Do strategy choices matter for nascent firms? A study on effectuation and causation impacts on new ventures outcomes

Principal Topic : Nascent entrepreneurship has drawn the attention of scholars in the last few years (Davidsson, 2006, Wagner, 2004). However, most studies have asked why firms are created focussing on questions such as what are the characteristics (Delmar and Davidsson, 2000) and motivations (Carter, Gartner, Shaver & Reynolds, 2004) of nascent entrepreneurs, or what are the success factors in venture creation (Davidsson & Honig; 2003; Delmar and Shane, 2004). In contrast, the question of how companies emerge is still in its infancy. On a theoretical side, effectuation, developed by Sarasvathy (2001) offers one view of the strategies that may be at work during the venture creation process. Causation, the theorized inverse to effectuation, may be described as a rational reasoning method to create a company. After a comprehensive market analysis to discover opportunities, the entrepreneur will select the alternative with the higher expected return and implement it through the use of a business plan. In contrast, effectuation suggests that the future entrepreneur will develop her new venture in a more iterative way by selecting possibilities through flexibility and interaction with the market, affordability of loss of resources and time invested, development of pre-commitments and alliances from stakeholders. Another contrasting point is that causation is ''goal driven'' while an effectual approach is ''mean driven'' (Sarasvathy, 2001) One of the predictions of effectuation theory is effectuation is more likely to be used by entrepreneurs early in the venture creation process (Sarasvathy, 2001). However, this temporal aspect and the impact of the effectuation strategy on the venture outcomes has so far not been systematically and empirically tested on large samples. The reason behind this research gap is twofold. Firstly, few studies collect longitudinal data on emerging ventures at an early enough stage of development to avoid severe survivor bias. Second, the studies that collect such data have not included validated measures of effectuation. The research we are conducting attempts to partially fill this gap by combining an empirical investigation on a large sample of nascent and young firms with the effectuation/causation continuum as a basis (Sarasvathy, 2001). The objectives are to understand the strategies used by the firms during the creation process and measure their impacts on the firm outcomes. Methodology/Key Propositions : This study draws its data from the first wave of the CAUSEE project where 28,383 Australian households were randomly contacted by phone using a specific methodology to capture emerging firms (Davidsson, Steffens, Gordon, Reynolds, 2008). This screening led to the identification of 594 nascent ventures (i.e., firms that are not operating yet) and 514 young firms (i.e., firms that have started operating from 2004) that were willing to participate in the study. Comprehensive phone interviews were conducted with these 1108 ventures. In a likewise comprehensive follow-up 12 months later, 80% of the eligible cases completed the interview. The questionnaire contains specific sections designed to distinguish effectual and causal processes, innovation, gestation activities, business idea changes and ventures outcomes. The effectuation questions are based on the components of effectuation strategy as described by Sarasvathy (2001) namely: flexibility, affordable loss and pre-commitment from stakeholders. Results from two rounds of pre-testing informed the design of the instrument included in the main survey. The first two waves of data have will be used to test and compare the use of effectuation in the venture creation process. To increase the robustness of the results, temporal use of effectuation will be tested both directly and indirectly. 1. By comparing the use of effectuation in nascent and young firms from wave 1 to 2, we will be able to find out how effectuation is affected by time over a 12-month duration and if the stage of venture development has an impact on its use. 2. By comparing nascent ventures early in the creation process versus nascent ventures late in the creation process. Early versus late can be determined with the help of time-stamped gestation activity questions included in the survey. This will help us to determine the change on a small time scale during the creation phase of the venture. 3. By comparing nascent firms to young (already operational) firms. 4. By comparing young firms becoming operational in 2006 with those first becoming operational in 2004. Results and Implications : Wave 1 and 2 data have been completed and wave 2 is currently being checked and 'cleaned'. Analysis work will commence in September, 2009. This paper is expected to contribute to the body of knowledge on effectuation by measuring quantitatively its use and impact on nascent and young firms activities at different stages of their development. In addition, this study will also increase the understanding of the venture creation process by comparing over time nascent and young firms from a large sample of randomly selected ventures. We acknowledge the results from this study will be preliminary and will have to be interpreted with caution as the changes identified may be due to several factors and may not only be attributed to the use/not use of effectuation. Meanwhile, we believe that this study is important to the field of entrepreneurship as it provides some much needed insights on the processes used by nascent and young firms during their creation and early operating stages.

Using old concepts to gain new insights: Addressing the issue of consistency

Purpose – This paper aims to go beyond a bookkeeping approach to evolutionary analysis whereby surviving firms are better adapted and extinct firms were less adapted. From discussion of the preliminary findings of research into the Hobart pizza industry, evidence is presented of the need to adopt a more traditional approach to applying evolutionary theories with organizational research. Design/methodology/approach – After a brief review of the relevant literature, the preliminary findings of research into the Hobart pizza industry are presented. Then, several evolutionary concepts that are commonplace in ecological research are introduced to help explain the emergent findings. The paper concludes with consideration given to advancing a more consistent approach to employing evolutionary theories within organizational research. Findings – The paper finds that the process of selection cannot be assumed to occur evenly across time and/or space. Within geographically small markets different forms of selection operate in different ways and degrees requiring the use of more traditional evolutionary theories to highlight the causal process associated with population change. Research limitations/implications – The paper concludes by highlighting Geoffrey Hodgson’s Principle of Consistency. It is demonstrated that a failure to truly understand how and why theory is used in one domain will likely result in its misuse in another domain. That, at present, too few evolutionary concepts are employed in organisational research to ensure an appreciation of any underlying causal processes through which social change occurs. Originality/value – The concepts introduced throughout this paper, whilst not new, provide new entry points for organizational researchers intent on employing an evolutionary approach to understand the process of social change.

The politics of hazard: imminent critique and deconstruction of ecological modernisation in Ireland

This dissertation sets out to provide immanent critique and deconstruction of ecological modernisation or ecomodernism.It does so, from a critical social theory approach, in order to correctly address the essential issues at the heart of the environmental crisis that ecomodernism purports to address. This critical approach argues that the solution to the environmental crisis can only be concretely achieved by recognising its root cause as being foremost the issue of material interaction between classes in society, and not simply between society and nature in any structurally meaningful way. Based on a metaphysic of false dualism, ecological modernisation attributes a materiality of exchange value relations to issues of society, while simultaneously offering a non- material ontology to issues of nature. Thus ecomodernism serves asymmetrical relations of power whereby, as a polysemic policy discourse, it serves the material interests of those who have the power to impose abstract interpretations on the materiality of actual phenomena. The research of this dissertation is conducted by the critical evaluation of the empirical data from two exemplary Irish case studies. Discovery of the causal processes of the various public issues in the case studies and thereafter the revelation of the meaning structures under- pinning such causal processes, is a theoretically- driven task requiring analysis of those social practices found in the cognitive, cultural and structural constitutions respectively of actors, mediations and systems.Therefore, the imminent critique of the case study paradigms serves as a research strategy for comprehending Ireland’s nature- society relations as influenced essentially by a systems (techno- corporatist) ecomodernist discourse. Moreover, the deconstruction of this systems ideological discourse serves not only to demonstrate how weak ecomodernism practically undermines its declared ecological objectives, but also indicates how such objectives intervene as systemic contradictions at the cultural heart of Ireland’s late modernisation.

Evaluating the legacies of state-building: success, failure, and the role of responsibility

What impact do international state-building missions have on the domestic politics of states they seek to build, and how can we measure this impact with confidence? This article seeks to address these questions and challenge some existing approaches that often appear to assume that state-builders leave lasting legacies rather than demonstrating such influence with the use of carefully chosen empirical evidence. Too often, domestic conditions that follow in the wake of international state-building are assumed to follow as a result of international intervention, usually due to insufficient attention to the causal processes that link international actions to domestic outcomes. The article calls for greater appreciation of the methodological challenges to establishing causal inferences regarding the legacies of state-building and identifies three qualitative methodological strategies—process tracing, counterfactual analysis, and the use of control cases—that can be used to improve confidence in causal claims about state-building legacies. The article concludes with a case study of international state-building in East Timor, highlighting several flaws of existing evaluations of the United Nations' role in East Timor and identifying the critical role that domestic actors play even in the context of authoritative international intervention

The vertical dimension of social relations and accurate interpersonal perception: A meta-analysis

There is little consensus regarding how verticality (social power, dominance, and status) is related to accurate interpersonal perception. The relation could be either positive or negative, and there could be many causal processes at play. The present article discusses the theoretical possibilities and presents a meta-analysis of this question. In studies using a standard test of interpersonal accuracy, higher socioeconomic status (SES) predicted higher accuracy defined as accurate inference about the meanings of cues; also, higher experimentally manipulated vertical position predicted higher accuracy defined as accurate recall of others’ words. In addition, although personality dominance did not predict accurate inference overall, the type of personality dominance did, such that empathic/responsible dominance had a positive relation and egoistic/aggressive dominance had a negative relation to accuracy. In studies involving live interaction, higher experimentally manipulated vertical position produced lower accuracy defined as accurate inference about cues; however, methodological problems place this result in doubt.

Social contact and trust: a study of a super diverse neighbourhood

This thesis presents an in-depth case study of a superdiverse neighbourhood in Glasgow where long-term white and ethnic minority communities reside alongside Roma migrants, asylum seekers and refugees, young professionals and other recent arrivals in traditional tenement housing. It focuses on the nature and extent of social contact and trust and on the role of context in shaping social relations. Employing the concepts of social milieu and intersectionality to identify social differences the research examines the relationships between five broad groupings of residents in the neighbourhood: Nostalgic Working Class, Scottish Asian, Liberal Homeowners, Kinship-sited Roma and Global Migrants. Ethnographic fieldwork was carried out in contexts within the neighbourhood, theorised as being potential sites for intergroup contact. Three types of interactions were examined: Group-based Interactions, Neighbour Interactions and Street Interactions. The data comprised documentary evidence, participant and direct observations, in-depth qualitative and walk-along interviews with residents and local organisations. Findings show that rather than individualising and isolating residents, superdiversity can stimulate community activism, yet there remains a preference for interaction within one’s own social milieu. The research has found that the concentration of poverty and material conditions has a more profound effect on social relations than historical diversity and the extent to which diversity is normalised within local discourses. Trust judgements in a superdiverse context may rely more on shared interests, moral outlook and assessments of the context rather than the extent of social contact. The quasi-private spaces of shared residential spaces and community activities can facilitate encounters with the potential to build trust, yet for this to occur cooperation through shared activities may not be sufficient. Interactions may need to move beyond co-presence and conviviality to increased understanding and empathy through dialogue. At an aggregate level, the extent to which superdiversity contributes to social contact and trust within the neighbourhood is strongly influenced by contextual factors and wider economic processes influencing housing tenure mix, private renting, property maintenance, residential churn and environmental conditions. Through examining different types of social contacts, the dynamics of trust as well as contextual influences, this thesis offers insights into the causal processes and factors that influence social relations at a local level.

Reconceptualising International Intervention: Statebuilding, ‘Organic Processes’ and the Limits of Causal Knowledge

This article examines the transformation in the conceptual understanding of international intervention over the last two decades. It suggests that this conceptual shift can be usefully interrogated through its imbrication within broader epistemological shifts highlighting the limits of causal knowledge claims: heuristically framed in this article in terms of the shift from policy interventions within the problematic of causation to those concerned with the management of effects. In this shift, the means and mechanisms of international intervention have been transformed, no longer focused on the universal application of Western causal knowledge through policy interventions but rather on the effects of specific and unique local and organic processes at work in societies themselves. The focus on effects takes the conceptualisation of intervention out of the traditional terminological lexicon of International Relations theory and instead recasts problems in increasingly organicised ways, suggesting that artificial or hubristic attempts at socio-political intervention should be excluded or minimised.

An empirical test of causal relationships of factors affecting ICT adoption for building project management : an Indian SME case study

Purpose - Building project management (BPM) requires effective coordination and collaboration between multiple project team organisations which can be achieved by real time information flow between all participants. In the present scenario, this can be achieved by the use of information communication technologies (ICT). The purpose of this paper is to present part of a research project conducted to study the causal relationships between factors affecting ICT adoption for BPM by small and medium enterprises. Design/methodology/approach - This paper discusses structural equation modelling (SEM) analysis conducted to test the causal relationships between quantitative factors. Data for quantitative analysis were gathered through a questionnaire survey conducted in the Indian construction industry. Findings - SEM analysis results help in demonstrating that an increased and matured use of ICT for general administration within the organisation would lead to: an improved ICT infrastructure within the organisation; development of electronic databases; and a staff that is confident of using information technology (IT) tools. In such a scenario, staff would use advanced software and IT technologies for project management (PM) processes and that would lead to an increased adoption of ICT for PM processes. But, for general administration also, ICT adoption would be enhanced if the organisation is interacting more with geographically separated agencies and senior management perceives that significant benefits would accrue by adoption of ICT. All the factors are inter-related and their effect cannot be maximized in isolation. Originality/value - The results provide direction to building project managements for strategically adopting the effective use of ICT within their organisations and for BPM general.

Inflammation-driven bone formation in a mouse model of ankylosing spondylitis: Sequential not parallel processes

Background Ankylosing spondylitis (AS) is an immune-mediated arthritis particularly targeting the spine and pelvis and is characterised by inflammation, osteoproliferation and frequently ankylosis. Current treatments that predominately target inflammatory pathways have disappointing efficacy in slowing disease progression. Thus, a better understanding of the causal association and pathological progression from inflammation to bone formation, particularly whether inflammation directly initiates osteoproliferation, is required. Methods The proteoglycan-induced spondylitis (PGISp) mouse model of AS was used to histopathologically map the progressive axial disease events, assess molecular changes during disease progression and define disease progression using unbiased clustering of semi-quantitative histology. PGISp mice were followed over a 24-week time course. Spinal disease was assessed using a novel semi-quantitative histological scoring system that independently evaluated the breadth of pathological features associated with PGISp axial disease, including inflammation, joint destruction and excessive tissue formation (osteoproliferation). Matrix components were identified using immunohistochemistry. Results Disease initiated with inflammation at the periphery of the intervertebral disc (IVD) adjacent to the longitudinal ligament, reminiscent of enthesitis, and was associated with upregulated tumor necrosis factor and metalloproteinases. After a lag phase, established inflammation was temporospatially associated with destruction of IVDs, cartilage and bone. At later time points, advanced disease was characterised by substantially reduced inflammation, excessive tissue formation and ectopic chondrocyte expansion. These distinct features differentiated affected mice into early, intermediate and advanced disease stages. Excessive tissue formation was observed in vertebral joints only if the IVD was destroyed as a consequence of the early inflammation. Ectopic excessive tissue was predominantly chondroidal with chondrocyte-like cells embedded within collagen type II- and X-rich matrix. This corresponded with upregulation of mRNA for cartilage markers Col2a1, sox9 and Comp. Osteophytes, though infrequent, were more prevalent in later disease. Conclusions The inflammation-driven IVD destruction was shown to be a prerequisite for axial disease progression to osteoproliferation in the PGISp mouse. Osteoproliferation led to vertebral body deformity and fusion but was never seen concurrent with persistent inflammation, suggesting a sequential process. The findings support that early intervention with anti-inflammatory therapies will be needed to limit destructive processes and consequently prevent progression of AS.

Work Stress in the Nursing Profession : An Evaluation of Organizational Causal Attribution

The goal of this study was to examine the role of organizational causal attribution in understanding the relation of work stressors (work-role overload, excessive role responsibility, and unpleasant physical environment) and personal resources (social support and cognitive coping) to such organizational-attitudinal outcomes as work engagement, turnover intention, and organizational identification. In some analyses, cognitive coping was also treated as an organizational outcome. Causal attribution was conceptualized in terms of four dimensions: internality-externality, attributing the cause of one’s successes and failures to oneself, as opposed to external factors, stability (thinking that the cause of one’s successes and failures is stable over time), globality (perceiving the cause to be operative on many areas of one’s life), and controllability (believing that one can control the causes of one’s successes and failures). Several hypotheses were derived from Karasek’s (1989) Job Demands–Control (JD-C) model and from the Job Demands–Resources (JD-R) model (Demerouti, Bakker, Nachreiner & Schaufeli, 2001). Based on the JD-C model, a number of moderation effects were predicted, stating that the strength of the association of work stressors with the outcome variables (e.g. turnover intentions) varies as a function of the causal attribution; for example, unpleasant work environment is more strongly associated with turnover intention among those with an external locus of causality than among those with an internal locuse of causality. From the JD-R model, a number of hypotheses on the mediation model were derived. They were based on two processes posited by the model: an energy-draining process in which work stressors along with a mediating effect of causal attribution for failures deplete the nurses’ energy, leading to turnover intention, and a motivational process in which personal resources along with a mediating effect of causal attribution for successes foster the nurses’ engagement in their work, leading to higher organizational identification and to decreased intention to leave the nursing job. For instance, it was expected that the relationship between work stressors and turnover intention could be explained (mediated) by a tendency to attribute one’s work failures to stable causes. The data were collected from among Finnish hospital nurses using e-questionnaires. Overall 934 nurses responded the questionnaires. Work stressors and personal resources were measured by five scales derived from the Occupational Stress Inventory-Revised (Osipow, 1998). Causal attribution was measured using the Occupational Attributional Style Questionnaire (Furnham, 2004). Work engagement was assessed through the Utrecht Work Engagement Scale (Schaufeli & al., 2002), turnover intention by the Van Veldhoven & Meijman (1994) scale, and organizational identification by the Mael & Ashforth (1992) measure. The results provided support for the function of causal attribution in the overall work stress process. Findings related to the moderation model can be divided into three main findings. First, external locus of causality along with job level moderated the relationship between work overload and cognitive coping. Hence, this interaction was evidenced only among nurses in non-supervisory positions. Second, external locus of causality and job level together moderated the relationship between physical environment and turnover intention. An opposite pattern of interaction was found for this interaction: among nurses, externality exacerbated the effect of perceived unpleasantness of the physical environment on turnover intention, whereas among supervisors internality produced the same effect. Third, job level also disclosed a moderation effect for controllability attribution over the relationship between physical environment and cognitive coping. Findings related to the mediation model for the energetic process indicated that the partial model in which work stressors have also a direct effect on turnover intention fitted the data better. In the mediation model for the motivational process, an intermediate mediation effect in which the effects of personal resources on turnover intention went through two mediators (e.g., causal dimensions and organizational identification) fitted the data better. All dimensions of causal attribution appeared to follow a somewhat unique pattern of mediation effect not only for energetic but also for motivational processes. Overall findings on mediation models partly supported the two simultaneous underlying processes proposed by the JD-R model. While in the energetic process the dimension of externality mediated the relationship between stressors and turnover partially, all the dimensions of causal attribution appeared to entail significant mediator effects in the motivational process. The general findings supported the moderation effect and the mediation effect of causal attribution in the work stress process. The study contributes to several research traditions, including the interaction approach, the JD-C, and the JD-R models. However, many potential functions of organizational causal attribution are yet to be evaluated by relevant academic and organizational research. Keywords: organizational causal attribution, optimistic / pessimistic attributional style, work stressors, organisational stress process, stressors in nursing profession, hospital nursing, JD-R model, personal resources, turnover intention, work engagement, organizational identification.

Implementación del Modelo de Red Causal en un texto narrativo en español

Resumen: El Modelo de Red Causal propone que la estructura causal de una historia y su representación en la memoria episódica se asemejan a una red, en la que los acontecimientos resultan de una combinación de antecedentes causales, que a su vez tienen múltiples consecuencias. El estudio de la comprensión de textos según este modelo ha tendido a llevarse a cabo utilizando textos experimentales en inglés. En razón de ello, el objetivo de este trabajo consistió en presentar la aplicación del Modelo de Red Causal a un texto narrativo natural en español, a fin de abogar por su utilidad para examinar los procesos cognitivos involucrados en la comprensión textual.

Causal conjunction fallacies: The roles of causal strength and mental resources

In two experiments we tested the prediction derived from Tversky and Kahneman's (1983) work on the causal conjunction fallacy that the strength of the causal connection between constituent events directly affects the magnitude of the causal conjunction fallacy. We also explored whether any effects of perceived causal strength were due to graded output from heuristic Type 1 reasoning processes or the result of analytic Type 2 reasoning processes. As predicted, Experiment 1 demonstrated that fallacy rates were higher for strongly than for weakly related conjunctions. Weakly related conjunctions in turn attracted higher rates of fallacious responding than did unrelated conjunctions. Experiment 2 showed that a concurrent memory load increased rates of fallacious responding for strongly related but not for weakly related conjunctions. We interpret these results as showing that manipulations of the strength of the perceived causal relationship between the conjuncts result in graded output from heuristic reasoning process and that additional mental resources are required to suppress strong heuristic output.

Inferring the conservative causal core of gene regulatory networks

Background
Inferring gene regulatory networks from large-scale expression data is an important problem that received much attention in recent years. These networks have the potential to gain insights into causal molecular interactions of biological processes. Hence, from a methodological point of view, reliable estimation methods based on observational data are needed to approach this problem practically.

Results
In this paper, we introduce a novel gene regulatory network inference (GRNI) algorithm, called C3NET. We compare C3NET with four well known methods, ARACNE, CLR, MRNET and RN, conducting in-depth numerical ensemble simulations and demonstrate also for biological expression data from E. coli that C3NET performs consistently better than the best known GRNI methods in the literature. In addition, it has also a low computational complexity. Since C3NET is based on estimates of mutual information values in conjunction with a maximization step, our numerical investigations demonstrate that our inference algorithm exploits causal structural information in the data efficiently.

Conclusions
For systems biology to succeed in the long run, it is of crucial importance to establish methods that extract large-scale gene networks from high-throughput data that reflect the underlying causal interactions among genes or gene products. Our method can contribute to this endeavor by demonstrating that an inference algorithm with a neat design permits not only a more intuitive and possibly biological interpretation of its working mechanism but can also result in superior results.