Essays on effectuation: insights from CEOs, top managers, and middle management
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Date
2024-07-13
Authors
Shen, Zhe
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Abstract
This dissertation aims to understand effectuation theory by examining the individual antecedents of effectuation principles, and the materialization of effectuation principles within the firm.
Essay 1 investigates the relationship between chief executive officer (CEO) narcissism and affordable loss (AL) behaviors, based on the narcissistic admiration and narcissistic rivalry perspective. Conflicting conceptualizations remain regarding whether entrepreneurs’ psychological traits matter for AL. Using data collected from the CEOs and paired vice presidents at 122 small and medium enterprises (SMEs) in mainland China, this study explores the association between psychological traits, especially CEO narcissism and AL behaviors under environment and resource constrains.
The findings show that CEO admiration-based narcissism is positively related to AL behaviors in the firm. Furthermore, when firms hold more slack resources, narcissistic admiration has a stronger positive association with AL; while when the environment becomes more uncertain, narcissistic admiration has a weaker positive association with AL. Meanwhile, only when environment becomes more uncertain, CEO rivalry-based narcissism has a stronger negative association with AL. This article contributes to trait-based effectuation research and suggests that individual psychological traits affect AL behaviors at the firm level, though the patterns of the relationship vary with both the type of narcissism and contexts.
Essay 2 explores how firm-level effectuation influences the behaviors of middle managers. The literature exploring effectuation and causation at the firm-level has largely neglected the challenges involved in implementing effectuation within organizational settings. This study investigates how individual dimensions of effectuation influence middle-level managers' participation in decision-making.
Utilizing multilevel data from 536 middle-level managers across 131 SMEs in mainland China, I found that experimentation, affordable loss, and precommitment exhibit unique patterns in their interactions with the collective organizational engagement climate in these firms. As collective organizational engagement becomes stronger, the impact of experimentation on middle managers’ participation in decision-making switches from positive to negative. However, the increase in collective organizational engagement weakens the positive impact of affordable loss and lessens the negative impact of precommitment. This study underscores the importance of integrating variables related to internal organizational dynamics into research on the nexus between effectuation and middle managers’ entrepreneurial behaviors.
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Keywords
Effectuation, CEO narcissism, Middle management, SMEs