Experience, effectuation, and something good does the use of effectuation lead to positive outcomes

The theory of effectuation is ascending in entrepreneurship education. Hundreds of articles have been written on the topic. Many textbooks mention the theory, and one college level textbook teaches entrepreneurship entirely from an effectual perspective. Given its acceptance, the natural assumption is that effectuation is somehow ‘good.’ That is, there is some unique benefit that an entrepreneur gains from using effectuation. This dissertation examines the concept of effectuation, and its value to entrepreneurship. It seeks to determine if entrepreneurs who use effectual logic outperform entrepreneurs who don’t. Four hundred and fifty entrepreneurs across three states are surveyed to determine if and how much they effectuate, their business’s performance, and their satisfaction with their business’s performance, as well as their lives overall. Findings indicate that entrepreneurs with more experience adopt the effectual idea of seeking out pre-commitments before starting a new venture. Findings also indicate that the entrepreneur’s perception of his business’s financial performance is positively related to his or her inclination to experiment, be flexible, and to evaluate business opportunities by considering how much he or she can afford to lose.

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University of Louisville
T E Nelson
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