Abstract

“Curry in a Hurry” is the name of the imaginary Indian restaurant introduced by Sarasvathy (2001) to illustrate the concept of effectuation. Since then, empirical evidence on effectuation is growing. After examinations in various industry contexts – radio frequency (Sarasvathy and Dew, 2002) and private equity (Wiltbank, Read, Dew, and Sarasvathy, 2009) – protocol analyses have shown that expert entrepreneurs use these heuristics more often than MBA graduates (Read, Dew, Sarasvathy, Wiltbank, 2009). There is also evidence that effectual logic increases new venture performance (Read, Song, and Smit, 2009). However, it is still unknown whether effectuation is purely the domain of expert entrepreneurs; and whether this logic would help nascent entrepreneurs accelerate their new firm creation. We address this issue by decomposing the total effect of effectuation on new firm creation effect into a two-stage mechanism. First, we develop and test hypotheses about the effect of the four effectual principles on new firm creation. Second, we examine whether these effects are mediated by the two dynamic cycles of expanding means and converging goals in motion.

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