Abstract

Effectuation has been proposed as an alternative decision-making approach that takes into account the cognitive implications of uncertainty and the consequent constraints it places on both information processing and the use of planning heuristics in entrepreneurship (Gregoire et al., 2011). Effectuation is contrasted with causation, which represents the rational decision-making approach. Although individuals can use both causal and effectual reasoning at different times during venture development, prior research finds that entrepreneurs do not transition well between the modes (Sarasvathy, 2008). Literature has not sufficiently addressed the reasons that underlie an entrepreneur’s tendency towards a causal or effectual approach. Considering that both approaches are believed to fundamentally refer to cognitive processes, our study probes the cognitive roots of causal and effectual logics. This paper attempts to study how entrepreneurs’ stable psychological attributes such as thinking style influence entrepreneurial decision-making behaviors associated with the causal and effectual logics.

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