Abstract
Prior work suggests that well-reasoned strategic choices, those that are logically consistent and convincing to others, boost startup performance. Yet whether the value of forming such choices early generalizes across contexts remains unclear. This study conceptualizes entrepreneurial decision-making as belief updating that ideally converges toward well-reasoned strategic choices, and it examines how the returns and costs of achieving such choices prior to large scaling commitments vary across environments. Using interviews with 253 scaling software startups across 34 economies, the analysis shows that well-reasoned strategic choices more strongly associate with performance in startup ecosystems distant from the top hubs, where relatively scarce resources and institutional constraints raise both the difficulty of recovering from bad decisions and the bar for convincing resource holders to invest. However, startups in these environments achieve no more well-reasoned choices than others, and even form less reasoned ones in tacit organizational decisions, suggesting that these environments also face higher knowledge constraints that increase the costs of forming such choices. The study offers a novel way to measure strategic reasoning and reveals a fundamental tension: The contexts where well-reasoned strategic choices matter most are precisely those where they are hardest to develop.