Influence of University Infrastructure on Effectual and Causal
Reasoning of Student Entrepreneurs*
Galina Shirokova, St.Petersburg University Graduate School of
Management, Russia
Karina Bogatyreva, St.Petersburg University Graduate School of
Management, Russia
Tamara Galkina, Abo Academy,Finland
GSOM Emerging Markets Conference: Business and Government Perspectives
October, 16-17, 2014
*Research has been conducted with financial support from a Russian Science Foundation grant
(project No. 14-18-01093)
1
Research Motivation
Effectuation theory developed by Sarasvathy (2001) suggests new
insights on understanding entrepreneurial actions and logic of reasoning.
Ø
Ø Effectuation
as a means driven non-predictive logic of entrepreneurial
reasoning is an alternative to goal driven causal logic (Sarasvathy, 2001:
245).
Ø Being
a promising and fast-growing study area, effectuation is considered
to be still in infancy with a slight move towards the intermediate level of
scholarship. The antecedents and different conditions of effectual behaviour
of entrepreneurs are understudied (Perry, Chandler & Markova, 2011;
Svensrud & Åsvoll, 2012).
Ø Effectuation
theory has been criticised because it was developed from
research on expert entrepreneurs who represent just a part of the
entrepreneurial population (Perry, Chandler & Markova, 2011).
2
Research Question
•
How does university entrepreneurial infrastructure affect
effectual or causal behaviour of student entrepreneurs?
3
Theory and Research Hypotheses
Ø Individuals
have different perceptions of the extent to which the future is
predictable and controllable which in turn will influence their decisionmaking (Sarasvathy, 2001). The specific context where entrepreneurs
operate will influence their perception of what is preferable and effective
(Gabrielsson & Politis, 2011). è The university entrepreneurial
infrastructure can influence decision-making logic chosen by student
entrepreneurs.
Ø Student
entrepreneurs are exposed to pressure to apply a planning
approach at the start-up process and thus develop a preference for
predetermined and specific goals, relatively great use of formal business
planning and a focus on securing complementary resources to reach these
specific goals (Honig, 2004; Karlsson & Honig, 2009).
Ø H1:
The favorable university climate promoting student
entrepreneurship is positively associated with causal logic used by
student entrepreneurs.
4
Theory and Research Hypotheses
Ø Traditional
business education including entrepreneurship education is based on
conventional paradigm of business planning, market analysis and search and select
logic in opportunity identification process (e.g. Barringer & Ireland, 2010).
Ø Academic
start-ups relied much more on formal business planning in comparison
with start-ups not originating within the academic context (Roininen, 2006).
Ø Business
students, even if they have the venture creation experience, rely more on
analytical reasoning in decision-making process (Dew et al, 2009; Dew et al., 2011).
Ø Student
entrepreneurs who have followed entrepreneurship programs become
socialized into a certain way of thinking and behaving in relation to their preferences
for how to secure and use resources in the process of starting up and managing a
new firm (Politis, Winborg & Dahlstrand, 2012).
Ø H2:
The number of entrepreneurship courses at the university is
positively associated with causal logic used by student entrepreneurs.
5
Theory and Research Hypotheses
Ø Social
networks have a strong influence on individual desire to become an
entrepreneur and on the practical orientation of this desire (Davidsson & Honig,
2003;Sequeira, Mueller & McGee, 2007).
Ø Working
with others to co-create opportunities is an aspect of effectuation logic and
pre-committed partners play an essential role as they expand the means of the
effort, and create a market specific to opportunity that develop over time (Witlbank,
Read, Dew & Sarasvathy, 2009).
Ø At
the same time, the study by Chandler et al. (2011) shows that the deployment of
strategic alliances and pre-commitments does not differentiate effectuation from
causation as they are equally used in both strategies.
Ø Н3.
The level of networking and coaching offerings at the university
is positively associated both with effectual logic (H3a) and causal
logic (H3b) used by student entrepreneurs.
6
Theory and Research Hypotheses
Ø Causal
approach involves calculating the levels of investment required to achieve
certain levels of expected return and predicating actual plans and implementation on
those calculations while effectual approach is based on an affordable loss principle
(Sarasvathy, 2001).
Ø Because
entrepreneurs that use effectuation invest only what they can afford to
lose, normally it takes place when the investments are unavailable for potential
entrepreneur (Sarasvathy et al., 2011). Therefore, funding provision may encourage
the use of causal logic.
Ø At
the same time, in a predominately resource-poor situation, such as in the case
of student entrepreneurship, effectual strategies are more likely, simply because the
resources required for implementing casual strategies may not be available (Read &
Sarasvathy, 2005) as university-based funding often can be insufficient.
Ø Н4.
The provision of financial support from university is positively
associated both with effectual logic (4a) and causal logic (4b) used by
7
student entrepreneurs.
Theoretical Framework
Favorable
university climate
promoting student
entrepreneurship
H1
Effectual behavior
Number of
entrepreneurship
courses
H2
H3а
Level of networking
and coaching
Causal behavior
H3b
H4а
Provision of
financial support
University entrepreneurial
infrastructure
H4b
8
Data Description
Ø  Data collected in the course of Global University Entrepreneurial
Spirit Students’ Survey (GUESSS) 2011 was used to perform the
analysis.
Ø In
2011, 26 countries took part in the survey with 489 universities
being involved. In the course of data collection, 1 374 678 students
were addressed. The eventual number of responses accounted for
93 265 giving a response rate of 6.3%.
Ø The
sample of students having participated in the survey is divided
into three categories: students with no intention to found their own
business, intentional founders and active founders.
Ø A
total of 2,324 respondents form the group of active founders.
9
Measures
Ø Effectuation
is measured with the seven-point Likert scale proposed by
Chandler et al. (2011) including 4 dimensions (experimentation, affordable
loss, flexibility, and pre-commitments). It was operationalized as an unweight
sum index of the factor scores of the items following the logic of Harms &
Schiele (2012).
Ø Causation
is measured with the seven-point Likert scale proposed by
Chandler et al. (2011) and operationalized with the factor score of the items
following the logic of Harms and Schiele (2012).
Ø University
climate is measured by a seven-point Likert scale comprising
eight items proposed by Souitaris et al. (2007) and used in the GUESSS
questionnaire with own adaptations and extensions. University climate was
operationalized with an average score based on the opinion of all
respondents from a given university.
10
Measures
The number of entrepreneurship courses is operationalized with the
number of entrepreneurship related courses proposed at the university. The
list of entrepreneurship related courses includes Entrepreneurship in General,
Family Firms, Financing Entrepreneurial Ventures, Technology
Entrepreneurship, Social Entrepreneurship, Entrepreneurial Marketing,
Innovation and Idea Generation, Business Planning.
Ø
Networking and coaching offerings are operationalized with the number
of different offering kinds provided by the university. These include
workshops/networking with experienced entrepreneurs, contact platforms with
potential investors, business plan contests/workshops, mentoring and
coaching programs for entrepreneurs, contact points for entrepreneurial
issues.
Ø
Financial support from university is operationalized with a dummy
variable which equals 1 if a university provides financial assistance, and 0
otherwise.
Ø
11
Control variables
Ø  Student’s
age in years in 2011.
Ø  Student’s
gender coded as 1 if a student is female and 0 if a student is male.
Ø  Education
field coded with 1 being Business and Management field and 0
otherwise.
Ø  Previous
experience coded with 1 if a student had professional work experiences
that are relevant to his or her business venture before and 0 otherwise.
Ø  University
base country development level coded with 1 being a developed
country and 0 being an emerging country.
Ø  Existence
of family business background coded with 1 if at least one of the
student’s parents is an entrepreneur and 0 otherwise.
Ø  Student’s
desire for self-realization and independence. These variables are
measured with the 7-point Likert scales adopted from Carter et al. (2003) and
operationalized with the factor scores of the items following the logic of Harms and
Schiele (2012).
12
Summary of Regression Analysis
Causation
Effectuation
University climate
.169 (.101)*
Number of Entrepreneurship courses
.008 (.026)
Networking and coaching offerings
.019 (.035)
.081 (.052)
Financial support
.233 (.115)**
.824 (.218)***
Age
-.001 (.013)
-.030 (.023)
Gender
-.167 (.109)
-.249 (.211)
Country
.168 (.131)
.140 (.246)
Previous experience
.265 (.105)**
.534 (.186)**
Education field
.114 (.101)
.088 (.180)
Family influence
.181 (.098)*
.349 (.177)**
Need for self-realization
.069 (.065)
.247 (.123)**
Need for independence
.219 (.060)***
.392 (.114)**
F-statistics
7.17***
8.37***
R-squared
.18
.16
Number of observations
344
497
Summary of Regression Analysis
Causation
Entrepreneurship courses taken
.055 (.032)*
Age
-.008 (.019)
Gender
.-045 (.205)
Country
.059 (.206)
Previous experience
.774 (.170)***
Education field
.048 (.163)
Family influence
.525 (.164)**
Need for self-realization
.285 (.123)**
Need for independence
.400 (.139)**
F-statistics
9.15***
R-squared
.43
Number of observations
99
Summary of Regression Analysis
Causation
Effectuation
Networking and coaching offerings
(number of participations)
.135 (.032)***
.311 (.078)***
Age
-.004 (.017)
-.063 (.037)*
Gender
-.002 (.165)
-.221 (.394)
Country
.389 (.173)**
.627 (.437)
Previous experience
.292 (.130)**
.801 (.302)**
Education field
.082 (.121)
-.233 (.291)
Family influence
.147 (.026)
-.001 (.295)
Need for self-realization
-.025 (.088)
.178 (.237)
Need for independence
.296 (.075)***
.413 (.192)**
F-statistics
7.63***
5.10***
R-squared
.22
.20
Number of observations
205
198
Findings
Ø  Favorable university climate is positively associated with causal logic of student
entrepreneurs. Student entrepreneurs, through their exposure to the university
milieu, develop a specific logic characterized by a preference for predetermined
and specific goals, involving a relatively greater use of formal business planning
and focus on securing resources to reach these goals (Politis at al., 2010).
Ø Financial
support from the university is positively associated with both effectual
and causal logic of student entrepreneurs. This finding supports the idea that
causation and effectuation are orthogonal constructs (Perry, Chandler & Markova,
2011), and they are constantly intertwined and can unfold simultaneously
(Sarasvathy, 2001).
Ø We
did not find the association between the number of entrepreneurship courses
offered at a university and causal logic of student entrepreneurs and between the
number of networking and coaching offerings and both types of logic.
Ø However,
if we consider the number of entrepreneurship courses taken by a
student and the number of actual participations in the networking and coaching
events, the hypothesized relations are held.
16
Contribution
Ø Entrepreneurship
support in universities is not only associated with
the amount of student entrepreneurs but also with effectual or causal
logic they use.
Ø The
study extends effectuation theory empirical application on nonexpert student entrepreneurs. In particular context, non-expert
entrepreneurs may use effectual reasoning in entrepreneurial decision
making process.
Ø Causation
and effectuation are interdependant constructs, and they
are constantly intertwined and can unfold simultaneously.
Ø In
order to encourage a certain way of entrepreneurial logic,
universities should not only develop the elements of entrepreneurial
infrastructure, but also motivate students to take active part in it.
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Thank you for your attention!
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