The nexus between effectual actions and small business performance

Abstract

Purpose: This study interrogates the interrelatedness of effectual actions and small business performance. It provides fresh insights about effectual heuristics and small business performance, as evinced in a study with data drawn from a variety of sectors.Design/methodology/approach: Based on primary data from 685 small businesses, the study examines hypothesised relationships using the partial least squares structural equation modelling technique.Findings/results: The findings reveal the varied effects of composite effectuation and its dimensions on small business performance. Composite effectuation, affordable loss and flexibility are positively related to small business performance, whilst experimentation and precommitment have negative relationships with small business performance. The study concludes that the application of effectual actions has diverse implications for small business performance.Research implications: The generalisation of findings can be limited, given that this is a single country study. Limitations notwithstanding, this article provides new empirical data, knowledge and insight about the relationship between effectual actions and small business performance. This provides a strong base for future multicountry research into effectual actions and small business performance.Practical implications: The findings of this article have implications for small businesses navigating uncertainties occasioned by resource constraints. Essentially, the findings of this study can enhance the development of a learning curriculum to improve the ability of small businesses to apply effectual heuristics in managing resource challenges.Originality/value: This article addresses the research gap in the field of entrepreneurship arising from the limited empirical studies on the relationships between effectual actions and small business performance.

Exploring the affordable loss principle: a systematic literature review

“…In the Performance cluster, the main findings show that experimentation, ALP, flexibility, and pre-commitments are positively related to innovation and R&D of enterprises (Deligianni, Sapouna, Voudouris, & Lioukas, 2022;Haneberg, 2021;Li et al, 2022), to performance and enterprise diversification (Deligianni et al, 2017;Fischer et al, 2021;Osuigwe & Eresia-Eke, 2022), internationalization (Deligianni, 2023) and strategies related to environ- (Haneberg, 2021;Henninger et al, 2020;Long, Xia, & Hu, 2017;Pati, Ghobadian, Nandakumar, Hitt, & O'Regan, 2021;Taghvaee & Talebi, 2022), and the financial sector of the company (Nyoni & Moos, 2022). The studies brought outstanding contributions to both the ALP literature and studies of SMEs.…”

The Intervening role of Absorptive Capacity in the Nexus of Effectual Actions and Performance in Small Businesses

“…Despite the importance ascribed to such an interrogation, extant empirical studies have had varied results. For instance, researchers (see Eyana et al, 2018;McKelvie et al, 2013;Smolka et al, 2018;Osuigwe and Eresia-Eke, 2022) report findings that show varied outcomes in the relationship between effectuation, its dimensions, and business performance indicators. Other researchers (see Cai et al, 2017;Guo et al, 2016;Laskovaia et al, 2017;Peng et al, 2020;Wiltbank et al, 2009;Yu et al, 2018) however, report positive and/or significant effects in the relationship between effectuation and business performance indicators.…”

“…The significance of effectual actions for the success of entrepreneurial endeavors is buttressed by the increasing number of empirical studies (see Eyana, et al, 2018;Laskovaia et al, 2017;Osuigwe and Eresia-Eke, 2022) interrogating the relationships between effectuation and business performance. However, despite ISSN : 2597-4785 (ONLINE) ISSN : 2597-4750 (PRINTED)…”