Search results for "effectuation"
showing 10 items of 16 documents
Immigrant entrepreneur firm start-up behavior and reasoning : a reflective study of causation, effectuation and bricolage
2013
Entrepreneurship research studies how and why firms come into being, survive and grow (Davidsson, 2004; Gartner, 1985; Schumpeter, 1934). Early literature has proposed a linear model of entrepreneurship which is intentional (Bird, 1988), opportunity discovery (Kirzner, 1997; Shane and Venkataraman, 2000) and goal & strategy oriented (Wiklund & Shepherd, 2005). Being a mainstream in the earlier research, it is labelled as causation model by Sarasvathy (2001). Several scholars such as Baker & Nelson (2005) and Sarasvathy (2001a, b; 2008) questioned the validity of the model and proposed two additional models to the classic model: Effectuation (Sarasvathy, 1998) and Entrepreneurial Bricolage (…
Prediction and Control: The Specific Role of Business Angels in the Investment Process
2019
International audience; Entrepreneurs and related investors (business angels and venture capitalists) rely on different types of rationalities. Extant research suggests that conflicts resulting from misunderstanding can emerge between entrepreneurs and investors when they adopt different rationalities but must switch those rationalities because of the maturity of their ventures and the degree of uncertainty they face. Relying on three in-depth case studies, this research contributes to both entrepreneurship and effectuation literature by emphasizing the specific role of business angels in helping entrepreneurs switch rationalities when necessary to attract funding resources from venture cap…
Towards Understanding Startup Product Development as Effectual Entrepreneurial Behaviors
2017
With the rapid development of technology and competitiveness of IT sectors, the speed of learning and evolving is vital for success of software startups. However, software startups often face with multiple technical and business challenges, which lengthen the duration of their idea-to-launch process. Little is known about the relation of entrepreneurial characteristics of software startups and their product development. We conducted an empirical study on twenty software startups to understand their challenges that leads long idea-to-launch processes. Six engineering-related challenges were identified and interpreted via a lens of an entrepreneurial behavior theory. Our main finding is that …
Entrepreneurial Decision-Making Logic Related to Software Development in Different Growth Phases of INVs
2019
Software-based innovations with global market-potential are the main product offering of digital-based International New Ventures, an emerging type of rapidly internationalizing firm. Despite increasing research attention on the internationalization phases of these firms, knowledge of how the characteristics of the firm’s software offerings change over time remains scarce. In this paper, we analyze how standardization, customization and localization evolve through the growth and commitment of International New Ventures in foreign markets. Specifically, we posit that an entrepreneurial decision-making logic based on a logic of effectuation or causation acts as a trigger mechanism for specifi…
The entrepreneurial logic of startup software development : A study of 40 software startups
2021
Context: Software startups are an essential source of innovation and software-intensive products. The need to understand product development in startups and to provide relevant support are highlighted in software research. While state-of-the-art literature reveals how startups develop their software, the reasons why they adopt these activities are underexplored. Objective: This study investigates the tactics behind software engineering (SE) activities by analyzing key engineering events during startup journeys. We explore how entrepreneurial mindsets may be associated with SE knowledge areas and with each startup case. Method: Our theoretical foundation is based on causation and effectuatio…
Effectuation and foreign market entry of entrepreneurial firms
2015
Purpose – The purpose of this study is to examine the decision-making process for entrepreneurial firms when entering foreign markets and how and why they entered those markets. Design/methodology/approach – A nascent theory in entrepreneurship called effectuation is combined with internationalization process theory as the conceptual framework to study decision-making under uncertainty. The central concept in both these theories is relationships and how they can be used to gain knowledge and thus reduce uncertainty and in the case of effectuation to co-create opportunities to enter foreign markets. The research design involves a multiple case study of software firms from Finland and New Ze…
An effectual approach to executing dynamic capabilities under unexpected uncertainty
2022
This study investigates how business-to-business (B2B) firms navigate contexts of unexpected uncertainty. Building on the theories of effectuation and dynamic capabilities, the study develops a model that highlights how effectual decision-making logic is manifested in the activities B2B firms employ to sense and seize new opportunities and threats and transform existing business operations. The qualitative data were collected in two phases (before and after the COVID-19 outbreak) and consisted of 24 interviews with 13 B2B firms. The findings demonstrate a strong reliance on managers' effectual decision-making in situations of unexpected uncertainty and provide a set of key activities that h…
Effectuating Person-Organization Fit : Effectuation in Organizations
2015
Industrial policies of innovation concentrate on funding or encouraging promising innovations entailing growth or that have possibilities of internationalization. However, concrete innovation process happens in and between individuals. Effectuation is a logic that is emergent and iterative in nature. It develops through enactment and trial-and-error processes that follow deep expertise, contextual experience and abilities to leverage contingencies. Harnessing individuals to challenge their working environment to function better may improve both work well-being and organization performance. The integration of person-organization fit and effectuation suggest that paying attention to effectuat…
Pricing of digital services as an effectual co-creative process
2022
Entrepreneurs have to price their innovations under the unpredictability of customers’ reactions. While predictive pricing methods are prevalent in business-to-business pricing literature, we argue for the critical importance of control-oriented pricing strategies for digital services. By applying effectuation theory, our study investigates how entrepreneurs co-create their pricing strategies for their digital services as a co-evolutionary, iterative process with their customers. We found that pricing is the co-evolutionary process where entrepreneurs learn from their interactions with customers and use this knowledge to develop and improve their pricing practices further. The findings cont…
Entrepreneurs (novices vs. experts) and investors: Interaction and rationality dynamics (effectual vs. causal)
2019
The paper studies the mechanisms that govern the interactions between the entrepreneur (novice or expert) and the specific investors of emerging firms (business angels (BAs) and venture-capital firms (VCs)). Combining both literatures on entrepreneurship and entrepreneurial finance, our aim is to understand if the rationalities of these three actors help them or not to interact, and, to study how they influence each other during the firm's growth. In order to do so, we undertake two processual case studies. Our results show that effectual rationality underlines the interaction between the entrepreneur and the BAs at the creation of the firm, whilst causal rationality is helpful in the searc…