Exploring Entrepreneurial Motivations Human Capital and Environmental Uncertainty As Antecedents of Causation and Effectuation

Abstract

Entrepreneurship has been acknowledged as one of the most important drivers of growth and prosperity in modern times. Existing ways of life are creatively destroyed to make way for new ways of living. It is the process through which entrepreneurs create new firms that address the growing needs of a changing society. Decision making is at the heart of the entrepreneurial process. Existing literature has found that expert entrepreneurs use a different set of heuristics rather than rely on the analytical and planning approaches to make decisions in the face of uncertainty. These heuristics are termed as effectuation . The planning approaches are contrasted with the heuristics of effectuation and are called causation . Entrepreneurs who use the effectuation heuristics are means oriented, use affordable loss strategies, engage with committed self-selected stakeholders to invent the future, and prefer to leverage contingencies. Alternatively entrepreneurs who use causation are goal oriented, use expected return strategies, rely on analytical and forecasting techniques to predict the future and prefer to avoid contingencies. There have been insufficient attempts to uncover the antecedents of causation and effectuation in the entrepreneurial context. This motivates us to study entrepreneurial motivations (career reasons), human capital and environmental uncertainty as antecedents to causation and effectuation. Data were collected from start-ups across multiple domains aged 3 months to 6 years. A total of 115 data points were available for final analysis. Factor analysis and regressions were used to analyse the data. The treatment of causation and effectuation is unique and useful since we measure both causation and effectuation as independent formative constructs. On one hand we refine the operationalization of effectuation while on the other, we treat causation with equal importance by operationalizing the sub dimensions of causation as reflective constructs. The study reveals that entrepreneurial motivations do ha...