Managing uncertainty in emerging economies : The interaction effects between causation and effectuation on firm performance. / Yu, Xiaoyu; Tao, Yida; Tao, Xiangming; Xia, Fan; Li, Yajie.

In: Technological Forecasting and Social Change, Vol. 135, 10.2018, p. 121-131.

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Abstract

Causation and effectuation are acknowledged as two fundamental strategic decision-making logics that firms use to form strategies to cope with uncertainty. Using data collected from 312 software firms in an emerging economy, we explore the effects of causation and effectuation on firm performance. In addition, we investigate the contingent interaction effects between causation and effectuation on firm performance from the perspective of organizational ambidexterity. We find that (1) causation and effectuation have a positive interaction effect on firm performance when environmental uncertainty is (relatively) high, but have a negative interaction effect on firm performance when environmental uncertainty is (relatively) low; (2) causation has a positive effect on firm performance in emerging economies; and (3) effectuation has a positive effect on firm performance in emerging economies when environmental uncertainty is (relatively) high. Our findings suggest entrepreneurial firms in emerging economies use a combination of causation and effectuation in a more uncertain environment, and adopt causation as a priority in a less uncertain environment.
Original languageEnglish
Pages (from-to)121-131
Number of pages11
JournalTechnological Forecasting and Social Change
Volume135
Early online date9 Dec 2017
DOIs
Publication statusPublished - Oct 2018
This open access research output is licenced under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

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