An Investigation of Iranian Entrepreneurs’ Decision Making Logic Based On Effectuation Theory

Document Type : Original Article

Authors

1 Assistant Professor, Department of Mechanical Engineering, Arak University of Technology, Arak, Iran

2 Assistant Professor, Department of Industrial Engineering, Arak Branch, Islamic Azad University, Arak, Iran

3 MSc Graduate, Department of Industrial Engineering, Arak Branch, Islamic Azad University, Arak, Iran

Abstract

Effectuation theory by Sarasvathy has helped scholars and practitioners to better understand the logic and process of entrepreneurs’ decision making. Five main principles of this theory show that entrepreneurs are thinking in different way in comparison with traditional managers especially who manage large companies. This paper has a qualitative approach and data gathered through semi-structured interviews with some entrepreneurs from different industries in Iran. The cases are successful entrepreneurial companies. Analysis by causal mapping method demonstrates that Iranian entrepreneurs make decisions in accordance with effectuation principles. They use their available means, affordable loss instead of expected return, partnership, contingencies and prediction instead of control. More analysis show that entrepreneurs make decisions effectually in the beginning stage of the firm but after a while, they shift to causation manner. Finally effectuation logic may cause to gradual or sudden creation of the firm based on available resources.

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References

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