Effectual versus causal logics in entrepreneurial decision-making: Differences between entrepreneurially educated novices and expert entrepreneurs

Abstract: This study looks at effectual and causal logics in entrepreneurial decision-making. We have compared entrepreneurially educated novices with expert entrepreneurs using think-aloud protocols to determine differences in their effectual logics and expertise in general. Prior research suggests that experts are more likely to take an effectual approach when solving problems (Sarasvathy, 2008; Dew et al., 2009). We sampled three recently entrepreneurially educated novices and three expert entrepreneurs. Their decision-making processes were compared by having them continuously thinkaloud as they solved standard decision-making problems in creating a new venture. Results showed that entrepreneurially educated novices were substantially more effectual than initially expected and more effectual than the experts in our study. These findings provide implications and a basis for further research to whether effectual logic is something that entrepreneurship students naturally possess, learn during their studies or whether this is a natural developmental stage for becoming an expert entrepreneur.