When does experimentation create economic value for early-stage startups? Extant research has highlighted why, what, and how to experiment. This paper develops a theoretical framework to explicate the boundary conditions for when entrepreneurial experimentation creates economic value. Entrepreneurial experimentation is viewed as a process of making strategic choices to validate business ideas in advance of full commitment. Its value creation potential resides in experiential learning to make more informed decisions and in acting flexibly to capture the upside and limit the downside of entrepreneurial ideas. Entrepreneurial flexibility is valuable under the joint conditions of uncertainty and redeployability. The paper explores the major types and sources of uncertainty and redeployability in entrepreneurial experimentation. We use the developed theoretical framework to explain several critical strategic choices, including decisions on initial and subsequent experimentation, pivoting and exit, parallel and sequential experimentation, and independent and collaborative experimentation.
