When it comes to naming a company, new entrepreneurs are all business, but experienced ones go for the gut.
When coming up with a name for their first venture, entrepreneurs devise ones that emphasize what they do as a company, a practice called cognitive naming, according to research from Yuval Engel, an assistant professor at the University of Amsterdam. More-experienced entrepreneurs tend to use names that resonate with people’s feelings, or emotive naming, Prof. Engel finds.
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He reached his conclusions after comparing the naming strategies from a group of eight novices and a group of eight experienced entrepreneurs. When asked to come up with the name for a software startup, new entrepreneurs said they wanted names that were simple and referenced the product or service, while serial entrepreneurs said they chose names that were aspirational or could create buzz for investors.
So, to highlight the company’s signature product—a digital simulation of entrepreneurship—new entrepreneurs came up with names that alluded to “game” or “software,” or that described what the product did, such as “Cashflow Simulator.” Serial entrepreneurs leaned more heavily on emotive names, such as “Be Your Own Boss” and “CEO.”
Which type of name is more effective? The study, published last year in the Journal of Small Business Management, didn’t cover the question. But Prof. Engel says that prior research has shown that emotive names have benefits—including higher evaluations from customers and stakeholders. Among other things, names that evoke emotions tend to fare better because they can subconsciously strike at emotional chords, he says.
“Novices are not entirely sure what it is that they are doing,” Prof. Engel says. “The experts have learned something along the way about what moves people.”
Ms. Dizik is a writer in Chicago. She can be reached at reports@wsj.com.
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