Effectuation as a construct for new business formation in South Africa

Abstract

The field of entrepreneurship research offers differing theories regarding the underlying behaviours of entrepreneurs. These theoretical frameworks describe the behaviours and principal thought processes that entrepreneurs use to create new businesses. The unique attributes of the South African context, characterised by high unemployment and low entrepreneurial activity, together with new business formation make this field of research particularly important. Some of the major theoretical frameworks were reviewed in the study, and a qualitative study was employed using the Grounded Theory approach. Ten successful entrepreneurs were interviewed for the study and the data collected was used to provide insight into their behaviour and particularly sought to determine whether principles from Effectual Theory were present. The findings of the research supported some aspects of the important theoretical frameworks, emphasising the need for a multitude of perspectives rather than a single best framework. Particularly strong evidence of effectual entrepreneurial behaviours were found in the data, supporting the Theory of Effectuation as a construct for new business formation in South Africa.