Entrepreneurial cognition, sustainability and venture performance: a machine learning approach

Abstract

Entrepreneurial process centres on decision-making and action in an uncertain context. Effectuation and causation are two complimentary decision-making logics through which entrepreneurs recognize and exploit entrepreneurial opportunities. So far, there has been only limited evidence about the circumstances under which effectuation and causation generate gains and losses, especially in the context of sustainable entrepreneurship. Sustainable entrepreneurs aim to balance three types of value _ social, environmental and economic value _ due to their conflicting nature. This chapter addresses the above-mentioned question by applying a machine learning approach, namely an artificial neural network, to analyse 301 Finnish small and medium-sized enterprises from multiple industries. The results of the analysis suggest three distinctive mindsets that combine characteristics of potential entrepreneurial opportunities, including different value creation potentials, and decision-making logics. These results contribute to both entrepreneurial decision-making and sustainable entrepreneurship research.