The Role Of Effectuation In Entrepreneurial Opportunity Exploitation In New Venture

Entrepreneurs' initial strategy choices in a new venture are made in the face of inherently uncertain and fundamentally unpredictable futures.Prior studies propose which also criticized traditional method,namely causation logic.Causation logic failed because it works in a more stable environment where the goals and market are well structured,the expected return is calculated and uses historical information to exploit the opportunities.This study draws upon effectuation as an example of flexible decision-making logic and investigates its application in a new venture.As a respond to a call,this study examines the relationship between effectuation set of means in opportunity exploitation of the newly established ventures.This study raises the reasons that,although the outcome of new ventures is affected by many factors,the effectuation logic which works under uncertainties and brings entrepreneurial results has empirically received less attention in the literature.The effectuation,through its principle;a set of means,says to provide the entrepreneurs with the ability of what they are capable of doing given the means available to them.Notions such as what each stakeholder brings during the creation process of opportunity,how they manage risks,their contribution to the means,and how flexible they can act during the environment surprises that could challenge a start-up offers the understanding to the aspiring entrepreneur.Also,this study investigates the underlying mechanisms(mediators)through which entrepreneurial utilize to build the opportunity exploitation abilities of a new venture.These are effectuation principles,namely affordable loss,flexibility,and pre-commitment.The principles,as mentioned earlier,mediate the relationship between effectuation set of means and opportunity exploitation both independently and as a whole.This objective was motivated by the fact that individuals might act in a situation in which the assumptions of causal strategy are not met and because effectuation research has the potential of making a significant contribution to the entrepreneurship field.The other point is from the literature is that the means suggested,preferred to be used in the early stage of the venture creation.Moreover,a number of founders were examined as a moderator between effectuation set of means and opportunity exploitation ability(resources acquisition ability and strategy ability).The motivation of the objective,as mentioned earlier,supported in the literature was that the strength of a new venture with fewer numbers of founders is not the same as the strength of a new venture with a large number of founders.The study collected a sample of 2459 entrepreneurs from eight regions of Tanzania country in East Africa.The instrument and scale used to collect data were developed and validated in prior studies and used in previous studies in both developed and developing countries.The research performed the validity fitness of scales,and several analytical and statistical procedures conducted to confirm the validity of the data collected by using these instruments.The study results showed that the effectuation set of means relates positively to opportunity exploitation ability.However,the opportunity exploitation ability in this study attributed to resources acquisition and strategy ability variables.Therefore,the effectuation set of means relates positively to resources acquisition ability and strategy ability.Moreover,the underlying mechanism(mediators)of effectual principles proved to affect the relationship between effectuation set of means and opportunity exploitation ability as follows:Affordable loss and pre-commitment principles were positively and significantly affecting the relationship between effectuation set of means and resources acquisition ability.There was no mediation effect of flexibility between effectuation set of means and resources acquisition ability.Affordable loss and flexibility were positively and significantly affected the relationship between effectuation set of means and strategy ability.The study could not find the mediation effect of pre-commitment between effectuation set of means and strategy ability.Also,the results showed that the effect of entrepreneurs' effectuation set of means in opportunity exploitation(both strategy and resources acquisition capability)conveyed positively through overall principles(flexibility,affordable loss,and pre-commitment).Moreover,in the moderation point of view,the number of founders proved to strengthen the relationship between effectuation set of means and resources acquisition ability.The moderation effect between effectuation set of means and strategy ability was not found.The results and associated findings are essential to both theory and practice.The contribution to the theory in this study revealed after manage to incorporate effectuation and other theories in the relationship.The study contributes new knowledge and vision to contribute to the theory of effectuation by extending its scope into a domain of entrepreneurial behaviour and venture's opportunity exploitation.Tanzania country,which allocated in east Africa,was chosen for the study.The results obtained have practical implications for preparing and providing business management training tools to enhance the entrepreneurial and managerial skills of venture owners in Tanzania.It is the call to policymakers in the entrepreneurs' field to have public training that could improve means they have,and finally,they can face the environment they are in as well as regulations reform.The findings of this research can be applied in other countries with similar business environments.