Effectuation and home-based online business entrepreneurs

Abstract

This article explores effectual processes within home-based, online businesses. Our empirical evidence provides a number of refinements to the concept of effectuation in this specific domain. First, the ubiquity of non-proprietary online trading platforms encourages the adoption of effectual approaches and removes the importance of forming proprietary strategic alliances and pre-commitments. Second, the notion of affordable loss – a central tenet of effectuation – should be extended beyond the notion of economic to social affordable loss, including loss of status and reputation, and finally, home-based online businesses allow effectuation to be associated with low levels of entrepreneurial self-efficacy and experience.