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Causation and effectuation processes: A validation study

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  • Chandler, Gaylen N.
  • DeTienne, Dawn R.
  • McKelvie, Alexander
  • Mumford, Troy V.
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    Abstract

    We develop and validate measures of causation and effectuation approaches to new venture creation and test our measures with two samples of entrepreneurs in young firms. Our measure of causation is a well-defined and coherent uni-dimensional construct. We propose that effectuation is a formative, multidimensional construct with three associated sub-dimensions (experimentation, affordable loss, and flexibility) and one dimension shared with the causation construct (pre-commitments). As specified by Sarasvathy (2001), we also show that causation is negatively associated with uncertainty, while experimentation, a sub-dimension of effectuation, is positively correlated with uncertainty. The major contribution is the resulting validated scales that measure causation and effectuation.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Venturing.

    Volume (Year): 26 (2011)
    Issue (Month): 3 (May)
    Pages: 375-390

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    Handle: RePEc:eee:jbvent:v:26:y:2011:i:3:p:375-390

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    Web page: http://www.elsevier.com/locate/jbusvent

    Related research

    Keywords: Causation Effectuation Measurement validation;

    References

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    1. Coltman, Tim & Devinney, Timothy M. & Midgley, David F. & Venaik, Sunil, 2008. "Formative versus reflective measurement models: Two applications of formative measurement," Journal of Business Research, Elsevier, vol. 61(12), pages 1250-1262, December.
    2. Ruiz, David Martín & Gremler, Dwayne D. & Washburn, Judith H. & Carrión, Gabriel Cepeda, 2008. "Service value revisited: Specifying a higher-order, formative measure," Journal of Business Research, Elsevier, vol. 61(12), pages 1278-1291, December.
    3. Mark Casson & Nigel Wadeson, 2007. "The Discovery of Opportunities: Extending the Economic Theory of the Entrepreneur," Small Business Economics, Springer, vol. 28(4), pages 285-300, April.
    4. Nicholls-Nixon, Charlene L. & Cooper, Arnold C. & Woo, Carolyn Y., 2000. "Strategic experimentation: Understanding change and performance in new ventures," Journal of Business Venturing, Elsevier, vol. 15(5-6), pages 493-521.
    5. Jianwen Liao & William Gartner, 2006. "The Effects of Pre-venture Plan Timing and Perceived Environmental Uncertainty on the Persistence of Emerging Firms," Small Business Economics, Springer, vol. 27(1), pages 23-40, August.
    6. Diamantopoulos, Adamantios, 2008. "Formative indicators: Introduction to the special issue," Journal of Business Research, Elsevier, vol. 61(12), pages 1201-1202, December.
    7. Bryan Caplan, 1999. "The Austrian Search for Realistic Foundations," Southern Economic Journal, Southern Economic Association, vol. 65(4), pages 823-838, April.
    8. Sarasvathy, Saras D. & Dew, Nicholas, 2005. "Entrepreneurial logics for a technology of foolishness," Scandinavian Journal of Management, Elsevier, vol. 21(4), pages 385-406, December.
    9. Akerlof, George A & Yellen, Janet L, 1985. "Unemployment through the Filter of Memory," The Quarterly Journal of Economics, MIT Press, vol. 100(3), pages 747-73, August.
    10. Dew, Nicholas & Read, Stuart & Sarasvathy, Saras D. & Wiltbank, Robert, 2009. "Effectual versus predictive logics in entrepreneurial decision-making: Differences between experts and novices," Journal of Business Venturing, Elsevier, vol. 24(4), pages 287-309, July.
    11. Cadogan, John W. & Souchon, Anne L. & Procter, David B., 2008. "The quality of market-oriented behaviors: Formative index construction," Journal of Business Research, Elsevier, vol. 61(12), pages 1263-1277, December.
    12. Diamantopoulos, Adamantios & Riefler, Petra & Roth, Katharina P., 2008. "Advancing formative measurement models," Journal of Business Research, Elsevier, vol. 61(12), pages 1203-1218, December.
    13. Henry Mintzberg, 1978. "Patterns in Strategy Formation," Management Science, INFORMS, vol. 24(9), pages 934-948, May.
    14. Sarasvathy, D. K. & Simon, Herbert A. & Lave, Lester, 1998. "Perceiving and managing business risks: differences between entrepreneurs and bankers," Journal of Economic Behavior & Organization, Elsevier, vol. 33(2), pages 207-225, January.
    15. Wiltbank, Robert & Read, Stuart & Dew, Nicholas & Sarasvathy, Saras D., 2009. "Prediction and control under uncertainty: Outcomes in angel investing," Journal of Business Venturing, Elsevier, vol. 24(2), pages 116-133, March.
    16. Forbes, Daniel P., 2005. "Are some entrepreneurs more overconfident than others?," Journal of Business Venturing, Elsevier, vol. 20(5), pages 623-640, September.
    17. John Horn, 1965. "A rationale and test for the number of factors in factor analysis," Psychometrika, Springer, vol. 30(2), pages 179-185, June.
    18. Jarvis, Cheryl Burke & MacKenzie, Scott B & Podsakoff, Philip M, 2003. " A Critical Review of Construct Indicators and Measurement Model Misspecification in Marketing and Consumer Research," Journal of Consumer Research, University of Chicago Press, vol. 30(2), pages 199-218, September.
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    Cited by:
    1. Ing. Matthijs H. M. Hammer, 2012. "How Business Management benefit from Entrepreneurship," Proceedings- 10th International Conference on Mangement, Enterprise and Benchmarking (MEB 2012), Óbuda University, Keleti Faculty of Business and Management.
    2. Cardon, Melissa S. & Gregoire, Denis A. & Stevens, Christopher E. & Patel, Pankaj C., 2013. "Measuring entrepreneurial passion: Conceptual foundations and scale validation," Journal of Business Venturing, Elsevier, vol. 28(3), pages 373-396.
    3. Brettel, Malte & Mauer, René & Engelen, Andreas & Küpper, Daniel, 2012. "Corporate effectuation: Entrepreneurial action and its impact on R&D project performance," Journal of Business Venturing, Elsevier, vol. 27(2), pages 167-184.

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