Managerial Decision-Making in International Business: Effectual Logics in the Context of the MNC

Abstract

While effectual theory is well-known and widely used in the field of entrepreneurship, research on its application within the context of corporate entrepreneurship, and specifically in the Multinational Corporation (MNC), remains undeveloped. The present study attempts to extend current knowledge on how effectual theory applies to the subsidiary initiative literature. Particularly, it analyses how the subsidiary manager engages in managerial decision-making, and to what extent the process of initiative taking involves the use of effectual logics. This is examined by merging theoretical approaches from extant literature and evidence through an inductive case study. Findings suggest that subsidiary managers are indeed likely to use effectuation logics to implement subsidiary initiatives within the MNC, which is supported by an analysis of the five principles of effectuation within the context of a global firm’s foreign subsidiary in Spain.