The findings were reported by applying the causation and effectuation models built by Sarasvathy (2001, 250-252) combined with theoretical framework developed by Dew et al. (2009, 290) as seen in Table 2.
Entrepreneur A’s decision-making logic
Entrepreneur A had clear goals and target customer market in mind when establishing the business that described the use of causation logic. Causation logic stipulates that “when an entrepreneur has a goal, he or she will focus on acquiring means that help to reach the goal” (Sarasvathy, 2001). The company A was under joint ownership that followed effectuation logic. Joint ownership was formed based on the entrepreneur A ‘s personal connections that was considered as a means-oriented use. This choice referred to her own network, belonging to the means “whom they know” as Sarasvathy defined effectuation (2001, 250).
Entrepreneur A exploited her expertise in social care for bringing a competitive advantage to her company. This point matches means-oriented use “what they know” in effectuation
logic statement. Sarasvathy (2001, 250) defines means “what they know” as the knowledge corridors entrepreneurs possess.
Both causation and effectuation logics appeared in the stage of designing and marketing product. Effectuation logic was used when the company A took plenty of cooperation with Jyväskylä University and many other companies in terms of game coding, creating game pictures and music. Meanwhile, causation logic also happened in the cooperation process when market analysis and penetration were discussed.
Entrepreneur A was facing challenges that were not planned beforehand even though she had savings and cashback in case of unexpected costs. The preparation for savings and cashback indicated her careful planning, hence the adoption of causation logic. On the contrary, the solution to challenges confirmed the use of effectuation logic because she co-engaged with customers to find out the solution, re-emphasizing collaboration and partnership that was an important element in effectuation. It was recognized that she had a propensity for exploiting contingencies.
Entrepreneur A admitted that she was satisfied with the current outcome and did not desire to make large investment in the business because she was not a big risk-taker. She believed there was both positive and negative effect on big investment, and negative effect might cause debt accumulation. She was frightened of debt rather than ready for increasing earnings. Thus, her viewpoint represented affordable loss principle in effectuation logic. “Affordable loss stipulates that expert entrepreneurs risk no more than they are willing to lose” (Duening et al. 2012, 208).
As entrepreneur A pointed out, the future plan relied on external funding to ensure the next stage of their business development. This disclosure highlighted her carefulness and hesitancy, confirming control of unpredictable future. Hence, this point matched causation logic.
TABLE 5. Summarized results from entrepreneur A’s decision-making logic
Causation Effectuation
Goal-oriented action: had redefined goals Means-oriented action: the use of expertise in social care area
Expected returns:
No evidence found
Affordable loss: did not desire to boost more investment in the business because of apprehensive about debt
Competitive analysis:
Conducted market analysis, and evaluated market conditions
Strategic alliance:
Joint ownership,
External cooperation in designing and marketing products
Avoidance of contingencies:
Prepared savings and cashback to cover unexpected costs
Exploitation of contingencies: coped with incidents by discussing with customers Prediction of uncertain future:
Prepared savings and cashback to cover unexpected costs,
Uncertain about future plan and depended on external funding
Control of unpredictable future:
No evidence found
Entrepreneur B’s decision-making logic
Entrepreneur B often responded flexibly to new situation in business practice that showed an inclination towards contingency exploitation, thereby fitting effectual logic. But his attitude reflected his opposite direction that he attempted to avoid incidents. This point indicated his careful planning for contingency avoidance, hence the utilization of causal logic. He emphasized the importance of building relationships with partners and collaborating with employees which proved strategic alliance in effectuation.
“Effectuation emphasizes strategic alliances and precommitments from stakeholders as a way to reduce and/or eliminate uncertainty” (Sarasvathy 2001, 252).
Effectual logic also took place when entrepreneur B exploited his extensive experience in prior business setting and his expertise in programming for implementing the business idea. In contrast, causal logic occurred when he determined customer markets beforehand with his expectation about the market growth and sales increase. The implementation process also highlighted causation logic since entrepreneur B predetermined market segment, product distribution, logistics and supplementary support services.
The shipment-related problem was in entrepreneur B’s advance planning that showed causal logic, whereas effectual logic happened in the stage of finding solutions to the problem. Solutions have been still in the process of discussing so far. Entrepreneur B became aware of public opinions – additional problem that proved effectual logic because this problem was not in his prediction.
Entrepreneur B narrowed down focus on software skills to mobile platform, utilizing affordable loss principle in effectual logic since he accepted trade-off between the company’s strength and investment in bringing a new method to the business.
He also disclosed a fairly detailed plan for next stage that included new product development, relevant added devices, and capital budget. This point matched predictive approach - causal logic due to his prior careful planning.
TABLE 6. Summarized results from entrepreneur B’s decision-making logic
Causation Effectuation
Goal-oriented action: confirmed customer markets in advance
Means-oriented action: the use of extensive experience and special expertise in programming and software development Expected returns:
Expectation about market growth, then increasing turnover
Affordable loss:
Accepted trade-off between the company’s strength and investment in bringing a new method to the business.
Competitive analysis:
Predetermined market segment, product distribution, logistics and supplementary support services
His characteristic trait that flexibly reacted to changing situations,
Problem-solving skill in finding solutions to shipment through maintain discussion
Prediction of uncertain future:
Problem about shipment was in his anticipation,
Carefully prepared for a future plan
Control of unpredictable future:
Became aware of public opinions about downside of game-like application
Entrepreneur C’s decision-making logic
Manager C is responsible for supervising production and communicating between company C and clients, thus the narrative of company C is told more distinctly from his side. As he narrated, his CEO desired to create entertainment games into a scientific context, proving predefined objective, thus matching causation logic.
Company C developed first gamified solution without advance confirmed markets.
Instead, the business implementation hinged on pharmaceutical corporations’ demand for partnership with star-ups, demonstrating strategic alliance in effectual logic (Sarasvathy 2001, 252). From manager C’s revelation, they relied his team members’ expertise in programming, painting, and game designing during the implementation process, proving the use of effectuation logic.
Manager C looked proud of his company’s greatest achievement, the ability to find stakeholders who committed to investment his company. This achievement followed unpredictable future control in effectuation logic. According to Sarasvathy (2001, 252), unpredictable future control stipulates that “the founder, along with others, creates the market by bringing together enough stakeholders who buy into the idea to sustain the enterprise”.
Strategic alliance was also presented in the implementation process when manager C emphasized the importance of internal collaboration with advisory board, communication between his team members, and company C’s effort in building up large network that involved partner in the same industry, pharmaceutical and healthcare companies. Besides, strategic alliance was highlighted through co-creating and co-developing products with clients.
Their company carried out proper risk assessment beforehand, confirming causation logic. Meanwhile, their respond to those incidents confirmed the use of effectuation since the occurrence of challenges and risk were not in their prediction. Even though manager C did not mention specific solutions, he admitted it was learning journey from experience.
Likewise, he affirmed that his company have been able to troubleshoot and overcome problems and incidents along the way in the interview’s opening session. Consequently, company C showed an inclination towards contingency leverage, indicating effectuation logic.
Although manager C did not reveal a detailed plan for next step, he affirmed that collaboration with both game and pharmaceutical companies would be extremely important part of the company’s long-term strategy. This disclosure re-emphasized strategic alliance, hence effectuation logic-oriented utilization.
TABLE 7. Summarized results from manger C’s narrative
Causation Effectuation
Goal-oriented action: predefined objective Means-oriented action: the use of team members’ expertise in programming, painting, game designing
Co-created and co-developed products with clients,
Affirmed that external collaboration would be a key part of the company’ future plan Avoidance of contingencies:
Carried out proper risk assessment beforehand
Exploitation of contingencies:
Coping with challenges and risk that were not in their prediction
Prediction of uncertain future:
No evidence found
Control of unpredictable future:
Developed business without confirmed market,
Was proud of greatest achievement in finding stakeholders who committed to investment his company
Entrepreneur D’s decision-making logic
Entrepreneur D often responded flexibly to new situations and simultaneously presented minor consideration of goal-oriented plan in business practice, showing both effectual and causal logic respectively. Her respond to new situations matched contingency exploiting in effectual logic, whereas she displayed a tendency towards future possibilities which highlighted predictable aspect in causal logic. Dew et al. (2009, 290) assert that “causal logic frames the future as a continuation of the past. Hence accurate prediction is both necessary and useful”.
Effectual logic happened in her cooperative strategy, emphasizing both internal and external collaboration because there were some decisions under discussion with employees and partners. The business idea derived from entrepreneur D’s love for speech therapy combined with her extensive work experience and expertise in this field, entrepreneurship and leadership, which followed means-oriented use in effectual logic.
Sarasvathy (2001, 250) describes means “who they are” as entrepreneurs’ traits, and abilities. Entrepreneur D desired to build a team which has brought people together and understand to each other, showing effectual logic as well because
Entrepreneur D exploited financial autonomy, and personnel’s expertise in therapy, IT, game designing, and application developing in the implementation stage that referred to the use of means in effectual logic. Means incorporated physical resource (capital), and human resource (employees’ talents) that she was able to access at hand. Causal logic appeared when entrepreneur D conducted market analysis and examine market conditions. She pondered whether the business idea was worth investing. Additionally, she evaluated degree of risk which her business could accept and manage, describing affordable loss principle in effectuation.
Entrepreneur D was concerned that the products did not generate profit, indicating turnover expectation, thereby matching causation. Though she made risk assessment beforehand, using causation; however, the way she handled problems showed a propensity towards the use of effectuation - contingencies since those problems occurred by chance and were not in her prior preparation.
To summarize, entrepreneur D expressed quite satisfaction with her decisions and outcome. She preferred slow and stable development rather than rapid growth because she was apprehensive that there was a vast amount of problems in case of very fast growth. This point fitted predictable uncertain future in causation.
Further, entrepreneur D presented a future plan for fostering collaboration among universities, confirming effectuation. Marketing and selling improvement were also mentioned in the plan, relating to raising turnover, hence confirmation of causation.
TABLE 8. Summarized results from entrepreneur D’s decision-making logic extensive work experience and expertise in this field, entrepreneurship and leadership, Desire for building a team,
Financial autonomy, personnel’s expertise in therapy, IT, game designing, and application developing
Expected returns:
Was concerned that products did not bring profit
Affordable loss:
Evaluated degree of risk which her business could accept and manage
Competitive analysis:
Conducted market analysis and examine market conditions
Strategic alliance:
Internal and external collaboration,
Future plan for fostering collaboration among universities
Preferred slow and stable development rather than rapid growth because her apprehensive about fast growth-related problems,
In entrepreneur A’s narrative, both causation and effectuation logic were applied to the majority of her decisions, excluding the aspect of expected returns and controlling unpredictable future. There was no evidence linking these two aspects.
Meanwhile, both causation and effectuation logics accounted for most of entrepreneur B’s and entrepreneur D’s decisions. In manager C’s narrative, characterized by the nature of business-to-business, his company showed a tendency to apply effectuation rather than causation.
Validity of narrative research
Eriksson and Kovalainen (2008, 223) postulates that “the purpose of narrative research is not to produce one definite truth about what is being studies, but to offer one version of
it, told by the author from a specific point of view. In narrative research, facts are interpreted; therefore, it is always possible to narrate the same events in a different way.
This is why the evaluation criteria of positivist and postpositivist research cannot be used”. For this reason, the results from four narratives above could not be generalized that both causation and effectuation logics were normally adopted by decision-makers.
Instead, the findings helped me to get basic understanding of gamification industry, to be aware that the decision-makers used causation and effectuation logics as their habitual response to real-life situations.
5 DISCUSSION AND CONCLUSION Discussion
Discussion about key findings
All the participants or the decision-makers are from small-sized companies that have a staff of from three to twelve, and all the companies are still in the process of development.
As I realize, both entrepreneur B and entrepreneur D possess their own decision-making pattern in leveraging contingencies. They cope with incidents as their habitual response to real situations in business setting. However, entrepreneur B is more outstanding than entrepreneur D regarding exploitation of contingency since he has extensive experience in managing his prior business that leads to his decision-making process without advance planning, instead, normally based on evaluating actual situations.
The findings show both causation and effectuation logics appear in almost narrative cases, except for manager C’s narrative. His company (company C) has an inclination to apply effectuation logic in decision-making process rather than causation logic. I believe the difference lies in its own business type because company C belongs to business-to business type, providing gamified products for business customers instead of end customers. For this reason, they accelerate network and relationship building to foster strategic alliance and reduce uncertainty.
Strong strategic alliance constitutes company C’s greatest achievement that is stakeholders’ precommitments. That achievement highlights the aspect of controlling unpredictable future in effectuation reasoning, also makes company C more exceptional in comparison with the rest.
Besides, the findings disclose that all the narrative cases mention goals more or less in routine business management, indicating the use of causation logic. Though entrepreneur B usually adapts flexibly to situations, he also predefines aims of investment in gamification. Excluding manager C’s narrative case, three remaining decision-makers do research and select target markets as well as confirm target customer group, which shows competitive analysis aspect in causation reasoning. Likewise, those three predetermine how much loss they can afford to take, particularly entrepreneur A does not desire to boost more investment in her business because she is apprehensive about debts although
she admitted there will be a chance to have more products and succeed. Meanwhile, entrepreneur B accepts a trade-off between his company’s strength (software skills) and new method development (the adoption of mobile platforms), entrepreneur D thoroughly evaluates whether the business is worth investing, if she is able to finance this investment.
All decision-makers have careful planning to for risk avoidance that also matches causation reasoning. Similarly, all of them emphasize the importance of both internal and external collaboration when doing the business, which proves strategic alliance in effectuation logic. This point is shown most notably through entrepreneur A’s and manager C’s narrative. Company A is under joint ownership, and they cooperate with many other companies in designing and marketing product as well as getting training in gamification-related techniques. Manager C confirms that coordination with both game and pharmaceutical companies will play a key part in his company’s long-term strategy, even in the future plans. Besides, strategic alliance is proved by creating and co-developing products with clients (company C) or discussing solutions with customers (company A).
Except for manager C’s narrative case, the rest have careful planning for future direction which confirms the utilization of causation logic. I recognize that this aspect is interesting to consider, especially in the entrepreneur B’ s and entrepreneur D’s narrative. As I interpret earlier, both the entrepreneurs show a propensity to use contingencies for deciding, hence indication of effectual logic. But when considering their decisions about future plan, causation logic is used because they make prior and careful preparation for future plan, matching uncertain future prediction (one of five elements in causation logic).
Findings’ contribution to the literature on the topic
In relation to existing literature on causation and effectuation logics, the findings of my thesis report that both causation and effectuation logics are used in parallel by decision-makers. The findings show consistency with recent studies’ inference. For instance, Sarasvathy (2001, 245) stated that “causation and effectuation seem to function as integral parts of human reasoning that can occur simultaneously, overlapping and interweaving over different contexts of decisions and actions.”
Evidence in entrepreneurship literature suggests that “the causation logic seems to correlate positively with core aspects of effectuation such as affordable loss and
particularly pre-commitment” (Chandler et al. 2011; Harms and Schiele 2012; Ortega et al. 2017, 1730). Likewise, the study of Chetty et al. (2015, 1453) “propose that is meaningless to consider causation and effectuation logics as opposites on a continuum;
instead, the two logics are considered as substitutes relating to the context of the decision-making”. It is realized that “although effectuation and causation logics represent rather opposite views, they can also exist in parallel” (Read et al., 2009; Smolka et al., 2018, Barber et al. 2019, 813).
After all, the findings of my thesis explore the logics used by decision-makers based on their experience. Almost narrative cases reveal a combination of causation and effectuation logics in decision-making process, excluding narrative case pertaining to business-to-business type. Decision-makers use causation and effectuation reasoning as their habitual response to actual situations in business practice. Even though the results cannot be used as generalization in business practice, the study helps me to gain basic understanding of gamification industry and considerable insight of decision-makers’
experience in applying gamification to healthcare and well-being solutions.
Research evaluation
Framework for the evaluation of my thesis research is based on reliability and validity concepts. Reliability is one of the classic evaluation criteria, measuring “the extent to which an approach, procedure or instrument yields the same result on repeated trials”
(Eriksson and Kovalainen 2008, 292). Meanwhile, validity is another classic evaluation criterion, referring to “the extent to which conclusions drawn in research give an accurate description or explanation of what happened. It also means that findings of a study accurately represent the phenomenon referred to and that they are backed by evidence”
(Eriksson and Kovalainen 2008, 292).
My thesis research ensures reliability since the findings are reported from the decision-makers’ own perspective and experience. They shared their reasons, motivations for
My thesis research ensures reliability since the findings are reported from the decision-makers’ own perspective and experience. They shared their reasons, motivations for