PLANNING EFFECTUAL GROWTH: A STUDY OF EFFECTUATION AND CAUSATION IN BUSINESS PLANS (SUMMARY)
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Groen, Aard J.
Type of Work15 pages
Citation of Original PublicationKraaijenbrink, Jeroen; Ratinho, Tiago; and Groen, Aard (2011) "PLANNING EFFECTUAL GROWTH: A STUDY OF EFFECTUATION AND CAUSATION IN BUSINESS PLANS (SUMMARY)," Frontiers of Entrepreneurship Research: Vol. 31 : Iss. 4 , Article 15.
Two main contrasting approaches are used in the entrepreneurship literature to explain how new ventures strategize: causal/planned strategies and effectual/emergent strategies. In this study, we explore the use of these strategies within micro and small firms. Our results show that larger companies typically used more planned strategies while simultaneously relying on effectual mechanisms. We observe that companies operating in known markets, anchoring their business ideas on experience and having a strong growth intention grow larger. This suggests that causal and effectual mechanisms can co-exist and lead to growth when combined. Theoretical and practical implications of these findings are discussed.