Intersection of entrepreneurial processes: The effect of integrating causation and effectuation processes on venture performance

Abstract

Entrepreneurs rely on a variety of decision-making heuristics when implementing entrepreneurial processes in small ventures. Researchers have suggested that entrepreneurs use effectual logic to utilize their available means and create the desired effects for their venture creations. This stands in contrast to causal logic that uses a variety of planning and prediction techniques to determine the entrepreneurs' desired effect and means available to launch a viable venture. Building upon recent research, I plan to continue the investigation on whether causation and effectuation are interchangeable in entrepreneurial ventures. In this study, I have used a sample of ventures across five industries with fewer than 100 employees. The preferences shown by entrepreneurs for causation and effectuation processes have been analyzed. I introduce stepping-stone options that provide a way for venture owners to mitigate risks while selecting a process. By incorporating multiple streams of literature, I have performed a rigorous examination of the processes used by entrepreneurs as the degree of uncertainty of increases. Using survey data collected from 211 entrepreneurial ventures, this study reveals that effectuation could be related to profit growth in environments of high technical and market uncertainty.