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Journal of Business Venturing 24 (2009) 310 315

Effectual versus predictive logics in entrepreneurial decision making:

Differences between experts and novices
Does experience in starting new ventures change the way entrepreneurs
think? Perhaps, but for now, Caution is essential
Robert A. Baron
Lally School of Management, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, United States
Received 18 March 2008; accepted 2 April 2008

Abstract
The preceding paper by Wiltbank et al. reports that highly successful and experienced entrepreneurs rely, to a greater degree
than novices (MBA students), on effectual logic. This finding raises a key question: Why do these two groups differ? The authors
imply that this difference is the result of entrepreneurs' experience in starting new ventures. This is a reasonable suggestion but
unfortunately, there are important reasons for viewing it with caution. The most crucial of these involve serious threats to internal
validity arising from the use of a post-test only design with nonequivalent groups [see Cook, T.D., Campbell, D.T. (1979). Quasiexperimentation design and analysis issues for field settings. Boston: Houghton Mifflin]. Such designs are helpful, but do not allow
for firm conclusions regarding causal relationships between variables. This is an important point for entrepreneurship researchers
who, because of practical constraints, must often adopt such designs. Additional difficulties with respect to interpreting the
obtained results derive from the fact that although the study is cast as being closely related to research on expert performance,
several key links to that extensive literature remain unclear. Overall, however, it is a creative contribution, and paves the way for
additional informative research.
2008 Elsevier Inc. All rights reserved.
Keywords: Entrepreneurial experience; Expert entrepreneurs

1. Executive summary
Do highly experienced entrepreneurs think differently from other persons? In other words, does their experience in
starting and running new ventures change the ways in which they process information, reason, make decisions, and
perform other cognitive tasks? Since it is clear that overall, individuals are indeed changed by their experiences in many
walks of life, this idea seems eminently reasonable. Yet, to date, researchers have provided very little direct evidence
concerning its accuracy. The paper by Wiltbank et al. provides such evidence, and seems to suggest that as a function of
staring and running many new ventures, highly experienced entrepreneurs shift toward the use of effectual logic in their
decision-making activities.
Tel.: +518 276 2864; fax: +518 276 8661.
E-mail address: baronr@rpi.edu.
0883-9026/$ - see front matter 2008 Elsevier Inc. All rights reserved.
doi:10.1016/j.jbusvent.2008.04.001

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At first blush, this conclusion, too, seems highly reasonable. However, the evidence provided by Wiltbank et al. is,
unfortunately, far from conclusive in this respect. Key issues in this regard arise from the fact that the research
performed adopted what Cook and Campbell (1979) describe as a post-test only design with nonequivalent groups.
Specifically, the two groups comparedhighly experienced entrepreneurs and MBA studentsdiffer in many respects
other than amount of experience as entrepreneurs. For instance, they differ greatly in terms of age, life history,
educational background, and perhaps along many other dimensions, too. Because of these differences, the conclusion
that divergence between them with respect to preference for effectual versus causal reasoning stems primarily from
differences in amount of entrepreneurial experience rests on somewhat uncertain grounds, and should be accepted only
with considerable caution.
Other issues relating to this intriguing paper relate to the applicability of principles established in cognitive science
research on expert performance to the field of entrepreneurship. Such application does indeed seem feasible, but only to
the extent that key issues concerning (1) the extent to which entrepreneurs actually engage in deliberate practice (a key
factor in the development of expert performance), and (2) the question of whether use of effectual logic actually
represents expert performance (i.e., performance is consistently superior to that attained by most others in a given
domain), are carefully addressedtasks beyond the scope of the research by Wiltbank et al.
Despite these unresolved issues, the research conducted by Wiltbank et al. is indeed highly innovative both in
conception and execution, and offers a strong contribution to ongoing efforts to build conceptual bridges between
entrepreneurship and other, related fields (e.g., organizational behavior, cognitive science). For this, the authors are to
be strongly commended.
2. Introduction
It is often said that in every field, there are two key groups of participants: the doers and the naysayers. The
doers are members of that field who, when confronted with complex problems, set about the task of solving them. As a
result, they often take flying leaps into uncharted territory and develop new methods for addressing the issues that
intrigue them. In contrast, the second group (naysayers) stands on the side-lines repeating warnings that This can't be
done.
My own sympathies lie strongly with the doers. In fact, it seems only appropriate that anyone conducting research
in the field of entrepreneurship should value very highly creativity and innovation in ongoing efforts to investigate new
venture creation. From this perspective, I see much of merit in this paper. Indeed, I strongly commend the authors for
attempting to gather evidence on the nature of the cognitive changes experienced by highly successful entrepreneurs as
a result of starting and running new ventures. Moreover, as the authors suggest, if we can identify these shifts, we can
design our courses so as to do a better job of imparting essential skills to our students. The methods used in this study
are appropriate, involving think-aloud protocolsa technique long used in cognitive science but rarely employed by
entrepreneurship researchers. Careful analysis of these protocols suggests that as compared to inexperienced novices
(MBA students) highly experienced (and highly successful) entrepreneurs show a much stronger preference for
effectual logic in their decision making. These intriguing results leave readers with the idea that it is the experience
of starting and running new ventures that causes successful entrepreneurs to shift toward effectual logic. This
possibility is highly plausible, but basic principles of experimental design suggest the need for considerable caution in
reaching such conclusions. As I'll now explain, there are several reasons for viewing the present findings as suggestive
rather than conclusive in nature. These are summarized below.
3. Threats to internal validity: the use of a post-test only design with nonequivalent groups
A key goal of all science is establishing cause-and-effect relationships. In essence, we want to know what factors
cause certain effects that we observe. There is general agreement among philosophers of science that the best single
way of achieving this goal is through completely randomized experimental designs. As noted by Cook and Campbell
(1979) and Cook et al. (1990), however, there are many situations in which such designs cannot be used, yet we still
wish to gather evidence concerning causality. This dilemma can be mitigated, if not resolved, by the use of quasiexperimental designsones in which participants are not assigned randomly to various treatments (e.g., Cook and
Campbell, 1979). While such designs cannot provide the same degree of certainty concerning causal relationships as
fully-randomized experiments, they can be at least suggestive in this respect. Such designs are widely used in the field

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of entrepreneurship, where individuals self-select into various situations or experiences, (including entrepreneurship
itself) and in which systematic manipulation of variables of central interest is often not feasible.
Fully aware of these constraints, Wiltbank et al. adopted one type of quasi-experimental designan approach Cook et
al. describe as a post-test only design with nonequivalent groups. In such designs, observations on two groups of
participants are made at a given point in time; one of the groups has been exposed to the treatment of interest (in this case,
experience in starting and running new ventures), while the other has not. If the two groups differ with respect to key
dependent measures (in this research, measures of effectual versus causal logic), it can be suggestedalthough only
tentativelythat these differences are caused by the treatment variable (experience in starting and running new ventures).
While such conclusions seem reasonable, Wiltbank et al. note that in fact, there are many important reasons for
caution with respect to their acceptance. Since the two groups being compared are not equivalent (they differ on several
dimensions), any observed contrasts between them with respect to key dependent measures may stem from these
differences rather than from the variable(s) of interest. In the Wiltbank et al. study, unfortunately, there are many
differences between the two groups included, and as a result, conclusions about why they now differ with respect to the
use of effectual logic rest on highly uncertain grounds. Here, briefly, are some of the threats to internal validity listed by
Cook and Campbell (1979) and Cook et al. (1990):
3.1. Maturation or age
The MBAs in this study are considerably younger than the experienced entrepreneurs (as much as 30 years younger).
As a result, any differences between the two groups with respect to preferred modes of logic may reflect age-related shifts
in logic or reasoning, not the effects of being an entrepreneur. In other words, it may be differences in age, not the
experience of being an entrepreneur per se, that produces the observed findings. Shifts towards effectual logic may simply
derive from the process of cognitive developmentone that continues throughout life (e.g., Schaie and Willis, 2002). This
problem can be mitigated through the use of additional comparison groups who are similar in age to the entrepreneurs (e.g.,
groups of professionals in other fields who are the same age as the entrepreneurs). Unfortunately, such comparison groups
were not included in the research by Cook and Campbell, and the result is the presence of an important threat to internal
validity.
3.2. Selection
Are persons who have chosen to be, and remain, entrepreneurs for many years different from young persons
whose careers stretch before them? Almost certainly they are; for instance, individuals who choose to become
entrepreneurs and remain in this role may be more tolerant of risk, more resilient in the face of adversity, and better
able to handle high levels of stress than individuals who do not become entrepreneurs or choose to leave this role.
Thus, it might be such pre-existing differences between the groups that produce the current observed differences in
their use of effectual logic.
3.3. Life history
In the years between 30 and 60, many different kinds of life experiences occur for most people (e.g., marriage,
becoming a parent or grandparent, a wide assortment of successesand failures). It is possible that this unfolding
succession of important and life-shaping events might produce the differences in effectual and causal logic observed in the
two groups studied by Cook and Campbell For instance, perhaps being a parent provides individuals with potent lessons to
the effect that prediction is uncertain, or that there are many different means to attaining the same ends. Such possibilities,
too, make it difficult to attribute the observed differences in effectual logic to experience as an entrepreneur.
3.4. Educational background and experience
Educational systems change greatly over time in many countries, and as a result, it is quite possible that the
experienced entrepreneurs in this research had very different educational backgrounds than the much younger MBAs.
Perhaps, for instance, they were not exposed to formal business education and didn't learn as much about causal
reasoning. Or, perhaps they simply had less education and acquired their knowledge through the school of hard

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knocks. Such factors, too, might contribute to differences in their current modes of logic that, in fact, have little or
nothing to do with experience as an entrepreneur.
This is only a partial list of the potential threats to firm conclusions concerning causality, but hopefully, it suggests
why scientific caution dictates that we view the results reported in the preceding paper with considerable caution.
Fortunately, there are several means of reducing the uncertainty of causal inferences from posttest only designs with
nonequivalent groups. For instance, as noted earlier, the two (or more) groups can be carefully matched on variables that
are relevant to the key dependent measures. In the present context, this might involve matching with respect to
educational background, personal health, family socioeconomic status, and several other variables. Such matching on
key variables has been adopted in previous research (e.g., Baron and Ensley, 2006) and would, I believe, have been
useful in the present instance as well.
Another technique involves the use of proxies to stand-in for the unavailable pre-tests (comparisons between the two
groups before the treatment variable was introduced). In the present context, this might involve measures of general
cognitive functioning or other variables that could influence preferences for causal or effectual logic, and that would not be
expected to be strongly influenced by career experience. Fully examining these and other procedures is beyond the scope
of the present paper, but interested readers can see Cook and Campbell (1979) or Cook et al. (1990) for detailed
information.
4. Relationship of this study to cognitive science research on expert performance
The issue described above (important threats to internal validity) is, I believe, the most central one. In addition,
though, it seems useful to consider the suggestion by Wiltbank et al. that their research is closely related to a large body
of research in cognitive science concerning expert performanceperformance that is consistently far above that
shown by most others in a given domain or field (e.g., Ericsson, 2006). Building conceptual bridges to other fields and
bodies of knowledge is a valuable taskone that I myself have strongly recommended (e.g., Baron, 2002) and pursued
(e.g., Baron, 2006). However, it is unclear precisely how the study by Wiltbank et al. relates to this previous research or
how it helps to develop conceptual links between entrepreneurship and this body of knowledge. Although several
issues exist, I will only comment briefly on two that appear to be most central: (1) the difficulties involved in applying
the concept of deliberate practice to the domain of entrepreneurship, and (2) the complexities involved in identifying
the specific tasks or activities in which entrepreneurs become expert.
4.1. Do (can) entrepreneurs engage in deliberate practice?
Research on expert performance strongly indicates that exceptional performance in almost any field is due neither to
innate talents and aptitudes, nor sheer amount of experience in that field. Rather, across many domains ranging from tennis
and chess to surgery and science, the key to attaining impressive levels of performance lies in deliberate practicepractice
that continues on a regular basis for many hours and is highly focused on attaining improved performance with respect to
task-related skills (e.g., Ericsson et al., 1993; Hodges and Starkes, 1996). If deliberate practice is a necessary condition for
the development of expert performance (as leading theories of such performance suggest; Ericsson et al., 2006), then the
suggestion that highly experienced entrepreneurs have become experts in starting and running new ventures faces a
complex question: Do (can) entrepreneurs engage in such practice? Only to the extent that they do are the findings and
principles of research on expert performance relevant to understanding the launch and growth of new ventures. This is a
crucial issue and until it is resolved, the relationship of the research conducted by Wiltbank et al. to the field of expert
performance remains somewhat uncertain (see Baron and Henry, 2006, 2008 for further discussions of how, potentially,
this issue can be resolved).
4.2. Does a preference for effectual logic = expert performance?
Another issueand one of considerable importance, I believeis the question of whether the preference for
effectual logic shown by the entrepreneurs in this study is truly indicative of expert performance. As noted earlier, such
performance refers, in the relevant literature, to performance in a given domain that is clearly and consistently superior
to that attained by most others in that domain. Does a preference for (or shift toward) effectual logic clearly indicate the
attainment of exceptional, superior performance? The suggestion implicit in the paper by Wiltbank et al. is, Yes, it

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does. But since we have no independent evidence that the decisions made by the experienced entrepreneurs are in fact
superior (i.e., better in quality, accuracy, or any other basic dimension), this question remains open. As the authors
themselves put it: The strength of claims about any relationship between effectual logic and entrepreneurial expertise
has to come from the fact that we carefully selected experts and gave them decision tasks precisely within their domain
of expertise. This strength is moderated by the assumption that the logical frame they used was acquired through their
experience as entrepreneurs since we do not directly test this assumption. That comment suggests that in fact, we don't
have any evidence that the experienced entrepreneurs in the sample actually demonstrate expert performance, and that,
of course, makes it difficult to apply the principles of expert performance to this research.
In a sense, then, the investigation by Wiltbank et al. does not address a key question: In what tasks or activities do
successful entrepreneurs demonstrate expert performance? The answer provided by the authors is, in essence,
Decision making, but unless we grant the assumption that effectual decision framing is superior to cause-and-effect
framing, that answer is not compelling. In fact, one could argue strongly that cause-and-effect logic, which is the basis
for scientific reasoning, theory, and research, has been exceptionally useful and productive. Indeed, the basic rules of
science virtually require the use of causal logic, and the tremendous progress attained through the use of such logic
suggests that an effectual approach is not necessarily superior in all contexts.
With respect to applying the principles of expert performance to entrepreneurship, a co-author and I (Baron and
Henry, 2006, 2008), have suggested that entrepreneurs may indeed acquire expertise with respect to several key tasks,
such as (1) recognizing and evaluating business opportunities, (2) building effective social networks, (3) acquiring
essential resources or, as Wiltbank et al. suggest, (4) in making effective decisions. Alternatively, perhaps highly
experienced entrepreneurs become experts in metacognition or self-regulationin knowing what they do and do not
know, and in regulating their own behavior (e.g., Baumeister et al., 2007). Only future research can fully address this
complex issue, and until such data are available, the question of whether the principles of expert performance can be
usefully applied to entrepreneurship must, unfortunately, remain open.
5. Concluding comments
Although the comments above suggest that we must exercise considerable caution in interpreting the findings of the
preceding paper, this is in no way detracts from the fact that it reports truly innovative research. Indeed, it seems certain
that the paper by Wiltbank et al. will stimulate further efforts to build conceptual links between entrepreneurship and
several other fields (e.g., cognitive science). Such ties, in turn, promise to significantly broaden entrepreneurship's set
of conceptual and theoretical tools. As noted earlier, I have little personal sympathy for naysayers, so I will conclude
by commending the authors for providing a truly fascinating paperone that, I fully believe, will significantly
facilitate progress toward entrepreneurship's central goal: attaining comprehensive understanding of the complex
process through which energetic, enterprising individuals convert their ideas, talents, and vision into the proverbial
something truly new under the suna goal many seek, but few actually achieve.
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