Journal of Entrepreneurship Development

Journal of Entrepreneurship Development

Investigating the effects of Decision-Making Logics (Causation/Effectuation) on New Product Development Performance

Document Type : Research Paper

Authors
Niloofar Salajegheh 1
Mohsen Motiei 2
Hamid Reza Rahmani 3
1 Faculty of Management and Accounting, College of Farabi, University of Tehran
2 Department of Technolgoy managment and entrepreneurship. Faculty of Management and Accounting, Allameh Tabatabe’i University, Tehran, Iran
3 Department of technology management and entrepreneurship, Faculty of Management and Accounting, Allameh Tabatabe’i University
10.22059/jed.2026.409774.654640
Abstract
Objective: Given the high failure rate of new product development (NPD) projects and increasing uncertainty in business environments, this study aims to investigate the role of causal and effectual decision-making logics in the success of NPD projects. Specifically, the current study seeks to answer whether a single decision-making approach is suitable for all NPD projects, or if applying causal and effectual logics in different contexts—considering varying levels of innovation and uncertainty—yields different results for NPD performance.


Method: This study employed a quantitative approach through a survey to investigate the effects of causal/effectual logics on NPD performance with regard to varying degress of innovation among small and medium-sized enterprises (SMEs) in the food industry in Tehran. Data were collected via an online questionnaire from 158 senior managers of NPD teams and then analyzed utilizing structural modelling via smart-PLS.


Results: The findings indicate that causal and effectual logics do not function as absolute alternatives; rather, their impact on NPD success is contingent upon project context.Findings of this research indicate that causal logic has a positive impact on the performance of new product development in high-innovative projects, while effectual logic positively affects new product development in low-innovative projects. However, not all dimensions of causal and effectual logic positively influence outcome of new product development. In highly innovative projects, the effectual dimensions of affordable loss and leveraging contingencies significantly enhance NPD process efficiency, while partnerships and leveraging contingencies positively influence NPD output. In contrast, the means orientation dimension does not exert a significant effect on either dimension of NPD performance. For projects characterized by low innovativeness, competitive market analysis has a significant positive effect only on NPD output, whereas overcoming the unexpected improves both process efficiency and output. However, goal orientation and expected return orientation show no significant effects on NPD performance.These results confirm that both effectual and causal logic can be effective depending on the context, and different degrees of innovation require varied approaches to new product development, which aligns with existing literature.





Conclusion: By extending the application of effectuation theory from entrepreneurship literature to new product development in established organizations, this study demonstrates that there is no single "best practice" for managing all NPD projects. but there is a need for an informed and context-appropriate choice of decision-making logic, based on the levels of innovation and uncertainty, This insight can significantly enhance the likelihood of project success.Since the development of new products behaves as an entrepreneurial process, leveraging the theory of effectuation from the domain of entrepreneurship and its application in organizational process literature such as new product development, can open new avenues for better understanding these processes and factors related to their success in uncertain conditions. This research, provides a deeper understanding of the role decision-making logics in the new product development projects by going beyond traditional linear approaches and help managers and decision-makers to select appropriate approac based on the level of innovation and increase the success of these projects.
Keywords
Causation
Effectuation
New Product Development (NPD)
Subjects
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Journal of Entrepreneurship Development
Volume 19, Issue 3
Autumn 2026
Pages 54-82