Paradoxum Ex Machina: Exploring the Impact of Generative Artificial Intelligence Technologies on the Strategies and Actions of Entrepreneurial Ventures

Abstract

The rapid advancements of artificial intelligence (AI)—and more recently, generative AI (GenAI)—are fundamentally reshaping the entrepreneurial landscape, altering how entrepreneurs acquire critical resources, tackle uncertain environments, develop opportunity, and address entrepreneurial action processes. Despite these dramatic transformations that we have already witnessed, the era of AI technologies is often described as 'just the beginning.' As these transformative technologies become the new norm in the field of entrepreneurship, the use of these technologies raises important questions regarding the transformative benefits as well as the perils these technologies introduce in the entrepreneurial landscape. Accordingly, this dissertation explores the dual nature of AI and GenAI as both enablers and disruptors in entrepreneurship, offering a theoretical and empirical investigation into their transformative effects across three core entrepreneurial domains: legitimacy and resource mobilization, opportunity identification, and venture ideation.

Through three interrelated essays, this dissertation explores three critical paradoxes that are introduced or magnified by GenAI technologies to provide a profound understanding of how entrepreneurs are able to create and capture value by using with these technologies. The first essay focuses on the paradox of legitimate distinctiveness, analyzing how AI startups use rhetorical strategies (i.e., particularly firm hype) to attract and secure investor support. This empirical study demonstrates that while moderate hype enhances firm valuation, excessive hype backfires unless bolstered by credibility and comprehensibility factors. This study also offers novels empirical contributions to the field of entrepreneurship by developing a computational linguistic approach to measure hyperbole, offering methodological tools for future research.

The second essay investigates the automation-augmentation paradox, theorizing the emergence of hybrid intelligence through entrepreneur–AI ensembles and its implications for the rise of cyborg entrepreneurship. By integrating entrepreneurial and artificial intelligence, these ensembles, or as "cyborg entrepreneurs," demonstrate enhanced task performance through the emergence of a shared cognitive system shaped by complementary human and AI capabilities. The essay defines and conceptualizes hybrid intelligence as comprising three core dimensions: transactive memory, generative learning, and meta-heuristic reasoning. Together, these dimensions provide a theoretical framework for understanding how hybrid intelligence influences opportunity identification, entrepreneurial action, and entrepreneurial overall task performance.

The third essay addresses the paradox of future knowledge by examining the epistemic risks GenAI introduces during the ideation stage and their potential impacts on opportunity actualization processes. While GenAI can produce highly creative venture ideas, these outputs may be erroneous, misleading, implausible, or difficult to interpret. Drawing on the entrepreneurial work and entrepreneurial judgment literatures, this essay explores the unique types of challenges these tools pose and mechanisms for entrepreneurs to navigate them. Specifically, it introduces a novel entrepreneurial judgment framework, comprised of possibility and plausibility judgments, to guide entrepreneurs in assessing the attainability and potential value of pursuing and acting on GenAI-generated ideas. This framework provides a structured lens for mitigating epistemic uncertainty and enhancing decision quality during early-stage opportunity development.

Collectively, these essays provide a cohesive theoretical foundation for understanding how the growing adoption of AI and GenAI influences entrepreneurial action, cognition, and communication, offering multifaceted contributions to sociology of expectations, entrepreneurial cognition, entrepreneurial judgment, and entrepreneurial action theories. They highlight both the promise and perils of these technologies, laying the groundwork for future research and offering practical insights for navigating a rapidly evolving entrepreneurial environment.