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An empirical investigation of determinants of effectual and causal decision logics in online and high-tech start-up firms

Author

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  • Tobias Frese

    (Freie Universität Berlin)

  • Ingmar Geiger

    (Freie Universität Berlin
    Aalen University)

  • Florian Dost

    (Lancaster University Management School)

Abstract

Scholars have criticized effectuation research for being insufficiently embedded in a nomological network of practically relevant antecedents. To address this research gap, the current study uses a mixed-methods design. First, a qualitative study with 20 venturing experts (entrepreneurs and investors) validates various effectuation logics and uncovers the following four antecedents of effectuation and causation: founders’ perceived uncertainty, entrepreneurial experience, management experience, and investor influence. Second, a large-scale quantitative study of founders in online, software, and high-tech start-ups (n = 435) provides statistical support for the identified antecedents, using structural equation modeling and multigroup comparisons over early and later venture stages. The study confirms the multifaceted nature of effectuation; experimentation is the only effectual logic that reflects influences of all the determinants. Founders’ prior experiences affect experimentation and causation in the early venture stage, but not during the later stages. Investor influence displays the broadest array of effects on the decision logics, offering both theoretical embeddedness for effectuation and a new, practically relevant driver.

Suggested Citation

  • Tobias Frese & Ingmar Geiger & Florian Dost, 2020. "An empirical investigation of determinants of effectual and causal decision logics in online and high-tech start-up firms," Small Business Economics, Springer, vol. 54(3), pages 641-664, March.
    • Handle: RePEc:kap:sbusec:v:54:y:2020:i:3:d:10.1007_s11187-019-00147-8
    DOI: 10.1007/s11187-019-00147-8
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    Cited by:

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    2. Christian Rudeloff & Stefanie Pakura & Fabian Eggers & Thomas Niemand, 2022. "It takes two to tango: the interplay between decision logics, communication strategies and social media engagement in start-ups," Review of Managerial Science, Springer, vol. 16(3), pages 681-712, April.
    3. Kamble, Sachin & Rana, Nripendra P. & Gupta, Shivam & Belhadi, Amine & Sharma, Rohit & Kulkarni, Praveen, 2023. "An effectuation and causation perspective on the role of design thinking practices and digital capabilities in platform-based ventures," Technological Forecasting and Social Change, Elsevier, vol. 193(C).
    4. Bai, Wensong & Johanson, Martin & Oliveira, Luis & Ratajczak-Mrozek, Milena & Francioni, Barbara, 2022. "Where business networks and institutions meet: Internationalization decision-making under uncertainty," Journal of International Management, Elsevier, vol. 28(1).
    5. Kusi, Samuel Yaw & Gabrielsson, Peter & Baumgarth, Carsten, 2022. "How classical and entrepreneurial brand management increases the performance of internationalising SMEs?," Journal of World Business, Elsevier, vol. 57(5).
    6. Jie Yang & Mingxing Yu, 2022. "The Influence of Institutional Support on the Innovation Performance of New Ventures: The Mediating Mechanism of Entrepreneurial Orientation," Sustainability, MDPI, vol. 14(4), pages 1-15, February.

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    More about this item

    Keywords

    Entrepreneurship; Uncertainty; Entrepreneurial and management experience; Investor influence; Venture stage; Mixed-methods design;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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