Stakeholder Effectuation & Causation
Research Paper Title:
“Co-creation in effectuation processes: A stakeholder perspective on commitment reasoning”
Authors:
Background:
Co-creative entrepreneurial processes by definition involve a range of different actors, or stakeholders, contributing time, money, or any number of other resources in a commitment to joint action with others. But why do these stakeholders commit? Is it the promise of future profits or glory? Or maybe it is out of love or the belief in a better tomorrow. In this article, the authors seek to conceptualize the various rationales by which a stakeholder may choose to make a commitment to joint action toward the co-creation of new markets. The authors develop a typology that examines commitment reasoning along the dimensions of means versus goal orientation, and instrumental versus value rationality. The authors show that, in addition to causal and effectual logic, stakeholders may exercise value rational state-belief and change-belief logics in their decisions to commit. The authors posit that these different types of reasoning may affect if and how commitments are made and may alter that market co-creation space for networks of committed stakeholders going forwards. Using our typology, the authors propose a new research agenda for investigating entrepreneurial effectuation processes with stakeholders as the focus.
Highlights:
Stakeholders who commit to co-creative entrepreneurial processes are usually portrayed as applying instrumental rationality.
However, commitments based on value rationality imply qualitatively distinct logics from effectuation and causation.
Stakeholder commitments may follow causal and effectual logics, or value rational state-belief and change-belief logics.
This typology explains stakeholder behavior in relation to different perceptions of the commitment decision space.
Value rational stakeholder reasoning may enable commitments under conditions that preclude instrumentally rational action.
Methodology:
Analytical Approach: Conceptual
Hypothesis:
Stronger state-belief reasoning enables commitments under high unpredictability.
Stronger change-belief reasoning enables commitments under high path dependence.
Value rationality is more likely to mitigate both conflict and effectual churn than instrumental rationality.
Causal commitments are likely to increase conflict and decrease effectual churn.
Effectual commitments are likely to increase effectual churn while resulting in fewer conflicts than causal commitments.
Change-belief commitments are likely to produce more conflicts and effectual churn than state-belief commitments but fewer than causal and effectual commitments.
Proposition 4
Causal commitments signal that the market has become more predictable and less shapable.
Effectual commitments keep the market shapable.
State-belief commitments emphasize goals while continuing to keep the market at least partially shapable.
Change-belief commitments have little to no impact on the market's predictability or shapebility unless such commitments result in new courses of action.
Results:
The authors conceptualize a stakeholder-centric perspective that recognizes value rationality in commitment reasoning and how this might affect co-creation in effectuation processes.
The authors argue that commitment decisions, as a form of social action, may be either instrumental or based on subjective values, and such decisions may be directed toward preconceived ends or individual means.
Commitments based on value rationales may be qualitatively different from those driven by instrumental rationales and may enable commitments under conditions that preclude instrumentally rational action.
Different stakeholder commitments may follow causal and effectual logic or value rational logic that the authors’ label state-belief and change-belief logic.
A stakeholder following causal reasoning makes a commitment in the pursuit of calculated ends, whereby risk is weighed against potential profit. A stakeholder making a commitment using effectual reasoning pursues less well-formed goals while avoiding the dangers of uncertainty via the logic of control, contingency, and never risking more than they can afford.
A stakeholder making a commitment based upon state-belief reasoning may choose to risk everything on a hunch or invest in a future that is unpredictable.
A stakeholder making a commitment based on change-belief reasoning may have overconfidence in their abilities, or other means at their disposal, and may therefore attempt to guide processes in new directions despite potential action is limited.
This typology provides a framework to examine potential stakeholder behavior in relation to how they perceive the commitment decision space.
Conclusion:
In our article the authors begin to answer the question of “Why do stakeholders commit to co-creation in effectuation processes?” The authors argue that when it comes to the multi-actor, intersubjective process of entrepreneurial market co-creation, as described by effectuation, the authors must go beyond the classification that divides reasoning into either effectual or causal. Instead, the authors should consider forms of reasoning and logic that, rather than being based predominantly on instrumental rationality, also include value rationality. While different stakeholders in entrepreneurial processes may be driven by any number of motives, the typology elaborated in this article offers a parsimonious yet conceptually powerful and meaningful way of categorizing stakeholder rationales and predicting common behaviors. This recognition of the importance of value rationality (and its state-belief and change-belief kinds) offers a more complete understanding of the effectuation process and provides a new link between effectuation theory and other entrepreneurship and decision-making theories. A stakeholder-centric perspective that recognizes the value of rational action opens up effectuation theory to other discussions in entrepreneurship studies on the roles of effect, trust, and persuasive leadership and demonstrates how these different concepts and constructs can be connected to effectuation in a systematic and logical manner.