Effectuation in the context of established organizations
Master thesis
Name: Ferdinand de Booij Student number: 10317198 Date: June 29th 2014 Version: Final version
To obtain qualification: MSc. in Business Studies – Strategy Track Institute: Amsterdam Business School
Table of Contents
List of tables 4
List of figures 4
Abstract 5
1 Introduction 6
2 Review of the literature 10
2.1 Corporate entrepreneurship 10
2.2 Effectuation 11
2.2.1 Effectuation principles 14
2.2.2 Further development of effectuation 16
2.3 Effectuation in the context of established organizations 18
2.3.1 Organizational strategy 19
2.3.2 Organizational structure 24
2.3.3 Organizational culture 29
2.3.4 Concluding remarks 32
3 Research design 33
3.1 Description of case study, research setting and sample 33
3.2 Description of research instruments and procedures 37
3.3 Description of data analysis methods and procedures 41
4 Findings 45
4.1 The use of effectuation 45
4.2 Contextual factors and their influence on effectuation 50
4.2.1 Organizational strategy 50
4.2.2 Organizational structure 58
4.2.3 Organizational culture 63
5 Discussion 70
5.1 Organizational strategy 70
5.2 Organizational structure 71
5.3 Organizational culture 73
5.4 Toward a model for the use of effectuation in established organizations 74
6 Conclusions and implications 78
6.1 Conclusions 78
6.2 Research implications 79
6.3 Practical implications 80
6.4 Limitations and opportunities for future research 81
7 References 84
Appendix A - Background questions subjects 93
Appendix B - Semi structured interview questions 95
Appendix C - Instruction Think aloud protocol 97
Appendix D - Exploitive case – Paying with the infrastructure app 98
Appendix E - Explorative case 99
List of tables
Table 1: Organizational antecedents 18
Table 2: Organizational information 34
Table 3: Personal information from survey 36
Table 4: Comparison between interviewees and organizations for the exploitive case 38 Table 5: Comparison between interviewees and organizations for the explorative case 39
Table 6: Interview duration and number of words 42
Table 7: Coded effectuation and causation principles 45
Table 8: Average coverage of effectuation and causation principles per interview 49 Table 9: Summary of findings for category organizational strategy 58 Table 10: Summary of findings for category organizational structure 63 Table 11: Summary of findings for category organizational culture 67
List of figures
Figure 1: Causation approach 13
Figure 2: Effectuation approach 16
Abstract
If you are able to predict the future you can gain the upper hand over competition. However due to uncertainty prediction of the future is virtually impossible. Effectuation is found as an important approach to deal with decision-making under uncertainty. It is recognized as a paradigmatic shift in how entrepreneurship is understood.
The research on effectuation thus far focuses on the use of effectuation by individual entrepreneurs. In this study the use of effectuation as part of corporate entrepreneurship, within the context of an established organization, is studied. The aim of this study is to find which factors in the context of an established organization stimulate or impede the use of effectuation. To explore this, corporate entrepreneurs and middle level managers employed in two different established organizations are interviewed. Think aloud protocols and semi structured interview questions are combined to retrieve data. The findings show several stimulating factors such as external transformational triggers, work discretion and autonomy, managerial support and risk taking. The impeding factors found are organizational ambidexterity, governance, bureaucracy and politics. Especially governance structure and consequent agency problems are found to impede the use of effectuation. Based on the findings of this study a model for effectuation in the context of established organizations is proposed.
This study contributes to our existing knowledge by extending the theory of effectuation by transferring it from the context of an individual entrepreneur or start-up firm to the context of established organizations. It proposes a model for the use of effectuation in the context of established organizations. In addition it gives insight in stimulating and impeding factors for the use of effectuation in the context of an established organization. Finally it also gives insight in which situation the use of effectuation is most likely to be efficient and effective in relation to organizational impact of an entrepreneurial opportunity.
1 Introduction
The business environment is filled with ambiguity, discontinuity and constantly changing rules of the game (Kuratko, 2009). Scholars have acknowledged corporate entrepreneurship as a possible and promising way to deal with this intensifying competition and dynamic organizational market environments (Ács & Audretsch, 2010; 1983a; Burgelman, 1983b; 1984; J. Covin & Miles, 1999; Dess et al., 2003; Hornsby, Kuratko, & Zahra, 2002; Kuratko, 2009). Barringer and Bluedorn (1999) take their opinion on corporate entrepreneurship even a step further by suggesting that for organizations of all sizes to prosper and flourish entrepreneurial attitudes and behaviours are a necessity. This is in line with Burgelman’s (1984) statement that in their quest to sustain growth, large and established organizations have to search for and exploit opportunities in areas that are partially related or even unrelated to their current lines of business.
An interesting and for scientific standards new line of research within the field of corporate entrepreneurship is the study of effectuation (Perry, Chandler, & Markova, 2012). Sarasvathy (2001c, p. 245) describes effectuation as follows: “Effectuation processes take a set of means as a given and focus on selecting between possible effects that can be created with that set of means”. Besides the principle of taking means as a starting point instead of goals there are four other principles that form the bases of effectuation theory: 1) Affordable loss rather than expected returns, 2) Strategic alliances rather than competitive analysis, 3) Exploitation of contingencies rather than exploitation of pre-existing knowledge and 4) Controlling an unpredictable future rather than predicting an uncertain future (Sarasvathy, 2001b; Sarasvathy, 2001c). These underlying principles are defined by Sarasvathy (2001c) based on research on the reasoning of expert entrepreneurs who in their career were involved in several new business start-ups. The rationale behind the use of effectuation is: To the extent that we can control the future, we do not need to predict it” (Sarasvathy, 2001c, p. 252).
Perry et al. (2012) state that effectuation represents a paradigmatic shift in the way that we understand entrepreneurship. Generally MBA and business students are taught causal reasoning in their classes and virtually all models and tools used in these classes are based on this causal reasoning (Sarasvathy, 2001c). It is exactly this causal reasoning that might fall short in decision-making and problem solving under high uncertainty (Sarasvathy, 2001c). Research has shown that under high uncertainty, such as new business start up, the utilization of effectual reasoning by entrepreneurs is more appropriate than causal reasoning (Chandler, DeTienne, McKelvie, & Mumford, 2011).
In recent history an increasing attention for corporate entrepreneurship research is noticeable (Busenitz et al., 2003; Dess et al., 2003). This increasing attention thus far has increased our understanding and knowledge on corporate entrepreneurship but there is still a lot of ground to cover (Busenitz et al., 2003; Dess et al., 2003; Hornsby et al., 2002). In particular research on effectuation as a part of corporate entrepreneurship deserves more attention. Perry et al. (2012) classify the current state of research on effectuation as nascent or in some parts intermediate and thus further research is a necessity.
Prior research on effectuation is mostly focused on the entrepreneur as an individual and/ or the emerging firm (Perry et al., 2012). The use of effectuation as part of corporate entrepreneurship in established organizations has received little attention thus far. But established organizations just as well as individual entrepreneurs have to deal with decision-making under uncertainty. Effectuation possibly is a way to deal with this (Sarasvathy, 2001c). The earlier mentioned ambiguous business environments and changing rules of the game (Kuratko, 2009) are just two of the many reasons for this uncertainty. In larger organizations however causational reasoning and planned strategy seems to be more prevalent
(Kraaijenbrink, Ratinho, & Groen, 2011). It is questionable whether the use of causational reasoning is sufficient to deal with the organizational need to explore new business
opportunities. Dew and Sarasvathy (2002, p. 19) propose that: “Effectuation is not just for small, start-up firms – it can be applied to large firms and economies as well”. The use of effectuation within established organizations is a particular interesting and possible fruitful avenue for further research (Dew & Sarasvathy, 2002; Perry et al., 2012; Wiltbank, Read, Dew, & Sarasvathy, 2009).
The principles underlying the process of effectuation that are defined by Sarasvathy (2001c) were defined after research on the reasoning of individual expert entrepreneurs involved in business start-ups. These entrepreneurs operate independently of organizations and they are fully responsible for the risk of failure but also receive the full results of their success (Sharma & Chrisman, 1999). A corporate Entrepreneur on the other hand operates within the organization where he is employed, he does not bear the full losses in case of failure nor does he receive the full result in case of success (Sharma & Chrisman, 1999). This and several other contextual differences in established organizations are expected to have an influence on the underlying principles and thus the use of effectuation within established organizations.
Further research on effectual reasoning is deemed relevant because it contributes to our existing knowledge on corporate entrepreneurship (Perry et al., 2012) and because it has proved to be a rewarding reasoning process in case of uncertainty (Sarasvathy, 2001c). This study aims to give further insight in the use of effectuation within established organizations. It explores how the underlying principles of effectuation are influenced by the context of an established organization. The following question will be guiding in this study:
Q. How is the use of effectuation, as part of corporate entrepreneurship, influenced by the contextual factors of an established organization?
To explore this question a case study is conducted at a large financial services organization with multiple units and an infrastructure company both based in the Netherlands. Both organizations are established organizations with a stable and dominant position in their industries.
The contribution of this study will be a better theoretical understanding of the use of effectuation in established organizations. It will give further insight in the underlying factors that stimulate or impede the use of effectuation within established organizations. Based on this study a model is proposed the shows the use of effectuation in relation to the organizational impact of an entrepreneurial opportunity and the contextual factors influencing the use of effectuation. It also will increase our knowledge on the differences between individual entrepreneurs and corporate entrepreneurs and the way in which they use effectuation. These insights are highly valuable for practitioners and in particular managers responsible for innovation and exploration of new business opportunities in established organizations. With the insights from this study these managers will have a better understanding of the use of effectuation by corporate entrepreneurs within an established organization. It will also give managers more insight in the organizational factors influencing the use of effectuation. This can give managers understanding on how to stimulate and improve the use of effectuation.
The thesis proceeds as follows. In the next section literature is reviewed on the subjects of corporate entrepreneurship, effectuation and contextual influences of established organization on the use effectuation. Section 3 describes the research design followed by the findings in section 4. Then in sections 5 the findings will be discussed and related to the literature. In the final section conclusions are drawn, research and practical implications are described and limitations of this study and possibilities for future research are given.
2 Review of the literature
This review of the literature starts with discussing theory on corporate
entrepreneurship. The discussion on corporate entrepreneurship theory is followed by a discussion of the work of several researchers on effectuation. In the final part of this literature review the theory of effectuation will be discussed in relation to theory on the context of established organizations.
2.1 Corporate entrepreneurship
Many authors have proposed corporate entrepreneurship as a possible viable strategy towards growth and competitive advantage (e.g. Birkinshaw, 1997; J. Covin & Miles, 1999; Ireland, Covin, & Kuratko, 2009; Stopford & Badenfuller, 1994; Zahra, 1991). Throughout the past years of research and publications on corporate entrepreneurship several different definitions of corporate entrepreneurship have been proposed (Ács & Audretsch, 2010; Sharma & Chrisman, 1999). Although different to some extent most definitions also show resemblance on several parts. Corporate entrepreneurship is by several scholars described as a process (Guth & Ginsberg, 1990; Sharma & Chrisman, 1999), that takes place in existing organizations (Burgelman, 1983a; Guth & Ginsberg, 1990; Kuratko, Montagno, & Hornsby, 1990; Stopford & Badenfuller, 1994), which involves some sort of innovation, transformation or renewal (Burgelman, 1983a; Guth & Ginsberg, 1990; Sharma & Chrisman, 1999). Sharma and Chrisman (1999) proposed the following definition for corporate entrepreneurship, which will be used in this thesis:
“Corporate entrepreneurship is the process whereby an individual or a group of individuals, in association with an existing organization, create a new organization or instigate renewal or innovation within that organization” (Sharma & Chrisman, 1999, p. 18).
In prior research several internal organizational antecedents are described that have a stimulating or impeding influence on corporate entrepreneurship (Ács & Audretsch, 2010). Several researchers describe that organizational structure can have an influence on entrepreneurial behaviour in an organization (e.g. Burgelman, 1983a; Dess, Lumpkin, & McGee, 1999; Hornsby et al., 2002; Kuratko et al., 1990). Dess et al. (1999) for example state that organizational models build around rigid hierarchies with clear defined boundaries tend to increase bureaucracy and through this impede corporate entrepreneurship. Also the administrative mechanisms to evaluate, choose and implement ideas are part of this structure (Hornsby et al., 2002). Burgelman (1983a; 1983b; 1984) also introduces culture and strategy as antecedents for entrepreneurial behaviour. Other antecedents are management support
(Hornsby et al., 2002; Kuratko, Hornsby, Naffziger, & Montagno, 1993) and work discretion/ autonomy (Hornsby et al., 2002). Management support shows the level of willingness of management to facilitate and promote corporate entrepreneurship. This management support can take many forms such as championing innovative ideas or contributing resources such as funding and expertise (Hornsby et al., 2002). Work discretion and autonomy is top-level management commitment to tolerate failure and their willingness to delegate authority and responsibility (Hornsby et al., 2002).
Before linking the above-mentioned and other organizational factors and antecedents to the theory of effectuation the following paragraph will first discuss the theory of effectuation as it is developed by several authors (e.g. Dew, Read, Sarasvathy, & Wiltbank, 2009; Sarasvathy, 2001a; Sarasvathy, 2001c).
2.2 Effectuation
In their review on entrepreneurial effectuation Perry et al. (2012) state that entrepreneurships’ main body of research is based on rational decision-making models with
its origin in neoclassical economics. Based on this neoclassical economical models entrepreneurs are assumed to behave rational and goal-driven (Perry et al., 2012). These goal driven decision-making models is what students are taught in business school classrooms (Sarasvathy, 2001c). Sarasvathy (2001c) calls these models causation models and the reasoning behind it causational reasoning or rational choice theory (Read & Sarasvathy, 2005). The definition for causation used in this study is: “Causation processes take a particular effect as given and focus on selecting between means to create that effect” (Sarasvathy, 2001c, p. 245).
“The logic for using causation processes is: To the extent that we can predict the future, we can control it” (Sarasvathy, 2001c, p. 252). Causation is a viable decision-making approach especially when pre definition of objectives and prediction of the future is deemed possible (Chandler et al., 2011; Dew et al., 2009; Sarasvathy, 2001c). Decision-makers base decisions on systematic information gathering and analysis when they believe that the decision to be made is related to a measurable and predictable future (Sarasvathy, 2001c). To use this causal approach a market needs to pre-exist and analysis and evaluation based on historic market information is needed to exploit market opportunities (Sarasvathy, 2001c). The process of causation starts with the recognition and the evaluation of an opportunity. Based on this evaluation an opportunity is identified. Goals are determined and plans to reach these goals are made. Resources are searched needed to accomplish the plans and to pursue the determined goal. Based on the opportunity evaluation and market research a product or service proposition to meet market demands is developed. After entering the market the product or service will be adapted based on feedback from the market (Fisher, 2012). The logic underlying causation assumes that prediction of the future is possible. In figure 1 a visualization of the causal approach is shown.
Figure 1: Causation approach (Fisher, 2012) Opportunity Recognition Opportunity evaluation Opportunity identification
Goals established & plan devised to achieve goals Entrepreneur develops solution to meet perceived needs Entrepreneur seeks to raise resources to pursue
the opportunity
Entry into the commercial market
space
Market feedback leads to adaption
By assuming that prediction of the future is possible in the case of highly dynamic markets and ambiguity one discards Knightian “true” uncertainty (Knight, 1921). To deal with this uncertainty by causal rationality one indirectly assumes infinite intelligence (Knight, 1921) and full rationality (Simon, 1991b). Sarasvathy (2001b) found that expert entrepreneurs, dealing with decision-making under uncertainty, use what she calls effectual reasoning processes in their attempts to materialize ideas and opportunities. This approach, which deviates from the traditional perspective on entrepreneurship, is a way to address the entrepreneurial environment that usually is surrounded by uncertainty and ambiguity (Fisher, 2012). This logic of effectuation is based on a consistent set of heuristic principles (Wiltbank et al., 2009). Busenitz and Barney (1997) also found the use of heuristics by entrepreneurs in the case of strategic decision-making. Especially in case of decision-making under uncertainty these heuristics (Tversky & Kahneman, 1974) are seen as an effective possibility to make decisions (Busenitz & Barney, 1997).
Where in the case of causation one starts with a specific goal and predictions this is not the case with effectuation (Sarasvathy, 2001b). The definition for effectuation as described by Sarasvathy and used in this study is:
“Effectuation processes take a set of means as a given and focus on selecting between possible effects that can be created with that set of means” (Sarasvathy, 2001c, p. 245).
“The logic for using effectuation processes is: To the extent that we can control the future, we do not need to predict it” (Sarasvathy, 2001c, p. 252). Effectuation acknowledges “true” uncertainty (Knight, 1921) and bounded rationality (Simon, 1991a) and deals with decision-making under uncertainty through a set of heuristics (Read & Sarasvathy, 2005).
2.2.1 Effectuation principles
The process of effectuation is based on five principles (Sarasvathy, 2001b; Sarasvathy, 2001c). 1) A means driven starting point rather then a goal driven starting point, 2) Affordable loss rather than expected returns, 3) Strategic alliances rather than competitive analysis, 4) Exploitation of contingencies rather than exploitation of pre-existing knowledge and 5) Controlling an unpredictable future rather than predicting an uncertain future (Sarasvathy, 2001b; Sarasvathy, 2001c). The fifth principle is based on the earlier mentioned underlying logic of effectuation.
The first principle of a means driven starting point starts with three categories of means. The entrepreneur can identify these means by asking: 1) Who they are, focussing on their own traits, tastes and abilities; 2) What they know which are the knowledge corridors they are in and 3) Whom they know, which are the social networks they are part of (Sarasvathy, 2001b; Sarasvathy, 2001c). Looking at means, as a starting point does not make effectuation a resource based view (e.g. Barney, 1991; Peteraf, 1993) of individual decision-making (Dew & Sarasvathy, 2002). Valuable resources are assumed as a given within the resource based view, whilst in effectuation one searches what makes resources valuable and how one can obtain and/ or generate value in resources (Dew & Sarasvathy, 2002). With these
means as a starting point an entrepreneur starts to imagine which effects can be realised with this means (Sarasvathy, 2001b; Sarasvathy, 2001c).
The second principle of affordable loss is about the difference between focussing on returns versus focussing on what one is prepared to loose. With causational reasoning the focus is on maximizing potential returns by selecting an optimal strategy (Sarasvathy, 2001c). While with effectual reasoning the focus is on how much loss is affordable and experimenting with as much strategies as possible within the given limited means (Sarasvathy, 2001c).
The third principle deals with strategic alliances versus competitive analysis. Causational models focus on competitive analysis and market analysis to determine a position in a market. Causation focuses on reducing uncertainty through market analysis (Brettel, Mauer, Engelen, & Kuepper, 2012). Effectuation focuses on strategic alliances and pre commitments from stakeholders and uses the involvement and pre commitment of stakeholders, such as customers, suppliers etc., to reduce uncertainty (Sarasvathy, 2001c).
The fourth principle is exploiting contingencies versus exploiting pre-existing knowledge. Causation focuses on using pre existing knowledge to deal with the unexpected and to avoid risks. In the case of effectuation unexpected events are seen as possible sources of opportunity (Brettel et al., 2012). As Sarasvathy (2001b, p. 6) puts it: “the ability to turn the unexpected into the profitable”.
The final principle is also the core logic behind effectuation that says controlling an unpredictable future is preferred over trying to predict this unpredictable future (Sarasvathy, 2001c). The logic is not about defining a market but is about creating a market (Sarasvathy, 2001c). In figure 2 a visualization of the effectuation approach is shown.
Figure 2: Effectuation approach (Sarasvathy & Dew, 2005)
Who am I? What I know? Who I know?
What can I do? Interactions with other people Effectual stakeholder commitment New means New goals New market Actual means Actual courses of action possible
Expanding cycle of resources
Converging cycle of constraints on transformation of the new artifact
Effectuation is not to be seen as a replacement of causation in fact these two types of reasoning can exists parallel to each other (Dew & Sarasvathy, 2002). The same individual can use both causational and effectual reasoning at a certain moment (Sarasvathy, 2001b). Depending on circumstances, such as the level of uncertainty, the use of either causation or effectuation is proposed to be more effective (Chandler et al., 2011; Sarasvathy, 2001c).
2.2.2 Further development of effectuation
The work on effectuation is seen as innovative and a strong contribution to build bridges between entrepreneurship and other related research fields (Baron, 2009; Perry et al., 2012). However some researchers describe that aspects of the current work and theory on effectuation should only be accepted with cautiousness and might be in need of more attention. Baron (2009) for example state that the two focal groups of MBA students and expert entrepreneurs, used in the research of Dew et al. (2009), might be too different in many other aspects, besides expertise as well. Therefore the claim that the differences in the use of effectuation stem from entrepreneurial experience alone, although plausible, should be
accepted with caution (Baron, 2009). Another question that remains open according to Baron (2009) is whether decisions made by expert entrepreneurs are indeed superior in for example quality and accuracy. He continues by asking the question in which tasks or activities do successful entrepreneurs demonstrate expert performance (Baron, 2009). Baron (2009) states that according to Dew et al. (2009) expert entrepreneurs are superior in decision-making. It is however questionable whether effectual decision-making is indeed superior compared to causational decision-making (Baron, 2009). An important nuance here is that depending on circumstances, such as the level of uncertainty; effectual decision-making could be superior to causal decision-making but also vice versa (Chandler et al., 2011; Sarasvathy, 2001c). Sarasvathy (2001c) describes the causation and effectuation models as a combination of the underlying principles by connecting them together. Kraaijenbrink (2012) however claims that this is an oversimplification of the model. He continues to state that the models of causation and effectuation are two extreme models and that the underlying dimensions, are to a large extend independent (Kraaijenbrink, 2012). The causal and effectuation models are ideal types but the practice of entrepreneurship is not limited to these two models (Kraaijenbrink, 2012). Besides effectuation as alternative to the more traditional causal approach there are also other alternative approaches (Fisher, 2012). One approach that is widely cited, like the effectuation approach, is the bricolage approach (Fisher, 2012). Baker and Nelson (2005, p. 333) define Bricolage as “making do by applying combinations of the resources at hand to new problems and opportunities”. Fisher (2012) found fundamental similarities between effectuation and bricolage in relation to the entrepreneurial process. Bricolage could thus be a possible interesting alternative or complement approach to effectuation and causation when studying corporate entrepreneurship (Fisher, 2012). However this study focuses on the use of effectuation as a possible alternative to causation in the context of an established organization.
Current research on effectuation mainly focussed on the use of effectuation by individual entrepreneurs (e.g. Chandler et al., 2011; Dew et al., 2009; Sarasvathy, 2001b; Sarasvathy, 2001c). Dew and Sarasvathy (2002) propose that: “Effectuation is not just for small, start-up firms – it can be applied to large firms and economies as well”. To explore this proposition the use of effectuation will be placed in the context and theory about established organizations the next paragraph.
2.3 Effectuation in the context of established organizations
To discuss the use of effectuation in the context of an established organisation, organizational factors known from entrepreneurship and other organizational literature are linked to the principles of effectuation. To do so the organizational factors will be placed within three categories that determine the context of an established organization. These categories are: 1) Strategy, 2) Structure and 3) Culture. These categories are based on the work of Burgelman and several other researchers (Ács & Audretsch, 2010; Burgelman, 1983a; 1983b; 1984; Kanter, 1986; R. E. Miles, Snow, Meyer, & Coleman, 1978; Nohria, Joyce, & Roberson, 2003). Underlying these three categories are several antecedents based on the antecedents as described by Kuratko in the model of corporate entrepreneurship process
(Ács & Audretsch, 2010). These antecedents are summarized in Table 1 as well as their possible stimulating of impeding effect on effectuation. In the following paragraphs these antecedents will be discussed in further detail as well as their effect on effectuation.
Table 1: Organizational antecedents
Category Antecedents Description
Organizational strategy
Organization ambidexterity
Balancing exploitation and exploration and consequent decisions on resource allocation A strong focus on exploitation is expected to impede the use of effectuation. A strong focus on exploration gives room for corporate entrepreneurial behaviour and stimulates the use of effectuation.
Induced and autonomous strategic behaviour
Induced strategy is formal entrepreneurial behaviour in relation to familiar external environments. When the planned strategy gives room for entrepreneurial activity this stimulates the use of effectuation. Autonomous strategic behaviour is informal strategic behaviour that introduces new opportunities. When there is room for emergent strategy this stimulates the use of effectuation
External transformational triggers
Transformational trigger provides the impetus to behave entrepreneurially. E.g. competition and technological change in organizational environment may force an increase of risk taking. External transformation triggers are expected to stimulate the use of effectuation.
Organizational structure
Bureaucracy (Complicated) rules and routines within the organization. Bureaucracy can lead to inflexibility and inertia both of which are expected to impede entrepreneurial behaviour and effectuation.
Governance How is the organization owned and governed. Due to the separation between corporate entrepreneur and management agency problems can impede the use of effectuation.
Work discretion and autonomy
Managers’ commitment to tolerate failure, provide decision-making latitude and freedom from excessive oversight, and delegate authority and responsibility. When sufficient work discretion and autonomy is given to the corporate entrepreneur the use of effectuation is expected to be stimulated.
Organizational culture
Managerial support The willingness of top-level managers to facilitate and promote entrepreneurial behaviour, including championing of innovative ideas and providing necessary resources. High levels of management support are expected to stimulate the use of effectuation.
Politics Intentional social influence process in which behaviour is strategically designed to maximize short-term or long-term self interests. Self-interested managers not in favour of entrepreneurial behaviour are expected to impede the use of effectuation.
Risk taking The willingness to commit significant levels of resources to pursue entrepreneurial opportunities with a reasonable chance of failure. A certain amount of risk taking is needed within an organization to make decisions under uncertainty possible. Low levels of risk taking are expected to impede the use of effectuation.
2.3.1 Organizational strategy
The choice of an organizational strategy is a critical performance influencing decision
(Ács & Audretsch, 2010). In case of a rapidly changing environment a strategy that stimulates corporate entrepreneurial behaviour is best suitable (Ács & Audretsch, 2010). Ireland et al. (2009, p. 21) introduce the following definition for corporate entrepreneurship strategy: “a vision-directed, organization-wide reliance on entrepreneurial behaviour that purposefully and continuously rejuvenates the organization and shapes the scope of its operations through the recognition and exploitation of entrepreneurial opportunity”. The effect of organizational ambidexterity, induced and autonomous strategic behaviour and external transformational triggers on effectuation will now be discussed.
Organizational ambidexterity
For organizational survival both the exploration of new opportunities and the exploitation of existing business is essential (Benner & Tushman, 2003; March, 1991; O’Reilly III & Tushman, 2008). Since resources are scarce within organizations explorative
and exploitive activities both have to compete for the same resources (March, 1991; O’Reilly III & Tushman, 2008). Organizations therefore have to make the strategic decision how to balance their efforts and resources between the exploration of new possibilities and the exploitation of existing accomplishments (March, 1991; O’Reilly III & Tushman, 2008). Organizations often have the tendency to lean more towards exploitation of existing accomplishments due to higher certainty because of current customer demand and subsequent returns (O’Reilly III & Tushman, 2008). Exploration generally is more uncertain than exploitation and this higher uncertainty for exploration is related to returns being more distant in time and possibly threatening existing returns (March, 1991; O’Reilly III & Tushman, 2008). The resources present in the organization often are assigned to the more certain exploitive activities. Organizations are in most cases better in exploiting existing activities than in exploring new opportunities (March, 1991). Another reason for this focus on exploitation is that as organizations grow and become more successful internal forces for stability are developed (Tushman, Newman, & Romanelli, 1986). Organizational structures and systems become so related that they mainly give room for changes that fit within that systems and structure (Tushman et al., 1986). In the case of exploitation the use of causational reasoning often will suffice because of higher certainty (Dew & Sarasvathy, 2002). In case of the higher uncertainty, related to exploration, however the use of effectuation is suggested
(Dew & Sarasvathy, 2002). Dew and Sarasvathy therefore advice organizations to develop and use causational and effectual decisions procedures parallel to each other (2002). Despite these advices it is expected that due to the tendency of organizations to lean more towards the certainty of exploitation the use of causation is more present and preferred in established organization.
Scarcity of resources due to an exploitive focus in an established organization is expected to influence the use of effectuation. Due to the need to make resource allocation
decision between exploitation and exploration the use of a means driven starting point and the affordable loss principles is impeded. The effectuation approach starts with looking at means instead of ends (Sarasvathy, 2001c). This is directly related to how an organization decides to distribute and use its resources. Contrary to an individual entrepreneur an established organization generally has access to a large pool and large variety of resources and means. However these resources must be allocated over a variety of activities. For the affordable loss principle the entrepreneur asks himself what he is prepared to loose, both financial and other resources, and within that limit he experiments with as many strategies as possible (Sarasvathy, 2001c). In an established organization this is for a large part dependent on decision-making about resource allocation as described above.
Due to the overall stronger focus of established organizations on exploitation an impeding effect on the use of the effectuation principles of a means driven starting point and the affordable loss principle is expected due to need for these organizations to be ambidextrous.
Induced and autonomous strategic behaviour
Burgelman (1983a; 1983b; 1984) introduces the concepts of induced and autonomous strategic behaviour within established firms. Induced strategic behaviour takes place in relation to an organizations’ existing and known business (Burgelman, 1983a; 1983b; 1984). This induced strategic behaviour is the more traditional top driven strategic management view (Burgelman, 1983a; 1983b; 1984). It is this induced strategy combined with an appropriate structure that is needed to elicit and support entrepreneurial behaviour (Burgelman, 1983a; 1983b; 1984). Autonomous strategic behaviour on the other hand takes place outside the current concept of strategy (Burgelman, 1983a; 1983b; 1984). Through this autonomous strategic behaviour new categories of opportunities are introduced (Burgelman, 1983a; 1983b;
1984). Eventually successful autonomous strategic behaviour must be integrated into the concept of strategy and through this become part of the induced strategy (Burgelman, 1983a; 1983b; 1984). Both induced and autonomous strategic behaviour are of importance to organizations corporate entrepreneurial activities (Ács & Audretsch, 2010).
Autonomous strategic behaviour is related to the experimenting that is part of the affordable loss principle. This principle involves experimenting within the limit of what one is prepared to loose. It is this experimenting that can lead to the introduction of new opportunities which is the possible start for autonomous strategic behaviour (Burgelman, 1984)
A planned corporate entrepreneurship strategy should give sufficient room for exploration, experimentation and flexibility to encourage autonomous strategic behaviour to surface (Ács & Audretsch, 2010). It is expected that especially when an organization gives room and stimulates autonomous strategic behaviour the use of effectuation will be stimulated.
External transformational triggers
Possible reasons for strategic change are external transformational triggers (Ács & Audretsch, 2010). External transformational triggers are events or situations that may force an organization to respond to these triggers. Entrepreneurial projects started as a response to transformational triggers may obtain management support more easily (Ács & Audretsch, 2010). Zahra (1991) described the following possible triggers: hostility, environmental dynamism and heterogeneity. Some examples of these triggers are: Specific customer request, competitor threat, declining market share, regulatory requirements and so on and so forth
It is expected that these external transformational triggers are related to the effectuation principle of controlling an unpredictable future and leveraging contingencies. The principle of controlling an unpredictable future rather than predicting it can be related to strategic decision-making in relation to transformational triggers. Tushman et al. (1986) found that organizations that were most successful in responding to transformational triggers were those who expected them and were able to act before a crises struck. However this is a more causal view in which prediction of this triggers is deemed possible. In the effectuation approach the aim is to be the one who instigates a transformational trigger for example by creating a new market. By creating this market the organization controls the future and thus prediction of this transformational triggers is of less importance. The principle of leveraging contingencies is about how one deals with unexpected occurrences such as for example transformational trigger. Does one try to limit the risk by using internal knowledge or does one try to transform the unexpected event into a new opportunity (Sarasvathy, 2001c). The ability of an organization to do so also depends on whether the strategy gives room for both formal and informal entrepreneurial behaviour (Ács & Audretsch, 2010).
These external transformation triggers increase the need for action. This need for action may increase the risk taking at management level. It is therefore expected that external transformation triggers stimulate the use of effectuation.
Partnerships and venturing
Organizational strategy also for a large part determines how an organization position itself and wants to deal with competitors and possible partners. The earlier mentioned line of literature on stakeholder theory (e.g. Donaldson & Preston, 1995) and alliances and networks (e.g. Das & Teng, 2000; Gulati, 1998) give several insights on how and why an organization might choose for a form of cooperation. Instead of using causal models for
competitive analysis effectuation uses strategic alliances with and pre commitments from partners to reduce uncertainty and competition (Sarasvathy, 2001c) and to build a market in cooperation with customers, suppliers and possible competitors (Kraaijenbrink, 2012). Although competitive analysis is part of causal models this does not rule out partnerships and alliances as a part of causation (Kraaijenbrink, 2012). A reason for establishing partnerships is thus that partnerships can increase the means and resources available to an organization. However this approach to partnerships is more ends driven than the effectuation approach (Kraaijenbrink, 2012).
It is expected that a more causal approach to partnerships is used within established organization. The use of a more causal approach to partnerships within established organizations is expected to impede the effectuation principle of partnership.
2.3.2 Organizational structure
As stated by Kuratko (Ács & Audretsch, 2010): induced strategic and entrepreneurial behaviour is shaped by the firm’s structural context. To prepare organizations for organizational change the fit between strategy and structure must be optimal (Ács & Audretsch, 2010). As stated by several authors an appropriate organizational structure is highly important to stimulate firm performance trough entrepreneurship (J. G. Covin & Slevin, 1991; Kanter, 1986). They introduce, amongst others, the following attributes of an appropriate structure: decentralization of decision-making authority, minimal hierarchical levels or structural layers and free-flowing communication channels (J. G. Covin & Slevin, 1991). There are some obvious structural differences between an individual entrepreneur and an established organization. Examples of these differences are: size, age, complexity, governance and so on and so forth. Researchers hold the organizational structures of established organizations for a large part responsible for organizational inflexibility,
bureaucracy and inertia (Ács & Audretsch, 2010). The effect on effectuation of work discretion and autonomy, bureaucracy and governance will now be discussed.
Work discretion and autonomy
The antecedent of work discretion and autonomy is by Kuratko (Ács & Audretsch, 2010, p. 142) described as: “top-level managers’ commitment to tolerate failure, provide decision-making latitude and freedom from excessive oversight, and delegate authority and responsibility”. An individual entrepreneur is free from oversight form management, fully responsible himself for results and does not have to deal with somebody who has to tolerate his failure but himself. However within the context of an established organization this is an antecedent to stimulate entrepreneurship (Ács & Audretsch, 2010).
It is expected that the means driven starting point of effectuation will be influenced by the organizational structure of an established organization. While an individual entrepreneur can freely decide how he wants to use the means at hands this is not how it usually works in an established organization. Depending on the work discretion and decision autonomy (Ács & Audretsch, 2010) one has to deal with other departments and decision-makers such as management who decide how to use the desired resources. Because resources often are already in use within the organization this means that it has to be decided how to redirect resources (Burgelman, 1984) from where they are currently employed in order to use them as the starting point of effectuation.
Chandler (2011) states that the affordable loss principle is an important criterion to base decisions on. Within the affordable loss principle an entrepreneur determines what he is prepared to loose and within that range he experiments to see what possible ends can be accomplished with the given means (Sarasvathy, 2001c). The individual entrepreneur can decide if and how much he is willing to loose by himself. Corporate entrepreneurs however,
depending on the level of their work discretion and autonomy (Hornsby et al., 2002), often need an approval from management and other departments within the organization. How decisions for this approval are made is related to theory on organizational decision-making
(March & Simon, 1958; Simon, 1976; Simon, 1979) and prospect theory (Kahneman & Tversky, 1979). In established organizations a more causal approach is usually used to retrieve information to base a decision on. Investment decisions and decisions to allocate resources are generally based on business cases and other types of plans that give insight in expected returns. To base decisions on this type of plans the reader must believe that prediction of the future is possible, at least partially.
Higher levels of work discretion and autonomy are expected to stimulate the use of effectuation. In particular the possibility for a corporate entrepreneur to decide on what means he wants to use a starting point and how much he is willing to loose are stimulating the use of effectuation.
Bureaucracy
In an organizations pursuit to realise stability it may evolve into an overly bureaucratic organization. This can result in a strong reliance’s on rules, regulations and standardization. Scherer (as cited in Ács & Audretsch, 2010) argues that in large organizations, due to bureaucracy, entrepreneurial activity is difficult. Several layers of bureaucratic resistance must be passed before a decision to innovate is made. These bureaucratic layers can lead to inertia and a bias against undertaking new projects (Ács & Audretsch, 2010).
A bureaucratic organization is expected to have an impeding effect on the use of effectuation. Especially the use of a means driven starting point, affordable loss and leveraging contingencies are expected to be impeded. The main reason for this is that bureaucracy decreases organizational efficiency in relation to exploration. The uncertainty
surrounding entrepreneurial activity conflicts with the stability that is desired and realised through bureaucracy.
Governance
The logic underlying effectuation relates to how decisions are made under the uncertainty of an unpredictable future (Sarasvathy, 2001c). In the case of an individual entrepreneur this entrepreneur is able to decide to act on an opportunity, both certain and uncertain, whenever he wants to (Sharma & Chrisman, 1999). There is no organizational structure with which he has to deal. In the case of a corporate entrepreneur in an established organization a distinction arises between the corporate entrepreneur and the management of the organization (Jones & Butler, 1992). This distinction separates the one who detects an opportunity from the one who decides whether or not to act on and allocate resources to these opportunities (Jones & Butler, 1992). As soon as this distinction occurs agency problems arise because of information asymmetry, difference in risk preference and opportunism (Jones & Butler, 1992). The three factors organizational size, age and complexity all promote agency problems (Jones & Butler, 1992). In established organizations these three factors are present and thus increase agency problems surrounding entrepreneurship and consequent decision-making under uncertainty (Jones & Butler, 1992).
The separation between corporate entrepreneur and management and the consequent information asymmetry is expected to impede the use of effectuation. Within the organization management wants to make a well-informed decision. Currently a causal approach is often used within established organizations to transfer the desired information. However through this causal approach it is assumed that prediction under uncertainty is possible. In the case of what Knight (1921) calls risk the use of a causal approach is possible because a probable distribution of outcomes is can be calculated. However in the case of “true” uncertainty
(Knight, 1921) effectuation might be a better option (Sarasvathy, 2001c). Because the causal approach is expected to be preferred over an effectual approach to transfer information from corporate entrepreneur to management the use of effectuation is impeded because of agency problems.
Other possible effects of organization structure on effectuation
The principle of leveraging contingencies rather than the exploitation of pre-existing knowledge describes how effectuation is used to react to unexpected situations and occurrences (Sarasvathy, 2001c). Within the causational process the focus is on exploiting existing knowledge in relation to current customers and existing markets. Based on existing knowledge one tries to rule out contingencies and overcome the unexpected as much as possible (Brettel et al., 2012). Within the effectuation approach contingencies are seen as new possibilities and opportunities (Sarasvathy, 2001c). Exploiting contingencies basically can be seen as organizational flexibility and how well one can respond to these contingencies. Established organizations usually are good at exploiting existing knowledge and innovating within more certain and stable environments (Henderson, 1993). While individual entrepreneurs with small (start-up) firms are more flexible and better in leveraging contingencies and through this come up with innovate ideas and solutions (Henderson, 1993).
There are several theoretical explanations for the fact that established firm’s have difficulties leveraging contingencies. One reason is the fact that firms, which currently have a good market position don’t have an incentive to innovate and they thus mainly focus on their current business (Arrow, 1962; Levitt & March, 1988). Another possible reason are the three assumptions described by Ahuja and Lampert (2001). The first assumption is that established organizations generally act on the bases of routines (March & Simon, 1958). Several scholars see these routines as possible sources of inflexibility and inertia (Gersick & Hackman, 1990;
Hannan & Freeman, 1984). The second assumption is that routines have an orientation to certain outcomes (Simon, 1955). The third assumption is that organizational routines and actions are path dependent. The current market position an organization has reached is reached in a path dependent way (Lei, Hitt, & Bettis, 1996; Levitt & March, 1988). Another reason is the fact that the core capabilities that made the established organization successful can become core rigidities (Leonard‐ Barton, 1992).
A structure focused on exploitation and routines is expected to impede the use of effectuation. The presence of routines is expected to decrease the ability for an organization to respond on unexpected events when they occur. This will drive the organization towards the more causal approach of risk avoiding behaviour.
2.3.3 Organizational culture
Ireland et al. (2003) adapted the following definition of corporate culture from Dess and Picken (1999) “Organizational culture is a system of shared values (i.e., what is important) and beliefs (i.e., how things work) that shape the firm’s structural arrangements and its members’ actions to produce behavioural norms (i.e., the way work is completed in the organization)”. They continue and describe an effective entrepreneurial culture as one where new ideas and creativity is expected, risk taking is encouraged and failure is tolerated (Ireland et al., 2003). Kanter (1986) introduces the importance of a “culture of pride” that she found in high innovation organizations. The effect on effectuation of managerial support, politics and risk-taking will now be discussed.
Managerial support
Management support is the willingness of management to support entrepreneurial behaviour (Ács & Audretsch, 2010). The support of management can take several forms such
as providing necessary resources, championing entrepreneurial ideas or institutionalizing the entrepreneurial activity within the firm’s system and processes (Hornsby et al., 2002). An induced strategy that supports entrepreneurial behaviour gives room for management support
(Burgelman, 1983a; 1984). Entrepreneurial activity and innovation is stimulated when management support is present in an organization (Ács & Audretsch, 2010).
It is expected that when sufficient management support is present in an organization the use of effectuation will be stimulated. Managerial support in the form of providing resources stimulates the use of the principles of a means driven starting point and the affordable loss principle. Support in the form of championing entrepreneurial ideas is expected to stimulate exploration and experimentation that can lead to more entrepreneurial ideas.
Politics
Parker, Dipboye and Jackson (1995) define politics as “an intentional social influence process in which behaviour is strategically designed to maximize short-term or long-term self interests”. This definition gives room for politics to have both functional (when the self-interest of the actor is in line with the self-interest of the organization) as well as dysfunctional outcomes (when the subjects self-interest is not in line with organizational interest) for the organization (Parker et al., 1995).
It is expected that the presence of politics within established organizations could both have an impeding as well as a stimulating influence on the use of effectuation. Politics can have an impeding effect on effectuation when a person is able to successfully apply politics and has a self-interest that is against organizational change. In that situation the use of politics is what Parker et al. (1995) call dysfunctional. However a corporate entrepreneur himself could also use politics in a functional way that could stimulate the use of effectuation. A
corporate entrepreneur could for example use his social influence to persuade and enthuse management in favour of entrepreneurial activity. How the behaviour of someone who tries to socially influence somebody else is perceived determines whether the behaviour is helpful or harmful for the organization (Parker et al., 1995). If someone for example perceives the behaviour of a corporate entrepreneur as dysfunctional when he tries to get management support this could violate his attempts to corporate entrepreneurial behaviour. Even though this behaviour could be in the best interest of the organization as well.
Risk taking
Risk taking is “The willingness to commit significant levels of resources to pursue entrepreneurial opportunities with a reasonable chance of failure” (Ács & Audretsch, 2010). In the case of uncertainty the risk of failure is often present. Therefore the willingness to take a risk in those situations determines whether or not opportunities in case of uncertainty are pursued. Busenitz and Barney (1997) found differences in the use in heuristics and biases used in decision-making between managers and entrepreneurs. A higher level of confidence encourages entrepreneurs to take action faster than is the case with managers in large organizations (Busenitz & Barney, 1997). Larger organizations tend to attract more cautious decision-makers (Busenitz & Barney, 1997). Therefore a difference in risk taking between managers and corporate entrepreneurs is expected.
The difference in risk aversion between decision-makers within established organizations and corporate entrepreneurs is expected to have an impeding effect on the use of effectuation. When an increase in risk taking occurs, for example because of external transformation triggers, the use of effectuation is expected to be stimulated.
2.3.4 Concluding remarks
Based on the above literature review it is expected that in all three categories of organizational strategy, organizational structure and organizational culture there are several factors that stimulate or impede the use of effectuation. In the category of organizational strategy the need for an ambidextrous organization combined with the tendency of
organizations to focus on exploitation is expected to impede the use of effectuation (Benner & Tushman, 2003; March, 1991; O’Reilly III & Tushman, 2008). An induced strategy with room for entrepreneurial behaviour and autonomous strategic behaviour is expected to stimulate the use of effectuation Burgelman (1983a; 1983b; 1984). External transformational triggers are also expected to stimulate the use of effectuation (Ács & Audretsch, 2010; Tushman et al., 1986; Zahra, 1991). Also the use of partnerships as one of the effectuation principles is expected to be influence by the organizational strategy. Within the category of organizational structure Bureaucracy and governance are expected to haven an impeding effect on the use of effectuation (Ács & Audretsch, 2010; Jones & Butler, 1992). Work discretion and autonomy is expected to have a stimulating effect (Ács & Audretsch, 2010). The structure of an organization can also lead to organizational routines and core
competencies that once were successful can lead to core rigidities (Leonard‐ Barton, 1992; March & Simon, 1958). In the final category of organizational culture managerial support and risk taking is expected to stimulate the use of effectuation (Ács & Audretsch, 2010). Politics however is expected to be an impeding factor on the use of effectuation (Parker et al., 1995). Although in some cases the use of politics could also be functional and stimulate the use of effectuation.
Based on the data retrieved for this study other factors and antecedents, stimulating or impeding the use of effectuation, might be found as well. In the next chapter the research design of this study will be discussed.
3 Research design
3.1 Description of case study, research setting and sample
Because there is little theory on the use of effectuation in the context of an established organization a case study approach is deemed the most appropriate (Saunders, Lewis, & Thornhill, 2009; Yin, 2014). This approach gives opportunity to study the phenomena of effectuation in the real life setting of an established organization (Yin, 2014). Using this approach gives the opportunity to gather data and by analysis of this data contribute to current theory and knowledge on effectuation inductively (Saunders et al., 2009; Siggelkow, 2007). The purpose of this study is both exploratory and explanatory (Saunders et al., 2009; Yin, 2014). It aims to expand current knowledge on effectuation by looking at the phenomenon in the context of established organizations and how this phenomenon is influenced by this context. The case study has an embedded multiple-case design (Yin, 2014). The underlying logic for selecting multiple cases is the aim for literal replication of the findings and increasing generalizability and robustness (Eisenhardt & Graebner, 2007; Yin, 2014). The embedded design by using several units of analysis (i.e. Corporate Entrepreneurs, Explorative managers and Exploitive managers) improves the likelihood of rich and accurate theory (Yin, 2014).
The research setting consists of two established organizations based in the Netherlands. The first organization (from now on called: Finance org) is a large financial services organization. This organization provides a broad scope of financial products and services through several branches stationed in different countries. The study is held at the corporate head office of this organization. The organization originated into its current state more then 40 years ago. The second organization (from now on called: Infrastructure org) is a major global infrastructure company. This organization designs, builds, finances and operates infrastructure in the Netherlands, Sweden, France, United States of America, Italy and
Australia. The organization originated more then 70 years ago and has achieved a stable and a dominant position in the European and global market. In table 2 an overview with organizational information and the sample per organization is shown. Because of their age, size and position in their separate industries both organizations are seen as established organization.
Table 2: Organizational information
Firm Industry Existence
Number of employees Number of subjects interviewed Corporate entrepreneurs Exploitive middle level managers Explorative middle level managers
Finance org. Financial services > 40 years 6500 8 4 2 2 Infrastructure org
.
Infrastructure > 70 years 2100 8 4 2 2
The data collection is done together with a second student who is also conducting a study for his master thesis about effectuation. To select the desired sample within each of the two organizations purposive sampling is used (Berg, 2004; Saunders et al., 2009). The researchers know the organizations therefore their internal networks were used to selects the desired sample. Although purposive sampling does have its limitations such as generalizability (Yin, 2014) it is deemed most suitable to select the specific subjects needed to study the use of effectuation within established organizations.
The sample consists of three types of roles active in the organizations. These roles are corporate entrepreneurs, exploitive middle level managers and explorative middle level managers. The corporate entrepreneur is selected because according to Hisrich (1990) similarities between corporate entrepreneurs and individual entrepreneurs exist. It is therefore expected that corporate entrepreneurs use effectual reasoning as Sarasvathy (2001c) described it being used by individual entrepreneurs. These corporate entrepreneurs are thus expected to give insight in the stimulating or impeding effect of the context of an organization on the use of effectuation. To find employees in both organization that could be designated as corporate
entrepreneurs the knowledge and internal network of both researchers of the organizations was used. After determining which departments in the organization are responsible for innovation and strategy development the middle level managers of these department were asked to name persons within the organization who they perceived as corporate entrepreneurs. The definition of Sharma and Chrisman (1999) was described to make sure that the managers had the same understanding about corporate entrepreneurship as the researchers. From the group of names provided by the managers 4 corporate entrepreneurs per organization were selected to participate. Middle-level managers play an important role in the process of corporate entrepreneurship therefore they are also included (Ács & Audretsch, 2010). Sarasvathy (2001c, P. 245) speculates that: “decision units of exploration would contain processes of effectuation, whereas causation models would dominate exploitation”. Therefore two types of middle level managers (explorative and exploitive) were interviewed. Middle level managers focussed on exploration often have to deal with decision-making under uncertainty and are expected to be open-minded towards and to stimulate the use of effectuation. While on the other hand middle level managers focused on exploitation are expected to prefer a more causal approach and to have difficulties embracing the principles of effectuation and possibly impede the use of it. These three roles are expected to give insight in the contextual factors of an organization stimulating or impeding the use of effectuation. The subjects were asked to answer a list of questions about education, age, job title, job responsibilities, working experience and job tenure (See appendix A). These questions were asked to check whether the subjects fit into one of the three desired profiles.
In total seventeen interviews were held however the fifth interview was left out of the analysis because the quality was not good enough to make a good transcription of this interview. Therefore a total sample of 16 employees was included in the analysis. In table 3 the background data of the interviews is shown.
Table 3: Personal information from survey Ta b le 3 : P er son al i n for m at ion f rom s u rve y N um be r o f v ent ur es sta rte d 4 0 3 0 3 2 3 0 0 3 0 0 3 4 3 3 T enur e i n bus ine ss ex p lo ra ti o n 8 2 14 0 3 3 3 0 3 41 0 0 10 19 13 18 T enur e i n bus ine ss ex p lo it a ti o n 1 0 4 4 12 14 2 15 52 3 4 1 5 8 12 13 8 T enur e a t cu rr en t em p lo y er > 1 0 y ea rs 5 1 0 ye ar s > 1 0 y ea rs 5 1 0 ye ar s > 1 0 y ea rs 0 2 y ea rs > 1 0 y ea rs > 1 0 y ea rs > 1 0 y ea rs > 1 0 y ea rs 2 5 y ea rs > 1 0 y ea rs > 1 0 y ea rs 5 1 0 ye ar s > 1 0 y ea rs 5 1 0 ye ar s T enur e i n cu rr en t fu n cti o n 2 5 y ea rs 0 2 y ea rs 2 5 y ea rs 2 5 y ea rs 0 2 y ea rs 0 2 y ea rs 2 5 y ea rs > 1 0 y ea rs 5 1 0 ye ar s 2 5 y ea rs 0 2 y ea rs 5 1 0 ye ar s 2 5 y ea rs 0 2 y ea rs 2 5 y ea rs 2 5 y ea rs W o rki n g ex p eri en ce (y ea rs ) 1 8 6 18 12 17 2 22 35 61 18 2 15 27 13 26 25 E duc a ti o n a l ba ckg ro und La w B u si n es s / e co n o m ic s D u tc h la n g u ag e an d li te ra tu re C o m m u n ic at io n s ci en ce s La w T ec h no lo gy / e n g in ee ri n g B u si n es s / e co n o m ic s T ec h no lo gy / e n g in ee ri ng C o m m u n ic at io n s ci en ce s T ec h no lo gy / e n g in ee ri n g P h il o so p h y B io ch em is tr y La w La w T ec h no lo gy / e n g in ee ri n g B u si n es s / e co n o m ic s T y p e o f fu n cti o n E x p lo ra ti v e m an ag er C o rp o ra te e n tr ep re n eu r C o rp o ra te e n tr ep re n eu r C o rp o ra te e n tr ep re n eu r E x p lo ra ti v e m an ag er C o rp o ra te e n tr ep re n eu r E x p lo it iv e m an ag er E x p lo it iv e m an ag er C o rp o ra te e n tr ep re n eu r C o rp o ra te e n tr ep re n eu r C o rp o ra te e n tr ep re n eu r E x p lo ra ti v e m an ag er E x p lo it iv e m an ag er E x p lo it iv e m an ag er C o rp o ra te e n tr ep re n eu r E x p lo ra ti v e m an ag er C ur re nt E m pl o y er In fra st ru ct u re o rg In fra st ru ct u re o rg F in anc e o rg. In fra st ru ct u re o rg In fra st ru ct u re o rg In fra st ru ct u re o rg F in anc e o rg. In fra st ru ct u re o rg F in anc e o rg. F in anc e o rg. F in anc e o rg. F in anc e o rg. F in anc e o rg. In fra st ru ct u re o rg In fra st ru ct u re o rg F in anc e o rg. G ende r Ma le Ma le Ma le Ma le Ma le Ma le Ma le Ma le Ma le Ma le F em al e Ma le Ma le Ma le Ma le Ma le Ag e (y ea rs ) 4 3 31 42 35 44 27 49 55 43 44 28 41 42 38 46 45 P ers o n a l in fo rm a ti o n fr o m s u rv ey P ar ti ci p an t 0 1 P ar ti ci p an t 0 2 * P ar ti ci p an t 0 3 P ar ti ci p an t 0 4 P ar ti ci p an t 0 6 P ar ti ci p an t 0 7 P ar ti ci p an t 0 8 P ar ti ci p an t 0 9 P ar ti ci p an t 1 0 P ar ti ci p an t 1 1 P ar ti ci p an t 1 2 P ar ti ci p an t 1 3 P ar ti ci p an t 1 4 P ar ti ci p an t 1 5 P ar ti ci p an t 1 6 P ar ti ci p an t 1 7
