The Role of Effectuation as a Device to Stimulate Innovativeness

Abstract

This study investigates the mechanisms that link entrepreneurial passion (EP) to product and service innovativeness. The study is causal and cross-sectional research. It investigates the mediating role of effectuation as a mechanism for the relationship between EP and product and service innovativeness. A primary research survey was conducted using a structured questionnaire among 306 respondents of micro small and medium enterprises (MSMEs). The data was analyzed using Hays process analyses SPSS version 4. Findings suggested that effectuation plays a significant role as a mediator to entrepreneurs’ passion for product and service innovativeness in the context of MSMEs in Pakistan. The study finds a strong link between effectuation as a mediator to product and service innovativeness and recommends using the model of effectuation proposed by Sarasvathy (2008) as a process to innovate in the organization. The model of effectuation needs to be understood in order to be applied by new entrepreneurs of MSME. The study suggests academia to develop an understanding of this concept and make it a part of the curriculum of entrepreneurship study for startups and innovations by new entrepreneurs. Effectuation is considered predominantly at theoretical and investigational stages; this study adds the literature by an empirical study of its dynamics in the real-life scenario of established MSME’s. This research recommended the effectuation model to the entrepreneur in order to develop a network for product and service innovativeness instead of trying to do everything on their own.