The moderating role of polycentric institutions in the relationship between effectuation/causation logics and corporate entrepreneur's decision‐making processes

Abstract

AbstractResearch SummaryThis study analyzes how firms respond to institutional polycentrism, a governance system that emerges from multiple and independent centers of power that interact to determine and regulate an evolutionary overarching comprehensive social system of rules. We propose that institutional polycentrism moderates corporate entrepreneurs' decision‐making processes. We conducted a case study at a multinational corporation over four decades of internationalization using process data analysis. We found that institutional polycentrism determines a calibration between causation and effectuation logics. The study offers two contributions: (a) expanding the explanatory power of institutional polycentrism by understanding how it moderates the corporate entrepreneur's decision‐making process in polycentric institutional contexts and (2) proposing a relatively novel contingency dimension of the effectuation versus causation and establishing new boundary conditions of the effectuation versus causation.Managerial summaryThis study analyzes the decision‐making process of corporate entrepreneurs of a multinational steel producer throughout its internationalization trajectory. The article highlights that decisions based on rules established with past experience are unsuitable in contexts characterized by a multiplicity of foreign institutional forces. The joint interaction of these forces on the firm induces corporate entrepreneurs to respond to such pressures under a new, more flexible, and experimental approach. Finally, the results indicate that institutional multiplicity generates a kind of calibration between these decision‐making approaches, contributing to innovation processes in the company.