Research 2017 - Present

Expanding the Boundaries of Effectuation

Research Paper Title Authors Content Outlet Publish Date Link To File
Toward a theory of affordable loss Richard A. Martina Although dozens of empirical studies have been published on effectuation as a whole, much work remains to be done on elaborating each principle in more depth. Based on an exploratory study of seven ventures from the Caribbean island of Curacao, this paper develops an elaborated process model of the affordable loss heuristic in effectuation. The model breaks affordable loss into two components—ability and willingness, and connects these to the concept of loss aversion from prospect theory. Furthermore, these components are encapsulated in a process involving identity, affect, and resourcefulness leading to the entry-stage entrepreneurial investment decision. Small Business Economics Journal 2019 PDF Download
The rise of art movements: an effectual process model of Picasso’s and Braque’s give-and-take during the creation of Cubism (1908–1914) Antoni Olivé
Susan S Harmeling
Cubism was the most influential movement in modern art, and Pablo Picasso transformed the art world like no other figure before him. Changes in institutional and market conditions have been until now mainstream explanations for the emergence of art movements such as Cubism. However, we argue that there are complementary explanations centered on the agency of the artists themselves and based on entrepreneurial decision-making processes, in particular on the theory of effectuation. We have analyzed the detailed accounts of art history experts to generate a longitudinal process model of the creation of Cubism. Cubism emerged because Picasso and Braque transformed their common set of means into a variety of effects. Cubist innovations originated sequentially, as part of a chain of achievements. One innovation and artistic achievement led to another. Picasso and Braque’s methods of producing series of paintings and drawings and building upon previous achievements enrich our existing understanding of effectuation on a central point—the transformation of means into effects. This research also uncovers relationships among effectuation, bricolage, and subversion. This study illustrates how the theory of effectuation can be a method for the creation of new artifacts in fields beyond entrepreneurship and how effectuation can be a general-purpose decision-making schema for operating under conditions of uncertainty. The results of our study offer lessons of interest to scholars and practitioners in both art and entrepreneurship. Small Business Economics Journal 2019 Download PDF
The measurement of effectuation: highlighting research tensions and opportunities for the future Alexander McKelvie
Gaylen Chandler
Dawn DeTienne
Anette Johansson
In this paper, we address issues related to the measurement of effectuation. We identify and examine 81 empirical studies focusing on research tensions (fundamental assumptions, theoretical underpinnings, boundary conditions, units of analyses, measures, and temporal issues) within the effectuation literature. Our findings suggest these tensions inhibit the accumulation of empirical knowledge. We highlight the challenges involved in effectively measuring effectuation and offer solutions and recommendations for systematic knowledge accumulation. Small Business Economics Journal 2019 link to abstract
Strategic decision-making in SMEs: effectuation, causation, and the absence of strategy Adrian Hauser
Fabian Eggers
Stefan Güldenberg
Since the early 2000s, effectuation has gained substantial interest in literature. Whereas Sarasvathy in her seminal 2001 article distinguished effectuation from causal decision-making, still effectuation seems to get confused with ad hoc decision-making or strategy absence. On the basis of a qualitative study with 12 managers from 10 Swiss small-to-medium enterprises (SMEs), this manuscript analyzes their decision-making approaches and distinguishes between causal, effectual, and absence-of-strategy reasoning. Whereas principles for effectuation and causation are well established, this study reveals new categories on which strategy absence can be mapped. The three decision approaches and their interplay are then investigated in four business contexts (founding, takeover, new artifact creation, and existing artifacts). Whereas causal reasoning is found in all four, signs of strategy absence are apparent in three. Effectual logic dominates all four contexts. Further, this manuscript finds that choice of the strategic decision approach does not depend on company size but rather on decision context. Also, firms demonstrate the ability to switch between effectual and causal decision models according to the specific decision context. Small Business Economics Journal 2019 link to abstract
Means versus goals at the starting line: Performance and conditions of effectiveness of entrepreneurial action René Mauer
Ksenia Podoynitsyna
Marco Furlotti
Various theoretical perspectives suggest that a means-oriented approach to new venture development can be a viable alternative to the conventional approach, which emphasizes predetermined goals, and that the former is favored by expert entrepreneurs. However, it is still unclear whether, and under which conditions, means-based action positively affects entrepreneurial performance and whether it would also be effective for novices. This study demonstrates the new venture performance impact of means orientation. We further contribute to various strands of entrepreneurship research by highlighting two moderating factors that are salient in the early-stage entrepreneurial process: opportunity recognition beliefs and process control practices. Journal of Small Business Management 2019 PDF Download
Learning from failures in business model innovation: solving decision‐making logic conficts through intrapreneurial efectuation Sebastian Brenk
Dirk Lüttgens
Kathleen Diener
Frank Piller
Established organizations need to adapt their current business models (BMs) to match dynamic changes in their environment. Alternatives to the established BM usually incorporate a diferent logic of how value is created, ofered, and captured. When selecting and implementing the best BM alternative, organizations have to make decisions on several highly uncertain questions: What will the future look like, on what basis should we take action, how do we act under risks and limited resources, and how should we behave in light of unexpected events and towards outsiders. Firms can apply the logic of causation or that of efectuation when mak-ing these decisions. In this context, we apply a longitudinal single case study of a manufacturing company encountering a digital transformation journey. In this case study, we investigate the shift from a product-based to a smart service model and the underlying process of decision-making in the context of business model innovation(BMI). From our case study, we identify latent conficts resulting from two difer-ent BM logics: the logic of value ofering, creation, and capture of the dominant(established) BM versus that of the new one. We show that logic conficts become especially visible when actors cannot reduce uncertainty about the new BM efec-tively. These conficts fnally inhibit the change of the dominant BM to the new one. Sensemaking in the company about the latent logic conficts within the BMI process reveals the need to change its decision-making logic from managerial causation to intrapreneurial efectuation. The fndings from our study contribute to entrepreneurship and institutional theory while highlighting the concept of institutional intra- preneurship for BMI. Our results suggest separating the alternative BM from the existing one. This separation can reduce cognitive uncertainty associated with BMI processes through logic pluralism, i.e., building a new decision-making logic in par- allel to the old one. We contribute to the BMI literature by adding logic conficts of BMI and the decision-making logic of an organization to the list of important con- tingency factors that infuence the execution and outcome of a BMI process. Journal of Business Economics 2019 PDF Download
How shared pre-start-up moments of transition and cognitions contextualize effectual and causal decisions in entrepreneurial teams Denise E. Fletcher
Anne Tryba
Although it is reported that early venture decisions are influenced by the relationships and common history of entrepreneurial team members, little is known about how the mutual interests and ambitions experienced in the pre-start-up phase provide a shared and relational context for joint decisions. Drawing on a multiple case study approach of nine entrepreneurial teams in new ventures, this study identifies the shared pre-start-up moments of transition during which team members’ prior work and life patterns start to change. We show that in these intense moments, shared entrepreneurial cognition evolves among team members—the relationality of which provides a unique social context for decision behaviors. Our findings conclude that effectual behaviors advance a theory of context because in simultaneously working with effectual and causal logics (albeit with varying intensities), team decisions are realized that are consistent with the relational context that emerges in the pre-start-up moment. Small Business Economics Journal 2019 link to article
Entrepreneurial Marketing: Global Perspectives Zubiz Sethna
Rosalind Jones
Paul Harrigan
The Present study explores the interrelationships between entrepreneurial experience, explanatory style, and effectuation logic in an attempt to better understand the antecedebts of entrepreneurial self-efficacy for policy and practice. This chapter contributes to the entrepreneurship cognition literature by expicitly framing the interrelationship between entrepreneurial experience-creating of human/social capital, the two dimensions of explanatory style(optimism vs. pessimism), effectuation, and entrepreneurial self-efficacy. In addition, this chapter enhances our understanding of cognitive conditions that facilitate business creation by proposing a theoretical framework and propositions to advance theory development in entrepreneurial cognition and self- efficacy.   2019 PDF Download
Effectuations, social bricolage and causation in the response to a natural disaster Reed E. Nelson
Edmilson Lima
This research uses the experience of residents and a local neighborhood association in Brazil before, during, and after a major natural disaster to examine entrepreneurial action in response to a major environmental jolt. When the community of Córrego d’Antas was hit by deadly mudslides in January of 2011, residents responded over time with combinations of different varieties of effectuation, social bricolage, and gradually more causation, supporting grassroots recovery efforts. We deepen inquiry into the intersection between entrepreneurship and disaster recovery using a temporal approach, involving alternate templates and more inductive analyses. Our results include new concepts, such as diseffectuation and extended effectuation, and a deeper understanding of the relation between effectuation and bricolage that may prove useful for the study of entrepreneurial action during crises and recuperation. We close with modest propositions connecting disaster recovery and entrepreneurship. Small Business Economics Journal 2019 Link to Article
Effectuation and internationalisation: a review and agenda for future research Masoud Karami
Ben Wooliscroft
Lisa McNeill
Effectuation theory has been increasingly applied in research examining the internationalisation of small- and medium-sized enterprises (SMEs). This study systematically reviews the SME internationalisation literature to clarify the ways effectuation theory helps international enrepreneurship (IE) scholarship respond to key questions of how international opportunities are developed. The review identified central topics of limited resources, networking, and an unplanned approach, which connect effectuation with extant internationalisation research. In so doing, the study offers two contributions. The first is an articulation of effectual mechanisms at work in IE opportunity development. The second offers insights back to effectuation theory regarding the context of IE and potential areas for improving the application of effectuation to IE research. We close with implications and an agenda for future research. Small Business Economics Journal 2019 PDF Download
Effectual Exchange: From Entrepreneurship to the Disciplines and Beyond Stuart Read
Saras Sarasvathy
René Mauer
Gry Agnete Alsos
Tommy Høyvarde Clausen
Reflecting on the 12 works that compose this special issue, we are struck by the distinctiveness of effectuation as a theory native to the domain of entrepreneurship. While theoretical perspectives from disciplines including economics, psychology, and sociology have been applied to understanding the new venture phenomenon, entrepreneurship scholars have historically had little to offer in return beyond the testing bed. The authors in this special issue begin to make the case for transforming the bed into fertile soil in which the disciplines can grow and bear new fruit. Moreover, uncertainty, co-creation, resources, goals, and control all represent important and current issues in management, marketing, organizations, finance, and operations. Effectuation has something new to offer each of these. In this article, we summarize what we learn from the works in the special issue in order to construct a research agenda that can move effectuation from entrepreneurship to the disciplines and beyond into new futures.

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Small Business Economics Journal Special Issue on Effectuation 2019 link to article
Effectual control orientation and innovation performance: clarifying implications in the corporate context Sebastian Markus Szambelan Szambelan
Yi Dragon Jiang
This study aims to assess the relationship between effectual control orientation (ECO) and a firm’s innovation performance, with entrepreneurial orientation (EO) as a mediator, in a corporate context. Based on data from 157 established corporations in Germany, the findings indicate that ECO has a positive effect on innovation performance. The study also shows that EO’s behavioral dimension (i.e., innovation and proactiveness), rather than risk-taking, acts as a mediating mechanism between ECO and innovation performance. The empirical results provide theoretical and managerial implications for innovation, effectuation, and EO literatures. Small Business Economics Journal 2019 Download PDF
Does practice make micro-entrepreneurs perfect? An investigation of expertise acquisition using effectuation and causation Nadeera Ranabahu
Mary Barrett Barrett
This paper reports on a study testing whether and how the use of effectuation and causation logics influences deliberate practice in businesses started by microfinance borrowers (“micro-entrepreneurs”) in Sri Lanka. Using mixed methods, we surveyed clients of a large Sri Lankan microfinance institution and deepened findings from the survey through 24 interviews. In this way, we identified specific patterns of relationships between principles of the two logics and five elements of deliberate practice identified in the expertise literature from cognitive science. We found that both effectual and causal logics (but not effectuation alone) facilitate deliberate practice, an important result since deliberate practice could be expected to help micro-entrepreneurs gain business and entrepreneurial expertise. We also found interesting patterns in the links among effectuation and causation and specific elements of deliberate practice. In particular, one effectuation principle—acknowledging and leveraging the unexpected—impacted all five elements of deliberate practice, suggesting that learning to manage uncertainty is a central task—perhaps the central task—in becoming an entrepreneur. By contrast, causation influenced elements of deliberate practice linked to “venture-building” or “entrepreneuring,” and not the more personal elements linked to seeing oneself as an entrepreneur. As expected from the literature on expertise, deliberate practice was more likely to occur in earlier stages of venturing by younger, less-experienced entrepreneurs. Findings not only offer avenues for future research into deliberate practice in entrepreneurship but also suggest new ways for microfinance institutions to help their clients move toward entrepreneurial expertise. Small Business Economics Journal 2019 Download PDF
CONSIDERATIONS ON THE ADAPTATION OF THE THEORY effectual FOR ENTREPRENEURSHIP TRAINING Experiential R. Alejandro Hernández
María de la Cruz Sánchez
Antonio Fernandez
Manuel Almodovar
Ricardo M. Hernandez
In this article we analize the feasability of adapting effectual theory or worldview (as opposed to “causal” or managerial thinking) to training in entrepreneurship. Our aim is specially related to training based upon experiential principles and techniques, which diverge strongly from those others traditionally adopted by business management training institutions, specially MBA programs.
PALABRAS CLAVE: formación para el emprendimiento; teoría efectual del emprendimiento; efectuación
Proceedings of the Seventh International Congress on Entrepreneurship - AFIDE - Cordoba (Spain) 2019 PDF Download
Configurations of effectuation, causation, and bricolage: implications for firm growth paths Wenwen An
Charles-Clemens Rüling
Xin Zheng
Jianqi Zhang
This study examines how firms’ decision-making logics and entrepreneurial resourcing behaviors combine to create value. We conduct a qualitative comparative analysis investigating configurations of effectuation, causation, and bricolage that are associated with firm performance. We consider firm size and development stage as contextual factors that differentiate the effectiveness of ways in which firms combine effectuation, causation, and bricolage. Using a sample of 305 Chinese firms, we find six solutions explaining entrepreneurial processes in high-performing firms. Based on a comparison of effective configurations across firm size and development stages, we theorize three paths along which small early-stage firms can evolve into large late-stage firms while maintaining high performance. Small Business Economics Journal 2019 Download PDF
Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean startup, and design thinking Yashar Mansoori
Martin Lackéus
There has been a growing interest among entrepreneurs and students in explicit guidance for entrepreneurial action. Both scholars and practitioners have responded to this demand by suggesting a variety of entrepreneurial methods. This has led, however, to a proliferation of relatively unrelated methods with varying degrees of rigor and relevance. In an attempt to organize and bring clarity to the range and diversity of entrepreneurial methods, this article compares effectuation with five other entrepreneurial methods along nine conceptual dimensions. Through the application of two conceptual frameworks, core underpinnings of each method are highlighted. In addition to revealing similarities and differences between the methods, the study identifies some key implications for theory, practice, policy, and education. The strengths of effectuation on a theoretical level could be used to develop other entrepreneurial methods. Conversely, the strengths of other entrepreneurial methods could be used to shore up the potential weaknesses of effectuation, such as a lack of behavioral tactics and limited applicability in later stages of venture development. Findings from this article can thus aid entrepreneurship scholars and practitioners to improve their prescriptions and can create new avenues for developing entrepreneurial methods. Small Business Economics Journal 2019 Download PDF
An empirical investigation of determinants of effectual and causal decision logics in online and high-tech start-up firms Tobias Frese
Ingmar Geiger
Florian Dost
Scholars have criticized effectuation research for being insufficiently embedded in a nomological network of practically relevant antecedents. To address this research gap, the current study uses a mixed-methods design. First, a qualitative study with 20 venturing experts (entrepreneurs and investors) validates various effectuation logics and uncovers the following four antecedents of effectuation and causation: founders’ perceived uncertainty, entrepreneurial experience, management experience, and investor influence. Second, a large-scale quantitative study of founders in online, software, and high-tech start-ups (n = 435) provides statistical support for the identified antecedents, using structural equation modeling and multigroup comparisons over early and later venture stages. The study confirms the multifaceted nature of effectuation; experimentation is the only effectual logic that reflects influences of all the determinants. Founders’ prior experiences affect experimentation and causation in the early venture stage, but not during the later stages. Investor influence displays the broadest array of effects on the decision logics, offering both theoretical embeddedness for effectuation and a new, practically relevant driver. Small Business Economics Journal 2019 Link to Abstract
A structured literature review and suggestions for future effectuation research Denis A. Grégoire
Naïma Cherchem Cherchem
In spite of all the scholarly attention it has garnered, effectuation research continues to face a series of theoretical and methodological challenges. In order to help move effectuation research forward, we content-analyze a comprehensive sample of 101 effectuation articles published in JCR®-listed journals between 1998 and 2016 (inclusively), with the specific aim of uncovering the main conceptual and methodological articulations that have underpinned effectuation research to date. In doing so, we not only uncover some the field’s achievements and shortcomings but also examine the extent to which published effectuation research addresses its most salient criticisms. We build on these observations to propose three recommendations for future advances, namely (1) conceiving effectuation as a “mode of action”; (2) developing new methodological indicators centered on effectuation’s concrete manifestations; and (3) examining the underlying dynamics explaining effectuation’s antecedents and consequences. Small Business Economics Journal 2019 Link to Abstract
Toward Deliberate Practice in the Development of Entrepreneurial Expertise: The Anatomy of the Effectual Ask Nick Dew
Saras Sarasvathy
Stuart Read
Anusha Ramesh
This chapter reviews research on expertise in entrepreneurship. Over the past two decades researchers have studied expert performance in numerous professional and organizational domains (e.g. teaching, software, medicine, taxi driving), extending expertise investigations beyond traditional studies in games, sports and the arts. These streams of literature support the hypothesis that expertise develops and is sustained through both purposeful and deliberate practice in a domain. As Ericsson and Pool (2016) define the terms, whereas naïve practice may consist in nothing more than doing something repeatedly, purposeful practice is more focused on continual improvement by repeatedly engaging in practice tasks with immediate feedback. Purposeful practice is also more effortful in pushing one out of one’s comfort zone. Deliberate practice goes one step further than purposeful practice in that it requires supervision from a trained teacher. In entrepreneurship research there is a growing body of work demonstrating the existence of expertise. However, only recently have explicit mechanisms of purposeful practice been proposed and been subject to study. In this chapter we first review over two decades of scholarship on entrepreneurial expertise and then outline our own work that has posited the ‘Ask’ as an important mechanism for purposeful practice in entrepreneurship that can and should be studied if we are to develop entrepreneurship education capable of fostering deliberate practice. The chapter closes with key implications from entrepreneurial expertise to expertise research more generally, and outlines an agenda for future research on expert entrepreneurial performance. The Cambridge Handbook of Expertise and Expert Performance 2018 PDF Download
Enhancing the understanding of processes and outcomes of innovation – the contribution of effectuation to S-D logic Valtteri Kaartemo
CHRISTIAN BJORNSKOV
Bo Edvardsson
S-D logic understands innovation as a novel and useful integration of dynamic resources and highlights the role of institutionalization as an essential driver of innovation. The purpose of this chapter is to examine in more detail the nature of innovation processes and outcomes in the S-D logic framework. The focus is on the contribution that the approach of effectuation can provide to S-D logic in the analysis of innovation. While the S-D logic suggests two particular outcomes of innovation processes-value propositions and transformed service ecosystems-the former alone is insufficient to innovation. For innovation to be sustainable, new market practices must become institutionalized and value propositions agreed upon by the engaged actors to (re)create the market and transform the service ecosystem. The chapter shows how the views of effectuation can help elaborate the institutionalization processes in innovation by emphasizing experimentation in value proposition development and negotiations in actor engagement. The SAGE Handbook of Service-Dominant Logic 2018 PDF Download
An effectual leadership perspective for developing rural entrepreneurial ecosystems Morgan P. Miles
Mark Morrison
This study articulates the importance of an entrepreneurial method approach to leadership, relevant contextual issues, and policy implications for developing entrepreneurial ecosystems in a rural context. The entrepreneurial method is proposed as the foundations of a new leadership style to facilitate the creation and success of rural entrepreneurial ecosystems. The contextual issues that make rural entrepreneurial ecosystems unique include the critical need for entrepreneurial leadership in their creation and development; the role of entrepreneurial social infrastructure in enabling and supporting development; the need to leverage networks and virtual platforms to access markets, knowledge, and funding; the scarcity of and need to develop enterprising individuals; the role of institutions and supportive governance; and the importance of natural capital. Small Business Economics Journal 2018 PDF Download
Toward a dynamic process model of entrepreneurial networking under uncertainty Yuval Engel
mariette kaandorp
Tom Elfring
Abstract Although research has begun to acknowledge the strategies by which entrepreneurs form and maintain network ties, most efforts to date present an incomplete picture of entrepreneurs as heroic network architects who search, plan, and pursue contact with targeted ties. Herein, we briefly review this nascent literature, argue that it has so far overlooked alternatives in favor of an overly planned and instrumental perspective, and consider the implications of incorporating the notion of uncertainty into investigations of how entrepreneurs engage in networking. We therefore take a novel perspective on entrepreneurial networking and theorize about how entrepreneurs act when desired ties cannot be identified in advance, networking outcomes cannot be predicted, and ongoing social interactions fuel the emergence of new objectives. Overall, we add important insights to the literature, as we flesh out a dynamic networking process that unfolds alongside efforts to create a new venture. We then discuss how this model, which highlights distinctive elements such as altruism, pre-commitment, serendipity, and co-creation, can stimulate a broader research agenda focused on the inquiry of networking agency under uncertainty. Journal of Business Venturing 2017 PDF Download
The spatial dynamics of new firm births during an economic crisis: the case of Great Britain, 2004–2012 Paul Bishop
Daniel Shilcof
AbstractSpatial variations in entrepreneurial activity have been shown to be a time persistent phenomenon in many countries. This paper analyses how these spatial variations have been affected by the recent financial crisis within the context of theories of regional resilience and adaptability. The analysis applies Exploratory Spatial Data Analysis techniques to data on firm births across Local Authority Districts of Great Britain during the period 2004?2012. The results demonstrate that, whilst the overall shape of the spatial distribution of firm births remained persistent, there is evidence of an increase in regional inequality. This is primarily associated with a divergence between London and the rest of the distribution. London, together with part of its surrounding area, appears to constitute a resilient entrepreneurial regime that has generated a dynamic, adaptive response to the crisis with high rates of new firm formation in contrast to other regions which have remained locked into lower rates of entrepreneurship. This supports the view that regional entrepreneurship is a path dependent process: entrepreneurial regions are more adaptable to the effects of an exogenous shock than less entrepreneurial regions. Accordingly, entrepreneurship is a critical factor influencing the resilience of regions in responding to an economic crisis. Entrepreneurship & Regional Development 2017 Link to Article
The Scaffolding Activities of International Returnee Executives: A Learning Based Perspective of Global Boundary Spanning Michael J.D Roberts
Paul W. Beamish
This study contributes to the literature on global boundary spanning by taking a learning perspective that positions the boundary spanner as an active change agent. Grounded in a practice-based theory of knowledge, it considers boundary spanning as the negotiation of knowledge and relationships across fields of practice. We argue that global boundary spanning is a long-term commitment to help internal members become aware of foreign knowledge practices, see these practices as valuable, and adopt them internally. We frame the activities of the boundary spanner within a scaffolding framework that theorizes boundary spanning as a combination of ability, persistent willingness, and opportunity. Here scaffolding refers to the cognitive, relational, and material supports enacted by boundary spanners that facilitate organization members’ engagement in practices that allow for the awareness, capacity building, and commitment to adoption of foreign practices. We draw on interviews from international returnee managers employed in large Korean financial firms. This article is protected by copyright. All rights reserved. Journal of Management Studies 2017 PDF Download
The Museum of Old and New Art: Leveraging entrepreneurial marketing to create a unique arts and vacation venture Ian Fillis Fillis
Kim Lehman
Morgan P Miles
Entrepreneurial marketing is used to understand new venture creation in the vacation tourism sector through a case study of private art museum in Tasmania that has become a tourist destination of major international significance. The Museum of Old and New Art (MONA) has emerged as a major driver of tourism in the region. Interrogation of the arts and cultural tourism literature sets up a key research proposition – in arts and cultural tourism, the unique artistic tastes of the entrepreneur often trump customer needs and preferences by shaping the visitor’s experience through creative artistic innovation. The findings support our proposition, with additional grounding through the impact of the owner/ manager and associated entrepreneurial marketing and effectuation impacts. Journal of Vacation Marketing 2017 PDF Download
Tasmania’s Bioeconomy: Employing the Seven Capitals to Sustain Innovative and Entrepreneurial Agrifood Value Chains Holger Meinke
Laurie Bonney
Katherine Evans
Morgan Miles
Tasmania, Australia’s southernmost and smallest island state, depends strongly on its bioeconomy. Currently the farm gate production of Tasmania’s bioeconomy contributes around 7.4% to the overall Gross State Product (GSP). This figure is considerably higher than for Australia, where the bioeconomy contributes 2.5% to the overall Gross Domestic Product (GDP). Based on this measure, Tasmania’s economy is more in line with the economies of Brazil (5.7%) or New Zealand (7.2%). It is estimated that Tasmania’s bioeconomy currently contributes 16–20% of overall economic output, when taking into account the economic impact of related value chains that reach from agricultural suppliers to retailers. Government policy for economic growth in Tasmania aims to build up this sector over the following decades. To achieve the stated growth targets, technologies must be combined with business capabilities in order to effectively and efficiently commercialize innovation while maintaining sound environmental practices. A techology-driven, irrigation-led transformation is currently underway in the state, turning Tasmania’s bioeconomy into a highly knowledge-intensive sector of the economy. To fully realize the economic, environmental and social potential of investment in irrigation infrastructure, there must be similar investments in research, knowledge creation, marketing, value chain innovations and capability development.   2017 PDF Download
Sustaining Actor Engagement During the Opportunity Development Process YULIYA SNIHUR
B. SEBASTIAN REICHE
ERIC QUINTANE
Research summary Recent entrepreneurship research has examined how opportunities are developed, highlighting the engagement of external actors. However, we know little about how entrepreneurs should interact with external actors to sustain their engagement. Since opportunity development is a process that unfolds over time, sustaining actor engagement is critical because it enables continued feedback and access to actors’ resources. We present a process model that explains how entrepreneurs can sustain external actor engagement through two iterative phases: translation and transformation. We also propose that entrepreneurs can sustain actor engagement by structuring the timing of interactions and by modifying actors’ perceptions of the time available for novel opportunity development. We conclude with an agenda for future research on actor engagement and entrepreneurs’ temporal capabilities. Managerial summary To develop business opportunities, entrepreneurs require support, feedback, and other resources from different groups of individuals (actors), such as customers, business partners, investors, and regulators. We explain how entrepreneurs should continue to interact with these actors throughout the development period to secure sustained access to resources. Entrepreneurs need to present the business opportunity to actors in an engaging way, and subsequently integrate the feedback received during development of the project. Sustaining engagement from actors involves an iterative process through which the business opportunity is communicated and transformed. Entrepreneurs can influence actors’ engagement by choosing how and when to interact with them. We highlight time and actor feedback as important resources that can be used by skillful entrepreneurs to increase the odds of opportunity development success. Copyright © 2016 Strategic Management Society. Strategic Entrepreneurship Journal 2017 PDF Download
Questions from the Effectuation Conference June 6 & 7, Bodo Norway Stuart Read
Saras Sarasvathy
At the 2016 effectuation conference, participants submitted 14 open questions. These questions derived from conversations at the conference and span research and practice topics. In the effectual spirit, we shared the questions around with the effectuation community and have consolidated responses to these questions in this document, as well as “Two cents from Saras” on every one. We are quick to note that these responses are not definitive answers, but a part of a conversation and an invitation to continue it. We hope you find them useful.   2017 PDF Download
Past Career in Future Thinking: How Career Management Practices Shape Entrepreneurial Decision Making Yuval Engel
Elco van Burg
Emma Kleijn
Svetlana Khapova
Research Summary: This study builds a grounded model of how careers shape entrepreneurs’ preferences for causal and effectual decision logics when starting new ventures. Using both verbal protocol analysis and interviews, we adopt a qualitative research approach to induct career management practices germane to entrepreneurial decision making. Based on our empirical findings, we develop a model conceptualizing how configurations of career management practices, reflecting different emphases on career planning and career investment, are linked to entrepreneurial decision making through the imprint that they leave on one’s view of the future, generating a tendency toward predictive and/or creative control. These findings extend effectuation theorizing by reformulating one of its most pervasive assumptions and showing how careers produce distinct pathways to entrepreneurial thinking, even prior to entrepreneurial entry. Managerial Summary: Treating your own career as a start-up impacts how you make decisions when actually becoming an entrepreneur. Based on empirical findings, we explain why and how sets of career management practices are distinctively linked to the use of different logics when making entrepreneurial decisions. Individuals who throughout their careers have emphasized investments in skills and networks over efforts to forecast and plan develop a general view of the future in which creative control dominates predictive control. The opposite is true for those who rely on managing their careers through planning but remain passive in their career investments. Upon entry to entrepreneurship, these differences become relevant such that some entrepreneurs rely on attempts to predict the future while others actively try to create it. © 2016 The Authors. Strategic Entrepreneurship Journal published by Strategic Management Society. Strategic Entrepreneurship Journal 2017 PDF Download
Monetising blogs: Enterprising behaviour, co-creation of opportunities and social media entrepreneurship VERONICA GUSTAFSSON
Mohammad Saud Khan
Abstract Our essay aims to investigate the emerging phenomenon of monetising life-style blogs as an example of social media entrepreneurship. Using a variety of business models and based on interplay of virtual and real-life networks while monetising their blogs, bloggers engage in numerous economic activities. By attracting attention to this phenomenon, we seek to understand the process of co-creation of entrepreneurial opportunities as it occurs among the networking actors. We pose that bloggers, despite taking focal positions within their virtual networks may not be the most (pro)active partners in the process of opportunity co-creation. Rather, their role is often receptive, whereas opportunities become actively identified by other, corporate members of networks, who demonstrate creative and innovative approaches. Thus, opportunity co-creation within the network becomes the main driver of the entrepreneurial process. Journal of Business Venturing Insights 2017 PDF Download
Misgivings about dismantling the opportunity construct Matthew S Wood Abstract The concept of entrepreneurial opportunity has become a fundamental entity organizing entrepreneurship research. Recently, however, the validity of the construct has come into question with scholars noting definitional fragmentation as highly problematic and advocating for dismantling the construct in favor of replacement concepts. This paper articulates misgivings over this movement by identifying several stumbling blocks it creates for the future of entrepreneurship research. These realizations are followed by the notion that agreeing the construct is representationally valuable and accepting systematic variation in construct definition as a function of clarified conceptualizations of the process underpinning entrepreneurship is a more advantageous equilibrium state. Specific benefits associated with a move in this direction are identified. Journal of Business Venturing Insights 2017 PDF Download
IT Enabled Frugal Effectuation Prem B. Khanal
Didier BERNARD
Benoit A Aubert
To succeed, entrepreneurs operating in frugal contexts tend to adopt an effectual logic of action. Such entrepreneurs also increasingly rely on digital technologies to pursue opportunities. Yet, despite a flurry of scholarly attention to effectuation tactics and their outcomes, surprisingly little is known about how digital technologies support effectuation, and with what outcomes. This paper sketches a theoretical model of how IT affordances support effectuation in frugal contexts.
The model extends entrepreneurship and information systems theories of frugal entrepreneurship by linking specific IT affordances to dimensions of effectuation. The paper also discusses how the model could be refined by empirical studies and extended across levels of analysis.
Digital Business and Innovation 2017 PDF Download
Is R&D risky? Philip Bromiley
DEVAKI RAU
YU ZHANG
Research summary: Many studies use research and development (R&D) intensity or R&D spending as a proxy for risk taking, but we have little evidence that either associates positively with firm risk. We analyze the relations between R&D intensity (R&D spending to sales) and R&D spending on the one hand and 11 different indicators of firm risk on the other, using data from 1,907 to 3,908 firms in various industries over 13 years. The analysis finds a general lack of consistent positive association between R&D and firm risk, making the use of R&D as an indicator of risk taking questionable. Furthermore, R&D intensity and spending do not correlate positively, suggesting they measure different constructs. We discuss potential reasons for these nonsignificant results. Our study demonstrates that researchers should avoid casual use of R&D as a proxy for risk taking without explicitly providing a clear definition and measurement model for risk. Managerial summary: Risk is a key construct in strategic management research. Many studies in this area measure risk taking by research and development (R&D) intensity (the ratio of R&D spending to sales) or R&D spending. However, since R&D intensity and spending have also been used to measure various other things such as information processing demands, this raises the question of whether R&D intensity and spending are valid indicators of firm risk. We examine this issue by considering the associations of R&D intensity and R&D spending with conventional measures of firm risk. We find a general lack of consistent positive association between R&D and firm risk, making the use of R&D as an indicator of risk taking questionable. Furthermore, R&D intensity and spending do not correlate positively, suggesting they measure different things. Copyright © 2016 John Wiley & Sons, Ltd. Strategic Management Journal 2017 PDF Download
Interplay between reputation and growth: the source, role and audience of reputation of rapid growth technology-based SMEs Jukka Partanen
Sanjay Goel
AbstractDrawing on resource-based view and signalling theory, this paper presents a comparative case of four (young vs. old; small vs. medium-sized) business-to-business firms to examine how (i.e. through which sources), why (i.e. for which managerial purposes) and for whom (i.e. for which audiences) do technology-based small and medium-sized enterprises build their reputation along the process of rapid growth? The results indicate that in the pre-growth stage product awards as well as technological and financial partners are important sources of reputation for demonstrating technological capabilities and firm sustainability to potential customers especially for young firms. Older firms, in turn, rely on technology partners and acquisitions in the rapid growth stage to convince existing customers that the firms? can keep up with their customer?s changing needs. Moreover, the reputation gained from the first well-known customer and a focused clientele appear to be two critical antecedents of rapid growth whereas patents do not seem to have a significant reputational role in rapid growth. Our study informs the theory of reputation development of growing technology-based firms by abstracting a more nuanced understanding of stakeholder- and stage-contingent reputation that fosters rapid growth, and provides new insight into the literature on small firm growth. Entrepreneurship & Regional Development 2017 Link to Abstract
In the beginning: Identity processes and organizing in multi-founder nascent ventures TED BAKER
E. Erin Powell
We conducted a longitudinal field study of nine nascent ventures attempting to revitalize local municipalities to understand how and why identity processes shape organizing in multi-founder nascent ventures. We develop grounded theory and a process model showing how the patterning of founders’ social identities shapes early structuring processes, how this in turn influences the construction of a collective identity prototype and its attempted enforcement by an in-group, and how the overall process influences whether or not founders remain engaged in their joint organizing efforts. Our contributions extend the growing entrepreneurship literature on founder identity from an individual focus toward understanding how founding teams work through organizing issues and from a focus on established organizations to exploring why and whether teams move forward in nascent ventures. We open up a series of important questions for future research about how founders become “who we are.” Academy of Management Journal 2017 PDF Download
Environmental Entrepreneurship and Interorganizational Arrangements: A Model of Social-benefit Market Creation Jacqueline Corbett
Wren Montgomery
Research summary Social-benefit markets, such as those for carbon trading, are becoming increasingly popular for combating complex social and environmental problems. However, their unique characteristics pose substantial challenges to market creation and require novel entrepreneurial approaches. Integrating the entrepreneurship literature with that of management information systems, we conceptualize social-benefit markets as a new type of interorganizational arrangement and develop a model of social-benefit market creation. First, we argue a core entrepreneurial collective, comprising a plurality of actors from government, business and social movements, is essential. Second, we elaborate a six-phase process through which the interests of entrepreneurs are aligned and inscribed in a market artifact and the market is formed. The model is illustrated with reference to the Western Climate Initiative’s carbon market creation efforts. Managerial summary Carbon markets have become a popular strategy for reducing greenhouse gas emissions, with similar market-based solutions being proposed for other social and environmental challenges. We refer to these new structures as social-benefit markets. Social-benefit market creation is a complex undertaking that will require novel entrepreneurial approaches and new interorganizational information systems. In an effort to reduce some of this complexity, we propose a model to explain how entrepreneurs from government, business and social movements must work collectively to build social-benefit markets. We further elaborate a six-phase process through which entrepreneurs are able to align their diverse interests and create a stable market artifact. For managers from all sectors, our work offers actionable guidance for forming collective ventures that deliver real social benefits. Strategic Entrepreneurship Journal 2017 PDF Download
Entrepreneurial beacons: The Yale endowment, run-ups, and the growth of venture capital Y. Sekou Bermiss
Benjamin Hallen
RORY McDONALD
EMILY C. PAHNKE
Research summary: This article investigates the social context of entrepreneurship in organizational sectors. Prior research suggests that firm foundings are driven by collective patterns of activity—such as patterns of prior foundings in a given sector. Building on research on social salience and signals, we consider the influence of singular sector-level triggers, which we call entrepreneurial beacons. We argue that the actions or outcomes of single, salient organizations attract and motivate entrepreneurs, thus increasing the rate of foundings. We test this logic by examining the impact of the Yale University endowment’s investment choices and of venture-capital-backed IPO run-ups on venture-capital foundings between 1984 and 2011. We find support for the existence and influence of beacons and outline boundary conditions for their effects. Managerial summary: What leads entrepreneurs to found new companies in nascent sectors? In contrast to prior research, which emphasizes patterns of activity, we argue that entrepreneurial activity can sometimes be driven by the actions of a singular trigger—what we call an entrepreneurial beacon. We examine the influence of two such beacons, Yale University’s endowment investments and exceptional venture-capital-backed IPO run-ups, on the founding of new venture-capital firms over a 28-year period. We find that Yale’s increased allocations to the venture-capital asset-class has a significant influence on the founding of new venture-capital firms, while exceptional venture-capital-backed IPO run-ups only influence venture-capital foundings under certain conditions. Overall, we offer an explanation for heretofore anecdotal accounts of certain organizations or events that appear to have an outsized influence on entrepreneurial activity. Copyright © 2016 John Wiley & Sons, Ltd. Strategic Management Journal 2017 PDF Download
Effectual entrepreneuring: sensemaking in a family-based start-up ossie jones
Hongqin Li
AbstractIn this paper we examine the microprocesses associated with a successful business established by two young brothers (16 and 18). The study is informed by recent processual approaches to entrepreneurship associated with effectuation theory and sensemaking. We also draw on literature related to personal dispositions, which are the basis of habitual behaviours. The empirical data are drawn from a longitudinal study of an unconventional family business which was created by the two brothers while still at school. Opportunities were created, rather than discovered, by optimizing limited familial resources during the early stages of start-up. We expand effectuation theory by demonstrating the role of sensemaking (enactment, selection and retention), familial influences on dispositions (habits, heuristics and routines) and experiential learning during the first three years of operation. Entrepreneurship & Regional Development 2017 PDF Download
Demystifying the Genius of Entrepreneurship: How Design Cognition Can Help Create the Next Generation of Entrepreneurs Massimo Garbuio
Andy Dong
nidthida lin
TED TSCHANG TSCHANG
DAN LOVALLO
Entrepreneurship education is a key beneficiary of design thinking’s recent momentum. Both designers and entrepreneurs create opportunities for innovation in products, services, processes, and business models. More specifically, both design thinking and entrepreneurship education encourage individuals to look at the world with fresh eyes, create hypotheses to explain their surroundings and desired futures, and adopt cognitive acts to reduce the psychological uncertainty associated with ambiguous situations. In this article, we illustrate how we train students to apply four well-established cognitive acts from the design cognition research paradigm—framing, analogical reasoning, abductive reasoning, and mental simulation—to opportunity creation. Our pedagogical approach is based on scholarship in design cognition that emphasizes creating preferred situations from existing ones rather than applying a defined set of tools from management scholarship. In doing so, we provide avenues for further development of entrepreneurship education, particularly the integration of design cognition. Academy of Management Learning & Education 2017 PDF Download
Boundary Capabilities in MNCs: Knowledge Transformation for Creative Solution Development Esther Tippmann
Pamela Sharkey Scott
Andrew Parker
The management of knowledge across country units is critical to multinational corporations (MNCs). Building on the argument that boundary spanning leads to the development of creative problem solving outcomes, this study advances the concept of MNC knowledge transformation and examines its relationship with solution creativity. Using questionnaire data on 67 problem solving projects, we find that opportunity formation is an underlying mechanism linking MNC knowledge transformation to the development of creative solutions. These insights contribute to our understanding of boundary spanning in global organizations by substantiating MNC knowledge transformation and elaborating the relationship between boundary spanning and creative solution development. If successful at knowledge transformation, collaborators from across the MNC can construct previously unimagined opportunities for the generation of creative outcomes. Journal of Management Studies 2017 PDF Download
Are Formal Planners More Likely To Achieve New Venture Viability? A Counterfactual Model And Analysis FRANCIS J. GREENE
CHRISTIAN HOPP
Research Summary This study develops and tests a counterfactual model of the relationship between formal written business plans and the achievement of new venture viability. This is important because extant theory remains oppositional, and there is a practical need to provide guidance to founders on the utility of formal plans. To test our model, we use propensity score matching to identify the impact that founder, venture, and environmental factors have on the decision to write a formal plan (selection effects). Having isolated these selection effects, we test whether or not these plans help founders achieve venture viability (performance effects). Our results, using data on 1,088 founders, identify two key results: (1) selection effects matter in the decision to plan; and (2) it pays to plan. Managerial Summary This study assesses whether founders who write formal plans are more likely to achieve new venture viability. This is important because, despite its popularity, there is considerable debate about the value of plans. One root reason for this is that what prompts a founder to plan also impacts his/her chances of creating a viable new venture. The study’s novelty is to separate out influences on the decision to plan from the plan-venture viability relationship. Our results show that better-educated founders, those wanting to grow and innovate, and those needing external finance are more likely to plan. Subsequently, having isolated what prompts planning, we assess if writing a plan actually promotes venture viability. We find that it pays to plan. Copyright © 2016 Strategic Management Society. Strategic Management Journal 2017 PDF Download
After the Venture: The Reproduction and Destruction of Entrepreneurial Opportunity William McKinley
Matthew S Wood
Research summary The endogenous formation of entrepreneurial opportunity has become an important theoretical perspective. Research to date focuses on initial opportunity creation dynamics leading to venture formation. This excludes the ongoing enactment of opportunity that takes place after venture founding. We focus on this phenomenon, arguing that opportunities must be continually reproduced through maintenance of consensus among stakeholders about their viability. If consensus fails, the objectivity of the opportunity is ‘destroyed’ in a process we label ‘opportunity de-objectification.’ We identify predictors of opportunity de-objectification and summarize their effects in propositions suitable for future empirical testing. Implications for future theory and research are also discussed. Managerial summary Previous entrepreneurship research has focused attention on the process through which opportunity ideas become objectified and perceived as external facts by entrepreneurs and their stakeholders during venture formation. While such attention is critical, we argue that venture founding marks the beginning, rather than the end, of a dynamic process in which the fact-like status of opportunities is maintained. If stakeholder consensus about opportunity viability is disrupted, it raises questions about this factual status and opens up the possibility that the opportunity is a subjective cognition of the entrepreneur rather than an objective reality. We call this phenomenon ‘opportunity de-objectification,’ and we identify a number of factors that precipitate it. We also suggest that entrepreneurs may reduce the likelihood of this phenomenon by managing some of the factors that induce it. Copyright © 2016 Strategic Management Society. Strategic Entrepreneurship Journal 2017 PDF Download
A time-based process model of international entrepreneurial opportunity evaluation Yanto Chandra This article investigates two important research gaps in international business (IB): how entrepreneurs evaluate international entrepreneurial opportunities (IEOs) and the role of time in the evaluation process. Drawing on the literature on decision-making models and the philosophical foundation of opportunity, this study employs Gioia’s methodology and content analysis to examine how the founders of 15 early-internationalizing firms evaluated IEOs in the early- and late-stage of internationalization. The findings reveal that the interaction of time and three general rules of IEO evaluation that I coin ‘simple’, ‘revised’, and ‘complex’ influenced the entrepreneurs’ decisions. The findings show that the founders transitioned from simple to revised and to complex rules in the IEO evaluation process and that various contingent factors such as time pressure, resource availability, and type of stakeholders drove these transitions. The three general rules correspond to what I label as ‘opportunity actualization’, ‘revision’, and ‘development maximization’ processes, respectively. I propose a Timebased Process model that reconciles extant internationalization models’ (i.e., Process, Network, Economics, and Entrepreneurship) different explanations regarding why and how firms internationalize   2017 PDF Download
Why Metallica changed music world – Effectuation perspective Erno Salmela   Business and non-profit organizations facing increased competition and growing customers´demand Vol. 15 2016 PDF Download