'Effectual Versus Predictive Logics in Entrepreneurial Decision-Making: Differences between Experts and Novices'

Posted: 10 Aug 2009 Last revised: 20 Jan 2010

See all articles by Robert Wiltbank

Robert Wiltbank

Willamette University - Atkinson Graduate School of Management

Nicholas Dew

University of Virginia - Darden School of Business

Stuart Read

Willamette University - Atkinson Graduate School of Management

Saras D. Sarasvathy

University of Virginia - Darden School of Business

Date Written: July 2, 2009

Abstract

In support of theory, this study demonstrates that entrepreneurial experts frame decisions using an “effectual” logic (identify more potential markets, focus more on building the venture as a whole, pay less attention to predictive information, worry more about making do with resources on hand to invest only what they could afford to lose, and emphasize stitching together networks of partnerships); while novices use a “predictive frame” and tend to “go by the textbook.” We asked 27 expert entrepreneurs and 37 MBA students to think aloud continuously as they solved typical decision-making problems in creating a new venture. Transcriptions were analyzed using methods from cognitive science. Results showed that expert entrepreneurs framed problems in a dramatically different way than MBA students.

Suggested Citation

Wiltbank, Robert and Dew, Nicholas and Read, Stuart and Sarasvathy, Saras D., 'Effectual Versus Predictive Logics in Entrepreneurial Decision-Making: Differences between Experts and Novices' (July 2, 2009). Journal of Business Venturing, Vol. 24, No. 4, 2009, Batten Institute Research Paper No. 2009 W 1, Available at SSRN: https://ssrn.com/abstract=1428867

Robert Wiltbank (Contact Author)

Willamette University - Atkinson Graduate School of Management ( email )

900 State Street
Salem, OR 97301
United States
503 370 6955 (Phone)
503 370 3011 (Fax)

Nicholas Dew

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Stuart Read

Willamette University - Atkinson Graduate School of Management ( email )

900 State Street
Salem, OR 97301
United States

Saras D. Sarasvathy

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.effectuation.org

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