What does it mean for an entrepreneur to behave in an effectual way?
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Do we know how tourism entrepreneurs will behave?

What does it mean for an entrepreneur to behave in an effectual way?

In the current economic landscape, the engine of economic growth often rests in the hands of entrepreneurs, individuals who dare to innovate, create, and embark on the adventure of building their businesses. Their efforts not only drive job creation but also fuel economic vitality, fostering a culture of innovation and progress. In countries like Spain, a world leader where tourism thrives as a cornerstone of its economy, fostering entrepreneurial spirit among tourism students promises widespread sustainable growth and development. Spain, renowned for its rich cultural heritage and scenic landscapes, boasts a robust tourism industry that significantly contributes to its Gross Domestic Product and serves as a lifeline to local businesses.

How does an entrepreneur behave?

But, regardless of the sector, how does an entrepreneur behave? Do they meticulously plan each step, or do they embrace uncertainty and adapt to market dynamics? Recent studies shed light on the behavioral patterns of entrepreneurs, distinguishing between those inclined to develop a causal behavior and those tending toward effectual behavior. Causal entrepreneurs meticulously plan, predict, and design strategies to capture market share through an established action plan from which they should not deviate.

In contrast, effectual entrepreneurs thrive in ambiguity, leveraging available resources, emerging opportunities, potential alliances, and experimenting and adapting as they progress. Understanding the likelihood that potential entrepreneurs will behave causally or effectually is vital, as it can determine their probability of success, depending on the competitive environment they encounter.

Entrepreneurs behaving effectually is an entrepreneurs that adapt flexibly, leveraging resources, exploring opportunities, and adjusting to market dynamics. They embrace uncertainty, innovate, and respond to changing conditions, rather than adhering strictly to predetermined plans.

Jose Aurelio Medina-Garrido

What are the keys to entrepreneurial effectual behavior?

Entrepreneurial effectual behavior, based on Sarasvathy’s effectuation theory, offers a unique perspective on how entrepreneurs tackle uncertainty and complexity in the process of business creation and management. In contrast to the causal approach, which focuses on planning and executing predefined plans, effectual behavior is based on a set of fundamental principles that guide decision-making and action.

  1. Acceptance of uncertainty: Effectual entrepreneurs recognize that the future is inherently uncertain and, instead of trying to predict and control it, they are willing to adapt and respond to changing circumstances.
  2. Leveraging existing resources: Rather than seeking specific external resources to execute a preconceived plan, effectual entrepreneurs utilize their available resources, such as personal skills, social networks, and previous knowledge, to explore emerging opportunities.
  3. Focus on effect, not cause: Effectual entrepreneurs focus on the desired effect or outcome of their actions and work towards achieving this result rather than trying to predict and control all the variables that cause said effect or outcome.
  4.  Iteration and experimentation: Instead of following a linear and predefined path, effectual entrepreneurs are open to experimentation and iterative learning, adjusting their approach as they gain new knowledge and experience.
  5. Growth through alliances and coalitions: Effectual entrepreneurs recognize the importance of collaborating with other actors in the business ecosystem, forming alliances and coalitions that allow them to leverage complementary resources and multiply their impact.

Can we measure effectual or causal propensity?

In the picturesque region of Andalusia, Spain, universities such as the University of Cádiz and the University of Seville are at the forefront of unraveling the entrepreneurial aspirations of tourism students. By delving into the minds of these future leaders in the tourism sector, academic studies have sought to decipher their inclinations toward causal or effectual behaviors even before they decide to start a business. To this end, a research study conducted by various universities has validated a scale for measuring potential effectual and causal behaviors, which has been tested on university students.

How useful could this new measurement scale be?

Why would it be interesting to have a validated measurement scale to know which students are more inclined toward effectual behavior and which toward causal behavior? The practical implications of this measurement scale are significant, as it would provide information about the entrepreneurial inclinations of students even before they can become entrepreneurs in the tourism sector. Of course, this tool is also valid for use with students and individuals from other areas besides tourism. This knowledge equips educators and policymakers with the necessary tools to tailor educational programs, shaping students with the mindset and skills needed to thrive in the dynamic world of entrepreneurship, and developing causal or effectual behaviors according to the circumstances they encounter.

In this sense, future entrepreneurs must be prepared to devise a meticulous strategic plan for their companies and diligently adhere to it (which would be causal behavior), but also to develop effectual behaviors to leverage the resources available to them, the opportunities they encounter, and the alliances they can forge with others, without being limited by a predetermined plan of action. And, why not, future entrepreneurs must be prepared to combine both types of behaviors (effectual and causal) on the fly, depending on the circumstances they face.

What does it mean for an entrepreneur to behave in an effectual way?
Credit. Midjourney

On the other hand, government officials responsible for education policy and tourism promotion should promote training and development programs that foster both effectual and causal thinking among future entrepreneurs. This can be achieved through collaborations with universities and specialized mentorship programs focusing on the effectual approach, providing students with practical experiences and learning opportunities centered around adaptability, creativity, and effective management of resources and emerging opportunities.

Furthermore, the implications extend beyond academia and entrepreneurship, reaching into the realms of industry and society at large. A tool like the one described here for measuring the effectual or causal propensity of individuals would also be useful, for example, for managers seeking employees or allies. These managers could assess which type of behavior is most suitable in their company and sector and apply this behavior assessment test to select the right person.

In conclusion

In summary, the distinction between causal and effectual behaviors offers valuable insight into how future entrepreneurs can tackle the challenges of the business world. With tools like the validated “effectual versus causal propensity scale of individuals,” educators, entrepreneurship, territorial development policymakers, and business leaders can prepare future generations to confront the challenges of an ever-changing market successfully.

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Journal reference

Martín-Navarro, A., Velicia-Martín, F., Medina-Garrido, J. A., & Palos-Sánchez, P. R. (2023). Impact of effectual propensity on entrepreneurial intention. Journal of Business Research157, 113604. https://doi.org/10.1016/j.jbusres.2022.113604

Dr Alicia Martín Navarro, since joining the University of Cadiz in 2009, excels as an expert in Entrepreneurship and Information Systems Management. Her doctoral thesis, "The Impact of BPMS on Organizational Process and Knowledge Management," underscores her focus on business technologies. With numerous publications in JCR, her research revolves around the intersection of technology and entrepreneurship. A co-author of several books and book chapters, and with notable contributions to international journals such as Studies in Higher Education and Expert Systems with Applications, she showcases significant contributions to the field. Furthermore, she has been a guest speaker at international conferences. Actively engaging in research projects, she currently serves as the Vice Director of INDESS (Institute for Sustainable Social Development) at the University of Cadiz, Spain. Her previous experience in a multinational corporation, leading teams and managing business units, complements her holistic perspective on entrepreneurship, business management, and technology leadership, bringing a unique insight to her academic endeavors.

Félix Velicia-Martín, PhD in Business Management and Administration from the University of Seville, is a University Lecturer specializing in Business Administration and Marketing. He has directed courses at the University of Seville and served as a Visiting Professor at prestigious European and Latin American universities. Engaged in academic circles, he's a member of the Institute of Economics and Business at the University of Seville and the NECE Research Unit at Beira Interior University. With notable contributions to the field through publications and participation in conferences, he leads research projects on societal, business, and digital transformation themes. Additionally, he imparts his expertise through teaching and consultancy services in Business Management and Marketing.

Dr Jose Aurelio Medina-Garrido, a distinguished member of the Department of Business Organization and INDESS (University Institute for Sustainable Social Development) at the University of Cadiz, is a seasoned academic leader focusing on entrepreneurship and information systems management. With over 80 impactful research publications, including articles in high-impact journals like JCR and SJR, his contributions to journals such as the International Small Business Journal and the International Journal of Hospitality Management have garnered substantial citations. He is the leader of the research group "New Challenges for Entrepreneurial Management: Information Systems, Sustainability, and Entrepreneurship (NewReD)" and led the projects "Determinants and socio-economic impact of high-potential entrepreneurship" and "Success factors for high-growth start-ups," reflecting his strategic research capabilities. He has participated in more than 32 university-industry research results transfer contracts. Currently, he also teaches entrepreneurship and information systems management.

Palos-Sánchez, Pedro R. received the Bachelor of Science degree in Computer Science from Extremadura University, Spain, the Master’s degree in Marketing from UOC, Spain, an MBA from Camilo José Cela University, Spain, and the Ph.D. degree in Business Administration from the University of Seville, Spain. He is an Information Systems Associate Professor in the Department of Financial Economy and Operation Management at Seville University, lecturing at the Faculty of Economics and Business Administration. He has lectured on master's degrees and courses at various European and Latin American universities. He has also provided consultancy services to several private companies as well as public administrations.

Ricardo Gouveia Rodrigues is an Assistant Professor at the Universidade da Beira Interior and the director of the Research Centre NECE-UBI. He holds a Ph.D. in Business and his research interests lie in Entrepreneurship and Marketing. With over 90 publications to his name, he has participated in numerous research projects and has also coordinated an international project on the impact of Entrepreneurship Education.