On the use of imagination by entrepreneurs

Many scholars acknowledge that entrepreneurs use their imagination. What entrepreneurs use their imagination for is known. However, what imagination is, and how entrepreneurs can use their imagination most effectively remain unknown. The goal of this research is to increase our understanding of the use of imagination by entrepreneurs. We conceptualize, demarcate and define the concept of imagination based on social and cognitive psychology literature. Subsequently, we theorize how certain factors influence the effective use of imagination by entrepreneurs. Based on the literature and the interviews we conducted with entrepreneurs, we developed propositions that guide us in our research. We analyzed the use of imagination by entrepreneurs by studying their diaries and conducting experiments. Among other results, we find that prospective thinking, which is future-oriented imagination, is effective for entrepreneurs to identify business opportunities. Additionally, we find that counterfactual thinking, which is alternatives-oriented imagination, is effective for entrepreneurs to develop business strategies. Our research contributes to the entrepreneurship literature by offering a theoretical lens to study the use of imagination by entrepreneurs. Furthermore, our research informs practice by suggesting that entrepreneurs should train the use of their imagination and that entrepreneurship support organizations could include such trainings in their programs.