1 Introduction

In entrepreneurship research, it is increasingly acknowledged that most new ventures are created by entrepreneurial teams (Beckman 2006; Kamm et al. 1990; Lechler 2001)—teams that are jointly responsible for the early venture decisions. Previous studies have shown that the shared backgrounds, perspectives, and social ties of team members influence entrepreneurial team decisions. For example, extant research demonstrates that shared prior experiences enable quick team decisions (Eisenhardt and Schoonhoven 1996), that previous work affiliations increase a team’s preference for exploitation (Beckman 2006), and that collective cognition affects strategic choices (West 2007). This research is often framed in terms of social antecedents that influence decision-making and that are often treated as static entities, which have discrete effects for determining, causing, or predicting decision outcomes.

What extant entrepreneurial team research does not do, however, is demonstrate how the mutual interests and perceptions of team members experienced in the pre-start-up phase constitute a shared relational context that shapes how they make decisions. Understanding this is important, but not merely because it frames context as a significant indicator of team decisions. Instead, and more distinctly, directing specific analytical attention to the relational context that was created prior to founding helps to explain the prevalence of certain decision behaviors—be they effectual or causal. Effectual and causal decision logics are often distinguished to indicate two contrasting types of decision behaviors: an experimental, participative, or effectual approach, and a linear, planning-based, causal approach. These contrasting decision logics are both present in the early uncertain and unpredictable entrepreneurial stages (Andries et al. 2013). The effectuation concept also acknowledges the backgrounds and skills of entrepreneurs in terms of their available means for steering decision-making (Dew et al. 2009). Effectual behaviors are often predicated, therefore, on a high sensitivity to context in the sense that entrepreneurs “use” their contexts to negotiate particular actions and contingencies (Sarasvathy 2008).

Despite acknowledging the significance of context for entrepreneurial action, effectuation does not explicitly address how effectual and causal decisions are contextualized in the shared pre-start-up phase. As just mentioned, context is recognized as central for enabling the means that are to hand (Sarasvathy 2008) but we are not usually able to trace decision logics, especially in team situations, to the shared perceptions and interests that emerge in the early start-up phase. Moreover, although we are informed that both effectual and causal behaviors are present in team decision-making, little has been written about the emergence of team cognition and its incorporation in entrepreneurial team decisions (de Mol et al. 2015). This is especially the case when considering the ways in which effectual and causal decision behaviors, rather than being sensitive to context, are instead contextualized in shared team ambitions, perspectives, and cognition.

In view of these limitations, we draw from the work on team cognition and decision-making (Eisenhardt 2013; Ensley and Pearce 2001; West 2007) and relate this to the analytical interests of effectual and predictive decision logics. This follows calls for effectuation research to be extended to founding teams (Read et al. 2016; Smolka et al. 2016). We also build upon calls (Arend et al. 2015; Read et al. 2016) to strengthen the theoretical validity of effectuation, which we do by explicitly attending to the shared pre-start-up moment of transition during which a particular relational context is formed among team members—a context that goes on to shape particular patterns of effectual/causal decision-making. In addition, we add to the empirical applicability of effectuation (Arend et al. 2015; Read et al. 2016) by examining it in the hitherto underexplored settings of entrepreneurial teams.

2 Analytical framework

Although Sarasvathy (2001) did not explicitly discuss teams in her initial conceptualization of effectuation, some studies illustrate how effectual behaviors emerge in new venture teams (Alsos et al. 2016; DeTienne et al. 2015; Sarasvathy et al. 2008). Effectuation is relevant for team research because, as commonly expressed in the principles of effectuation (Sarasvathy 2008), entrepreneurs draw upon “who they are, what they know and whom they know” in order to drive the creation of the “pie” or the “final artifact” (Sarasvathy and Dew 2005: p. 548). Implicit within this is an assumption that focusing on available means enables entrepreneurs to relate to their social context to activate required resources. Often, however, the social context is recognized to be “present’” although it is mostly implicit in the entrepreneurs’ scope of action and use of resources.

When addressing the social factors influencing teams and their decision-making, most research focuses on how the unique perspectives, skills, social ties, and histories of team members conspire to influence team decisions. Some authors focus on how teams co-create to integrate these capabilities into shared forms of knowledge (e.g., Beckman 2006; Eisenhardt and Schoonhoven 1996; Kamm and Nurick 1993) that enable speed, exploitation, or effectiveness of joint decision-making. Other studies emphasize the importance of shared cognition, which is an emergent state that describes a similar distribution of knowledge among team members resulting from interactions inside the team in relation to its environment (de Mol et al. 2015). Shared cognition is important for entrepreneurial teams because it facilitates decisions by allowing team members to align interpretations of the environment, take quick action, improve information processing, and achieve consensus about procedures and strategies (Cannon-Bowers and Salas 2001; Furr et al. 2012). Also, emphasizing the link between sharedness and early team decisions, Eisenhardt (2013) demonstrates that simple cognitive rules for key firm activities increase decision effectiveness; Souitaris and Maestro (2009) highlight how shared multitasking preferences improve decision speed and comprehensiveness; and West (2007) posits that collective cognition impacts the direction of strategic decisions.

This short review shows that the type of consensus reached within teams is distinct for shaping joint decisions in specific ways. Despite debate about the context of early planning and experimentation (Brinckmann et al. 2010), the relationship between shared cognition and contextual factors shaping decision behaviors has not yet been investigated (Arend et al. 2015; Chwolka and Raith 2012). This is particularly the case for how effectual and predictive decision behaviors are contextualized in the shared interests, ambitions, and cognitions that are developed in the pre-start-up phase. Investigating how the social context induces particular modes of team cognition is important for understanding how they anticipate specific entrepreneurial decision heuristics (Grégoire et al. 2011).

To address this gap, we focus on the shared entrepreneurial cognition that arises from the social context of entrepreneurial teams. While prior studies have validated uncertainty and experience as effectual preconditions (Dew et al. 2009) and linked self-efficacy (Engel et al. 2014), career motives (Gabrielsson and Politis 2011), and social identity (Alsos et al. 2016) to effectual behavior, it is rare to see how effectual/causal logics are shaped by the social context in which they are located. Also, although Arend et al. (2015) propose directions for specifying the landscape of effectuation, many scholars have pointed to the limitations in entrepreneurship research arising from the lack of attention to context (Fletcher 2011; Welter 2011; Welter and Gartner 2016). Zahra and Wright (2011), for example, identify the need to factor in contextual dimensions, and Welter (2011: pp. 165–166) argues that contextual factors are useful for highlighting “when, where and how particular circumstances and situations” influence entrepreneurial outcomes.

We build upon these calls for a closer consideration of how context is significant for shaping entrepreneurial outcomes. However, rather than framing context in terms of the social antecedents that unidirectionally determine decision-making, we start from a relational view of context to emphasize “how actors co-create their context, how the context itself evolves and how it impacts on the actors involved” (van Gelderen et al. 2012). In this way, we direct analytical attention to context to demonstrate how a shared relational context is created by team members prior to founding and how this shapes subsequent decision behaviors. Specifically, we focus on the pre-start-up moments in which mutual interests and ambitions are shared among team members. We conceptualize these significant events as shared moments of transition, which are analytically distinctive since they capture the foundational relational dynamic context within which a shared cognition for entrepreneurial joint action is recognized. They also provide a pivotal point for entrepreneurial action in that the relational dynamic generated here creates a particular social context for further decision-making. With these interests in mind, we pose the following research question:

How does the shared pre-start-up context of team members shape early entrepreneurial decisions in young ventures?

3 Methodology

3.1 Research design and case selection

The research setting for this study is independent, profit-oriented young ventures, which are created and managed by entrepreneurial teams in which at least one founding member is still active. We adopted an inductive multiple case study approach (Eisenhardt 1989) and engaged in purposeful sampling to select information-rich cases that met these criteria (Gerring 2007). To find sample ventures, we focused on Luxembourg, which has a nascent but highly promoted entrepreneurship culture, and we contacted five incubators as they were likely to host young ventures with founding members still on board (Breugst et al. 2015). From this mapping exercise, 117 ventures were identified. Using data from the Luxembourg company registry and statistical office, we were able to filter out those ventures not conforming to our selection criteria. This left a total of 13 ventures for close examination.

We began by contacting these ventures and interviewing their active, available entrepreneurial team members. Since we aimed to detect common factors that might shape team decision contexts (Reymen et al. 2015), and to enable heterogeneity between cases, we applied maximum variation sampling (Creswell 2012). To this end, we iteratively added cases and looked for differences in shared member history (Beckman 2006), prior relationships (Brannon et al. 2013), and founding motivations (West 2007). When analyzing our interview material and secondary data, we identified a common pattern whereby, despite the diversity of team backgrounds, members of the team recalled a pivotal pre-founding moment in which their mutual appreciation, similar motivation, and collective desire to change were recognized. Moreover, these situations constitute the pre-founding moment, or what we refer to as the pre-start-up shared moment of transition (SMT), which became the core construct of the study. It captures the point at which the joint decision for venture creation was triggered by a sudden external or cognitive/relational incident.

When we examined more closely the interests and ambitions underlying the teams’ respective SMTs, two dominant but contrasting and mutually exclusive orientations were detected: (i) changing the world and (ii) securing personal interests. These were identified by looking for differences in the scope of reference of the shared events constituting an SMT. We found that cofounders’ interests/ambitions were either clearly oriented toward fostering change/innovation in the market, or toward improving their own lives and continuing cherished activities. These distinct orientations allowed us to refine the SMT construct and to characterize each venture’s SMT. After interviewing nine teams, theoretical saturation was reached, meaning sufficient evidence for our criteria of interest was achieved (Eisenhardt 1989), with five cases showing distinctly one SMT orientation and four cases the other. This number of cases is consistent with recommendations for inductive theorizing (Eisenhardt 1989) and practices used in other case studies (e.g., Knockaert et al. 2011).Footnote 1 Table 1 provides an overview of the ventures.

Table 1 Venture characteristics
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3.2 Data collection

Case material was primarily collected in 16 semistructured interviews with active entrepreneurial team members who were highly involved in the venture’s development, which suggested the possibility for them to recall past behaviors. With the knowledge that their responses were confidential, interviewees spoke openly and provided rich information. Interviews lasted, on average, 50 minutes and were conducted one-to-one at the incubators, while on some occasions two members jointly participated. Additionally, informal follow-up meetings and/or calls were undertaken, enabling a comprehensive view of the backgrounds and joint histories of all team members. In each case, both shared and individual views could be identified, and cofounders who were separately interviewed provided overlapping information. Since team members had known each other for a long time and had interacted intensively in the pursuit of shared goals during their venture creation, we interpreted that they were well aware of each other’s views. Therefore, we asked our respondents about their own and their cofounders’ traits, motivations for founding/team selection, their prior relationships, and their common backgrounds. Furthermore, they accounted for the development of their business, product/service, and market. This helped us to gain an appreciation of the relational team contexts. Finally, they were asked to describe their joint early decisions, followed by directed questioning using the five effectual/causal principles (Alsos et al. 2014; Sarasvathy 2001). Interviews were recorded and transcribed, with transcriptions amounting to 146 pages of data.

To triangulate cofounders’ reports, we verified and extended information about their environment, ecosystem, and factual aspects of the venture development by questioning five incubator managers, the sector development team of the Luxembourgish innovation clusters, and three employees of the business/entrepreneurship section of the statistical office. Facilitated by the high media coverage that some firms had experienced, we also referred to archival data from venture and public institution websites, online business networks, newspapers/magazines, and start-up award nominations to confirm interviewees’ responses.

3.3 Data analysis

We used an inductive, iterative approach for analyzing our transcriptions and archival sources, and organized our data with the help of computer-based software (NVivo v.11). Since we were particularly interested in exploring the significance of each team’s pre-start-up context, we searched for descriptions of cofounders’ backgrounds, relations, motivations, and explicit rationales for firm creation and later actions. We coded pieces of text that reflected both individual-level constructs (e.g., own perceptions) and team-level constructs (e.g., shared history). This enabled us to detect a set of first-order categories that focused on cofounders’ reasons for co-creating their venture and their priorities for its development.

Next, we assessed the extent to which these categories were shared. Adopting a relational view (Bradbury and Lichtenstein 2000), we considered the narrative of each cofounder as a configuration of perspectives and a partial reflection of his/her social context, including the intra-team interactions. We detected sharedness if cofounders had similar personal views and situations (e.g., all being unhappy with their jobs), or if they clearly referred to common beliefs and actions (e.g., all having the desire for greater independence) (Discua Cruz et al. 2013). By doing so, and by conducting cross-case comparisons (Eisenhardt 1989), we identified shared patterns among members that allowed us to summarize the first-order categories into second-order themes (Strauss and Corbin 1998).Footnote 2

In a first stage, it became clear that four of the identified themes (collective urge for action, similar motivation for change, feelings of interdependence, and joint transition trigger) are related to collective events that described the origins of each venture foundation. These became our aggregated theoretical construct SMT. In a second stage, we reassessed the remaining themes and underlying categories with the aim to fully capture the joint aspirations for developing the venture. By doing so, we realized that four themes reflected two sets of collective ambitions or concerns that determined two contrasting sets of entrepreneurial cognitions shaping the venture priorities. These were aggregated into two theoretical constructs: product focus and venture growth focus.Footnote 3

By this point, we had identified the significance of an SMT for each team, but it was still not clear how it related to shared cognition and later decisions. Therefore, in a third stage, we returned to the SMT categories/themes and undertook a more fine-grained analysis of the underlying coded pieces of text to identify possible differences. In so doing, we detected that the reasons for venture creation considerably differed since one group of teams showed a strong desire to master new challenges and innovate, whereas the other signaled their wish for realizing their own values/interests at work and continuing their cherished activities. To account for this dualism of ambitions/interests, we created six new themes and related categories reflecting the two different SMT orientations and aggregated them into two theoretical constructs: changing the world and securing personal interests. Figure 1 illustrates the data structure resulting from the multistage analytical process. The key themes and theoretical constructs are supported with exemplary quotes for each case (Miles and Huberman 1984) as illustrated in Appendix Tables 3 and 4.

Fig. 1
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Data structure and stages of analysis

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In a fourth stage, to determine the extent of effectual/causal decisions, we used an abductive coding approach (Dubois and Gadde 2002). We treated effectuation and causation as independent constructs and differentiated these by using 40 identified indicators that we assigned to the five effectual and causal principles as illustrated in Table 5 (Appendix). Similar to Reymen et al. (2015), we coded as decisions all statements reflecting actions/decisions taken by the entrepreneurial team related to their venture creation. Examples are experimenting with products, investing carefully, and starting a close customer dialogue. To test the reliability of the coding framework, three interviews were co-coded by an independent rater signaling high interrater agreement (95.8%). Discrepancies were discussed until consensus was reached.

To classify decisions and facilitate cross-team comparisons, we calculated the percentages of each effectual/causal principle related to all coded decisions per team, as shown in Table 2. This tabulation enabled us to identify specific patterns in team decision behaviors and to trace their linkage to shared moments and cognition. To determine a dominant cross-team decision pattern, we focused only on the three principles with the highest percentages for each team. For the final analysis stage, archival data about cofounders’ early behavior/views were coded and helped to verify, extend, and strengthen identified constructs and relationships.

Table 2 Team decisions
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Table 3 Shared moments of transition (SMT)
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Table 4 Entrepreneurial cognition
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Table 5 Effectuation and causation indicators
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4 Findings

4.1 Shared moments of transition

As shown in Table 1, our case material reveals that all team members either were friends, shared hobbies, or worked/studied together. When describing their relationships, they referred to “really deep trust” (Mia, ManuCo) or “a foundation that you can trust” (Chris, CyberCo). Paralleling earlier findings (Dai et al. 2016), we observe that these trust-based relations stimulated a willingness to change and to engage in collective action. In view of these close ties and open interaction, all teams experienced a specific shared moment of transition (SMT), a life-changing moment, in which both the idea to jointly create a venture was made and the framework for how this venture should be developed was formed.

Such an SMT happened when team members faced the simultaneous occurrence of four events: (1) a collective urge for action (i.e., members shared an urgent desire to change their situation); (2) a similar motivation for change (i.e., the underlying motivations driving the desire for change were similar); (3) a strong feeling of interdependence (i.e., they mutually thought that only together could they realize their desired changes); and (4) a transition trigger (i.e., a brief, intense, and sudden incident that became a significant team matter through the initiative of one of the cofounders). These incidents reflected each team’s specific relations and situation. For example, in PureCo, their transition started when Pete saw his “lucky draw” in the moment when cofounder Phil “decided to stop his [former] start-up.” SeeCo’s transition began when Sara teased Sean that if he was so clever, he should start a firm, to which he countered “Yes, let’s go!” and ManuCo’s transition started as their former employer refused to fund a customer project, which induced Mia to signal that she was ready to leave.

Although we detected SMTs in each team, the overall orientations of these moments differed. After assessing the scope of relevance of each of the four underlying events of an SMT, we found that they jointly determined the extent to which the teams were either oriented toward changing the world or securing personal interests (with the exception of the trigger event which had a more activating role). The former orientation reflects a more external focus on changing or transforming existing structures/markets in the sense of “world-making” (Spinosa et al. 1997), while the latter concentrates on personal fulfillment and self-identity issues related to a wish to improve the team members’ individual working lives. See Table 3 (Appendix) for exemplary quotes from all teams for both orientations along the four SMT events.

4.1.1 Changing the world orientation

We found a changing the world orientation in the SMT of EduCo, PureCo, SeeCo, and TechCo. Their urges for action were strongly linked to their desire to realize a unique, market-impacting project and to master a new challenge. For example, in PureCo, Pete “felt that [he] needed some new challenges, a new project” while his colleague, Phil, dreamed of creating something “totally new” that “was kind of adventurous.” Likewise, the shared motivations for change of these four teams reflected their ambitions for being bold, inventive, or involved in significant product or market transformations. For example, in SeeCo, their idea was “to do innovative projects” (Sean) and in TechCo, they were motivated by creating an “incredible project,” “something they believe in” that would “create a big interest” (Tom). For PureCo, they spoke of being driven by a wish “to start from scratch and build something [new]” (Pete).

Further, the strong feeling of interdependence between members of these teams was reflected in the mutual appreciation of the perceived complementarity of their skills and traits, which they spoke of as crucial for realizing their envisioned changes. Among the valued diverse characteristics were soft skills, personality traits, viewpoints, age, and expertise, which were expected to provide diversified knowledge and perspectives, enabling them to develop novel ideas and address complex tasks. For example, in PureCo, Phil stated that a CEO and CTO are needed “like the two legs of the body,” while Pete believed that they “complemented each other well” having “20 years age difference”; Sean (SeeCo) affirmed that “Sara listens to feelings,” which is something he is not good at, and concluded that complementary teams “create value” and allow the management of “contradictory problems or ideas in order to find the best idea”; EduCo counted on Elvis’s founding experience to disrupt the market as, in contrast to the rest of the team, “he knew how young firms work.” This parallels previous studies showing that diversity stimulates team creativity and innovation by increasing problem-solving capabilities and the willingness to change and explore new opportunities (Jin et al. 2017; Bell et al. 2011).

4.1.2 Securing personal interests orientation

In contrast to the above, the SMTs of five teams (CyberCo, DataCo, GameCo, LifeCo, and ManuCo) focused on achieving individual-level goals. These teams’ urges for action indicated their desire to avert an impending life change, which mirrored a wish to continue with their cherished activities. For example, at ManuCo, they were keen to continue doing what they did in their previous company because this activity was no longer a core business for their employer. Members of CyberCo were frustrated with their work arrangements when their employer was acquired, hindering them from serving their customers in the expected quality, and members of LifeCo were not able to advance their research project due to limited funding.

Similarly, the shared motivations for change within these teams indicated a high sensitivity to their personal satisfaction and self-fulfillment. To them, aligning their areas of interests to their jobs or being able to create their ideal jobs was important. For example, at GameCo, they wanted to work in a “field in which [they] are super passionate” (Glen); at DataCo, they strove to realize their long-term dream project; and those at ManuCo and CyberCo aimed to work according to their “own values and…way of doing things” (Craig) or “to create [their] own jobs” (Mia).

We also discovered that the feeling of interdependence between these team members was attributed to their collective appraisal of their perceived similarities. Common prior experiences, education, fundamental values, soft skills, and personality traits were considered important for their effective communication and fast decisions. For example, those at ManuCo and CyberCo appreciated their similar lifestyles, family situations, friends, values, and ways of thinking, as these allowed them to limit discussion time. Equally, at LifeCo, they valued their similar expertise that helped them to “know who [they] can work with and collaborate…, and with whom [they] cannot” (Levi), and those at GameCo cherished their similar backgrounds, hobbies, and networks, which made their collaboration “easy” (Guy). Consistent with prior research, this finding shows that similarity in teams facilitates cohesion (Hambrick et al. 1996).

We now explore how these team orientations shaped the teams’ ability to generate team cognition.

4.2 Entrepreneurial team cognition

While investigating team members’ stated reasons for venture creation, their common priorities for the venture’s future, and the way they explained key venture challenges/achievements, we identified two types of shared entrepreneurial cognition. In further assessing the role of these cognitions in the pre-start-up context, we found that they were closely related to the two SMT orientations. This finding parallels previous work showing that interactions inside the team generate a common knowledge reflecting collective attitudes, beliefs, and perceptions (Cannon-Bowers and Salas 2001; de Mol et al. 2015). In this study, however, the shared entrepreneurial cognition we observed reflected the way team members approached, valued, and comprehended entrepreneurial action. More specifically, we found the emergence of a shared product focus in teams oriented to changing the world and a shared venture growth focus in teams oriented to securing personal interests.

4.2.1 Product focus

Teams with a product focus aimed to make a distinct market impact by offering a novel or technically superior product. When asked why they created their venture, members of these teams referred explicitly to their wish to develop such a product. For instance, at EduCo, they confirmed that their most important founding motives were clearly “product-related/product opportunity driven” as they “wanted to take the opportunity to further develop and expand the product” (Eric). They described their product as being “disruptive” and “world-leading.” Likewise, Tom (TechCo) explained that “the business was created by the product” and Phil (PureCo) admitted that being among the first to make “a consumer product” in a market dominated by business solutions is what “drove [him] into this company.”

These teams showed strong emotions when talking about their product in the sense of being fascinated and proud about product benefits or frustrated by product-related issues. For instance, Sean (SeeCo) and Pete (PureCo) proudly praised unique features of their product, and Tom (TechCo) demonstrated his product enthusiasm by commenting multiple times how innovatively they deal with the underlying technology.

4.2.2 Venture growth focus

In contrast, teams with a venture growth focus were interested in achieving financial benefits to be able to pursue their personal goals. Consequently, they tried either to acquire funding or achieve financial success through organic growth. For example, ManuCo aimed to guarantee its future by making the venture “bigger and more profitable” to prepare it for sale. GameCo had pecuniary interests as founders focused on realizing “a massive opportunity” (Guy), having “a scalable product” (Glen), and benefitting from “growth in the market” (Guy). Those at CyberCo intended to “get benefits from the investments [they had] made” (Craig). Similarly, at DataCo, they desired to “grow the company and get a good investor on board” (Dean), and in LifeCo, they created their venture to be “economically successful” and “to make profits” (Levi).

These teams provided many details about topics related to the development of their venture rather than to specific product features when describing key challenges/achievements. For example, at LifeCo, they informed interviewers in-depth about the difficult funding situation in their industry and explained exit scenarios, and at CyberCo, they showed high frustration when talking extensively about bad experiences with potential investors. Table 4 in the Appendix contains further examples of both types of shared cognition. Next, we analyze the teams’ early decision-making behavior.

4.3 Entrepreneurial team decisions

Our data reveal that a team’s pre-start-up SMT and associated cognitions strongly impacted their decision behavior. From the team members’ descriptions of their joint decisions, we found that all teams showed decision behaviors that were more effectual than causal, as illustrated in Table 2.

However, depending on their SMT orientation, the overall strength of their effectual behavior varied significantly. In the four teams with a transition oriented to changing the world (EduCo, PureCo, SeeCo, TechCo), we observed strong, predominantly effectual behavior across all five principles. Having a common product focus, these teams made decisions in an adaptive, participative, and experimental way to develop and introduce their innovative, market-impacting offering. In contrast, the five teams that aimed for a transition oriented to securing personal interests (CyberCo, DataCo, GameCo, ManuCo, LifeCo) showed almost similarly frequent causal behavior by relying more on planning in at least one principle. Their strong venture growth focus steered their decisions to be more linear and predictive in achieving their individual goals. These observations allow us to form a proposition:

Proposition 1

Shared pre-start-up moments of transition in entrepreneurial teams facilitate the emergence of shared cognition, which together reflect the relational pre-start-up context that shapes team decision behavior.

In the next section, we describe the decision patterns related to the underlying effectual/causal principles and link these to the teams’ relational pre-start-up contexts.

4.3.1 Teams with predominantly effectual decisions

Teams who decided predominantly effectually (see Table 2, effectuation total 89–94%) were particularly guided by the principles “nonpredictive control,” “means orientation,” and “partnerships.” Prioritizing these principles can be traced to their relational pre-start-up context in multiple ways. First, their changing the world orientation and shared product focus shaped decision preferences that aimed at controlling an unpredictable market. Being challenge-/innovation-driven, these teams acted as “pilots in the plane” (Sarasvathy et al. 2014) and focused on their own development abilities and cooperative strategies to shape future trends and opportunities. For example, PureCo decided to create a product that would change “the way [people] think about air quality” (Phil); SeeCo relied on its advanced programming skills to develop an innovative solution that “has no competitors worldwide” (Sean), and Elvis (EduCo) stated their intention to “set future trends” rather than “just follow[ing] the market.”

Second, to strengthen their market control, these teams relied heavily on the available means that they had mutually considered valuable in their pre-start-up phase. These included their members’ diverse skills, backgrounds, and characteristics as well as their trust-based relations, shared desire for challenges, and product focus. Consequently, these teams displayed skill sets that gave them the ability and confidence to innovate and to experiment with disruptive business models. For instance, in PureCo, their different functional skills and experiences inspired them to explore new ways of testing their idea and to apply an iterative hardware development process to identify the ideal business model while consistently sticking to their initial vision. Similarly, in TechCo, the founders’ diverse skills enabled them to work on what they were good at and contributed to their openness toward others’ ideas, while their product focus helped them to concentrate on the planned direction.

Third, reflecting their diverse networks/approaches and their strong product focus, the predominantly effectual teams sought collaborations with various players to test, improve, and extend their product, to expand resources, and to pursue joint goals. For example, the SeeCo founders used their diverse contacts to ensure initial funding and decided to collaborate with a leading player to increase their global reach. Likewise, those at TechCo partnered with a big US–based company selling their product under their name, which gave them access to key customers and markets. Also, both the PureCo and EduCo founders confirmed that exchanging with competitors was crucial for their subsequent product development. Our findings and above argumentation suggest:

Proposition 2

A shared “changing the world”–oriented moment of transition and a “product focus” cognition contextualize an entrepreneurial team’s predominantly effectual behavior in the sense of achieving nonpredictive control by exploiting means and building partnerships.

4.3.2 Teams with simultaneously effectual and causal decisions

Teams who displayed decision behaviors that were simultaneously effectual and causal (see Table 2, causation total 36–47%) were mainly guided by the principles of “goal orientation,” “means orientation,” and “leverage contingencies.” The emphasis on these decision principles was shaped by their pre-start-up context, albeit in different ways. First, their securing personal interests orientation and their venture growth focus drove them to start with preset goals. Being interested in their personal well-being and in continuing their cherished activities, these teams concentrated on setting clear goals for their venture’s future based on planning, analyses, and systematic gathering of required resources. For example, those at GameCo would never “leave anything to chance” but instead “always set milestones over a period […]” indicating their clarity on the venture’s future. Both CyberCo and ManuCo teams explained that they acquired business planning skills in order to “get the long-term vision” (Craig) and to steer their business in the desired direction. Also, those at LifeCo and DataCo spent considerable time acquiring funding as their business model is focused on fast growth.

Second, these teams exploited their available resources to attain set goals. Their similar profiles, close ties, and shared venture growth focus allowed them to continue favored work activities but in the context of their own venture. Shared views about the growth of the business reduced the necessity to continuously negotiate priorities or next steps. Also, knowing their markets and product areas well, they reused existing networks to identify new opportunities within their industry boundaries and leveraged available support structures to overcome resource gaps. For instance, both founders of GameCo were professional sportsmen and coincidently discovered a niche in the sports market. Having similar experiences, a shared “passion” and a “wide network of international corporations, investment firms, and wealthy people” (Guy) helped them start their venture. Likewise, the cofounders of LifeCo, ManuCo, and CyberCo had a joint work history. So, when starting their venture, they transferred their well-rehearsed roles, familiar collaboration schemes, and existing business networks to the new company setup.

Third, we found that these teams leveraged contingencies to achieve their common goals. Being more interested in venture growth than in product features, they adapted to environmental changes by evolving their venture as opportunities emerged and accepted unexpected events as a possibility to create additional value. For example, when the ManuCo team realized that the market for their service had changed, they accepted this as an opportunity to adapt their offer and quickly modify their business model. Likewise, those at CyberCo constantly adapted their offering to respond to customers’ needs or to the skills of new members joining their team. This leads us to propose:

Proposition 3

A shared “securing personal interests”–oriented moment of transition and a “venture growth focus” cognition contextualize an entrepreneurial team’s simultaneous effectual and causal behavior in the sense of achieving preset goals by exploiting means and leveraging contingencies.

Overall findings of this study are visualized in Fig. 2.

Fig. 2
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A model of the relational pre-start-up context and its impact on decision behaviors in entrepreneurial teams

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5 Discussion

This study aims to explore how the shared interests and ambitions of entrepreneurial team members experienced in the pre-start-up phase provide a relational context for joint effectual/causal decisions. Specifically, our findings show how effectual and causal decisions are contextualized in so-called pre-start-up shared moments of transition (SMT)—intense life-changing moments, which are highly susceptible to stimuli from social context (Mathias et al. 2015) and during which the initiative to co-create a venture, and the framework for how this venture takes shape, are formed. These SMTs happen when teams simultaneously experience four events: (1) a collective urge for action, (2) a similar motivation for change, (3) a strong feeling of interdependence, and (4) a transition trigger. They occur in two distinct orientations reflecting cofounders’ ambitions for either changing the world or securing personal interests. Related to these orientations, collective entrepreneurial cognition emerges that is either product- or venture growth–focused. Together, these cognitions and orientations represent the relational pre-start-up context that shapes team decision behaviors. Specifically, as illustrated in Fig. 2, teams with a changing the world SMT and a product focus displayed mainly effectual behaviors, whereas teams with a securing personal interests SMT and a venture growth focus concurrently displayed causal decision behaviors.

5.1 Theoretical contribution

Our findings have implications for the theoretical and empirical validity of effectuation (Arend et al. 2015; Read et al. 2016). The empirical validity of effectuation is enhanced by focusing on entrepreneurial teams to examine how decision behaviors are related to the shared interests, interdependencies, and cognition that emerge in the pre-start-up phase. This focus is distinctive because although there is extant work on team cognition and decision-making (Eisenhardt 2013; Ensley and Pearce 2001; West 2007) and on how collective attitudes, beliefs, and team interactions influence team dynamics (Cannon-Bowers and Salas 2001; de Mol et al. 2015), it is rare to see studies directly linking social context, team dynamics, and decision behaviors. Our findings provide a new empirical angle to both team research and effectuation by linking these aspects and tracing the intensities of effectual and predictive decision behaviors to the relational context in which they are produced.

The theoretical validity of effectuation is advanced by showing how effectual and predictive logics are contextualized in the situationally intense (Baron et al. 1999) and pivotal pre-founding, shared transition moments. Rather than emphasizing the contextual sensitivity of decision behaviors (Sarasvathy 2008), we adopt a relational view of context (Fletcher and Selden 2016) that enables us to contextualize entrepreneurial agency in relation to what has happened (past relations, ambitions, and cognitions), with what should happen now (decision principles), and what is intended to happen in the future (purpose and priorities for the business) (Fletcher and Selden 2016, referring to Emirbayer and Mische 1998).

By examining how team members align their mutual interests concerning the venture’s purpose, our findings illustrate how two distinct SMT orientations emerge. This parallels the work of Fauchart and Gruber (2011) and Grimes (2017) who show how founders privilege the association between their creative ideas and their self-(identity) concepts. In our study, however, we take a team focus rather than adopting an identity lens and create a new theoretical construct (SMT) to acknowledge the collective and trust-based interdependencies shared within teams. This construct makes a distinctive contribution to the literature on teams, cognition, and decision behaviors in that it captures how shared cognition is co-created from the team’s relational context.

5.2 Implications for related literatures

Our findings have implications for related literatures. First, they add to work on social identity (e.g., Fauchart and Gruber 2011) by showing how SMT orientation, which can be related to team social identity, emerges and influences venture decisions. Second, they extend research on the nature and role of contexts for entrepreneurial behaviors by showing how we can account for the “multiplicity of contexts” and their changing meaning for entrepreneurial cognition or decision behaviors (e.g., Fletcher and Selden 2016: p. 81). Third, they add to entrepreneurial imprinting (e.g., Mathias et al. 2015) by illustrating how shared relational pre-start-up contexts and cognition imprint decisions.

5.3 Practical implications

Team cognition and how it emerges in entrepreneurial contexts is often an intuitive and intangible process to team members. We suggest that entrepreneurial teams should explicitly acknowledge their relational pre-start-up context including their shared cognition, as this will sustainably shape the way their venture develops (i.e., having implications for their value proposition or their adaptability to unplanned events). This is particularly important in uncertain environments where contingent events can threaten the purpose of the team. Such an awareness can help teams to be alert to the fact that although the (political, industry) context of their venture is always in flux, it is possible to maintain a degree of continuity through this unpredictability if their core vision, identity, and intent is clear and explicit. Educational institutions could, therefore, integrate material about the context-specific issues that characterize the pre-start-up setting and focus less on generic models that gloss over these specificities. Finally, incubators could embrace more variety in the use of tools for evaluating the performance of hosted firms, with less emphasis on the use of forecasts and plans and more on helping ventures to appreciate the value of their micro-foundations—foundations that can aid sustainability.

5.4 Limitations

This study also has some limitations. First, our sample includes only young incubator-hosted ventures, which gives rise to a potential for endogeneity. They differed in terms of their industry, age, size, and market uncertainty, and as these factors might influence team decisions, future studies could investigate the propositions with nonincubator or sector-specific ventures. Second, this study focuses only on transition moments and cognitions that are shared. However, those that are not shared might also impact team decisions and would be interesting to explore.

6 Conclusion

To conclude, shared pre-founding moments of transition and entrepreneurial cognition provide the relational context for effectual and causal decisions of entrepreneurial teams in new ventures. We trace how decision behaviors in teams are connected to the relational context. In so doing, we demonstrate the theoretical potential of effectual logic for enabling a theory of context (Bamberger 2008).