Increasing the Problem Solving Speed Through Effectual Decision Making

Abstract

Effectuation has been acknowledged as an appropriate alternative to causal decision making in highly uncertain situations by shifting the focus from a logic of prediction to a logic of control (Sarasvathy, 2001). Problem-solving speed as part of the holistic problem solving competence is crucial for the establishment of competitive advantages within corporations, as it promotes the ability to develop and market innovative products in a timely manner (Atuahene-Gima and Wei, 2011). Problem- solving speed can be defined as the time needed to find, evaluate and implement an adequate solution to a particular problem (Atuahene-Gima and Li, 2004). We conducted a survey with employees from new product development (NPD) departments of industrial and service companies located in Germany and discovered, that embracing the unexpected as one of the four effectual dimensions has a positive impact on the problem solving speed in highly uncertain situations. In contrast the causal dimensions of goal- and competition-orientation slow down problem-solving speed. All effects depend on the moderating influence of uncertainty. Thus, building decisions on entrepreneurial decision-making logic in uncertain situations partially explains the differences in problem-solving speed and uncovers a novel source of competitive advantage.