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The effect of cultural tightness-looseness on effectuation or causation strategies of novice entrepreneurs in Germany

Lettau, Christina (2016) The effect of cultural tightness-looseness on effectuation or causation strategies of novice entrepreneurs in Germany.

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Abstract:Within today’s uncertain business environment an entrepreneur brings innovation, creativity and economic coordination to the economy. How do entrepreneurs set up their business? How do they make decisions? The literature proposes two approaches of entrepreneurial decision-making: causation and effectuation. An individual following the causation process is goal-oriented, focuses on expected returns, emphasizes competitive analysis, exploits pre-existing knowledge and attempts to predict the uncertain future. In contrast, an individual following the effectuation strategy is means-oriented, focuses on affordable loss, emphasizes strategic alliances, exploits contingencies and attempts to control the unpredictable future. Nevertheless, these two approaches are not substitutional, but rather complementary. Either one approach might fit to different situations and different contexts. In addition, the term ‘effectuation’ arose out of a study focusing on expert entrepreneurs. So, how do novice entrepreneurs make their decisions? Which factors do influence their decision-making process? One aspect, which might influence this process, is the national culture of the individual. As norms and values of a society shape its members’ behavior, this study focused on the cultural looseness-tightness and relates it to the decision-making processes of causation and effectuation. A tight culture can be explained as a culture with many norms and values, and with a low tolerance of deviant behavior. Whereas a loose culture is the opposite: less norms and values and high tolerance towards deviant behavior. Novice German entrepreneurs, who are not more than five years in business and who have at least a bachelor degree, were asked to fill in an online questionnaire. The results show that the respondents tend to perceive their culture as rather tight. However, the perceived tightness has nearly no effect on either causation or effectuation. Nevertheless, a relation between the perception of the national culture and the attempt to control the unpredictable future (effectuation) could be detected. Therefore, future research should include other factors besides the cultural tightness-looseness into their research, such as the industry type, the venture type and the cognitive style as well as the educational background of the individuals.
Item Type:Essay (Bachelor)
Clients:
Unknown organization, Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:02 science and culture in general, 85 business administration, organizational science
Programme:International Business Administration BSc (50952)
Link to this item:http://purl.utwente.nl/essays/70155
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