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Entrepreneurial Decision Making: Examining Preferences for Causal and Effectual Reasoning in the New Venture Creation Process

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Author Info
Politis, Diamanto () (Department of Business Administration, School of Economics and Management, Lund University)
Gabrielsson, Jonas () (Department of Business Administration, School of Economics and Management, Lund University)
Abstract

A growing body of studies emphasizes the discovery of opportunities and the decision to exploit them as the essence of entrepreneurial activity. Following this stream of research, we present a study that examines entrepreneurs’ preferences for causal and effectual reasoning in the new venture creation process. The dominating view is that entrepreneurial decision making to a large degree varies in response to the unique situational context. In contrast, we are in this paper particularly interested to what extent individual career experiences and career motives makes entrepreneurs in favour of one decision making logic over another. From this point of departure we develop hypotheses of the expected influence of career experience and career motives on entrepreneurs’ preferences for causal and effectual reasoning. Statistical analysis on a sample of 291 Swedish entrepreneurs give ample support for the argument that entrepreneurs’ career experience and career motives have a significant influence on entrepreneurial decision making. The finding suggests that future research into entrepreneurial decision making should include career experience and career motives as contingency variables. Furthermore, the article provides an attempt to operationalize entrepreneurs’ preference for causal and effectual modes of reasoning. To our knowledge no such operationalizations exists.

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Paper provided by Lund University, Institute of Economic Research in its series Working Paper Series with number 2006/5.

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Length: 22 pages
Date of creation: 19 Sep 2006
Date of revision:
Handle: RePEc:hhb:lufewp:2006_005

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Postal: Institutet för Ekonomisk Forskning, Box 7080, SE-220 07 LUND, Sweden
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Keywords: entrepreneurial decision making; career experience; career motives; effectuation;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Vohora, Ajay & Wright, Mike & Lockett, Andy, 2004. "Critical junctures in the development of university high-tech spinout companies," Research Policy, Elsevier, vol. 33(1), pages 147-175, January. [Downloadable!] (restricted)
  2. Ronstadt, Robert, 1988. "The Corridor Principle," Journal of Business Venturing, Elsevier, vol. 3(1), pages 31-40. [Downloadable!] (restricted)
  3. Mullins, John W. & Forlani, David, 2005. "Missing the boat or sinking the boat: a study of new venture decision making," Journal of Business Venturing, Elsevier, vol. 20(1), pages 47-69, January. [Downloadable!] (restricted)
  4. Lazear, Edward P., 2003. "Entrepreneurship," IZA Discussion Papers 760, Institute for the Study of Labor (IZA). [Downloadable!]
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  5. Harvey, Michael & Evans, Rodney, 1995. "Strategic windows in the entrepreneurial process," Journal of Business Venturing, Elsevier, vol. 10(5), pages 331-347, September. [Downloadable!] (restricted)
  6. Levesque, Moren & Schade, Christian, 2005. "Intuitive optimizing: experimental findings on time allocation decisions with newly formed ventures," Journal of Business Venturing, Elsevier, vol. 20(3), pages 313-342, May. [Downloadable!] (restricted)
  7. Forlani, David & Mullins, John W., 2000. "Perceived risks and choices in entrepreneurs' new venture decisions," Journal of Business Venturing, Elsevier, vol. 15(4), pages 305-322, July. [Downloadable!] (restricted)
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