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Strategic decision-making in SMEs: effectuation, causation, and the absence of strategy

Author

Listed:
  • Adrian Hauser

    (University of Liechtenstein)

  • Fabian Eggers

    (Menlo College)

  • Stefan Güldenberg

    (University of Liechtenstein)

Abstract

Since the early 2000s, effectuation has gained substantial interest in literature. Whereas Sarasvathy in her seminal 2001 article distinguished effectuation from causal decision-making, still effectuation seems to get confused with ad hoc decision-making or strategy absence. On the basis of a qualitative study with 12 managers from 10 Swiss small-to-medium enterprises (SMEs), this manuscript analyzes their decision-making approaches and distinguishes between causal, effectual, and absence-of-strategy reasoning. Whereas principles for effectuation and causation are well established, this study reveals new categories on which strategy absence can be mapped. The three decision approaches and their interplay are then investigated in four business contexts (founding, takeover, new artifact creation, and existing artifacts). Whereas causal reasoning is found in all four, signs of strategy absence are apparent in three. Effectual logic dominates all four contexts. Further, this manuscript finds that choice of the strategic decision approach does not depend on company size but rather on decision context. Also, firms demonstrate the ability to switch between effectual and causal decision models according to the specific decision context.

Suggested Citation

  • Adrian Hauser & Fabian Eggers & Stefan Güldenberg, 2020. "Strategic decision-making in SMEs: effectuation, causation, and the absence of strategy," Small Business Economics, Springer, vol. 54(3), pages 775-790, March.
  • Handle: RePEc:kap:sbusec:v:54:y:2020:i:3:d:10.1007_s11187-019-00152-x
    DOI: 10.1007/s11187-019-00152-x
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    More about this item

    Keywords

    Small and medium-sized enterprises; Effectuation; Causation; Strategy; Entrepreneurial decision-making; Emergent strategies; Absence of strategy;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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