Planning the unknown: the simultaneity of predictive and non-predictive entrepreneurial strategies

Abstract

Two distinct approaches have emerged to categorize entrepreneurial strategies. While some argue that planning is beneficial for entrepreneurs, a growing body of literature argues that non-predictive strategies can also lead to successful outcomes. The effectuation framework gained attention and it is perhaps the most sophisticated theoretical framework to understand non-predictive strategies. In this paper, we investigate two of the effectuation principles and their relationship to firm performance. Based on an analysis of the business plans of 102 small firms, we find that both principles are comprised of two independent, orthogonal dimensions and that these dimensions affect firm performance differently. The implications are that future theorizing and research on entrepreneurship needs to go beyond the causation-effectuation dichotomy and that it is more fruitful to scrutinize the space of possible entrepreneurial strategies comprised by the various independent dimensions that make up the effectuation construct.