Entrepreneurial decision making: examining preferences for causal and effectual reasoning in the new venture creation process

A growing body of studies emphasizes the discovery of opportunities and the decision to exploit them as the essence of entrepreneurial activity. Following this stream of research, we present a study of the influence of entrepreneurs’ career experience and career motives on two alternative modes of decision making logic; causation and effectuation. Causal reasoning is a process that rests on logic of prediction, while effectual reasoning relies on logic of control. Statistical analysis is made on a sample of 291 Swedish individuals involved in new venture creation. The findings suggest that entrepreneurs with prior small business management experience and with a linear or expert career motive have a higher preference for causal decision making logic. Entrepreneurs with prior managerial experience from large firms and with a spiral or transitory career motive have a higher preference for effectual decision making logic. No association was found between prior start-up experience and entrepreneurs’ preferred decision making logic. The overall results give ample support for that entrepreneurs’ career experience and career motives influence entrepreneurial decision making.