new

venture development. Finally, we discuss theoretical implications for both the entrepreneurship

and real options literatures.

BACKGROUND AND RESEARCH MODEL

Entrepreneurial Process and Organizational Life Cycle

The entrepreneurial process has been primarily investigated from a lifecycle perspective.

Reynolds and White (1997) use a biological creation analogy to conceptualize the

entrepreneurial process as conception, gestation, infancy, and adolescence. Morris (1998)

proposes a model of the entrepreneurial process, which includes stages to identify an

opportunity, develop the concept, determine the required resources, acquire the necessary

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resources, implement and manage, and harvest the venture. Van de Ven et al. (1984) views the

entrepreneurial process from a product extension perspective, which also follows the stage

principle - - gestation, planning, contract services, proprietary product, and multiproduct stage.

Refer to the appendix for a further review of the literature on the entrepreneurial process.

Since these entrepreneurial process studies adopt a life cycle approach, they are subject to

its limitations.1 First, a life cycle approach attempts to determine what observable,

distinguishable organizational forms exist over its evolution. While it is important for

entrepreneurs to understand the stages in a new venture’s life, another important aspect, which is

largely ignored, is to understand how and why some new ventures change and arrive at a specific

stage, while others do not. Second, on the assumption that changes in organizations follow

predictable stages of development (e.g., Greiner, 1972), scholars show that firms often fail to

exhibit the common life cycle progression (Miller & Friesen, 1984; Mintzberg & Waters, 1982).

This irregularity in stage progression might be explained by the entrepreneur’s decisions. In fact,

the role of an actor’s decisions on firm evolution has largely been ignored (Child, 1997; Penrose,

1952). Third, most previous studies of the entrepreneurial process have focused on firms that

have survived, severely restricting our understanding of failed businesses. Since firm failure is a

possible outcome of the entrepreneurial process, a model that does not consider failed firms may

generate misleading implications. Finally, these previous studies have not sufficiently considered

the role of uncertainty and decision making in the entrepreneurial process. For example,

Reynolds and White (1997) explain that “[O]nce “conception” has taken place, gestation occurs

as the business structure develops, and the operational procedures emerge” (6). Like them, most

scholars of the entrepreneurial process assume that transition from stage to stage occurs

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automatically. However, since building organizational routines requires the resolution of internal

uncertainty the entrepreneur must make decision under uncertainty and the transition from stage

to stage may not be automatic. Since real options directly deal with decision making under

uncertainty, we adopt that perspective and further develop it to increase our understanding of the

entrepreneurial process.

Real Options Reasoning and Entrepreneurial Process

Management scholars have adapted the notion of real options from the financial

investment fields to build theory in management (strategy, technology, and entrepreneurship),

which forms a real options reasoning approach - - a new thought process that is used in devising

strategy and searching entrepreneurial opportunities (Bowman & Hurry, 1993; McGrath &

MacMillan, 2000; Sanchez, 1993). In real options reasoning, scholars attempt to identify and

build option-like managing logics rather than build a valuation model for an investment project

(McGrath & MacMillan, 2000; Sanchez, 1993). Real options reasoning studies in management

are reviewed in Table 1.

…………………….………. Insert Table 1 About Here

…………………….……….

In strategic management, option scholars seem to agree that the firm’s resources and

capabilities act as an option for future opportunities. “Shadow options” represent the firm’s

resources and capabilities that await managers’ recognition (Bowman & Hurry, 1993; Hurry,

1994; Sanchez, 1993). The sequential recognition of shadow options and a series of sequential

investments form a chain of options throughout the firm’s life cycle (Bowman & Hurry, 1993).

1 For a review of life cycle stage models, see Hanks et al. (1993).

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Sanchez (1993) uses the term “strategic options” to indicate the firm’s opportunities for both

growth and operating flexibility, and suggest that the firm’s strategy (and its choices of resources

and capabilities) be developed so as to optimize these strategic options. Some scholars consider

explicit organization strategies as options (Folta, 1998; Hurry, Miller, & Bowman, 1992;

McGrath, 1997).

In entrepreneurship, McGrath (1996) views the entrepreneurial process as an options

chain and explains entrepreneurs’ opportunities and wealth creation with social capital, asset

parsimony, and technical and external uncertainties in the entrepreneurial process. This

perspective of viewing entrepreneurial initiatives as a real option suggests that attempts to

constrain initiatives related to high variance outcomes result in low wealth creation (McGrath,

1999). While real options reasoning has potential to provide more insight into the entrepreneurial

process, there are a number of criticisms that need to be addressed.

Critiques on real options reasoning. First, the concept of an option in management is so

widely defined that it becomes unclear. Bettis (1994) points out that the popular usage of the

term “option” as an alternative is much closer to what is being discussed in the strategy option

literature. Furthermore, by definition (Bowman & Hurry, 1993; Sanchez, 1993), an option is

equivalent to a resource or bundle of resources (Bettis, 1994), which indicates that this approach

of real options reasoning contributes little to our understanding of a management phenomenon

beyond the resource-based view. We argue that little contribution is made because the role of

uncertainty has been de-emphasized. In particular, the role of endogenous uncertainty has largely

been ignored in current real options studies - - “[T]he value of real options lies in the enhanced

ability of the firm to cope with exogenous uncertainty” (Kulatilaka, 1995: 91). Options to wait

and to expand implicitly assume that there is little endogenous uncertainty. For example,

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constructing an existing restaurant or plant may not involve much technological endogenous

uncertainty because decision makers can purchase the necessary knowledge to build the existing

restaurant or plant. The entrepreneurial opportunity, however, entails substantial endogenous

uncertainty such as developing new technologies and building new venture teams.

Second, most of these studies have not explicitly defined the real option being

investigated or its underlying asset. To accumulate knowledge on real options reasoning and

provide explicit managerial implications, explicit definitions are required. “The underlying asset

is an asset with the same risks as the project (or asset) that the firm would own if the option were

“exercised,” that is, if the investment were made and the project completed” (Teisberg, 1995:35).

For example, in the development of an oil field, the underlying asset is an identical, but already

developed oil field (Teisberg, 1995). In a technological positioning investment (a real option),

the future rent stream is the underlying asset of the real option (McGrath, 1997). While McGrath

(1996) defines business formation as a real option and economic return as its underlying asset in

the entrepreneurial process, further extension is required to enhance our understanding of the

entrepreneurial phenomenon through an options lens - - for example, when an entrepreneur

begins an entrepreneurial initiative (a real option), what does the entrepreneur expect or want to

obtain from the initiative? Is it the same for all entrepreneurs? Does it change as the

entrepreneur proceeds through the entrepreneurial process? We propose a model that

acknowledges the abovementioned limitations.

An Integrated Model of the Entrepreneurial Process

Following Garud, Kumaraswamy, and Nayyar’s (1998) suggestion that scholars must

first understand the context in which a real option occurs, we closely examine the entrepreneurial

process and identify its key elements, namely, uncertainty, honeymoon period, learning, and new

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asset creation.

…………………….………. Insert Figure 1About Here

…………………….……….

Our model of the entrepreneurial process is shown in Figure 1. We argue that the

entrepreneur begins the entrepreneurial process with a newly “theorized” opportunity. As

discussed above, entrepreneurs therefore face endogenous and exogenous uncertainties. The

level of these uncertainties depends on the nature of both the new opportunity and the founding

conditions. The initial psychological attachment and resource commitment of the entrepreneur

and founding members form the basis of a honeymoon - - a period where the entrepreneur

attempts to reduce uncertainty surrounding the viability of the new opportunity. This organizing

process resembles a real option because as the uncertainty embedded in the entrepreneurial

opportunity is resolved a new asset is created.

The entrepreneur utilizes various learning activities during the honeymoon period to

resolve uncertainty. Having created a new asset, the entrepreneur faces the question of whether

or not to proceed in building it into a rent generating business. Several internal and external

factors, such as the entrepreneur’s ability and the condition of the strategic factor market for new

assets, will influence the economic return of different option decisions. The entrepreneurs could

sell the new asset and exit the entrepreneurial process or reenter with a new or related

opportunity. For both these cases the real option is related to a “put”. On the other hand, if the

entrepreneur decides to further build up the new asset by remaining in the entrepreneurial

process, he/she exercises a “call” option. In this case the entrepreneur faces another type of

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uncertainty that can be resolved through learning which leads to the creation of a different asset.2

This entrepreneurial process forms a path-dependent chain of real options (c.f., Bowman &

Hurry, 1993; McGrath, 1996). To make our real options reasoning explicit, a direct analogy of

the honeymoon to an option contract is presented in the Table 2. Specifically, the greater the

volatility of the underlying asset, the greater the option value. We further argue that the learning

ability of the entrepreneur influences option value by increasing or decreasing the chance that the

entrepreneur can obtain the underlying assets. We now elaborate on each element of the model

and offer a series of propositions.

……………………………… Insert Table 2 About Here

………………………………

ENTREPRENEURIAL OPPORTUNTY AND UNCERTAINTY

Entrepreneurial Opportunity

Entrepreneurial opportunities are those opportunities to bring into existence future goods

and services rather than producing existing goods and services (Kirzner, 1997; Shane &

Venkataraman, 2000). The sources of entrepreneurial opportunities include technological change

(Schumpeter, 1934), inefficiencies within existing market, the emergence of significant changes

in social, political, demographic, and economic forces, and inventions and discoveries (Drucker,

1985). These entrepreneurial opportunities exist, because different members of society have

different beliefs about the value of resources (Barney, 1986; Casson, 1982; Kirzner, 1997; Shane

& Venkataraman, 2000). Moreover, even in the case of holding the same beliefs, they may differ

in preferences on the way to obtain value from these opportunities. Entrepreneurs are individuals

2 We discuss the detail nature of this process (i.e., sequential vs. simultaneous) in the discussion section.

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that pursue entrepreneurial rents (Rumelt, 1987) - - entrepreneurial rents are defined as “the

difference between a venture’s ex post value (or payment stream) and the ex ante cost (or value)

of the resources combined to form the venture”(Rumelt, 1987: 143). Therefore, we can assert

that entrepreneurial opportunities are those cause-and-effect relationships “believed” to lead to

value creation based on the entrepreneur’s “theorization” on the unproven (c.f., Block &

MacMillan, 1985; McGrath, 1999). Theorizing on these future cause-and-effect relationships

involves inevitable assumptions that lead to various types of uncertainties.

Dimensions of Uncertainty in the Entrepreneurial Process

Uncertainty, according to Knight (1921), refers to situations where an individual is

unable to calculate probabilities on the basis of an objective classification of outcomes. More

generally, uncertainty is defined as “an individual’s perceived inability to predict something

accurately” (Milliken, 1987: 136). Even though entrepreneurs might be optimistic about the

future, they are uncertain about “something,” for example, sufficient demand, successful

development of proprietary technology, harmony with other founders, and an advantageous

position in the industry (Christensen, Suarez, & Utterback, 1998; Tegarden, Hatfield, & Echols,

1999; Wernerfelt & Karnani, 1987). Uncertainties are classified as either endogenous or

exogenous (Dixit & Pindyck, 1994; Folta, 1998; McGrath, 1997; Williamson, 1985). In this

study, we further classify uncertainties into technological endogenous, organizational

endogenous, quasi exogenous, and pure exogenous uncertainties, as shown in Table 3.

…………………….………. Insert Table 3 About Here

…………………….……….

Endogenous uncertainty is largely affected by firm actions (Folta, 1998) and can be

represented by technological and organizational uncertainty. Technological endogenous

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uncertainty is related to the realization of the theorized technological promises. Dixit and

Pindyck (1994) referred to technological uncertainty to indicate the likely costs and probabilities

of accomplishing technical success. Organizational endogenous uncertainty is related to the

realization of organizational routines and a sustainable venture team. As Stinchcombe (1965)

mentioned, the likelihood of shirking and the need for metering would be particularly immense

during the early periods of the entrepreneurial process due to unfamiliar roles and new work

relationships. The new roles and new work relationships indicate that new ventures lack

accountability of organizational actions, which refers to the firm’s ability to document how

resources have been used and to reconstruct the sequences of organizational decisions, rules, and

actions that produced particular outcomes (Hannan & Carroll, 1995; Hannan & Freeman, 1984).

Moreover, scholars proposing the theory of the firm recognize organizational endogenous

uncertainty as a fundamental issue that firms must face and deal with. Alchian and Demsetz

(1972) view the firm as a team production system with two critical organizing tasks - - metering

input productivity and metering rewards - - which are designed to reduce an incentive to shirk.

Transaction cost economics recognizes that uncertainty may arise from endogenous sources such

as adverse selection, moral hazard, or performance ambiguity (Williamson, 1985).

Exogenous uncertainty is “largely unaffected by firm actions and is predominantly

resolved over time” (Folta, 1998: 1011). Exogenous uncertainty - - such as uncertainties in

“input cost” (Dixit & Pindyck, 1994), technological trajectory (Folta, 1998; Wernerfelt &

Karnani, 1987), demand (Wernerfelt & Karnani, 1987), industry infrastructure and legislation,

and competitive environments - - do not appear to be identical in the means by which they are

resolved. Thus we distinguish two types of exogenous uncertainty. Quasi exogenous uncertainty

can be resolved by the venture’s external collective and/or relational activities and its

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investments i.e., it is largely not affected by the new venture’s investments in internal areas, but

can be resolved by either external joint activities among firms, communities, and industries over

time, or the firm’s special investment in external areas (McGrath, 1997). Pure exogenous

uncertainty is primarily resolved by the passage of time (c.f., Achrol, Reve, & Stern, 1983). In

most cases, the entrepreneur or collective activities cannot influence the entire social, economic,

or technological trends. Moreover, there exist some unexpected changes and events in the

environment, which are not included in the expected future consideration sets of entrepreneurs.

These pure exogenous uncertainties are almost impossible to control or influence ex ante (e.g.,

Folta, 1998).

We argue that the entrepreneurial process involves honeymoon periods that are used to

resolve each of the above uncertainties. We now detail the honeymoon phenomenon and the

entrepreneur’s real options reasoning.

HONEYMOON PERIOD FOR UNCERTAINTY REDUCTION

According to Merriam-Webster Collegiate Dictionary, the term honeymoon was coined

from the idea that the first month of marriage is the sweetest. A secondary meaning of

honeymoon is a period of unusual harmony especially following the establishment of a new

relationship. The honeymoon has been observed in the dynamics of various relational formations

at several levels of analysis, e.g., individual-individual as in marriage (Diekmann & Mitter,

1984; Ferriss, 1970), individual-organization as in job match (March & March, 1978), inter-

organizations as in auditor-client (Levinthal & Fichman, 1988), or in organization building such

as new firm formations and dissolutions (Brüderl & Schüssler, 1990; Fichman & Levinthal,

1991). Levinthal and Fichman (1988) capture reasons for the honeymoon observed in various

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contexts: “[A]ll relationships start with some initial capital of favorable prior beliefs, trust,

goodwill, financial resources, or psychological commitment. The fact that a relationship has been

initiated usually indicates that the participants must have some optimism about its viability”

(366).

Recognizing that both the honeymoon and the entrepreneurial process involve beliefs,

theorization, and uncertainty, we propose that the honeymoon is an essential element of the

entrepreneurial process. Entrepreneurs make their initial commitment to the new opportunity’s

value creation based on idiosyncratic beliefs and assumptions. These beliefs and assumptions

will be tested during the entrepreneurial process. We propose that entrepreneurs’ and

participants’ unique conjectures and optimism about the viability of entrepreneurial opportunities

(Shane & Venkataraman, 2000) forms the basis of a honeymoon in the entrepreneurial process.

Though useful, the honeymoon literature in organization fields appear to ignore a fundamental

reason for the existence of the honeymoon -- the presence of uncertainty in the process of

relational formations. In client-auditor relationships, for instance, client companies are uncertain

about a new auditor’s judgment quality on important issues influencing firm values (such as the

going-concern opinion) (Louwers, 1998). Employers are uncertain about applicants’ productivity

and employment match (Simon & Warner, 1992). Potential employees are also uncertain about

the match between their career development and the employer’s human resource management

policy. Entrepreneurs and stakeholders are uncertain about the viability of new opportunities

(Brüderl & Schüssler, 1990). If little uncertainty exists, there is no reason to make a confined

investment or commitment in the relationship formation and no reason to explore its viability. As

a result, we define the honeymoon in the entrepreneurial process as the time the new venture is

permitted by the participants (entrepreneur and stakeholders) to resolve uncertainty in the

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theorized opportunity (thus creating new assets) or until the participants’ resources and

commitments are depleted. Therefore, the presence of uncertainty is necessary to warrant a

honeymoon. As defined in the previous section, four types of uncertainty embedded in the new

opportunity will lead the entrepreneur to form a honeymoon that corresponds to a type of

uncertainty.3

From the option contract perspective, this relationship indicates that the entrepreneur can

create multiple options in the entrepreneurial process and as a result s/he can minimize the

downside risk while maintaining the upside potential. Thus,

Proposition 1a: In the entrepreneurial process there exist multiple honeymoons (a chain

of options), each corresponding to a type of uncertainty (technological endogenous,

organizational endogenous, quasi exogenous, and pure exogenous), until a rent

generating business has been created or until resources have been depleted.

Proposition 1b: Those entrepreneurs that manage the entrepreneurial process through

its multiple honeymoons (a chain of options or sub-entrepreneurial processes) are better

able to reduce possible losses than those who do not.

An entrepreneur may face less uncertainty in one dimension than in other dimensions.

For example, the new venture team that has extensive prior joint work experience (thus high

trustworthiness and shared value among team members) may face a lower organizational

endogenous uncertainty and thus, the team may need a shorter honeymoon period to reduce that

uncertainty. We argue that the length of the honeymoon permitted for the resolution of a

particular type of uncertainty is positively related to the level of that uncertainty embedded in the

3 The presence of the four uncertainties depends on the nature of new opportunities.

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new opportunity. From the option contract perspective, this relationship indicates that the

entrepreneur and stakeholders should expect a longer honeymoon period (longer expiration date)

and a higher option price (in the form of opportunity cost), for an opportunity with a higher

uncertainty. Thus,

Proposition 1c: The higher the uncertainty of a particular type, the longer the

corresponding honeymoon period (option expiration) and thus the higher the opportunity

cost (option price) for the corresponding new asset.

While the new venture invests its resources in the development of technical functions of

the new opportunity, they can also engage in other activities to the other uncertainties. For

example, as a necessary step for product development the entrepreneur can work with lead

customers, suppliers, and distributors. This will reduce some portion of quasi exogenous

uncertainty. Moreover, organizational endogenous uncertainty (routines and team building) can

also be reduced while they repeat product/technology development activities. Pure exogenous

uncertainty reduces as time passes. That is, there might be an overlap between the honeymoons

in the entrepreneurial process, as shown in Figure 1.4 Due to the overlap nature of the

honeymoons for different uncertainties, the total length of the honeymoons (total options price)

will be smaller than the sum of each honeymoon (sum of each option price). Thus,

Proposition 1d: The entrepreneur who goes through the whole entrepreneurial process

using a chain of real options (honeymoons) will pay less option price than other

entrepreneurs who repeat the same type of option (honeymoon) for different

opportunities.

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NEW ASSETS CREATION FROM UNCERTAINTY REDUCTION

Why is it so important that the entrepreneur resolve the uncertainties surrounding a new

opportunity and its potential returns? Institutional theory and population ecology suggest that

stakeholders favor certain and reliable organizational results (e.g., Hannan & Freeman, 1984).

From the entrepreneurship perspective, we suggest that in resolving corresponding uncertainties

embedded in the entrepreneurial opportunity the entrepreneur generates new assets - - assets that

had not previously existed. To understand the nature of the new asset, we first briefly review

literature related to assets and resources in strategic management, and then we articulate the

types of new assets that can be created and their strategic implications.

Resources, Factors and Assets in Strategic Management

Resource-based view explains above normal economic performance of the firm through

the notions of firm resources - - resources, strategic factors, or strategic assets. These notions are

interlaced. In general, resources refer to “a source of supply or support” or “an available means”

(Merriam-Webster Dictionary). Similarly, Amit and Schoemaker (1993) defined resources as

stocks of available factors that are owned or controlled by the firm and these resources include

know-how that can be traded (e.g., patents and license), financial or physical assets (e.g.,

property, plant and equipment), and human capital. Resource-based view scholars are interested

in particular types of resources that are insisted to bring firms above normal economic

performance - - resources that are rare (not widely held), valuable (contribute to firm efficiency

and effectiveness), not substitutable (other resources cannot fulfill the same function), not

4 The possible patterns of the honeymoon seem to largely rely on both the nature of the new opportunity and

founding conditions. We focus here on the entrepreneurial opportunities as such defined in Venkataraman’s (1997) strong premise of entrepreneurship, and independent start-ups.

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imitable (not easily replicated by competitors), and/or not transferable (cannot be purchased in

resource markets) (Barney, 1991; Priem & Butler, 2001).

Such resources are equivalent to the notion of strategic assets, since strategic assets are

defined as the set of firm-specific resources and capabilities that are difficult to trade and imitate,

scarce, appropriable and specialized (Amit & Schoemaker, 1993; Dierickx & Cool, 1989).

Unlike strategic assets, strategic factors in this study can be defined as resources that rare,

valuable, but tradable and not bundled, since these factors are necessary resources to implement

strategy and one can purchase them in the strategic factor market (Barney, 1986). Dierickx and

Cool (1989) argue that “[F]irms may of course acquire imperfect substitutes for the desired

strategic input factor(s) and adapt them, at a cost to the specific use it intends. … “General

labor” is rented in the market; firm-specific skills, knowledge and values are accumulated

through on the job learning and training” (1505). That is, valuable labor forces can be considered

as a strategic factor, while the same labor force bundled with other human resources and

embodied in the firm can be considered as a strategic asset. We now discuss each type of new

asset created through uncertainty reduction in the entrepreneurial process, in which we

characterizes each asset with properties of resources.5

Creating Strategic Technological Assets

We argue that as technological endogenous uncertainty around a new opportunity is

reduced during the honeymoon period, entrepreneurs create new assets. Since the entrepreneur

creates the new asset by reducing technological endogenous uncertainty of the new opportunity,

the new asset is rare. Moreover, it is valuable, since it makes the new opportunity viable

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(through increased efficiency and/or effectiveness) by providing functions for the new

opportunity. The new technological asset may lack some necessary characteristics of a strategic

asset, for instance, they may be not bundled with other firm resources so that they are not firm-

specific and are subject to imitation. That is, the new asset likely lacks asset mass efficiencies

(e.g., the advantage of network externalities), and interconnectedness of asset stocks (e.g.,

necessity of complementary assets and infrastructure) (Dierickx & Cool, 1989). Furthermore, in

the early development of the new opportunity, industry strategic factors (i.e., industry key

success factors) have not likely been defined yet.

The new technological asset arising from the reduction in technological endogenous

uncertainty is insufficient to produce above normal economic profits in the future, if there exist

other types of uncertainty. It requires further development with complementary assets and the

reduction of exogenous uncertainty. For example, a new-to-the-industry Web system that

incorporates both 3D display of fashion items and online supply-distribution procurements

represents a new technological asset but uncertainties in market demand and dominant design

competition hamper an accurate assessment of the new asset’s value. The entrepreneur may be

able to build on the asset with other resources purchased in the strategic factor market or

accumulated internally to create a new strategic asset (Amit & Schoemaker, 1993; Dierickx &

Cool, 1989). The new strategic asset could then be sold in the technology factor market.

Proposition 2a: The new technological asset created from the reduction of

technological endogenous uncertainty is a rare and valuable resource; it is either

5 Even though we use the term “asset” for the outcome of uncertainty reduction in this article, it does not mean

the notion of strategic asset defined in Amit and Schoemaker (1993). Instead, we characterize the new assets with the properties of resources.

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sellable in the technology factor market or further bundled with other resources moving

closer toward a rent generating new business.

Proposition 2b: The greater the volatility of the value of the new technological asset in

the technology factor market, the higher the honeymoon (real option) value for reducing

technological endogenous uncertainty.

Creating Strategic Organizational Assets

Resolving organizational endogenous uncertainty (e.g., shirking, metering input

productivity and rewards, and adverse selection) enhances confidence between the entrepreneur

and key founding members creating a set of cohesive human assets. These cohesive human

assets will share values, knowledge, and skills about business operations and strategy. They

know how to get along, communicate with each other, and have knowledge about each other’s

idiosyncrasies and strengths (Eisenhardt & Schoonhoven, 1990). They are a cohesive team.

More cohesive teams have greater commitment to the organization (e.g., Mathieu & Zajac, 1990;

Podsakoff, MacKenzie, & Bommer, 1996), which may help sustain an extended honeymoon.

The honeymoon provides a “safe” period for the new venture to create routines. Several

scholars have proposed that the reliability of an organization depends on the extent to which the

organization builds routines, as the routines represent the memorized (institutionalized)

knowledge of the organization (Nelson & Winter, 1982). Based on this relationship, scholars

have also proposed that the shared knowledge embedded within an organization’s systems

represent the core capabilities of highly experienced teams and highly-reliable organizations

(e.g., Araujo, 1998; Nahapiet & Ghoshal, 1998).6 Thus, routines increase accountability and

6 Once these routines are created they are not necessarily permanent -- changes that render an organization's

accumulated skills, roles, and routines obsolete, or upset its exchange relationships with the environment, can

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trust among the stakeholders of the new venture. The new organizational asset is rare, since

forming an accountable new venture and building trust among team members are difficult (c.f.,

Stinchcombe, 1965). The asset is also valuable, since it is related to efficient and effective

collective actions (Araujo, 1998). The asset is difficult to trade and difficult for competitors to

imitate because it is deeply rooted in the new venture’s history.

Proposition 2c: The new organizational asset created from the reduction of

organizational endogenous uncertainty is rare, valuable, and a substantially bundled

resource; it is positively related to a cohesive entrepreneurial team and an accountable

new venture.

Proposition 2d: The greater the volatility of the value of the cohesive entrepreneurial

team and accountable new venture in the IPO (Initial Public Offering) or trade sale

market, the higher the honeymoon (real option) value for reducing organizational

endogenous uncertainty.

Creating Strategic Complementary Assets

In the presence of quasi exogenous uncertainty, it is difficult to accurately assess the

ability of strategic technological assets to generate above normal economic profits in the future

The strategic technology assets, created from the reduction of technological endogenous

uncertainty, are rare and valuable resources. However, they are by themselves not sufficient to

prove the new opportunity’s viability in the market and thus unable to generate continuous above

normal profits. For example, only with the strategic technological assets, the entrepreneur will

find it difficult to eliminate market skepticism regarding the newness of the opportunity; the

reduce its reliability of performance thereby increasing mortality risk (Amburgey, Kelly, & Barnett, 1993; Hannan & Freeman, 1984).

21

strategic assets may be contradictory to current technological standards and/or legal regulations.

The new technological assets may need infrastructure or complementary assets to convey its

value to customers, which externally legitimizes the new technological assets.

To do so, the entrepreneur may make investments in shifting boundary conditions such as

regulations and environmental constraints, as argued by McGrath (1997) and engage in co-

evolutionary activities (e.g., Aldrich, 1999; Garud, Kumaraswamy, & Nayyar, 1998) - - joint

activities of new firms, communities, and related industries can increase the legitimacy of new

activities and facilitate infrastructure developments (e.g., Lewin & Volberda, 1999; Van de Ven

& Grazman, 1999). Uncertainty surrounding potential suppliers’ and users’ support, determines,

in part, the value of the new technological assets. The strategic complementary assets provide the

new venture a value chain through which economic profits can accrue. Thus,

Proposition 2e: The new complementary asset created from the reduction of quasi

exogenous uncertainty is rare, valuable, and a substantially bundled resource; it

completes the value chain for the new opportunity.

Proposition 2f: The greater the volatility of the value of the complementary assets in the

value chain, the higher the honeymoon (real option) value for reducing quasi exogenous

uncertainty.

UNCERTAINTY REDUCTION THROUGH LEARNING

Our next investigation is on both how the new venture reduces the uncertainty and how

real options reasoning is involved in the uncertainty reduction method. Entrepreneurs decrease

uncertainty through learning (Huber, 1991; Miller, 1996). Miller (1996) distinguishes six modes

of learning including analytical, synthetic, experimental, interactive, structural, and instrumental

learning. Miller (1996) argues that these modes produce disparate outcomes and must occur in

22

distinctive contexts. Since structural and instrumental learning are based on established routines

and organizational ritual, these types of learning seem less applicable to the entrepreneurial

process. Analytical learning refers to learning through a systematic rational analysis. Synthetic

learning refers to a less systematic but more emergent, intuitive and holistic model of learning,

compared to analytical learning. Experimental learning refers to an intendedly rational learning

through performing small experiments and monitoring the results (Quinn, 1980). Interactive

learning refers to learning by bargaining and trading with internal members and with external

stakeholders (Cohen, March, & Olsen, 1972).

Technological Endogenous Uncertainty and Experimental Learning

Entrepreneurs will benefit from a reduction in technological uncertainty because in doing

so they can create new assets that will be the basis of quality products or services and maybe for

negotiation with investors. This reduction in technological endogenous uncertainty may best be

achieved by learning, investment, and doing (Folta, 1998; McGrath, 1997). Since reducing

technological endogenous uncertainty requires analytical activities, both analytical and

experimental types of learning have potential to reduce this uncertainty. Synthetic and interactive

learning rely on subtle emergent and normative values (Miller, 1996), which are inappropriate

for reducing technological endogenous uncertainty.

Analytical learning is best conceptualized as a scientific and engineering type of learning,

which will create technological knowledge needed to reduce functional uncertainties embedded

in the new products or services. Although analytical learning is well suited to creating

knowledge, entrepreneurs may need to do experimental learning activities in order to materialize

working products or services, since new ventures are bounded by intellectual, temporal, and

economic constraints (Grandori, 1984; Miller, 1996). Learning scholars suggest that

23

experimental learning overcomes such organizational constraints (March & Simon, 1958; Quinn,

1980) and increases the accuracy of feedback about cause-effect relationships between

organizational actions and outcomes (c.f., Warner, 1984; Wildavsky, 1972). For example,

technological endogenous uncertainty can be reduced, and reliability of products and services

enhanced, when entrepreneurs change and modify their original ideas in responding to new

information about its potential viability. This experimental learning by individuals in the

entrepreneurial process appears more important than analytical learning, since the technological

validity of the unproven cause-and-effect relationships will be defined largely by the market.

Thus,

Proposition 3a: Experimental learning is more effective than other forms of learning in

reducing technological endogenous uncertainty. Thus, the more experimental learning

during the entrepreneurial process, the greater the reduction in technological

endogenous uncertainty.

Organizational Endogenous Uncertainty and Internal Interactive Learning

Creating a new business entity is accomplished by multiple actors. To reduce

organizational endogenous uncertainty in this context, team members should be linked through

communication and an authority structure. They also learn from other members of the team if

they have been socialized to organizational beliefs (mutual learning) (March, 1991). By

conducting joint venture creation activities and learning, team members create routines (Cohen

& Bacdayan, 1994). These routines encourage the continuation of joint activities, which

increases accountability and trust among the stakeholders of the new venture.

We argue that building organizational routines relies on interactive learning. Miller

(1996) states that “[L]ike experimentation, interactive learning involves learning-by-doing,

24

which occurs simultaneously in many parts of an organization” (493). Since it is difficult to

systematically experiment with organizational practices and confidence building activities,

experimental learning is rather limited. Instead, interactive learning that happens in a more

emergent and implicit way by bargaining and trading with each other (Cohen, March, & Olson,

1972) will be more effective in informal confidence building. Thus,

Proposition 3b: Interactive learning is more effective than other forms of learning for

reducing organizational endogenous uncertainty. Thus, the more the interactive learning

among team members during the entrepreneurial process, the greater the reduction in

organizational endogenous uncertainty.

Quasi Exogenous Uncertainty and External Interactive Learning

While experimentation may generate information on exogenous uncertainty (for example,

a pilot market test may reveal an aspect of uncertain customer preferences), it does not reduce it.

Entrepreneurs appear to reduce quasi exogenous uncertainty through investments in shifting

boundary conditions (e.g., McGrath, 1997) and co-evolutionary activities (e.g., Aldrich, 1999;

Lewin & Volberda, 1999; Van de Ven & Grazman, 1999). Since reducing quasi exogenous

uncertainty involves mostly collective (at least with one external agent) or political activities 7,

entrepreneurs should be able to perform collective and interactive learning with stakeholders or

other firms in the value chain of the new opportunity (see Miller, 1996). For example, Rosenkopf

and Nerkar (1999) suggest that in a product hierarchy -- consisting of component-specific

communities, firms manufacturing the product, and system-level community -- simultaneous

processes of variation, selection and retention operate and interact at each of these three levels.

7 In political science, collective action refers to the collaboration and cooperation of two or more individuals or

firms in the policy process – e.g., a trade association of firms lobbying political decision makers (Olson, 1965).

25

As the entrepreneur attracts and negotiates with component suppliers and system users, this

uncertainty decreases. In this kind of coevolutionary process, it is essential for a participating

new venture to build more realistic collaborations through negotiation and exchange. Thus,

Proposition 3c: Interactive learning with outside stakeholders is more effective than

other forms of learning for reducing quasi exogenous uncertainty. Thus, the more the

interactive learning with outside stakeholders during the entrepreneurial process, the

greater the reduction of quasi exogenous uncertainty.

Pure Exogenous Uncertainty and Environmental Scanning

Strictly speaking, the only way to resolve pure exogenous uncertainty is to wait and

gather information on environmental changes. Even though entrepreneurs are unable to directly

influence the reduction of pure exogenous uncertainty, they may adopt environmental scanning

activities to collect relevant information. The ability to engage in wide-ranging environmental

scanning produces information on pure exogenous events and contributes to learning through

interpretation (Daft & Weick, 1984; Huber, 1991), and better decisions (c.f., Daft, Sormunen, &

Parks, 1988).

Proposition 3d: Environmental scanning is more effective than other forms of learning

for collecting information on pure exogenous uncertainty. Thus, the more the

environmental scanning during the entrepreneurial process, the greater the information

on pure exogenous events.

Learning Ability and Option Exercise Decisions

According to our model, shown in Figure 1, the entrepreneur and founding team may

make three transitional option exercise decisions before they have established a rent generating

business. One of the purposes of this article is to explain different evolution paths of the new

26

venture through an options lens. Since the entrepreneurial process can be depicted as a process of

creating new assets, we draw on Barney (1986) who argues that in the investigation of potential

sources of above normal economic profits the tradeability or nontradeability of assets is a

nonissue - - the real issue is comparing the total costs of developing (or purchasing) assets with

the value they create. How does the entrepreneur make his/her assessment of the costs and

benefits of an asset? Is it luck, belief, superior expectation or private information? Hayek (1945)

asserts that asymmetrical distribution of knowledge among people leads them to different

economic behaviors. Following Hayek’s (1945) assertion, we suggest that the new venture’s

learning ability influences their option exercise decisions and thus different evolution paths of

the new venture. This is because in the presence of an ability to learn and reduce endogenous

(and/or quasi exogenous) uncertainty will influence the likelihood of obtaining the underlying

asset. In fact, we believe that entrepreneurs’ decisions are influenced by the economic valuation

of their new venture’s learning abilities in a particular option exercise decision.

Specifically, after a new venture has created new technological assets, there will likely be

tension among new venture team members over problems association with metering and

institutionalizing rules. Thus, the most urgent task of the new venture is to engage in building

both a cohesive entrepreneurial team and organizational routines. If the new venture possesses

greater experimental learning ability in reducing technological uncertainty than in internal

interactive learning ability, more value will be produced by repeating the first sub-

entrepreneurial process than by moving forward to the incompetent learning area. By the same

logic, if a new venture lacks competence in external interactive learning, there is a lower

expectation in their ability to create the new complementary assets that are necessary for the

completion of the value chain for the new opportunity. In such a situation, a put option is more

27

economically reasonable for the new venture. In this aspect, the composition of the new venture

team seems to influence its interactive learning ability. Thus,

Proposition 3e: The learning ability of the new venture will positively influence the

likelihood of the transition to the next sub-entrepreneurial process by influencing its expectation

on new asset creation.

DISCUSSION AND CONCLUSION

Implications for Entrepreneurship Research

In this article, we developed a model of the entrepreneurial process that explicitly

incorporates uncertainty and the entrepreneur’s decision making. That is, the entrepreneurial

process is viewed as a nexus of uncertainty, learning, and value creation, in which real options

reasoning can be used to manage the process. Our model of a chain of real options provides a

way to better understand firm evolution in its earliest phases: Entrepreneurs resolve an

uncertainty and create an underlying asset. This way of organizing the entrepreneurial process

minimizes the downside risk, while maintaining the same upside potential for the new

opportunity.

With the extended classification of uncertainty including organizational endogenous and

quasi exogenous uncertainties, the entrepreneurial process model provides a parsimonious view

to enhance our understanding of the entrepreneurial process. As an important outcome of the

entrepreneurial process, various types of value creation are articulated. We suggested three value

creation intermediaries - - new strategic technological assets, organizational assets,

complementary assets, and the creation of a rent generating business. We also argued that these

assets are direct result of reducing uncertainty that is embedded in the entrepreneurial

opportunity, which is an extension of Rumelt’s (1987) assertion that entrepreneurial rents stem

28

from ex ante uncertainty. These value creation intermediaries - - underlying assets of

honeymoons - - are new assets both for entrepreneurs and society. The entrepreneur can sell

these new assets or use them to create a business entity that generates above normal returns.

Another important contribution of this article is the incorporation of the honeymoon

phenomenon as part of the entrepreneurial process. Scholars of entrepreneurship tend to agree

that entrepreneurs initiate disequilibrium in the market, in the sense of discovery of opportunity,

reallocation of resources, and creation of change (Kirzner, 1997; Minniti & Bygrave, 1999;

Schumpeter, 1934; Shane & Venkataraman, 2000; c.f., Sarasvathy, 1999). The presence of the

honeymoon implies that within the context of disequilibrium initiatives and thus high uncertainty,

entrepreneurs may attempt to be rational by organizing the entrepreneurial process with

honeymoons, following real options reasoning.

Implications for Managerial Real Options Research

Our real options model of the entrepreneurial process has made a number of contributions

over and above previous real options studies in management fields. We identified gaps in the real

options literature - - the role of endogenous uncertainty and learning in generating and exercising

real options has been largely ignored in the literature. The present study suggested a way to fill

these gaps by illustrating, for example, how technological endogenous uncertainty motivates the

entrepreneur use a honeymoon (a real option) for new technological assets (underlying assets).

Learning activities reduce uncertainty necessary to develop the underlying assets.

This approach is considered a response to recent debates on real options theorizing in

management. Garud, Kumaraswamy, and Nayyar (1998) suggest that the real options approach

should embrace the aspects of coevolutionary dynamics (simultaneously rather than sequentially)

and examine the context in which real options occur. The model in this article supports both

29

simultaneous and sequential aspects of a technology real option. A technological real option

possesses a simultaneous coevolutionary dynamics in that multiple uncertainties are involved

from the beginning of the real option and there might be some overlap among corresponding

honeymoons. The technological real option, on the other hand, possesses a sequential

progression in that decision makers may need to resolve a salient uncertainty at a specific point

in time.

Also, Bettis (1994) proposes that real options scholars need to pay more attention to the

organizational process in the creation and use of options rather than a specific option itself. We

further argued that the honeymoon is an organizing process for entrepreneurship and acts as a

real option. Responding to Bettis’ suggestion, we proposed a model that helps explain how new

ventures can differ in their honeymoons (real options) for new assets and the organizational

factors (e.g., learning ability in this article) that influence the firm’s ability to do so. His

emphasis on capability and resources is extended with our arguments on learning. We focused on

the ongoing process of resource and capability development rather than the allocation of existing

resource or capability.

There exist issues around our real options approach to the entrepreneurial process, which

are beyond the scope of the present article but are worthy of future research. First, it is important

to investigate the distinctive patterns of various uncertainties throughout the entrepreneurial

process. The patterns will be influenced by founding factors such as the composition of the

founding team and level of newness of both the technology and market. The next question will

be in what order should entrepreneurs reduce different uncertainties. Should the entrepreneur

reduce technological endogenous uncertainty first before organizational endogenous or quasi

exogenous uncertainty? Does the differing order of uncertainty reduction impact the path of new

30

venture evolution and the ability to create value? To further investigate this issue, one may draw

on the decision-making literature and/or investigate empirically the patterns of uncertainty

resolution. Finally, scholarly attention needs to also focus on the timing and content of option

exercise decisions within the entrepreneurial process with emphasis on environmental and

individual factors that influence the entrepreneur’s decision (e.g., nature of opportunity,

perception on mortality risk, and psychological attachments). This could be tested using a think

aloud procedure and/or conjoint analysis based on hypothetical scenarios.

Conclusion

In this article we developed a theoretical model to view the entrepreneurial process as a

path-dependent chain of real options incorporating uncertainty and an entrepreneur’s decision

making. By doing so, this article addresses previously unanswered questions on the

entrepreneurial process and value creation. Moreover, this article extends the real options

literature in management by articulating the roles of various uncertainties and learning in

entrepreneurs’ real options reasoning and by showing a way that an organizing process such as

the honeymoon can be considered real options.

31

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TABLE 1

Summary of Studies Adopting Real Options Reasoning in Management

Authors (Year)

Application Fields Real Options Underlying Assets Related Uncertainties

Sanchez (1993)

Strategic management

Resources and capabilities Learning and revenues (from new products)

Exogenous uncertainty

Kogut & Kulatilaka

(1994)

Strategic management

Platform investment in new capabilities, including new technologies, organizational capabilities, and joint venture, flexible manufacturing system, country platform

Not explicitly mentioned Exogenous uncertainty

Bowman & Hurry (1993)

Strategic management

Strategy, a process of organizational resource-investment choices

Not explicitly mentioned (exploitation of the opportunity)

Environmental uncertainty (Exogenous)

Folta (1998)

Strategic management

Governance choices (equity R&D collaboration & JV)

Technology acquisition Emphasize exogenous uncertainty & mention endogenous uncertainty

McGrath (1996)

Entrepreneur-ship

Entrepreneur’s resources as shadow option; business formation as real option

Wealth creation External uncertainty (exogenous) & technical uncertainty (endogenous)

McGrath (1999)

Entrepreneur-ship

Entrepreneurial initiatives Wealth creation Not explicitly mention

Hurry, Miller, & Bowman (1992)

Strategy & Technology management

Japan VCs' Investment New technology Not explicitly mention

McGrath (1997)

Technology management

Technology positioning investment

Rent stream Recognize three types of uncertainties (technical, input cost, and boundary conditions) and emphasize the value of shifting boundary conditions (exogenous uncertainty)

Hurry (1994)

Strategy & International

business

Four shadow options (entry, exit, global/integration, flexibility)

Not explicitly mentioned Exogenous uncertainty

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TABLE 2

An Explicit Analogy of the Honeymoon to a Call Option Contract

Elements of a Call Option Contract Corresponding Elements of the Honeymoon

1. A call option 1. Forming the honeymoon

2. An underlying asset (a share of stock) 2. A new asset (ultimately a rent generating business entity)

3. Premium (option price) 3. Opportunity cost of forming the honeymoon

4. Exercise price (buying price of the stock) 4. Expense paid for maintaining the honeymoon, including investments

5. Expiration date 5. The honeymoon length

38

TABLE 3

Dimensions of Uncertainty and Related New Assets Technological

Endogenous Uncertainty

Organizational Endogenous Uncertainty

Quasi-Exogenous Uncertainty

Pure Exogenous Uncertainty

Related Studies

Dixit & Pindyck (1994), Folta (1998)

Alchian & Demsetz (1972), Hannan & Freeman (1984), Stinchcombe (1965), Williamson (1985)

McGrath (1997) Achrol (1991), Achrol, Reve, & Stern (1983), Folta (1998), Weiss & Heide (1993), Wernerfelt & Karnani (1987)

Definition One that is related to technological functioning of a new opportunity and can be resolved by the new venture’s internal technological activities

One that is related to shirking, need for metering, and accountability of organizational actions, and can be resolved by the new venture members’ internal managerial activities

One that is related to external factors affecting the viability of the new opportunity and can be resolved by the new venture’s external collective and/or relational activities (e.g., , industry infrastructure, regulation, and particular technological regime, etc.)

One that is related to external factors affecting the viability of the new opportunity and can not be resolved by any kinds of the new venture’s internal and external activities (e.g., demand, the entire social, economic, or technological trends).

Learning Methods

Experimental learning Internal interactive learning

External interactive learning

Environmental scanning

New Assets

New technological strategic assets

Organizational routines; a sustainable entrepreneurial team

Jointly possessed complementary strategic assets (dominant design; complementary assets; favorable legal environment; all these assets together make up a value chain for the new opportunity)

Rent generating new business entity

Nature of asset

Rare & valuable resource (increase technological efficiency & effectiveness)

Rare, valuable (increase organizational efficiency and effectiveness); & substantially bundled resource

Rare, valuable (increase system level efficiency and effectiveness); & substantially bundled resource

Rare, valuable, & bundled resource

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FIGURE 1

An Integrated Model for the Entrepreneurial Process: The Honeymoons as Real Options

Entrepreneurial Process (Time)

Pure exogenous uncertainty

Quasi exogenous uncertainty

Organizational endogenous uncertainty

Technologicalendogenous uncertainty

Forming honeymoon Forming honeymoon Forming honeymoon Forming honeymoon

Engaging Learning Engaging Learning Engaging Learning Scanning environments

Creating New Assets Creating New Assets Creating New Assets Rent generatingbusiness entity

Real optiondecisionmaking

Sell accumulated new assets & exit or restart

Real optiondecisionmaking

Real optiondecisionmaking

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* Sub-entrepreneurial Process (Real options reasoning)

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