Planning Effectual Growth: A Study of Effectuations and Causation in Nascent Firms

Abstract

Two main contrasting approaches are typically used in entrepreneurship literature to explain how new ventures strategize: causal/planned strategies and effectual/emergent strategies. In this study, we explore the use of causal and effectual strategies within micro and small firms. Our results show that bigger companies typically used more planned strategies while simultaneously relying on effectual mechanisms. We observe that companies operating in known markets, anchoring their business ideas on experience and having a strong growth intention grow bigger. This suggests that causal and effectual mechanism can co-exist and lead to growth. Theoretical and practical implications of these findings are discussed

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