SME innovativeness in a dynamic environment: is there any value in combining causation and effectuation?

ABSTRACT

It has been suggested that, in dynamic environments, the combination of causation and effectuation will boost an SME’s innovative performance, compared to a sole focus on planning. To statistically test this claim, we develop a contingency model for business planning, which considers effectuation as an internal and environmental dynamism as an external boundary condition. As expected, we find that causation positively relates to an SME’s innovativeness and that this effect is amplified when combined with effectual decision-making logics. Interestingly, it turns out that this leverage effect is only present in stable environments. What is more, in dynamic environments, SMEs relying on pre-committed resources from partners appear to score lower on innovativeness than their counterparts without pre-commitments. With this finding, we provide statistical evidence that combining causal and effectual decision-making logics is beneficial for innovative performance, but that environmental dynamism acts as a barrier to fully take advantage of it.

KEYWORDS:

• Effectuation
• pre-commitments
• environmental dynamism
• innovative performance

Acknowledgements

We gratefully acknowledge the financial support from the Belgian Federal Ministry for Science and Policy (Belspo), Grant number: TA/00/40, and Dendi Ramdani, former PhD student at the University of Antwerp, for his contribution during data gathering.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes on contributors

Johanna Vanderstraeten is Assistant Professor at the department of Management of the Faculty of Business and Economics of the University of Antwerp, Belgium. Her research focuses on strategic management and entrepreneurship. Within these domains, she executes research about business incubators and ambitious and international entrepreneurship. She employs theories such as strategic positioning, effectuation & causation, and institutional theory and has specific attention for the impact of the individual on e.g. strategic decision-making, company performance and (international) entrepreneurial intention. Her research is published in, among others, Technovation, Industrial Marketing Management, PLoS ONE, and Journal of Engineering and Technology Management.

Julie Hermans is Assistant Professor in entrepreneurship at UCLouvain, member of the Louvain Research Institute in Management and Organizations. Her research focuses on multiple-goal pursuit in entrepreneurial contexts such as social enterprises (commercial goals-social mission), innovation (exploration-exploitation), and growth (development-consolidation), using a cognitive perspective.

Arjen van Witteloostuijn is Dean of the School of Business and Economics at the Vrije Universiteit Amsterdam. He is also affiliated to the University of Antwerp. He holds degrees in business, economics and psychology. He is an Area Editor of the Journal of International Business Studies and a Reviewing Editor of Cross Cultural and Strategic Management, and a member/former member of many editorial boards, including the Academy Management Journal, British Journal of Management, Industrial and Corporate Change, Organization Studies and Strategic Organization. He has published widely in such international journals as the Academy of Management Journal, Academy of Management Review, Journal of International Business Studies, Journal of Management, and Strategic Management Journal.

Marcus Dejardin is Professor of Economics at the University of Namur and the UCLouvain. He has developed expertise in entrepreneurship, innovation, spatial and regional economics, and public policy analysis. Marcus is Director of the Chair of Excellence for Research and Expertise in Entrepreneurship (CHEREE). He is the Founding Editor of the New Economics Papers – Entrepreneurship Newsletter. He serves as an Editor of Small Business Economics: An Entrepreneurship Journal; an Associate Editor of The Annals of Regional Science and of Revue d’Economie Régionale et Urbaine - Journal of Regional and Urban Economics.

Additional information

Funding

This work was supported by a Belgian Federal Science Policy Office [grant number TA/00/40 SMESESAP].