Effectuation, Causation and the Performance of Entrepreneurial Businesses

Purposefulness, feasibility and performance of entrepreneurial businessesAbstractPurposefulness (causality) and possibilityism (effectiveness) are two decision logics that entrepreneurs use in doing activities. Over the past two decades, much attention has been paid to these two behavioral logics that entrepreneurs use to start and develop new companies. Existing research suggests that business performance is associated with purposefulness and feasibility. The purpose of this paper is to examine the purposefulness and feasibility (with four dimensions of experimentation, tolerable loss, flexibility and pre-commitment) on business performance using structural equation modeling. This research is applied from the perspective of purpose and the data are collected by descriptive-correlation method. The statistical population of the study is businesses active in the information technology industry. The statistical sample through Cochran's formula includes 175 entrepreneurs active in this field who have been selected by random sampling method. The collected data were analyzed by SPSS26 and SmartPLS3 software. Research findings show that flexibility, goal orientation, experimentation have a positive and significant relationship with entrepreneurial performance; And tolerable losses and pre-commitments have a negative and significant relationship with performance. In other words, the relationship between tolerable losses and pre-commitments is inversely related to performance, and with the increase of either of these, the performance of the business decreases. The reason for this discrepancy may be explained in the results due to differences, and finally some suggestions for research are provided.