Corporate effectuation: Entrepreneurial action and its impact on R&D project performance

https://doi.org/10.1016/j.jbusvent.2011.01.001Get rights and content

Abstract

Innovative products are widely recognized as an important source of competitive advantage. However, many companies have difficulties finding efficient and successful approaches to different types of R&D projects, particularly those that involve a high level of innovativeness. Therefore, the present study moves effectuation theory from the entrepreneurial context to R&D research. First, the characteristics of an effectual approach in the context of R&D projects are developed and differentiated from those of conventional prediction-based strategies (causation). Second, using a thorough qualitative and quantitative scale-development process to capture particularities of effectual and causal dimensions in the R&D context, expert interviews and a pilot study (123 R&D projects), the study develops a multi-factor measurement model of effectuation and causation. These measures are validated in a follow-up study with a larger sample of 400 projects. Third, the new measures are applied to test two central hypotheses: (a) effectuation is positively related to success in highly innovative contexts, (b) causation approaches are beneficial in projects with low levels of innovativeness. Overall, this study moves the effectuation logic from the entrepreneurial to the corporate R&D context, captures its particularities, and investigates its performance outcomes.

Research highlights

► We develop a scale for effectuation and causation in the corporate R&D context. ► We examine the impact of effectuation and causation on R&D project performance. ► The R&D projects differ in their degree of innovativeness. ► Effectuation is positively related to success in highly innovative R&D projects. ► Causation approaches are beneficial in projects with low levels of innovativeness.

Section snippets

Executive summary

R&D literature provides contradictory findings on planning as a success factor in more innovative R&D projects and is characterized by a dearth on broader R&D project success factors beyond planning for these projects. Therefore, the present study adopts the lens of effectuation and causation and applies it to the corporate R&D context in order to provide meaningful contributions to the burgeoning literature on R&D projects. The effectuation logic is particularly suitable for forming a

Theoretical background

Section 3.1 outlines how the effectuation approach differs from established frameworks in R&D management, presents the dimensions of effectuation, and differentiates them from causation logic. Section 3.2 introduces the moderating variable of innovativeness and links it to the concept of uncertainty, a central element in effectuation logic.

Hypotheses

This section deals with the impact of effectuation and causation on R&D projects' performance. To accommodate the fact that some effectual and causal dimensions are more process-related and others are more output-related, we differentiate two types of R&D project success: process efficiency and project output. Process efficiency assesses the level of success in meeting schedule and budget goals, as well as the operational and technical performances of the process (e.g., Montoya-Weiss and

Study context and samples

For both the samples in this study, we asked R&D managers to report on their most recent R&D project (e.g., Ottum and Moore, 1997). We used the first sample for the scale-development process and the second sample to cross-validate the findings.

Findings

In a preliminary step, we looked at the direct effects of the four dimensions on our dependent variables in the complete sample without differentiating between degrees of innovativeness. With the exception of the causal “goals-driven” orientation on R&D output, we find no significant influences for either effectuation or causation. This result supports the importance of the moderating effect of innovativeness. Then we split the sample into two groups based on the composite mean score of the

Discussion

The objective of this study is to analyze the effects of effectuation and causation practices in the corporate R&D context. In this section we discuss the contributions of our study, first in terms of its contribution to R&D literature and then in terms of its contribution to effectuation literature. Subsequently, we derive managerial implications, present the study's limitations, and suggest avenues for further research.

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      Therefore, causation decision-making could result in business engagements aimed at achieving specific sets of objectives defined by a university's strategic road map, whereas effectuation could lead to ad hoc interactions with less strategic planning. Effectuation is a “general theory of decision-making in uncertain situations” (Sarasvathy, 2009, p. 227), whereas causation “follows a linear process that seeks to reach the project target as efficiently and with as few surprises as possible” (Brettel et al., 2012, p. 169). This suggests that academics may adopt causation for planned, linear engagements with less uncertain outcomes in the presence of abundant individual resources, whereas they may adopt effectuation when engaging in activities characterized by greater outcome uncertainty and vagueness and under individual resource constraints.

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