Built to Sustain: The Effect of Entrepreneurial Decision-Making Logic on New Venture Sustainability

Dan Long,Houhong Wang,Peili Wang

doi:10.3390/su13042170

Dan Long, Houhong Wang + Show 1 more

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https://doi.org/10.3390/su13042170

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Journal: Sustainability	Publication Date: Feb 18, 2021
Citations: 7	License type: CC BY 4.0

Affiliation: Hefei University of Technology

Abstract

How entrepreneurs make entrepreneurial decisions to improve entrepreneurial performance is a popular concern in both theoretical and practical circles. Existing studies mostly analyze the effect of entrepreneurial decision-making logic on the survival and growth of new ventures from the perspective of financial performance, but few studies focus on new venture sustainability. Based on datasets from the first two survey rounds of CPSED (Chinese Panel Study of Entrepreneurial Dynamics), this paper selects a group of 259 entrepreneurs as a sample and uses logistic regression analysis as a research method. The purpose of this study is to examine the effects of entrepreneurial decision-making logic on new venture sustainability. There are two main entrepreneurial logics, namely effectuation and causation. The paper discusses causation in terms of four dimensions, namely goal orientation, expected returns, competitive analysis, and avoiding contingencies. It examines effectuation in terms of the dimensions of means orientation, affordable loss, partnerships, and leveraging contingencies. The empirical results show that goal orientation plays a negative role in promoting new venture sustainability, while avoiding contingencies has a positive influence on it. Partnerships are conducive to new venture sustainability, while means orientation and leveraging contingencies have a negative effect.

Highlights

This paper aims to explore the effects of entrepreneurial decision-making logic on new venture sustainability, which can enrich the research on entrepreneurial outcomes related to entrepreneurial decision-making logic and cover the shortage of new venture sustainability studies in terms of entrepreneurial decision-making logic
Based on entrepreneurial decision-making theory, this study focuses on the following question: “how do different entrepreneurial decision-making logics affect new venture sustainability?” Causation and effectuation are seen as the two most common entrepreneurial decision-making logics [6,14,21]
From the point of view of different dimensions of entrepreneurial decision-making logic, this paper investigates how causation and effectuation influence new venture sustainability

Summary

Introduction

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Entrepreneurship is a dynamic, complex process that involves taking a series of entrepreneurial actions to obtain external resources, exploit identified opportunities, and create a new venture [1,2]. According to CPSED (Chinese Panel Study of Entrepreneurial Dynamics), the prevalence of nascent entrepreneurship in China is 4.77%, indicating that nearly five out of every hundred adults in China are involved in starting new firms. In the initial CPSED dataset, there were 321 nascent entrepreneurs (individuals who had initiated entrepreneurship but who had not yet been successful in creating a new venture). In the second wave of follow-up interviews, only 29 of these individuals

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