Expect the unexpected: examining the shaping role of entrepreneurial orientation on causal and effectual decision-making logic during economic crisis

ABSTRACT

While many firms operate in dynamic environments, the competitive conditions faced by firms during an economic crisis are especially unstable and turbulent. We examine firm strategic decision-making in this distinctive context and investigate the question of whether causal and effectual logic provide similar paths to performance during such challenging economic times. Further, we examine the potential impact that a firm’s level of entrepreneurial orientation (EO) has upon the relationship between managers’ predominant decision-making logic and their firm’s overall performance in this crisis. To test these relationships, we employ a robust national random sample of 447 Russian small and medium-sized enterprises (SMEs) collected from 2015 to 2016 during a period of economic crisis. Our results indicate that EO plays an important moderating role, shaping the nature of the relationships between managers’ decision-making logic and financial performance. Moreover, additional analysis identifies the presence of a non-linear relationship between both logics and the performance of SMEs.

KEYWORDS:

• Effectuation
• causation
• entrepreneurial orientation
• firm performance
• economic crisis
• Russia

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. The Main State Registration Number in Russia is a 13-digit combination number. It consists of the status of the state registration number, year of registration, constituent entity of Russian Federation, tax inspection code, record number, and control figure.

2. SPARK Interfax database contains information on all registered companies in Russia, including legal entities and individual entrepreneurs. The information constantly-updates based on data from official government databases. The database includes registration numbers of Russian companies (OGRN) and other information such as registration details, financial statements, description of activities, information on liabilities, decisions of arbitration courts, etc. URL: http://www.spark-interfax.ru/en.

3. The detailed analysis is available from authors upon request.

Additional information

Funding

This work was supported by St. Petersburg University, [Competition 7, project No. 16.23.1442.2017].