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Book part
Publication date: 28 August 2020

Virginia Cha, Yi Ruan and Michael Frese

This study enriches the theory of effectuation by discussing the four independent dimensions of effectuation and their relationships with causation. Additionally, we fill…

Abstract

This study enriches the theory of effectuation by discussing the four independent dimensions of effectuation and their relationships with causation. Additionally, we fill the gap in prior literature by showing how entrepreneurial experience moderates the relationship between effectuation and innovativeness of the venture. Our study of 171 practising entrepreneurs regarding their entrepreneurial decision-making logic yielded multiple findings. The authors find that entrepreneurs rely on causation as well as effectuation in their decision-making; the more experienced entrepreneurs are, the more they actually use causation; and entrepreneurial experience moderates the relationship between effectuation and innovativeness of the venture firm.

Details

The Entrepreneurial Behaviour: Unveiling the cognitive and emotional aspect of entrepreneurship
Type: Book
ISBN: 978-1-78973-508-6

Keywords

Article
Publication date: 21 March 2022

Yun Zhang, Zhihong Li, Yongzhong Sha and Kehu Yang

As two essential styles of firm decision-making, the relationships among effectuation logic, causation logic and firm performance are unclear. It is helpful to deepen the…

Abstract

Purpose

As two essential styles of firm decision-making, the relationships among effectuation logic, causation logic and firm performance are unclear. It is helpful to deepen the understanding of reasoning theory and the process of decision-making. The purpose of this paper is to explore the relationship between effectuation logic, causation logic and firm performance.

Design/methodology/approach

Based on 31 independent empirical studies (including 11,600 samples) published by predecessors, meta-analysis is used to systematically integrate the impact of two decision-making styles on firm performance and explore the potential factors affecting their relationship.

Findings

The results show a positive correlation between two decision-making styles and firm performance and the influence of effectuation decision-making style in firm performance is slightly stronger. However, the application environment is different: in the emerging market, the causation decision-making style is more effective for firm performance management. When the firm chooses the effectuation decision-making style, it is more effective for performance management in the emerging market. In addition, the industry type, firm performance evaluation tools, national development level and firm scale and firm age can significantly moderate the impact of two decision-making styles on firm performance.

Research limitations/implications

Both decision-making logics are possible ways for firm to success. Still, the future needs to dig deeper into the black box that can unlock the decision-making styles to achieve firm performance or competitive advantage based on other factors of the decision-behavior-outcome business model, more longitudinal data and experiments.

Originality/value

To the best of the authors’ knowledge, this is the first study to explore the impact of decision-making styles (effectuation logic and causation logic) on firm performance using a meta-analysis.

Details

Journal of Business & Industrial Marketing, vol. 38 no. 1
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 13 October 2021

Dafnis N. Coudounaris and Henrik G.S. Arvidsson

This study aims to investigate the antecedents of the internationalisation strategy i.e., effectuation, causation and bricolage on the international performance of the firm.

Abstract

Purpose

This study aims to investigate the antecedents of the internationalisation strategy i.e., effectuation, causation and bricolage on the international performance of the firm.

Design/methodology/approach

In total, the study uses 138 peer-reviewed articles on effectuation, causation, effectual/causal decision-making logics and related issues such as the impact of antecedent factors of international strategy (i.e. effectuation, causation and bricolage) on the international performance of the firm.

Findings

Even though the theory of effectuation was formulated in 2001, to a large extent it has still not moved away from the realm of small entrepreneurial firms. The development of effectuation logic has accelerated in recent years, but the bulk of the research still focusses on small entrepreneurial firms rather than on the application of the theory in larger, non-entrepreneurial firms. Furthermore, effectuation theory would benefit from being developed into the realm of psychology and sociology.

Originality/value

This study offers a conceptual model on how effectuation, causation and bricolage influence internationalisation strategy, which, in turn, impacts the international performance of the firm. Furthermore, the study discusses the effectual logic for larger firms. The exponential growth of studies on effectuation during recent years, i.e. 2017 to the first quarter of 2020, shows that researchers have responded to calls by leading authors stating that effectuation theory is a field with great potential for further theoretical developments. This study presents a literature review of the critical issue of the engagement of internationalisation strategies with effectuation, causation, bricolage and the international performance of the firm compared to the earlier literature review for the period 2001–2016 by Matalamäki (2017) and Karami et al. (2019) on effectuation and internationalisation.

Details

Review of International Business and Strategy, vol. 32 no. 2
Type: Research Article
ISSN: 2059-6014

Keywords

Article
Publication date: 4 April 2016

Runping Guo, Li Cai and Weiyong Zhang

Research on new internet venture growth is lacking. The purpose of this paper is to address the gap by developing and testing a theoretical model that links venturing…

2655

Abstract

Purpose

Research on new internet venture growth is lacking. The purpose of this paper is to address the gap by developing and testing a theoretical model that links venturing principles (effectuation or causation) to new internet venture growth through resource bundling (pioneering or stabilizing).

Design/methodology/approach

The proposed theoretical model is developed upon the entrepreneurship literature and resource-based view. Empirical data are collected from entrepreneurs and top executives in China via a survey. The Baron and Kenny (1986) mediation model assessment procedure is used to analyze the data.

Findings

Both effectuation and causation are positively associated with new internet venture growth. Effectuation leads to pioneering resource bundling, which in turn contributes to new internet venture growth. Causation also contributes to new internet venture growth, but through stabilizing resource bundling.

Research limitations/implications

This research helps link the theory of effectuation to resource-based theory by revealing resource bundling as the mediator between effectuation, causation, and new venture growth. Moreover, the authors provide empirical evidence of the importance of resource bundling with entrepreneurial strategic decision logics to the growth of new internet ventures in transitional economies.

Practical implications

Entrepreneurs and managers of new internet ventures should leverage both venturing principles to support growth. Internet ventures generally are creative and innovative in nature, hence favor effectuation. But it will be unwise to ignore causation, which also leads to growth.

Originality/value

This is an original empirical research guided by theories. It is a novel insight to identify the mediating effect of resource bundling. This study likely will inspire more scholarly research on the subject. It also lays a solid foundation for further inquiry such as complementarities between effectuation and causation.

Details

Internet Research, vol. 26 no. 2
Type: Research Article
ISSN: 1066-2243

Keywords

Article
Publication date: 6 October 2017

Shiferaw Muleta Eyana, Enno Masurel and Leo J. Paas

The purpose of this paper is to investigate the implications of causation and effectuation behaviour of Ethiopian entrepreneurs on the eventual performance of their newly…

1502

Abstract

Purpose

The purpose of this paper is to investigate the implications of causation and effectuation behaviour of Ethiopian entrepreneurs on the eventual performance of their newly established small firms. It adds new knowledge and insights to advance the theory of effectuation by extending its scope into the domain of entrepreneurial behaviour and firm performance and by testing one of the operationalized scales in an African context.

Design/methodology/approach

This empirical research is conducted amongst Ethiopian tour operators (n=118) based on primary data from the field. The scales are based on Chandler et al. (2011), which are adapted to fit to the tourism sector and validated in an African context using a two-stage exploratory factor analysis (EFA). Hierarchical multiple regression is used to assess the ability of entrepreneurs’ behaviour (i.e. causation and effectuation) at the startup phase to predict the eventual performance of their newly established firms (self-reported changes in employment size, sales, profit and assets) over three years (January 2012-2015).

Findings

The findings reveal a varied effect of causation and effectuation on financial and non-financial measures. Causation is positively related to an increase in employment size, whereas the overall effect of effectuation is positively related to financial performance measures, although its dimensions vary in their effects on sales, profit and assets increase. The paper concludes that causation and effectuation have varied implications on firm performance. In other words, unlike the findings of other research in Western contexts, a strong empirical support is not found to claim that effectuation is superior to causation in outcomes such as firm performance in Ethiopian context.

Research limitations/implications

While this paper provides a new data set for entrepreneurship literature, its findings may lack generalisability. Not only it is industry specific (tourism sector), but also it is conducted in a single African country (Ethiopia). Despite its limitations, the paper adds new knowledge and insights for empirical studies in entrepreneurship field on the effects of entrepreneurs’ behaviour, such as causation and effectuation; on firm performance. Future research should focus on other economic sectors and in different African countries before making generalisations about the effect of causation and effectuation behaviour of African entrepreneurs on firm performance.

Practical implications

The findings of this paper can be used in other hospitality and tourism sectors like hotels and souvenir shops since tour operating business includes a broad range of service activities such as sightseeing, accommodation, transportation, recreational activities and shopping. Besides, these results have practical implications to prepare and provide business and management training tools to enhance entrepreneurial and managerial skills of owners of small tourism firms in Ethiopia. The findings of the study can also be applied in other African countries with similar culture and business environments to promote tourism development and success in Africa.

Originality/value

There have been hardly any empirical studies that are undertaken on the implications of entrepreneurial behaviour such as causation and effectuation on the performance of small tourism firms, particularly in an African context. The paper addresses this research gap in entrepreneurship literature in drawing on empirical evidence from small tourism firms (tour operators) in Ethiopia.

Details

Journal of Small Business and Enterprise Development, vol. 25 no. 5
Type: Research Article
ISSN: 1462-6004

Keywords

Article
Publication date: 6 March 2017

Emiel L. Eijdenberg, Leonard J. Paas and Enno Masurel

This paper aims to investigate the effect of decision-making, in terms of the effectuation and causation orientation of small business owners, on the growth of their small…

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Abstract

Purpose

This paper aims to investigate the effect of decision-making, in terms of the effectuation and causation orientation of small business owners, on the growth of their small businesses in an uncertain environment: Burundi.

Design/methodology/approach

On the basis of primary data from a pre-study of 29 expert interviews, a questionnaire was developed and was filled in by 154 small business owners in Burundi’s capital, Bujumbura. Subsequently, correlation analyses, a factor analysis and regression analyses were performed to test the hypotheses.

Findings

While, on the one hand, the findings show that small business owners who perceive the environment as uncertain are more effectuation-oriented than causation-oriented; on the other hand, the findings show that effectuation and causation orientations do not influence later small business growth. Therefore, other determinants for small business growth in an uncertain environment should be further explored.

Originality/value

This paper fills the research gap of decision-making in relation to small business growth from the entrepreneurs who are among the billion people who live in absolute poverty. On the basis of Western studies, effectuation might be more present in contexts of dealing with many uncertainties of future phenomena, and that it is often positively correlated with firm growth. In contrast, this paper shows that neither an effectuation orientation nor a causation orientation significantly affects small business growth in a context that can be assumed as highly uncertain.

Details

Journal of Entrepreneurship in Emerging Economies, vol. 9 no. 1
Type: Research Article
ISSN: 2053-4604

Keywords

Abstract

Details

Consciousness and Creativity in Artificial Intelligence
Type: Book
ISBN: 978-1-80455-161-5

Article
Publication date: 16 April 2020

Zelong Wei and Linqian Zhang

In spite of the significance of the strategic change, its high rate of failure inspires us to explore how to successfully enact new strategic change in a different…

Abstract

Purpose

In spite of the significance of the strategic change, its high rate of failure inspires us to explore how to successfully enact new strategic change in a different environment. Based on strategy as practice perspective and effectuation theory, this study aims to extend extant literature by identifying two approaches performing strategic change (e.g. causation strategic change or effectuation strategic change) and investigating their effects on firm performance and also boundary conditions (e.g. market uncertainty or technological uncertainty).

Design/methodology/approach

Based on a data set from 238 firms in China, the authors empirically test the hypotheses through regression analysis.

Findings

The findings indicate that causation and effectuation strategic changes can promote firm performance. However, the roles of the two approaches vary with the external environment. Specifically, market uncertainty strengthens while technological uncertainty weakens the positive effect of causation strategic change. In contrast, technological uncertainty strengthens the positive effect of effectuation strategic change on firm performance.

Originality/value

This study extends research literature of strategic change by identifying causation and effectuation strategic changes and investigating how their roles vary with market uncertainty and technological uncertainty. The findings guide firms to adopt a fit approach to perform a strategic change in different external environments.

Details

Chinese Management Studies, vol. 14 no. 3
Type: Research Article
ISSN: 1750-614X

Keywords

Open Access
Article
Publication date: 3 May 2022

Giulia Tagliazucchi and Gianluca Marchi

By using the lens of effectuation and causation, this paper aims at exploring how the team is formed in high-tech academic spinoffs, by looking specifically at decisional…

Abstract

Purpose

By using the lens of effectuation and causation, this paper aims at exploring how the team is formed in high-tech academic spinoffs, by looking specifically at decisional heuristics in an academic context. Indeed, the team composition is a critical issue for the subsequent growth of the academic new venture: on the one hand, the scientific-centred knowledge of the academic entrepreneurs is one of the main elements that lay the foundation for the new venture; on the other hand, it has been widely recognized that the lack of market-related knowledge and experience often has detrimental effects on performance. Decisive is then to explore how team decisions pertaining to the team formation process are taken.

Design/methodology/approach

A qualitative methodology based on multiple case studies is adopted under an abductive approach.

Findings

Results shed light on how decisions pertaining to team formation are taken by academic entrepreneurs and with what effects on team composition, a fundamental element to foster the growth of academic new ventures. Specifically, this study derives some propositions about the adoption of effectuation and causation in the team formation process, their occurrence and sequence in the light of the scientific context in which academic new ventures spin out and the effects on the team composition.

Originality/value

This study contributes to the debate on academic entrepreneurs’ decisional heuristic and the use of effectuation or causation in the early stages of an academic new venture, by focusing on the team formation process. This study specifically considers three temporal micro-phases – the selection of founders before inception, the appointment of top management teams, and the integration of early employees after the inception – and whether the academic context influences the decisional heuristics. Managerial implications are also derived.

Details

European Journal of Innovation Management, vol. 25 no. 6
Type: Research Article
ISSN: 1460-1060

Keywords

Article
Publication date: 23 August 2021

Oliver Kwabena Aggrey, Alfred Kwadwo Djan, Naomi Abena Dei Antoh and Louis Numelio Tettey

This study aims to investigate the effectiveness of causation decision-making and effectual decision-making logic in challenging economic situations within agricultural…

Abstract

Purpose

This study aims to investigate the effectiveness of causation decision-making and effectual decision-making logic in challenging economic situations within agricultural small and medium-sized enterprises in Ghana.

Design/methodology/approach

The authors collect and derive composite variables from effectuation, causation, financial capital availability (FCA) and crisis performance data through a randomized system based on literature precedents. This study analyzes the data using descriptive analysis, confirmatory factor analysis and ordinary least squared regression through STATA 15.

Findings

The authors find that effectual managers are indeed better off during crisis conditions. Also, there is a significant moderation relationship between the effectuation, FCA and crisis performance.

Originality/value

From strategic management and entrepreneurial process standpoint, the effectuation theory thrives within uncertain business environments. This notwithstanding, literature has often focused on hypothetical, uncertain business environments. The authors present plausible evidence of effectual business behavior from a real crisis, from small agriculture firms’ perspectives and an emerging economy context.

Details

Journal of Enterprising Communities: People and Places in the Global Economy, vol. 15 no. 5
Type: Research Article
ISSN: 1750-6204

Keywords

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