Ecological rationality and entrepreneurship: How entrepreneurs fit decision logics to decision content and structure

TY - JOUR

T1 - Ecological rationality and entrepreneurship:

T2 - How entrepreneurs fit decision logics to decision content and structure

AU - Codreanu, Sonia-Cristina

AU - Stephan, Ute

AU - Ahmetoglu, Gorkan

PY - 2022/3/22

Y1 - 2022/3/22

N2 - During new venture creation, entrepreneurs make decisions in a variety of areas from seeking funding to hiring employees. When and why entrepreneurs use effectual or causal logics to make such decisions is poorly understood. In this study, we integrate ecological rationality theory and effectuation theory to examine how the nature of decisions influences entrepreneurs’ use of decision logics. In a qualitative study with 41 entrepreneurs across 290 decisions, we explore how decision content (what the decision is about) and decision structure (what information about a decision is represented in the decision-maker’s mind) influence entrepreneurs’ use effectual or causal logics. We extend our findings in an experiment with 224 entrepreneurs where we manipulate decision structure. Our results suggest that decision content influences entrepreneurs’ mental representations of decision structure. In turn, the combination of two elements of decision structure — decision complexity and the perceived costs of implementing different options — drives entrepreneurs’ use of decision logics. We contribute to the effectuation literature by integrating it with ecological rationality theory, introducing the concept of decision fit as a driver of decision logics and developing our understanding of hybrid decision-making (the simultaneous use of effectuation and causation).

AB - During new venture creation, entrepreneurs make decisions in a variety of areas from seeking funding to hiring employees. When and why entrepreneurs use effectual or causal logics to make such decisions is poorly understood. In this study, we integrate ecological rationality theory and effectuation theory to examine how the nature of decisions influences entrepreneurs’ use of decision logics. In a qualitative study with 41 entrepreneurs across 290 decisions, we explore how decision content (what the decision is about) and decision structure (what information about a decision is represented in the decision-maker’s mind) influence entrepreneurs’ use effectual or causal logics. We extend our findings in an experiment with 224 entrepreneurs where we manipulate decision structure. Our results suggest that decision content influences entrepreneurs’ mental representations of decision structure. In turn, the combination of two elements of decision structure — decision complexity and the perceived costs of implementing different options — drives entrepreneurs’ use of decision logics. We contribute to the effectuation literature by integrating it with ecological rationality theory, introducing the concept of decision fit as a driver of decision logics and developing our understanding of hybrid decision-making (the simultaneous use of effectuation and causation).

KW - Effectuation; Ecological rationality; Decision fit; Decision content; Decision structure

KW - entrepreneur

KW - DECISION-MAKING

KW - rationality

KW - start-up

KW - entrepreneurship

M3 - Article

SN - 0883-9026

VL - 37

SP - 1

EP - 62

JO - JOURNAL OF BUSINESS VENTURING

JF - JOURNAL OF BUSINESS VENTURING

IS - 4

M1 - 106221

ER -