The spectrum of perceived uncertainty and entrepreneurial orientation: Impacts on effectuation

ABSTRACT

Effectuation research suggests that effectuation is most appropriate in pure uncertain conditions. However, effectuation research is unclear about how decision-makers respond to varying levels of perceived uncertainty. Behavioral decision-making research suggests that as uncertainty increases, decision-makers may attempt to protect the status quo rather than engage in new opportunities. The present study combines these thoughts to derive a curvilinear relationship between uncertainty and effectuation, providing a more realistic picture of decision-making logic applied by entrepreneurs of small businesses. We also argue that the curvilinear relationship is moderated by the entrepreneurial orientation (EO) of the firm. We find, based on data from four samples of 990 entrepreneurs in three emerging economies,support for the curvilinear relationship and the negative moderating effect of EO. Our findings contribute to effectuation theory by extending its theoretical boundaries to include a spectrum of uncertainty.

KEYWORDS:

• Effectuation
• environmental uncertainty
• entrepreneurial orientation
• curvilinear relationship
• small businesses

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

Funding was received from National Natural Science Foundation of China Grants: #71902072, 71732004, & 72032007 and The Royal Society of New Zealand Marsden Research Grant (13-UOO-065).