Some principles are more equal than others: Promotion‐ versus prevention‐focused effectuation principles and their disparate relationships with entrepreneurial orientation

• DOI: http://doi.org/10.1002/sej.1305
• Author: Marcus M. Keupp,Dietmar Grichnik,Peter Huerzeler,Oliver Gassmann,Maximilian Palmié
• Date: 01 March 2019
• Published date: 01 March 2019

RESEARCH ARTICLE

Some principles are more equal than others:

Promotion- versus prevention-focused

effectuation principles and their disparate

relationships with entrepreneurial orientation

Maximilian Palmié

1

| Peter Huerzeler

1

| Dietmar Grichnik

1

|

Marcus M. Keupp

2,3

| Oliver Gassmann

1

1

Institute of Technology Management,

University of St. Gallen, St. Gallen, Switzerland

2

Department of Military Business

Administration, Military Academy at the Swiss

Federal Institute of Technology Zurich,

Birmensdorf, Switzerland

3

University of St. Gallen, St. Gallen,

Switzerland

Correspondence

Maximilian Palmié, Institute of Technology

Management, University of St. Gallen,

Dufourstrasse 40A, CH-9000 St. Gallen,

Switzerland.

Email: maximilian.palmie@unisg.ch

Funding information

Swiss Federal Office of Energy (SFOE); Swiss

Innovation Agency Innosuisse, Grant/Award

Number: SCCER CREST - 1157002527

Research Summary:Recent research suggests that effectuation

principles such as flexibility, precommitments, and affordable loss

may differ substantially from one another. Responding to the call

to clarify the effectuation concept, our study introduces the dis-

tinction between promotion- and prevention-focused effectuation

principles. It argues that promotion-focused (prevention-focused)

principles are positively (negatively) associated with a firm's entre-

preneurial orientation (EO). It further argues that causation is also

promotion-focused and positively associated with EO. An analysis

of 151 Swiss energy small and medium-sized enterprises supports

this account. Thus, our study suggests that some effectuation prin-

ciples are more similar to causation in their underlying regulatory

focus and their relationship with EO than they are to other effectu-

ation principles. We offer several paths for future research on

effectuation, causation, and EO that emerge from these findings.

Managerial Summary:Practitioner-oriented presentations and texts

on entrepreneurial decision making frequently portray the means-

driven effectuation approach as opposite to the goals-driven causa-

tion approach. Our study challenges this portrayal by highlighting

substantial differences between the individual effectuation princi-

ples. Specifically, our research suggests that these principles differ

in the underlying psychological processes and consequently in their

relationships with key organizational attributes such as the firm's

entrepreneurial orientation. In these important regards, some effec-

tuation principles are actually more similar to causation than they

are to other effectuation principles. Our study has substantial

Received: 8 April 2016 Revised: 25 August 2018 Accepted: 19 September 2018 Published on: 14 November 2018

DOI: 10.1002/sej.1305

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and

reproduction in any medium, provided the original work is properly cited.

© 2018 The Authors. Strategic Entrepreneurship Journal published by Strategic Management Society.

Strategic Entrepreneurship Journal. 2019;13:93–117. wileyonlinelibrary.com/journal/sej 93

implications for the adoption of effectuation and for the “mixing

and matching”of effectuation and causation. It not only makes a

difference whether decision makers pursue an effectuation or cau-

sation approach, but also which effectuation principles they

choose.

KEYWORDS

causation, effectuation, entrepreneurial orientation, prevention

focus, promotion focus, regulatory focus theory

1|INTRODUCTION

Since Sarasvathy (2001) distinguished the means-driven effectuation approach to entrepreneurial decision making

from the goal-oriented causation approach, effectuation has become a main interest of entrepreneurship research

(Mauer, Wuebker, Schlüter, & Brettel, 2018; Reymen et al., 2015). Whereas causation subsumes efforts to predict

the future and work toward an envisioned end, effectuation refers to a set of principles by which decision makers

attempt to control the future without having to predict it (Sarasvathy, 2008, 2014). Effectuation principles include

generating new opportunities from available means (experimentation), leveraging unexpected contingencies (flexibil-

ity), getting stakeholder precommitments, and emphasizing affordable loss as a selection criterion (Smolka, Verheul,

Burmeister-Lamp, & Heugens, in press).

Recently, a Dialogue in the Academy of Management Review concluded that the effectuation principles differ con-

siderably as they reflect different cognitive processes and behaviors (Arend, Sarooghi, & Burkemper, 2015) and con-

found different aspects of control (Read, Sarasvathy, Dew, & Wiltbank, 2016). Arend et al. (2015) and Read

et al. (2016) also agree that a sound understanding of the implications of pursuing effectuation is essential. This con-

stellation leaves us with the question whether the effectuation principles also differ substantially in their implications.

This question is especially relevant because effectual decision makers do not need to adopt the entire set of princi-

ples, but can focus on selected principles as they see fit (Engel, Van Burg, Kleijn, & Khapova, 2017). Comprehending

whether, and if so, how the principles differ in their implications supports decision makers when choosing among

them. Yet, we know rather little about this issue.

With the exception of Brettel, Mauer, Engelen, and Küpper (2012), emergent quantitative work on the implica-

tions of pursuing effectuation has either studied effectuation as a whole (Murnieks, Haynie, Wiltbank, & Harting,

2011; Parida, George, Lahti, & Wincent, 2016; Wiltbank, Read, Dew, & Sarasvathy, 2009) or hypothesized uniform

effects across its different principles (Deligianni, Voudouris, & Lioukas, 2017; Read, Song, & Smit, 2009; Smolka et al.,

in press). However, unexpected results in the latter studies suggest that effectuation principles could exert opposite

effects on the same criterion—while some principles promote the criterion, others impede it (Deligianni et al., 2017;

Smolka et al., in press). In contrast, Brettel et al. (2012) do not find support for the expected opposite effects across

principles. Thus, our knowledge about whether and why effectuation principles exert opposite effects on the same

criterion is currently characterized by unexpected findings.

To overcome this unsatisfactory situation, the first purpose of our study is to look at the principles' underlying

regulatory focus in order to predict their association with the entrepreneurial orientation (EO) of small and medium-

sized enterprises (SMEs). EO represents “a firm-level attribute that is recognizable through the exhibition of sustained

entrepreneurial behavioral patterns”(Covin & Lumpkin, 2011, p. 859). Its theoretical and practical significance

(Wales, Gupta, & Mousa, 2013) as well as its acknowledged roots in top management decisions (Covin & Lumpkin,

94 PALMIÉ ET AL.