Navigating the emerging market context: Performance implications of effectuation and causation for small and medium enterprises during adverse economic conditions in Russia
Entrepreneurial actions can be based on one of two behavioral logics: causation (rigorous forward-looking analysis, relying on well-prepared plans, pre-defined goals, and required resources) or effectuation (leveraging the existing resources and controlling the environmental uncertainty through creating new markets, products, and opportunities). We investigate the effectiveness of these logics for Russian SMEs navigating adversity in the emerging market context. The results suggest that causation leads to performance improvements, yet these become marginal and highly unreliable if a firm finds itself in adverse conditions. Effectuation, on the other hand, is a costly and unreliable strategy in stable times, yet leads to reliable performance improvements in volatile contexts.
