Strategic decision-making logics, entrepreneurial capability and opportunity exploitation in high-tech new ventures
Abstract
This paper aims at exploring the influences of effectuation and causation on opportunity exploitation in high-tech new ventures and the mediating role of entrepreneurial capability by integrating effectuation theory and a perspective of entrepreneurial capability. The data was collected from entrepreneurs and top executives in high-tech new ventures through an interview survey instrument implemented in China. Factor analysis and multivariate linear regressions were run to test the hypotheses. The Baron and Kenny (1986) mediation model assessment procedure was used to analyze the data. The empirical analysis results of 176 Chinese high-tech new ventures indicate that both effectuation and causation have positive effects on opportunity exploitation and that entrepreneurial capability plays a fully mediating role in the relationship between strategic decision logic and opportunity exploitation. It is also found that in the context of China’s transition economy, the interaction effect between effectuation and causation on opportunity exploitation and entrepreneurial capability is insignificant. The research furthers the development of effectuation theory and enriches current literature on entrepreneurial capability by linking strategic decision-making logics to entrepreneurial capability and opportunity exploitation systematically. Moreover, the research has significant managerial implications for high-tech entrepreneurial practices, particularly in transition economies.
Keyword : strategic decision-making logic, opportunity exploitation, entrepreneurial capability, high-tech new ventures, entrepreneurship, transition economies
How to Cite
Guo, R. (2018). Strategic decision-making logics, entrepreneurial capability and opportunity exploitation in high-tech new ventures. Journal of Business Economics and Management, 19(2), 235-252. https://doi.org/10.3846/jbem.2018.5201
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Dew, N., Sarasathy, S., Read, S., & Wiltbank, R. (2010). Affordable loss: behavioral economic aspects of the plunge decision. Strategic Entrepreneurship Journal, 3(2), 105-126. https://doi.org/10.1002/sej.66
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Foss, N. J., Lyngsie, J., & Zahra, S. A. (2013). The role of external knowledge sources and organizational design in the process of opportunity exploitation. Strategic Management Journal, 34(12), 1453-1471. https://doi.org/10.1002/smj.2135
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Hmieleski, K. M., Carr, J. C., & Baron, R. A. (2015). Integrating discovery and creation perspectives of entrepreneurial action: The relative roles of founding CEO human capital, social capital, and psychological capital in contexts of risk versus uncertainty. Strategic Entrepreneurship Journal, 9(4), 289-4312. https://doi.org/10.1002/sej.1208
Huarng, K. H., & Ribeiro-Soriano, D. E. (2014). Developmental management: theories, methods, and applications in entrepreneurship, innovation, and sensemaking. Journal of Business Research, 67(5), 657-662. https://doi.org/10.1016/j.jbusres.2013.11.023
Maine, E., Soh, P. H., & Santos, N. D. (2015). The role of entrepreneurial decision-making in opportunity creation and recognition. Technovation, 39(40), 53-72. https://doi.org/10.1016/j.technovation.2014.02.007
Markin, E., Swab, R., G., & Marshall, D. R. (2016). Who is driving the bus? An analysis of author and institution contributions to entrepreneurship research. Journal of Innovation & Knowledge, 2(1), 1-9. https://doi.org/10.1016/j.jik.2016.10.001
Mckelvie, A., & Davidsson, P. (2009). From resource base to dynamic capabilities: an investigation of new firms. British Journal of Management, 20(1), 63-80. https://doi.org/10.1111/j.1467-8551.2008.00613.x
Milanov, H., & Fernhaber, S. A. (2009). The impact of early imprinting on the evolution of new venture networks. Journal of Business Venturing, 24(1), 46-61. https://doi.org/10.1016/j.jbusvent.2007.11.001
Olugbola, S. A. (2017). Exploring entrepreneurial readiness of youth and start-up success components: Entrepreneurship training as a moderator. Journal of Innovation & Knowledge, 2(3), 155-171. https://doi.org/10.1016/j.jik.2016.12.004
O’Reilly, C. A., & Tushman, M. L. (2013). Organizational ambidexterity: past, present, and future. Academy of Management Perspectives, 27(4), 324-338. https://doi.org/10.5465/amp.2013.0025
Parida, V., George, N. M., Lahti, T., & Wincent, J. (2016). Influence of subjective interpretation, causation, and effectuation on initial venture sale. Journal of Business Research, 69(11), 4815-4819. https://doi.org/10.1016/j.jbusres.2016.04.036
Patel, P. C., & Jayaram, J. (2014). The antecedents and consequences of product variety in new ventures: an empirical study. Journal of Operations Management, 32(1-2), 34-50. https://doi.org/10.1016/j.jom.2013.07.002
Perry, J. T., Chandler, G. N., & Markova, G. (2012). Entrepreneurial effectuation: a review and suggestions for future research. Entrepreneurship Theory and Practice, 36(4), 837-861. https://doi.org/10.1111/j.1540-6520.2010.00435.x
Powell, W. W., & Sandholtz, K. W. (2012). Amphibious entrepreneurs and the emergence of organizational forms. Strategic Entrepreneurship Journal 6(2), 94-115. https://doi.org/10.1002/sej.1129
Read, S., Song, M., & Smit, W. (2009). A meta–analytic review of effectuation and venture performance. Journal of Business Venturing, 24(6), 573-587. https://doi.org/10.1016/j.jbusvent.2008.02.005
Reymen, I. M. M. J., Andries, P., Berends, H., Mauer, R., Stephan, U., & Burg, E. (2016). Understanding dynamics of strategic decision making in venture creation: a process study of effectuation and causation. Strategic Entrepreneurship Journal, 9(4), 351-379. https://doi.org/10.1002/sej.1201
Sarasvathy, S. D. (2001). Causation and effectuation: toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of Management Review, 26(2), 243-263. https://doi.org/10.5465/amr.2001.4378020
Sarasvathy, S. D., & Dew, N. (2005). New market creation through transformation. Journal of Evolutionary Economics, 15(5), 533-565. https://doi.org/10.1007/s00191-005-0264-x
Sarasvathy, S., Kumar, K., York, J. G., & Bhagavatula, S. (2014). An effectual approach to international entrepreneurship: overlaps, challenges, and provocative possibilities. Entrepreneurship Theory and Practice, 38(1), 71-93. https://doi.org/10.1111/etap.12088
Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217-226. https://doi.org/10.5465/amr.2000.2791611
Smolka, K. M., Verheul, I., Burmeister-Lamp, K., & Heugens, P. P. M. A. R. (2016). Get it together! Synergistic effects of causal and effectual decision-making logics on venture performance. Entrepreneurship Theory and Practice. https://doi.org/10.1111/etap.12266
Stinchcombe, A. L. (1965). Social structure and organizations. Advances in Strategic Management, 17(17), 229-259.
Su, Z., Li, J., Yang, Z., & Li, Y. (2011). Exploratory learning and exploitative learning in different organ-izational structures. Asia Pacific Journal of Management, 28(4), 697–714. https://doi.org/10.1007/s10490-009-9177-9
Teece, D. J. (2012). Dynamic capabilities: Routines versus entrepreneurial action. Journal of Management Studies, 49(8), 1395-1401. https://doi.org/10.1111/j.1467-6486.2012.01080.x
Uygur, U. (2016). An analogy explanation for the evaluation of entrepreneurial opportunities. Journal of Small Business Management. https://doi.org/10.1111/jsbm.12321
Vera, D., & Crossan, M. (2005). Improvisation and innovative performance in teams. Organization Science, 16(3), 203-224. https://doi.org/10.1287/orsc.1050.0126
Wiltbank, R., Dew, N., Read, S., & Sarasvathy, S. D. (2006). What to do next? The case for non predictive strategy. Strategic Management Journal, 27(10), 981-998. https://doi.org/10.1002/smj.555
Yli-Renko, H., Autio, E., & Sapienza, H. J. (2001). Social capital, knowledge acquisition, and knowledge exploitation in young technology-based firms. Strategic Management Journal, 22(6-7), 587-613. https://doi.org/10.1002/smj.183
Zahra, S. A. (2012). Organizational learning and entrepreneurship in family firms: exploring the moderating effect of ownership and cohesion. Small Business Economics, 38(1), 51-65. https://doi.org/10.1007/s11187-010-9266-7
Zahra, S. A., Abdelgawad, S. G., & Tang, E. W. K. (2011). Emerging multinationals venturing into developed economies. Journal of Management Inquiry, 20(20), 323-330. https://doi.org/10.1177/1056492611408266
Ahlstrom, D., & Bruton, G. D. (2010). Rapid institutional shifts and the co-evolution of entrepreneurial firms in transition economies. Entrepreneurship Theory and Practice, 34(3), 531-554. https://doi.org/10.1111/j.1540–6520.2010.00373.x
Alvarez, S. A., & Barney, J. B. (2007). Discovery and creation: alternative theories of entrepreneurial action. Strategic Entrepreneurship Journal, 1(1-2), 11-26. https://doi.org/10.1002/sej.4
Ardichvili, A., Cardozo, R., & Ray, S. (2003). A theory of entrepreneurial opportunity identification and development. Journal of Business Venturing, 18(1), 105-123. https://doi.org/10.1016/S0883-9026(01)00068-4
Aslan, I., Çınar, O., & Kumpikaitė, V. (2012). Creating strategies from tows matrix for strategic sustainable development of Kipaş Group. Journal of Business Economics & Management, 13(1), 95-110. https://doi.org/10.3846/16111699.2011.620134
Baker, T., & Nelson, R. E. (2005). Creating something from nothing: resource construction through entrepreneurial bricolage. Administrative Science Quarterly, 50(3), 329-366. https://doi.org/10.2189/asqu.2005.50.3.329
Baron, R. M., & Kenny, D. A. (1986). The Moderator–mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51, 1173-1182. https://doi.org/10.1037/0022-3514.51.6.1173
Berends, H., Jelinek, M., Reymen, I., & Stultiëns, R. (2014). Product innovation processes in small firms: combining entrepreneurial effectuation and managerial causation. Journal of Product Innovation Management, 31(3), 616-635. https://doi.org/10.1111/jpim.12117
Brettel, M., Mauer, R., Engelen, A., & Küpper, D. (2012). Corporate effectuation: entrepreneurial action and its impact on R&D project performance. Journal of Business Venturing, 27(2), 167-184. https://doi.org/10.1016/j.jbusvent.2011.01.001
Cai, L., Guo, R., Fei, Y., & Liu, Z. (2017). Effectuation, exploratory learning and new venture performance: evidence from China. Journal of Small Business Management, 55(3), 388-403. https://doi.org/10.1111/jsbm.12247
Chandler, G. N., Detienne, D. R., Mckelvie, A., & Mumford, T. V. (2011). Causation and effectuation processes: a validation study. Journal of Business Venturing, 26(3), 375-390. https://doi.org/10.1016/j.jbusvent.2009.10.006
Deligianni, I., Voudouris, I., & Lioukas, S. (2015). Do effectuation processes shape the relationship between product diversification and performance in new ventures?. Entrepreneurship Theory and Practice, 2004(5), 891-893. https://doi.org/10.1111/etap.12210
Dew, N., Sarasathy, S., Read, S., & Wiltbank, R. (2010). Affordable loss: behavioral economic aspects of the plunge decision. Strategic Entrepreneurship Journal, 3(2), 105-126. https://doi.org/10.1002/sej.66
Dutta, D. K., Gwebu, K. L., & Wang, J. (2015). Personal innovativeness in technology, related knowledge and experience, and entrepreneurial intentions in emerging technology industries: a process ofcausation or effectuation?. International Entrepreneurship & Management Journal, 11(3), 529-555. https://doi.org/10.1007/s11365-013-0287-y
Fisher, G. (2012). Effectuation, causation, and bricolage: a behavioral comparison of emerging theories in entrepreneurship research. Entrepreneurship Theory & Practice, 36(5), 1019-1051. https://doi.org/10.1111/j.1540-6520.2012.00537.x
Foss, N. J., Lyngsie, J., & Zahra, S. A. (2013). The role of external knowledge sources and organizational design in the process of opportunity exploitation. Strategic Management Journal, 34(12), 1453-1471. https://doi.org/10.1002/smj.2135
Guo, R., Cai, L., & Zhang, W. (2016). Effectuation and causation in new internet venture growth: the mediating effect of resource bundling strategy. Internet Research, 26(2), 460-483. https://doi.org/10.1108/IntR-01-2015-0003
Hmieleski, K. M., Carr, J. C., & Baron, R. A. (2015). Integrating discovery and creation perspectives of entrepreneurial action: The relative roles of founding CEO human capital, social capital, and psychological capital in contexts of risk versus uncertainty. Strategic Entrepreneurship Journal, 9(4), 289-4312. https://doi.org/10.1002/sej.1208
Huarng, K. H., & Ribeiro-Soriano, D. E. (2014). Developmental management: theories, methods, and applications in entrepreneurship, innovation, and sensemaking. Journal of Business Research, 67(5), 657-662. https://doi.org/10.1016/j.jbusres.2013.11.023
Maine, E., Soh, P. H., & Santos, N. D. (2015). The role of entrepreneurial decision-making in opportunity creation and recognition. Technovation, 39(40), 53-72. https://doi.org/10.1016/j.technovation.2014.02.007
Markin, E., Swab, R., G., & Marshall, D. R. (2016). Who is driving the bus? An analysis of author and institution contributions to entrepreneurship research. Journal of Innovation & Knowledge, 2(1), 1-9. https://doi.org/10.1016/j.jik.2016.10.001
Mckelvie, A., & Davidsson, P. (2009). From resource base to dynamic capabilities: an investigation of new firms. British Journal of Management, 20(1), 63-80. https://doi.org/10.1111/j.1467-8551.2008.00613.x
Milanov, H., & Fernhaber, S. A. (2009). The impact of early imprinting on the evolution of new venture networks. Journal of Business Venturing, 24(1), 46-61. https://doi.org/10.1016/j.jbusvent.2007.11.001
Olugbola, S. A. (2017). Exploring entrepreneurial readiness of youth and start-up success components: Entrepreneurship training as a moderator. Journal of Innovation & Knowledge, 2(3), 155-171. https://doi.org/10.1016/j.jik.2016.12.004
O’Reilly, C. A., & Tushman, M. L. (2013). Organizational ambidexterity: past, present, and future. Academy of Management Perspectives, 27(4), 324-338. https://doi.org/10.5465/amp.2013.0025
Parida, V., George, N. M., Lahti, T., & Wincent, J. (2016). Influence of subjective interpretation, causation, and effectuation on initial venture sale. Journal of Business Research, 69(11), 4815-4819. https://doi.org/10.1016/j.jbusres.2016.04.036
Patel, P. C., & Jayaram, J. (2014). The antecedents and consequences of product variety in new ventures: an empirical study. Journal of Operations Management, 32(1-2), 34-50. https://doi.org/10.1016/j.jom.2013.07.002
Perry, J. T., Chandler, G. N., & Markova, G. (2012). Entrepreneurial effectuation: a review and suggestions for future research. Entrepreneurship Theory and Practice, 36(4), 837-861. https://doi.org/10.1111/j.1540-6520.2010.00435.x
Powell, W. W., & Sandholtz, K. W. (2012). Amphibious entrepreneurs and the emergence of organizational forms. Strategic Entrepreneurship Journal 6(2), 94-115. https://doi.org/10.1002/sej.1129
Read, S., Song, M., & Smit, W. (2009). A meta–analytic review of effectuation and venture performance. Journal of Business Venturing, 24(6), 573-587. https://doi.org/10.1016/j.jbusvent.2008.02.005
Reymen, I. M. M. J., Andries, P., Berends, H., Mauer, R., Stephan, U., & Burg, E. (2016). Understanding dynamics of strategic decision making in venture creation: a process study of effectuation and causation. Strategic Entrepreneurship Journal, 9(4), 351-379. https://doi.org/10.1002/sej.1201
Sarasvathy, S. D. (2001). Causation and effectuation: toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of Management Review, 26(2), 243-263. https://doi.org/10.5465/amr.2001.4378020
Sarasvathy, S. D., & Dew, N. (2005). New market creation through transformation. Journal of Evolutionary Economics, 15(5), 533-565. https://doi.org/10.1007/s00191-005-0264-x
Sarasvathy, S., Kumar, K., York, J. G., & Bhagavatula, S. (2014). An effectual approach to international entrepreneurship: overlaps, challenges, and provocative possibilities. Entrepreneurship Theory and Practice, 38(1), 71-93. https://doi.org/10.1111/etap.12088
Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217-226. https://doi.org/10.5465/amr.2000.2791611
Smolka, K. M., Verheul, I., Burmeister-Lamp, K., & Heugens, P. P. M. A. R. (2016). Get it together! Synergistic effects of causal and effectual decision-making logics on venture performance. Entrepreneurship Theory and Practice. https://doi.org/10.1111/etap.12266
Stinchcombe, A. L. (1965). Social structure and organizations. Advances in Strategic Management, 17(17), 229-259.
Su, Z., Li, J., Yang, Z., & Li, Y. (2011). Exploratory learning and exploitative learning in different organ-izational structures. Asia Pacific Journal of Management, 28(4), 697–714. https://doi.org/10.1007/s10490-009-9177-9
Teece, D. J. (2012). Dynamic capabilities: Routines versus entrepreneurial action. Journal of Management Studies, 49(8), 1395-1401. https://doi.org/10.1111/j.1467-6486.2012.01080.x
Uygur, U. (2016). An analogy explanation for the evaluation of entrepreneurial opportunities. Journal of Small Business Management. https://doi.org/10.1111/jsbm.12321
Vera, D., & Crossan, M. (2005). Improvisation and innovative performance in teams. Organization Science, 16(3), 203-224. https://doi.org/10.1287/orsc.1050.0126
Wiltbank, R., Dew, N., Read, S., & Sarasvathy, S. D. (2006). What to do next? The case for non predictive strategy. Strategic Management Journal, 27(10), 981-998. https://doi.org/10.1002/smj.555
Yli-Renko, H., Autio, E., & Sapienza, H. J. (2001). Social capital, knowledge acquisition, and knowledge exploitation in young technology-based firms. Strategic Management Journal, 22(6-7), 587-613. https://doi.org/10.1002/smj.183
Zahra, S. A. (2012). Organizational learning and entrepreneurship in family firms: exploring the moderating effect of ownership and cohesion. Small Business Economics, 38(1), 51-65. https://doi.org/10.1007/s11187-010-9266-7
Zahra, S. A., Abdelgawad, S. G., & Tang, E. W. K. (2011). Emerging multinationals venturing into developed economies. Journal of Management Inquiry, 20(20), 323-330. https://doi.org/10.1177/1056492611408266