Does practice make micro-entrepreneurs perfect? An investigation of expertise acquisition using effectuation and causation

Abstract

The paper reports on a study testing whether effectuation (means-driven thinking) and causation (predictive thinking) influence the use of deliberate practice during business start-up by microfinance borrowers (‘micro-entrepreneurs’) running low-tech businesses in Sri Lanka. We surveyed clients of a large Sri Lankan microfinance institution and analysed 24 interviews to see whether links existed, and if so, how they played out in everyday business practice.

We found both effectual and causal logics (not effectuation alone) facilitate deliberate practice, an important result since deliberate practice could be expected to help micro-entrepreneurs gain business expertise. We also found conceptual links between effectuation and causation and some elements of deliberate practice. Specific effectuation and causation actions laid a foundation for repetitive practice. Causation logic and certain effectuation principles influenced some elements of deliberate practice. One effectuation principle, however, ‘acknowledging the unexpected’, impacted all five elements of deliberate practice, suggesting that learning to manage uncertainty is a central task – perhaps the central task – in becoming an entrepreneur. By contrast, causation influenced elements of deliberate practice linked to ‘venture-building’ or ‘entrepreneuring’, not the more personal elements linked to seeing oneself as an entrepreneur. Micro-entrepreneurs with younger (<5 years), lower asset-value businesses (<150,000 SLR) were significantly more engaged in practicing tasks than micro-entrepreneurs running older, higher asset-value businesses.

Our findings suggest new ways that microfinance institutions could help their clients become expert entrepreneurs, especially helping them learn to manage the unexpected. Future researchers could test whether our findings hold in other entrepreneurial populations, and whether there are patterns in how micro-entrepreneurs (and others) manage uncertainty.