Research Highlights - Family Financial Support as Enabler of Causal and Effectual Entrepreneurship

(posted on behalf of @Tobias Pret  and @Aviel Cogan , Research Committee)  

Causation and effectuation have long been recognized as decision-making logics that drive entrepreneurial activity. Initially, these logics were often juxtaposed, but there has been a growing recognition that they can be used together to achieve synergies and improve firm performance. However, little is known about the factors that enable entrepreneurs to use causal and effectual approaches simultaneously. Accordingly, Ilija Braun and Philipp Sieger from the University of Bern explore this subject in their recent Strategic Entrepreneurship Journal (SEJ) article, titled “Under pressure: Family financial support and the ambidextrous use of causation and effectuation.”

As Sieger explains, “We came to this question of how do you create a business in terms of decision making: Should you write a sophisticated business plan or should you just take what you have and try it out? What we saw in the literature was that doing both together, simultaneously, seemed to be something promising… but how it is induced was unknown. I had a previous paper on family financial support… and then we kind of connected the dots and said, ‘Okay, the degree of family financial support could be an antecedent.’” However, this idea was initially difficult to sell to reviewers. According to Sieger, “The reviewers were buying the point that we needed to look for an antecedent of this ambidextrous use… but why should it be family financial support? What is the theoretical mechanism behind it?” This forced the authors to explore the family embeddedness literature “about obligation to reciprocate and the dynamics in social systems to justify that and build a really waterproof theoretical argument that underlies our main relationships.”

Of course, the journey was more complex than one might expect. As Sieger notes, “What was surprising for us was [that], at several points in time, we had the impression that ‘Okay, now it's maybe as good as it gets… We cannot justify any better why we use family financial support or how we develop our hypotheses,’ and we kind of thought, ‘Reviewers, editor, please: Take it or reject it.’ But then we got further feedback and again rewrote it… [W]e realized that, from an objective point of view, it was getting better and better… That was amazing to see, especially for Ilija, who was an early-stage PhD student. It was also a key learning experience for me personally… that you're never done, that it can always get even better. We're very thankful to the reviewers and to the editor in that regard… It was a very impressive journey in that sense.”

Indeed, before publishing in SEJ, Braun and Sieger submitted their paper elsewhere and realized the significance of positioning the paper to reach the right audience. As Sieger acknowledged, “We learned that you need to be very careful with the terms and wording… because, if you're not precise, your paper will go to reviewers who have a different perspective or deal with a different literature… In the initial version, we talked about family financing, and we submitted it to a journal where we got rejected… partly because the reviewers seemed to have more of an entrepreneurial finance perspective. So then we looked at it again and realized, ‘Okay, what we really deal with is not entrepreneurial financing in the actual sense; it’s family financial support, which sounds almost the same… but it’s a different thing because it mainly relates to family embeddedness and the underlying dynamics.” He notes that, once they addressed this issue, “we reached the right audience” of reviewers who could help point the way towards real improvement. According to Sieger, “If we look at the end product today and compare it to the very initial version that we had in 2017, that's a huge difference,” which thankfully led to the paper’s publication.