Under pressure: Family financial support and the ambidextrous use of causation and effectuation

Research Summary Using causal and effectual decision-making logics ambidextrously leads to positive firm-level outcomes, such as enhanced new venture performance. However, what makes an entrepreneur more or less likely to apply this ambidextrous use? We address this unanswered question by introducing family financial support as a corresponding antecedent. Taking a family embeddedness perspective, we further theorize that our proposed relationships are weaker when the entrepreneur exhibits a strong internal locus of control. Analyzing a sample of 1,460 student entrepreneurs from 19 countries confirms our general reasoning and offers valuable contributions to different streams of literature. Managerial Summary Using both causal and effectual decision-making logics simultaneously in the founding process has been shown to enhance new venture performance. It is unknown, however, what makes an entrepreneur more likely to apply this ambidextrous use of causation and effectuation. In the present paper, we suggest that the more entrepreneurs rely on family financial support for creating their new venture, the more likely is their engagement in the ambidextrous use. Moreover, we believe that this relationship depends on whether entrepreneurs have a strong internal locus of control or not. We generally confirm our expectations by analyzing a global sample of student entrepreneurs. Thus, we encourage entrepreneurs to be aware of the important underlying dynamics that arise when creating a business with family money.

Automated summary

Employing both causal and effectual decision-making logics ambidextrously leads to positive firm-level outcomes, but the likelihood of entrepreneurs applying this ambidextrous use depends on their reliance on family financial support and the strength of their internal locus of control. Our analysis of a global sample of student entrepreneurs generally confirms these expectations.