Towards understanding startup product development as effectual entrepreneurial behaviors

Software startups face with multiple technical and business challenges, which could make the startup journey longer, or even become a failure. Little is known about entrepreneurial decision making as a direct force to startup development outcome. In this study, we attempted to apply a behaviour theory of entrepreneurial firms to understand the root-cause of some software startup s challenges. Six common challenges related to prototyping and product development in twenty software startups were identified. We found the behaviour theory as a useful theoretical lens to explain the technical challenges. Software startups search for local optimal solutions, emphasise on short-run feedback rather than long-run strategies, which results in vague prototype planning, paradox of demonstration and evolving throw-away prototypes. The finding implies that effectual entrepreneurial processes might require a more suitable product development approach than the current state-of-practice.Comment: This is the author's version of the work. Copyright owner's version can be accessed at https://doi.org/10.1007/978-3-319-69191-6_15, 8th ICSOB 2017, Essen, German

Creating New Ventures: A review and research agenda

Creating new ventures is one of the most central topics to entrepreneurship and is a critical step from which many theories of management, organizational behavior, and strategic management build. Therefore, this review and proposed research agenda is not only relevant to entrepreneurship scholars but also other management scholars who wish to challenge some of the implicit assumptions of their current streams of research and extend the boundaries of their current theories to earlier in the organization’s life. Given that the last systematic review of the topic was published 16 years ago, and that the topic has evolved rapidly over this time, an overview and research outlook are long overdue. From our review, we inductively generated ten sub-topics: (1) Lead founder, (2) Founding team, (3) Social relationships, (4) Cognitions, (5) Emergent organizing, (6) New venture strategy, (7) Organizational emergence, (8) New venture legitimacy, (9) Founder exit, and (10) Entrepreneurial environment. These sub-topics are then organized into three major stages of the entrepreneurial process—co-creating, organizing, and performing. Together, the framework provides a cohesive story of the past and a road map for future research on creating new ventures, focusing on the links connecting these sub-topics

ENTREPRENEURIAL PROCESS ORIENTATION: A CHOICE OF THREE THEORIES

While entrepreneurship has gained in prevalence among universities in recent years (Singer, 2015), many individuals stay out of the arena due to beliefs of their match to necessary entrepreneurial behaviors, as well as lack of outside acceptance as an entrepreneur. The popular view on which behaviors are required for success in entrepreneurship, however, may be incomplete and even misleading. To address this concern, I introduced the new construct of entrepreneurial process orientation (EPO) and studied how this construct, while it possesses the potential to encompass several facets of personality, could be initially explored using variables from the Panel Study of Entrepreneurial Dynamics. Evidence supported that by ensuring proper fit between EPO and founding behaviors undertaken in venture formation, a firm could increase their odds of earning profit within an extraordinarily rare 12-month timeframe

On the cognitive microfoundations of effectual design: the Situated Function–Behavior–Structure framework

PurposeThe purpose of this article is to extend effectuation theory at the front end by building cognitive foundations for the effectual design process.Design/methodology/approachWe adopt an integrative conceptual approach drawing on design cognition theory to explain entrepreneurial cognition.FindingsWe find a significant gap in the entrepreneurial cognition literature with respect to effectuation processes. We thus integrate the Situated Function–Behavior–Structure framework from design theory to elaborate on the cognitive processes of effectuation, specifically with regard to the opportunity development process. This framework describes the cognitive subprocesses by which entrepreneurs means and ends are cyclically (re)formulated over time until a viable “opportunity” emerges, and the venture is formalized, or else, the entrepreneur abandons the venture and exits.”Practical implicationsUnravelling this entrepreneurial design process may facilitate more appropriate and effective design work by entrepreneurs, leading to more successful product designs. It also should facilitate the development of better design techniques and instruction.Originality/valueThis research contributes to new cognitive foundations for effectuation theory and entrepreneurial process research. It better explains how means are transformed into valuable goods over time through an iterative reconsideration of means-ends frameworks. This theoretical elaboration will expectedly facilitate additional research into the iterative cognitive processes of design and enable more formulaic design thinking

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 \u27good.\u27 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\u27t. Four hundred and fifty entrepreneurs across three states are surveyed to determine if and how much they effectuate, their business\u27s performance, and their satisfaction with their business\u27s 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\u27s perception of his business\u27s 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

Causation and effectuation in the context of product development process in a large-sized established company

Effectuation represents entrepreneurial way of thinking and it is commonly applied to new ventures. Causation, as the inverse logic to effectuation, represents traditional way of thinking, and it is commonly used among large existing organizations. Recent research on effectuation shows that causation and effectuation are two relative logics, and effectuation can be extended to the existing organizations. The purpose of this research is to study relationship between causation and effectuation and to reveal how causation and effectuation influence each other during the product development process of Stage-Gate in the context of a large existing organization

To Plan or Not to Plan? Exploring Entrepreneurial Logics in Digital Servitization

Digital servitization is of increasing concern for manufacturers to exploit the potentials of digitaliza-tion with new service offerings. In this context, substantial changes within a firm´s capabilities, processes and mindset of employees need to be considered. To better understand such changes, we carve out behavioral logics of manufacturers undergoing digital servitization. An alternate template research design is used to discover the entrepreneurial logics of effectuation, causation, and bricolage. For this purpose, we conducted 13 semi-structured interviews with experts from the German manufacturing industry. Our results show that firms approaching digital servitization via hybrid decision logics. Causation can be found within all organizations. Effectuation is integrated to various degrees. Against it, the bricolage-logic is barely present. In total, the results provide new insights for digital servitization and for organizational ambidexterity

Effectual logic of international entrepreneurs in digital platform environments

Due to globalization and the ongoing transformation towards a highly digitalized environment, international new ventures increasingly face dynamic and rapidly changing ecosystems. Resultingly international entrepreneurs are in close contact with dynamic digital platform constructs that impact today’s B2B and B2C markets on many levels. International entrepreneurs encounter uncertainty and an unpredictably fast changing future in this network- based environment, but at the same time explore novelty and a wide range of opportunities. This thesis aims to explore how the international entrepreneur’s decision-making, concretely under the perspective of effectual logic, is abled to navigate through the dynamic nature of fast changing digital platform environments. The theoretical framework of this thesis builds upon a wide range of literature discussing effectuation, digital platforms and their shared conjunction in the international context. Effectuation and digital platforming are concepts that emerged within the last 30 years and showed a significant increase in relevance as today’s globalized and digitalized economy facilitates their growth and interplay. The concepts have been discussed increasingly over the last years, while the conjunction of effectual decision making by international entrepreneurs in digital platform environments has not been discussed sufficiently. In order to observe the resulting interplay, this master’s thesis carries out a qualitative study that observed three German based international new ventures through semi structured interviews. While observing international entrepreneurs in dynamic platform environments, factors such as agility, dynamism and reactiveness seem to play a huge role in the effectual decision-making process. Big tech platforms, in conjunction with the innovative power by small high-tech companies, create an unpredictably fast changing environment that is globally connected and forces international entrepreneurs to consistently adapt their assumptions about the future. Opportunities and solutions to start new ventures are largely enabled by big tech platforms, while competition between entrepreneurs is also accelerated. The resulting environment of an interconnected digital platform - INV ecosystem - brings a wide range of novelty, innovation as well as dependency that selects only the fittest and most agile companies

From the bitterness of lemons to the sweet taste of lemonade: three essays in entrepreneurship

To critically evaluate the constraints faced by entrepreneurs, scholars have lean on two fundamental research questions. First, why doesn’t everyone who pursues his/her entrepreneurial aspirations actually succeed? Second, what are the most effective strategies entrepreneurs lean on to manage their ventures in such turbulent environments? Answering to the first question provides knowledge about how entrepreneurs react to constraints and what fuels/inhibits their behavior in the face of adversity. Furthermore, getting knowledge about how entrepreneurs act, disentangles the nuances of their activity and helps to explain what management practices foster and/or deters the development of a new business. In three studies, using different samples and methodologies, we highlight the importance of understanding the effect of constraints on entrepreneurial behavior, as well as the implications that the strategies used to manage such demands have for the venture development. Our findings deliver contributions for both research and practice. For scholars, this research provides a more granular view about the impact of constraints in entrepreneurial behavior. For entrepreneurs, we provide evidence about the effectiveness of some management practices for venture high-performance. Our findings also help policy makers to elaborate more effective propositions to stimulate entrepreneurial activity

Effectual Versus Predictive Logics in Entrepreneurial Decision-Making: Differences Between Experts and Novices in the State of Maine

This study is a replication of research done by Dew et al. (2009) that aims to confirm that expert entrepreneurs use effectual logic framework as opposed to the casual, or predicitive, logic utilized by novices. In order to test this theory we provided 5 expert entrepreneurs and 5 novices with a case statement that provided information of an imaginary new venture and asked them to think aloud continuously as they solved decision-making problems relevant to this, and any, new venture while we recorded them. We coded the transcriptions of these recordings according to the scheme of the Dew et al. 2009 study and analyzed the coded results. We found that while the majority of the results were similar, there were notable differences among specific metrics, but not entire constructs. We posit that many of these differences may be attributed to the smaller sample size of this study and the three main differences between the two studies: participant pool, environmental factors, and the recruitment process. We further recommend that additional research be conducted to better understand the influence of the participants environment, innovation engineering training, and the participants overall experience with the recruitment process and execution of the interviews