Toward a theory of affordable loss

Richard A. Martina ()
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Richard A. Martina: Amsterdam University of Applied Sciences

Small Business Economics, 2020, vol. 54, issue 3, No 7, 774 pages

Abstract: Abstract Although dozens of empirical studies have been published on effectuation as a whole, much work remains to be done on elaborating each principle in more depth. Based on an exploratory study of seven ventures from the Caribbean island of Curacao, this paper develops an elaborated process model of the affordable loss heuristic in effectuation. The model breaks affordable loss into two components—ability and willingness, and connects these to the concept of loss aversion from prospect theory. Furthermore, these components are encapsulated in a process involving identity, affect, and resourcefulness leading to the entry-stage entrepreneurial investment decision.

Keywords: Affordable loss; Effectuation; Entrepreneurial entry; Heuristic; Investment (search for similar items in EconPapers)
JEL-codes: D03 D81 L26 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11187-019-00151-y

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