Exploring entrepreneurs' adaptive toolbox: The relationship between the environment, decisions, and decision-making

Entrepreneurship is becoming an ever more popular career choice for individuals worldwide, and this trend has been encouraged by policy-makers given the economic, technological, and social benefits associated with entrepreneurship (Van Praag & Versloot, 2007). Thus, understanding how individuals can successfully build and grow new ventures is a topic of significance, with both academic and practical implications. The most promising area of research on the role of the individual in entrepreneurship has focused on entrepreneurs’ cognitions and decision-making. Whereas a variety of perspectives have emerged, effectuation theory (Sarasvathy, 2001a) has established itself in the literature as one of the most prominent frameworks for understanding how entrepreneurs make decisions during new venture creation. Nevertheless, when and why entrepreneurs rely on effectual or causal logics to make decisions is still poorly understood (S. Read, Sarasvathy, Dew, & Wiltbank, 2016). To address this gap, this thesis introduces a micro-level investigation of the role that the environment plays in driving entrepreneurs’ use of effectuation and causation. It integrates effectuation theory with insights stemming from ecological rationality theory (Gigerenzer & Gaissmaier, 2011; Todd, Gigerenzer, & The ABC Research Group, 2012) and action theory (Hacker, 2003; Suchman, 1987). The findings show that entrepreneurs’ perceptions of the environment in which they operate – in particular, perceptions of decision structure (chapter 2) and perceptions of different types of missing information about the environment (chapter 4) – drive their use of effectuation and causation. This thesis also makes a methodological contribution to the effectuation literature by developing and validating a scenario-based measure of effectuation, which assesses entrepreneurs’ use of effectual logics for specific decisions in the new venture creation process (chapter 3). Thus, this research contributes to our understanding of the antecedents of effectuation, and proposes a novel approach to studying entrepreneurial decision-making that integrates effectuation and insights from psychological theories