TY - JOUR

T1 - Navigating the emerging market context

T2 - Performance implications of effectuation and causation for small and medium enterprises during adverse economic conditions in Russia

AU - Shirokova, Galina

AU - Osiyevskyy, Oleksiy

AU - Laskovaia, Anastasiia

AU - MahdaviMazdeh, Hossein

N1 - Funding Information: This research has been conducted with financial support from the Russian Science Foundation [project No. 19-18-00081]. Publisher Copyright: © 2020 The Authors. Strategic Entrepreneurship Journal published by John Wiley & Sons, Ltd. on behalf of Strategic Management Society. Copyright: Copyright 2020 Elsevier B.V., All rights reserved.

PY - 2020/9/1

Y1 - 2020/9/1

N2 - Research Summary: This study aims to broaden the understanding of effectuation and causation by investigating their effectiveness for small and medium enterprises (SMEs) in the emerging market context during adverse economic conditions. We embrace a holistic view of the performance implications of these behavioral logics, theorizing and empirically testing their impact not only on the level of firm performance but also on its variability. The findings suggest that emerging market conditions create significant contingencies in the relationships between effectuation, causation, and firm performance, substantively affecting their effectiveness. In particular, we demonstrate that for the firms affected by adverse conditions, causation brings marginal performance improvements while also making it highly unreliable (variable), whereas effectuation leads to performance improvements coupled with higher reliability. Managerial Summary: Entrepreneurial actions can be based on one of two behavioral logics: causation (rigorous forward-looking analysis, relying on well-prepared plans, pre-defined goals, and required resources) or effectuation (leveraging the existing resources and controlling the environmental uncertainty through creating new markets, products, and opportunities). We investigate the effectiveness of these logics for Russian SMEs navigating adversity in the emerging market context. The results suggest that causation leads to performance improvements, yet these become marginal and highly unreliable if a firm finds itself in adverse conditions. Effectuation, on the other hand, is a costly and unreliable strategy in stable times, yet leads to reliable performance improvements in volatile contexts.

AB - Research Summary: This study aims to broaden the understanding of effectuation and causation by investigating their effectiveness for small and medium enterprises (SMEs) in the emerging market context during adverse economic conditions. We embrace a holistic view of the performance implications of these behavioral logics, theorizing and empirically testing their impact not only on the level of firm performance but also on its variability. The findings suggest that emerging market conditions create significant contingencies in the relationships between effectuation, causation, and firm performance, substantively affecting their effectiveness. In particular, we demonstrate that for the firms affected by adverse conditions, causation brings marginal performance improvements while also making it highly unreliable (variable), whereas effectuation leads to performance improvements coupled with higher reliability. Managerial Summary: Entrepreneurial actions can be based on one of two behavioral logics: causation (rigorous forward-looking analysis, relying on well-prepared plans, pre-defined goals, and required resources) or effectuation (leveraging the existing resources and controlling the environmental uncertainty through creating new markets, products, and opportunities). We investigate the effectiveness of these logics for Russian SMEs navigating adversity in the emerging market context. The results suggest that causation leads to performance improvements, yet these become marginal and highly unreliable if a firm finds itself in adverse conditions. Effectuation, on the other hand, is a costly and unreliable strategy in stable times, yet leads to reliable performance improvements in volatile contexts.

KW - causation

KW - effectuation

KW - emerging market

KW - performance variability

KW - Russia

KW - MANAGEMENT

KW - ENTREPRENEURIAL ORIENTATION

KW - BUSINESS GROUPS

KW - INNOVATION

KW - VENTURE PERFORMANCE

KW - PRODUCT PERFORMANCE

KW - FINANCIAL CRISIS

KW - DECISION-MAKING

KW - UNCERTAINTY

KW - FIRM PERFORMANCE

UR - http://www.scopus.com/inward/record.url?scp=85083580810&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/29435c17-fcde-3b98-b8ce-fcab61f0eac1/

U2 - 10.1002/sej.1353

DO - 10.1002/sej.1353

M3 - Article

AN - SCOPUS:85083580810

VL - 14

SP - 470

EP - 500

JO - Strategic Entrepreneurship Journal

JF - Strategic Entrepreneurship Journal

SN - 1932-4391

IS - 3

ER -