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Effectuation and Causation in Science-based New Venture Creation: A Configurational Approach
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Author: Elisa Villani, Free U. Bozen, Bolzano
Author: Christian Linder, Free U. Bozen, Bolzano
Author: Rosa Grimaldi, Alma Mater Studiorum U. di Bologna
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Science-based entrepreneurship plays a central role for economic and technological development. The existing literature shows that the process of new venture creation differs between science-based and traditional ventures. Building on effectuation and causation literatures, we aim to explore the antecedents and specificities of the approach that science-based entrepreneurs follow in new venture creation. Using data from PSED II and a QCA approach, we identify two configurations of antecedent factors relevant for science-based founders to successfully launch their ventures and two for non science-based founders. We contribute to effectuation and causation literatures by looking at the approach followed by a specific type of entrepreneurs in the establishment of successful ventures.
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Search Terms: science-based entrepreneurship | effectuation-causation | QCA
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Paper is No Longer Available Online: Please contact the author(s).
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Exchange Mechanisms of Transition from Effectuation to Causation in Entrepreneurial Contingency
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Author: William Lin, WISKEY CAPITAL
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Most entrepreneurial research has not addressed the phenomena of entrepreneurial teams adjusting their cognitive styles based on the different challenges they face during the new venture life cycle under startups, accelerators and incubators. Our objective in this article is to attempt to investigate the social mechanism between effectuation and causation over the life cycle of ventures launched by 10 startup teams under 2 accelerators and one incubator in China and Taiwan; and to explore the consequences of this transition and these mechanisms. Drawing on data from 64 in-depth interviews with 28 executive members, we recorded 172 key decisions chronologically and examined the pattern of decision-making processes. According to our observations and interviews, many companies remain at the survival stage for some time even when they know their breakeven point is reachable. We found that the remaining decision, the decision to remain below breakeven, is a signal of cognitive style transition from before the breakeven point and the breakeven point itself are two significant consequences for startup teams to transition from a dominantly effectual model of decision-making and action to a causation model. Our examination supported the exchange mechanisms with effectuation principles and explored how the transitions between the two decision-making processes impact start- up teams. This exchange mechanism demonstrates how new venture firms encourage their structurally embedding their transactions, negotiating and financing capabilities, which enable firms to use social mechanisms for adapting, coordination and safeguarding. Our study not only extends effectuation research by examining the significant timing for transition timing, but also sheds light on entrepreneurial research by integrating and synthesizing transaction cost economics and social network theory.
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Search Terms: effectuation | Causation | entrepreneurship
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Paper is No Longer Available Online: Please contact the author(s).
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The Optimal Strategy for an Entrepreneur with Experience Diversity: Causation or effectuation?
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Author: Anne Spanjer, Tilburg U.
Author: Arjen Van Witteloostuijn, Tilburg U.
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This study explores how entrepreneurs’ experience diversity affects how they run their business, and how this chosen strategy – i.e., causation and/or effectuation – influences their performance. First, we hypothesize that an entrepreneur’s low experience diversity entrepreneurs is positively associated with a preference for effectual logics, and negatively related to a preference for causal logics. Second, we argue that an entrepreneur with high experience diversity using effectual logics is likely to produce low entrepreneurial performance, whilst her/his use of causal logics is associated with high entrepreneurial performance. To test our theory we examine survey data from 3,513 entrepreneurs in the Netherlands. Our results show that the use of effectual logics negatively mediates the relationship between experience diversity and entrepreneurial performance. The use of causal logics positively mediates the relationship between experience diversity and performance. Furthermore, for low levels of experience diversity, the use of effectual logics is positively related to entrepreneurial performance. For high or intermediary levels of experience diversity, the use of effectual logics is associated negatively with entrepreneurial performance. Thus, entrepreneurs scoring high on experience diversity are better off using effectual logics, whereas entrepreneurs with little experience diversity tend to perform better when using causal logics.
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Search Terms: Experience diversity | Effectuation | Causation
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Paper is No Longer Available Online: Please contact the author(s).
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Configurations of Effectuation, Causation, and Bricolage for firm Performance: a fsQCA study
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Author: Wenwen An, Tianjin U. of Technology
Author: Charles-Clemens Rüling, Grenoble Ecole de Management
Author: Xin Zheng, Lingnan U. / Sun Yat-sen U.
Author: Jianqi Zhang, Lingnan U. / Sun Yat-sen U.
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Effectuation, causation, and bricolage have been recognized as three main entrepreneurial factors that are critical for firm success. To have a holistic understanding of their relationship, we use a fuzzy set theoretic methodology to examine how configurations of causal and effectual decision making logics, entrepreneurial bricolage behavior influence firm¡¯s financial and growth performance. Moreover, we also consider firm size and stage as important contextual factors that differentiate the effectiveness of configurations for high performance. Our findings contribute to the integrative perspective on the configurations of entrepreneurial logics and behavior on value creation.
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Search Terms: effectuation | bricolage | fsQCA
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Paper is No Longer Available Online: Please contact the author(s).
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Disentangling the Role of Experience and Expertise in the Context of Effectuation and Causation
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Author: Gry Agnete Alsos, Nord U. Business School
Author: Rene Mauer, ESCP Europe
Author: Tommy Clausen, Nord U. Business School
Author: Sølvi Solvoll, Nordland Research Institute
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Effectuation is developed as a theory about how expert entrepreneurs make decisions in situations characterized with uncertainty. While the theory has gained prominence, the relationship between expertise and effectuation or causation has yet not been subject of critical examination. This paper addresses this gap by examining relationships between expertise and adoption of effectual and causal approaches during new venture start-up processes. We distinguish between experience and expertise, as well as between entrepreneurial and other types of business related experience/expertise. We find that while entrepreneurial expertise is related to effectuation, entrepreneurial experience is not, indicating that not all experienced entrepreneurs adopt expert behaviors. Further, work/management experience in general and expertise within an industry domain are related to a causal approach in new business start-up processes. The results give important insights to the role of experience and expertise for entrepreneurial behavior, and bring nuances to theorizing on expertise and effectuation.
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Search Terms: Effectuation | Expertise | Business start-ups
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Paper is No Longer Available Online: Please contact the author(s).
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