Effectuation and causation as decision-making strategies by nascent entrepreneurs in South Africa
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Date
2018
Authors
Malinga, Wandile Martin
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Abstract
The study aimed to evaluate the influence of causation and effectuation decision
making strategies on the performance of nascent entrepreneurship ventures in South
Africa. The study utilised a cross-sectional, quantitative approach. The empirical study
was composed of 75 independent samples that were obtained from nascent
entrepreneurs in South Africa.
The main findings of the study suggest an association between effectuation and
venture performance. Evidence was also found to suggest a positive association
between the effectuation sub-dimensions of affordable loss, pre-commitment and
experimentation. There was, however, no association found between flexibility and
venture performance. Contrary to the stated hypothesis, a positive relationship was
found between causation and venture performance. Overall the study finds evidence
to support the view that entrepreneurs employed both effectuation and causation
logics with a certain level of success for the venture. The findings of the study indicate
that venture performance was not necessarily influenced by the decision to utilise
effectual or causal decision-making strategies. However, effectual decision-making
strategies had a greater influence on venture performance when compared to causal
decision-making strategies.
The findings of the study provide evidence in support of the theoretical arguments put
forward by Sarasvathy (2001), that effectuation has a positive impact on the
performance of a new venture. The implication for entrepreneurs is that effectuation
provides a different method that entrepreneurs can utilise in the formation of new
ventures. Should entrepreneurs determine that the environment in which they are
operating or the opportunities they are pursuing are characterised by high levels of
uncertainty, effectuation is a possible alternative to causation. This research makes a
contribution to the discourse about the suitability of effectuation as a decision-making
logic that entrepreneurs can apply in emerging economies.
Description
A research report submitted to the Faculty of Commerce, Law and
Management, University of the Witwatersrand, in partial fulfillment of the
requirements for the degree of Master of Management in Entrepreneurship and
New Venture Creation
Wits Business School
March 2018
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Citation
Malinga, Wandile Martin (2018) Effectuation and causation as decision-making strategies by nascent entrepreneurs in South Africa, University of the Witwatersrand, Johannesburg, <http://hdl.handle.net/10539/26860>