Managing uncertainty in emerging economies: The interaction effects between causation and effectuation on firm performance

Xiaoyu Yu, Yida Tao, Xiangming Tao, Fan Xia and Yajie Li
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Fan Xia: ESC [Rennes] - ESC Rennes School of Business
Yajie Li: I2M - Institut de Mécanique et d'Ingénierie - UB - Université de Bordeaux - Institut Polytechnique de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Arts et Métiers Sciences et Technologies

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Abstract: Causation and effectuation are acknowledged as two fundamental strategic decision-making logics that firms use to form strategies to cope with uncertainty. Using data collected from 312 software firms in an emerging economy, we explore the effects of causation and effectuation on firm performance. In addition, we investigate the contingent interaction effects between causation and effectuation on firm performance from the perspective of organizational ambidexterity. We find that (1) causation and effectuation have a positive interaction effect on firm performance when environmental uncertainty is (relatively) high, but have a negative interaction effect on firm performance when environmental uncertainty is (relatively) low; (2) causation has a positive effect on firm performance in emerging economies; and (3) effectuation has a positive effect on firm performance in emerging economies when environmental uncertainty is (relatively) high. Our findings suggest entrepreneurial firms in emerging economies use a combination of causation and effectuation in a more uncertain environment, and adopt causation as a priority in a less uncertain environment.

Keywords: Causation; Effectuation; Environmental uncertainty; Organizational ambidexterity; Emerging economies; Technological entrepreneurship (search for similar items in EconPapers)
Date: 2018-10
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Citations: View citations in EconPapers (11)

Published in Technological Forecasting and Social Change, 2018, 135, pp.121-131

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01989673

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