Determining The Effectual

Thinking, Entrepreneurial Talent

And Venture Performance : An
Exploratory Study In Malaysian
Small Medium Enterprise (SME)
Dayang Hasliza Muhd Yusuf
Mohd Salleh Hj. Din
Muhammad Shahar Jusoh

 to explore the effect of non-predictive decision making

strategy (effectual thinking) and entrepreneurial talent on
venture performance

Objective

> 95% of businesses

contributed to 6070% of new jobs

creation

expected to help Malaysia

achieve the status of a highincome nation by 2020

Introduction

Entrepreneurs who
transition from managers
/corporate (Yaacob &
Yusoff, 2010; Terjesen &
Sullivan, 2011)

Resources invested eg.

human capital development
programs to develop talents
in order to ensure
successful performance of
the SMEs

A myriad of aspects assets,

talents and abilities, to use in
the marketplace

Entrepreneurs
vs. Managers
Decisions
Risk propensity
Ambiguity in
venture startups

Constant changes
requires quick
decisions

Demographics of entrepreneurs, ownership, venture creation and social entrepreneurial

activities. (Mohamed, Rezai, Shamsudin, & Mahmud, 2012; Othman, Hashim,& Wahid,
2012) .
The importance of effectual thinking and talent have long been recognized in
entrepreneurship studies (Mayer-Haug, Read, Brinckmann, Dew, & Grichnik ,2013;
Djukic ,2011; Ferrante, 2007; Shane, 2003; Perry, Chandler & Markova, 2012; Read &
Sarasvathy, 2005; Read, Song & Smit, 2009)

Research Problem

LITERATURE REVIEW

 Measures adopted when discussing entrepreneurial performance

include:
Financial performance e.g.. sales and revenues, profitability, size of
assets, and also their rates of growth.
Non-financial approaches e.g.. productivity growth, company growth
e.g. number of employees, number of products, number of years in
operation since inception (Francis, Saliola, & Seker, 2013)
Qualitative measures e.g. entrepreneurs satisfaction and other
perceptual variables, investment innovativeness, market analysis
techniques, quality & competitive advantages (Ferrante, 2005;
Cachon et al., 2013)

This research will adopt the non-financial measures e.g. the number
of employees, the number of years in operation, and perceptual
variables of innovativeness

Venture Performance

 The qualities, ability, and values of the entrepreneur, to carry out innovative
projects and deal with the uncertainty of starting a venture (Ferrante, 2005).
Resource-based view (RBV) perspective - entrepreneurial talent variables are
significantly associated with performance (Ferrante, 2005; Mayer-Haug et al.,
2013; Zhang et al., 2010).
Constructs of talent include technical skills, knowledge and business experience,
level of education, business planning, founding team size & networking
However, findings on some of the effect of the constructs on specific performance
have been inconclusive (Mayer-Haug et al., 2013; Weber & Schaper, 2004 &
Djukic, 2011).
The authors are proposing that Social Intelligence (SI), the ability to get along
with others and getting people to cooperate, as a new variable / construct to
explain the effect of talent on performance
Social intelligence has been found to be associated with individual success
(Albrecht, 2006)

Entrepreneurial Talent

 A set of heuristics / strategy for decision making in uncertain

environments (Read & Sarasvathy, 2005; )
The constructs of effectuation have also been found to have positive
relationship with venture performance (Read, Song & Smit, 2008)
In tandem with the Timmons model of entrepreneurial process i.e. the
components of the entrepreneurial process are argued to be in
constant motion, expanding and contracting in response to the
dynamics of the environment and opportunity, the entrepreneurs role
is like the balancing act of a juggler (Spinelli Jr. et al., 2007).
Effectuation constructs to be used are Experimentation, Affordable
loss, Flexibility and Pre-commitments to be adapted from Chandler,
DeTinenne, McKelvie & Mumford (2011)

Effectual Thinking

Entrepreneurial
talent

Effectual
thinking

Venture
performance

Social
intelligence

Based on the review of literature on venture performance, entrepreneurial

talent, and effectuation, we propose that the conceptual framework for the
exploratory study to be as per the above figure

Research Framework

 The following relationship are expected:

Entrepreneurial talent positive relationship with venture
performance
Effectual thinking positive relationship with performance
Effectual thinking mediates the effect of entrepreneurial
talent on performance
Social intelligence moderates the effect of entrepreneurial
talent on performance

Expected Outcome

 This research will explore the aspects of venture performance, entrepreneurial

talent and effectual thinking. Prior research has established the effect of
entrepreneurial talent on venture performance. However, the effect of the specific
dimension of the entrepreneurial talent i.e. education, skills and knowledge, on
venture performance has been inconclusive and therefore further research into the
subject is deemed timely.
A further empirical study on the role of effectual thinking and its relationship to
the concepts of entrepreneurial talent and venture performance is also proposed to
be conducted among experienced employees who become entrepreneurs as this
group of entrepreneurs bring with them years of experience and other financial
and non-financial resources.
A deeper understanding of the dimensions of entrepreneurial talent and its
relationship with the specific dimension of venture performance will be a useful
insight as to the types of development program which will be suitable to
encourage the type of performance that is needed.

Conclusion

Thank You