Causation and effectuation in Zimbabwe's high growth firms
Date
2016-10-10
Authors
Chidakwa, Arnold M
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Abstract
The present study explores the entrepreneurial processes of high growth firms in Zimbabwe using causation and effectual processes as the underlying logics. Causation is a process that takes a business objective as given and focuses on selecting between means in order to achieve the objective. Effectuation, on the other hand, takes resources as given and focuses on exploiting possible options generated from the available resources. Thus, causation relies on formal planning and predictions while effectuation is a non-predictive logic. The study was motivated by the need to understand how high growth firms identify business opportunities, mobilise resources and sustain growth under dynamic conditions prevailing in Zimbabwe. Zimbabwe’s environment has been characterised by shallow credit markets, depressed economic activities and high cost of doing business.
A multiple case study of six high growth firms drawn from the agricultural, construction, manufacturing, services as well as Information Communications Technology (ICT) and stationery sectors was undertaken. Data were collected using interviews, documentary sources and observations. Thirty interviews were conducted with the founders, and senior executives from finance, business development, marketing or equivalent positions as well as the firm’s bankers. Data were inductively analysed using ATLAS.ti Version 7 package.
The study evidence shows that there is no complete transition from effectuation to causation process. The major study conclusions are that; first, entrepreneurs relied on the social networks as sources of business and capital. Second, the ability to socially innovate is influenced by trust. Third, firms are wary of using external finance because of business uncertainty and cost. Fourth, the firms do not engage in direct competition with incumbents, but collaborate with industry peers. Fifth, the participating firms relied on incremental innovation and local business. Sixth, the firms showed high levels of serial and portfolio entrepreneurship. Finally, contextual factors had an influence on business success, and therefore the ability to adapt to the environmental changes is vital for business growth.
The main contribution of this study is the development of a theoretical framework that extends the effectuation logic. The additional dimensions that emerged from the evidence are social innovation, portfolio diversification, incremental innovation, portfolio diversification, trust, business systems and contextual factors. The study also makes important methodological, empirical and practical contributions. Further research is recommended to move the Extended Effectuation framework towards the development of normative theory.
Description
A thesis submitted to
Faculty of Commerce, Law & Management
The University of the Witwatersrand
In fulfilment of the requirements for the degree of Doctor of Philosophy
September 2015