ijcrb.webs.com JANUARY 2012 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 9 A cognitive approach for analyzing the influence of effectual network on entrepreneurs actions. Ghorbel Faiez Faculty of Economics and Management of Sfax, University of Sfax, Tunisia, Route de Mahdia km 5, Chez Hamadi Borcheni, Sfax 3011, Tunisie. Boujelbène Younes Faculty of Economics and Management of Sfax, University of Sfax, Tunisia, Institut Superieur D'administration des affaires de Sfax, Route de l'aerodrome km 4, Sfax BP 1013 Sfax 3018, Tunisie. Abstract The purpose of this paper is to analyze the impact of effectual network components in the decisions and actions of effectual entrepreneurs. An innovative approach is proposed which is based on cognitive mapping with a series of interviews. The data content were analyzed and cognitive map was extracted. A total of ten concepts were selected from literature to represent effectuation principles and effectual network basis. Through a crosssectional design the proposed approach is captured by the inclusion of the different components. For validation purpose, a sample of seven entrepreneurs from S f a x (Tunisia) is used. The results show that effectual network components are vital for oriented entrepreneur actions. This paper can provide assistance to academics and practitioners to recognize decisions and actions of effectuators in a specific entrepreneurial environment. Keywords: Effectuation, Effectual network, Social capital, Entrepreneur, cognitive maps COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1409 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS JANUARY 2012 VOL 3, NO 9 1. Introduction An awareness of the actions of entrepreneurs is critical to understanding the entrepreneurial reasonning. There are two type of entrepreneur thinking: causal and effectual. Many authors, such as Sarasvathy (2001), Wiltbank et al., (2006), Read et al., (2011), proposed that effectual thinking is contrasted with causal thinking. According to Sarasvathy (2001), entrepreneurs are entrepreneurial, as differentiated from managerial or strategic, because they think effectually. In fact, effectuation originates in ent r epr en e urshi p , na mel y the des ign of new m a r k e t s an d ne w businesses Read et al., (2011). In the following, we present the example of Sarasvathy (2008), to more explain the difference between causal and effectual thinking. In the causal case, the chef selects a menu, comes up with good recipes for each item on the menu, shops for necessary ingredients, arranges proper implements and appliances, and then cooks the meal. The causal process starts with selecting a menu as the goal and finding effective ways to achieve the goal. In the effectual case, the chef begins by looking through the kitchen cupboards for ingredients and utensils. She then designs possible menus based on those ingredients and utensils. In fact, the menu often emerges as she is preparing the meal. The effectual chef starts with a given kitchen, and designs possible, sometimes unintended, even entirely original meals with its contents (Sarasvathy, 2008; Hoffmann et al., 2008, Fayolle and Hernandez, 2007). Effectuation puts low emphasis on prediction and high emphasis on control (Wiltbank et al., 2006). When expert entrepreneurs seek to build a new venture they start with their means. These means can be grouped into three categories: (1) who I am- my traits, tastes, and abilities (2) what I know- my education, training, expertise, and experience (3) who I know- my social and professional network. This last idea is the target of this paper applied in effectual context. In spite of the importance of the idea of effectual network in the heart of effectuation theory a lack of studies is pointed. The purpose of this paper is twofold. Firstly we analyze the importance of effectual network in the decisions and actions of effectual entrepreneurs as well as we intend to propose a methodology based on cognitive mapping to detect the influence of the selected concept (Schema 1) in actions of effectuators entrepreneurs. The preference of the seven entrepreneurs’ s of our case sample to oncept and not to another is vital to understand the reasoning of entrepreneurs of Sfax. 2. The proposed approach Recent studies (Sarasvathy 2008; Lee and Jones, 2008; Krueger and Day, 2010; Read et al; 2011), have turned to a more sophisticated understanding of the cognitive biases of entrepreneurs and their ability to garner human and social capital as predictors of firm creation and firm success. The proposed schema 1 is a conceptual thought about the specific items of effectuation theory: bird in hand principle, Social capital and effectual network that are analyzed in order to explain their importance in the actions of entrepreneurs from a cognitive register. To achieve this task we exploit the cognitive maps technics. COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1410 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS JANUARY 2012 VOL 3, NO 9 Figure. 1. Architecture of the proposed approach Effectuation is action oriented (Sarasvathy, 2008). Each action is a result of a combination between different elements such as the contingency, resource, circumstance and manner of reasoning. The cognitive dimension is the core of effectuation theory. The theoretical foundations of an effectuation approach lie in cognitive science, particularly the work which emphasizes entrepreneurial framing how entrepreneurs view inputs (relevant or not), make inferences, perceive alternatives, and attend to constraints (Chandler et al., 2011). The effectuation approach suggests that thinking and action proceed together in an attempt to create one of several possible outcomes. Effectuation assumes that the future is unpredictable but that entrepreneurs can control a value- creating part of it through the use of a given set of means available to them. In this sense, entrepreneurs can utilize the means at their disposal to influence their future without having to predict it (Mitchell et al., 2007). The components of the proposed approach will be analyzed in next sections. Effectuation (section 2.1), Bird in hand principle (section 2.2), Social network (section 2.3), and effectual network (section 2.4) and cognitive maps (section 2.5). 2.1. Effectuation “The society for effectual action” defines effectuation as logic of entrepreneurial expertise. What makes great entrepreneurs isn’ t genetic or personality traits,risk-seeking behavior, money, or unique vision. Effectuation research has found that there is a science to entrepreneurship and that great entrepreneurs across industries, geographies, and time use a common logic, or thinking process, to COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1411 ijcrb.webs.com JANUARY 2012 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 9 solve entrepreneurial problems. Effectuation is a logic of entrepreneurial expertise that both novice and experienced entrepreneurs can use in the highly unpredictable start-up phase of a venture to reduce failure costs for the entrepreneur. Table .1. Effectuation Principles Principle Bird-in-hand principle Affordable loss principle Crazy Quilt principle Lemonade principle Pilot-in-the-plane principle Description Start with who you are, what you know, and whom you know Invest what you can afford to lose. Calculate downside potential and risk no more than can you afford to lose. Build a network of self-selected stakeholders. This principle involves negotiating with any and all stakeholders who are willing to make actual commitments to the project, without worrying about opportunity costs, or carrying out elaborate competitive analyses. Embrace and Leverage surprises. Effectuating new value through acting on what is available. Effectuation is action oriented. The future comes from what people do. Relying on and working with human agency as the prime driver of opportunity. According to Sarasvathy (2008) expert entrepreneurs use the following principles. Each principle inverts key decision-making criteria in received theories and conventional management practices. 2.2. Bird in hand principle Effectuation is action oriented. Expert entrepreneurs started with three categories of means: their identity, their knowledge base, and their social networks (Sarasvathy, 2008). It is important to note that identity (who I am) depends on and is changed by knowledge (what I know) and networks (who I know) refers to your social networks and vice versa. The three categories of means are not mutually exclusive and independent. One of the greatest assets of an entrepreneur is the people s/he knows. Expert entrepreneurs build firms by building stakeholders networks-adding others means to their own means. There are people that are directly accessible to you, and that you can pull in almost immediately friends, family and acquaintances (Read et al; 2001). There are two other aspects of human interaction that help you add to your means. The first is that you aften meet people through interaction that are contingencies and serendipitous. The second is about the fact that you are linked to people you don’ t know by people you do know (Read et al; 2001). The network is initiated through an effectual commitment that sets in motion two concurrent cycles of expanding resources and converging constraints that result in the new market (Sarasvathy and Dew, 2005). COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1412 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS JANUARY 2012 VOL 3, NO 9 2.3. Social network For Casson and Dell Giusta (2007) a network is a very general concept – it is far more general than is suggested by the specific contexts in which it is often used. The defining feature of a network is ‘ connection’ , a set of ‘ elements’ that are connected to each other form ‘ anetwork’ . The elements a r e t h e ‘ m e m b e r s ’ o f t h e n e t w o r k . The c o n n e c t i o n i s cera t e d b y s o m e k i n d of ‘ relationship’ betw e en the elements. Every pair of membres is c onn e cted , e i t h e r ‘ directly’ or ‘ indirectly’ ; indirect connections are effectedrothugh other members of the network. The growth of so many organizations and associations devoted to helping people create and maintain social networks poses a puzzle for social scientists. Why do people need any help? Social relations seem fundamental to everyone’ s life and would appear to follownaturally from growing up in organized social settings. Throughout their life course, people are embedded in social situations that put them in touch with others, such as kin reunions, gatherings of friends, workplace teams, and voluntary association meetings (Aldrich and K i m , 2005). More generally, the idea that individuals and organizations affect and are affected by their social context is not new (Thornton et al., 2011). Bowey and Easton (2007), think that the social capital concept has penetrated every corner of sociology (Granovetter, Coleman, Loury, Lin), political science (Putnam, Fukuyama), and economics (Woolcock). During the 1990s, organizational behaviourialists increased their interest in social capital as an explanatory construct (Burt, Nahapiet and Ghoshal, Uzzi). Recently, social capital has become an important research focus of entrepreneurial studies (Aldrich, Baron and Markman, Anderson and Jack). In entrepreneurship social capital and the effectual network are considered as resources. The difference resides in the nature of the both concept: Social capital aims Successful Startup ≠ Effectual network aims Successful Growth. Social network was exploited in the depth of entrepreneurship. An entrepreneur’ s network is a learning habitat from which to gain understanding about opportunities and resources (Bowey and Easton, 2007). Modern theory affords a coherent view of the socially embedded entrepreneur advancing the coordination of activities in a complex economic system. Social networks influence several different aspects of entrepreneurship. It is useful at the outset to distinguish three aspects of entrepreneurship: opportunity seeking, resource acquisition, and project implementation. A major advance in entrepreneurship was the introduction of the theory of effectuation. COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1413 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS JANUARY 2012 VOL 3, NO 9 The social network as a main ingredient of entrepreneurship research is taken again in the effectual context. Sarasvathy et al., (2001; 2004; 2008; 2011) advance the Effectual Network. Expert entrepreneurs started w i t h t h r e e c a t e g o r i e s o f means: their identity, their knowledge base, and their social networks. Commitments from key stakeholders destroy uncertainty by contracting along certain dimensions for the future, and as the stakeholders act on those contracts and the network grow. The mutual commitment is the first link in a new chain of stakeholders, the first dyad in a new network that eventually transforms extant reality into a new market. The chain of commitments launched at the start of the venture has two impacts: its increases the resources available to the venture by increasing stakeholders ownership, while at the same time constraining the venture, crystallizing its goals, and helping it converge towards something specific, which may or not may not be what the entrepreneur had in mind at the beginning. 2.4. Effectual network Entrepreneurship requires focused action. The effectuating mind is oriented towards understanding the gap between current and future reality, and towards traversing the pathway between them. Creativity may play a role in pioneering a path to be traversed, but that is not necessarily required. Many entrepreneurs are expert followers or ‘ second movers’ , followingthe pathways blazed by pioneers (Duening 2010). In their explanations to the effectual network Sarasvathy and Dew (2003), use Simon’ s (1993) notion of docility and combine it with Sarasvathy’ s (200)1 exposition of effectuation for dealing with environmental uncertainty. Docility is the tendency to depend on suggestions, recommendation, persuasion, and information obtained through social channels as a major basis of choice (Simon, 1993). A pre-commitment is a self-imposed non-negotiable constraint that stacks the deck in favor of or against specific future choices. According to Elster (2000), pre-commitment is about why and how individuals might want to restrict their freedom of choice. The basic idea is that while individuals might in general prefer to have more options, they might sometimes benefit from having fewer options, and at other times it might be especially beneficial if some options were somehow made entirely unavailable. In other words, sometimes less is more, even in the case of freedom (Dew and Sarasvathy, 2007). As Blaug (1996: 444) notes, “The beauty of Knight’ s argument was to show that the per sence of true ‘ uncertainty’ about the future might allow entrepreneurs to earn positiveprofits despite perfect competition, long-run equilibrium and product exhaustion (Sarasvathy and Kotha; 2001). The conceptual distinction between ‘ risk’ and ‘ uncertainty’ ix s pelored by Knight (1921). Knight introduced a fundamental distinction between risk, which can be observed and, at least in principle, insured against, and uncertainty, which cannot be estimated according to a known probability distribution, and can only be resolved by taking some real-world action (Matheus, 2010). Under conditions of Knightian uncertainty, the enactment process can have the effect of exacerbating what were originally very small differences in resource uses to create quite substantial differences over time. Knight divided unknown distributions into the following three types (Sarasvathy, 2003): (1) Risk – known distribution, unknown draw: The urn contains five red balls and five green balls. The expected value of any draw is perfectly calculable through statistical analysis. COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1414 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS JANUARY 2012 VOL 3, NO 9 (2) Uncertainty – unknown distribution, unknown draw: We do not know how many balls are in the urn, or what color they are. But based on several draws we can learn the underlying distribution of balls and thereafter calculate the value of any future individual draw. (3) “True” (Knightian) uncertainty – distribution does not exist or is unknowable. We simple do not know what we’ ll get when we make a draw. This may be true of the kinds of resources and capabilities an individual or the resulting organization accumulates over the opportunity enactment process (Alvarez and Barney 2010). The interaction of the actor with the environment in an iterative process that enables learning also helps the actor to define the properties of the opportunity. Thus meaning, understanding, and learning about the opportunity are defined relative to the individual’ s actions and not through some self contained or abstract structure (Kogut and Zander, 1996). Boardman (1999) states that: ‘ ‘ When we anticipate the making of a decision at some future time, pre-commitment is something like stacking the deck in the present for or against one of the choices which we might make on a future occasion. The key quality of pre- commitments is that they serve to skew the distribution of future outcomes in one way, rather than another. As the effectual network grows over time, and includes more and more of the external world, it tends to become less effectual as it eventually coalesces into an empirically distinct new market (Sarasvathy and Dew 2005). Sarasvathy and Dew (2003) note that the pre-commitment approach serves as a mechanism of non-predictive control (at least partially) irrespective of what exogenous factors might constitute the state-of- nature that actually comes to be. In other words, the pre-commitment approach rests on our ability to partition future states into things outside our control and those within, allowing us to act upon those pieces of the distribution that are a direct result of human action. The actions of effectuators consist in things which can be done and believed in interaction with other people. Some of those interactions result in commitments to the new venture But each stakeholder who comes on board brings to the venture both new means and new goals. And each new commitment sets in motions two concurrent cycles, one expanding and the other converging (Sarasvathy, 2008). The effectual commitment i s u s u a l l y l imite d t o what each party can afford to lose. According to Srasvathy (2008), members of the effectual network can respond to interactions in one of three ways: 1. They can ignore them and continue to build the network effectually. (Transform) 2. They can begin exploring alternatives to growing the network effectually. (Explore) 3. They can declare the effectual transformation complete and begin competing with alternative markets. (Exploit) In Sarasvathy effectual network conception the particulars of who they are, what they know and whom they know matter and drive the creation of the final artifact (or pie) that the network ends up with. Stakeholders selecting into the network have to be willing to negotiate primarily for the content and shape of the pie rather than its size and subdivision, especially since they cannot predict what it will eventually turn out to be. At the heart of the dynamic and interactive model of effectuation is sited a network of stakeholders called “effectual network” that transforms current realities into new markets (Sarasvathy and Dew, 2001). From an economics perspective, entrepreneurship researchers have argued that the presence of market gaps or imperfections creates opportunities for entrepreneurial intervention in re- equilibrating the market system (Kirzner, 1973). The word ‘ market’ is used in a large vraiety of ways (Menard, COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1415 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS JANUARY 2012 VOL 3, NO 9 1995). The various descriptions could be divided into three distinct categories: demand, supply and institutions (Sarasvathy, 2008). Pacheco et al., (2010) argue that entrepreneurial opportunities consist of a set of ideas, beliefs, and actions that enable the creation of future goods and services in the absence of current markets for them. Some scholars embracing the creation view argue that opportunities do not always preexist as objective phenomena until created by the actions and perceptions of the entrepreneur. Creation theories embrace entrepreneurial agency and the endogenous emergence of opportunities. Sarasvathy (2008) argues that new-market creation is not always a search and selection process in some theoretical space of all possible markets; instead, it is more likely a transformation of extant realities into new possibilities. Bala and Goyal (1994) postulate that new markets are constantly “opening up” because of technological, political or regulatory changes, saying that the emergence of the new market then depends on the expectations of entrepreneurs and their requisite attempts to enter the market. In fact the rhetoric of “entry” pervades a substantial portion of the growing literature on new market creation (Sarasvathy, 2008; Sarsvathy and Dew, 2005). Effectuators start with who they are, what they know, and whom they know, and begin acting upon whatever they can afford to do (Sarasvathy, 2001). Most important of what they can do is to call people they know or meet, and plunge straight into negotiating a series of commitments. Sarasvathy and Dew ( 2005) argue that The new market, however, gets fabricated, not through the designs of any one person, but as a chain of interactive commitments that form the interface between the inner environment of the effectual network (current members of the network), and the outer environment (current nonmembers). At any given point in time, the effectual network is impacted by one of three categories of things: (1) interactions that become embodied in actual additional commitments; (2) those that do not; and (3) non-negotiable exogenous states of nature. The resultant artifact, the new market that comes to be, is an outcome of how the network deals with each of these three categories. 2.5. Cognitive map Entrepreneurship has been widely studied through management, economics, political science and psychology frameworks (for example, Baron and Shane, 2005; Levenburg, Lane and Schwarz, 2006). Despite this increasing interest in entrepreneurship research and its recognized importance in modern societies, there are still limited explanations regarding some aspects of its cognitive and behavioral processes (Santos and Caetano 2010). We use in this study the cognitive mapping technique. Downs et al., (1973) define the cognitive mapping as “a process composed of a series of psychological transformations by which an individual acquires,codes, stores, recalls, and decodes information about the relative locations and attributes of phenomena in their every day spatial environment”. In more general terms, Arthur and Passini (1992) define cognitive map as “an overall mental image or representation of the space and layout of a setting” this means that the cognitive mapping is “the mental structuring process leading to the creation of a cognitive map”. In his pioneering paper, Tolman (1948) argues that rats, like humans, have a mental representation of the world he called a cognitive map. These maps hold detailed spatial information that individuals collect, integrate and use while interacting with the environment. Tolman’ s work has led to the modern psychological definition of a cognitive map: an overall mental image or COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1416 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS JANUARY 2012 VOL 3, NO 9 representation of the space and layout of a setting (Arthur and Passini, 1992). Samsonovich and Ascoli (2007) examine conceptual value maps to represent a human value system with a cognitive map beyond spatial and temporal dimensions. Different kinds of cognitive maps, they write, can be "distinguished on the basis of the semantics they represent (logic, values, feelings…) and on the representation systems they map (one may distinguish contextual and conceptual cognitive maps)". David Ausubel (Ausubel, 1968) emphasized on the importance of prior knowledge in being able to learn about new concepts. Drawing on this theory, Novak (1993) concludes that existing cognitive structures are critical for learning new concepts. A concept map is a graphical representation where nodes represent concepts, and links represent the relationships between concepts. The links, with labels to represent the type of relationship between concepts, can be one-way, two-way, or nondirectional. The concepts and the links may be categorized, and the concept map may show temporal relationships between concepts. 3. Results and validation 3.1. Sample Our sample consists of 7 effectual entrepreneurs originated from Sfax / Tunisia. For each entrepreneur, we realize an interview between 30 minutes and one hour. At the beginning of each interview, we present the aim of our study and we define the different concepts used in the study. We use a semi-directive interview. Each entrepreneur was invited to talk about the ten concepts concentrated on the effectual network in correlation with effectual principles components: Identity, Knowledge, network, negotiation, and opportunities cost, competitive analysis, expertise contingency control and uncertaint y. The discuss ion covers the meaning of these concepts from the entrepreneur’ s point of view and whether they affect in their entrepreneurial decisions and actions or not. A paper with the different cited concepts was distributed and which connect between concepts that can have a relationship between them. He will indicate the orientation of each relationship. The intensity a relationship between two concepts A and B can be weak (with a value of (1), moderate (2) or strong (3). During the interview process, we ask entrepreneurs about any relationship that seemed illogically. 3.2. Cognitive map process In three sequential phases process appropriate to the situation of our survey was developed. This process is composed of three phases: explorating, coding and analysing. Phase I: The exploration phase involves collecting data from entrepreneurs. The collection is made by individual semi-directive interviews and a questionnaire. Phase II: Identify and make a list of concepts and relationships of influence between concepts. Phase III: Following the potential coding of phase II, a cognitive map is created. The analysis of maps is done individually. Analysis indicators were proposed: “the centrality of the concepts”, “explanations” and” the “analysis of loops”. The literature cognitive mapping suggests assessing the relative importance of each concept in a graph. A concept is considered particularly important when it has many links with COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1417 ijcrb.webs.com JANUARY 2012 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 9 others. We proceed with the analysis of the complexity of cognitive representations of entrepreneurs in the beginning of the next section. 3.3. Discussion and validation Table . 2. General information about concepts complexity Case 1 2 3 4 5 6 7 Number of concept (C) 10 10 10 10 10 10 10 Number of links (L) 76 87 79 88 81 78 83 L / (C²-C) 0,84 0,96 0,87 0,97 0,9 0,86 0,92 L/C 7,6 8,7 7,9 8,8 8,1 7,8 8,3 The number of concepts contained in the cards for effectuator’ s entrepreneurs is 10. The different entrepreneurs have the same degree of differentiation for the concepts used in this study. Presumably, effectuators entrepreneur attach the same importance to the effectual logic in the context of Sfax. The classification by the number of links, the average is 81.71 links per card and the number of links on a card links varies between 76 for entrepreneur 1 and 88 for entrepreneur 4. Effectuators entrepreneur in the context of the region of Sfax are not in the same degree of integration in the theme of effectual network. The analysis of degree of integration clearly shows that the development of thinking on the subject effectuation is not the same intensity of an entrepreneur to another. The density measurement does not indicate the content of cognitive maps but can be useful to determine the robustness of a speech. Indeed, more ideas are related to someone, more it will take action on several links to be able to accept change. According to the calculation of the density taken into the number of possible connections: there are entrepreneurs 2 and 4 in extreme position. As the number of possible links increases exponentially facing an increase in the number of concepts in the map, it seems more appropriate to refer here only to the results of the ratio of the number of links on the number of concepts. In Bougon et al., (1977), it is implied that the importance of a concept can be assessed by using an "adjacency matrix" that takes into account many factors that are related directly, or by the use a “reachabilit matrix” where the indirect links are also taken into consideration. Our output consists of an adjacency matrix which can be translated to a cognitive map. Table 3 shows the different possible interactions between all considered concepts of the effectual logic. The adjacency matrix shows different areas of communication between the different basics of effectual logic. In a first step, we study the impact of influence between concepts then we explore the impact of this influence on the decisions and actions of entrepreneurs. The table 3 is a product of the seven personnel matrix (appendix 2) of our sample. We aggregate personnel card in order to achieve a synthetic representation (figure 2) of the studied phenomena. COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1418 ijcrb.webs.com JANUARY 2012 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 9 Table . 3. The form of the adjacency matrix Concepts P1 P2 P3 P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 - 2 1,85 1,85 1,14 1,42 3 2,14 1,57 2 1.28 - 2,57 3 2,28 2,57 2 1,85 1,85 1,14 1.14 2,57 - 2,71 1,85 2 1,85 1,85 2 1,28 P4 0,28 1,85 1,85 - 2,57 2 2 1 2,14 1,28 P5 1 0,71 2 3 - 3 1,42 1 2,71 0,85 P6 1,28 1,71 2 3 2,14 - 1,28 1 1 1,57 P7 2,14 3 1,85 2 2,42 2 - 2,14 2,28 1,42 P8 1,57 2,14 1,14 1,85 1,71 1,85 2,71 - 2,14 2 P9 1,42 1 1,71 2,28 1,14 2,28 2 1,71 - 1,71 P10 1,42 1,42 1,85 2,71 2,28 2,57 2,71 2,28 2,14 - Our results show that the core concept of effectual theory “Expertise” affects the entire different concept related to effectuation principles (network, contingency...) and effectual network (Negotiating, Knowledge...). In a cognitive map, a relationship between concept A and B means that A is the explanation of B or B is the consequence of A (see Prigent et al., 2008). In our case, for example “Identity” explains “Expertise”. This relationship goes into an intensity of 3. According to Down and Warren (2008) in the fields of sociology and social psychology there is increasing consensus that identity is not a stable unit of the individual, but instead is constituted through ongoing interactions between individual resources and contextual discourses. Løwe Nielsen and Lassen (2011) indicate that the entrepreneurial effectuation process constantly gives rise to identity work and that this work speaks back to the entrepreneurial process and thus affects how the entrepreneur perceives opportunities, generate resources, and approaches new people. In this manner, identity cannot be seen as a stable core that guides the enterprising individuals in the entrepreneurial effectuation process as a whole. Entrepreneurs often explain their actions and decisions in terms of something fundamental about who they are rather than their more superficial preferences. Sometimes their identities have to do with being an entrepreneur, however idiosyncratically interpreted… (Sarasvathy, 2008). In his final analysis an effectual network entrepreneur takes as primitive the categories of means: Identity, Knowledge and Network. The “knowledge aim”, “the network aim” and the “identity aim” drive actions and decisions of entrepreneurs. The majority of interviews know that “Expertise” is the core of entrepreneurial activities; this vital element is the guide to “entrepreneurial success”. The importance of expertise is proved in estimating affordable lose, control, making decisions in uncertain environment and exploited means. This suggests that non-predictive strategies that leverage both our own and other people’ s docility may prove at least as effecitve under conditions of motivational and environmental uncertainty as those built upon more familiar predictive prescriptions (Sarasvathy, 2001). COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1419 ijcrb.webs.com JANUARY 2012 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 9 Our result corroborates the theoretical conception of Sarasvathy, the most intense relationship is between expertise and knowledge. Discussions with them during the interview let us concluding that there are more familiar with the “Expertise” concept. The majority of interviewees know that Entrepreneurial expertise is beneficial in the sense that it can guaranty firm performance by the control, affordable loss and contingency... Entrepreneurial expertise gives a comprehensive alternate frame for tackling entrepreneurial problems (Sarasvathy, 2008). Our results highlight that the negotiation concept and competitive analysis concept are the result of expertise. This relationship goes until a value of 2. It is clear that the “Expertise” concept is closed to the entrepreneurial decisions. Network as means for entrepreneurs exerts an influence in decisions and actions of effectuators from Sfax during the effectuation cycle. The majority of interviewees affirm that they use network as fundamental means and sign in their decisions. For example an entrepreneur in his negotiation with stakeholders exploits his connection in a social network. In the adjacency matrix we note that network has an intense influence on negotiation (2.71) and knowledge (2.57). The relationship between social network and entrepreneurial decisions is intense. For opportunists have real opportunity costs in the form of other more predictable markets with low hanging fruit (as opposed to those under construction through effectual networks). Joining and working with an effectual network requires them to forgo those other opportunities that provide more immediate and surer gains (Sarasvathy, 2008). The concept “network” is very clear in the mind of the majority of effectuators in our sample. In our case we use a method to calculate the relative importance of each concept in the cognitive structure of effectual entrepreneurs. We use weights W’ and W’’ to study the intensity of the influences exerted by the different concepts. The influence is measured by this formula: W = W '+ W'' With W ': the influence of weight put up by the concept in cognitive structure. W'': the weight of influence of the concept to other concepts. Table . 4. Concepts weights based analysis Concepts W' P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 16,97 17,26 16,11 14,69 14,69 13,7 17,11 15,54 13,83 17,96 COPY RIGHT © 2012 Institute of Interdisciplinary Business Research W'' 11,53 14,4 14,97 20,55 16,39 18,27 15,97 12,83 16,26 11,25 W'+W'' 35,24 33,08 31,97 31,66 31,08 31,08 30,09 29,21 28,5 28,37 1420 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS JANUARY 2012 VOL 3, NO 9 In our case, the most central themes are negotiation and expertise with a score of 35 and 34. There are central themes in the speech of entrepreneurs in the region of Sfax. We find that the weight of concept negotiation and expertise is coherent with Sarasvathy analysis in expertise and effectual network. Discussions with entrepreneurs from our sample let us deducting that their concept are very clear in their minds. We find also that the concept network is more active than the concept opportunity cost. Starting from this finding, we can note that network is vital elements in entrepreneur decisions and actions. Table 4 summarizes the received influences weight of concepts. It is observable that the “Negotiation concept” and the “Expertise concept” are the most receiver concepts. There weights reflect that they are the most influenced concepts. As it mentioned before, the Sfaxian entrepreneurs are aware of the role of the expertise and network in their decisions. We notice that identity of entrepreneurs have a law weight. Our findings may be explained by the fact of their cognitive nature. The total weight of concepts can be held as a criterion to detect their capacity on linking effectuation principles and effectual network. Table 4 shows that the “negotiation concept” can be considered as the best variable of connection that can assure the linking action. The Expertise concept can reinforce this relationship. Figure 2 (appendix 1) represents the average cognitive map of entrepreneurs. We draw the cognitive map in order to detect all the relationships between the different concepts. The most remarkable thing is that these concepts are combined together in the cognitive schema of entrepreneurs. The results highlight the impact of psychological factors in entrepreneurial decisions. For example, the entrepreneur can orient his negotiation with stakeholders from his level of expertise. Our results confirm the theoretical analysis of Sarasvathy. Network and expertise a f f e c t t he decisions m akin g b y entrepreneurs. Our findi n g highli ght s t h at t h e effectual network concept in relation with the effectual network are present in the spatial cognitive of entrepreneurs but they are influenced by other dimensions. We can confirm that effectual network and effectual principles are interrelated. 4. Empirical implications Using causal reasoning, one begins with a specific goal and a given set of means for reaching it. Using effectual reasoning, one starts with only a set of means; in the process of deploying them, goals gradually emerge. Human behavior is fundamentally unpredictable, it is also docile. Docility implies that we are teachable, persuadable, adaptable, and manageable. In our study we find that entrepreneurs combine between effectual principles and effectual network. In their cognitive schema, concepts are linked and their intense in term of entrepreneurial decisions are vital in the performance of firm. Decisions and actions of entrepreneurs are affected by the means which an entrepreneur disposes. Network, knowledge and identity are the core of effectual analysis. Effectual network can be interrelated to effectual principles in order to explain his importance in effectuators decisions. It is time now to generate some models that both analysis effectual network from the point of view: transform, explore and exploit. Models that should be useful (practical) and that integrate psychological and cognitive dimensions. COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1421 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS JANUARY 2012 VOL 3, NO 9 Effectual entrepreneurs are convinced by the spirit of the effectuation theory. Entrepreneurs are faced a complex dimensions, tools and concepts that underpin their decisions and actions that focus on success and performance of their organizations. However, it is difficult or impossible to master all principles and dimensions. The object of this work is to clarify the role of the cognitive map in the understanding of effectuation principles and effectuation tendency. Let this idea some broad suggestions for future research can be put forth focusing on the application of the different concept in specific context included psychological, geographical, organizational and mental dimensions etc...The application of various principles of the theory of effectuation on the cited context is an interesting work for researchers conducting. 5. Conclusion In this study we demonstrate that a relationship exist between effectual principles and effectual network. Decisions and actions of entrepreneurs are affected by the presence of effectual network in term of negotiation with stakeholders, deciding in critical situation and find a coherent position between means and contingence in effectual process. Effectuation consist of non- predictive strategies that combine actual means available with unanticipated contingencies to construct a series of stockholders commitment. The precommitment approach rests on our ability to partition future states into things outside our control. We assume that this research shortage the number of cases which don’ t exceed 7 enrtepreneurs in Sfax. Notwithstanding this limitation it is believed that this study provides some reasonable insights and future directions into the cognitive analysis of effectuation and effectual network. COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1422 ijcrb.webs.com JANUARY 2012 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 3, NO 9 Reference Axelord, R. (1976), Structure of Decision: University, NJ. the Cognitive Maps of Political Elites. Princeton Bougon, M.; Weick, K ; D. Binkhorst. (1977), Cognition in organization: an analysis of the Utrecht Jazz Orchestra. Administrative Science Quarterly, 22, 606-639. Borroi M., Minoja M; Sinatra A. 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COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1426 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Appendix . 1 Figure. 2. Cognitive map JANUARY 2012 VOL 3, NO 9 1427 COPY RIGHT © 2012 Institute of Interdisciplinary Business Research ijcrb.webs.com JANUARY 2012 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Ressources 1 VOL 3, NO 9 Perte supportable Identité Connaissances Réseau social Négociation Coût de l’opportunité Analyse compétitive Expertise Contingence Control Incertitude Identité _ 1 1 3 0 0 3 2 1 2 Connaissances 1 _ 2 3 2 3 2 1 1 0 Réseau social 1 2 _ 3 1 2 1 1 2 1 Négociation 0 3 3 _ 2 1 0 1 1 1 Coût de l’opportunité 1 0 2 3 _ 3 2 1 3 0 Analyse compétitive 2 2 2 3 2 _ 1 0 1 1 Expertise 1 3 1 1 2 1 _ 1 2 0 Contingence 1 2 0 1 2 1 3 _ 2 3 Contrôle 2 1 2 2 0 2 2 2 _ 3 Incertitude 0 0 2 3 2 3 3 2 1 _ Ressources Perte supportbale Ressources 2 Perte supportable Identité Connaissances Réseau social Négociation Coût de l’opportunité Analyse compétitive Expertise Contingence Control Incertitude Identité _ 3 3 3 1 2 3 3 2 3 Connaissances 2 _ 3 3 3 3 2 2 2 2 Réseau social 0 3 _ 3 3 2 2 2 2 2 Négociation 0 2 1 _ 3 3 3 1 3 3 Coût de l’opportunité 2 2 1 3 _ 3 1 1 2 2 Analyse compétitive 1 1 2 3 3 _ 2 2 2 1 Expertise 3 3 3 3 3 3 _ 3 3 3 Contingence 1 2 2 3 2 2 2 _ 3 2 Contrôle 2 2 2 2 2 2 2 2 _ 1 Incertitude 2 2 2 2 2 2 3 2 3 _ Ressources Perte supportbale 1428 ijcrb.webs.com JANUARY 2012 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Ressources 3 VOL 3, NO 9 Perte supportable Identité Connaissances Réseau social Négociation Coût de l’opportunité Analyse compétitive Expertise Contingence Control Incertitude Identité _ 1 0 3 0 0 3 2 1 2 Connaissances 1 _ 2 3 2 2 2 1 1 0 Réseau social 1 2 _ 3 1 2 1 1 2 1 Négociation 0 3 3 _ 2 1 2 1 1 1 Coût de l’opportunité 1 0 2 3 _ 3 2 1 3 0 Analyse compétitive 2 2 2 3 3 _ 1 1 1 1 Expertise 1 3 1 1 2 1 _ 1 2 0 Contingence 1 2 0 1 2 1 3 _ 2 3 Contrôle 2 1 2 2 0 2 2 2 _ 3 Incertitude 1 1 3 3 2 2 3 2 1 _ Ressources Perte supportbale Ressources 4 Perte supportable Identité Connaissances Réseau social Négociation Coût de l’opportunité Analyse compétitive Expertise Contingence Control Incertitude Identité _ 3 2 3 1 2 3 1 2 1 Connaissances 2 _ 3 3 3 2 2 2 2 2 Réseau social 0 3 _ 3 3 2 2 2 2 2 Négociation 0 2 1 _ 3 3 3 1 3 3 Coût de l’opportunité 2 2 1 3 _ 3 1 1 2 2 Analyse compétitive 2 1 2 3 3 _ 2 2 2 1 Expertise 3 3 2 2 2 2 _ 3 3 3 Contingence 1 2 2 3 2 2 2 _ 3 2 Contrôle 2 2 2 2 2 2 2 2 _ 1 Incertitude 2 2 2 2 2 2 3 2 3 _ Ressources Perte supportbale 1429 ijcrb.webs.com JANUARY 2012 INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Ressources 5 VOL 3, NO 9 Perte supportable Identité Connaissances Réseau social Négociation Coût de l’opportunité Analyse compétitive Expertise Contingence Control Incertitude Identité _ 2 3 3 3 3 3 3 2 3 Connaissances 1 _ 3 3 3 3 3 3 3 3 Réseau social 3 3 _ 2 2 2 3 3 2 1 Négociation 0 0 1 _ 3 3 3 1 3 0 Coût de l’opportunité 0 0 3 3 _ 3 1 0 3 1 Analyse compétitive 0 1 2 3 2 _ 1 1 1 3 Expertise 3 3 2 3 3 3 _ 3 2 2 Contingence 3 3 2 2 2 3 3 _ 2 1 Contrôle 0 0 1 3 3 3 2 1 _ 1 Incertitude 3 2 1 3 3 3 2 3 3 _ Ressources Perte supportbale Ressources 6 Perte supportable Identité Connaissances Réseau social Négociation Coût de l’opportunité Analyse compétitive Expertise Contingence Control Incertitude Identité _ 1 1 3 0 0 3 2 1 2 Connaissances 1 _ 2 3 2 3 2 1 1 0 Réseau social 1 2 _ 3 1 2 1 1 2 1 Négociation 1 3 3 _ 2 1 0 1 1 1 Coût de l’opportunité 1 0 2 3 _ 3 2 1 3 0 Analyse compétitive 2 2 2 3 2 _ 1 0 1 1 Expertise 1 3 1 1 2 1 _ 1 2 0 Contingence 1 2 0 1 2 1 3 _ 2 3 Contrôle 2 1 2 2 0 2 2 2 _ 3 Incertitude 0 1 2 3 2 3 3 2 1 _ Ressources Perte supportbale 1430 ijcrb.webs.com INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS Ressources 7 JANUARY 2012 VOL 3, NO 9 Perte supportable Identité Connaissances Réseau social Négociation Coût de l’opportunité Analyse compétitive Expertise Contingence Control Incertitude Identité _ 3 3 3 3 3 3 3 3 3 Connaissances 1 _ 3 3 3 3 3 3 3 3 Réseau social 3 3 _ 2 2 2 3 3 2 1 Négociation 1 0 1 _ 3 3 3 1 3 0 Coût de l’opportunité 0 1 3 3 _ 3 1 2 3 1 Analyse compétitive 0 1 2 3 3 _ 1 1 1 3 Expertise 3 3 3 3 3 3 _ 3 2 2 Contingence 3 3 2 2 2 3 3 _ 3 1 Contrôle 0 0 1 3 3 3 2 1 _ 1 Incertitude 3 2 1 3 3 3 2 3 3 _ Ressources Perte supportbale COPY RIGHT © 2012 Institute of Interdisciplinary Business Research 1431
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