Effectuation and/or Causation: What Cognitive Logic One Should Foster in Different Institutional Settings?

Abstract

Strategic management and entrepreneurship literature pay substantive attention to rational decision-making processes. Despite the advantages of planning-based logic, some scholars prefer alternative approaches to making decisions. In entrepreneurship, effectuation theory rose to prominence as an alternative to planning reasoning. With this paper, we intend to reach a new level in effectuation research by examining macro-level factors that may influence the efficiency of entrepreneurial cognitive processes. Particularly, we investigate how formal institutions shape the relationship between student entrepreneurs' venture cognitive logic and performance of their ventures. We found this relationship is shaped by the characteristics of the country-level institutional environment.