Decision Making for Business Model Development: A Process Study of Effectuation and Causation in New Technology‐Based Ventures

12 Pages Posted: 14 Aug 2017

See all articles by Isabelle M. M. J. Reymen

Isabelle M. M. J. Reymen

Eindhoven University of Technology (TUE)

Hans Berends

Vrije Universiteit Amsterdam, School of Business & Economics

Rob Oudehand

Independent

Rutger Stultiëns

Chematronics BV

Date Written: September 2017

Abstract

This study investigates the decision‐making logics used by new ventures to develop their business models. In particular, they focussed on the logics of effectuation and causation and how their dynamics shape the development of business models over time. They found that the effectual decision‐making logic was used dominantly to generate a viable value proposition for a specific customer segment. Causal logic is then used dominantly to define the other business model components in relation to the value proposition and customer segment. When a shortage of resources emerges, causal logic is replaced by an increase in effectual decision‐making again. They concluded that before investing significant resources in a business model it was crucial for firms to reduce, as far as possible, technological and market uncertainty through effectual strategies to avoid high re‐configuration costs later.

Suggested Citation

Reymen, Isabelle M. M. J. and Berends, Hans and Oudehand, Rob and Stultiëns, Rutger, Decision Making for Business Model Development: A Process Study of Effectuation and Causation in New Technology‐Based Ventures (September 2017). R&D Management, Vol. 47, Issue 4, pp. 595-606, 2017, Available at SSRN: https://ssrn.com/abstract=3017551 or http://dx.doi.org/10.1111/radm.12249

Isabelle M. M. J. Reymen (Contact Author)

Eindhoven University of Technology (TUE) ( email )

PO Box 513
Eindhoven, 5600 MB
Netherlands

Hans Berends

Vrije Universiteit Amsterdam, School of Business & Economics ( email )

Netherlands

Rob Oudehand

Independent ( email )

Rutger Stultiëns

Chematronics BV ( email )

High Tech Campus 9
Eindhoven, 5656 AE
Netherlands

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