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Effectuation and Causation among Dutch expert entrepreneurs

Jong, Bart de (2014) Effectuation and Causation among Dutch expert entrepreneurs.

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Abstract:With the world being globally connected at increasing speeds and ease, more people than ever turn to entrepreneurship as their main source of income. As the overall attention on entrepreneurship is growing, governments stimulate and subsidize innovation programs and startup incubators are increasingly active. In line with that, the research into entrepreneurship is rapidly gaining interest in the academic world. One direction in the research field of entrepreneurship that particularly stands out is the decision-making process of expert entrepreneurs, on which Sarasvathy (2001a) made a significant contribution. She distinguishes the concepts of causation and effectuation. Causational decision-making takes a certain effect as given and focuses on selecting between means to create that effect, whereas effectual decision-making starts with a given set of means and focuses on selecting between possible effects that can be created with that set of means. Sarasvathy states that expert entrepreneurs predominantly use effectuation. The objective of the research at hand is to expand and deepen the body of knowledge on these processes and in particular on effectuation. By researching the use of causation and effectuation among Dutch expert entrepreneurs, a broader insight into effectuation is gained, for most contributions to existing empirical work on effectuation are based on data gathered in the United States. The use of effectuation and causation by Dutch expert entrepreneurs was researched by means of both a qualitative and a quantitative research method, with a sample size of 20 subjects. By applying the think aloud method as a qualitative research method, the respondent is requested to think out loud while formulating an answer on a given problem or question in a business case, therefore verbalizing their thought as these enter consciousness, maximizing observed cognitive information and behavior. The quantitative method entailed a survey to test the dimensionality of causation and effectuation. The results indicate that Dutch expert entrepreneurs do not use all effectuation principles as proposed by Sarasvathy (2001a), finding only significant proof for the effectual principles of means-based and partnerships & alliances. Furthermore, on the subject of risk, Dutch expert entrepreneurs take a more causal stance, preferring a focus on expected returns instead of a focus on affordable loss, contrasting the assumptions of Sarasvathy (2001a). The survey even provided no proof for a preference of causation or effectuation. The sample size of the research is rather small for a quantitative method, decreasing the generalizability, which could explain the absence of significant distinctions in the survey results. Another factor of consideration is the distinction between the think aloud method and survey in terms of immediacy in answering. The survey provided the subject the time and opportunity to consider several answers before making a weighed decision, removing the immediacy and allowing for retrospection ad introspection biases. Based on the results, several recommendations for further research are presented to gain more insight into the principles of causation and effectuation. More research on this specific topic is required to increase its generalizability. Also, future research is recommended to investigate the importance of immediacy of the written or spoken verbalization of the thought in the application of effectuation. To improve the survey outcomes, investigation is required into what the questions evoke. Further research on effectuation and on its practical applications are recommended to focus on means-based behavior and the formation of partnerships & alliances, with special attention to its implication on leadership, developing a company vision and on human resource management. To effectively introduce effectuation, it is recommended to incorporate effectuation as a main element in studies of business administration.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:02 science and culture in general, 70 social sciences in general, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/65702
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