PURPOSE : This study interrogates the interrelatedness of effectual actions and small business
performance. It provides fresh insights about effectual heuristics and small business
performance, as evinced in a study with data drawn from a variety of sectors.
DESIGN/METHODOLOGY/APPROACH : Based on primary data from 685 small businesses, the study
examines hypothesised relationships using the partial least squares structural equation
FINDIBGS/RESULTS : The findings reveal the varied effects of composite effectuation and its
dimensions on small business performance. Composite effectuation, affordable loss and
flexibility are positively related to small business performance, whilst experimentation and
precommitment have negative relationships with small business performance. The study
concludes that the application of effectual actions has diverse implications for small business
RESEARCH IMPLICATIONS : The generalisation of findings can be limited, given that this is a single
country study. Limitations notwithstanding, this article provides new empirical data,
knowledge and insight about the relationship between effectual actions and small business
performance. This provides a strong base for future multicountry research into effectual
actions and small business performance.
PRACTICAL IMPLICATIONS : The findings of this article have implications for small businesses
navigating uncertainties occasioned by resource constraints. Essentially, the findings of this
study can enhance the development of a learning curriculum to improve the ability of small
businesses to apply effectual heuristics in managing resource challenges.
ORIGINALITY/VALUE : This article addresses the research gap in the field of entrepreneurship arising from the limited empirical studies on the relationships between effectual actions and
small business performance.
This study is based on the U.U.S.O.’s PhD thesis entitled ‘The relationship between effectuation, absorptive capacity and small business performance’, submitted to the University of Pretoria, South Africa. The co-author of this study (C.E-E.) is the supervisor of the thesis. (http://hdl.handle.net/2263/81132)